Part 6 – Occupational pensions and survivor benefits
132.Paragraph 18 of Schedule 9 to the Equality Act 2010 provides that it is not discrimination because of sexual orientation to restrict access to a benefit, facility or service that would be available to a person who was married to someone who is in a civil partnership, in relation to rights accrued before 5 December 2005 (the date the Civil Partnership Act came into force). This means that an occupational pension scheme as a minimum only has to provide survivor benefits to civil partners on rights accrued since that date. Paragraph 17 removes the word “married” from sub-paragraph (1) and inserts a new sub-paragraph (1A) into paragraph 18 of Schedule 9 to the Equality Act 2010. This extends the exception so that it also applies to same sex couples in the same way as to civil partners. Sub-paragraph (1A)(c) and (1B) provide that this does not apply to people who were in a marriage with a person of the opposite sex but who are now in a marriage of a same sex couple as a result of one spouse changing legal gender.
Examples
An example of an employment benefit provided by reference to marital status is an occupational pension scheme which pays benefits to an employee's spouse on the death of the employee, but does not similarly compensate an unmarried employee’s partner.
A scheme which pays out to surviving married partners must also pay out to surviving same sex spouses and surviving civil partners in respect of any employee service since 5 December 2005 (when the Civil Partnership Act came into force).
A member of an occupational pension scheme is married to a person of the opposite sex. The husband or wife changes legal gender and the marriage changes to a marriage of a same sex couple. In this case the survivor would retain the expectation of survivor benefits they would have had in a marriage of an opposite sex couple.
133.Paragraphs 18 to 26 of Schedule 4 amend the Pension Schemes Act 1993 to extend requirements on occupational pension schemes that are or have been contracted out to provide survivor benefits to widows or widowers of a marriage of a same sex couple. In particular, section 17 of the Pension Schemes Act 1993 requires schemes to provide that if the scheme member (the “earner”) dies leaving a widow, widower or surviving civil partner, the survivor will be entitled to a guaranteed minimum pension under the scheme. Paragraph 20 of Schedule 4 inserts new subsections (2)(d) and (e) into section 17 and amends subsections (4) to (6) so that the guaranteed minimum pension provisions apply to same sex married partners as they do for civil partners. Section 8(2) of the Pension Schemes Act 1993 defines “guaranteed minimum pension” for the purposes of that Act. Paragraph 19 extends the definition of guaranteed minimum pension to include an earner’s surviving same sex spouse’s guaranteed minimum.
134.Widows and widowers of marriages of same sex couples will be entitled to any guaranteed minimum pension accrued after April 1988. However, an exception is made for a woman in a marriage of a same sex couple whose spouse was her husband immediately before obtaining a gender recognition certificate - a “relevant gender change case”. In such cases widows will be treated like widows of men for the purpose of inheritance of the guaranteed minimum pension.
135.Schemes may convert members’ rights to a guaranteed minimum pension into an ordinary scheme pension. Under section 24D of the Pension Schemes Act 1993, the scheme must provide post-conversion benefits that include survivors’ benefits. Paragraph 21 amends section 24D to require schemes to provide these survivors’ benefits to widows or widowers of marriages of same sex couples. Widows or widowers of marriages of same sex couples will be entitled to the same benefits as surviving civil partners, except as with inheritance of the guaranteed minimum pension where a woman was married to a woman in a relevant gender change case. In these cases a widow will be entitled to a pension of at least half the value of any pension accrued by the earner from April 1978 to April 1997.
136.Section 37 of the Pension Schemes Act 1993 prohibits alterations to the rules of a contracted-out scheme unless the alteration is of a prescribed description and except in prescribed circumstances. Section 37(3) prohibits such alterations by schemes that were formerly contracted-out so long as any person is entitled to receive benefits for the period when the scheme was contracted-out. Section 37(4) limits the application of section 37(3) where the person entitled is a widower or surviving civil partner to only such cases as may be prescribed. Paragraph 22 amends section 37(4) and inserts new subsections (5) and (6) to extend this limitation to include widows and widowers of marriages of same sex couples except for widows in a relevant gender change case.
137.In order to benefit from the exception made for relevant gender change cases, widows will need to produce evidence of their spouse having changed legal gender to support their claim. Paragraph 23 inserts new section 38A (Regulations about relevant gender change cases) into the Pension Schemes Act 1993 to enable regulations to be made to specify the detail of what information may need to be provided or other conditions that may be met before schemes are obliged to treat these widows as if they were widows of marriages of opposite sex couples. Under subsection 38A(3) regulations may also specify what schemes must do if the required information is not provided or the conditions are not met for this special exception to apply.
138.Section 46(1) of the Pension Schemes Act 1993 provides for the reduction of social security benefits where a person is also entitled to a guaranteed minimum pension. Section 47(1) limits the application of section 46(1) in relation to individuals who are entitled to a guaranteed minimum pension by virtue of being the widower or surviving civil partner of an earner in certain circumstances. Section 47(1) does not make any provision about widows, who are currently provided for under section 46(1). The policy intention is that survivors of marriages of same sex couples be treated in the same manner as surviving civil partners in respect of their guaranteed minimum pension entitlement. Paragraph 24 of Schedule 4 gives effect to this policy by making provision for widows of marriages of same sex couples in section 47(1).
139.Section 84 of the Pension Schemes Act 1993 makes provision about which method of revaluation is to be used to revalue pension benefits. Subsection (5) is amended by paragraph 25 of Schedule 4 to make reference to the guaranteed minimum of surviving same sex spouses.
140.Schedule 3 of the Pension Schemes Act 1993 makes further provision about each of the methods of revaluing accrued pension benefits. Paragraph 1(1E) defines “the accrued benefit” for the purposes of paragraph 1, which provides further detail on the final salary method of revaluation. Sub-paragraph (b) is amended by paragraph 26 of Schedule 4 to make reference to the guaranteed minimum of surviving same sex spouses.
Examples
A survivor of a marriage of a same sex couple makes an application to a pension scheme for a survivor benefit. The deceased was a member of a contracted-out pension scheme with a guaranteed minimum pension. The scheme is required to pay a survivor benefit of half the guaranteed minimum pension based on accruals back to April 1988.
A widow who was married to a woman in a relevant gender change case makes an application to a pension scheme for a survivor benefit. The deceased was a member of a contracted-out pension scheme with a guaranteed minimum pension. If the widow can provide the scheme with the required evidence that her spouse was her husband immediately before obtaining a gender recognition certificate, the scheme will be required to pay a survivor benefit of half the guaranteed minimum pension based on accruals back to April 1978.
