PensionsMay 29 2013

‘Gov’t needs to work on pensions equality’

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The pensions consultant for London-based Broadstone Corporate Benefits said the government was keen to debate the Marriage (Same Sex Couples) Bill but “continues to reject pensions equality”.

He said: “This would be the least controversial element if the Bill is passed. At a Commons debate the cost of equality has been estimated at a paltry £18m, which is small in the greater context of the enormous pensions industry.”

Mr Brooks added that the government had set a precedent for pensions equalisation when it imposed on schemes and employers the rules to equalise guaranteed minimum pension for the contracted-out benefits earned between 1978 and 1997.

He said: “Providing statutory equal death benefits for same-sex and opposite married couples is a fraction of the cost of GMP equalisation.

“Estimates vary, but GMP equalisation could cost employers more than £10bn in increased liabilities and £300m in administration costs. The government’s inconsistency here is very surprising as on one hand it calls for gender equality but it has rejected sexual orientation equality with little justification.”

Adviser view

Arwyn Bailey, principal of Middlesex-based Justamo Financial Planning, said: “Some press reports say the cost to pension schemes of gay marriage could reach £4bn. These figures seem little more than guesswork, but what is certain is that high costs and great legal confusion lie ahead

“A pension, in its simplest terms, is a trust and trusts are enshrined in laws that extend back into antiquity. Those laws are ill-adapted to deal with today’s increasingly complex array of relationships.

He said that as the law stands, entitlements to pension benefits were less for those in civil partnerships than for married couples. To change the marriage law, without any change to the pensions law, and apply it equally for all could create “a serious conundrum for trustees of pension schemes”.

Mr Bailey added: “Professionals who advise on pensions and draft wills are about to plunge into a legal minefield.”