The Supreme Court has ruled that regulations requiring unmarried Local Government Pension Scheme members to nominate a cohabiting partner in order for them to receive a survivor’s pension contravenes the European Convention on Human Rights.
The ruling is the result of a six-year legal battle begun by Denise Brewster, a lifeguard from Coleraine in Northern Ireland.
Brewster was denied a survivor’s pension by the Northern Ireland Local Government Officers’ Superannuation Committee after the death of her partner William McMullan, a member of the scheme, in late 2009.
Trustees need to avoid unlawful discrimination or just something that’s unfair
Catherine McKenna, Squire Patton Boggs
Experts explained that the ruling is unlikely to affect private sector schemes, which are normally able to use their discretion to grant spouses’ pensions to unmarried couples, but cautioned that trustee boards should be careful to act fairly in such matters.
Regulatory inconsistency
Nilgosc’s refusal to grant a survivor’s pension was in line with 2009 LGPS Regulations, which stated that a cohabiting partner of a deceased member must be nominated, but did not include the same condition for married couples.
Brewster, who had lived with McMullan for about 10 years prior to his death, believed that her partner had nominated her, but Nilgosc said it had received no such submission.
After she called for a judicial review, the High Court found that the regulations were incompatible with article 14 of the ECHR, which prohibits discrimination, although that ruling was subsequently overturned by the Court of Appeal.
The High Court decision prompted LGPS regulations in England, Wales and Scotland to drop the requirement for a nomination, but not in Northern Ireland.
“It’s a bit of a mystery why the Northern Ireland scheme didn’t do the same,” said Lesley Harrold, pensions partner at Norton Rose Fulbright.
Brewster took up the matter again in light of the changes, and the Supreme Court ruled on Wednesday that the requirement for a nomination should be dropped, meaning Brewster can now claim a pension.
Funding hit likely
Nilgosc welcomed the Supreme Court’s clarification on the matter, and confirmed that it will take immediate steps to provide Brewster with her pension.
David Murphy, chief executive and secretary, said that the scheme had not yet factored the impact of the decision into its funding assumptions, but would be discussing it with its actuaries.
“My assumption is we will need to assess how many cohabitees [are linked to the scheme],” he said, and added that Nilgosc would likely follow the example set by schemes in England, Scotland and Wales.
“Most people would think it’s the right decision,” said former pensions minister Ros Altmann, explaining that unmarried couples can exhibit the same interdependency as married couples.
But she added that it could affect Nilgosc’s financial position: “It’s not something that schemes are funded for.”
Private sector not affected
The court’s ruling is unlikely to directly impact private sector schemes, where scheme rules normally allow trustees discretion to grant a spouse’s pension to partners and other dependants, such as children.
“The requirement to provide a nomination form, which seems to have been an absolute requirement, is much more commonly found in public sector schemes,” said Chantal Thompson, partner at law firm Baker McKenzie.
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In a private sector scheme, trustees would be expected to check for financial dependency or interdependency before paying a pension, she said.
Treat members fairly
In fact pensions legislation and the Equality Act do not prohibit trustees from discriminating on the grounds of marriage, but lawyers said the ruling’s use of the ECHR could lead to legal challenges beyond the use of nomination forms.
“I think that does leave the door open to challenge other things that are different between marrieds and unmarrieds,” said Tamara Calvert, partner at law firm DLA Piper.
In light of this, trustees were urged to carefully check scheme rules and to ensure that they promote equality in their decisions.
“Trustees need to avoid unlawful discrimination or just something that’s unfair,” said Catherine McKenna, partner at law firm Squire Patton Boggs, adding: “Quite often it’s helpful to try to take cost out of the equation.”
