Alastair Meeks, pensions partner at Pinsent Masons, says:
"After the EAT decision in 2014, the government carried out a review of same sex survivors' benefits but failed to take steps in response: it merely pledged to consider the findings "very carefully". Whilst the Secretary of State has the power to change the law for the purpose of eliminating or reducing the differences in survivors' benefits, the outcome of the Innospec v Walker appeal may deter the government from taking any action now.
The original Employment Appeals Tribunal (EAT) decision was controversial, and many pension schemes had voluntarily chosen to treat civil partnerships in exactly the same way as opposite sex marriages. However, the cost to schemes of providing fully equalised benefits could be substantial – government estimates in excess of £3bn between private and public sector pension schemes have been reported (although there are also concerns that these figures may be underestimated). Making retrospective changes to pension schemes is always fraught with difficulty. There are many points to consider - such as the impact of the extra cost on scheme funding or what to do about individuals who have paid additional contributions to purchase extra survivors' benefits.
The Court of Appeal admitted that Mr Walker would find its conclusion hard to accept, but reasoned that "changes in social attitudes, and the legislation which embodies those changes, cannot fully undo the effects of the past." That said, schemes which do not provide fully equalised benefits to civil partners are looking increasingly out-of-touch. But there is inevitably a financial burden where schemes are asked to respond to changing social mores; who will foot the bill?"
Isabel Nurse-Marsh, who heads the pensions litigation team at Pinsent Masons, adds:
"Many lawyers will not be surprised at the outcome of this appeal. It shows the courts unwilling to intervene and challenge the legality of exemptions to European discrimination law. The EAT felt that the UK law was clear in allowing schemes not to equalise survivors' benefits fully, and to ignore this would be to "legislate rather than interpret". The Court of Appeal evidently agrees."
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