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Cypen & Cypen
NEWSLETTER
for
AUGUST 6, 2004

Stephen H. Cypen, Esq., Editor

Never Forget - September 11, 2001

1. CRR ISSUES UPDATE ON PENSION DATA:

The Center for Retirement Research at Boston College has issued a brief update on pension data. The report concludes that employer-sponsored pensions can provide an important source of income for retirees. Currently, however, pensions cover less than half of the workforce at any given time. While a majority of those without pensions work for companies that do not sponsor plans, many workers could participate in their employer plan, but decline -- mainly because of the shift in pensions from traditional defined benefit plans to defined contribution plans that place most of the responsibility on the employee and increase the possibility for making mistakes along the way. Going forward, the amount of pre-retirement earnings replaced by social security will decline for a number of reasons, making other sources of retirement income even more crucial. In recent years, earnings have become an increasingly important part of older individuals’ financial picture. With normal retirement age rising, and private pensions uncertain, work later in life or during retirement will continue to become more essential to providing a secure retirement. Policymakers should continue to search for effective ways to increase pension coverage, both by making it easier for employers without plans to adopt them and by encouraging employers with plans to allow more of their workers to participate. For workers who choose not to contribute to a pension plan, one possible policy approach may be to establish a system of defaults where, for example, an employee is automatically enrolled, his contributions set to maximize the employer match and his portfolios automatically rebalanced. Successful efforts to expand participation in private pensions would make an important contribution to assuring that more workers can maintain their living standards in retirement. The entire report, which contains numerous figures and tables, is online at http://www.bc.edu/centers/crr/issues/ib_ 20.pdf.

.2. FLORIDA STATUTES GOVERNING MARRIAGE DO NOT AUTHORIZE POSTOPERATIVE TRANSSEXUAL TO MARRY IN THE REASSIGNED SEX:

We predicted it was just a matter of time until Florida was faced with a case involving marriage of a transse.xual (see C&C Newsletter for August, 2001, Item 11 and C&C Newsletter for April 4, 2003, Item 3). In a case of first impression in Florida, the trial court was faced with the issue of whether a postoperative female-to-male transse.xual person can validly marry a female under the current laws of Florida. On appeal from a judgment holding that the laws of Florida do not prohibit such a marriage, the Second District Court of Appeal reversed. Since at least 1977, the statute governing issuance of a marriage license provides that no license shall be issued unless one party is a male and the other a female. In 1997, the Florida Legislature enacted the Florida Defense of Marriage Act, Section 241.212, Florida Statutes, prohibiting marriage between persons of the same se.x and prohibiting the state, its agencies and its political subdivisions from giving any effect to same se.x marriages entered into within or outside the State of Florida. Following courts in Ohio, Kansas, Texas and New York, the appellate court held that, as a matter of law, Florida statutes governing marriage do not authorize a postoperative transse.xual to marry in the reassigned se.x. The common meaning of male and female, as those terms are used statutorily, refer to immutable traits determined at birth. Whether advances in medical science support a change in the meaning commonly attributed to the terms male and female as they are used in the Florida marriage statutes is a question that raises issues of public policy that should be addressed by the Legislature. Thus, the question of whether a postoperative transse.xual should be authorized to marry members of their birth se.x is a matter for the Florida Legislature and the not the Florida courts to decide. Pension boards should be aware of the potential for claims of transse.xual “spouses,” and be prepared to deal with them. Kantaras v. Kantaras, 26 Fla. L. Weekly D1699 (Fla. 2d DCA, July 23, 2004)

.3. ERISA BENEFITS IN HANDS OF BENEFICIARY NOT PROTECTED FROM CREDITORS:

Jennifer Hoult recovered a $500,000 judgment against her father for se.xual abuse throughout her childhood. When, after eleven years, the judgment had not been paid, a Federal District Court ordered the father to deposit all income in a designated account and limit his withdrawals from that account to $2,900 per month, covering reasonable living expenses. The father moved to strike from the order Employee Retirement Income Security Act pension benefits and social security benefits, arguing that federal statutes prohibit alienation of each of those benefits. On appeal from an order denying the father’s motion, the court of appeals affirmed, joining four of the five other courts of appeals that have decided the issue. ERISA’s anti-alienation provision states that benefits provided under a plan may not be assigned or alienated. The language governs only the plan itself. Standing alone, it does not read comfortably as a prohibition against creditors reaching pension benefits once they have left the hands of the administrator. A more difficult question was raised by the lower court’s refusal to strike social security benefits from the order: the Social Security Act’s anti-alienation provision clearly applies to benefits even after they have been distributed to beneficiaries. However, because the parties “worked out” an arrangement that exempted the father’s social security from the order (but reduced his monthly withdrawal limit by that amount), the appellate court did not have to resolve the question. In our opinion, the anti-alienation language in Sections 175.241 and 185.25, Florida Statutes, is more like the ERISA language than the Social Security Act language, but a broader local law plan provision would govern. Hoult v. Hoult, Case No. 02-2128 (U.S. 1st Cir., June 22, 2004).

4. INVESTMENTS IN THE DIPLOMAT HOTEL COST TRUSTEES THEIR POSITIONS:

In settlement of litigation instituted by the Department of Labor claiming violation of the Employee Retirement Income Security Act, four Trustees on the Board of the Plumbers and Pipefitters National Pension Fund have stepped down from their positions. The four also agreed to pay almost $11 Million in restitution and civil penalties connected with the imprudent management of the Fund’s $800 Million investment in the Diplomat Hotel project, as alleged by DoL. In the suit, DoL claimed that union officials failed to conduct feasability studies or market analyses and failed to maintain adequate financial controls over construction costs, while paying excessive fees to vendors on the project.

5. COPS TO ROBBER -- “FREEZE”:

A 24-year-old man recently held up a Jackson, Michigan, Dairy Freeze. While making his getaway, however, he knocked over a large container of strawberry syrup. Attempting to get up, he slipped in the strawberry goo and fell down again. Ultimately he got back to his feet, leaving his wallet stuck in the syrup, making it relatively easy for police to track him down. Not that identification would have been a problem anyway. When arrested, “he still had strawberry syrup all over him,” according to arresting officers.

Editor’s Note: Some of our more astute readers may notice that this edition has periods in the middle of certain words. We have learned, the hard way, that some of our readers’ e-mail programs filter out words perceived to be inappropriate. We will try to be more “sensitive” in the future. Who’da thunk a filter would stop “b.utt?”

Copyright, 1996-2004, all rights reserved.

Items in this Newsletter may be excerpts or summaries of original or secondary source material, and may have been reorganized for clarity and brevity. This Newsletter is general in nature and is not intended to provide specific legal or other advice.


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