Industry news and analysis

Survivor's pensions for cohabitees

A Supreme Court judicial review relating to the Northern Ireland Local Government Scheme recently concluded that cohabitee Denise Brewster was entitled to a dependant’s pension from the scheme. (Dependant’s pensions are also known as survivor’s pensions.) It had refused to pay her a pension on the grounds that the deceased member had not provided a nomination form.

The key points are as follows:

  • Under the scheme rules a cohabitee was only entitled to a dependant’s pension:
    • if they had lived with the member for at least two years as at the date of the member’s death
    • and the member had completed a nomination form naming the cohabitee.
  • In contrast, the scheme paid dependant’s pensions to surviving spouses and civil partners without requiring a nomination form.
  • The Court decided that the nomination form requirement was a discriminatory barrier to a cohabitee receiving a dependant’s pension. In the Court’s view, the two year cohabitation rule in itself allowed the scheme to establish whether there was a genuine relationship.

Pension legislation permits schemes to treat cohabitees as dependants provided the scheme administrator considers they were financially dependent on, or financially interdependent with, the deceased member. Who can actually receive a dependant’s pension depends on the scheme rules in each case. Therefore, this outcome could prompt reviews of scheme rules relating to the provision of dependant’s pensions to cohabitees.

It’s unlikely to affect personal pensions and GPPs, provided the administrators have the discretion under the scheme rules to pay lump sum death benefits, flexi-access drawdown or dependant’s annuities in line with whatever is permitted by legislation.

Members can still provide nominations of beneficiary to give the trustees or administrators guidance when it comes to using their discretion.

The press summary of the case is here. And the full judgement is here.

 

15 February 2017

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