Review of Survivor
Benefits in Occupational
Pension Schemes
June 2014
Review of Survivor Benefits in Occupational Pension Schemes
Contents
Executive summary .................................................................................................... 3
1. Introduction............................................................................................................. 6
2. Background – occupational pension schemes........................................................ 8
3. Current differences in survivor benefits ................................................................ 14
Public service pension schemes.......................................................................... 14
Private sector pension schemes.......................................................................... 16
4. Costs and other effects of equalising survivor benefits......................................... 22
5. Consultation.......................................................................................................... 28
6. Conclusion............................................................................................................ 31
Review of Survivor Benefits in Occupational Pension Schemes
Executive summary
1. The Marriage (Same Sex Couples) Act 2013 requires the Government to
conduct a review of survivor benefits in occupational pension schemes.
The review must consider the differences in survivor benefits between
different groups and the costs and other effects of eliminating those
differences.
2. This review has been carried out jointly by the Department for Work and
Pensions (DWP), which has responsibility for the legislation on private
sector occupational pension schemes, and HM Treasury (HMT), which has
overall policy responsibility for public service pension schemes.
3. In order to inform the review, the Government has commissioned research
which gathered information on the provision of survivors’ benefits in
defined benefit occupational pension schemes. HMT worked with those
government departments responsible for the public service schemes to
identify differences in survivor benefits provided to different categories of
survivor in those schemes.
4. Both DWP and HMT commissioned the Government Actuary’s Department
(GAD) to estimate the costs of removing these differences in survivor
benefits in private sector and public service schemes respectively.
5. The review has also involved a consultation with interested parties. A
summary of the views obtained through this consultation form part of this
report.
6. The review investigates differences in occupational pension schemes
between:
• same sex survivor benefits and opposite sex survivor benefits provided
to widows;
• same sex survivor benefits and opposite sex survivor benefits provided
to widowers; and
• opposite sex survivor benefits provided to widows and opposite sex
survivor benefits provided to widowers.
7. For the purpose of the review “same sex survivor benefits” means survivor
benefits provided to surviving civil partners, and surviving same sex
spouses.
8. The review also considers the extent to which same sex survivor benefits
are provided in reliance on paragraph 18 of Schedule 9 to the Equality Act
2010.
Review of Survivor Benefits in Occupational Pension Schemes
9. The review was required to consider separately survivor benefits provided
to civil partners and those provided to same sex married couples. The law
treats civil partners equally to same sex married couples for the purposes
of survivor benefits in pension schemes because they both provide
comparable rights and responsibilities. There is no significant difference
between them. As such, any differences in the benefits provided to
survivors of civil partners and same sex spouses would be difficult to
justify, and could give rise to further legal discrimination challenges. The
review therefore gives no further consideration to the differences between
these two groups.
10. Key findings of the review include:
• The capitalised cost
1
of removing differences in survivor benefits
between opposite sex surviving spouses, same sex surviving spouses
and surviving civil partners in the public service pension schemes is
estimated at around £2.9 billion.
• Of this around £1 billion would be payable immediately in respect of
benefits due before 1 April 2015. It is estimated there would then be
ongoing costs across public service schemes of around £0.1 billion per
annum into the 2020s, reducing thereafter.
• The estimated cost to the private sector schemes of removing these
differences is around £0.4 billion.
• Removing differences in the survivor benefits provided to surviving
same sex spouses and civil partners on the one hand and those
provided to opposite sex widows on the other is estimated to have a
capitalised cost of around £0.08 billion to the public service schemes.
• The estimated cost to private sector schemes of removing these
differences is around £0.1billion.
• If private sector schemes were to provide benefits to same sex couples
on the same basis as opposite sex widowers, as most public service
schemes do, this is estimated to cost £0.1 billion.
• Public service schemes exceed the statutory minimum requirement
which permits occupational pensions schemes to provide survivor
benefits for same sex couples only taking account of service since
2005. However, the majority of public service schemes only take into
account service from 1988 when calculating same sex survivor
benefits, and so rely on paragraph 18 of Schedule 9 of the Equality Act.
1
Capitalised costs mean that the amount of money needed now to pay a series of cashflows
in the future. A more detailed explanation is provided in the letter from the Government
Actuary’s Department to HM Treasury. That letter is attached as Annex B to this document.
4
Review of Survivor Benefits in Occupational Pension Schemes
5
• Of the 27 per cent of private pension schemes that were found to have
a difference in the way survivor benefits between surviving opposite
sex spouses and surviving civil partners were calculated, around two-
thirds only took into account accruals after 2005 in those calculations.
Review of Survivor Benefits in Occupational Pension Schemes
1. Introduction
1.1 There are currently differences in the benefits paid by occupational pension
schemes to survivors of the members of those schemes. There are a
number of differences in the benefits payable to men and women who
survive an opposite sex spouse, and those who survive a same sex spouse
or civil partner. During the passage of the Marriage (Same Sex Couples)
Act 2013 the Government proposed an amendment requiring a statutory
review of differences in survivor benefits in occupational schemes. The Act
also includes an order-making power which enables the Government to
change the law of England and Wales, and Scotland, if, having considered
the outcome of the review, the Government considers that the law should
be changed to reduce or eliminate differences in survivor benefits.
2
1.2 The terms of reference of the review are set out in box 1.1:
Box 1.1 – Terms of reference
The review will investigate differences in occupational pension schemes
between: same sex survivor benefits and opposite sex survivor benefits
provided to widows; same sex survivor benefits and opposite sex survivor
benefits provided to widowers; and opposite sex survivor benefits provided to
widows and opposite sex survivor benefits provided to widowers. The review
will include separate consideration of survivor benefits provided to both
surviving same sex married couples and to surviving civil partners.
The review will investigate what the costs and other effects would be of the
elimination of these differences by the equalisation of survivor benefits. The
review will consider the extent to which same sex survivor benefits are
provided in reliance on paragraph 18 of Schedule 9 to the Equality Act 2010,
and the extent to which same sex and opposite sex survivor benefits are
calculated by reference to different periods of pensionable service.
The review will involve consultation with the parties which the Secretary of
State considers it appropriate to consult. This is likely to include pension
trustees, industry bodies including CBI and NAPF, trades unions and groups
representing the lesbian and gay community.
The review will inform the Secretary of State’s decision as to whether he
should exercise his powers to change the law to eliminate or reduce
differences in survivor benefits in occupational schemes.
