Compliance January 26, 2007

Judge Accepts WA State QDRO as ERISA Valid

January 26, 2007 (PLANSPONSOR.com) - Because a qualified domestic relations order (QDRO) allowing a participant's common-law wife a portion of his pension is valid under state law, it is also valid under federal law, a judge has ruled.
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U.S. District Judge Thomas S. Zilly of the U.S. District Court for the Western District of Washington decided that the key issue in the case involving   Philip and Norma Owens was that the state of Washington recognizes quasi-marital relationships for the purposes of dividing up marital property,.

Zilly turned away arguments by the pension plan that because the couple was never legally married, the state QDRO did not relate to marital property rights recognizable by the Employee Retirement Income Security Act (ERISA).

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Philip and Norma Owens were never legally married but lived together in a quasi-marital relationship for more than 30 years, had two children together, and held themselves out to the community as married, according to the court.

When the pair separated, Norma Owens went into court to get a distribution of their assets. A state court issued a QDRO which, among other things, granted Norma Owens half of the pension payments that Philip Owens was receiving. The plan refused to make the payments to Norma Owens, saying the QDRO was not valid under ERISA because the couple had never been legally married.

The court also found that Norma Owens was an “alternate payee” under ERISA because she was a dependent of Philip Owens. In making that determination, Zilly noted that Norma Owens was dependent on Philip Owens for financial support for the 30 years they lived together.

The case is Owens v. Automotive Machinists Pension Trust,W.D. Wash., No. C06-943Z, 1/19/07.

Benefits January 25, 2007

Dissipation of Employer-Sponsored Benefits Endangers American Dream

January 25, 2007 (PLANSPONSOR.com) - Workers are beginning to see the shift in the cost of benefits from the employer to the employee as a threat to their financial security, with just more than 60% saying that is the case, according to a new research from MetLife.
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The study commissioned by MetLife found that, among other causes, the erosion of corporate benefit plans in favor of higher costs to individuals is making the pursuit of the American Dream even more difficult.

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Even though a majority of all generations – particularly Baby Boomers and Generation X – say their financial future is at greater risk than in the past, nearly the same number of Americans who say they haven’t achieved the American dream (66%) remains optimistic they still can (67%).

According to the study, 72% of Americans – and a strong majority of each generation – do not expect to have Social Security safety nets and 53% no longer expect to have Medicare. In fact, more than half (53%) of workers say they have had to change jobs – or may need to change jobs in the future – to generate enough income for basic needs and 69% say that if they earned more money they would save most of the additional income rather than spend it.

The survey of 1,500 people was conducted by Strategy First Partners and Penn, Schoen and Berland Associates in November 2006.

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