Walker v Innospec Limited - Supreme Court rules on equal pension rights for same gender partners
In July, a landmark decision of the Supreme Court held that a widespread form of pensions discrimination based on sexual orientation is unlawful.
In the long-running case of Walker v Innospec Limited the Supreme Court ruled that restricting the calculation of pensions for the surviving partner of a same sex marriage or civil partnership to the period of the member’s service on or after 5 December 2005 (the date on which the Civil Partnership Act 2004 became law) discriminates unlawfully on the basis of sexual orientation.
The Supreme Court held that the exception in the Equality Act 2010 which permits this practice is incompatible with EU law on equal treatment and must be disapplied.
The Claimant, Mr Walker worked for chemicals group Innospec for 23 years, from 1980 until his retirement in 2003. He started living with his male partner in September 1993.
The Civil Partnership Act 2004 came into force on 5 December 2005 and Mr Walker and his partner entered into a civil partnership in early 2006. They later converted their civil partnership into a marriage.
Mr Walker sought to clarify the amount of survivor’s pension that his husband would receive in the event of his death. His employer’s pension scheme provided that the survivor’s pension should be calculated only on the basis of pensionable service after 5 December 2005.
As all of Mr Walker’s pensionable service fell before this date, his husband would have been entitled to a pension of approximately only £500 per year whereas a surviving widow would be entitled to a pension of approximately £41,000 (two-third’s of Mr Walker’s own pension entitlement).
Mr Walker brought a claim to the Employment Tribunal, which upheld his complaint, ruling that Innospec and the pension scheme trustees had unlawfully discriminated against him on the basis of his sexual orientation.
The Employment Appeal Tribunal (EAT) later overturned this decision, stating that the pension benefits accrued by Mr Walker before the date that civil partnerships became lawful should be discounted for the purposes of calculating his partner’s entitlement. The EAT pointed to a specific exception in the Equality Act 2010 which states that civil partners must receive equal pension benefits but only in respect of this restricted period of time.
On further appeal by Mr Walker, the Court of Appeal agreed with the EAT and dismissed his claim.
The Supreme Court: a landmark decision
Mr Walker once again appealed, this time to the Supreme Court. He argued that the Equality Act exception was not compatible with the principle of ‘equal treatment’ enshrined in European law and should be disapplied. He also argued that his former employer and the trustees of its pension scheme had breached the ‘non-discrimination’ rule which domestic legislation implies into all occupational pension schemes.
The Supreme Court upheld his claim, holding that Mr Walker’s husband was entitled to survivor benefits calculated on the basis of Mr Walker’s full period of service with Innospec.
It disagreed with the Court of Appeal’s finding that Mr Walker’s pension rights were ‘fixed’ at the date of his retirement. Instead it held that his pension rights would be fixed at the date of his death when the survivor’s benefit provided under the scheme became payable. The law in force at that date, and not the date of Mr Walker’s retirement, should apply and Mr Walker’s husband should therefore receive a full survivor’s pension entitlement.
What does this mean for other schemes?
The Supreme Court has finally resolved a long period of uncertainty on this issue. This decision ensures that all civil partners and married couples, whether they are of the same sex or opposite sex, have equal pension rights in the event of the scheme member’s death. Thousands of couples will benefit.
The decision, of course, comes at an additional cost to many employers who now face the expense of ‘equalising’ benefits. Many UK pension schemes have already voluntarily chosen to treat civil partnerships and same sex marriages in exactly the same way as opposite sex marriages. However, the trustees of any scheme which chose to rely on the Equality Act exemption to keep down costs will now need to review the scheme rules to make sure that there is no ongoing discrimination. Evidence heard by the Supreme Court suggested that the cost of applying the ruling retrospectively will be around £100m for private sector schemes.
The Equality Act exception was reviewed by government in June 2014 when, against a background of already escalating pension liabilities, it did not make any recommendations to remove it. Many will welcome the Supreme Court bringing the law up to date with social attitudes. There will also be concern amongst employers that the decision ‘retrospectively’ imposes an additional financial burden.
As this decision is based on EU equality law, the next question is whether this new protection will survive the upheaval of Brexit. Human rights organisation Liberty, which represented Mr Walker in the Supreme Court, has sought a promise from the government that there will be no ‘roll back’ on pension equality when the UK leaves the EU.
The extent of the impact of this decision on other pension schemes will depend on the provision they currently make for surviving partners. Employers and scheme trustees should seek advice to ensure that they comply with legal requirements.
Mark Poulston is a Partner and Head of Pensions at Weightmans LLP and can be contacted on 0151 242 9473 or on email email@example.com.