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A gender for change

What financial planning issues need to be considered by any individual acquiring a new gender?

For the most part, the implications of a successful application under the Gender Recognition Act will be positive for a transsexual person as this gives them a legal basis to demonstrate their acquired gender.

Applications for a gender recognition certificate are made to the gender recognition panel and, if successful, that person will then be considered in the eyes of the law to be of their new sex. For persons whose birth was registered in the UK, the registrar general can then offer an updated birth certificate.

For most individuals, there will be a need to assess the effects that these changes will have on their finances.

Existing life insurance will be unaffected but new applications will correctly be made in the sex as shown in the gender recognition certificate. This will be the underwriter’s starting point. From here, the approach is likely to differ among providers. However, when considering the medical information, it may be that the life expectancy of the individual’s original gender will be a factor. Hormone treatment and/or surgery undertaken as part of the gender change, and any resultant effects on life expectancy, will also be considered.

Financial advisers will be wise to ask the person if they are likely to receive any inheritances. Some wills, for example, will specify the gender of the beneficiary. If a person would have inherited something except for the fact that they have become legally recognised in an acquired gender, they should be advised to apply to the courts to have the will interpreted in light of the Gender Recognition Act.

The most complex area for consideration is pensions. As a first step, the individual needs to assess and make provision for the fact that the state pension may be payable either five years later than would have been the case (for a female to male gender change) or five years earlier (for male to female gender changes).

They should also remember that guaranteed minimum pensions contained in occupational pension schemes will be affected in a similar way.

The situation for transsexuals who gain a gender recognition certificate after age 60 is more complex. For a transsexual female, the certificate will take effect as soon as they are awarded it. However, it will not be backdated to their 60th birthday. For a transsexual male aged over 60 when the certificate is issued, their entitlement to the guaranteed minimum pension will cease. It will start again at age 65 and be revalued in the meantime.

The certificate does not affect the value of the guaranteed minimum pension itself, since this was based on pensionable service built up before April 1997.

For all other pension funds, it is the gender shown in the certificate which must be used when assessing annuity rates or Government Actuary’s Department rates for drawdown. However, the person should also remember that medical information can be taken into account when assessing annuity rates. Since impaired lives will result in greater annuity payments, this could be a benefit to the person concerned.

Same-sex marriages and opposite-sex civil partnerships are not recognised in the UK, so married people or civil partners may choose to dissolve their marriage or civil partnership. This will also have implications for pension planning.

Couples who have chosen to dissolve their marriage or civil partnership but who stay together should remember that death benefits from an occupational pension scheme may not now be payable. It would be wise to approach the trustees of the pension scheme to clarify the situation.

For other pension funds, where the death benefits are decided by expression of wish, the individual’s wishes should be unaffected.

For couples who are going their separate ways, an application may be made to the court for ancillary relief. A division of all of their assets must be decided on. For pensions, this may result in a pension-sharing order or a pension attachment order.

The pension-sharing order will offer a clean break. Here, the pension funds will be split and a proportion held in the individual names of the couple concerned. An attempt to provide for parity of income in retirement might be considered, rather than assessing the fund on its strict value. Once again, it will be the acquired gender of the transsexual person that will be applicable for calculations but impaired life annuity rates might be available to that person. This will mean that a greater share of the pension rights will need to be awarded to the other partner if parity is to be reached.

Julie Hedge is principal of Christie Scott’s

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