Same-Sex Marriage: Get Your Scheme Ready For The Big Day

Summary and implications

The first same-sex marriages can take place in England and Wales on 29 March 2014. The legislation gives surviving same-sex spouses similar occupational pension rights to civil partners.

Schemes, including those closed to future accrual, need to decide what benefits they will provide to surviving partners (statutory minimum or more generous) and consider what amendments are required to achieve this. This largely affects defined benefit schemes but other schemes may also need to consider making changes, particularly to any insured death-in-service benefits and pension sharing on divorce provisions.

If no action is taken then a surviving same-sex spouse will be entitled to the same benefit as a surviving opposite-sex spouse, but (for non-contracted out rights) only in relation to pensionable service since 5 December 2005. Amendments will be needed to contracted out schemes to reflect the right of a surviving same-sex spouse to a GMP on the same basis as a widower. Lump sum death-in-service benefits calculated as a multiple of salary will be payable in full on the same basis as for a surviving opposite-sex spouse. We would recommend that schemes adopt the same benefits for surviving same-sex spouses as they have for civil partners. This will avoid complications should a member who is already in a civil partnership subsequently choose to marry.

Same-sex marriage: impact on occupational pension schemes

The starting point is that a marriage of a same-sex couple will have the same legal effect as a marriage of an opposite-sex couple. This means that any references in law to marriage, or connected terms such as "spouse", will apply equally to a same-sex married couple as to one of the opposite sex, unless the legislation provides otherwise.

Crucial for pension schemes is a provision which states that the new law does not alter the effect of any private legal instrument made before it comes into force. This includes pension scheme trust deeds and rules. This means that a same-sex spouse will not automatically be a "spouse" for the purposes of the scheme and, if nothing is done after 29 March, will only be entitled to the minimum benefits required by equality law (these are covered in more detail below). Care should be taken in any future scheme amendments affecting spouse benefits as they may have unintended consequences for same-sex spouses.

Providing the statutory minimum: still good practice to amend

Benefits payable to a...