"We're Here, We're Queer and we're not going shopping"....challenging discrimination over pension rights.

You knew when the annual Gay Pride march arrived in London's Oxford Circus. Thousands of voices, jubilant, yet defiant, chanted in chorus, "We're here, we're queer and we're not going shopping, Every year. Pride marches take place in cities around the world, they have done for the last 50 years, since the first Stonewall protests in the U.S.

Pride marches have a unique atmosphere, part commemoration, part carnival and part protest. The photo accompanying this article was taken in 1998. Since then we have had the introduction of Civil Partnerships in December 2005 and Marriage rights in March 2014. Yet in 2019 at the time of writing this article, legal discrimination still exists in 2019 when it comes to occupational pension scheme rules and death benefits for same sex couples, with huge sums of money at risk, as the case of Walker vs Innospec demonstrates......

Hello, my name is Jill and I am a life centered financial planner, helping my clients to save for their future, have the best life possible with the money that they have, manage risk and protect the ones they love.

This article is long but please stick with it there are huge financial implications for same sex couples and employers alike and contains breathtaking discrimination. It also fits in neatly with celebrating 50 years of LGBTQ+ pride, all the Brexit hubbub, and with the UN Sustainable Goal 10 which aims to:

Ensure equal opportunity and reduce inequalities of outcome, including by eliminating discriminatory laws, policies and practices and promoting appropriate legislation, policies and action in this regard

So.... are you sitting comfortably..... I have just finished wading through the Supreme Court Ruling for Walker vs Innospec Ltd ( July 2107 ) which makes interesting but alarming reading and I commend Mr Walker and his team for persisting with this case, through to the highest court in the country. The case has far reaching implications for all same sex couples and for employers who run final salary pension schemes.

I'll endeavour to weave in some background information and summarise the case outcome. Please follow this as there are significant sums of money at stake. The full ruling can be read here, The Supreme Court Case Details.

Mr Walker worked for Innospec Ltd since 1980 and throughout his employment he had contributed to the company pension scheme. Mr Walker is gay and has lived with his partner since 1993. They entered into a civil partnership and then latterly as changes in the law allowed, they married.

A feature of most occupational pension schemes, particularly final salary pensions, is that if a member dies whilst still in employment, their surviving dependants receive a lump sum death in service benefit and a spouse's pension. Dependant children can also be included to receive a dependants pension. Whilst a member may not see the fruits of their pension contributions, they are "not wasted", instead there is a promise of some financial security for their loved ones.

In 2006 Mr Walker wrote to the Innospec pension scheme administrator to confirm that in the event of his death, they would pay the spouse's pension, which the scheme does make provision for, to his civil partner.

Now here comes the first parry and riposte.

Innospec Ltd refused on the basis that Mr Walker's service predated 5th December 2005, the date when civil partnerships were introduced. Occupational schemes in the private sector can set their own rules.

Some occupational schemes have adopted into their rule book, that dependant's pensions and lump sum death in service benefits, will only be paid to a survivor of a same sex couple, based on the member's service accrued from the date when civil partnerships were first introduced and not from the actual date when the member first joined the pension scheme.

As things stood before the case was taken to the Supreme Court, Mr Walker's husband is entitled to the statutory minimum pension of ￡1,000 per annum. Now, according to the press summary of the case, if Mr Walker had married a woman or marries a woman in the future, on his death she would be entitled to a pension of ￡45,700 per annum for life. A considerable financial disadvantage for Mr Walker's loved one and a considerable chunk of funding for the pension scheme.

Pension schemes act in this way in the belief that it is the right thing to do, in order to protect the funding of the scheme. At the time of the court case Pension Schemes had the protection of paragraph 18 of Schedule 9 of the Equality Act 2010 which states that it is lawful to discriminate against an employee who is in a civil partnership or same sex marriage by preventing or restricting them from having access to a benefit, facility or service the right to which accrued before 5th December 2005.

Mr Walker took his claim for discrimination to an Employment Tribunal who found that he had been directly and indirectly discriminated against. However, Innospec's appeal to the Employment Tribunal was allowed and Mr Walker's appeal to the Court of Appeal was dismissed. Mr Walker then took his appeal to the Supreme Court.

This is where it all gets a bit tricky and I need to call on my legal connections to translate the judgement and the full ruling.

