Pension law slowly catches up with society on equal rights

From same-sex relationships being decriminalised in 1967, to couples being able to get married from 2014, the legal framework for same-sex partners has just taken another step.

Employers and pension schemes have not previously had to pay pensions to same-sex spouses for service up to December 2005, when the Civil Partnership Act 2004 came into force.

John Walker, a member of the Innospec defined benefit scheme, brought the claim as in the event of his death his husband would only have been entitled to a spouse’s pension of about £1,000 a year. Innospec did not take into account service before 2005, and Mr Walker had taken early retirement in 2003.

If Mr Walker had married a woman, she would have received about £45,700 a year from the scheme following his death.

Lord Kerr gave the court's final conclusion saying that the pre-2005 exemption in the Equalities Act “is incompatible” with the EU framework directive for equal treatment in employment and occupation, “and must be disapplied”.

Supreme Court overrules statute with ‘striking’ ease

The ease with which the Supreme Court was willing to overturn statute – after all the lower courts had been reluctant to go against it – was “striking”, said Alastair Meeks, partner at law firm Pinsent Masons, especially as it is based on EU law, and comes amid the UK’s exit from the EU.

Meeks noted that gay rights had seen “a remarkable transformation” in the past five decades, adding: “I get the very distinct sense from the judgment that the Supreme Court is very mindful of that social direction.”

Even though the court went against the Equalities Act with its judgment, some said they were not surprised by the decision.

Steve Wardlaw, chair of Emerald Life, a specialist insurer for the lesbian, gay, bisexual and transgender community, said it was clear there had been attempts to limit the scope of equality when the Equalities Act was introduced.

He noted that many in the LGBT community had not known about the previously reduced pension entitlements for same-sex spouses. “I’ve had a few friends say this morning, ‘I had no idea that stuff like this was still going on’,” he said. Therefore, while there is satisfaction in the community about the result, “Pride won’t be extended on the basis of this judgment”.

Wardlaw also highlighted that many larger employers already provide equal pension entitlements to same-sex spouses.

“It’s not that you have to discriminate, but you were able to,” he said. “The vast majority of private companies have ignored this ability and offer equality to married couples across the board.”

What role do trustees play?

Chantal Thompson, partner at law firm Baker McKenzie, said trustees have had to be neutral in these decisions.

“They can’t say, ‘Oh we think it’s right that same-sex partners should have all benefits’, because it does affect the funding position,” she said, adding that boards will prefer to take direction from the employer on cost issues.

However, in terms of the judgment affecting scheme funding levels, “whether it makes a significant difference I would doubt”.

Penny Cogher, partner at law firm Irwin Mitchell, said that “in today’s society, it makes sense” for same-sex couples to have equivalent pension rights.

Cogher advised schemes that do not already grant equal treatment to make it a priority to review past decisions they have made and update rules and member communications.

Part-time worker faces uphill struggle

At the same time as Walker v Innospec, the Supreme Court dealt with O’Brien v Ministry of Justice, which also involved equal treatment and temporal restrictions.

In this case a fee-paid judge, who had been excluded from becoming a member of the judicial pension scheme on the basis of his part-time role, maintained that he should receive a pension in respect of his service before the EU directive on part-time work came into force.

However, unlike in the previous case, the Supreme Court did not decide in favour of the appellant; instead, it referred the case to the Court of Justice of the European Union.

The judgments relate to separate EU directives. The O’Brien case also seems to have more in common with the Barber sex discrimination rulings, said Thompson.

“It’s less about discrimination and more about whether there can be retrospective treatment of your pension accrual,” she said.

Cogher, however, noted that it was “almost unhelpful” at this stage for the case to go to the CJEU for the second time, having already been heard there in 2012.

Although the Supreme Court has referred the case, it noted in its decision that the majority of the court was “inclined to think” that it would be unlawful to discriminate against part-time workers. O'Brien's solicitors expect a favourable outcome.

“It just seems disproportionate to put all this government force into saying, ‘We can explicitly exclude fee-paid part-time judges from getting the same equal treatment as other workers’. It starts to look a bit petty almost,” Cogher said.