In a landmark ruling, the Supreme Court has settled a long-running pensions dispute.
In 2012, John Walker brought a claim for unlawful discrimination on grounds of sexual orientation, having calculated that his civil partner, later his husband, would receive a pension on his death of £1,000 per annum, not the £45,000 per annum a female spouse would receive.
The difference in amount was due to the scheme's reliance on an exemption incorporated by the UK government into the Equality Act 2010. This permitted trustees to restrict the calculation of the scheme's pension, over and above any contracted-out minimum pension, to post 5 December 2005 pensionable service only.
The Supreme Court has declared that the statutory exemption is incompatible with EU Directive 2000/78/EC and must be disapplied. Provided that they remain married, on Walker's death, his husband will now receive a spouse's pension calculated using all Walker's pensionable service, which is the same amount a female spouse would receive.
For those employers and trustees that already provide equal death benefits, this ruling will vindicate their earlier decision to do so.
Schemes that restrict scheme survivors' benefits, as opposed to contracted-out pensions, for civil partners and same-sex spouses should now bring these into line with those for opposite-sex married couples. Defined benefit (DB) schemes should also consult their actuary to ascertain what, if any, impact a move to providing full benefits to civil partners and same-sex spouses will have on scheme funding.
Depending on the proportion of members the actuary assumes to be 'married' (on full benefits) for valuation purposes, in the private sector this ruling may not make much difference in practice.
Philippa Connaughton is partner at law firm Sackers
