Spousal pensions: SC overturns inequality for same sex couple

Tamar Burton considers, in this blog, the judgment in the Supreme Court case of Walker v Innospec Limited and others [2017] UKSC 47 which was handed down on 12 July 2017.  The case concerns equal access to a spousal pension for a gay man. The issue for the Court was whether paragraph 18 of Schedule 9 of the Equality Act 2010 is incompatible with the Framework Directive

The facts

John Walker worked for Innospec Ltd (“Innospec”) from 1980 until his retirement in 2003. Throughout that time he made regular contributions to the firm’s occupational pension scheme. Mr Walker is gay and has lived with his male partner since 1993. They entered into a civil partnership on 23 January 2006 and married once this was permitted under UK law.

In 2006, Mr Walker asked Innospec to confirm that, in the event of his death, they would pay the spouse’s pension, which the scheme provides for, to his civil partner. Innospec refused because his service predated 5 December 2005, the date that civil partnerships were introduced in the UK, and any discriminatory treatment is therefore permitted under paragraph 18 of Schedule 9 to the Equality Act 2010.

This statutory provision provides that it is lawful to discriminate against an employee who is in a civil partnership or same-sex marriage by preventing or restricting them from having access to a benefit, facility or service the right to which accrued before 5 December 2005 or which is payable in respect of periods of service before that date.

It was not in dispute that if Mr Walker was married to a woman she would be entitled on his death to a “spouse’s pension”. This amounts to about £45,700 each year. In contrast, Mr Walker’s husband would only be entitled to around £1,000 each year.

The Decision

The Supreme Court has unanimously held that paragraph 18 of Schedule 9 to the Equality Act 2010 is incompatible with EU law and should therefore be disapplied. This means that Mr Walker’s husband is entitled to a spousal pension upon Mr Walker’s death.

The reason for this conclusion was that the EU principle, known as the future effects principle, applies to Mr Walker’s circumstances. This principle is that “new rules apply, unless otherwise specifically provided, immediately to the future effects of a situation which arose under the old rule” as set out in the joined cases of Istituto Nazionale della Previdenza Sociale v Bruno & Pettini C-395/08 and C-396/08 [2010] ECR I-5199. In other words, the right to a spousal pension is to be determined at the date of retirement, when the Framework Directive is in force, and does not crystallise at an earlier date.

The Supreme Court rejected the Court of Appeal’s reasoning and stated that it had been wrongly influenced by a line of authority (known as “the Barber Limitation”), which related to an exceptional and distinct point about the temporal application of a judgment concerning equal pay. The Supreme Court indicated that the Barber Limitation should be confined to its particular factual context.

Relying on Case C-267/06 Maruko v Versorgungsanstalt der Deutschen Bühnen and Case C-147/08 Römer v Freie und Hansestadt Hamburg, the majority concluded that unless there was evidence which establishes that there would be unacceptable economic or social consequences of giving effect to Mr Walker’s entitlement to a survivor’s pension for his husband, at the time that this pension would fall due, there is no reason that he should be subjected to unequal treatment as to the payment of that pension.

Analysis

The judgment is a welcome step. It ensures that same sex couples are on an equal footing with heterosexual couples in enforcing pension rights.

Lord Kerr’s judgment will be a useful tool for those seeking to persuade a bench that a piece of legislation is incompatible with EU-derived rights and should be disapplied by English and Welsh courts.

The judgment also provides clarity on the proper application of the future effects principle in the context of occupational pensions. 

The case was heard alongside the case of O’Brien v Ministry of Justice. Please see here for the analysis of that case.

Tamar Burton

12 July 2017