Civil partner LGPS survivor benefits set to match widows

The government's new rules, which are currently under consultation, come after the Supreme Court ruled in July 2017 that the male spouse of a deceased occupational defined benefit scheme member was entitled to the same benefits that would be paid had the member left behind a widow in an opposite sex marriage.

LGPS funds currently pay an ongoing pension to the spouse or civil partner, and children, of a former member who has died.

The costs and the implications to do that for all female members with widowers would be much bigger

Michaela Berry, Sackers

The judgment inWalker v Innospec meant that the survivor benefits to be received by Mr Walker’s spouse would be calculated on the years of his service with chemicals company Innospec, provided that at the date of his death they had been married.

The ruling meant that all survivors of same-sex civil partnerships and same-sex marriage were entitled to the same equal treatment as widows. They are currently entitled to the benefits granted to widowers, which are less generous.

Earlier benefit designs for the LGPS recognise past service back to 1978 for widows, but only back to 1988 for widowers. This differential treatment has previously been deemed lawful by the Supreme Court and the European Court of Justice.

The government has also proposed giving itself the power to grant statutory guidance on LGPS benefits to achieve standardisation of interpretation and avoid amending scheme rules each time a judgment is reached.

Furthermore, it has suggested reforms that will grant early access to benefits for deferred members of the 1995 LGPS fund. This access was unintentionally hampered by regulations made in April.

Complete equal treatment too costly

In the influential Barber case, the ECJ ruled that schemes had to provide equal survivor benefits for males who survive their female spouses, but only in service from the judgment date in May 1990.

The Ministry of Housing, Communities and Local Government has ruled out equalising all benefits for widowers who survive females, owing to the estimated £2.8bn it would cost to do so.

The government is yet to decide on how survivor pensions for opposite sex civil partners will be treated, according to a Treasury spokesperson. The introduction of civil partnerships for opposite sex couples was announced by Prime Minister Theresa May last week.

Michaela Berry, who leads law firm Sackers’ public sector team, said the government would rely on the Barber judgment in order to avoid equalising benefits for men and women in service before 1990.

“The costs and the implications to do that for all female members with widowers would be much bigger,” she said.

The MHCLG said: “There will be a need for LGPS administering authorities to revisit all awards made under the current rules to partners affected and pay any additional sums that are due.”

Ian Colvin, head of public sector benefit consultancy and governance at Hymans Robertson, said: “It is a case of revisiting all of the deaths where you don’t have a spouse’s pension in payment, or where you have a spouse’s pension in payment but it’s a civil partner’s pension, and carrying out that check.”

Michael Hayles, partner at law firm Burges Salmon, predicted that the government's wish to issue statutory guidance on LGPS pensions may eventually apply beyond survivor benefits.

“The government has recognised that there may be situations... where actually to ensure there’s standardisation, it may be beneficial for the harmonisation of the LGPS that it has this power,” he said.

Too much regulatory change

On April 17 2018, regulations were made that were intended to lift the requirement for members aged between 55 and 60 to secure their employer’s consent before drawing their benefits early.

The MHCLG subsequently proposed to remove this hurdle for those who left the LGPS with deferred benefits before April 1 2018. But differences between the 1995 scheme rules and the other LGPS schemes meant that amendment would have left members of the 1995 scheme “likely to have lost the option to elect for early payment of benefits,” according to the consultation.

Ian Neale, director at pensions intelligence service Aries Insight said that this oversight was “a good illustration of the mess we have got into with constant tinkering with the legislation”.

There have been 88 separate sets of regulations concerning the LGPS issued since 1972, according to Neale.