A ruling that bereaved spouses in same-sex marriages can receive the same pension payouts as widows in heterosexual unions will push liabilities higher, an adviser says.
On Wednesday John Walker secured equal pension benefits for his husband after a five-year legal battle. He successfully challenged a loophole in the Equality Act that allowed employers to exclude same-sex spouses and civil partners from receiving benefits paid into a pension fund before 2005.
Quantum Advisory, a pensions specialist, estimates that the ruling could cost private occupational schemes by around £100m.
Following the Supreme Court’s decision, pension schemes must calculate a spouse’s pension for same-sex marriages and civil partnerships in the same way as for heterosexual unions now that the 2005 cut-off date has been abolished.
Quantum Advisory partner and actuary Stuart Price said that schemes could face claims from widows of members who have already died.
“The number of these cases that will need to be retrospectively addressed is likely to be small in the grand context of UK pensions, however, estimates are that the cost of doing so is likely to be in the region of £100m for private occupational schemes and £20m for public sector schemes.
“Whilst this change is long overdue, the end result will be, that if impacted, UK pension schemes will yet again have additional liability they were not expecting and this will ultimately have to be paid for by the scheme’s sponsoring employer.”
The pension schemes of FTSE 350 companies have a combined £58bn deficit, according to JLT Employee Benefits. The same research also highlighted that all private sector private pension schemes are £176bn in the red.
