Corporate

At the recent Conservative Party Conference, Theresa May announced that civil partnerships in England and Wales are to be extended beyond same-sex partnerships. In future, this means that every couple in England and Wales will be able to choose between marriage and civil partnership if they want to formalise their relationship.

Civil partnerships were introduced for same-sex couples by the Civil Partnership Act 2004. In 2013, the Marriage (Same Sex Couples) Act 2013 legalised same-sex marriage in England and Wales; and the Marriage and Civil Partnership (Scotland) Act 2014 legalised same-sex marriage in Scotland. However, the law does not currently permit civil partnerships between mixed-sex couples anywhere in the UK.

The proposal to extend civil partnerships to mixed-sex couples comes after a Supreme Court case in June 2018, which ruled in favour of Rebecca Steinfeld and her partner Charles Keidan, who campaigned to be allowed to have a civil partnership. Following the case, the Court said that the Civil Partnership Act 2004 was incompatible with the European Convention on Human Rights.

In her announcement, the Prime Minister said “As home secretary, I was proud to sponsor the legislation that created equal marriage. Now, by extending civil partnerships, we are making sure that all couples, be they same sex or opposite sex, are given the same choices in life.” The government has indicated that there are still a number of legal issues to consider, including in relation to pensions and family law and ministers will now consult on the technical detail. In response to the Supreme Court ruling, the Scottish Government has also launched a consultation on the possibility of extending civil partnerships to mixed-sex couples in Scotland.

What does this have to do with pensions?

At present a mixed-sex couple who don’t wish – for whatever reason- to marry, have no other option to formalise their relationship. However, contrary to popular belief, cohabiting couples do not have the same rights and protections as spouses or civil partners on separation or death of their partner. A cohabiting partner could therefore find themselves facing severe financial hardship when they find that they are not entitled to the same pension death benefits or inheritance tax treatment as a spouse or civil partner. The extension of civil partnerships is expected to increase the number of cohabiting couples formalising their relationships as civil partnerships, creating legal obligations and conferring various benefits to those couples.

The key pension benefit advantage of extending civil partnership rights to mixed-sex couples relates to survivors’ benefits i.e. benefits paid by occupational pension schemes to survivors of the scheme member. The detailed arrangements relating to survivors’ benefits vary by scheme and by category of survivor but will now need to be extended to mixed-sex couples in civil partnerships.

For members of pension schemes, the extension of these benefits will likely bring greater financial security for those seeking civil partnerships. For pension schemes, the change will ultimately mean that more benefits will need to be paid out to spouses and civil partners in the future. Trustees of pension schemes may therefore need to change their assumptions about the proportion of members who will receive a spouse’s pension and carefully consider the associated funding implications for their schemes. Until the outcome of the consultations is known it will be difficult to fully assess the potential impact but Trustees and their advisors should continue to monitor the position carefully.

The future

The Civil Partnerships, Marriages and Deaths Bill, currently at report stage, will be debated in the House of Commons on 26 October 2018. The Scottish government consultation closes on 21 December 2018 and the government has pledged to take a decision to ensure future compatibility with the European Convention on Human Rights. Look out for our further updates on this topic as matters progress.

If you would like to discuss anything raised in this blog, please get in touch with your usual contact at Brodies

Jennifer Crawford

Jennifer Crawford

Senior Solicitor at Brodies LLP
Jennifer has specialised in pensions law since 2011 and works as an assistant solicitor within our specialist pensions team.
Jennifer Crawford