Our thoughts on the world of employment law - and beyond.

Equal marriage, unequal pensions

The UK’s first same sex marriages are due to take place next Saturday, but our pension laws still have a little way to go in matching that equality for same sex couples.

A few months ago, whilst doing a bit of research around the Marriage Act 2013, I stumbled across what struck me as a peculiar exemption to our discrimination law.  Whilst the Equality Act provides that an occupational pension scheme must be taken to include a non-discrimination rule, an exemption restricts access for civil partners to a benefit, facility or service the right to which accrued before 5 December 2005 (the date upon which civil partnerships were given legal force).  Registered civil partners are, however, entitled to survivor benefits in respect of the contracted-out part of their partner's pension (if any), as far back as 1988.

 The new Marriage Act was drafted so that this exemption will also apply to same sex marriages.

The Equality Act, therefore, allows pension schemes to treat a civil partner or same sex spouse less favourably than a heterosexual spouse. 

Last month the Employment Appeal Tribunal in Innospec Ltd and others -v- Walker UKEAT 0232/13/1802 overturned an Employment Tribunal decision that the Equality Act exemption contravenes the EU’s Equal Treatment Framework Directive.

Putting aside the legal arguments, I cannot really grasp the basis on which this exemption was drafted in the first place and why the government continues to defend it.  The Government has said that granting fully retrospective spouses’ pensions would "entail an unforeseen retrospective cost to schemes". 

This strikes me as a difficult position to sustain – in terms of financial risk to pension schemes the danger cannot be that great.  Firstly, the Government estimates that as many as two-thirds of pension schemes have already chosen to voluntarily equalise their survivor benefits.  Secondly, as of the end of 2012, there were only 60,000 civil partnerships in the UK anyway.  If we presume there is therefore a potential addition of 60,000 spouses over a period of seven years who probably would not have got married under old legislation, that hardly seems to me to entail an excessive unforeseen cost to pension schemes.

A late amendment to the Marriage Act may lead to the end of this exemption, with the Government compelled to undertake a review to be completed by 1 July this year. 

So while same sex couples look forward to celebrating the equalisation of our marriage laws next week, they’ll have to wait until the summer to find out whether our pension laws will catch up.

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