Issued: 25 November 2004
By the end of 2005, gay and lesbian couples will be able to enter into legally recognised civil partnerships.
The Civil Partnerships Act, which received Royal Assent on 19 November 2004, allows same sex couples to register as civil partners provided:
- they are not already married or in an existing civil partnership,
- are not within prohibited degrees of relationship, and
- have reached age 18 (16 in Scotland) or age 16 and have the consent of a parent or guardian (England, Wales and Northern Ireland).
Opponents of the Bill argued that it would undermine marriage. However, civil partnership registration will not be available to heterosexual couples, so it is difficult to see how this can be the case. Alan Duncan, Conservative MP for Rutland and Melton explained "We are not exactly fishing in the same pool….the Bill establishes a clear distinction between secular civil partnership and the existing institution of marriage."
The Act has not has an easy passage through Parliament. The House of Lords passed 'wrecking' amendments that would have allowed two family members over 30 years of age, who had shared a home for 12 years, to register as civil partners to avoid inheritance tax when one of them died. The House of Commons rejected these in October. Similar amendments were reintroduced and rejected in the Commons on 9 November and in the Lords on 17 November.
The Civil Partnerships Act will apply to the whole of the UK. There were, however, strong representations that it should not be considered for Northern Ireland until the Assembly is reinstated. Stonewall, which campaigns for equality and justice for lesbians, gay men and bisexuals, points out, "On no previous occasion has it been suggested that legislation be delayed until the Assembly is restored. This suggests that those proposing this are less concerned with devolution and more about denying rights to lesbian and gay couples."
A total of 13 Western European countries already allow or are planning to introduce registration for same-sex partners; Canada, New Zealand and parts of the USA and Australia are also considering reforms. Against this background Angela Eagle, Labour MP for Wallasey, considers the Civil Partnership Act to be "In the mainstream of legal reform throughout advanced societies."
The effect of the Act is to confer on registered civil partners most of the rights available to married couples. These include:
- Tenancy – when one partner dies, tenancy rights will transfer to the surviving partner.
- Next of kin. Civil partners will gain the right to be recognised as each other’s next-of-kin. They will be entitled to visit their partners in hospital and to participate in decisions about their treatment. They will be entitled to register their partners' deaths and to claim Fatal Accidents and Criminal Injuries compensation as a dependant.
- Inheritance – when a civil partner dies intestate, the surviving partner may inherit the estate under the intestacy laws. If a surviving partner is inadequately provided for in their deceased partner's will, he or she may apply for reasonable financial provision from the estate.
- State contributory benefits – civil partners will be recognised as dependants. They will eventually be able to qualify for basic state pension on their partner's National Insurance records, and for a survivor's pension based on their deceased partner’s basic, SERPS and S2P pensions.
- Some rights to survivors' benefits from occupational pension schemes.
- Cover from the Pension Protection Fund. Registered civil partners will automatically qualify for survivors' benefits if their pension scheme claims on the PPF.
- Insurable interest. Registered civil partners will have unlimited insurable interest in each other.
The Government is committed to tax parity between married couples and civil partners. The married couples allowances and the inheritance and capital gains tax exemptions available to spouses will be extended to civil partners in the next available Finance Bill following the Civil Partnerships Bill receiving Royal Assent.
While the Bill confers many rights, it also brings responsibilities. If a partnership is dissolved, the Bill provides for assets to be split equitably between the parties, for maintenance of the former partner and children, for residence and contact orders for children, and for pension sharing.
The Act also removes some advantages currently available to same-sex couples that are not available to married couples or to heterosexual cohabiting couples. Same-sex couples claiming means-tested benefits and tax credits – for example, income support, pension credit, child and working tax credits – currently claim as individuals. The Act requires them to be assessed as couples (whether registered as civil partners or not), which will result in a reduction in benefits and tax credits in most cases.
Pension scheme issues
The Act's occupational pension provisions are, in some respects, long overdue and, in other respects, disappointing. In the first draft, survivors' pensions from public sector pension schemes were to accrue from the date the legislation becomes effective. The Fifteenth Report of the Joint Committee on Human Rights noted that this would "Give rise to an inequality of treatment between same-sex couples and married heterosexual couples in relation to survivors’ pension benefits under occupational pension schemes. Such less favourable treatment calls for justification."
The Government subsequently had a change of heart. At the Second Reading in the House of Commons on 12 October, Anne McGuire, Parliamentary Under-Secretary of State for Scotland announced "For survivor pensions in public service schemes, registered couples will be treated in the same way as married couples. ... regulations … will allow registered same-sex partners to accrue survivor pensions in public service schemes from 1988."
However, in private sector contracted-out schemes, it appears that the benefit available to a surviving partner may be rather less generous. Prior to the Third Reading in the Commons, Jacqui Smith, Minister for Industry and the Regions, announced "All members of contracted-out pension schemes will be able to build up rights for surviving civil partners on the basis of the contracted-out rights accrued from 1988."
