The [Pension] Benefits of the DOMA Decision

By Matthew Caulfield

The day that the Supreme Court struck down Section 3 of the 1996 Defense of Marriage Act was a day that would change the lives of millions of Americans, LGBTQI, and heterosexual alike. It was a historic decision and a step in the direction of equality that will continue to define American jurisprudence as it relates to federal marriage recognition for years to come. 

The US v. Windsor (2013) decision raised questions on issues ranging from American federalism to the ethics of what some would call “legislating love.” But one subject, in particular, has always been a grey area: the issue of qualified pensions. Admittedly, pension benefits are not the first thing that comes to mind when many think of the burgeoning egalitarianism in our society, but, according to the U.S. Department of Labor, as of 2011, assets in US pension plans total more than 6.3 trillion dollars.[1]

This sizable pool of national assets had sometimes been met with confusion and even hostility when it came to how these pension plans were to be applied to same-sex couples; pension plan documents are, after all, generally riddled with references to the nebulous term “spouse.” Qualified pensions are regulated federally by ERISA, the Employee Retirement Income Security Act of 1974. Under this body of law, spouses play a significant role in pension plans; ERISA, for example, stipulates that spouses are entitled to receive death benefits (i.e., your spouse would actually have to sign a waiver if you wanted to designate a different beneficiary). Your spouse would also have to provide consent if you wished to change your death benefit option to something other than a Qualified Joint and Survivor Annuity, an annuity that makes at least half the monthly payments to your spouse that you had received as part of your pension.

After US v. Windsor, though, ERISA no longer unconstitutionally necessitates that “spouses” be of opposite sexes, as it had under DOMA.  In the first post-Windsor federal ruling related to employee benefits, O’Connor v. Tobits (2013), the US District Court for the Eastern District of Pennsylvania pointed out that:

“Prior to the Court’s decision in Windsor, under the plain language of ERISA, the Code, and the Plan at issue in this case, qualified retirement plans were under no obligation to provide benefits to same-sex Spouses.”

Now, however, the term ‘spouse’ under ERISA, “…rightfully includes those same-sex spouses in ‘otherwise valid marriages.’” Following this reasoning, the court ruled that the same-sex couple, married in Canada, were, in fact, spouses under the plan. 

However, this ruling was narrowly justified by citing the fact that the couple’s “domicile” was in a state in which same-sex marriages are recognized. This begs the question: What rights have the married same-sex couples that reside in states that don’t recognize their marriages?

Days after the DOMA decision, President Obama said:

“It's my personal belief—but I'm speaking now as a President as opposed to as a lawyer—that if you've been married in Massachusetts and you move someplace else, you're still married, and that under federal law you should be able to obtain the benefits of any lawfully married couple.”[2]

While somewhat encouraging, this statement was not as reassuring as many had hoped. There was no clear executive mandate for the enforcement of such an interpretation … until now, at least.

On September 18th of this year, the U.S. Department of Labor Employee Benefits Security Administration issued “Technical Release 2013-04,” which stated that, “…the term ‘spouse’ will be read to refer to any individuals who are lawfully married under any state law, including individuals married to a person of the same sex who were legally married in a state that recognizes such marriages, but who are domiciled in a state that does not recognize such marriages.” In effect, it only matters that a couple’s marriage is recognized in the state in which it is celebrated – the couple’s domicile is irrelevant.

This guidance directly addresses the issue at hand. As some critics may profess, though, the new rules were not due to the President’s “personal belief[s].” The Department spent much time in its explanation detailing how the uniformity of the system would help avoid certain “significant challenges for employers that have employees (or former employees) in more than one state,” and obviate the “substantial financial and administrative burdens” that would have been placed on these employers under a system otherwise dependent on the employees’ domicile. Ultimately, the system based on the marriage’s state of celebration, “promotes uniformity in administration of employee benefit plans and affords the most protection to same-sex couples.”

This new system no longer gives plan administrators the nearly plenary power afforded to them previously in the determination of spousal pension benefits for same-sex couples. The ramifications of this guidance and the overall development of this new status of same-sex couples in the realm of federal recognition will undoubtedly have lasting and far-reaching effects. It brings our intricate web of state laws to an entirely new level of complexity. We can only hope that the transition from an old era to the new proceeds smoothly and without incident.

[1] U.S. Department of Labor Employee Benefits Security Administration. "Private Pension Plan Bulletin Historical Tables and Graphs." DOL.gov. U.S. Department of Labor, June 2013. Web. 29 Oct. 2013.
[2] "Remarks by President Obama and President Sall of the Republic of Senegal at Joint Press Conference." The White House. Office of the Press Secretary, 27 June 2013. Web. 30 Oct. 2013.

Photo Credit: Wikimedia Commons