Whenever pension lawyers get together these days, conver-sation invariably turns to the subjects of sex and sexuality – usually outside of marriage.
What has brought about this resurgent interest among some of the country's finest and most knowledgeable (not to mention old and boring) pension folk?
Regrettably, I have to report, nothing to do with the physical side of these issues but, rather, everything to do with a whole raft of legal cases in which individuals of various sexual persuasions are attempting to assert their right to benefits from the pension schemes of their sexual partners.
I want to visit, or revisit, some of the more interesting and relevant cases for pension advisers.
Starting at the beginning, we have the issue of part-timers. It is long established that very few employers' pension schemes are allowed to exclude part-timers from membership simply because they are part-timers. This is nothing really to do with any rights conferred on part-timers and everything to do with the now concluded argument that, where there are more females than males among the part-time workforce in a particular company, then to discriminate against part-timers is tantamount to discrimination against women.
Such discrimination contravenes a number of laws, not least the European Human Rights Act. It is now accepted that the same principle applies where more of the part-time workforce is male. What is good for the goose is good for the gander, as it were.
Much more recent is the battle for these people not only to be allowed membership of the pension scheme (almost 100 per cent of such schemes have conceded this issue, according to the last two years' surveys from the National Association of Pension Funds) but also to have this membership backdated. Such a claim stems from the assertion that part-timers' membership of pension schemes has only recently been granted following confirmation that exclusion is illegal and, moreover, has been illegal for many years.
This is not an issue which is likely to affect a large part of an IFA's client bank directly as these part-timers generally populate the lower-paid end of the market and will not, therefore, seek or benefit from the advice of most IFAs. However, I would suggest that this is an issue which should be of interest to IFAs seeking to help close friends or relatives of their more valued clients.
Moreover, for those IFAs who provide advice to employers, the potential liability of their schemes to backdated claims – and the potential, or otherwise, to defend those claims – must be closely and urgently considered.
Regular readers of my articles will be aware that this backdating battle was largely won following the case of Mrs Preston
Wolverhampton Health Care Trust, which established that backdated rights for part-timers could be claimed as far back as April 1976 – the date of a European judgment in the name of Defrenne.
That happened a little over a year ago, when the House of Lords ruled on a number of outstanding issues following the pronouncements of the European Court.
However, a number of issues have been left largely unresolved – until now, that is.
Although the trade unions won the war in the Preston case by establishing backdating rights to 1976, they lost a number of important battles.
First, the House of Lords' judgment confirmed that backdating claims from part-timers must be brought within six months of the date of their leaving the employer's service, meaning that the Preston victory could only be applied to current part-timers and those who had only very recently left service. It had been previously hoped by the Preston supporters (not to be confused with the dying breed of Preston football supporters, of course) that anyone who had worked part-time since 1976 would be able to claim, including, perhaps, families of deceased part-timers (dependants' pensions, death-in-service lump sums and all that).
Second, where a pension scheme requires contributions from employee members, then backdating claims from part-timers will usually and legitimately be met with a request from the scheme for backdating of contributions, possibly with some addition for backdated interest.
However, a number of issues remained unresolved even after the Lords' judgment. For example, could discrimination against part-timers ever be justified and defended? Might a trade-off be agreed between contributory schemes and part-timers to allow a lower level of claim against the scheme by waiving rights to backdated contributions? Must a scheme proactively seek out these part-timers to advise them of their rights or could the scheme wait for the claims to come in?
Can a male part-timer in a largely female part-time workforce also claim discrimination? Does liability for a claim transfer to a new employer where, for example, one company is taken over by another or where one department of a local authority's functions are transferred to a private enterprise?
Well, these and many other questions have been argued over in the course of a number of claims brought through the employment tribunals and clarification is soon to be provided from that source, even though, up to the present time, no hearings have yet taken place and so the only settlements which have been reached are those where the employer's scheme has volunteered a settlement without recourse to the tribunal.
As regards the question of pension schemes being proactive, it is now clear that the vast majority are sitting back and waiting for claims to arrive and, even then, not processing the claims until other issues are clarified.
This reactive stance has not been universal, however, with Barclays Bank agreeing to settle claims “immediately” (though not contacting potential claimants proactively) while HSBC Bank has issued a questionnaire to part-timers and is even contacting part-timers who have left service.
So, what is now about to happen? Last week, a number of test cases were agreed upon which cover all the most important questions remaining unanswered (and there are many). These are now to be referred to John Macmillan, who is responsible for hearing these claims and will subsequently issue guidance which is intended for general application among all schemes and not just, of course, these test cases. These hearings are expected to be completed by late summer, with some kind of direction or judicial determination on the relevant issues shortly afterwards.
All this is excellent news for advisers to part-time claimants and their trade unions, as this development should clear up the vast majority of objections and delaying tactics from pension schemes.
However, this is probably less good news for those pension schemes, as the rulings are likely to once again bring the issue of part-timers' claims to the fore in the popular press and could lead to a further waive of often very expensive and certainly time-consuming claims.
In my next article, I will stay with recent legal developments but move away from sex discrimination between males and females and look at developments relating to same-sex partners, common-law partners, and perhaps even touching on transsexuals.
Keith Popplewell is managing director of Professional Briefing