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Supreme Court awards dependant's pension (1)

17/02/2017

Locations

United Kingdom

There has been much press coverage of the Supreme Court's decision to award a pension to the long-term partner of a member of Northern Ireland's Local Government Pension Scheme.  Andrew Patten looks at the implications of the judgment for other pension schemes.

What the case was about

Under Northern Ireland's Local Government Pension Scheme (LGPS), Mrs Brewster was entitled to a pension on the death of her partner, Mr McMullan, if she could establish they had been living together as if married and were financially interdependent for at least two years.  This she did.  However, a further condition was that Mr McMullan had provided a declaration, signed by both of them, that they met these requirements.  Unfortunately, he had failed to do this and the LGPS refused to pay Mrs Brewster a pension.

Mrs Brewster challenged the decision that she should be denied a pension simply because her partner had failed to fill in a form.

The court's decision

Mrs Brewster challenged the decision through a judicial review.  She argued the decision infringed her rights under the European Convention on Human Rights (ECHR).  One of these is a right not to be deprived of possessions, a right which has to be applied without discrimination, unless the discrimination can be objectively justified – that is, the discrimination has a legitimate aim and is a proportionate way of achieving that aim.  The parties accepted that the right to a survivor's pension under the LGPS was covered by the ECHR and the court was asked to decide the narrow issue of whether the discriminatory requirement for cohabitees (but not married members) to provide a declaration was objectively justified.

The court decided that the objective of the LGPS providing co-habitees with a pension is to avoid unjustified discrimination between cohabiting members in long-term relationships and members who are married or in a civil partnership.  The court decided there was no legitimate reason to require a declaration from cohabitees (but not married members) as this added nothing to the requirement to provide proof of long-standing cohabitation and financial interdependence.  It rejected the position of the Court of Appeal that a declaration acted as a crucial public statement about the nature of the member's relationship, similar to a marriage/civil partnership certificate.

Implications for pension schemes

Mainstream media headlines have given the impression that the decision paves the way for cohabitees to be entitled to pensions in the same way as people who are married or in a civil partnership.  This is overstating the effect of the case.

The main effect of the decision is to require public sector pension schemes to review their procedures applying married and unmarried members and harmonise procedures where there is no legitimate and reasonable reason for differences.  Schemes may need to review previous decisions not to award survivors' pensions on procedural grounds.  The decision does not go so far as to require unmarried couples to be treated in the same way as married couples.  For example, requirements for unmarried couples to have been living together for a certain period of time in an exclusive relationship which do not apply to married couples will continue to be acceptable.

Importantly, the ECHR applies only to the interpretation of UK legislation and the acts of public bodies.  This covers schemes such as the LGPS but not private sector schemes.  While many private sector schemes provide dependants' pensions (either as of right or at the trustees' discretion), the court's decision does not require schemes do so.  That said, employers whose schemes provide survivors' pensions only for members who are married or in a civil partnership may find themselves subject to increasing pressure to change benefits to reflect the position of many of their employees.

The decision provides a useful reminder for schemes to check if they operate procedural requirements which serve no real purpose and which could be usefully removed.  It also highlights the complications which can result from members not keeping things such as expression of wish forms up to date and the need for schemes to remind members of the importance of doing so.  The press coverage for the Brewster case may be a useful reference point in reminding members to do this.

Watch this space

Next month sees the Supreme Court consider the case of Walker v Innospec relating to whether a civil partner should be entitled to a pension based on a member's full benefits and not just those built up after December 2005.  This will have wider implications for private sector schemes and we will be sending you an update when that decision is out.

Brewster, Re Application for Judicial Review (Northern Ireland) [2017] UKSC 8 (8 February 2017)