2
See section 16 of the Marriage (Same Sex Couples) Act 2013.
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Review of Survivor Benefits in Occupational Pension Schemes
1.3 The review has explored differences that exist in both private sector
occupational pension schemes and public service pension schemes.
7
Review of Survivor Benefits in Occupational Pension Schemes
2. Background – occupational
pension schemes
2.1 The first UK pension schemes were for public servants. They were a reward
for loyal service and were paid by government from its revenues. These
schemes have developed into the range of public service pension schemes
seen today. Outside the public services, however, occupational pension
schemes based in the UK have historically been established under trust and
that is now a legal requirement for the majority of schemes outside of the
public sector. Such occupational pension schemes usually involve both
employers and employees making contributions to the scheme which are then
invested to provide benefits to employees upon their retirement (although they
can be “non-contributory”, in which case the employer makes payments but
the member is not required to do so).
Defined benefit pension schemes
2.2 Pension benefits paid under funded or unfunded arrangements are a form of
“deferred pay” with current income being forgone in the expectation of
payments in the future. In a defined benefit (DB) scheme, the member will be
entitled to a defined level of pension benefit on retirement, calculated
according to a formula set out in the rules of the scheme. DB schemes may
also provide a range of other retirement benefits, such as an early retirement
pension, an ill-health early retirement pension, survivor benefits, a lump sum
on retirement and death in service benefits. Legislation governing
occupational pension schemes provides a minimum statutory base in certain
areas but over and above that schemes/employers choose the benefits and
can provide more generous benefits should they wish to.
2.3 In a defined contribution scheme (DC), contributions are made to a fund which
can then be converted into an income on retirement. If the member chooses to
convert their pension into an income on retirement, they can choose whether
they wish to provide for a pension for their survivor. For that reason this review
has focused on DB schemes, as provision of survivor benefits in DB schemes
are prescribed by the rules of these schemes, rather than solely a matter of
individual choice.
2.4 In recent decades, most DB schemes have been final salary schemes. A final
salary scheme provides a member with a pension for life upon retirement
based upon a fraction of their final pensionable salary. An alternative type of
defined benefit pension is one which is based on members' average earnings
over the period of their scheme membership. Once accrued, rights to defined
benefits are protected by legislation which prevents detrimental alteration to
the value of accrued rights without members’ consent.
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Review of Survivor Benefits in Occupational Pension Schemes
2.5 As the pension benefits provided by a DB scheme are determined at the point
at which they are earned, the funding of the scheme has to be designed to
fund those accrued benefits. This means that for each DB scheme there has
to be someone responsible for dealing with the effects of funding shortfalls.
Therefore, under UK rules, a DB pension scheme can only be an occupational
pension scheme. The funding responsibility in respect of a trust based scheme
falls to the employer in the first instance, or in respect of a public service
scheme, to the authority responsible for paying the scheme benefits.
Differences in DB schemes – contracting out
2.6 The majority of defined benefit schemes have been “contracted-out” of the
additional state pension. In broad terms, if a pension scheme is “contracted-
out”, its members and the employer of those members pay reduced National
Insurance Contributions and receive benefits from that scheme which are
specified in legislation, which broadly replace those that would have been
provided by the additional state pension system (currently the State Second
Pension which in April 2002 replaced the State Earnings Related Pension
Scheme). DB schemes that were contracted-out between 6 April 1978 and 5
April 1997 have to provide members with a guaranteed minimum pension
(GMP) including a survivor’s GMP, which is half the member’s GMP for the
relevant period of accrual.
2.7 Contracting out for defined contribution schemes was abolished from 6 April
2012 and there are provisions in the Pensions Act 2014 to abolish contracting-
out in DB schemes from 6 April 2016, in order to establish a single tier state
pension. However, members who have accrued entitlements under
contracting out will retain their entitlement to these benefits.
Public service pension schemes
2.8 Public service pension schemes are almost all DB pension schemes. They are
run by Government for workers engaged in public service work. In the public
service schemes, scheme rules regarding benefit entitlement are determined
by Ministers and generally set out in legislation. There are currently around 12
million members in public service pension schemes
3
.
2.9 The majority of the public service pension schemes are unfunded “pay as you
go” schemes. The main exception is the Local Government Pension Scheme
which is a funded scheme. In the unfunded schemes there is no “pot” of
assets which is used to fund the payment of pension benefits. Instead,
Exchequer funds are used to meet the costs of paying pensions, although in
practice current contributions from employers and employees offset much of
the cost of the current pensions in payment. (If current contributions are lower
than pensions in payment the balance is provided by the Exchequer -
conversely, if contributions exceed pensions in payment, the surplus is
returned to the Exchequer.)
3
The main public service pension schemes are those which make provision for civil servants, teachers,
NHS workers, firefighters, the police, local government workers, the armed forces and the judiciary.
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Review of Survivor Benefits in Occupational Pension Schemes
Survivor benefits in DB schemes
2.10 Survivor benefits are the benefits paid to the dependant of a scheme member
who has died either before or after the member has started to draw the
pension income. Dependants can include opposite sex and same sex
spouses, and surviving civil partners. Many occupational schemes also include
options for scheme members who are co-habiting to nominate their partner to
receive survivor benefits in the event the scheme member dies before their
partner
4
. Survivor benefits commonly include a continuing survivor pension.
The detailed arrangements for these pensions vary considerably between
schemes and between categories of survivor. The formulae for calculating the
amount of pension can also vary considerably depending on the scheme rules
and the circumstances of the deceased member at the time of death. As such,
these pensions are also a form of defined benefit, as how a survivor pension is
to be calculated is fixed in advance by the scheme rules.
Survivor benefits for opposite sex spouses
2.11 Eligibility for survivor pensions has changed over time. Provision of survivor
pensions for females who survive their male spouse developed much earlier
than provision for males who survive their female spouse. In the post war
period many schemes began to provide survivor benefits for women who
survived their male spouse. However, survivor pensions for men who survived
their female spouse were not routinely provided until much later. In some
circumstances, women (and unmarried men) often received a larger pension
than married men to reflect these differences. In some schemes married men
paid a contribution towards a survivor’s pension that most female members of
that scheme did not. Member benefits therefore also potentially differed
between men and women in addition to the differences in benefits for their
survivors.
