Shell has gone above the legal minimum to guarantee same-sex married couples equal spousal benefits in its defined benefit pension fund, while other schemes have maintained a tiered benefit for same-sex partners.
The UK subsidiary of oil giant Royal Dutch Shell has granted DB members in same-sex marriages spousal benefits that are based on the entire length of their pensionable service.
The proportion of same sex couples for that benefit will be small enough that the margin of prudence will not reduce
Hugh Nolan, JLT Employee Benefits
This is in line with benefits offered to members of its Contributory Pension Fund in opposite-sex marriages and civil partnerships.
Schemes are only required to offer spousal benefits to those in civil partnerships and same-sex marriages based on pensionable service since December 5 2005, when the Civil Partnership Act 2004 came into force.
A Shell spokesperson said that when the act was introduced in 2005, it proposed – with the approval of its pension fund trustees – that a member’s “qualifying spouse” should be entitled to a dependant’s pension based on all of the member’s pensionable service.
“Shell decided to extend this entitlement to those in same-sex marriages, in order to further demonstrate its commitment to supporting greater diversity within our workforce, one of our core values,” said the spokesperson.
Schemes have taken a mixed approach on what basis to offer same-sex spouses and members in civil partnerships benefits, often due to the financial position of the employer, legal experts have said.
In February this year the Employment Appeal Tribunal overturned a decision by the Employment Tribunal in the case of Mr Walker v Innospec Ltd, which found a civil partner’s pension should not be restricted to the period after the act came into force.
Matthew Swynnerton, partner at DLA Piper, said he has clients that have equalised spousal benefits for members in same-sex marriages but not for those in civil partnerships.
They would justify this on the basis that a same-sex marriage is equal to an opposite-sex marriage so members should not be treated differently, he said.
“Another thing is someone that’s in a civil partnership can get married if they want access to the better benefits, that’s what they can do,” he added.
But schemes could be open to complaints from members if they were to offer a lower level of spousal benefits to members in civil partnerships.
“It might be harder for the trustee if they were to get a complaint to justify treating civil partnerships differently,” Swynnerton said.
Hugh Nolan, chief actuary at JLT Employee Benefits, said basing same-sex and civil partner spousal benefits on a member’s entire length of pensionable service could increase the liability of that individual by between 10-20 per cent.
However he added: “The proportion of same-sex couples for that benefit will be small enough that the margin of prudence will not reduce.”
Lesley Harrold, partner at Norton Rose Fulbright, said: “If [marriage] benefits are in excess of those offered to civil partnerships, then civil partnerships can change, re-register their partnership as a marriage.” She added this could result in “anomalies” in the scheme further down the line.
Schemes may yet have to reconsider the way benefits for civil partners are written into their rules, depending on what is included in the government’s response to its January consultation on civil partnerships.
