This week, the government rejected proposals to close a loophole which appears to have denied many trans women what they consider to be their rightful entitlement to pension payments.

However Lord Freud, the parliamentary under-secretary of state for work and pensions, accepted that the matter might need to be looked at further – and continuing pressure from the courts mean that it is far from resolved. The problem was created with the passage of the Gender Recognition Act (GRA) in 2004.

This was, in turn, a response to mounting legal pressure from European and domestic courts and a series of cases in which it was ruled that the absence of a legal framework within which trans men and women could obtain recognition within their new gender was discriminatory.

In theory, the GRA solved matters. In practice, it left as unfinished business individuals who said they had been advised not to claim a pension in their new gender by the Department of Work and Pensions (cases brought by individuals Richards and Grant before European courts), and those who had been told they were not entitled to a pension (see the Christine Timbrell case) because they refused to dissolve a pre-existing marriage.

Other losers were those unlucky enough to be caught by the fact that the gender recognition panel, responsible for granting gender certificates, required a period of at least two years “living in role” before they would do so. Thus, trans women who transitioned in or around 2005, when the Gender Recognition Act came into force, would have been unable to start claiming their pension as a woman until 2007.

In an attempt to resolve this issue, Lord Boswell of Aynho put an amendment to the Pensions Bill, currently going through its committee stage in the House of Lords, on Tuesday.

His proposal would have granted retrospective pension rights to trans women who had been caught out by the timing of the Act, granting full female pension rights to anyone who lived in their acquired gender “for a period of two years before the passage of that Act, or who have received a full gender recognition certificate under the terms of that Act within a period of two years after its coming into effect”.

Lord Boswell is no stranger to this issue. As the Conservative MP for Daventry from 1987 to 2010, he was active in assisting a constituent seriously affected by these issues: he later led for the Conservative Party in the standing committee appointed to consider the Gender Recognition Bill.

He told PinkNews.co.uk that he understands the intricacies involved and is sympathetic to the government’s difficulties on the issue.

But he added: “Ministers can’t hand out benefits like sweets.”

He is equally aware that any attempt to introduce “retrospectivity” into legislation frequently creates as many problems as it resolves.

For the government, Lord Freud resisted the proposal on two grounds: first, that the scale of the problem was a good deal greater than Lord Boswell had suggested. The latter put forward a view that the total number of individuals affected by such legislation was likely to be of the order of 50 – and therefore, the cost to government would be negligible.

Lord Freud claimed that estimates provided by the Inland Revenue were that 750 people would be affected, at a net cost to the economy of between £9 million and £38 million in total.

A spokeswoman for the DWP told us that these figures were an estimate of all trans women potentially covered by the 2006 court ruling.

Lord Boswell also argued that this was not “the thin end of the wedge”: granting rights to this group could not be an argument for extending similar retrospective considerations to others.

Lord Freud disagreed, citing women now in their 70s and 80s who draw only a small married women’s pension because they were too old to benefit from the various pension reforms that have taken place since the 1970s. He argued that if trans women were granted retrospective rights, this much larger group might also put in a claim for backdated payments.

It seems unlikely that the matter will rest there. The Timbrell case, heard last summer, ended in a ruling that a trans woman who transitioned before the GRA came into effect was entitled to her pension because there was no alternative legal framework within which she could claim her rights. The government therefore already faces the possibility of further legal challenge from those who would have been covered by this amendment.

If, at some future date, government also recognises gay marriage, then it may not be too fanciful to anticipate challenge from those denied a pension because they refused to divorce in order to gain their GRC.

Lord Boswell withdrew his amendment, but remains hopeful that the government will look at the issue further. As he told PinkNews.co.uk: “My impression was that the government is listening – and I have told the minister that if he would like further assistance in considering these matters, I would be happy to help.”