2.12 There are a number of historical reasons for the later provision of survivor
benefits for surviving male spouses. These reflect the societal expectations of
previous decades and the difference in life expectancies between men and
women at that time. When survivor pensions were first introduced, men were
generally expected to be the breadwinner and most women who outlived their
husbands were expected to have no income or pension of their own. On
average women also lived longer than men, and so it was more likely that they
would require this form of income protection.
2.13 The Social Security Pensions Act 1975 created the first overarching legal
framework for the provision of survivor pensions for women who survive their
male spouse. This Act imposed on all schemes which are “contracted out” of
the additional state pension a requirement to provide a surviving woman with a
survivor’s GMP based on any of her deceased husband’s service since 6 April
1978.
4
Survivor benefits provided to cohabiting couples are not explored by this review
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Review of Survivor Benefits in Occupational Pension Schemes
2.14 Over time, changes in society meant that the reasons for these differences in
provision began to be eroded. Women’s greater participation in the labour
market, and their greater participation in occupational pension schemes,
meant these differences in survivor benefits began to be perceived as
increasingly unfair.
2.15 Accordingly, action was taken to correct this inequality. The Social Security
Act 1986 provided that a GMP accrued after 6 April 1988 should provide for a
survivor pension to be paid to a surviving male whose female spouse was a
member of the scheme
5
. At the same time, in most public service schemes
survivor benefits taking into account all of the female member’s service since 6
April 1988 onwards (not just that part necessary to meet the minimum
requirements for “contracted out” schemes) were introduced for men who
survive their female spouse. The difference in treatment between male and
female scheme members for the purpose of survivor benefits in public service
pension schemes for service prior to 1988 was held in 2011 to be lawful
6
.
2.16 After the European Court of Justice judgment in Barber
7
occupational pension
schemes were required to provide equal pensions to men and women
(including equal pension ages), and to provide equal survivor benefits for
males who survive their female spouse, in relation to accruals from 17 May
1990 (the date of the judgment).
Survivor benefits for civil partners
2.17 The introduction of civil partnerships in 2005 represented a further change in
social attitudes, as it allowed for the legal recognition of same sex
partnerships for the first time.
2.18 Private sector schemes that are not contracted out are not obliged to pay
survivor benefits at all. However, following the introduction of civil partnerships
those that do provide survivor benefits to surviving opposite sex spouses have
been required to provide them to surviving civil partners. However, non-
contracted out schemes are permitted to provide survivor benefits to surviving
civil partners taking into account only service since 5 December 2005, the
date that civil partnerships were introduced. This is provided for in paragraph
18 of Schedule 9 of the Equality Act 2010, which provides that it is not
unlawful sexual orientation discrimination to restrict access to survivor
pensions payable to civil partners in relation to rights accrued or employment
service before that date.
2.19 In 2005, the then government also decided that contracted out schemes would
be required to pay surviving civil partners of either gender a survivor’s GMP
based on accruals since 6 April 1988. This meant that civil partners were
placed in a comparable position to widowers. However, it remained an option
for contracted out schemes to not provide survivor benefits for civil partners in
5
GMPs only accrued until 1997 when the Reference Scheme Test was introduced. From then
schemes must provide equal survivor benefits to all survivors on all accruals from 1997.
6
Cockburn v Secretary of State for Health [2011] EWHC 2095 (Admin).
7
Case C–262/88, [1990] ECR I–1889.
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Review of Survivor Benefits in Occupational Pension Schemes
relation to the scheme excess (scheme benefits provided over and above the
GMP) (because those benefits were accrued prior to 2005), or to provide more
limited survivor benefits on the scheme excess because of the effect of
paragraph 18 of Schedule 9 of the Equality Act 2010.
2.20 Most public service pension schemes went further than this legal minimum,
and the scheme rules were changed so that survivor benefits for civil partners
would be payable on the basis of all service accrued by the scheme member
since 6 April 1988, and not just that part necessary to meet the minimum
requirements on all “contracted out” schemes (i.e. the GMP).
The Marriage (Same Sex Couples) Act 2013
2.21 Following the passing into law of the Marriage (Same Sex Couples) Act 2013 it
became lawful for same sex couples to enter into a marriage. Married same
sex couples are treated in the same way as civil partners for the purposes of
determining survivor benefits. For the purposes of GMPs, as well as wider
benefits in most public service pension schemes, this means that surviving
same sex spouses have their survivor pension calculated on service accrued
after 6 April 1988, in line with surviving civil partners and most men who
survive their female spouse.
Scheme Funding
2.22 In funded pension schemes, operating both in the private sector and the public
sector, regular actuarial valuations are required. These compare the assets
held by the scheme to the value of the liabilities of the scheme, to determine if
the scheme has sufficient assets to meet these liabilities. Valuations also
calculate the contributions that will be made to pay for the value of the
liabilities that will be accrued in the future.
2.23 The unfunded public service pension schemes are those which are not backed
by a fund of assets which can be used to meet the cost of paying pension
benefits when they fall due. However, the unfunded public service pension
schemes also conduct valuations and use a similar approach to valuing the
costs of pension benefits, including the use of a “notional fund” to determine if
sufficient contributions have been made to the scheme to meet the scheme’s
liabilities
8
.
2.24 In conducting a valuation of a funded or unfunded pension scheme, the
scheme actuary must make many assumptions in order to put a value on the
benefits that will be earned in the future – for example the longevity of
members, and the rate of return that will be earned on the scheme’s assets.
However, the actuaries must also consider the scheme’s rules and any
relevant legislation which is in place at the time of the valuation. Actuaries
would not make any allowance for any future change in the scheme rules, or
8
Details of the Government’s approach to actuarial valuations in the public service pension schemes
can be found at: www.gov.uk/government/publications/public-service-pensions-actuarial-valuations-
and-the-employer-cost-cap-mechanism.
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Review of Survivor Benefits in Occupational Pension Schemes
in the relevant legislation, unless they were certain that this change would
occur.
2.25 It follows, therefore, that any improvements to benefit entitlements which take
place after the period in which they have been earned and paid for will
increase the size the scheme’s liabilities in a way which was not expected
when contributions to the scheme were paid. Without any corresponding
increase in the scheme’s assets, retrospective improvements such as these
would, all else being equal, create a deficit in the scheme’s funding. In a
funded trust based scheme, the additional costs of funding this kind of shortfall
would initially fall on employers (and so in the case of public service schemes,
on the Exchequer), and in some cases on scheme members. Given the
potential for retrospective changes to create scheme deficits, successive
Governments have maintained a policy presumption against making or
mandating retrospective changes to pension schemes. This particularly
applies when a pension has already been awarded, as there is then no scope
for offsetting reductions in the benefits that have been awarded or for the
member to make additional contributions.
