Pension rights of unmarried cohabitants on members’ death
Pension rights of unmarried cohabitants on members’ death

The following Pensions guidance note provides comprehensive and up to date legal information covering:

  • Pension rights of unmarried cohabitants on members’ death
  • Pensions tax treatment of cohabitants
  • Scheme rules in practice
  • No unlawful discrimination under Equality Act 2010
  • Incompatibility of public sector nomination requirement with the ECHR
  • Limits to the scope of the Brewster and Elmes cases
  • Implications of Brewster and Elmes for public sector pension schemes
  • Implications of Brewster for private sector pension schemes
  • Incompatibility of married cohabitant exclusion with the ECHR

In this Practice Note, the term ‘cohabitant’ is used to refer to an unmarried partner (other than a civil partner) of a member.

For information on the pension rights of same-sex spouses and civil partners of a member’s death, see Practice Note: Pension rights of spouses and civil partners on member’s death.

Pensions tax treatment of cohabitants

Pensions tax legislation under the Finance Act 2004 (FA 2004) allows registered pension schemes to provide a scheme pension to a cohabitant, but only if the cohabitant is a ‘dependant’ of the member. For this, it must be established that, at the date of the member’s death:

  1. the cohabitant was financially dependent on the member

  2. the cohabitant’s financial relationship with the member was one of mutual dependence, or

  3. the cohabitant was dependent on the member because of physical or mental impairment

Note however that there is no such restriction as regards the recipients of a lump sum death benefit under the FA 2004. Also, in the case of a money purchase arrangement, there is flexibility to provide an annuity or drawdown pension to a ‘nominee’ or ‘successor’ (not just a ‘dependent’).

For more information, see Practice Note: Pension payable on death—who is a dependant, nominee or successor?

Scheme rules in practice

In private sector schemes, it is usual for members to be asked to complete