The Court of Appeal has ruled that pensions for surviving civil partners may be restricted to the period of a member’s pensionable service completed from the date the Civil Partnership Act came in to force (being 5 December 2005). This means that surviving civil partners could receive considerably less than if they had been married to opposite-sex partners.
EU legislation contains a framework to combat discrimination, including discrimination on the grounds of sexual orientation. The Equality Act 2010 brought the EU requirement into force in England and Wales. However, equal treatment between civil partners/same-sex married couples and opposite-sex married couples only applies in respect of pension rights for surviving spouses/civil partners relating to pensionable service from:
- 6 April 1988 in respect of contracted-out benefits; and
- 5 December 2005 (the date the Civil Partnership Act 2004 came into force) in respect of all other benefits.
Mr Walker was employed by Innospec Limited until his retirement in March 2003. When he retired, he had been living with his male partner for a number of years, and they became civil partners on 23 January 2006 (they have since married).
Under the rules of the Innospec pension scheme, a surviving civil partner or same-sex spouse is entitled to survivor’s benefits only on the basis of accrual from 5 December 2005 (or from 6 April 1988 for contracted-out benefits). Accordingly, Mr Walker’s partner would only be entitled to a survivor’s pension of around £500 per year (derived from contracted-out benefits), compared to a pension of around £41,000 per year if the pension was based on the whole period of Mr Walker’s accrual of benefits in the scheme.
Mr Walker brought a claim in the Employment Tribunal on the grounds that this constituted unlawful discrimination on the grounds of sexual orientation. The Employment Tribunal upheld Mr Walker’s claim, but the Employment Appeal Tribunal (EAT) overturned the decision, holding that the exemption under the Equality Act 2010 did not contravene the requirements of EU discrimination law. Mr Walker appealed against the EAT decision.
The Court of Appeal’s judgment was handed down on 6 October 2015.
The Court of Appeal reaffirmed two basic principles of EU law:
- the “no retroactivity principle” – that EU legislation does not have retroactive effect (unless, exceptionally, it is clear that such an effect was intended); and
- the “future effects” principle – that amending legislation applies immediately to the future effects of a situation which arose under the law as it stood before amendment (unless specifically provided otherwise).
Mr Walker argued that:
- the act of discrimination was the pension scheme trustees’ refusal to confirm that his civil partner would be entitled to a survivor’s pension, and that act took place after EU discrimination laws came into force, meaning that the “future effects” principle applies;
- in any event, the European Court of Justice has decided in other cases that a claim such as Mr Walker’s is permitted even though his period of service ended before it came into force; and
- the prohibition on discrimination on the grounds of sexual orientation is a fundamental principle of EU law and the exception in the Equality Act 2010 must therefore be read in a way which makes it compatible with EU discrimination law or, if that is not possible, disapplied.
In respect of the first argument, the Court of Appeal held that Mr Walker’s entitlement to a pension was “permanently fixed” when he retired and, accordingly, the “future effects” principle cannot apply to give Mr Walker’s partner entitlement to survivors’ benefits based on Mr Walker’s accrual before 5 December 2005. Additionally, the principle of “no retroactivity” means that conduct which was lawful when it occurred cannot retroactively become unlawful.
In respect of the second and third arguments, the Court of Appeal took the view that previous cases did not deal with the question that arose in this appeal, and did not hold the Equality Act 2010 to be incompatible with EU discrimination law. Mr Justice Lewison further stated that the exception “was expressly designed to preclude a claim such as Mr Walker’s from being made” and “to interpret [the Equality Act] so as to allow the claim to be made would be to make new law which Parliament has plainly rejected”. His view was that the issue was a question of policy rather than interpretation, and that the legislation “is clear and cannot be interpreted in such a way as to enable Mr Walker to succeed”.
Mr Walker’s appeal was accordingly rejected.
The outcome of the appeal means that there is no change in the existing law, and pension schemes do not have to backdate the equalisation of survivors’ benefits for civil partners to before 5 December 2005.
We do not yet know whether the judgment will be appealed to the Supreme Court, which could in turn make a reference to the European Court of Justice.
It is important to also note that the Government’s decision following its review of survivor benefits for civil partners and samesex spouses (published in June 2014) is yet to be announced, so further changes in law could be in the pipeline