The Marriage (Same Sex Couples) Act 2013 (the '2013 Act') comes into force on 13 March 2014, with the first same sex weddings taking place on 29 March 2014.
This Act enables same sex couples to marry under the law of England and Wales and for Civil Partners to convert their civil partnerships to marriage.
With the introduction of civil partnerships in 2005, occupational pension schemes were required to provide death benefits to a surviving civil partner so that civil partners are entitled to the same level of benefit as a spouse for pensionable service from 5 December 2005 and, for the period from 6 April 1988 to 4 December 2005, a surviving civil partner must be provided with the level of contracted out benefits that are provided in respect of a spouse.
The basis on which civil partner's pensions are required to be provided has recently been challenged in the courts and we will come onto this later in this update.
Under the 2013 Act, same sex couples generally have the same legal rights as opposite sex couples. However this equality requirement does not cover occupational pension schemes. Instead, same sex couples are given the same rights as civil partners have under the Civil Partnership Act 2004. The 2013 Act says that the terms "husband and wife" include: a man married to another man, and a woman married to another woman and that widow and widower attracts similar definitions. The 2013 Act goes onto say that related expressions are to be construed accordingly. The term "spouse" is not expressly referred to in the legislation but it is possible that it would be regarded as a "related expression".
The 2013 Act states that it will not alter the effect of any private legal instrument made before 13 March 2014. Pension Scheme documents are not listed but should be covered by the term "private legal instrument". Accordingly, in any existing 'trust deed and rules', references to "husband", "wife" and "marriage", and possibly "spouse" will continue to be interpreted by reference to existing definitions. Future legal documents such as a new 'definitive deed and rules' will be caught by the change in the statutory definitions unless the document specifically provides otherwise.
For employers that want to provide same sex married couples with the statutory minimum benefits in line with requirements for civil partners, no amendments to existing pension scheme documents should be needed. For schemes that want to provide same sex married couples with the same benefits as married couples of the opposite sex, rule amendments will be needed.
In situations where a new trust deed and rules come into force on or after 13 March 2014, the exceptions regarding defined terms in the 2013 Act will not apply. This means that benefits for same sex married couples could automatically be extended to all pensionable service and not just pensionable service from 5 December 2005. If this is what is intended then that could be acceptable. However, if it is the intention to provide only the minimum required under legislation, then this will need to be expressly documented within the scheme's trust deed and rules.
A statutory amendment power has been introduced so that Trustees can amend pension scheme rules by statutory resolution. Amendments made using the statutory resolution procedure will be exempt from section 67 of the Pensions Act 1995, meaning that any impact on subsisting rights need not be considered. However, any amendment should be certified by the scheme actuary in order to confirm that the pension scheme will continue to be contracted out. Rule amendments which provide for more than the minimum required under the legislation will need employer consent.
Trustees should be checking the basis on which their scheme provides for survivor benefits, particularly where spouses' benefits are provided on a more generous basis than for civil partners. Trustees and employers should consider whether they wish to extend to civil partners and same sex married couples' benefits at the same level as opposite sex spouses.
The basis on which pension schemes are required to provide civil partners' pensions has been challenged in an employment tribunal case (Walker v Innospec) and an appeal from that case has recently been determined. In that case, the employment tribunal concluded that it was discrimination not to provide a civil partner with the same level of benefits as a widow or widower in respect of pensionable service before 5 December 2005.
The case concerned the exception contained in paragraph 18(1) of Schedule 9 to the Equality Act 2010 and whether it was compatible with the EU Equal Treatment Framework Directive. Paragraph 18 provides that employers will not be liable for sexual orientation discrimination on the basis that they used to offer survivors' benefits to married couples but not to unmarried couples. Unmarried couples would include civil partners. The 2013 Act extends the exemption in paragraph 18 to same sex marriages.
The employment tribunal's decision has been overturned on appeal by the Employment Appeal Tribunal. The EAT concluded that the Equal Treatment Directive did not require retrospective implementation of the prohibition on sexual orientation discrimination and that past discrimination would only give rise to a claim to the extent that the discrimination continued.
The Government is reviewing differences in survivor benefit between same sex and opposite sex couples and examining the costs to employers that would be involved in equalising survivor benefits. Regardless of the outcome of the Walker v Innospec case, there may still be further changes made in this area.
For further information, please contact your usual pensions contact at Shoosmiths.