The Supreme Court has handed down a ruling which means that all married gay couples and civil partners should receive equal pension rights.

Under Paragraph 18 of Schedule 9 of the Equality Act 2010, employers and pension funds are permitted to exclude civil partners from spousal benefits under a pension scheme the rights to which accrued prior to 5 December 2005, which is when Section 1 of the Civil Partnership Act 2004 (CPA) came into force.

This exemption was challenged in Walker v Innospec Limited and Others.

John Walker had worked for the Cheshire-based chemicals group Innospec Limited for more than 20 years until his retirement in 2003. For most of that time he was in a relationship with his partner and the couple entered into a civil partnership in 2006 and subsequently married. It was Mr Walker’s expectation that, upon his death, his partner would receive the same benefits under the company’s pension scheme as would a surviving spouse had he been married to a woman. Innospec, however, relied on the exemption and refused Mr Walker’s partner entitlement to a survivor’s pension.

Mr Walker’s employer had informed him that, were he to die, his partner would receive the statutory minimum pension of £1,000 per annum. Were he married to a woman, however, his widow would receive two thirds of his pension.

Mr Walker took his case to the Employment Tribunal (ET), which found that the operation of the exemption meant that the Innospec pension scheme discriminated against Mr Walker both directly and indirectly. Furthermore, although the scheme complied with domestic legislation, it was in breach of the EU Equal Treatment Directive and EU law. In the ET’s view, civil partners should receive benefits based on the deceased’s full length of service, not just from the date on which the CPA became law.

Innospec’s challenge to that decision was supported by the Secretary of State for Work and Pensions, who instructed counsel in the matter.

The Employment Appeal Tribunal (EAT) upheld the appeal. Whilst it accepted that a pension scheme which paid survivor’s benefits to a spouse of the opposite sex but not to a same-sex partner was clearly discriminatory, the EAT found that the effect of the scheme on Mr Walker was nevertheless lawful by virtue of the exemption contained in the Equality Act.

Mr Walker took his case to the Court of Appeal, which ruled that it was not unlawful for there to be discrimination in respect of access to a benefit payable in respect of periods of service prior to 5 December 2005.

In a ground-breaking decision, the Supreme Court has now upheld Mr Walker’s appeal, ruling that his spouse should enjoy the same right to a survivor’s pension as a wife would have done. The Court disapplied Paragraph 18 on the basis that it is incompatible with EU Directive 2000/78/EC (the Framework Directive), which bans discrimination on various grounds, including sexual orientation.

The Court noted that, although EU law does not impose a duty on member states to recognise same-sex partnerships, the Court of Justice of the European Union (CJEU) has ruled that, if a status equivalent to marriage is available under national law, it is directly discriminatory for an employer to treat a same-sex partner less favourably than an opposite-sex spouse.

Recent decisions of the CJEU had put the success of Mr Walker’s claim beyond doubt. They established that, absent evidence that there would be unacceptable economic or social consequences, there is no reason to treat the spouse in a same-sex marriage unequally. Mr Walker’s spouse is thus entitled to a full survivor’s pension so long as Mr Walker pre-deceases him and they remain married on the date of his death. The pension will be calculated on the basis of all Mr Walker’s years of service.