2.26 When making changes to scheme rules, or to legislation which will affect the
value of the members’ pension, the general position has therefore been to
make these changes prospectively. This means that these changes will apply
to benefits which were earned after the change has been made – but not
necessarily those which are only paid in the period following any change. This
avoids the risks to scheme funding that would be created if schemes were
required to meet legal obligations to pay benefits which did not exist at the
time that those benefits were accrued.
Conclusion
2.27 As this summary demonstrates, there has been a gradual evolution in the
provision of survivor benefits in occupational pension schemes. Successive
governments have taken steps to provide for greater equality in entitlements to
these benefits, reflecting the gradual changes in social attitudes that have
taken place over the last 60 years. With the exception of the changes that
were made at the time of the introduction of civil partnerships to contracted out
schemes, and in respect of all service in public service schemes, these
changes have generally been applied to benefits to be earned in the future, to
avoid creating risks to scheme funding.
2.28 For some scheme members with service in relevant periods survivor benefits
continue to be calculated on a different basis depending on the gender of their
spouse or whether they are in a civil partnership. These differences will work
their way out of the system as the number of scheme members with earlier
periods of service declines.
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Review of Survivor Benefits in Occupational Pension Schemes
3. Current differences in
survivor benefits
Public service pension schemes
3.1 In most public service schemes, the calculation of survivor benefits for women
who survive their male spouse takes into account a greater amount of service
than the calculation of survivor benefits for men who survive their female
spouse, or surviving same sex spouses or civil partners.
3.2 In respect of marriages that existed at the date of leaving the scheme, public
service schemes generally calculate survivor benefits for women who survive
their male spouse taking into account all of the service of the scheme member
prior to and since 6 April 1988
9
. The survivor benefits provided to males who
survive their female spouse only take into account the female member’s
service since 6 April 1988 in most of these schemes.
3.3 With the introduction of civil partnerships in 2005 and the extension of
marriage to same sex couples in 2014, most public service schemes calculate
survivor benefits for surviving civil partners and surviving same sex spouses
on the same basis as they do for men who survive their female spouse, only
taking into account service since 6 April 1988
10
. In each case these benefits
are in addition to the minimum requirement on all contracted out schemes to
pay same sex spouses, opposite sex spouses and surviving civil partners a
minimum survivor pension
3.4 There are some exceptions to the general approach described above. For
instance, following reforms in 2008, in the funded Local Government Pension
Scheme, where a marriage or civil partnership exists at the point of leaving, for
active members of the scheme, there are no differences in the survivor
benefits for both surviving same sex and opposite sex spouses and surviving
civil partners. In each case, benefits take into account all of a member’s
service
11
.
9
In many schemes restrictions apply where the marriage took place after the member left the scheme
and only service since 1978 is taken into account.
10
Under the Marriage (Same Sex Couples) Act 2013 a marriage will be able to continue in the event
that one member of the marriage changes legal gender. Where a scheme member changes legal
gender and the marriage continues and where the spouse of the scheme member would otherwise
lose their expectation of more advantageous survivor benefits, the spouse will retain their expectation
of survivor benefits as if the scheme member had not changed gender.
11
Allowance has also been made in the cost estimates which follow, to reflect the fact that differences
in survivor benefits between males who survive their female spouse and females who survive their
male spouse in the LGPS 1997, were removed for members in active service post April 1998
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Review of Survivor Benefits in Occupational Pension Schemes
3.5 Also, in the FireFighters Pension Scheme 1992, survivor benefits for both a
woman who survives her male spouse and for a man who survives his female
spouse are calculated on the same basis.
3.6 In 1988, reforms were introduced to the Armed Forces Pension Scheme 1975
(AFPS) to provide survivor benefits for male spouses of female members.
Similarly, the AFPS introduced survivor pensions for civil partners when they
were introduced in 2005. For those who were active members of the scheme
at the points at which these changes were made, where the marriage or civil
partnership exists at the point of leaving the scheme, benefits are calculated
on the same basis as benefits for a female who survives her male spouse.
These changes were not applied to female members or members in a civil
partnership with a deferred pension, or who were already receiving their
pension before the change was made.
3.7 Notably the schemes for firefighters and members of the Armed Forces have
historically had a low proportion of female members. The proportion of
opposite sex widowers’ and same sex survivor benefits expected to be paid
out by these schemes has remained low.
3.8 Public service schemes set up or significantly revised since 2000 also provide
equal survivor benefits to all survivors of a marriage, whether between an
opposite sex or same sex couple, and to surviving civil partners, where the
member was in service from the date the revisions took effect. By definition, all
new benefits accrued in these schemes will have been earned after 1988.
Some scheme members with pensionable service in earlier sections, including
service prior to 1988, have had the option to transfer this service into the
newer scheme sections on the basis that full survivor cover is provided. Where
they have opted to do this there is no restriction on the qualifying service taken
into account when calculating survivor pensions
12
. Such transfers have,
however, been allowed for on the basis that the members transferring should
meet the potential cost of any increases in benefits that they might gain
through transferring to the new terms, e.g. through the factors used to convert
service in the former scheme to the new one.
3.9 Some schemes have also provided options to purchase additional survivor
benefits, taking account of service before 1988, at the member’s own
expense. These options have been offered to female scheme members
married to men, as well as members in civil partnerships or with a same sex
spouse
3.10 A table setting out the main differences in the provision of survivor benefits for
different categories of survivor within each of the main public service schemes
is provided at Annex A.
12
These additional survivor benefits in the newer sections are provided as part of an overall package
of scheme benefits which in some respect will be less generous than the package provided in the
earlier sections. For example, in the NHS Pension Scheme, someone transferring their benefit from
the 1995 section to the 2008 section would also be transferring from a scheme with a normal pension
age (NPA) of 60 to one with an NPA of 65.
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Reliance on paragraph 18 of schedule 9 to the Equality Act
2010
3.11 Public service schemes exceed the statutory minimum requirement in respect
of survivor benefits for same sex couples, by providing benefits that take into
account service since 1988 and not only service since 2005. However, the
majority of public service schemes only take into account service from 1988
when calculating same sex survivor benefits, and so rely on paragraph 18 of
schedule 9 of the Equality Act.
