PensionsJul 5 2019

Pension benefits rules expected to be challenged

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Pension benefits rules expected to be challenged

Yesterday (July 4) Guy Opperman, minister for pensions and financial inclusion, said the government was not prepared to make any retrospective changes to existing rules on pension benefits.

He said the government respects the Supreme Court's decision in the Walker v Innospec case, which in July 2017 ruled same-sex couples that were married or in a civil-partnership should have the same pension benefits as heterosexual couples.

However, the treatment would not be widened to men surviving their female spouses, he added.

Male survivors are entitled to the same survivor benefits as women for any service after May 1990, while in public sector schemes the cut off date is April 6, 1988.

Mr Opperman said: "While this means that the differences in survivor benefits for accruals in past periods will remain for some, these will work their way out of the system in time."

Sir Steve Webb, director of policy at Royal London and former pensions minister, said the government was "going to do the least it can get away with in response to the ‘Walker’ judgment". 

He added: "In particular, it is not going to address the fact that men who become widowers can get smaller survivor benefits in some cases than women who become widows. 

"I believe it is only a matter of time before a widower takes the government or a pension scheme to court and successfully challenges this form of discrimination."

Pensions officer at trade union Prospect, Neil Walsh, said the statement was a response to the review of survivor benefits that was published in June 2014, and had not been worth the wait.

He said: "Government consistently fought against equal benefits for same-sex partners when same sex marriage legislation was debated in Parliament and when the Walker case went through the courts.

"Now they have set their face against equal benefits for male partners of female scheme members. As with same-sex partners’ benefits, the government’s position is unlikely to be the final word as it will inevitably be legally challenged."

David Robbins, senior consultant at Willis Towers Watson, said "there are a lot more widowers and prospective widowers of female members with pre-1988 service than there are potential same sex survivors".

According to an estimate from the Government Actuary Department in 2014, giving same sex survivors the same benefits as opposite sex widows would cost £80m, while equalising benefits for opposite sex widowers as well would raise the bill to £2.9bn.

Mr Robbins said: "With those sums of money at stake, members may well be tempted to test the government’s position in the courts if their legal advice is that they have a chance of winning (despite the treatment of widowers being upheld in a 2011 judgment).

"Equally, if the government prioritises avoiding new costs for the taxpayer above equal treatment for widows and widowers, it will make sense for it to contest any claims."

Mr Opperman said that the changes, to be implemented in all public-sector pension schemes, will benefit all same-sex survivors.

"How much they benefit by will be determined by a combination of factors, including when the deceased was employed, their pensionable earnings, the length of any pensionable service and the specific benefits of the scheme to which the deceased belonged," he noted.

However, the government didn’t make any considerations in relation to private sector pension schemes.

Stephen Scholefield, partner at Pinsent Masons, said that such decision seems strange, "as it doesn’t seem unreasonable to expect that the law as written by Parliament is in fact the law".

He added: "Private sector schemes may find it frustrating that they are left to work through the implications of the judgment themselves. They may reach different conclusions as to how equality is best achieved."

No timeline was given for public sector schemes to update their benefits. So far, only two public schemes – the Teachers’ Pension Scheme and Local Government Pension Scheme - have announced changes to their structures.

maria.espadinha@ft.com

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