Civil Partnership Act - Pension implications
This is another one of those BeeLines that does just what it says on the tin. Youíll probably already know that the Civil Partnership Act 2004 is due to come into force on 5th December this year (2005). If you didnít know that, I guess you do now. This Act is the one that gives same-sex couples the right to enter into a relationship that is legally recognised and comes with rights akin to marriage. When these laws come into force at the end of this year they will affect our pension legislation and this BeeLine is my way of summarising that.
The first thing to say is that state pension entitlement will be made available to Civil Partners to match the way pensions are accrued for married couples. So Civil Partners will have the same state pension rights as married couples, but this will only come into force from 2010, the date when changes are being made to equalise married couplesí pension rights anyway.
In company pension schemes there are a number of fundamental changes that will be made in respect of same-sex couples who enter into a Civil Partnership arrangement. At the moment same-sex partnerships are recognised in many ways by scheme trustees as are the rights of scheme members with a common-law husband or wife. Death benefits, for instance, can be made if dependency can be shown. But there are some things that cannot be recognised unless couples are married, a good example being that people can only get divorced if theyíre married in the first place so pension splitting on divorce isnít possible without the marriage contract having been made. After December the 5th this year (in fact the 21st December as there is a 15 day waiting period) same-sex partners who wish to may enter into a Civil Partnership agreement and get the same potential rights on divorce as an unmarried couple who subsequently marry. Pension splitting on dissolution of the Civil Partnership would be allowed.
The other obvious benefit in terms of both occupational and personal pension scheme membership, though, is that any benefits that would normally become payable to spouses will also automatically become payable to Civil Partners and schemes will need to be changed to reflect this.
14 October 2005
This is based on our understanding of the "Civil Partnership Act 2004".
Any research and analysis included has been provided by us for our own purposes and the results of it are being made available only incidentally.