On 12 July 2017, the Supreme Court handed down a unanimous ruling which will have a significant effect on the rights of same-sex couples to access their spouse’s pensions, overturning a 2015 ruling by the Court of Appeal.
The case was brought by John Walker, who had built up a substantial pension fund from his former career working for Innospec, a chemicals company. Like many occupational pension schemes, Mr Walker’s scheme allowed his spouse to receive 50% of the value of the pension after his death, regardless of the date of marriage.
Mr Walker had been in a relationship with his husband since 1993, and entered into a civil partnership with him in January 2006. This was subsequently converted into a marriage.
Under the current legislation, Mr Walker’s husband would only have received around £1,000 a year of pension income in the event of Mr Walker’s death. If Mr Walker had been married to a woman, she would have been entitled to an income of around £45,700 per annum on Mr Walker’s death.
Mr Walker argued that, as he had made the same contributions as his heterosexual colleagues, his husband should benefit from his pension in the same way that a heterosexual spouse would.
Innospec argued that because Mr Walker’s employment started and ended before the date on which civil partnerships became legal in the UK (5 December 2005), his husband was not entitled to benefit from his pension, relying on an exemption to the Equality Act 2010, which allowed employers to exclude civil partners from benefits accrued before December 2005.
The Supreme Court unanimously decided that it would be unlawful to deny Mr Walker’s husband access to his pension, as this amounts to discrimination on the grounds of his sexual orientation. The Court stated that the exemption to the Equality Act is incompatible with EU law.
The crucial point discussed was whether changing the law to allow Mr Walker’s husband to access his pension entitlement would be retrospectively changing legislation, which is prohibited under both UK and EU law.
The Court decided that this would not be a retrospective change in the law, and that it was irrelevant that the pension entitlement was accrued before 5 December 2005. The arrangement was that Mr Walker’s entitlement would go to his spouse whenever he became legally married to that spouse. Lord Kerr stated that “the period during which he acquired that entitlement had nothing whatever to do with its fulfilment”.
As a result of this decision, pension scheme providers may face previously unexpected liabilities in respect of same-sex couples. The Court made it clear that it was not lawful for pension providers to deny spouses in same-sex marriages access to their partner’s pension entitlement. As such, the amount paid out by providers to spouses is likely to rise.
In making their decision, the judges focused on an EU directive relating to equal treatment in employment and occupation. Much has been made recently of the ubiquity of EU law in the UK and, for better or for worse, this is certainly true for employment and discrimination legislation.
The UK’s impending exit from the European Union will affect this area of law significantly. The Government’s proposed “Great Repeal Bill” will result in swathes of EU legislation transferred automatically into UK law, which Parliament are capable of amending, altering or repealing. However, as a decision of the Supreme Court, it is not possible for this interpretation of the current law to be appealed or overturned by another court.
Similar cases are set to come before the European Court of Justice (ECJ) in the next few years but, as the Government has set the jurisdiction of the ECJ as one of its negotiation “red lines”, it is likely that the Supreme Court will be the ultimate arbiter of disputes such as this in the coming years.
The full judgment can be found on the Supreme Court website.
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