Pension inequality for same sex couples? Walker v Innospec
In this blog, Family Law in Partnership consultant Ann Northover examines the legal background to the case of Walker (Appellant) v Innospec Limited and others (Respondents), currently awaiting the judgment of the Supreme Court – UKSC 2016/0090.
The issue to be determined in the forthcoming judgment of the Supreme Court in Walker (Appellant) v Innospec Limited and others (Respondents) is whether a retired male may require his former employer’s occupational pension fund to pay a surviving spouse’s pension to his civil partner or husband, as it would if he were married to a woman. The survivor’s pension offered to Mr Walker’s husband being £500 per annum, versus £41,000 per annum if instead he was married to a woman.
In brief, Mr Walker worked for Innospec and was a member of the pension scheme from 1980 until retirement in 2003 on an annual pension of approximately £85,000. He retired before the Civil Partnership Act 2004 or Same Sex (Married Couples) Act 2013 came into effect. The pension scheme’s provision for payment of a surviving spouse’s entitlement to a pension for life upon a death after 1 December 1999 is a benefit that Mr Walker claims he should have in the same manner as for a heterosexual couple. Innospec has not updated the scheme rules voluntarily to allow this. This is the final appeal brought by Mr Walker against his former employer, regarding pension for his partner of over 20 years, whom he civilly partnered in 2006 and subsequently married.
This case is of great interest to family lawyers as it engages the issues of equality played out through sexual orientation, human rights and the EU, and most specifically financial aspects of pensions. This case therefore has huge relevance for family lawyers, financial planners, employers and pension trustees who are all concerned with pension sharing on divorce (same sex) or dissolution of civil partnerships.
At the time of writing this summary, the sense of excitement surrounding the forthcoming judgment has only been heightened by the judgment of the Supreme Court on 8 February 2017 in a judicial review case in Northern Ireland concerning Ms Brewster, an unmarried female cohabitee of the deceased, who won the right to benefit from her late partner’s survivor’s (public sector) pension in the same way as a spouse. The scheme was altered in 2009 to allow for a cohabiting surviving partner to benefit in the same way as a surviving spouse, but required completion of a nomination form, which had not happened. Also worthy of mention in a piece concerning issues of equality, is the Church of England’s current internal divisions on LBGT issues, and of course that same sex marriages may not be officiated in church by their clergy.
By way of reminder, same sex civil partnerships became possible pursuant to the Civil Partnership Act 2004 (“CPA”), which came into effect on 5 December 2005, and same sex marriage was introduced by the Marriage (Same Sex Couples) Act 2013, the first marriages taking effect on 29 March 2014.
Also of relevance in terms of the legislative framework is the EU Equal Treatment Framework Directive (2000/78/EC) (the “Directive”), which, inter alia, prohibited discrimination on grounds of sexual orientation. That legislation had to be transposed into UK law pre 2 December 2003, which it was. The Equality Act 2010 (“EA 2010”) requires occupational pension schemes to be non-discriminatory against members based on sexual orientation. However, the EA 10 Exemption provides a “get out” clause, (Schedule 9, Part 3, paragraph 18). This means there will be no unlawful discrimination based on sexual orientation if benefits are restricted for the period of accrual relating to service before the coming into force of the CPA (5 December 2005), or payable in respect of periods of service before that date, and where access to such benefits is prevented because the member is not in a heterosexual marriage.
In the present appeal, the litigation commenced when Mr Walker successfully applied to the Employment Tribunal in 2012 claiming unlawful discrimination based on sexual orientation, only then to have the decision reversed in favour of his former employer by the Employment Appeal Tribunal (“EAT”) in February 2014. The EAT held in effect that such discrimination was not unlawful before 5 December 2005, and there was no obligation to remedy it. Mr Walker’s subsequently appealed to the Court of Appeal, arguing that the EA 2010 Exemption contravened both the Directive and the European Convention on Human Rights. He lost and the 2014 decision was upheld, (and was heard joined with O’Brien v Ministry of Justice as that case also concerned issues of retroactivity of EU law).
At the heart of the present appeal is the “no retroactivity” principle of EU law, such that unequal treatment of pension benefits that at the time was lawful, does not become unlawful due to a subsequent change in the law through implementation of EU law. This is so even though the benefits will not become payable until after the change in the EU law. This means that despite the demonstrably unfair outcome, the Court of Appeal found that the EA 2010 was compatible with the Framework Directive.
The legislative loophole that allows such pension benefit disparity to continue for same sex couples is of an Orwellian nature. Some marriages and partnerships (i.e. opposite sex) are more equal than others, despite all the anti-discriminatory legislation. And let us not forget there is vast inequality of income amongst UK pensioners. People are living longer and the demographic (and other) changes are such that generous occupational and public sector pension schemes are now harder to come by. Mr Walker’s annual retirement pension of approximately £85,000 compares very favourably to the median annual income from all source for over 65s at around £24,000 gross (per the Department for Work and Pensions: The Pensioners’ Incomes Series UK report for 2012-2013.)
Of little interest perhaps to those directly affected by the current legislation is the estimated cost of “full equalisation” at around £3bn to rectify this anomaly whereby same sex partners often still miss out. The Government will need to pass new legislation if same sex partners are to be put on a fully equal footing with opposite sex couples. Underhill, LJ, in the Court of Appeal concluded in a supporting judgment that “changes in social attitudes, and the legislation which embodies those changes, cannot fully undo the effects of the past.” We wait with baited breath.
This article first appeared in Family Law and is reproduced by kind permission.
Ann Northover is a highly regarded family law specialist who is a consultant at Family Law in Partnership. Ann’s expertise in family law derives from over 20 years in practice, and she is known for her astute and incisive yet sensitive approach to resolving her client’s issues in the context of the needs of the wider family. The focus of Ann’s practice is on complex relationship issues, with particular emphasis on the finances and the wellbeing of and arrangements for any children affected. Read Ann’s website profile here or contact Ann at E: mailto:email@example.com or T: 020 7420 5000.
Update: The Supreme Court has now given its decision in this case. Click here for further details.
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