Although the amendment to make survivors' rights retrospective to 1988 is welcome, it does not confer equality of treatment for civil partners, even within public sector schemes. Widows' pensions have been provided from public sector schemes since long before 1988, and gay men who joined these schemes before 1988 have been required to pay for a survivor's benefit. If survivor benefits accrue only from 1988, these men's partners will not be treated the same as the widows of their married male colleagues.
The position of private sector schemes is unsatisfactory despite cross-party pressure for parity of treatment of civil partner survivors with widows and widowers, regardless of the type of scheme.
If the Act's provisions do not extend to contracted-in private sector schemes, then some registered civil partners may still find themselves without rights to any survivors' pension benefits.
The Equality of Employment (Sexual Orientation) (Amendment) Regulations 2003 provide that where schemes pay survivors' benefits to unmarried heterosexual partners, they must also pay out to same-sex partners, though only for service from 1 December 2003. However, where schemes pay survivors' benefits only to spouses, these Regulations do not apply. If a scheme is contracted-in and does not recognise unmarried partners, then as the Bill stands the scheme will not be required to recognise registered civil partners either.
One of the arguments for not extending equality in pension rights in private sector schemes is the cost of the additional benefits schemes may have to pay out once civil partnerships can be registered.
The rationale for requiring public sector schemes to pay up is very simple – the civil partner has paid member contributions on the same basis as other members, and the Treasury (i.e. the taxpayer) meets the cost of the benefits.
While the taxpayer is expected to stump up for public sector schemes, there is concern within Government that private sector schemes are funded on 'shifting actuarial principles' by employers and members and a sudden hike in past service liabilities could cause serious problems. In the vast majority of cases, though, all members will have paid the same contributions, and contracted-out schemes will be required to provide some benefits. The projected take-up of registration undermines the argument further. The current DTI estimate is 42,500 registrations by 2050 – an average of less than 1,000 registrations a year.
Statistics on schemes that already recognise unmarried and same-sex partners vary, but a recent NAPF survey indicated that around 90% of private sector schemes will consider paying benefits to unmarried or same-sex partners, though only 5% guarantee to do so.
With so few registrations expected, and given that most private sector schemes already recognise partners as potential beneficiaries, the arguments against requiring all private sector schemes to provide the same benefits to surviving civil partners as they do to widows and widowers on grounds of cost are unconvincing.
Issues for trustees
Where a contracted-out scheme currently does not recognise unmarried couples and same-sex partners, it will be required to provide survivor benefits for registered civil partners from the effective date of the legislation. This is expected to be at least a year after Royal Assent. Pensionable service from April 1988 must be included in the calculations, but it appears at this stage that the benefit will be the minimum required under contracting-out rules. Regulations may provide otherwise. Scheme rules, member literature and benefit calculation routines will need to be amended.
It is not clear if schemes that provide for both sexes' pre-1988 service to be included in the calculation of survivors' benefits, and for widowers to receive more than contracting out rules require, will be required to treat registered civil partners on exactly the same basis. Although the Act limits backdating of accrual to April 1988, and the Government has indicated that contracting out benefits apply, it would seem to be iniquitous if registered civil partners were to be treated differently from widowers.
The Pensions Trust
The Pensions Trust is an occupational pension scheme for the charitable, social, educational, voluntary and not-for-profit sectors. It offers a range of multi-employer schemes and also runs single-employer arrangements.
All of its six defined benefit multi-employer schemes (covering some 55,000 members and pensioners) can pay survivors' pensions to family members and to unmarried and same-sex partners, provided the Inland Revenue's requirements on dependency and interdependency are satisfied. Conversely, some of these schemes provide enhanced pensions to members who, at retirement, have nobody to benefit from a survivor’s pension when they die.
Members of the Trust's Money Purchase Plan can elect to provide survivors' pensions during their membership and on retirement.
The Trust also runs 30 schemes for individual employers. Within this group, only five small schemes provide survivor benefits exclusively to married couples. One of these schemes is contracted-out, so it will be required to provide survivors' pensions to registered civil partners in line with Regulations expected to be published next year. The remaining four are contracted-in and, as the Civil Partnerships Act and Employment Equality (Sexual Orientation) Regulations 2003 stand at the moment, it appears that these schemes will not be required to provide survivors' benefits to registered civil partners. All of the other schemes have adopted the widest definition of survivor available under the Rules.
The cost of providing survivors' benefits to same-sex partners is considered to be minimal, though no figures are available.
Chief Executive Richard Stroud says "When we introduced survivors' pensions it was to take account of gay and lesbian relationships as well as unmarried heterosexual couples. I really feel that it is not up to us to make moral judgements. At the Trust, we believe that pension schemes should operate within society and not abstract themselves from it."
On a practical level, The Pensions Trust asks members to make nominations for survivors' pensions on the application form, and provides guidance on who may or may not qualify. Details of members’ nominees for lump sum and pension death benefits are included on annual benefit statements, and members are invited to update their nominations if necessary.
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