YOU might not have heard of John Walker, but if you are in a same-sex marriage he may just have done you a massive favour.
You see, after years of pursuing a case against his former employer, chemicals company Innospec, Walker finally has it on the authority of no fewer than five Supreme Court judges that the company cannot discriminate against him and his husband because they are gay.
Thanks to the Government incorrectly interpreting EU law, Walker was told that because he retired from Innospec before the 2004 Civil Partnership Act came into force his husband would be entitled to a tiny fraction of his Innospec pension if he were to die first.
The Supreme Court said this was nonsense and now rather than a few hundred pounds a year his husband will be entitled to an annual survivor’s pension of £45,000 on Walker’s death – which is what an opposite-sex spouse would have been entitled to all along.
It is no wonder that Walker’s lawyer, Emma Norton of human rights organisation Liberty, called the discriminatory legislation “a pernicious little provision”, or that TUC general secretary Frances O’Grady hailed the court’s decision as “a huge moment”.
But what does it mean in practice?
According to Ros Altmann, an investment specialist and former pensions minister in David Cameron’s government, the ruling means that “all UK pension schemes will now have to pay survivors’ pensions to same-sex partners on the same basis as they would for opposite-sex partnerships”.
“Until [this ruling pension scheme] members who were married to someone of the opposite gender would know that their surviving partner will inherit part of their pension,” Altmann says.
“Even if the member married that person long after they left the scheme, the inheritance rules would apply.
“However, if the member had a partner of the same gender, even though they may have been together for decades, their pension scheme might refuse to pay a survivors’ pension on the grounds that the law only recognised gender-equal partnerships since 2005.”
Thankfully the majority of defined benefit pension schemes had already moved with the times and updated their rules to give all partnerships equal status, but as Aegon pensions head Kate Smith notes the ruling highlights an issue that is of importance to pensions more generally.
As most UK employees will now be a member of a defined contribution pension thanks to the Government’s auto-enrolment scheme, every one of us should be thinking about who we want to inherit our savings should we die before exhausting them. This is especially so, says Smith, because more of us are now choosing not to get married.
“Increasingly couples cohabit rather than get married or enter a civil partnership, but should the unthinkable happen and their partner dies it’s important they take steps to make sure they receive any survivor’s pension and any death in service lump sums payable, even if they aren’t financially dependent on their partner,” she says.
The simplest way to do this is to ensure you fill out a form nominating your beneficiary, something that can be done and updated at any time by contacting your pension provider.
“When people initially join a pension they will usually be asked to sign a form stating what they wish to happen to their pension in the event of their death,” Smith says. “If you join a pension at a young age you may not yet have a beneficiary in mind so it’s important to come back to the form at a later date and make sure the paperwork is in order.”
While that is an impact of the Waker case that can be dealt with at the micro level, another side effect of the Supreme Court’s decision could be felt on a macro scale.
Though pensions law has long been seen as discriminatory towards women, as Paisley and Renfrewshire South MP Mhairi Black has highlighted in relation to changes in the state retirement age, the judgment could force the Government to iron out an anomaly that in effect discriminates against men.
“Widows’ pension rights in many schemes differ from the pension rights of widowers,” Altmann says. “In some schemes a husband cannot inherit the wife’s pension but a wife will inherit that of her deceased husband. I expect this issue will now be looked at again.”
If that happens businesses and public bodies will have to brace themselves because, as Altmann notes “the cost to public sector pension schemes could be hundreds of millions of pounds”.
As Smith says in relation to the Innospec case, though, “this is surely a small price to pay for fairness and equality”.
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