UK: Supreme Court Strikes Down Restrictions on Pension Rights of Civil Partners and Same-Sex Spouses

By Keith Webster and Ian Greenstreet © CMS Cameron McKennon Jul 17, 2017
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​The U.K. Supreme Court has handed down an important decision in Walker v. Innospec Limited, a case about discrimination on grounds of sexual orientation and whether it is permissible, in some circumstances, to provide lower pension benefits to civil partners and same-sex spouses than spouses of the opposite sex. The judgment will require many schemes to take immediate action in relation to survivor benefits.

The Facts

John Walker worked for Innospec between 1980 and 2003 and was a member of the company pension scheme. He entered into a civil partnership in 2006 and subsequently married his partner in 2013. The scheme provided for payment of a spouse's pension, but the employer and trustees chose not to provide the same pension in relation to civil partners, save in respect of benefits accrued after the Civil Partnership Act came into force in December 2005. In doing so, they relied on the Equality Act 2010, which provides that applying such a cut-off for civil partners or same-sex spouses is not unlawful discrimination. As a result, Walker's spouse would only receive a pension relating to contracted-out benefits, which was a fraction of the pension that would have been provided to a different sex spouse.

The Route to the U.K. Supreme Court

These proceedings have been on foot for some years now. In 2012, an Employment Tribunal held that the employer and scheme trustees had directly discriminated against the member, but the employer successfully appealed that decision to the Employment Appeal Tribunal. In October 2015, the Court of Appeal dismissed the member's appeal: although sympathetic to Walker's position, it held that at the time the member was earning his pension entitlement, the discriminatory treatment of which he complained was lawful.

Court's Judgment

Allowing Walker's appeal, the Supreme Court held that the relevant Equality Act provision was, in so far as it allows restriction of payment of benefits based on periods of pre-Dec. 5, 2005 service, incompatible with the EU (anti-discrimination) Framework Directive and must be disapplied. The court declared that Walker's husband was entitled to a spouse's pension calculated on all the years of his service with Innospec, as long as they remained married at the date of Walker's death.

The court said that it was clear under EU law that, unless there were unacceptable economic or social consequences of giving effect to Walker's entitlement to a survivor's pension for his husband, at the time that this pension would fall due, it would be unlawful to subject him to unequal treatment as to the payment of that pension.

Conclusion

The outcome is clearly significant for members who have entered into civil partnerships or same-sex marriages. After a long-running court battle, it also finally establishes some certainty for trustees and employers as to the legal position.

Schemes which already provide the same benefits for civil partners and same-sex spouses as they do for different sex spouses should not have to take any action. However, a number of schemes have chosen to continue to rely on the December 2005 cut-off, for example on grounds of cost. Trustees of such schemes will now need to review their rules and practice with a view to ensuring that there is no further discrimination, and consider whether any past benefits need to be adjusted.

It is important to note that schemes will have different provisions on the circumstances in which survivor pensions are payable, which may mean that the precise effect of the judgment differs as between schemes. 

The judgment (and a useful summary) can be found here.

Keith Webster and Ian Greenstreet are attorneys with CMS Cameron McKennon in London.  © CMS Cameron McKennon. All rights reserved. Reposted with permission of Lexology.

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