Are pension schemes ready for gender recognition cases?
Keeping ahead of legal and regulatory change is a constant challenge for pension trustees, and gender recognition is one area that can easily slip under the radar.
Our Equity, Diversity & Inclusion team recognised this as a potential risk area, so supported by legal insights from Womble Bond Dickinson LLP, we arranged internal training to help identify what we as trustees and governance professionals should think about. We’re now keen to share our learnings with the industry to help make pensions more accessible and inclusive for all.
The challenge
The Supreme Court’s 2025 ruling on the legal definition of sex brought gender recognition issues into sharper focus. The Court confirmed that, for the purposes of the Equality Act 2010, sex means biological sex, while transgender people remain protected from discrimination under the separate protected characteristic of gender reassignment. For pension schemes, this sits alongside the Gender Recognition Act 2004 and can create difficult questions about how benefits should be calculated and administered. This is particularly complex for defined benefit and hybrid schemes, though defined contribution schemes also have important legal and practical implications to consider.
Put into context, larger schemes are statistically more likely to have members affected (the best current estimates suggest less than 1% of the UK population is transgender), but no scheme can assume the issue will never arise. It could be difficult to defend claims if you haven’t thought about how your scheme’s rules, administration processes and member communications are equipped to deal with a gender recognition case, before one arises.
At Vidett, we see it as good governance to have these conversations sooner rather than later.
Proportionate first steps
The answer is not necessarily a major review now, but there are some sensible initial questions trustees and employers can ask.
- The first call to arms is to gain awareness through some training on this governance issue and then think about what follow up steps might be right for you.
- A proportionate next step might then be to check whether your administrator is aware of any actual recorded gender reassignment cases for your scheme – but note, this might not give the full picture as one in four transgender people (26%) aren’t open with anyone at work about being transgender.
If there are any known cases, or it’s likely one might arise in the future, the following three-point checklist might help focus your thinking on the relevant areas. Support from your legal adviser and administrator will also be key.
1. Check data protection and administration processes
A member’s transgender status or Gender Recognition Certificate (GRC) is protected information under the Gender Recognition Act (GRA) and sensitive personal data under UK GDPR, so trustees need to ensure strict confidentiality and limit access on a need-to-know basis.
Trustees should consider asking the member if they consent to protected information being shared with personal representatives or family members, if they contact the administrator. This is important, as only 47% of transgender people are open about their gender identity with their whole family.
Administration and record keeping need careful thought. Trustees should ask how this data will be held, including whether records can clearly identify if there is a GRC and record the reassignment date, while still maintaining the necessary confidentiality.
2. Understand the implications for member benefits
The GRA is prescriptive about the legal treatment of Guaranteed Minimum Pensions (GMP) with a GRC, and it’s important to understand the nuance and risk of uncertainties this introduces for GMP equalisation.
For non-GMP benefits, particularly where no GRC is presented, trustees may need to consider:
- Which gender should be used to calculate benefits, including any impact on dependant benefits;
- The date from which any change should apply; and
- What evidence they should ask the member to provide.
Scheme rules may need amending, with relevant legal advice, to document these points.
Trustees should also consider which actuarial factors to use for determining funding requirements, transfer values and retirement quotations, if these are sex-based. Documenting decisions, based on social, legal and actuarial reasoning, will help address queries from members and reduce complaint risk.
3. Keep the member experience in mind
Pensions can be difficult for any member to understand, and members may be surprised, upset or angry at the inflexibility and complexity of the rules governing their benefits. This makes the way schemes communicate particularly important.
Good practice for inclusive member communications should apply, including:
- Gender-neutral language;
- Clear and jargon-free explanations; and
- Ensuring administrators have appropriate sensitivity training (helping ensure cases are handled in a dignified and empathetic way).
Trustees should also be mindful of the growing use of AI agents and chat functions, that may not recognise the nuances involved in dealing with transgender members, creating risk of protected or sensitive information not being stored in a compliant way.
Gender reassignment is a complex and niche area that is likely to arise relatively infrequently for most pension schemes, but that’s not a reason to be unprepared. If in doubt, always take appropriate legal advice and make sure your administrator’s processes are properly aligned with your expectations as trustees and employers.
This article draws on legal input from Tracy Walsh, Partner at Womble Bond Dickinson LLP. For extra guidance, please view our detailed briefing note.
Please note this piece was first published with Professional Pensions, which can be found here.
For further information on any of the areas covered above, please contact Nicole Johannesen from our Equity, Diversity & Inclusion team.
