The Ministry of Housing, Communities & Local Government (MHCLG) is consulting on proposals to amend the Local Government Pension Scheme (LGPS). The draft amendments are in response to two legal judgments - Walker v Innospec and R (on the application of Nicola Elmes) v Essex County Council - relating to survivors' benefits on the death of a member.
Amendment to survivor benefits
In the case of Walker v Innospec, the Supreme Court found in favour of Mr Walker and held that his male spouse was entitled to the same benefits which would be paid if Mr Walker had left a widow in an opposite-sex marriage. It decided that to limit civil partner and same-sex spouse rights to accrual after 5 December 2005 (when the Equal Treatment Directive was implemented) was not compliant with EU law.
Following the Walker case, the Government has proposed that all public service pension schemes should implement changes to provide that survivors of registered civil partnerships or same-sex marriages will receive benefits that replicate those provided to widows (rather than widowers which has been the position to date). The amendment would apply from the date on which civil partnerships and same-sex marriages were introduced.
However, benefits are not being fully equalised for all males – a male who survives his female spouse will still not receive the same benefits as a female who survives her male spouse because the costs of doing so would be significant and previous case law has held that the difference in treatment for pre-1990 service is lawful.
It will therefore be necessary for LGPS Funds to revisit any deaths that have resulted in a same-sex survivor to determine if benefits should have been granted where they were not or if the survivor is entitled to a higher pension.
Changes to co-habiting partner nominations
In the recent case of R (on the application of Nicola Elmes) v Essex County Council, the High Court, having considered the ruling in the Northern Ireland case, Brewster, granted a declaration that the nomination requirements for co-habiting partners was incompatible with the European Convention on Human Rights. It held that the surviving cohabiting partner of a deceased local government employee should be entitled to a survivor's pension from the LGPS notwithstanding that the member had not submitted a valid form nominating his partner as the recipient of the benefit.
As a result of these decisions, the MHCLG believes that LGPS Funds need to revisit any previous death benefit claims to determine whether they now need to offer a survivor's pension to partners whose claim for a pension had been rejected at the time the nomination requirement was in force.
However, this raises the issue of dependent children who may have been given larger pensions on the member's death than they would have received otherwise because the Fund believed that there was no eligible surviving partner. If a partner is now found to be eligible for a benefit, backdated to the member's death, the children's pensions would have to be reduced and, in theory, the overpayment recovered.
Due to the sensitive nature of these issues, and to avoid Funds taking different approaches, the Government proposes to create a power to issue statutory guidance on the operation of the LGPS rules.
Whilst the consultation does not close until 29 November 2018, Funds may wish to start reviewing past members' deaths to establish the benefits paid to date to survivors of registered civil partnerships or same-sex marriages.
Cases where payments were previously refused to a surviving cohabiting partner solely because of the lack of a nomination form will also need to be reconsidered (although Funds may wish to wait for the proposed guidance to ensure a consistent approach is being taken).
If you would like support with revisiting death benefits previously paid, or advice on paying back-dated pensions, please get in touch with your usual pensions team contact.