Survivors of deceased public sector scheme members may have to wait for the McCloud remedy to be implemented before discovering whether they are entitled to any of their spouse’s pension, a government minister has said.
A debate in parliament on February 28 was called by Conservative MP Jane Hunt, who raised the case of one of her constituents, a firefighter who died on duty in 2016.
Paul Wilkens was a member of the legacy Firefighters’ Pension Scheme 1992 and was in the process of being tapered into the reformed 2015 scheme, when he died.
Hunt explained that the technical provisions of the new scheme created three groups of members based on age.
Those born before April 1 1967 would remain in and receive all the benefits of the legacy scheme, those born between April 1 1967 and April 2 1971 would be entitled to “tapered protection”, allowing them “to remain in the legacy scheme for an extra 53 days for each month by which their age on April 1 2012 was over 41”, while the third group, active members born after April 1 1971, would receive no transitional protection and be transferred into the reformed scheme in 2015.
She said Wilkens fell into the second group, and was not due to be tapered into the reformed scheme until the year after his death.
This had implications for his partner, Melanie Perry, with whom he had been cohabiting for nine years. They had one child together.
The issue arose because, unlike the reformed scheme, the legacy scheme — of which Wilkens was still a member — made no provision for cohabiting heterosexual couples, meaning Perry was not entitled to succeed his pension.
Hunt said that attempts had been made over several years to rectify the matter, but she had been told by the trustee that the rules of the 1992 scheme did not put the awarding of such benefits within the discretion of the trustee.
She added that, though she supported the steps the government had taken to address the McCloud problem — an age discrimination issue created by the 2015 reforms — in particular, the deferred choice underpin, “this will not address all the discrimination that the protections caused, the effects of which are still having a substantial impact on Wilkens’ surviving family members”.
“I therefore ask for the secondary legislation to contain provisions to ensure that surviving partners who would have been eligible to succeed a pension under the 2015 scheme, had their partner not died during the transition period before they were tapered on to the reformed scheme, are able to succeed the pension,” Hunt said.
The financial burden of such a change would be minimal as there were no other known instances comparable with Wilkens’ case, she continued.
“This was, unfortunately, a ‘perfect storm’ of being the wrong age, sadly passing away at the wrong time, and not being married,” Hunt explained.
“Had Wilkens been two years younger, had he passed away two years later, or had he and Melanie been married, Melanie would not have had to fight for access to his pension and to endure so much hardship at an already difficult time.”
Wait for the remedy
Speaking for the government, security and borders minister Damian Hinds reiterated that the rules of the 1992 scheme did not allow for discretionary payments.
He said it was “quite common” for pension schemes of that time not to include provisions for unmarried partners, and “it has been the position of successive governments not to make retrospective changes to public service pension schemes, and that has not changed”.
Hinds added that, when a new Firefighters’ Pension Scheme was introduced in 2006, a letter was sent to all members — including Wilkens — offering them the chance to transfer into the new scheme, the updated design of which did allow for cohabiting couples to benefit from their deceased partner’s pension. Wilkens had not taken this option, he said.
Hunt replied: “At the time of Wilkens’ passing in 2016, he and his partner had been together for 10 years, so that letter would have come at the beginning of their relationship. I think we can therefore forgive them for not taking up that offer at the time.”
Hinds accepted the point, and said that Perry’s best hope may lie in the implementation of the McCloud remedy, especially the deferred choice underpin element, currently before parliament in the form of the public service pensions and judicial offices bill.
The underpin will allow members to decide whether to take their benefits on the terms of the legacy or the reformed scheme when they retire.
“It is the government’s intention that the underpin will give the beneficiaries of deceased members the opportunity to choose from which pension scheme to receive their survivor benefits for any service during the period April 1 2015 to March 31 2022,” Hinds explained.
He added that, though it appears Wilkens’ pension would qualify for that remedy, “the impact of the remedy on Wilkens’ survivor benefits will not be known until the remedy is fully implemented by October 2023”.
“At that stage, fire and rescue authorities will start the process of contacting all those entitled to the remedy with details of their options, as the statutory pensions administrator for each area,” he said.
Benjamin Mercer is a senior reporter at FTAdviser's sister publication Pensions Expert