To cut a long judgement short, on 2nd December 2003 the UK legal system incorporated the EU Framework Directive 2000 / 78/EC into domestic law, requiring member states to prohibit discrimination in the field of employment and occupation on various grounds including sexual orientation. This was now incorporated into part 5 of the Equality Act 2010 BUT Parliament also provided an exception restricting the benefits payable for service before 5th December 2005 ( How did we allow Parliament to pass that ? )

There was a long legal debate, which brought up all manner of case law from considering whether this case should be judged as an equal pay case, whether pensions constituted pay, whether it was right to apply no retroactive principles that were designed in the first place to protect pension scheme funding from the implications of the Barber vs Guardian Royal Exchange case.

After considering two recent decisions of the Grand Chamber of the European Court of Justice, concerning the equal treatment rights of same sex partners to survivors pension rights, (. Meruko vs Versorgungsanstalt Der Deutschen Buhen and Romer vs Frie und Hansestadt Hamburg, ) the judges ruled that paragraph 18 of Schedule 9 of the Equality Act 2010 is incompatible with the EU directive and must be misapplied and Mr Walker's husband is entitled on his death, to a spouse's pension, provided they remain married.

The final paragraph of the judgement states: on any view Mr Walker had earned a right to a pension for his spouse. That right, and the possibility of a change in his marital status, should have been taken into account in the financing of the scheme. The question who qualified as his spouse fell to be answered at a date when it was unlawful under the Directive to discriminate as between heterosexual and same-sex marriages. At that time, as Lord Kerr says (para 56), he was entitled to have for his married partner a spouse’s pension; “The period during which he acquired that entitlement had nothing whatever to do with its fulfilment.”

The key paragraphs in the ruling are Paragraphs 72 and 76 in which Lord Kerr rules :

I would therefore hold that Mr Walker’s husband, provided he does not predecease him, and that they remain married at the time of Mr Walker’s death, is entitled under the Framework Directive to a spouse’s pension calculated on the basis of all the years of Mr Walker’s service with Innospec. On that account, paragraph 18 of Schedule 9 is incompatible with the Framework Directive. In particular, paragraph 18(1)(b) which authorises a restriction of payment of benefits based on periods of service before 5 December 2005 cannot be reconciled with what I consider to be the plain effect of the Directive.

and paragraph 76

I would allow Mr Walker’s appeal and declare that, in so far as it authorises a restriction of payment of benefits based on periods of service before 5 December 2005, paragraph 18 of Schedule 9 to the 2010 Act is incompatible with the Framework Directive and must be disapplied. I would make a further declaration that Mr Walker’s husband is entitled to a spouse’s pension calculated on all the years of his service with Innospec, provided that at the date of Mr Walker’s death, they remain married.

Hurrah.

However, and unfortunately there always seems to be an however, reading a recent Stonewall post it seems that very little has been done by the UK government to ensure the landmark 2017 ruling is applied to all pension schemes in the private as well as the statutory sector. Indeed, the most recent LIBF 2019 pensions exam echoes the 5th December 2005 date for calculating survivor benefits. This is perhaps due to the ruling omitting a date by which schemes must ensure this ruling is put into effect.

This does of course leave a risk for employers who offer occupational pension schemes. Are they unaware of the 2017 ruling and still operating under the restricted 2010 Equality Act ? Will they face a future legal challenge? Lord Kerr states the possibility of changes in marital status needs to be taken into account when assessing the funding of schemes and paragraph 18, schedule 9 of the Equality Act 2010 must be disapplied. It will come as a shock if they haven't considered in their technical provisions, funding to cover additional dependant and spouses pensions payments.

Resources :

• Stonewall - Pensions
• The Supreme Court - Case Rulings
• Photo Credit : From the author's own collection.
• Thanks to James for his legal input.

If you are uncertain as to your pension benefits and your loved one's entitlement to a spouse or dependants pension or death in service benefits please:

• Write to your pension scheme administrator and ask for a scheme booklet and ask about survivor benefits.
• Write to your MP and ask why Parliament has not done much to progress the 2017 ruling and as Stonewall has done ask for reassurances that there will be no U Turn post Brexit.
• Get in contact with Stonewall or find legal advice if you and your partner are effected.
• Finally use this as an opportunity to review your financial planning and if I can help in anyway please get in contact.

Jill Turner is a chartered financial planner and the director of Big Picture Financial Planning. A finalist in the Money Management Financial Planning Awards 2016 in the Protection Category, a member of the Personal Finance Society, the London Institute of Banking and Finance, the European Financial Planning Association and a member of the UK Sustainable Investment and Finance Association.

#sustainability #pensionrights #LGBTQ #stonewall #financialplanning