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Advice to overcome pensions inequality

This article is part of
Guide to advising on pensions and equality

Advice to overcome pensions inequality

While the government consults and debates about removing the last obstacles to pensions parity for all, there are ways advisers can help same-sex partners and non-married heterosexual couples.

One way is to set up a personal pension for the couple.

Personal pensions can be arranged to give cover to whoever the pension scheme member wants, provided the pension scheme member can pay what might be large contributions to the pension fund.

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Thanks to the open market, annuity providers can set up joint life annuities with people other than spouses, civil partners or financial dependents.

Therefore, an adviser could shop around on the open annuity market for more flexible annuity products.

However Robert Graves, head of pensions technical services for Rowanmoor, says: “Although legislation allows annuities to provide for a joint life survivor’s pension to any individual, not just spouses or civil partners, more shopping around may be required to find an annuity provider offering acceptable terms.”

There are also self-invested personal pensions that can be used to help ensure a healthy income in retirement for cohabiting couples or married same-sex couples, as there can be the option of beneficiary flexi-access drawdown, which would allow the named beneficiary to draw down as much or as little of the inherited fund as they like as income.

Mr Graves adds: “Death benefit provisions under Sipps are flexible in terms of whether the member and their partner are married, civil partners, opposite sex, same-sex, cohabiting, dependant or non-dependant.

“But they will only offer full flexibility if the member has adequately completed a death benefit nomination form to reflect their wishes.”


This brings us onto the next point: form-filling.

Where a scheme is suitable for couples living together, they will need to complete a death benefit nomination form, sometimes called an ‘expression of wishes’ form, which states who you want benefits to be paid to when you die.

For occupational schemes, relying as it does on the discretion of the trustees, a lot of it comes down to basic administration: ensuring that as much paperwork as possible is done, logged, and kept up-to-date.

Trustees of personal pensions that allow flexi-access drawdown will decide who gets the pension pot and how - whether a lump sum or an income - but the decision will be helped greatly by accurate, up-to-date expression of wish and death benefit nomination forms. An adviser will be crucial to making sure that all the paperwork is in order.

Education and awareness

One of the first steps is to find out well in advance of the clients’ estimated retirement date what sort of benefits would be available to them and to their same-sex or unmarried partners, so that any potential shortfall in income could be met in other ways.

Alistair McQueen, savings and retirement director for Aviva, says: “Each pension scheme can choose how it wants to act within the law, so if an individual has specific concerns, perhaps surrounding their scheme’s treatment of the 2005 date, the best thing to do is for an adviser to check with the client’s scheme administrator(s) by asking for a full explanation of the survivors’ entitlements in the case of death.