The Equality Act 2010 contains a dispensation for occupational pension schemes, which allows them to calculate dependants’ pensions for surviving civil partners and same-sex spouses based only on service since December 2005, plus an addition of 50% of the GMP accrued by the member between April 1988 and December 2005.
An employment tribunal case in November 2012 (Walker v Innospec) opened the question of whether the dispensation is consistent with EU law that prohibits discrimination on the grounds of sexual orientation and the Government subsequently carried out a review into this issue and reported last year (see /news/government-review-of-survivor-benefits).
The Court of Appeal has now ruled unanimously that same-sex survivors’ pensions may be restricted to service from 5 December 2005.
Background
Mr Walker brought the original case against his former employer, Innospec Ltd, on the grounds that the Innospec had discriminated against him and that such discrimination was inconsistent with European law. Had he been married to a woman, Innospec’s pension scheme would have provided a spouse’s pension of £41,000 pa on Mr Walker’s death; however, it would provide only £500 pa to his civil partner, since the pension was calculated based only on service after 5 December 2005. The Employment Tribunal ruled in favour of Mr Walker but this decision was later overturned by the Employment Appeal Tribunal, who decided that the dispensation in the Equality Act is consistent with European law.
The Court of Appeal dismissed this further appeal and refused to refer the decision to the European Court of Justice, on the grounds that the Court of Appeal was sufficiently sure of its interpretation of the law to consider the case settled at national level.
The Court of Appeal’s finding relies on the principle that EU legislation does not have retroactive effect unless it is clear that the legislator intended such an effect.
Comment
Schemes which have not fully equalised benefits as between opposite-sex and same-sex couples may now be confident that the restriction of survivors’ pensions for same-sex couples to post-December 2005 service is legal, thus avoiding an additional retrospective increase in costs that the Government estimated at £0.4bn for the private sector and £3bn for the public sector.