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Civil Partnerships and Marriage – Understanding Your Pension Rights

Civil Partnerships and Marriage – Understanding Your Pension Rights

Introduction

In October 2018 the government announced that civil partnership rights are to be extended to opposite-sex couples in England and Wales.

Whether you've already tied the knot, or are deciding on the best option for you, we look at just some of the considerations you need to be aware of.

In particular, we look at your rights in relation to any defined benefit pensions schemes you may be a member of (including the Teachers' Pension Scheme and the NHS Pension Scheme), as well the State Pension.

The information does not constitute financial advice. It is not intended to be a comprehensive guide to your pension rights, but provides examples to illustrate the complex and changing nature of pensions and related legislation.


What is civil partnership?

A civil partnership is a legally recognised union of same-sex couples in some countries.

In England and Wales, same-sex couples have been able to register a civil partnership since 21 December 2015. This afforded them similar rights to married opposite-couples. Since the introduction of civil partnerships, the rights of same-sex couples to enter into marriage have been extended under the Marriage (Same Sex Couples) Act 2013.

To enter into a civil partnership there is no legal requirement for a ceremony to take place. However, where there is a ceremony, it:


  • will be conducted by a registrar, rather than a religious leader
  • can't contain hymns or readings from the bible
  • doesn't include an exchange of vows
  • can be held in an 'approved premises' which may not be your chosen place of worship

Who can enter a civil partnership?

As the law stands, opposite-sex couples cannot register as civil partners. Although plans have been announced to change this, the government are currently considering the technical details and are yet to announce an implementation date.

The minimum age that anyone can enter a marriage or civil partnership in England and Wales, with parental consent, is currently 16. Without parental consent, the minimum age is 18.

The Marriage and Civil Partnership (Minimum Age) Bill 2017-19 is currently going through parliament and proposes an increase in the minimum age for both marriage and civil partnership, to 18.

What about living and working abroad?

Opposite-sex marriage is recognised as a legally binding agreement across the world. Some countries however, don't recognise civil partnerships or same-sex marriages. If you choose to live or work abroad you'll need to understand how your status is recognised in the country you're planning to move to.

This could affect your rights as a couple in a number of ways including in relation to your personal finances as well as recognition as the legal parents/guardians of any children you have together.

Defined Benefit Pensions - Survivor Benefits

The pension rights of those in same-sex civil partnerships/marriages has been the subject of much debate following the case of Walker v. Innospec Limited and others 2017.

Mr Walker worked for Innospec Limited for over 20 years and was a member of their defined benefit pension scheme. He had been living with his male partner since 1993, with whom he entered into a civil partnership in 2006, and then later married.

His defined benefit pension scheme only took into account his pensionable service from 5 December 2005 (the date on which the Civil Partnership Act 2004 came into force) in respect of the survivor pension benefits that would be paid to his partner.

This is in line with many defined benefit pension schemes which rely on an exception in the Equalities Act 2010:

 "A person does not contravene this Part of this Act, so far as relating to sexual orientation, by doing anything which prevents or restricts a person who is not married from having access to a benefit, facility or service-

(a) the right to which accrued before 5 December 2005 (the day on which section 1 of the Civil Partnership Act 2004 came into force), or (b) which is payable in respect of periods of service before that date."

Mr. Walker argued that his husband's survivor pension would be significantly smaller than if he were married to a woman.

The Supreme Court found in favour of Mr Walker. This means that defined benefit pension schemes may now need to provide survivor pensions to civil partners and same-sex spouses based on the member's full period of pensionable service.

Currently, there's no legal requirement for providers of defined benefit pension schemes that used to contract their members out of the State Second Pension (including the Teachers' Pension Scheme and the NHS Pension Scheme) to award survivor pensions to those in civil partnerships.

However, in March 2018 the government wrote to public service pension scheme representatives about the Supreme Court judgment. The necessary regulatory changes will be taken forward by departments responsible for each scheme.

The Teachers' Pension Scheme

The Teachers' Pension Scheme is working in conjunction with The Department of Education to ensure changes are implemented.