Private sector pension schemes
3.12 Defined benefit provision in the private sector has been in long-term decline,
with many schemes being replaced by defined contribution arrangements.
This trend has been the result of significantly increased financial pressures on
sponsoring employers. Total active membership of defined benefit schemes
peaked in the 1960s at 8.1 million, and has fallen to 1.7 million by 2012 – with
active membership of open DB schemes dropping by 300,000 in that year
alone (from 900,000 to 600,000)
13
.
3.13 This decline in workplace defined benefit provision has been accompanied by
a growth in workplace defined contribution provision, particularly in the
contract-based sector of the market, in which employers facilitate the provision
of a pension and pay in contributions, but the contract exists between the
individual scheme member and the pension provider. This change in the
structure of the UK pensions market is shown in chart 1.
13
Source: Occupational Pension Scheme Survey
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Chart 1: Proportion of private sector employees with workplace pensions by
type of arrangement
0
5
10
15
20
25
30
35
40
45
50
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Occupational defined benefit Occupational defined contribution
Group personal and group stakeholder Any pension
Source: ONS, 2013 Annual Survey of Hours and Earnings (UK)
3.14 Given the long-standing nature of the defined benefit - defined contribution
shift, it is expected that the vast majority of people automatically enrolled into
workplace pensions under the Government’s pension reforms will be saving
into defined contribution pension plans.
Existing evidence
3.15 There is limited information available on the provision of survivor benefits in
occupational pension schemes. The available information focuses primarily on
the proportion of schemes that offer survivor benefits. There is no detailed
information on what benefits schemes provide for all different groups of
members for all different past periods of service. This is the key reason the
Government commissioned additional new research as part of this review.
3.16 The existing evidence is summarised below:
• The Occupational Pension Scheme Survey (OPSS)
14
shows that for
private sector defined benefit schemes in 2011, 94 per cent of pensions in
payment were accompanied by a pension to a surviving spouse or civil
partner on death of the retired scheme member, under the scheme rules.
14
Available at: http://www.ons.gov.uk/ons/rel/pensions/occupational-pension-scheme-survey-annual-
report/2011-annual-report/index.html
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Review of Survivor Benefits in Occupational Pension Schemes
Less than three-quarters (71 per cent) provided such a pension to
surviving children, and only 9 per cent provided such a pension to another
nominated person. For nearly all pensions in payment, the benefits
provided to the surviving spouse or other nominated person were based on
a percentage of the member’s pension; 72 per cent would receive benefits
of up to and including 50 per cent of the member’s pension before
commutation.
• In the 2009 Employer Pension Provision Survey (EPP)
15
respondents
were asked whether contracted-out or part-contracted-out occupational
schemes provided survivors benefits for parties other than legal spouses.
In 20 per cent of cases the respondent did not know. In a further 4 per cent
of cases, the scheme did not provide survivors’ benefits for other parties,
leaving 76 per cent of cases in which the scheme did provide such
benefits. 59 per cent of schemes did so for children, 53 per cent did so for
unmarried partners of the opposite sex and 44 per cent did so for
unmarried partners of the same sex. In 11 per cent of schemes there were
no fixed provisions but decisions were made on an individual basis.
• Respondents in the 2009 Employer Pension Provision Survey (EPP) were
also asked whether non contracted-out schemes provided survivors’
benefits. In 13 per cent of cases the respondent did not know. In a further
four per cent of cases, no benefits were provided, leaving 83 per cent of
schemes which did provide such benefits. These were most commonly
provided for legal married spouses (77 per cent), unmarried partners of the
opposite sex (39 per cent) and unmarried partners of the same sex (35 per
cent). In 6 per cent of schemes there were no fixed provisions but
decisions were made on an individual basis.
3.17 In addition, an estimate of the increase in pension scheme liabilities of
equalising survivor benefits for civil partners and same-sex married couples in
defined benefit pension schemes that were not contracted out was published
by DWP in July 2013
16
. The Department used data from the ONS and the
Occupational Pension Scheme Survey to estimate the proportion of not
contracted-out defined benefit members that may have a civil partner. This
proportion was then applied to total contracted-in defined benefit pension
liabilities to estimate the liabilities accrued in respect of these members. An
adjustment, based on the Employer Pension Provision Survey, was made to
take account that some already do provide full survivor benefits for those
members in a civil partnership.
3.18 As part of the review DWP analysts contacted a number of key stakeholders to
ask if they had information which may be useful for estimating the costs of
equalising certain pension scheme survivor benefits. This included the
Association of British Insurers, EEF - The Manufacturers Association, National
15
Available at: https://www.gov.uk/government/publications/employers-pension-provision-survey-
2009-rr687
16
Available at:
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/210859/Ad_hoc_analysi
s_civil_partners_survivors_benefit_010713.pdf
18
Review of Survivor Benefits in Occupational Pension Schemes
Association of Pension Funds, The Pension Regulator and The Pension
Protection Fund. Each organisation was informed of the review parameters
and asked if they were aware of or held any data which could provide insight
into the provision of survivor benefits. In each case no organisation held data
which could be used to inform the estimates of costs associated with
equalising certain pension scheme survivor benefits.
New commissioned research
3.19 In the absence of detailed information on differences in the provision of
survivor benefits in occupational pension schemes, the DWP commissioned
an independent research report
17
to collect this information.
3.20 The 2013 survivor’s benefit survey gathered information on the provision of
survivors’ pension benefits in defined benefit and hybrid
18
occupational
pension schemes across the UK. A 20-minute telephone survey was
conducted with 219 DB and hybrid schemes between 31 October and 29
November 2013 by IFF Research Ltd using Computer Assisted Telephone
Interviewing (CATI). The survey was designed to achieve useable sample
sizes in each of the pension scheme size bands, from which data could then
be weighted to reflect the UK DB and hybrid pension scheme universe.
Schemes were selected from the Pensions Regulator’s (tPR) database of
schemes using a stratified random sampling approach. In addition the top 42
schemes
19
were also specifically targeted to ensure the schemes with the
largest liabilities were included.
