Under the provisions of the Civil Partnership Act 2004, civil partners must be treated the same as spouses in any employment situation. There is an exemption for this specifically relating to pensions in that a spouse’s pension on the death of a member applies to a civil partner of a member but only in relation to benefits that that member has accrued in the scheme since the Civil Partnership Act came into force in December 20051. When the Marriage (Same Sex Couples) Act 2013 came into force, which provided amendments to legislation relating to matrimony in order to include same sex couples, it reflected the provisions of the Civil Partnership Act. Therefore, same sex spouses may only obtain a pension relating to the member’s service from 5 December 2005.
The reasoning behind this position was largely that pre-December 2005 benefits had been promised and funded for at a time when same sex marriages did not exist and, therefore, necessarily a change to the position would increase the funding costs of defined benefit pension schemes (an issue which has arisen with much legislation over recent years). However, it does give rise to a significant level of discrimination due to the sexual orientation of a member.
The case brought by Mr Walker was that his spouse (originally his civil partner prior to the 2013 Act) and he had been together for many years, but that if he had met and married a woman in short order she would receive a much more significant pension from the Innopsec pension scheme. This, he argued, was contrary to discrimination legislation and also to the provisions of the European Convention on Human Rights and thus the Human Rights Act 1998.
The Employment Tribunal originally found in his favour but this was overturned by the Employment Appeal Tribunal. Mr Walker then appealed to the Court of Appeal.
The Court of Appeal considered two basic principles of European law. The first is that there is “no retroactivity” in that no EU legislation should have retroactive effect “unless, exceptionally, it is clear from its terms or general theme that the legislator intended such effect, that the purpose to be achieved so requires, and that the legitimate expectation of those concerned are duly respected”. This principle sits alongside a “future effects” principle that the legislation immediately applies to the future effects of the law.
In short, the Court was deciding whether the provision of a pension to a same-sex spouse would affect rights that had already accrued in respect of the members such that the principle of “no retroactivity” would apply to benefits earned before December 2005, or whether the pension was a legal right that did not come into existence prior to the time at which the death occurred (at which point the pension would need to be the same for same sex and heterosexual couples in order to comply with the future effects principle).
The Court decided for these purposes that the benefit did exist, at least in some way, as the member accrued benefit which would make it retroactive to impose a full spouse’s pension on the funders of the pension scheme in order to comply with EU legislation.
The effect of this is that Mr Walker’s claim was again denied. Their Lordships were sympathetic to Mr Walker and the inequity of his situation, but clearly were aware of the effect of a retroactive step on those funding the pension scheme.
To date, there has been no Government response to the case or indeed to its own review of survivor benefits in occupational pension schemes2 but it would seem likely that this decision would make it easier should the Government so choose to leave in place the present requirements that civil partners’ and same sex married couples’ benefits accrue only from December 2005 (subject to any contracted-out benefits having to be provided to surviving same sex spouses/civil partners by reference to any service from 6 April 1988).