Pension rights of cohabitants

In these posts we have often spoken of the practical differences of the rights of married partners and those cohabiting without being married. These differences often emerge when a relationship breaks down but the position on death can be equally stark.

The usual rule on breakdown or death

(a)  Unmarried partners

• The position between married and unmarried partners is never more apparent when dealing with finances. In short, it will be recalled that, where the parties were not married, then, on separation, there is no right for one partner to make financial claims from the other. This is the usual rule even when that partner has made a significant contribution to the joint partnership assets and income. The only exception to this rule is where the party who owns the assets or income, has made a firm promise to share the financial resources with the other party.
• On the death of one of the parties, if no provision is made for the other, then there may be a claim that can be made against the estate on the basis that the survivor can show that he/she reasonably expected to be provided for by the deceased party.
• So far as pensions are concerned, whether the surviving partner is entitled on the death of the pension holder, depends on the specific wording of the pension documents. The usual rule in practice is that the survivor will only become entitled to a pension if the pension holder had formally nominated the other party to receive the benefits on his/her death.

(b) Married partners

• Where a relationship breaks down when the parties were married, then the starting point (in general terms) is that each party is entitled to a share (usually one half) of the assets and income of both of them. This would include pensions.

Nomination to receive Pension benefits when the parties are not married

As explained above, where the parties are not married, whether or not the surviving partner will be entitled to benefit from a pension will depend on the precise wording of the pension scheme.

Most employment pension schemes do not give any benefit rights to the surviving partner, except possibly for a lump sum, which will be paid at the discretion of the managers of the scheme. Those managers will make their decision taking into account all the relevant factors stated in the scheme rules.

One of the most important of those factors is whether or not the pension holder who has died, has formally elected (invariably in writing) for the surviving partner to benefit from the lump sum payment.

A recent case

A case from Northern Ireland has made the headlines in recent weeks. It involved a Ms. Denise Brewster who took her case all the way to the Supreme Court in London.

The Facts

• Ms. Brewster and her partner Mr McMullen lived together for ten years and owned their own home. The couple became engaged on Christmas Eve in 2009 but, sadly, Mr McMullen died suddenly two days later.
• At the time of his death Mr McMullan had worked for 15 years for Translink, which runs Northern Ireland’s public transport services. Throughout his employment with the company, Mr McMullen had been a member of the Local Government Pension Scheme (LGPS).
• Under the regulations which govern the LGPS, to be eligible for a survivor’s pension, an unmarried cohabiting partner has to be nominated, using a prescribed form, by the member during his or her lifetime. The surviving partner also has to demonstrate that he or she cohabited with the member for at least two years before the date the member returned the nomination form and for two years before the date of death.
• Although Ms Brewster had cohabited with Mr McMullen for over two years, Mr McMullen had not completed the necessary nomination form. Ms Brewster was therefore denied a survivor’s pension simply because Mr McMullen had not nominated her, on the appropriate form, to receive the benefits.

Ms. Brewster’s claim

Ms Brewster claimed she had been discriminated against because she was a cohabitant and not a spouse. She applied for a judicial review of the requirement to complete a nomination form, arguing that it breached the European Convention on Human Rights. She was successful in the High Court of Justice in Northern Ireland, where the judge said it was ‘irrational and disproportionate to impose a disqualifying hurdle of this kind.’ However, that decision was overturned on appeal in Northern Ireland. Ms. Brewster then appealed to the Supreme Court in London for a final decision.

The decision of the Supreme Court

The Supreme Court decided that Ms Brewster was entitled to receive a survivor’s pension under the LGPS.

The court said that the requirement to complete a nomination form was unlawful discrimination on the basis of Ms Brewster’s status, because a married member would not have had to submit such a form.

The court considered that the very reason long-term cohabitants were included in the regulations as potential recipients of survivors’ pensions was to give them equal treatment with married couples. While it made sense to require proof of cohabitation, this was required to be provided by the survivor in any event, so requiring the submission of a nomination form did not add anything and could potentially penalise a cohabitant.

What does the case mean for others?

The requirement for a nomination form in the LGPS in England and Wales and in Scotland has already been removed under the equivalent regulations.

However, many other public and private sector schemes retain the requirement for a nomination form. Many may now consider amending their rules as a result of the judgment in the Brewster case. If so, the position of unmarried cohabitants would improve and they would become eligible for survivors’ pensions without having been formally nominated by their former partners.

Nevertheless, in order to avoid what might be lengthy negotiations and possible legal action, if there is a requirement to complete a nomination form, the practical approach is to do so: there can then be no argument about what the pension holder intended.