Trustees cannot afford to ignore trans discrimination issues

The implications of ensuring that trans individuals are not discriminated against in the workplace are only just beginning to be understood. But there are also implications for a trans individual’s pension benefits. Trustees of occupational pension schemes should be live to this issue. 

The calculation of pension benefits in occupational pension schemes is not always straightforward, as many trustees will testify.

Trustees, alongside their many other duties under scheme rules and legislation, have an overriding duty under the Equality Act 2010 to imply a non-discrimination rule into their pension scheme rules, where the rules would otherwise be discriminatory.

There is a direct obligation on trustees and scheme administrators to ensure that benefits are not being calculated in a discriminatory manner

This places a direct obligation on trustees and scheme administrators to ensure that benefits are not being calculated in a discriminatory manner. To not do so runs the risk of complex discrimination claims, and the accompanying reputational damage if the scheme has been found to discriminate against trans members.

Wide-ranging protection for members

Gender reassignment is a protected characteristic, alongside the other protected characteristics such as age, race, sex, sexual orientation and disability, contained in the Equality Act 2010. The definition of gender reassignment for the purposes of the act is broader than you might think.

The law gives wide-ranging protection to those who are proposing to undergo, are undergoing, or who have undergone gender reassignment by changing physiological or other attributes of sex. 

There is no requirement for someone to have undergone medical procedures, or to have been granted a gender recognition certificate (which has the effect of legally changing their gender from that at birth) before a trans individual benefits from the protection.

Changes in pension benefits calculations

One of the key concerns when pension benefits are calculated is ensuring the right treatment of an individual’s pensionable service. All defined benefit pensions are calculated by reference to the member’s age, length of service and their assigned gender on a system. This calculation is more complex if a member changes their gender during the period of pensionable service (or subsequently).

An additional complexity arises from the fact that occupational pension schemes have, historically, not treated male and female members equally. In the past, it was common for female members to have more generous benefits based on an earlier normal retirement date of, for example, age 60 – with males retiring at, for example, 65.

Trustees of DB occupational pension schemes have been required, since the Barber v Guardian Royal Exchange decision of May 17 1990, to ensure that their schemes do not discriminate on the grounds of sex as between male and female members. This has led to years of complexity as trustees and scheme sponsors have sought to ensure equal treatment on the grounds of sex.

This therefore becomes an issue for an individual who may have changed their gender. Particularly, where trans members have periods of pensionable service that predate and postdate May 17 1990. How should they be treated for their periods of pensionable service?

Factors that trustees should think about when deciding how to calculate a trans member’s benefits, include:

• whether the member has a gender recognition certificate;

• in the absence of a gender recognition certificate, whether there is a date when the trustees can reasonably conclude that the member transitioned from their gender at birth, to their affirmed (chosen) gender;

• what the scheme rules say (if anything) about how a trans member’s benefits are to be calculated;

• how the Department for Work and Pensions is treating the member in question for the purpose of calculating the member’s guaranteed minimum pension, if any; and

• importantly, the sponsoring employer’s view. 

This is a complex area, and legal advice is recommended. 

Confidentiality obligations for trustees

Confidentiality is of absolute importance in relation to a trans employee or member’s gender identity. Some trans individuals may be willing to share their trans status, but for others, their gender at birth is a part of their past, which is not appropriate for others to share more widely.

Under Section 22 of the Gender Recognition Act 2004, it is a criminal offence to disclose someone’s past gender status if they hold a gender recognition certificate. This is a rare example of a criminal offence applying in an employment context. Care should be taken by trustees (and employers) to ensure that they do not fall foul of this provision.

Even if a trans member does not hold a gender recognition certificate, their gender history should remain confidential to avoid claims of unlawful discrimination. Appropriate measures must be taken to protect a trans individual’s identity and to maintain confidentiality.

Liz Wood is principal associate at Gowling WLG