As the government reviews the rights of same sex couples and pension entitlement, we look at the current rules and explain how you can protect your partner financially.
A landmark ruling in 2017 saw the Supreme Court rule that same-sex couples who are married or in civil partnerships should have the same pension rights as heterosexual couples. Following this, the government launched a review into how pension providers can facilitate this change.
Public service pension firms were last year told that survivors of male and female same sex-partners needed to have equal entitlement as heterosexual couple would have if his/her partner died.
The ruling came after a five-year fight by John Walker to get equal pension benefits for his husband, so in the event of death his husband would receive a pension of £45,000 a year, the same amount if he had been married to a woman.
Mr Walker brought the case against the firm Innospec, where he worked between 1980 and 2003. The company had originally refused Mr Walker’s husband’s pension rights on the grounds that civil partnerships had only been made legal in the UK in 2005, after he had left the company.
The Civil Partnership Act 2004 gave same sex-couples the right to register as civil partners from 21 December 2005 while the Marriage (Same Sex Couples) Act 2013 enabled same sex-couples to marry, giving them the same rights when it came to pensions and survivor’s benefits.
However, the 2010 Equality Act allowed employers to exclude civil partners for pension contributions paid before 2005. It said it was not discrimination because of sexual orientation to restrict access to a benefit accrued before 5 December 2005.
But in 2017, the Supreme Court ruled that this loophole was ‘unlawful’ and in breach of EU equality laws.
Married couples and those in civil partnerships, whether they are same or different sex couples, legally have the same rights to a partner’s pension after they die. However, if they are living together but not married or in a civil partnership, these rights aren’t the same.
“Care needs to be taken with couples, same sex or otherwise, who aren’t married or in a civil partnership, as co-habitees don’t have the same automatic rights as spouses or civil partners,” explains Patrick Connolly, chartered financial planner for Chase de Vere, explains.
“Couples that simply live together aren’t automatically entitled and, even if the scheme rules allow the surviving partner to benefit, they may still be required to prove inter-dependency,” he adds.
In order to make sure a partner is protected if you die, you can complete what’s called a nomination of beneficiary form. This states who you would like your pension to be left to upon death.
If it’s a private pension, including a SIPP, you can fill in an ‘expression of wish form’ in order to leave the pension to the person you choose.
With a pension, it’s always worth making sure you have the right information to make the best choice for you, your partner and any children.
“The exact form of death benefits we can offer a pension scheme member’s beneficiaries (e.g. lump sum or income benefits) are subject to complex rules, and are affected by things like whether the beneficiary was a ‘dependant’ or not,” explains Andrew Gilbert, spokesperson from LV=.
‘Dependants’ are legally defined as people who were married to a pension scheme member, people who were financially dependent on the member at the date of the member’s death, or children (including adopted children) of the member.
In the case of children and adopted children of the member, they are only automatically classed as ‘dependent’ up to the age of 23.
“Whether a member’s relationship was on a same sex or heterosexual basis is completely immaterial, and not therefore something that has any bearing on the death claims process.
“Therefore, as far as LV= pensions are concerned, the options available for customers who are part of a same-sex or heterosexual relationship are identical in terms of making provision for their partners, or children – including adopted children,” he adds.
Same sex and heterosexual couples now have the same pensions rights, following the Supreme Court ruling in 2017. However, for an extra safety net it may be worth contacting your pension provider to list the person (or persons) you would like to receive your pension upon death. If there’s anything you’re not sure about, or you want more information on, your provider should be able to help you.