Background
Mr Walker entered into a civil partnership with his male partner in 2006. In the same year, Mr Walker asked Innospec, his former employer, to confirm that, in the event of his death, a spouse’s pension would be paid to his civil partner.
Innospec’s response was that, on the basis that Mr Walker’s period of service predated the introduction of civil partnerships in the UK, Mr Walker’s civil partner would not be entitled to a spouse’s pension as there was an exception in the Equality Act 2010 which covered this.
The exception Innospec sought to rely on states that it is lawful to discriminate against an employee who is in a civil partnership or same-sex marriage by preventing or restricting them from having access to a benefit by reference to service before 5 December 2005.
However, the Supreme Court ruled on 12 July 2017 that this exception is incompatible with EU law and must be disapplied.
Based on that ruling, civil partners and same-sex spouses are entitled to the same spouses’ pensions as opposite-sex partners would be (including in relation to service before 5 December 2005).
What if the pension scheme already provides fully equal rights?
Some pension schemes already go beyond the minimum that was previously required by UK law and provide equal treatment for civil partners and same-sex spouses.
For those pension schemes, it is likely that no action will need to be taken (as they are already providing pensions in line with the Supreme Court’s ruling).
What if the pension scheme does not provide fully equal rights?
Based on the Supreme Court’s ruling, for pension schemes that do not provide full spouses’ benefits to civil partners and same-sex spouses in respect of service before 5 December 2005, this will now need to be changed.
This gives rise to a number of considerations, but the two key legal points to highlight for pension schemes are as follows:
Survivors’ pensions in respect of service before 5 December 2005
Where trustees are not currently providing equal treatment to civil partners or same-sex spouses in relation to service before 5 December 2005, they will now need to start providing a full pension (based on the equivalent opposite-sex married partner benefit).
That pension will also be treated as having been payable from the date the member died. It is likely that trustees would therefore also need to make good the historic shortfall in the pension paid (as well as correcting future pension payments).
Amendments to Scheme Rules
Trustees may wish to consider amending their scheme rules where they expressly limit civil partners’ or same-sex spouses’ pension rights in respect of service before 5 December 2005.
However, where scheme rules contain such a limitation, the Supreme Court’s ruling renders that limitation no longer effective. There is therefore no requirement to amend scheme rules immediately. Nevertheless, trustees may wish to ‘tidy up’ their rules to remove the limitation and reflect the current legal position, or make sure that this is taken into account when the scheme rules are next being amended.
Client Alert 2017-167
