Heart Sparkler

It has gone relatively unnoticed in the media, but the government has brought in legislation (effective 2 December) enabling civil partnerships to be formed by opposite-sex couples in England and Wales, with the first ceremonies being possible from 31 December 2019.

Opposite-sex civil partners will be treated in much the same way as same-sex civil partners. It remains to be seen whether there are many unmarried members of defined benefit pension schemes who are in an opposite-sex relationship and will wish now to formalise their relationship as civil partners. The likely impact this will have on pension scheme liabilities is therefore unclear at present, and of course there will only be an additional benefit cost if the scheme does not already provide full survivors’ benefits for unmarried partners.

The new legislation amends the definition of a civil partnership in the Civil Partnership Act 2004 to accommodate opposite-sex couples. Similar legislation is still going through the Scottish Parliament, with couples being referred to as “mixed sex” couples rather than “opposite-sex couples”.

Pension scheme trustees should check their scheme rules to ensure they are compatible with the new legislation. As most rules will define a civil partner as someone who has entered into a civil partnership under the Civil Partnership Act 2004, it is likely that the legislation change will work automatically under scheme rules, and no amendments will be required.

Where a pension scheme provides guaranteed minimum pensions (GMPs), the existing rule that surviving civil partners receive the widower’s GMP will also apply to opposite-sex civil partners. The government has changed this for public sector pension schemes, but has said that it does not plan to amend the legislation further, for private sector schemes. That may not be the end of the story though – given that the government had no intention of legislating for opposite-sex civil partners at all, but has now done so, it may yet revisit the GMP payable in respect of any surviving civil partner in due course. In the meantime, trustees should bear in mind that the statutory minimum GMP for surviving opposite-sex civil partners could be challenged in future, and they may wish to take legal advice.

Finally, the government is still considering the consultation responses it received relating to whether opposite sex-spouses should be able to re-register their marriage as a civil partnership, should they wish. This is in recognition of the fact that there may be some opposite sex couples who would have chosen a civil partnership had it been available. If this function is introduced, it will be time limited. Pension schemes would need to consider any contracting-out implications carefully, should re-registration become possible.

If you wish to discuss anything in this blog please get in touch with your usual contact in the Squire Patton Boggs pensions team.