In the case of Thomas v Southwark Council the High Court has given guidance on the test to be applied for the purposes of considering whether two individuals are "financially interdependent" where that is one of the conditions to be satisfied in order for a survivor's pension to be payable under the scheme rules.

The case involved the Local Government Pension Scheme (LGPS).  The scheme's rules provided for a survivor's pension to be payable to a "cohabiting partner", as defined in the scheme's rules, following the death of a member.  In order to qualify as a cohabiting partner, the relevant individual and the member had to have been living together as if they were husband and wife or civil partners, and there needed to have been a situation where either the individual was financially dependent on the deceased member or the two were "financially interdependent".

The case arose from a Pensions Ombudsman determination in which the Ombudsman had found that Southwark Council had acted reasonably in reaching the conclusion that Mr Thomas had not been the deceased member's cohabiting partner within the meaning of the scheme's rules.  The High Court concluded that the Ombudsman's decision had been wrong in law.  According to the Ombudsman determination, the Council's decision had rested on (a) a finding that Mr Thomas and the deceased had not been cohabiting, and (b) that there had been no interdependence.  The Ombudsman had rejected the Council's conclusion on the cohabitation point, but had found that the Council had been justified in concluding that there was no interdependence.  However, the judge considered that the Council's conclusion on the cohabitation point had likely influenced its conclusion on the interdependence point.  He therefore remitted the case to the Council for a fresh decision.

The judge made some observations on the question of financial dependence/interdependence in the hope that such observations might be helpful to the parties.  He said that a point of potential importance for considering whether Mr Thomas was dependent on the deceased member was that it appeared that they had been living together at the deceased member's home, which freed up Mr Thomas's own flat to provide rental income.  The judge said that it was not clear that attention had been paid to this point.  He also noted that the tenancy under which Mr Thomas's flat was being let to a third party named both Mr Thomas and the deceased member as landlords.  The judge considered that this was "surely significant evidence" supporting the contention that Mr Thomas and the deceased member were cohabiting.

Our thoughts

This case underlines the importance of looking at all the evidence when considering whether two individuals are financially interdependent.  In this case it appears that the Council asked about the existence of documentation in joint names (eg Council Tax bills, bank accounts, mortgages or tenancies), but it is not clear that it considered the financial impact of one individual providing another with accommodation, particularly in circumstances where this freed up a property to be rented out.