- Equality Wealth advisor Malcolm Cuthbert warns many older people, who spent time in the closet, may not have secured their financial future.
I am lucky today to be married to an amazing husband and have four children – but like many gay men of my generation, I spent many years in the closet.
Back then I was a policeman at a time when it was still a criminal offense for gay and bi men to be ‘intimate’ with another man in the UK.
Now, as one of the founding partners of Equality Wealth – a specialist firm providing financial advice to LGBT+ people – I see the legacy of those years in a different light.
I often meet others like me who have personal experience of being closeted – either now or in the past. And those complex issues can create real problems that can cost them, and their partners, dear.
Of course, there are other far deeper problems that those years in the closet can create. It’s hardly surprising that many older people in our community have poorer mental health as a result.
But relieving the financial implications can be useful in reducing stress and anxiety.
Despite this I very often find that LGBT+ people who come to me for advice are in danger of a poor financial future and haven’t sufficiently protected themselves and their partners.
Final salary pension trap
Making plans for retirement is one of the biggest issues facing those in the LGBT+ community over 45.
Those who have not planned for it might not be aware of the importance of being married or civil partnered, especially in final salary schemes (those where you get a pension payment at the end rather than a pot of money).
Pensions are complex and when advice is being sought, individuals have to give their advisors the full picture, including details of their partner and their partner’s situation.
If someone is still in the closet and does not place such full trust in their advisor, this can then lead to incomplete advice.
In particular, where an individual has a final salary or defined benefit pension which will pay them an income for life when they retire, the trustees of the scheme need to know what should happen to that income on their death.
Quite often these schemes will stipulate 50% benefit to the civil partner or married spouse.
I came across an example of this recently, where an individual had a final salary pension that would pay a good level of income per year but that income would stop upon death.
Of course, that would leave the partner, with whom the individual was not married or civil partnered, in a difficult financial situation.
Luckily there are often solutions. In this case, we found a way to transfer to a personal pension. As a result, the partner is now entitled to receive 100% of the pension.
Another common error for members of the LGBT+ community is to not update their Expression of Wishes forms for their various pensions.
These days, many have half a dozen or more pensions from previous workplaces!
This means that if they die, their pension monies are often left to brothers or sisters or even their exes rather than their current partner.
To sum up, pensions for the LGBT+ community are much more complicated than they used to be and with both final salary schemes and personal pension plans, individuals need advice pertinent to their situation, to protect themselves and a possible same-sex partner as best possible.
There is no one size fits all solution and it is important that people in the community find a trusted LGBT+ knowledgable advisor to help you through the pensions and partner protection maze.
To help people start to understand some of the issues, we provide a free LGBT Retirement Guide. If you’d like to receive a copy or discuss your own situation with an LGBT+ accredited advisor, you can register here.
Malcolm is part of LGBT+ specialists Equality Wealth at St James’s Place. If you’d like to talk to Malcolm or another Equality Wealth LGBT+ specialist, contact us here.
Equality Wealth is a GSN client.