ASSET PROTECTION: PENSION NOMINATIONS
The Supreme Court decision in the case of Denise Brewster
The right to receive a pension can be a valuable asset and it should not be overlooked by co-habiting couples.
Couples often assume that because they are living together, their partner will be treated the same as a married person or civil partner. They assume on death their partner will receive survivor’s benefits from their pension. This is not always the case. Everyone should check the terms of the pension to see if they need to nominate their partner and protect their pension asset.
Had William McMullan made a nomination his partner Denise Brewster would have avoided going to court. Fortunately for Denise the Supreme Court eventually ruled in her favour.
Denise Brewster lived in Coleraine Northern Ireland with her partner William McMullan for about 10 years. On Christmas Eve 2009 they got engaged but sadly he died 2 days later aged 43 years old. William left no will or children.
Prior to his death William had worked for 15 years with Translink a company that provides Northern Ireland’s public transport service. During his employment he was a member of the Local Government Pension Scheme and paid into his pension on a regular basis.
The pension scheme provided that on the death of a scheme member their married husband or wife would automatically have survivors’ rights to receive the dead spouse’s pension.
Unlike most occupational pensions in the private sector there was no automatic provision for unmarried partners. Instead Denise had to show that she and William had been living together for a period of 2 years and that they had been living together at that date of William’s death. The pension scheme regulations also required that William should complete a form in which he nominated Denise so that she would receive his pension should he die.
Because William had not nominated Denise the pension administrators refused to allow her any survivorship rights to his pension.
Denise claimed that the decision was unfair because there was no similar requirement for married couples to complete a nomination form. The High Court agreed with her but the pension administrators appealed that decision. They argued that they needed to know if co-habitating couples were in a relationship equivalent to marriage or civil partnership. The Court of Appeal sided with the pension administrators and held that the absence of a nomination form deprived Denise of any right to receive William’s pension.
A short time thereafter the pension regulations were amended in England, Scotland and Wales. The new regulations removed the requirement for a nomination form for co-habitating couples. When Denise discovered this change she asked the Court of Appeal in Northern Ireland for leave to review their earlier decision. When the Court of Appeal refused consent to appeal Denise brought a claim to the Supreme Court by way of judicial review.
The Supreme Court decided that the requirements for a nomination form was incompatible with Denise’s rights under article 14 of the European Convention on Human Rights. Article 14 prohibits discrimination. As William’s pension formed part of his possessions the requirement for a nomination form conflicted with Denise’s right to the peaceful enjoyment of those possessions.
The change in the regulations in England, Scotland and Wales removed the need for any formal notification. The new regulations aimed at removing the difference between long standing co-habitants and married or civil partners.
The pension scheme required that Denise as a co-habiting partner had to show that she and William had co-habited for 2 years prior to William’s death. The Supreme Court held that a further requirement for Denise as the surviving co-habitant to show that she was nominated by William could not be justified. It was an unreasonable limitation on Denise’s rights under the European Convention of Human Rights.
Had William and Denise been married she would have avoided the problem.
Denise can now receive William’s pension. However all of the proceedings could have been avoided if William had actually nominated Denise to receive his pension.
The Supreme Court created a solution for Denise. That decision may have other implications which may in the future assist co-habiting partners. For example under current law a husband or wife may transfer property and other assets to their spouse free of inheritance tax but this is not the case for co-habiting partners.
We will have to wait to see if there is a move to further equate the rights co-habiting couples with married couples. Meanwhile it makes sense to check the terms of any pension scheme and to make any nomination for the benefit of your co-habiting partner.
For further advice please contact us on 0121-632-2400