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Keith Popplewell – A gender for change

In my past couple of articles, I have started to discuss the state of play in a number of important areas of pensions in which very recent or imminent developments are destined to have a significant effect on a large number of people.

So far, I have concentrated on age discrimination and, at the end of my last article, I started to talk about the current situation regarding discrimination on the grounds of sex, sexuality and gender recognition.

I will start by summarising important developments as regards discrimination against homosexuals by pension schemes.

Historically, it has been commonplace among final-salary schemes to grant a pension to the spouse of a deceased member. Within most schemes, however, the same benefit has not been provided to a homosexual partner of a deceased member, thereby implying discrimination against homosexuals.

Until recently, there has been no legislation, either in this country or Europe, to prevent such discrimination and a leading case I briefly mentioned in my last article – Lisa GrantSouth West Trains – established some years ago that pension schemes were quite within their rights to deny a surviving dependant’s pension to a same-sex partner.

However, after much pressure, legislation has now been passed which seems certain to change this situation, with implications for homosexuals, employers and advisers. The Civil Partnership Act seems certain to grant the same or similar rights to same-sex partners as to married heterosexual couples where the homosexual couple registers the relationship. In these cases, the couple would then benefit from the same legal treatment as a married couple in such issues as inheritance tax and the ownership – either formally or beneficially – of property and other assets.

Thus, a registered homosexual couple will have very similar remedies, in the event of their separation, as divorcing married couples, for example, claims against assets owned in joint or single names and even, perhaps, a claim to maintenance by the lower-earning partner.

More important in the context of this series of articles, these registered relationships would almost certainly entitle a surviving partner to pension rights from any scheme which grants a surviving spouse’s pension to a married couple.

Note, by the way, the terminology which will not recognise homosexual couples as being married, only that they have been registered.

Over the years, I recollect noticing various statistics which purport to closely estimate or accurately state the number of homosexuals in this country. Anyway, if the numbers of homosexuals are anywhere near these figures, the additional cost to pension schemes is likely to be immense if, as might be expected, a significant number of couples register their relationship under the Civil Partnership Act.

Until now, almost all of the schemes which have been prepared to consider paying a survivor’s pension to a homosexual partner have done so only at the discretion, on a case-by-case basis, of the scheme trustees, who apply similar principles to the payment of such pensions to heterosexual common-law partners of deceased scheme members. I confidently predict that these discretions will increasingly be removed from trustees.

After all, what will now be easier than for schemes to simply stipulate that a survivor’s pension will only be payable (apart from where dependent children are claimants) to a legally married spouse or a surviving partner in a registered homosexual relationship? Partners who do not qualify under these definitions can, it could be reasonably argued, either get married (if heterosexual) or register their relationship (if homosexual) or forgo any possible claim against the scheme.

In passing, note that the Civil Partnership Act does not permit heterosexual couples to register their relationship as, logic dictates, if they want legal recognition of their relationship, they can quite simply get married.

In summary, on this issue, could I strongly suggest that financial advisers ensure they urgently contact their homosexual clients to discuss the implications of this act, not only in relation to pension rights but also tax, asset ownership (including investments) and inheritance planning.

So, with the issue of sexuality discrimination well under our belts, I will move on to developments regarding transsexuals. Believe it or not, even this issue has recently had an impact on pension benefits.

About a year ago, the European Court of Justice provided a ruling, in the case of KBNHS Pension Agency, which affects pension benefits for transsexuals.

In short, this case involved a retired female nurse (KB) who had been in a long-term relationship with a transsexual who had been born a female but had an operation to change her into a male. The correct term for this operation (or, indeed, an operation to change a male into a female) is gender reassignment.

Although now, to all obvious intents and purposes, KB’s partner is a bloke, the couple have been prevented from marrying under UK law. Thus, the couple have been treated in law as a female homosexual couple. This, among other issues unrelated to these articles, prevented KB’s partner from being able to claim surviving spouse’s pension benefits under the NHS scheme, which only recognises legally married couples in this respect.

This case was initially referred to the Employment Appeal Tribunal, which determined – in a similar fashion to the initial judgment in the Grant case – that no discrimination under sex discrimination legislation had been committed as that area of legislation prevents discrimination between males and females and, as gender reassignment can be undertaken either way, there is no discrimination between males and females.

Thus, as with Grant, the scheme could be said to have been discriminating against homosexuals generally (male homosexuals as well as female homosexuals). So, as with the KB case, the scheme was arguably discriminating against transsexuals generally, whether born a male or a female.

However, the KB judgment relied heavily on the earlier judgment in the Goodwin case, which ruled that a transsexual should be permitted to marry a person of the opposite sex to that which they have been reassigned. In other words, an individual who was born a male but has subsequently been reassigned as a female can now marry a male.

Thus, we have the situation that a European judgment (in the Goodwin case) permits UK transsexuals to marry someone of the opposite gender but pension schemes can still, it seems (after the KB judgment) discriminate against transsexuals, as the ECJ judgment in the KB case ruled that the UK’s failure to allow KB to marry her partner and thereby allow him inherit a widower’s pension was, in principle, a breach of EU law. This leaves the pension issue open to appeal, which is exactly the situation as we speak.

In summary, after the Goodwin and the KB case, pension schemes are no wiser over the possible requirement to grant surviving spouse’s pension benefits to a transsexual partner. We await the decision of the Court of Appeal.

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