Schemes mull increased benefits for same-sex spouses

Benefits provided to same-sex married partners have the same statutory minimum as civil partners. Schemes are required to provide contracted-out benefits on service from April 6 1988 and full benefit for service from December 5 2005.

The Marriage (Same Sex Couples) Act 2013 came into effect in July 2013, but couples were not able to register their intention to marry until March 13 this year.

The amount of benefits due to same-sex partners was thrown into doubt earlier this year when the Employment Appeal Tribunal overturned a previous verdict that stated civil partners would be eligible for full benefits.

Trustees have been given extended powers under the Pensions Act 1995 to pass resolutions changing scheme rules relating to same-sex spouses. Experts have said a key consideration for a discussion to up benefits is the impact on schemes’ liabilities.

Faith Dickson, partner at law firm Sackers, said some schemes are adopting more benefits, but added “quite a lot are just sticking to the minimum”.

She said: “There has been so much legislation to extend people's benefits people are wary of providing more.”

Dickson added schemes may choose to write the statutory minimum into the scheme rules but use the extended powers to provide extra benefits to members.

Some experts said that schemes may choose to extend benefits due to an ideological belief that it was the right thing to do.

“To the extent they’ve done a civil partner benefit they’ll track that,” said Anne-Marie Winton, partner at law firm Nabarro. She added people may choose to give a full benefit as a "non-legal" decision.

Increased scheme liabilities

However, trustees looking to provide full benefits faced possible difficulty from their sponsoring employers due to the potential financial implications.

“It’s a scheme design issue and has funding implications,” said Matthew Swynnerton, partner at law firm DLA Piper. “Most are seeking the views of employers. The first question to be answered is what did they do for civil partners.”

The government is undertaking a review of benefits offered to same-sex spouses and civil partners. It will also consider the cost to schemes associated with changing benefits.

Law firm Wragge & Co has estimated that providing equal benefit could cost private sector schemes up to £3bn. But Dickson argued that, subject to the number of same-sex spouses in the scheme, providing equal benefits could make little or no difference to funding assumptions.

The UK government’s decision may be influenced by the European Court of Justice, which is considering similar questions over same-sex spouses’ benefits.

“If you look at the way the European court is looking at these cases,” said Dickson, “they are moving in the direction of providing complete equality of benefits.”