Equality: where there’s a right…
Pensions briefing: some key developments addressing discrimination in survivors' benefits against same sex and unmarried couples, and the less generous provision proposed for the public sector
Judges, firefighters, RAF commodores, same sex civil partners and spouses. All have featured in recent court cases on inequality of treatment in pension benefits, affecting private and public sector pension schemes. A summary of recent key developments can be found below.
Paragraph 18 of Sched 9 to the Equality Act 2010 permitted survivors’ benefits for civil partners or same sex spouses to be restricted to benefits accrued in occupational defined benefit pension schemes from 5 December 2005 onwards, rather than any longer full period of benefit accrual. In Walker v Innospec  UKSC 47 (12 July 2017), Walker won his appeal to the Supreme Court that the restriction should not apply, so that on his death (provided they were still married), his husband would receive a survivor’s pension based on full accrual.
In a written statement to the House of Commons on 4 July, Guy Opperman, Parliamentary Under Secretary of State for Pensions and Financial Inclusion, covered two related aspects: first, the Government’s response to the decision in Walker v Innospec, and secondly, its position following its Review of Survivor Benefits in Occupational Pension Schemes (published 26 June 2014), on the differences in survivor benefits “between different categories of member and the costs and other effects of eliminating those differences by the equalisation of survivor benefits” in both private sector and public sector pension schemes.
He stated: “The Government respects the decision of the Supreme Court. It is now clear that same sex civil partners or spouses are entitled to survivor benefits in the same way as opposite sex spouses.” However, while public sector pension schemes will (except where dependent on making correct contributions) make changes to provide the same survivor benefits for same sex civil partnerships, same sex marriages and opposite sex marriages (per the Walker v Innospec judgment), the Government will not make other retrospective changes to eliminate inequality.
So far, only two public sector schemes, the Teachers’ Pension Scheme and the Local Government Pension Scheme, have made changes. By contrast, any Government action on public sector pension schemes “should not be interpreted as the minimum requirement for private pension schemes in considering how they respond to this judgment”. Accordingly, private pension schemes should take legal advice.
In addition, in Langford v Secretary of State for Defence  EWCA Civ 1271 the married partner of a deceased RAF commodore, who had not divorced her husband, was declared entitled to survivor’s benefits in the RAF Pension Scheme, with a regulation denying her being contrary to the Human Rights Act 1998. This has implications for other public sector pension schemes operating under similar regulations.
Public sector: diverse workforces
In Lord Chancellor v McCloud  EWCA Civ 2844 the Court of Appeal decided that the 2015 public sector pension scheme reforms, meaning less generous career-average pensions for younger firefighters and judges (compared to older colleagues), amounted to age, race and sex discrimination.
The Government sought to appeal but permission was refused by the UK Supreme Court on 27 June 2019, on the basis that no arguable point of law was raised.
Winding road to equality
Members of pension schemes should receive the benefits to which they are entitled. The principle of equal treatment confirmed in recent decisions means additional cost for the Government, but its approach to public sector pension schemes means that some inequality in survivors’ benefits will continue.
For sponsors and trustees of private defined benefit pension schemes, it means continued risk and cost, so legal and funding advice is key. Review of benefits in payment, back payments, transfers out and payments on death and additional payments may be required. Questions around other aspects, such as restrictions on payments in rules of individual private pension schemes remain to be answered too.
Employers that participate in public sector pension schemes because of outsourcing or acquisition also face increased costs. There are also implications for corporate sales and acquisitions in terms of due diligence, warranties and indemnities.
June Crombie, head of Pensions Scotland, DWF LLP