6: Round-up of recent developments on survivors’ benefits
Recent case law developments affecting public sector pension schemes may prompt trustees of private pension schemes to consider whether their scheme rules on survivors’ benefits are fit for purpose.
In addition, by 31 December 2019, new legislation will allow opposite sex couples to be eligible for civil partnerships and trustees may need to amend their rules accordingly.
Government’s statement following Walker v Innospec
In its landmark ruling in Walker v Innospec in 2017, the Supreme Court held that pension schemes must provide survivors’ benefits for same sex partners and civil partners on the same basis as other survivors. Benefits cannot be restricted to those calculated only on the basis of pensionable service after 5 December 2005, the date when the Civil Partnership Act 2004 came into force. The decision meant that Mr Walker’s husband was entitled to a spouse’s pension calculated by reference to service from 1980 to 2003, provided that they remained married at the point of Mr Walker’s death.
On 4 July 2019, the Department for Work and Pensions issued a written statement to parliament in response to the Supreme Court’s decision. The statement confirms that the government will implement the Supreme Court judgment for public sector schemes as soon as possible. All same sex survivors of a public sector pension scheme member will benefit from the change, although their precise benefit will depend on a number of factors specific to them or the scheme.
The government observed that private sector schemes are obliged to comply with the Supreme Court’s judgment and the majority or schemes will have already implemented the judgment. However if they have not made changes or they are unsure, trustees are encouraged to take legal advice as soon as possible.
The statement also contains the government’s response to the Review of Survivor Benefits in Occupational Pension Schemes which was published by the Treasury and the Department for Work and Pensions in 2014 and considered historic differences in treatment in pension scheme survivor benefits due to changes in social attitudes. An example of this may be the difference in male and female survivor benefits in respect of GMP accrued before 6 April 1988. It confirms that, save for those changes required following the Walker v Innospec judgment, the government will not introduce any further requirements for occupational pension schemes to address differences in survivor benefits for accruals in past periods. It concluded that these will be eliminated from the system in due course.
While the response to the Review means that no further action is needed by private schemes to address historic inequalities in survivor benefits, trustees may wish to review their rules to consider whether they are treating members equally.
Langford v The Secretary of State for Defence
Ms Langford was the partner of a deceased RAF officer and had lived with him in a relationship ‘akin to a marriage’ for 15 years. However, under the rules of the Armed Forces Compensation Scheme, Ms Langford was prevented from receiving a survivor’s pension because she remained legally married to her previous partner, from whom she had been estranged for 17 years.
Whilst the rules of the scheme allowed unmarried partners to qualify for survivors’ benefits, they needed to be in an ‘exclusive relationship’ with the member. Ms Langford did not qualify because her marriage to her previous partner meant that her relationship with the deceased was not ‘exclusive’.
The Court of Appeal held that this restriction in the rules amounted to unlawful discrimination under the European Convention on Human Rights. The government had argued that the rule was intended to achieve parity of treatment between married and unmarried partners of scheme members. However, the Court held that the rule did not do this, because it only discriminated between different classes of partners who are not married to scheme members. The court added that parity could be achieved by requiring a ‘substantial, exclusive and financially dependent relationship’.
This decision primarily concerns public sector schemes and public law issues and may impact other public sector schemes which contain a similar rule, although the Court of Appeal did note that it might be possible to justify such a rule with appropriate evidence.
The public law issue will not apply to private sector schemes and they are not directly affected by this decision, but trustees may wish to review their own scheme rules to establish whether the survivor provisions operate in a fair and non-discriminatory way.
Civil partnerships extended to opposite sex couples
Finally, The Civil Partnerships, Marriages and Deaths (Registration etc) Act 2019 will extend the scope of the Civil Partnership Act 2004 by no later than 31 December 2019 to include opposite sex couples within the definition of civil partnerships. It is also likely to deal with the associated financial consequences of civil partnerships, for example, in relation to pensions and social security.
This legislative development means that opposite sex civil partners will be entitled to the same survivors’ benefits as their counterpart same sex civil partners. The Local Government Pension Scheme has already laid regulations to deal with this and other public sector schemes will follow suit.
Private sector trustees should review their scheme rules to ensure that the payment of survivors’ benefits to opposite sex civil partners will be permitted under their scheme rules in accordance with the legislation. If not, the scheme rules will need to be amended to incorporate the relevant changes and trustees and their advisers may need to consider whether there are funding implications.