EAT: surviving civil partner's entitlement to pension death benefits can be restricted to service after law changed

Out-Law News | 20 Feb 2014 | 5:09 pm | 3 min. read

A surviving civil partner's entitlement to claim death benefits from his or her deceased partner's defined benefit (DB) pension scheme can be restricted to rights the scheme member built up from 5 December 2005, the date that civil partnerships were introduced, according to the UK's Employment Appeal Tribunal (EAT).

In its judgment, the EAT said that pension schemes that chose to do so would not be in breach of EU laws banning discrimination against employees on the grounds of sexuality, as anti-discrimination laws had only applied in the past in respect of rights built up after the relevant legislation was introduced.

Generally, the law treats civil partnerships in the same way as opposite sex marriages. However, the 2010 Equality Act allows pension scheme trustees to take account only of benefits built up from 5 December 2005 in calculating pensions payable on the death of a member in a civil partnership. Pensions expert Simon Tyler of Pinsent Masons, the law firm behind Out-Law.com, said that this exception had been controversial.

"Is it right that a civil partner should receive less than a widow or widower?" he said. "The EAT in this case pointed out that sex equality law had not needed to be retrospective, so the law preventing discrimination on the grounds of sexuality similarly did not need to apply to rights built up before 5 December 2005.  In practice, many schemes have voluntarily chosen to treat civil partnerships in exactly the same way as opposite sex marriages."

"However, this may not be the end of the story. The government has agreed to complete a review of the law by 1 July 2014. Even if the EAT's decision is not appealed, the government could change its stance as a result of that review," he said.

John Walker had been a member of the occupational pension scheme run by his former employer, Innospec, since 1980 and had been receiving a pension from the scheme since his retirement in 2003. According to the EAT, he had been living with his male partner for some time before retirement and the two entered into a civil partnership "at almost the first opportunity" after the law changed, in January 2006. Under the scheme rules, had he been married his wife would have been entitled to a pension worth two thirds of his considerable annual benefits if she had survived him. However, because his service with the company occurred entirely before the law changed, the EAT said that the most his partner could receive if he survived Walker was around £500 a year.

Walker brought a claim that he had been unlawfully discriminated against on the grounds of his sexual orientation to the employment tribunal, which ruled that although the scheme rules were permitted under the Equality Act, the Act itself was incompatible with EU law. However, EAT president Mr Justice Langstaff said that it had been wrong to do so.

"Only a few decades ago women were paid less than men expressly because they were women: many jobs had 'men's rates' and 'women's rates'," he said. "One of the fundamental principles of the European Union was that such discrimination should be eliminated. However, the introduction of the right to equal pay did not have the consequence that those on 'women's rates' could retrospectively issue a claim against their employers for the money they would have earned if only they had been paid 'men's rates'."

"The [EU Directive] does not itself say it has retrospective effect. It has never, so far as we know, been suggested that a provision making particular forms of discrimination unlawful in European Law has a retrospective effect so as to render unlawful acts which at the time when they were done would not have fallen foul of the law, however reprehensible in social terms the act might otherwise have been ... It is a basis for ensuring equal treatment as between those with different sexual orientation but who are (viewed broadly) in comparable situations after the latest date for transposition," he said.

He added that even if the tribunal had correctly concluded that the exception in the Equality Act was incompatible with EU law, permitting the claim would have been "diametrically opposed to the thrust of the legislation in this particular respect and to the apparent intention of Parliament", and so inappropriate for a court or tribunal.

The government decided to carry out a review of pension rights and civil partnerships last year, during parliamentary debate on the Marriage (Same Sex Couples) Act. The first same sex marriages will be able to take place from 29 March 2014, but as the law stands the Equality Act exemption will be extended to cover same sex marriages. An order-making power has been included in the Marriage Act to allow for a change in the law if one is considered appropriate, following the outcome of the review.

"Occupational pension schemes are now having to decide how they will handle same sex marriages," said Simon Tyler. "However, until the government's stance becomes clear following the review, a question mark will still hang over those schemes that decide to treat civil partnerships and same sex marriages differently from opposite sex marriages. We recommend that schemes discuss this with their lawyers."