3.21 The key findings from the survey were:
• 95 per cent of all schemes questioned provided some survivor benefit
• One per cent of schemes that provided survivors’ benefits and had benefits
accrued prior to 1990 had a difference in the way survivor benefits were
typically calculated for opposite sex widows and opposite sex widowers
before 1990 (equating to 28 schemes on a grossed up weighted basis):
• 27 per cent of schemes that provided survivor benefits to civil partners and
had benefits accrued prior to 2005 had a difference in the way benefits
were typically calculated between those in a civil partnership and those in a
marriage of an opposite sex couple (equating to 1,334 schemes on a
grossed up weighted basis): and
• Of those 27 per cent of schemes, two-thirds (65 per cent) did not take
account of any accruals before 2005 when calculating surviving benefits for
those in a civil partnership.
17
See Annex D. Also published at www.gov.uk/government/publications/provision-of-survivors-
benefits-in-occupational-pension-schemes
18
A hybrid pension schemes is a workplace pension schemes that can provide both defined benefits
and defined contributions benefits.
19
The Pension Regulator provided further information on the top 42 schemes with the largest total
liabilities.
19
Review of Survivor Benefits in Occupational Pension Schemes
Differences in entitlement between men and women in
marriages of an opposite sex couple
3.22 In order to identify schemes that would be affected by the equalisation of
survivors’ benefits between genders prior to 1990, schemes were asked if the
way benefits were typically accrued prior to 2005 were the same or different
for married men (widowers) and married women (widows). Although schemes
were asked about accruals prior to 2005, for the purposes of analysis the
research only looked at schemes that had accruals prior to 1990, given these
would be the only schemes in scope for any potential changes from
equalisation.
3.23 The analysis showed that one in a hundred schemes (one per cent) who
provide survivors’ benefits and have benefits accrued prior to 1990, said
benefits accrued for married men and married women were different before
this period. There was no difference in the likelihood of having differential
benefits by whether schemes were contracted out or not contracted out
20
.
Differences in entitlement between couples in marriages of
an opposite sex couple and civil partnerships
3.24 To gauge other differences in entitlement, schemes were asked if the way
benefits were typically accrued in periods prior to 2005 (when it became a
legal requirement to provide benefits at the same level for a marriage of an
opposite sex couple and a civil partnership) was the same or different for men
and women in a civil partnership compared to men and women in a marriage.
3.25 Just over a quarter of schemes (27 per cent) that provided civil partnership
survivors’ benefits and had benefits accrued prior to 2005 cited that there were
differences in the way benefits were accrued in periods prior to 2005 for those
in a marriage of an opposite sex couple and for those in a civil partnership.
This equates to 1,334 schemes that have a difference in this entitlement.
Small schemes were more likely to have a difference in how these benefits
were accrued (35 per cent) compared to large/extra large schemes (15 per
cent).
3.26 In terms of differences in accrual between marriages of opposite sex couples
and civil partnerships before 2005, there was no significant difference between
those schemes that were contracted out and those schemes that were not
contracted out.
3.27 Of those 27 per cent of schemes that did have a difference in the way benefits
for men and women in a marriage of an opposite sex couple compared to
couples in a civil partnership were accrued before 2005, two-thirds (65 per
cent) said this difference was that when calculating survivor benefits for those
in a civil partnership accruals before 2005 were not taken into account.
20
It is possible that while respondents to the survey have answered correctly in respect of current
employees they might not have taken in to account any previous differences in treatment and
therefore the provision of unequal benefits is wider that we are assuming.
20
Review of Survivor Benefits in Occupational Pension Schemes
Reliance on paragraph 18 of schedule 9 to the Equality Act
2010
3.28 In private sector occupational pension schemes, the findings from the
research which looked at the differences between opposite sex and same sex
survivor benefits also shows the extent to which schemes rely on paragraph
18. 27 per cent of schemes that provide survivor benefits to those scheme
members in a civil partnership relied on paragraph 18 by having a difference in
treatment to those in a marriage of an opposite sex couple. Of those, two-
thirds provided the legal minimum and only calculated benefits based on
accruals from 2005 onwards.
21
Review of Survivor Benefits in Occupational Pension Schemes
4. Costs and other effects of
equalising survivor benefits
4.1 This review also investigates what the costs and other effects would be of the
elimination of differences in survivor benefits.
4.2 In this section we look at the costs and other effects of reducing or eliminating
the differences in survivor benefits discussed in other sections.
4.3 If all these differences in the way survivor benefits are calculated were to be
completely eliminated for all those in a legal relationship, regardless of the
basis on which rights were accrued in the past, and the funding assumptions
that were made at the time, the costs would be as described below.
Eliminating all differences in treatment
This means:
• Providing survivor benefits for opposite sex widowers which are identical to
those provided to opposite sex widows; and
• Providing survivor benefits for surviving same sex spouses and civil
partners which are identical to those provided for survivors of marriages of
opposite sex couples.
4.4 The capitalised cost of removing all these differences in the public service
schemes is estimated to be around £2.9 billion. Of this around £1 billion would
be payable immediately in respect of benefits payable due 1 April 2015.
4.5 The costs are estimated to be around £0.4 billion for private sector schemes.
4.6 These costs to both public service and private occupational schemes and the
methodology GAD employed to calculate them are set out in more detail in
Annexes B and C.
22
Review of Survivor Benefits in Occupational Pension Schemes
Eliminating differences between same sex survivor benefits and opposite sex
survivor benefits provided to widows
The review is required to assess the costs and other effects of removing
differences between same sex survivor benefits and opposite sex survivor
benefits provided to widows.
This means:
• To align benefits for all surviving same sex spouses and civil partners (of
either gender) with those for widows of a marriage of an opposite sex
couple - that is, benefits within each scheme are to be based on the
same periods of accrual as surviving opposite sex widows’ benefits.
4.7 This would remove differences in treatment because of sexual orientation
between women and maintain differences of treatment because of sex for men
and women in marriages of opposite sex couples. As regards differences in
treatment because of sexual orientation between men, this approach would
introduce new differences between men in a marriage of an opposite sex
couple and men in a same sex legal relationship. Whereas previously, men in
a same sex legal relationship had lower or identical survivor benefits to men in
an marriage of an opposite sex couple, men in a marriage of an opposite sex
couple would now be entitled to lower value survivor benefits than both same
sex survivors of either gender and women in a marriage of an opposite sex
couple.
4.8 If these differences in survivor benefits were removed this is estimated to have
a capitalised cost of around £0.08 billion to the public service schemes and
around £0.1 billion to private sector schemes.
23
Review of Survivor Benefits in Occupational Pension Schemes
Eliminating differences between same sex survivor benefits and opposite sex
survivor benefits provided to widowers
The review is required to assess the costs and other effect of removing
differences between same sex survivor benefits and opposite sex survivor
benefits provided to widowers.