"Regulatory changes will be introduced to provide that:

  • survivors of same-sex marriages and civil partnerships are treated in the same way as widows of opposite sex marriages (survivor benefits in relation to service from 1 April 1972 or 6 April 1978 if the marriage was after the last day pensionable service); and
  • the change applies from the date civil partnerships and same-sex marriages were implemented

"The benefits that this will provide to same-sex survivors will be dependent upon when the deceased member was employed, their pensionable earnings and the length of their service." Teacher Pension Scheme, March 2018

Teachers' Pension Scheme - Current survivor benefits (with a Normal Pension Age of 60)

To illustrate how pension survivor rights differ based on relationship status and gender, let's look at an example where the Teachers' Pension Scheme member has a normal pension age of 60:

A woman who survives her husband is entitled to 50% of his pension for service from 1 April 1972. If the marriage took place after retirement or pensionable employment, she is entitled to 50% of her husband's pension based for service from 6 April 1978.

The pension will cease if she remarries or starts living with a new partner except where her husband has service on or after 1 January 2007. In this case, it's payable for life.

A man who survives his wife is entitled to 50% of her pension for service from 6 April 1988. The pension will cease if he remarries or starts living with a new partner except where his wife has service on or after 1 January 2007. In this case, it's payable for life.

The survivor of a civil partnership or same-sex marriage is entitled to 50% of the pension for service from 6 April 1988. The pension will cease if the survivor remarries, enters another civil partnership, or starts living with a new partner where service in the scheme started on or after 1 January 2007. In this case, it's payable for life.

The NHS Pension Scheme

The NHS Pension Scheme Advisory Board has also acknowledged the changes needed as a result of the Supreme Court ruling in 2017:

"The board has followed the progress of a number of ongoing legal cases of relevance to public service pension schemes.

"Walker v Innospec Ltd - the Supreme Court ruled that it is unlawful to calculate a survivor's pension payable to a surviving civil partner or same sex spouse based on restricted pensionable service since 5 December 2005. The judgement was applied retrospectively, meaning that survivor's pensions paid to a civil partner or same sex spouse must be based on all the member's pensionable service." NHS Pension Scheme Advisory Board, Annual Report 2017/18, May 2018

The NHS Pension Scheme (1995 Section) - Current survivor benefits

To illustrate how pension survivor rights differ based on relationship status and gender in the NHS Pension Scheme, let's look at an example where the member is part of the 1995 section:

A woman who survives her husband is entitled to 50% of his pension for service from 25 March 1972. She will be entitled to a third of the pension for service before this date.

A man who survives his wife, a surviving civil partner or the survivor of a same-sex marriage is entitled to 50% of the pension based for service from 6 April 1988.

In all cases, the pension will cease if the survivor remarries or starts living with a new partner and the last day of service in the Scheme was before 1 April 2008. Otherwise, it's payable for life.

The basic State Pension - National Insurance Contribution top-ups

Men born before 6 April 1951, and women born before 6 April 1953 are entitled to the full basic State Pension if they have 30 'qualifying years' of National Insurance Contributions.

Those with fewer than 30 qualifying years won't automatically get the full basic State Pension but may be able to top-up:


  • by paying voluntary National Insurance Contributions
  • through a spouse or civil partners National Insurance Contributions.


However, if your spouse or civil partner was born after 6 April 1950 you can only top up using their National Insurance Contributions if you are:

  • a woman who is married to a man
  • a woman who is married to a woman who has legally changed gender from male to female during your marriage.


The State pension - survivor benefits

The survivor of a same-sex marriage or civil partnership is treated the same as a man whose wife has died, regardless of their gender, in respect of State Pension survivor benefits.

A surviving spouse or civil partner over the state pension age, with a late spouse that dies whilst under the state pension age, can only inherit earnings related state pension if they reach the state pension age after 5 April 2010.

Understanding your personal circumstances

The rules related to pensions can be complex and time consuming to understand. It's essential to understand how your personal circumstances might influence the benefits you're entitled to.

If you'd like to discuss any aspect of your personal finances with a Wesleyan Financial Services Consultant, please contact us at: financialreview@wesleyan.co.uk

For more information on retirement income planning, visit: https://www.wesleyan.co.uk/retirement

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