By Pension and Benefits Editorial Staff
A pension plan, which by its terms was governed by California law, abused its discretion under the plan when it denied spousal survivor benefits to the domestic partner of a deceased, retired participant, the U.S. Court of Appeals in San Francisco (CA-9) has ruled. During the periods in which the plan’s Pension Committee made benefits decisions in this case, California law afforded domestic partners the same rights and benefits granted to spouses.
Two men living in California began a committed, long-term relationship in 1998. One of the men participated in an employer-provided pension plan governed by ERISA. In 2004, the men registered as domestic partners. The plan participant retired in 2009 and began receiving pension benefits. The men married in May 2014, four days before the plan participant died.
The surviving spouse made a claim for benefits to the plan. The plan’s Pension Committee denied the claim, stating that it “has consistently interpreted the term spouse to exclude domestic partners.” A district court sided with the plan, concluding that the Committee did not abuse its discretion in denying the claim for a survivor-spousal benefit.
Choice of law provision. In a brief, unpublished opinion, the Ninth Circuit reversed the lower court, concluding the plan abused its discretion when it denied benefits to the surviving spouse. Central to the court’s analysis was the plan’s choice of law provision, which provided that the plan should be administered in accordance with California law, in a manner consistent with the requirements of ERISA and the Code.
During all periods relevant to the case, California law afforded domestic partners the same rights, protections, and benefits as those granted to spouses. “Neither ERISA nor the Code,” the court explained, “provided binding guidance inconsistent with applying this interpretation of spouse to the Plan.” (The court noted that current IRS regulations, which exclude registered domestic partners from the definition of “spouse, husband and wife,” are applicable for tax years ending on or after September 2, 2016.)
Thus, the court concluded, because the men were domestic partners at the time of the participant’s retirement, the Committee should have awarded spousal benefits in accordance with California law, as required by the plan’s choice of law provision.
SOURCE: Reed v. KRON/IBEW Local 45 Pension Plan (CA-9).
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