Civil partner pension benefits need not be equalised

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Pension schemes will not be required to pay backdated benefits to civil partners of their members, due to a Court of Appeal ruling.

The Court of Appeal dismissed the case by John Walker, who argued that his former employer Innospec failed to treat surviving same-sex spouses and civil partners the same as widows or widowers in heterosexual marriages.

Walker retired from Innospec, a chemicals company, in 2003 after working for the company for 23 years. He wanted to ensure that his partner would be adequately provided for if he died first.

He claimed that, if he were to marry a woman, she would be entitled to around £41,000 per year, compared with his husband being entitled to receive around 1% of this amount.

The effect of this latest appeal is that pension schemes will not need to provide civil partners of pension scheme members with benefits in respect of service before 5 December 2005.

Walker made a successful tribunal claim for direct discrimination in 2013, but this went to the Employment Appeal Tribunal, when the Department for Work and Pensions argued that failing to backdate the contributions was not in contravention of EU law.

Following the EAT decision, the Government carried out a review of same-sex survivor benefits. It was estimated that the cost to pension schemes of equalising and backdating these benefits for same-sex marriages could be as much as £3 billion.

Alistair Meeks, pensions partner at Pinsent Masons, said: “Making retrospective changes to pension schemes is always fraught with difficulty.

“There are many points to consider – such as the impact of the extra cost on scheme funding or what to do about individuals who have paid additional contributions to purchase extra survivors’ benefits.”

The court admitted that Mr Walker would find the conclusion hard to accept, but said that “changes to social attitudes, and the legislation which embodies those changes, cannot fully undo the effects of the past”.

A number of employers have voluntarily chosen to equalise survivor benefits, treating civil partnerships exactly the same way as heterosexual marriages.

Earlier this year, TUC general-secretary Frances O’Grady said the Government’s refusal to legislate on same-sex survivor benefits was a “scandal”.

She said: “The Government must remove the last hurdle to equality under the law and bring an end to discrimination that could leave thousands of people in poverty at a time when they are grieving for a loved one.”

Isabel Nurse-Marsh, head of pensions litigation at Pinsent Masons, added: “Many lawyers will not be surprised at the outcome of this appeal. It shows the courts unwilling to intervene and challenge the legality of exemptions to European discrimination law.”

“The EAT felt that the UK law was clear in allowing schemes not to equalise survivors’ benefits fully, and to ignore this would be to ‘legislate rather than interpret’. The Court of Appeal evidently agrees.”

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