Case law: Lower company pension benefits for civil partners and same sex spouses are unlawful

Trustees and employers should review their pension scheme rules following a landmark Supreme Court ruling that pension schemes cannot lawfully provide lower pension benefits for surviving civil partners and same sex spouses of scheme members, compared to male and female spouses.

A member of a company pension scheme worked for his employer from 1980 to 2003. He entered into a civil partnership and then a same-sex marriage. The pension scheme provided for continued payment of a pension to a member's spouse after the member died, but payments to surviving civil partners or same-sex spouses were calculated only by reference to the period after civil partnerships (which were legalised in December 2005), and same-sex marriages were legally recognised. This was justified by reference to an express exception in UK equality law that it was lawful for pension schemes to discriminate in relation to benefits accrued before civil partnerships and/or same-sex marriages became lawful.

Civil partners and same-sex spouses therefore received only a very small pension compared to opposite sex spouses in the same circumstances. The employee claimed direct discrimination on grounds that the exemption contravened EU anti-discrimination laws.

An Employment Tribunal (ET) ruled that it was direct discrimination: direct discrimination was prohibited by EU law, and relevant UK law should therefore be read as if it was compatible with that EU law. This meant it should be read as if the December 2005 cut-off did not apply.

Both the Employment Appeal Tribunal and then the Court of Appeal disagreed with the ET. It was not possible to ignore the December 2005 cut-off if that went against 'express legislative intention' in UK law - which it did. The discriminatory treatment of civil partners was therefore lawful.

The Supreme Court has now overturned the Court of Appeal decision, saying that schemes must provide same-sex survivors' benefits based on a member's entire period of service, to ensure equality of treatment with opposite sex marriages. The exception in UK law was invalid to the extent that it went against the relevant EU rules.

Operative date

  • Now

Recommendation

  • Pension schemes providing lower benefits to surviving civil partners and/or individuals in same sex marriages should review their policies to ensure equal treatment with those in opposite sex marriages

Case ref: Walker v Innospec Ltd & Ors [2017] UKSC 47

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