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A gender for change

For some time, I have been interested in the role that sex has to play in the field of pension planning. So I would like to look at a very recent judgment in respect of a transsexual. The judgment has the potential to cause much wider repercussions to occupational pension schemes, in particular.

Arguments have continued for many years as to whether occupational pension schemes which pay benefits to a surviving spouse should also be prepared to pay benefits to a surviving common-law partner.

The latest survey by the National Association of Pension Funds notes that most occupational schemes in the private sector will consider paying a pension in such circumstances, although usually leaving the decision to the discretion of the trustees, who typically take into account such factors as financial dependency or interdependency, the period of cohabitation and whether the couple have dependent children.

By comparison, most schemes in the public sector will not consider paying a survivor&#39s pension to a common-law partner in any circumstances.

There has not been much change to the practice of pension schemes as regards common-law partners, this issue having been well and truly overtaken by claims for parity by homosexual partners, starting with the case of Lisa Grant

South West Trains, which was referred to the European Court of Justice. Discrimination against homosexual employees was deemed to be legal. Sex discrimination is illegal but discrimination against Grant was on the grounds of her sexuality, not her sex.

Although Grant lost her case for parity with heterosexuals, the time is very close when such discrimination will be outlawed and pension schemes will be forced to grant a survivor&#39s pension to same-sex partners of deceased employees. This will come about in December 2003 – brought about partly by continued lobbying following the Grant case – from which date EU legislation has ruled it will be illegal for pension schemes to discriminate on the grounds of a member&#39s sexuality.

In the meantime, the difficulty schemes face with claims from homosexual partners – and common-law partners to a lesser extent – is determining what period of cohabitation or other factors should result in a pension being awarded. This is in an attempt to defeat spurious claims from a so-called partner who might have only met the deceased a few nights earlier.

Only around half of private-sector pension schemes will presently consider paying benefits to a same-sex partner, with only around 25 per cent of public-sector schemes adopting a similar liberal approach.

Do not believe these issues affect only a small number of people. Varying figures indicate that up to 10 per cent of the population are homosexual. There is little dispute about the sizeable and increasing proportion of cohabiting heterosexuals. Financial planning for these two groups of people should be big business – starting with their eligibility or otherwise to survivor&#39s benefits from occupational pension schemes.

So, with no movement on common-law partners but imminent developments for same-sex partners, we pension folk thought these matters were more or less concluded for the time being. But, of course, the ability of life to dream up new challenges for the pension profession knows no bounds.

We now have the case of Christine Goodwin •UK, which recently passed through the European Court of Human Rights. What was Goodwin&#39s grouse? Well, Goodwin was a male at birth but later chose to have a sex-change operation. Now living life as a female, the law nonetheless still considers her to be a him.

Among issues claimed by Goodwin to represent discrimination, she alleged that her pension rights had been adversely affected, not least as regards entitlement to state pension benefits which, as a male, she could only receive from 65 but as a female she could claim from 60. She had already passed that age, so was claiming immediate payment backdated to the date of her operation.

Although the European judgment was that transsexuals must be allowed to marry in their new gender, it denied Goodwin a state pension from the age of 60.

Yet, as a female (if UK law now acknowledges Goodwin as being a female), she will be allowed to marry a male, giving her absolute entitlement to surviving spouse&#39s benefits from occupational and state pension schemes.

Note the link from common-law partners to same sex-partners and on to Goodwin. She cannot get married as she is still deemed in UK law to be a male. Well, she could get married to a woman, of course. But if she now co-habits with a man, would this relationship be considered by pension schemes to be a common-law relationship (which it would appear to be for practical purposes but not in the eyes of the law) or a same-sex relationship (which legally it would be)?

How will pension schemes treat this relationship, given the discretion they usually permit to trustees for the payment of survivor&#39s pensions?

OK, so there are not that many transsexuals in this country, so these thoughts have direct relevance to only a relatively small proportion of the population.

It is the issues raised by this case which are of more general interest, juxtaposing the rights of legally married couples against common-law couples and same-sex couples and highlighting the way in which views and lifestyles within our society are continuing to change.

This is perhaps nowhere better exemplified than in the court&#39s judgment in the Goodwin case, which noted the improvements in medical science and more liberal social views.

The extent to which the sex discrimination issue continues to increase in prominence and importance for pension schemes, members and their financial advisers has again, very recently, extended even further as a result of more developments from the European Union, as I will discuss in my next article.


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