Pension Fund’s Survivor Benefit Not Gender-Biased

The 9^th U.S. Circuit Court of Appeals agreed with a lower court that Janet M. Wood’s allegation – that she received a less valuable retirement benefit as a single employee — “rests upon a series of contingencies.” The district court observed that “[i]f Wood had retired married, the value of her [surviving spouse] benefit . . . would have been unknown on the date of retirement because that value was contingent upon a series of events: pre-deceasing her spouse, her spouse surviving her for a period of years, and her spouse’s eligibility for the benefit at the time of her death.”   

The district court also addressed Wood’s contention that she suffered economic injury “by receiving a refund of only her employee contributions . . . whereas married retirees receive a benefit funded also by ‘substantially equal’ matching employer contributions.” First, after reviewing the applicable City ordinances, the district court determined that there was no evidence that the City was required to make additional matching contributions to the survivor benefit. Second, the district court determined that Wood had no entitlement to any portion of the City’s normal contributions that might fund the surviving spouse benefit, because those benefits technically belong to surviving spouses and not retirees.  

Wood’s theory was because, in the aggregate, the City pays a larger amount of money to the married retirees who select the surviving spouse benefits than it does to single retirees who do the same, and male retirees are more likely to be married, the surviving spouse benefit has an unlawful disparate impact on female retirees.  

However, the court found Wood failed to allege any facts establishing that the City deliberately adopted an employment practice in order to discriminate based on gender. “The fact that an employer was aware of, or totally indifferent to the discriminatory impact of, its policy is not sufficient to state a claim for relief,” the court said.  

Under the SDCERS plan, when a City employee retires, she must choose among several options for allocating the pension benefit and the survivor benefit. If a City employee is married (or has a registered domestic partner) at the time of retirement and chooses the surviving spouse benefit, the employee will receive her full monthly pension benefit until her death. At that time, if the employee’s spouse or registered domestic partner survives her, the spouse or partner will receive a monthly allowance equal to half of the employee’s monthly pension benefit.   

If a City employee is single at the time of retirement and has chosen the surviving spouse benefit, the City either refunds the employee her contributions to the survivor benefit (plus interest) as a lump sum, or treats the employee’s survivor contributions as voluntary additional contributions made to provide a larger monthly pension benefit.   

Wood was single when she retired and had chosen the surviving spouse benefit. She elected to have her survivor contributions treated as additional voluntary contributions, adding to her monthly benefit.