Sexual Orientation And Pensions

With effect from 1 December 2003 the Government has introduced new anti-discrimination legislation which prohibits discrimination on grounds of sexual orientation and religious beliefs.

The law has also been specifically amended to apply to trustees of occupational pension plans.

What is the New Law?

The Employment Equality (Sexual Orientation) Regulations 2003 (as specifically amended for pension schemes) provide that it is unlawful to discriminate against employees directly or indirectly on the grounds of their sexual orientation in their terms of employment (which includes pensions).

There will be an overriding provision in pension plan rules to this effect. Consequently, with effect from 1 December 2003, trustees must not operate their plan in a way that discriminates against members on grounds of sexual orientation.

What are the Potential Consequences of the New Regulations for Pension Schemes?

There are broadly two main areas where the new regulations may apply:-

Where a plan currently pays benefits to opposite sex unmarried partners, but not same sex unmarried partners, this is likely to be direct discrimination. Direct discrimination cannot be justified.

Many schemes provide a spouse's pension on a member's death which is only payable to a legal spouse. The regulations currently allow benefits to be restricted by reference to marital status. However, many trade unions are arguing that the Government has, in providing this exemption, failed to interpret correctly the underlying European Directive and/or the exemption is a breach of the Human Rights Act 1998.

What About the Inland Revenue Rules ?

It is important to note that...