Case About Domestic Partner’s Right to Pension Proceeds

A motion to dismiss, claiming that a domestic partner’s claims for benefits as well as a surcharge were duplicative, was denied.

A federal district court has moved forward a case alleging a pension plan participant was not fully informed of his rights to a joint and survivor annuity upon retirement, in violation of the Employee Retirement Income Security Act (ERISA).

David R. Reed filed the lawsuit, claiming that as a domestic partner of the pension plan participant, the pension benefits should have been paid as a joint and survivor annuity. Reed and the participant were registered as domestic partners in California in 2004 and were married in 2014.

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Donald Lee Gardner retired from KRON-TV in 2009, and he and Reed met with human resources to discuss benefit options. According to the opinion written by U.S. District Judge Jeffrey S. White of the U.S. District Court for the Northern District of California, the plan allowed that a participant who is married at retirement or benefit commencement must be paid his monthly pension benefit in the form of a 50% joint-and-survivor annuity unless he elects otherwise after written notice of his right to the joint-and-survivor annuity and with the witness or notarized written consent of his spouse. Reed claims that during the talk with HR, the availability of a joint and survivor annuity was never mentioned, and Gardner selected a single-life annuity.

Reed argues that California law at the time granted domestic partners the same rights as spouses and since he did not consent to Gardner’s election, it was invalid. Gardner died in June 2014 and all benefit payments stopped.

Reed asks for declarations that the defendants are estopped from denying him a survivor benefit under the plan and that they are estopped from reducing his survivor benefit by “any overpayment occasioned by the payment of a single-life annuity during Mr. Gardner’s life.”  In addition, he asks the court to reform the plan “to provide that the provisions applicable to married participants apply to participants in registered domestic partnerships,” and to assess a surcharge “in the amount necessary to place him in the position he would have occupied but for the defendants’ breach of fiduciary duty, including in the amount of the survivor benefit and any claimed overpayment.

KRON-TV moves to dismiss the third claim for relief on the ground that the relief Reed seeks is duplicative of his first claim for benefits. White noted that in CIGNA Corp. v. Amara, the Supreme Court held that Section 1132(a)(3) of ERISA permits equitable relief, in a variety of forms, even where a plaintiff seeks relief under Section 1132(a)(1)(B). The 9th U.S. Circuit Court of Appeals has confirmed that a plaintiff may pursue claims under both Sections 1132(a)(1) and 1132(a)(3), “so long as there is no double recovery.”

White concluded that at this early stage in the litigation, the court cannot determine if the third claim simply “repackages” Reed’s first claim for relief. He denied the motion to dismiss.

Associations Promote Increased Retirement Data Standardization

DTCC’s Retirement Plan Reporting solution provides increased transparency for fee disclosure compliance requirements.

The American Retirement Association, the Investment Company Institute (ICI) and The SPARK Institute endorsed the use of The Depository Trust & Clearing Corporation’s (DTCC) Retirement Plan Reporting (RPR) solution to standardize and report plan level data across the industry.

DTCC’s RPR, offered through DTCC’s National Securities Clearing Corporation (NSCC) subsidiary, delivers a centralized and standardized solution for reporting retirement plan level information between mutual fund industry participants. RPR brings efficiency, automation, and security to the data exchange process as well as provides standard formats to accommodate the information flow among business partners, providing increased transparency for Form 5500 Schedule C and Employee Retirement Income Security Act (ERISA) Sections 408(b)(2) and 404(a)(5) fee disclosure compliance requirements, general supervision and sales reporting needs.           

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In addition to this endorsement, The American Retirement Association, ICI and the SPARK Institute have committed to on-going collaboration with DTCC to ensure the RPR solution continues to be enhanced to meet evolving client needs. In conjunction with DTCC’s clients, the organizations will collaborate to further define the data fields necessary to meet the requirements of all parties involved in sharing retirement plan information, as well as to identify additional ways to standardize retirement plan level data processes.

Marty Burns, chief industry operations officer at ICI, says, “Automation of retirement plan level data on a trusted, single platform will be a significant win for all parties to a transaction by increasing transparency, further improving client satisfaction and lowering costs. We look forward to working with DTCC and the industry to drive further levels of automation and standardization in this space.”

Ann Bergin, managing director of Wealth Management Services at DTCC, adds, “We are pleased that the RPR service has been acknowledged as a key enabler of providing the automation, standardization and increased level of transparency required to meet today’s evolving landscape. We look forward to our continued partnership with the industry to ensure that RPR evolves in tandem with industry needs.”

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