The Illinois Religious Freedom Protection and Civil Union Act went into effect on June 1, 2011. A civil union creates a legal relationship between two persons of either the same or opposite sex who now may be defined as a “spouse,” a “dependent” or some other term that denote the spousal relationship. Many individuals obtain retirement benefits through employment; some of those benefits also are provided to spouses or dependents. The Civil Union Act will impact those benefits.
Whether or not partners in a civil union are entitled to benefits as a result of the employment of their partner depends upon the source and type of benefits offered. You will need to know if the plan you or your partner participates in is an ERISA (Employee Retirement and Income Security Act) plan or not. ERISA is federal law, and under the federal Defense of Marriage Act (DOMA), a spouse is defined as an opposite sex marital partner only. Employers who offer benefits under ERISA plans have to comply only with DOMA and do not need to offer benefits to partners in a civil union. A plan can choose to offer benefits to civil union partners, but is not required to do so. An employer can always offer benefits greater than required. For instance, Illinois has a minimum wage higher than the minimum wage required by the federal government. An employer may choose to offer benefits to same sex couples if they operate in a number of states with conflicting laws regarding same sex marriage to be consistent and for administrative ease. For example, Iowa allows same-sex marriage, Illinois has civil unions, and Indiana recognizes only opposite sex marriages. Employees will have to check their plan document to see how a spouse is defined and if benefits are provided to a same sex partner.
Retirement plans that are not subject to ERISA, such as church plans and state and local government plans, must recognize and comply with the Civil Union Act and offer the same retirement benefits to civil union partners as are offered to spouses of employees.
There are a number of other retirement plan issues, such as death benefits and form of benefit payments that are affected by whether or not an individual is categorized as a spouse. A civil union partner may not have the same rights to death benefits as a spouse. A common form of benefit for spouses is a joint and survivor annuity, which pays the participant until he or she dies, and then pays the spouse a benefit until death. A non-spouse may not qualify for this form of benefit. An option that may be available for a civil union partner is a 10 year certain and life annuity. The participant is paid for life, but if the participant dies within 10 years of starting benefits, a beneficiary is paid for the remainder of the 10 year period. If the participant dies 10 years or more after starting benefits, no benefits are paid to the beneficiary. The participant cannot provide the same retirement security to a civil union partner using this form of benefit.
If you are planning to enter into a civil union partnership, do not assume that you will have all of the same rights and benefits as a traditional spouse. Do your homework: 1) check your employee benefit plan documents, and 2) talk to your benefit plan administrator to determine what benefits your civil union partner may qualify for.