Call for Equality – Survivor Benefits in Occupational Pension Schemes

The controversial subject of same-sex marriage and pensions briefly resurfaced in recent weeks.

The Government published the findings of their review into survivor benefits in occupation pension schemes on 26 June 2014 as promised following the introduction of same-sex marriage last year. The problem is that even though same-sex marriage provides equality - survivor benefits from occupational pension schemes are a little more complicated.

One major issue is contracted out rights. These have had different rules since their introduction in 1978 such that survivor benefits were not equalised until 1988. This means that a man surviving his wife (who had been a member of a contracted out scheme between 1978 and 1988) would not receive a pension for this period of service. However, a woman surviving her husband would receive a pension. So with the introduction of same-sex marriage and the following calls to make it the same as for opposite sex couples, there are inherent differences in the system which would need to be corrected.

The review to examine these differences estimates that the cost of removing the inequalities (between same-sex and opposite sex marriages and between genders) could be £3bn. The lion’s share will fall on the public-sector as they have by far the most members and complexity. The Government is now considering these costs and the potential impact on pension schemes, before making a decision on whether the law should be changed.

I believe that ignoring these inequalities is not an option. The Government itself says that it believes that there should not be inequalities between same-sex and opposite sex couples in the pensions system and cost and complexity cannot be a valid reason for not amending the rules.

The Government should now, during this fallow period while we await the next election, take steps to draft and present the required legislation for consultation on its implementation. By continuing to do nothing, more individuals will be affected by the payment of unequal and unfair benefits following the death of a loved one.

David Brooks

Pensions Consultant

Telephone: +44 (0)20 7893 3456

Email:  contactus [@] broadstoneltd.co.uk