The laws regarding same-sex couples have changed dramatically over the years. Since 21 December 2004, same-sex couples were given the right to register as civil partners and from 13 March 2014 they were able to marry. One would assume, therefore, that following these changing social attitudes, civil partners and same-sex married couples would be treated equally. Whilst this is true in most circumstances, the same cannot be said for some civil partner pension benefits.
A recent ruling by the Court of Appeal has ruled that some civil partner’s spouses will not be entitled to the same pension benefits as heterosexual couples.
Retired chemicals worker John Walker had worked for his employer for 23 years. In 1983 he began his relationship with his partner and in 2006 they entered into a civil partnership. Following their civil partnership, Mr Walker wanted to clarify the amount of pension his civil partner would receive on his death.
The Court of Appeal held that his partner of 19 years would only be entitled to a minimal payment of £500 per year upon his death, despite Mr Walker receiving a pension of around £85,000 per year. Mr Walker argued against the decision on the basis that if he were to dissolve his same-sex partnership and marry a woman, she would be entitled in the event of his death to approximately £41,000 a year.
Why the difference in pension benefits?
So why would the trustees of the pension scheme only pay Mr Walker’s civil partner such a small amount, around 1% of the total value?
The Equality Act 2010 prevents occupational pension schemes from discriminating on the grounds of sexual orientation, which means civil partners must be treated the same way as spouses on the death of a scheme member. This rule however only applies concerning money saved in a pension scheme after 5 December 2005. Anything saved before that date is subject to unequal rules.
As Mr Walker’s service with his employer occurred before 5 December 2005, and his money had been saved in his pension scheme before this date, the equality rules did not apply to him and the most his partner could obtain was £500 per year.
It has been suggested that a change in the current law could boost same-sex couples’ pensions by approximately £3.3bn. The Court of Appeal however has defended their ruling on the basis that the £3.3bn pension hole in the public sector would need to be filled one way or another.
Whilst some major British employers have voluntarily chosen to treat civil partners the same way as heterosexual marriages, other employers have not and it is estimated that one in four final salary pension schemes does not do more than the law requires. This case has illustrated that it can, quite literally, pay to speak with your employer so that you are under no misapprehension as to how your pension scheme works.
Our ‘Act On It’ team, run by our Wills Trusts and Probate department will be able to advise you expertly on planning for the future and legal documents that can be drawn up. They can also help you with advice in the unfortunate event of you losing a loved one and help you with the administration of their estate. If so send us an email: actonit@gorvins.com or call us on 0161 930 5151.
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