This means:
• To align benefits for all surviving civil partners and same sex spouses (of
either gender) with those for widowers of marriages of opposite sex
couples - that is, benefits within each scheme are to be based on the same
periods of accrual as widowers of marriages of opposite couples.
• Benefits provided to opposite sex widowers are subject to the legal
minimum that only accruals post-17 May 1990 must be taken into account
in equalising between men and women. But schemes can be more
generous than that, so to ensure that the costs to schemes of providing
exactly the same benefits to surviving same sex spouses and civil partners
as to opposite sex widowers are assessed, costs must be calculated for all
periods of accrual.
4.9 In most public service schemes benefits for surviving same sex spouses of
either gender and for males who survive their female spouse exceed the
minimum legal requirements and are already calculated on the same basis,
taking into account service since 1988. Removing these differences in public
service schemes would therefore have a negligible cost.
4.10 If all private sector schemes were to provide benefits to same sex couples on
the same basis as they provide benefits to opposite sex widowers this would
be estimated to cost around £0.1 billion.
4.11 Differences of treatment because of sexual orientation between men would be
removed, but differences of treatment because of sexual orientation between
women would be maintained. Differences because of sex between men and
women in marriages of opposite sex couples would also remain.
4.12 In this and the previous scenario above some differences because of sexual
orientation remain, and some differences because of sex remain. In the first, it
is the opposite sex widower who is treated the least favourably. In that case,
the widower of an marriage of an opposite sex couple would be entitled to a
more generous survivor benefit had he been the survivor of a civil partnership
or marriage of a same sex couple, whereas in the second, it is the widow of a
marriage of an opposite sex couple who is treated more favourably (as now),
and the widower of a marriage of an opposite sex couple and all survivors of
same sex relationships, who are treated the same - and less favourably
treated.
24
Review of Survivor Benefits in Occupational Pension Schemes
Eliminating all differences of treatment because of sexual orientation
This means:
• Providing survivor benefits to surviving female civil partners and female
survivors of a marriage of a same sex couple which are identical to those
provided to opposite sex widows, and of providing survivor benefits for
surviving male civil partners and male survivors of a marriage of a same
sex couple which are identical to those provided to opposite sex widowers.
• Eliminating all differences because of sexual orientation, leaving only the
differences because of sex between men and women to operate in survivor
benefits.
4.13 Another approach might be to eliminate all differences of treatment because of
sexual orientation. This would involve aligning the benefits for all female
survivors of civil partnerships or marriage of same sex couples with those
provided to surviving opposite sex widows, and aligning benefits for all male
survivors of civil partnerships and marriages of same sex couples with those
provided to surviving opposite sex widowers.
4.14 If these differences in survivor benefits were removed this is estimated to have
a capitalised cost of around £0.02 billion to the public service schemes and
around £0.1 billion to private sector schemes.
4.15 But although this approach eliminates all differences because of sexual
orientation in the provision of survivor benefits, it leaves differences because
of sex, as all surviving men of legal relationships, whether survivors of civil
partnerships, marriages of same sex couples, or marriages of opposite sex
couples will be treated differently to all surviving women of legal relationships,
whether survivors of civil partnerships, marriages of same sex couples, or
marriages of opposite sex couples.
Eliminating differences between opposite sex survivor benefits provided to
widows and opposite sex survivor benefits provide to widowers
• The review is required to assess the costs and other effects of removing
differences between opposite sex survivor benefits provided to widows
and opposite sex survivor benefits provided to widowers.
This means:
• Providing survivor benefits for males who survive their female spouse on
the same basis as they are provided to females who survive their male
spouse.
25
Review of Survivor Benefits in Occupational Pension Schemes
4.16 The differences were discussed in Chapter 3. If these differences in survivor
benefits were removed this is estimated to have a capitalised cost of around
£2.8 billion to the public service schemes and around £0.3 billion to private
sector schemes.
Other effects – introducing new differences in treatment
4.17 Short of eliminating all differences of treatment altogether, any approach for
reducing differences leaves some differences in place. Aligning survivors of
same sex legal relationships with survivor benefits received by opposite sex
widows would introduce new differences between different groups.
4.18 Legal challenges to these differences might seek to rely on EU law and the
European Convention on Human Rights. Article 157 of the Treaty of the
Functioning of the European Union provides for equal pay for men and women
in employment, and the EU “Framework Directive”
21
prohibits differences of
treatment because of sexual orientation in employment and occupation,
including occupational pensions. The European Convention on Human Rights
requires that the rights and freedoms set out in the Convention shall be
secured without discrimination, and rights to benefits for married couples and
those in a civil partnership fall within the context of the right to respect for a
private and family life, and the right to the peaceful enjoyment of
possessions
22
. Public service pension schemes must comply with the
Convention.
Other factors to consider
4.19 In the event that differences in the benefits provided to different categories of
survivor were removed there would be other potential considerations in
addition to those discussed above.
4.20 For instance consideration would also need to be given to the fact that some
scheme members may have voluntarily purchased additional survivor benefits
at their own expense or may, as mentioned previously, have received a
smaller member pension as a condition of providing a survivor pension for
their spouse.
4.21 The existence of these features present additional complications. Careful
consideration would be required if universal changes were made to remove
differences in survivor benefits between specific categories of survivor, where
some members had already paid more in the form of member contributions or
reduced pension for the same benefits.
4.22 Consideration would have to be given to the implications of any changes on
individual pension schemes, including the practical implications of the
resources that would be needed to apply a change in how survivor benefits
are calculated. Consideration would need to be given as to whether those
schemes that have a small membership or are in a funding deficit ,and which
21
(200/78/EC).
22
Article 14, Article 8 and Article 1 of the First Protocol respectively.
26
Review of Survivor Benefits in Occupational Pension Schemes
have not fully equalised survivor benefits, would be disproportionately
impacted by any changes.
4.23 The costs presented in this review do not include any associated
administrative costs to schemes that would be involved in changing scheme
rules to altering survivor benefits.
27
Review of Survivor Benefits in Occupational Pension Schemes
5. Consultation
5.1 DWP and HMT consulted with a number of organisations/individuals as part of
the review.
5.2 Consultation events were held with trades unions, LGBT organisations,
equality groups, the Police Negotiating Board, and stakeholders representing
the private pension industry.
