My Lords, I am grateful to the noble Lord, Lord Alli, and all others who contributed to this debate. I understand the strength of feeling behind this amendment and the speeches that have been made. Anticipating this debate, I decided to speak directly to the Pensions Ministers today and so was able to come properly armed with full information.
First, and as I have said in other contexts and in our other debates on the Bill, in making it possible for same-sex couples to marry we have sought to build on existing legislation and not amend the structure of marriage law. The point is that we focused on allowing same-sex couples to marry. In the context of pensions, we are following what already exists for civil partnerships, as has been referred to by several noble Lords in the debate. The introduction of civil partnerships was, as we have acknowledged several times over the last few weeks, a fundamental change in our society. It was a huge step forward. The Act was complex and covered a wide range of different issues. The Labour Government at the time decided to provide this exception for defined benefit pension schemes which are not contracted-out of the state second pension. They clearly did so for a principled reason: Governments do not generally make changes to pension schemes retrospectively. That is the general approach that is taken. That decision was made in 2005 during the passage of that Bill. The noble Lord, Lord Alli, referred to the Equality Act 2010 and suggested that it had then been open to this Government to remove the exception. It is worth reminding the noble Lord and the House that the Equality Act was passed under the previous Government. It was not a Bill that we were still debating and deciding after the election—it predated this Government.
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Let me get to the specifics of the point in hand. I would like to remind noble Lords listening to this debate who may not have been following it in detail
that we are discussing defined benefit schemes and survivor benefits—quite a specific aspect of pensions. As has been acknowledged, defined benefit schemes are struggling to survive. They are decreasing in numbers in terms of how many are still open to new members. The current economic climate has put companies sponsoring such schemes under great financial pressure. Clearly, we have to be mindful of that when we consider adding anything extra to their costs. As regards survivor benefits and this particular point, it is worth saying that while the impact of the change that the noble Lord, Lord Alli, is putting forward might be small for some large pension funds, it could be quite significant on a small pension fund. We would need to be very clear about who is being affected by such change.
As the noble Lord, Lord Alli, and the right reverend Prelate have acknowledged, some of the defined benefit schemes in existence are very generous and go beyond the statutory minimum in terms of what they provide for survivor benefits. That is a matter for those individual schemes, and the benefits provided by pension schemes are very much decided by the schemes themselves. Some schemes do not provide survivor benefits for any members—they are not always offered to opposite-sex couples. The noble Lord, Lord Alli, said that trustees may be able to decide which rules to apply to survivors based on their own personal belief. It is important to say that the decision about which rules to apply to survivors is based on various financial assumptions and not on their beliefs.
It is difficult to make a detailed estimate of the cost to pension schemes if this change in different treatment were made, because we do not have all the relevant data and information. However, using the 2009 ONS survey and other information, we have estimated that removing this exception could increase scheme liabilities by around £18 million in present-day values. The noble Baroness, Lady Lister, referred to remarks that were made by the Pensions Minister when he was giving evidence to the Joint Committee on Human Rights and the additional costs that may be effected by changes to pension schemes. The point he was making was that while there is a specific cost associated with the amendment that we are discussing today, a range of different measures fall under the heading of equalisation that could potentially extend the right to civil partnerships to opposite-sex couples. That is how you could eventually get to an estimated cost of £4 billion; it happens as you move from one thing to the next.
The noble Baroness, Lady Royall, asked about contracted-out schemes and the estimated cost of making changes to them. The statutory survivor requirements do not apply to all the benefits provided by the scheme. Therefore, our conservative estimate is that the direct costs for those schemes would be in the order of £70 million. If you add what we estimate for the contracted-in schemes, you get to £90 million.
It has been suggested that the Government should undertake a survey to obtain more exact information on the potential costs. Although we might be able to reconfirm which schemes go back before 2005 in terms of their accruals, obtaining the detailed data for those that do not to enable us to calculate the costs of removing the exception would be complex. Although I
referred to the 2009 ONS survey, the kind of survey necessary to be able to identify the different schemes that might be affected in different ways has not previously been carried out. A survey has not been done that could be repeated; it would have to be done from scratch.
To be fair, however, regardless of the scale of the cost, the Government believe that we should not impose the additional unforeseen obligations on schemes on the principle that we are not introducing retrospective changes. As we have said, these private schemes are funded by businesses, and we do not believe that it is for the Government to say what discretionary benefits they should offer.
The noble Baroness, Lady Howe, talked about public sector schemes that provide surviving civil partners with the same survivor benefits as those given to widowers. As she knows, the public sector schemes are funded by the Government, and it was the previous Government’s decision, as funder of the public sector schemes, to take that decision with the financial consequences. It was not for the Government to impose that on other schemes for employers. When all of this was considered in great detail some years ago, the Government accepted the costs and liabilities for the public sector schemes but did not feel that it was right to impose that same level of financial burden on the private sector.
As we all know, the pensions system as a whole is full of differences in treatment as a result of changes in society and social attitudes. The principle of the exception is to introduce those changes going forward, not retrospectively, as in this case. As time goes on, that difference in treatment will be diminished.
Of course, I realise that I am not providing the kind of response that noble Lords had hoped for. However, I hope that I have at least provided an explanation as to why the Government have taken this decision. It may also be helpful for me to inform the House that the exception, as in this difference of treatment, will be considered by the Employment Appeal Tribunal in the case of Walker—somebody who sought to appeal against their own pension scheme provider—and the Government have been added as an interested party in that appeal. We need to wait and see the outcome of that case. However, I hope that the noble Lord, Lord Alli, feels able to withdraw his amendment at this time.