How can being transgender affect your workplace pension?

UK citizens seeking legal recognition for their new gender apply for a Gender Recognition Certificate. The DWP has noted that this can, in some cases, alter a person’s state pension and workplace retirement benefits.

The department’s website indicates that it has "changed ‘transsexual’ references to ‘transgender’ and updated the information about state pension and bereavement benefits".

What they have to do is to throw themselves on the mercy of the pension provider

Suzanna Hopwood, Stonewall

Gender bias is on the way down

The DWP’s guidance makes note of survivor benefits in some occupational schemes. These are paid out to surviving spouses of deceased scheme members. It observes that “gender and sexual orientation can also affect survivor benefit provision”.

It adds that in England and Wales, under the Marriage (Same Sex Couples) Act 2013, “there is provision that a surviving spouse whose deceased spouse legally changed gender during the marriage will still be able to qualify for a survivor benefit on the same basis as they would have done before the legal change of gender”. Scottish marriages are also protected.

Daniel Taylor, director at administrator Trafalgar House, says that it is now quite rare to see “gender bias” in survivor benefits. But gender discrimination does take place in other aspects of occupational schemes.

“There are some common actuarial factors that have a gender bias,” he says. “With transfer values and lump sum commutation, those calculations will be based on whether you’re a man or a woman,” he adds.

Transfers can be intrusive for transgender members

Jon Sharp, director at consultancy Western Pension Solutions, has been involved in obtaining a transfer value for a transgender man at a defined benefit occupational scheme. The member identified as a male at the point of transfer, but was recognised as female at the date of accruing service.

In the absence of formal regulatory process, the transfer value was calculated using male mortality rate assumptions, along with the fact that he had been female when the benefits were accrued.

Sharp’s team engaged with the trustees and their lawyers throughout the process. He said: “The trustee’s lawyers were of the view that you don’t change your benefits by changing your gender, which I can understand, because obviously some benefits were more generous in the past.”

He added: “I suppose that there’s a concern that somebody could change their gender to claim a higher pension.”

The team had to collect the member’s birth certificate and the date upon which the member changed gender, alongside the request, “which I felt was quite an intrusive thing to say – can you provide evidence of when this took place?” Sharp said.

He called for a legislative rethink that would protect members from intrusion.

“I wonder on this one whether you could simply get it to the point where you said, ‘Okay, benefits in the past might change, but the gender of the member just is the gender of the member’, and you don’t have to go back into, ‘What was it when you accrued your pension’,” he said.

Suzanna Hopwood, a member of lesbian, gay, bisexual, and transgender charity Stonewall’s trans advisory group, said: “What they have to do is to throw themselves on the mercy of the pension provider and allow their discretion when they share this information, which can actually draw them out of what’s called ‘stealth’ – they’ve been living a life with nobody necessarily knowing about it.”

Hopwood said pensions engagement in the trans community is extremely low, and holds concerns over inadequate understanding from a provider’s perspective. “This is a developing area, and not many people have got much experience of it,” she said.

The DWP’s position could be discriminatory

A spokesperson from the Gender Identity Research & Education Society welcomed the DWP’s attempt to assist transgender individuals.

However, the spokesperson said the document fell short in providing advice for those without a gender recognition certificate.

“It makes no mention of a current case in the European court of justice relating to those who have undergone gender reassignment who do not hold a GRC.”

The case considers the plight of "MB", a transgender woman whose application for the state pension was rejected on the basis that she did not have a full gender recognition certificate. In 1995, at the time of her gender reassignment, UK legislation required the annulment of her marriage before applying for the certificate, since same sex marriage was not permitted.

“This case, which is at the opinion stage, may eventually indicate that the DWP's present position is discriminatory. The DWP might perhaps have alerted potential claimants to be aware of the possibility of a change in the pension rules.”

The DWP did not respond to a request for comment.