5.3 As part of a separate consultation on changes to the Teachers’ Pension
Scheme (TPS), which included information on changes to implement the
Government’s policy on survivor benefits for same sex married couples in the
TPS, the Government received written representations on differences in
survivor benefits from a number of individual teachers and education unions.
5.4 A list of organisations that were either invited to provide views to the review or
that submitted views is provided at Annex E. The Government is grateful to all
those organisations and individuals that submitted views.
5.5 The following is a summary of the views and themes that have emerged in
consultation.
• Many of those consulted expressed the view that prospective equality is
not full equality and that the costs involved with equalising survivor
benefits between different groups of survivors should not be used as an
argument against the progression towards full equality in survivor benefits
for both past and future service.
• Organisations responding said that the Government had the opportunity to
change a historic injustice and that removing differences in survivor
benefits should be done retrospectively and not just prospectively. A
number of individuals also expressed to the Department of Education
(DfE) their support for full equalisation of survivor benefits.
• Some groups acknowledged that there were complex issues to consider in
terms of removing differences in survivor benefits. There was an
acknowledgement of the historic rationale leading to more generous
survivor benefits for females who survive their male spouse. However
some groups viewed the exception in the Equality Act, which enables
schemes to restrict survivor benefits for same sex couples to service after
2005, fundamentally wrong.
• Trades unions noted that there are some members of public service
pension schemes who have opted to pay extra for additional survivor
benefits. There was concern that any decision to remove differences in
benefits would need to carefully consider the implications for scheme
members who had chosen these options in the past.
28
Review of Survivor Benefits in Occupational Pension Schemes
• Some of those consulted suggested that because of the historic
differences between men and women e.g. the fact that in some schemes
men paid higher contributions for survivor benefits than women, it would
be reasonable for the same sex spouse of a man to get higher survivor
benefits then the same sex survivor of a woman. One suggested approach
was that the Government should consider directly linking the survivor
benefit received to the amount of contributions paid by the member,
regardless of the sex of their spouse.
• Some of those consulted suggested that the historic justification for
providing a female who survives her male spouse with more generous
benefits, might logically also apply to a female who survives her female
spouse.
• It was suggested that the cost of equalisation should be viewed as
reimbursement of rights withheld until now because those in same sex
relationships have only recently been able to build up a survivor benefit.
• It was felt by some that retrospective changes in pension schemes have
already been made, for example - providing benefits for same sex
survivors in many public service schemes on the same basis as they are
provided for males who survive their female spouse. Therefore it was
considered that the Government should not use the principle of not
retrospectively imposing costs on pension schemes as an argument not to
equalise survivor benefits.
• Some of those consulted questioned the extent of wider risks involved in
making changes for same sex survivors. It was suggested that the
question of whether to remove differences in survivor benefits between
males who survive their female spouse and females who survive their
male spouse should be a separate question to the question of whether to
remove differences in survivor benefits between same sex and opposite
sex survivors.
• It was also suggested that the Government should take the opportunity
through the review to look at the provision of survivor benefits for
unmarried couples (e.g. the financial dependency test) and that the review
could also explore removing restrictions in schemes that limit survivor
pensions when the survivor remarries.
• Many organisations with whom the Government engaged suggested that
the Government should conduct a full public consultation to provide an
opportunity for those affected by arrangements to make their views on the
issues known directly to the Government. Some individuals also
expressed the view to DfE that the department should conduct a full public
consultation on the policy in respect of the TPS.
29
Review of Survivor Benefits in Occupational Pension Schemes
Costs
• It was suggested there are different factors to consider in each case and that
the costs involved with equalising survivor benefits for same sex survivors
would be relatively modest compared with the cost of equalising between
male and female opposite sex surviving spouses.
• Many trades unions questioned the methodology used for assessing costs to
the public service schemes. They questioned the extent to which specific
workforce characteristics were reflected in the cost analysis, including
characteristics which might be specific to workforces in different regions. In
particular respondents suggested that the cost estimates for equalisation in
the LGPS might not fully reflect the position in that scheme.
• It was also suggested that in some schemes valuations have revealed a fall
in the overall proportion of members leaving behind a qualifying survivor. It
was suggested this potentially makes equalisation affordable.
• Trades unions also suggested that costs of equalisation in different public
service schemes would vary and could be relatively modest in some
schemes. They said any costs associated with equalisation in public service
schemes should be borne by the employer and not included within scope of
the cost cap mechanism for public service schemes.
• It was noted by some respondents that many private sector schemes,
including those covering the privatised railway industry are already providing
full equality in survivor benefits for same sex survivors. It was suggested that
these schemes had deemed equalisation of benefits affordable and it was
argued that public service schemes should follow the example.
• Some of those consulted said that the costs involved with equalisation are
not significant when compared to overall scheme liabilities. It was also noted
that these costs would not all be due at once but would be spread into the
future.
• However others noted that the costs to smaller private schemes may be
more significant, where the increased costs of additional liabilities to pay
survivor benefits would be spread over a smaller number of members.
• It was noted that the cost estimates for removing differences in survivor
benefits in private occupational schemes were highly sensitive to certain
inputs which they thought might not be particularly robust. It was felt these
needed to be treated with considerable caution, and the true costs could be
greater by an order of magnitude. There was concern that any decision to
impose retrospective costs on private schemes could have significant
implications for scheme funding. The Government was urged against making
any decision affecting private schemes without further work to ascertain the
true costs to the private sector.
30
Review of Survivor Benefits in Occupational Pension Schemes
31
6. Conclusion
6.1 The Government has made it clear that it believes that it is right that married
same sex couples and civil partners should be treated equally to married opposite
sex couples. That is why it has brought forward legislation to ensure that survivor
benefits are now built up equally for all legal relationships.
6.2 However, pensions are unique in that the consequences of actions that were
taken in the past are crystallised today, and therefore reflect the inequalities of the
past in today’s pension outcomes. We know now that many schemes in the
private sector have already equalised survivor benefits despite the cost. The
review finds that reducing or eliminating the remaining differences in survivor
benefits in the private sector would cost £0.4 billion, but that this cost would be
concentrated in a relatively small group of schemes. Furthermore, the cost to the
public service schemes would be £2.9 billion.
6.3 In considering its response to this review, the Government will need to consider
these costs and the potential impact on pension schemes, along with the wider
consequences of making retrospective changes to scheme rules. As this review
demonstrates, these are complex issues and the Government will have to
consider these very carefully before making a decision on whether the law should
be changed.
