Pensions Alert: Benefits for unmarried cohabiting partners

Pensions Alert (UK)

Last week the Supreme Court issued a unanimous judgment in a case concerning a claim by the unmarried cohabiting partner of a member of a public service pension scheme that she should be entitled to receive a survivor's pension. In this Pensions Alert we provide an overview of the judgment and consider the possible implications for private sector occupational pension schemes.

Facts of the case

The scheme in this case was the Local Government Pension Scheme in Northern Ireland (Scheme). The regulations governing the Scheme provided for a pension to be payable to a "nominated cohabiting partner" on the death of a member. A member could nominate their partner by submitting a declaration, signed by them both, that certain conditions including cohabitation and financial dependency or interdependency had been met for at least two years. The nomination form alone would not entitle the partner to a pension. The partner would have to show that they had in fact been a cohabitant for two years before the date of the declaration, and that they had been in that position for two years before the date of death.

The applicant in this case had cohabited with her partner for ten years before his death in December 2009. However, the Scheme had not received a nomination form and therefore refused to pay her a survivor's pension. The applicant challenged that decision by way of judicial review on the basis that the requirement for a nomination form constitutes unlawful discrimination contrary to the European Convention on Human Rights (ECHR) because a nomination is not required in the case of marriage or civil partnership.

The Supreme Court's decision

The respondents to the application (the Scheme administrator and the department responsible for the regulations governing the Scheme) agreed that the denial of a survivor's pension falls within the ambit of the ECHR's provisions on entitlement to the peaceful enjoyment of possessions and that a person in a cohabiting relationship other than a marriage or civil partnership is covered by the ECHR's provisions prohibiting discrimination. The question for the Supreme Court was therefore whether the interference with the applicant's right to property has been objectively justified, and it concluded that it has not.

Its reasoning included that, under the regulations, unmarried partners have to establish that a genuine and subsisting relationship existed and therefore the requirement for a nomination form adds nothing to this evidential hurdle. The Supreme Court did not think that there was a rational connection between the objective of removing the difference in treatment between a longstanding cohabitant and a married or civil partner and the imposition of the nomination requirement.

A declaration was therefore made that the requirement that the applicant and her partner should have made a nomination be disapplied and that the applicant is entitled to receive a survivor's pension under the Scheme.

Implications for private sector schemes

Whilst there are similar provisions in some other public service schemes (although the regulations for the Local Government Pension Scheme in England, Wales and Scotland have already been amended to remove the nomination requirement), in our experience, a requirement for a nomination of this type is unusual in private sector schemes.

However, for schemes that do contain a similar rule, there is a risk of complaints that, in light of the judgment, this is unlawful and therefore schemes should seek advice on whether these rules should be amended.

Following the judgment it may also be more likely that schemes will receive complaints in relation to other rules which treat unmarried cohabiting partners differently. For example, scheme rules might provide that a spouse or civil partner has a right to a pension on the member's death but give a discretion as to whether a pension is payable to an unmarried cohabiting partner.

As to whether any such complaints might be successful, a key point is that being unmarried is not a protected characteristic under the non-discrimination rule that applies to occupational pension schemes under the Equality Act 2010. It therefore seems that any claim may have to argue that this aspect of the legislation is incompatible with the ECHR. Even if this was successfully argued, it may still be possible to show that the differential treatment can be objectively justified.

The judgment does not therefore mean that private sector schemes must immediately amend all rules to remove differential treatment. However, schemes should be aware of the risk of complaints and may want to consider whether their rules can be objectively justified and keep them under review. In addition, where there is a discretion as to whether to pay a pension to unmarried partners, schemes could take this opportunity to check that the discretion is being properly exercised.

Next steps

Trustees and employers should review their rules to see if there are any differences in the treatment of unmarried partners in the provision of death benefits and, if so, consider seeking further advice, particularly if their rules contain a requirement for a nomination form.

If you would like further information about this judgment and its implications for your scheme, please get in touch with your usual DLA Piper pensions contact.