Pride in Pensions: What should trustees and providers be doing to support trans and non-binary members?

In a first for a UK census, the 2021 England & Wales census asked the public to record their sexuality and gender identity and over 250,000 people living in England & Wales identified as a gender different to that assigned at birth.

When looking at these figures across generational cohorts, a greater proportion of trans and non-binary members are Millennials (born c. 1980 to 1996) or Gen Z (born c. 1997 – 2012). Whilst these groups may be quite a few years away from retiring, the census results show that pension schemes and providers need to be ready to respond appropriately to questions around administration of and benefits for trans and non-binary members.

So, what should trustees and providers be doing to support them?

Call me by my name

The easiest way to show allyship and inclusive treatment for trans and non-binary members is to respect any indicated naming preferences. Whilst this may sound very basic, deadnaming (calling a transgender person by their birth name when they have changed it as part of their transition) or using incorrect pronouns when referring to a member can be upsetting and offensive.

Schemes should ensure they have adequate systems and processes in place to accurately record members’ preferred addressee details and treat requests to change names or salutations with the utmost care and sensitivity.

Whilst the trustees’ overriding duty is to ensure that the correct benefits are paid to the correct person, where there are no contrary provisions in a scheme’s trust deed and rules (which would likely be rare), trustees can take a relatively relaxed approach to obtaining evidence from the member of their name change for communication purposes.

Additionally, with a general move to more informal and direct methods of communication, schemes and providers may prefer to address all members by their given name as opposed to the traditional “Mr / Mrs / Miss” addressee style. This, again, will reduce the likelihood of inadvertently misgendering a member.

Binary benefits persist

In a world of equalised benefits, theoretically, there should be no practical difference to the pension a member receives if they identify as a different gender to that they were assigned at birth. However, some historical benefits may prove slightly trickier to rationalise.

As ever, one of those trickier areas is GMPs. These are explicitly catered for in the Gender Recognition Act 2004 (“the GRA”) – legislation which allows individuals to legally change their gender by the issuing of a Gender Recognition Certificate (“GRC”). Where an individual is in receipt of a GRC, their GMP is considered to have accrued in the gender they were assigned at birth but is payable with reference to their acquired gender.

For a number of reasons, this can be difficult to administer in practice:

• Excess pension. For most members, their GMP will be a small proportion of their overall benefits payable from the scheme. However, the GRA does not cater for excess pension and therefore, to the extent that a member has unequalised excess pension rights (i.e. pre-Barber service), this will be subject to the rules of the scheme and – in most cases – the trustees’ discretion.
• Low numbers of GRCs. Ministry of Justice figures reported that between 4 April 2005 (date GRA came into force) and 31 March 2018, less than 5,000 GRCs had been issued – a small proportion of the number of trans people living in the UK. It is widely accepted that many, for many reasons, trans people choose not to obtain a GRC, citing that the process is lengthy, onerous and potentially dehumanising as individuals must admit to suffering from the mental illness of gender dysphoria. In the absence of a GRC, it is unclear how these benefits should be administered.
• Equality Act 2010. Schemes must also be alive to the non-discrimination provisions under the Equality Act which protects trans people from discrimination on the basis of their trans identity. Whilst a member may not have a GRC, they are still entitled to protection under the Equality Act, leaving room for conflict between this and the requirements of the GRA in terms of how such a member can and should be treated.

In addition, some schemes continue to use sex-related factors when carrying out actuarial calculations in respect of members’ benefits. In such scenarios, they may see a slight funding implication for members who identify as a different gender from that assigned at birth. However, in the context of an entire scheme, these are likely to be negligible.

Looking to the future 

Trans and non-binary people’s rights have been at the centre of political discourse over the last few years, with some political parties assessing whether the process for obtaining a GRC is in need of reform. An attempt to do so by the Scottish Parliament in 2023 was blocked by the UK Government. The Scottish Gender Recognition Reform Bill would have permitted individuals to change their legal gender by a process of self-ID, using a statutory declaration and removing the requirement to admit to suffering from gender dysphoria. This process follows that used in other European countries, including Malta, Denmark, Portugal and Ireland and could have resulted in an uptick in the number of pension scheme members applying for and being granted a GRC. The future of the GRA, and any changes to the process for obtaining a GRC, however, is at present unclear.

Additionally, some countries now permit the recognition of non-binary or ‘third gender’ classifications. Whilst a recent UK Supreme Court ruling determined that the UK Government was not required to offer an “X” classification on passports under the ECHR, schemes will need to be mindful that individuals may still choose to self-identify as neither male nor female and be mindful of any future legal developments in this area.

What all of this might mean for pensions is, understandably, not at the fore and remains largely unknown. What we do know is that pension schemes are required not to discriminate and will want to be respectful of their membership, including in relation to their trans and non-binary members.

Whether simplifying the process for members to update their scheme record, challenging bias and addressing outdated assumptions in the discretionary decision-making process, or simply calling a member what they wish to be called, every little helps.

Happy Pride Month! 

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