If you offer retirement benefits to your employees, here’s a case you need to understand.
Courts have spent considerable time sorting out the impact of Title VII on defined-benefit pension programs. Settled is whether men and women can be forced to make different contributions based on their gender and whether retiring men can receive higher monthly benefits than women because men don’t live as long.
Until now, one question remained: Does an employer have to equalize the total amount male and female retirees receive? The answer is no.
Recent case: Janet worked for the city of San Diego for 30 years and participated in its defined-benefit pension plan. She contributed regularly toward her own retirement, as well as toward survivor benefits. When she retired, she was unmarried.
She had a choice: Take a lump-sum payout for what she had contributed to the survivor plan or treat those contributions as having been made to her own plan, resulting in a higher monthly benefit. Under the retirement plan terms, married retirees were eligible to collect benefits until they died, and any surviving spouse would then continue to collect half the prior benefit.
Although she personally lost no benefits, Janet sued for sex discrimination, arguing this system favored married men by paying out more over the course of both their and their spouses’ lifetimes.
Her case was built on the assumption that men nearing retirement age were more likely than women to be married, and that men die younger. Men are more likely to never reach retirement age, while their wives would likely live much longer, collecting retirement benefits until they died.
The court upheld the city’s retirement plan, ruling that the difference in total payouts did not amount to sex discrimination. (Wood v. City of San Diego, No. 10-56826, 9th Cir., 2012)
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