In 1975, Nathalie Norris of Scottsdale, Ariz., was 50 years old, divorced, the mother of three, and employed in the state's Work Incentive program. When her employer offered a new pension benefit that would provide a tax break while she worked and income when she retired, she jumped at the opportunity to sign up.
She decided that a deferred annuity option, in which she placed part of her monthly salary in a fund from which she would receive a monthly payment after her retirement, was the best choice for her. Pamphlets describing the benefit told how much a man who put in $100 a month of his salary, for a specific amount of time, would get in monthly checks, and similar tables showed how much a woman would get. Norris realized something was wrong. "I found out that if I put in the same amount as a man and selected the annuity option, I would collect less than a man."
The plan was a way to save money. "You don't pay taxes on [the money] until you take it out, I got into it, but I also knew I didn't like what I was offered." She filed a complaint with the Equal Employment Opportunity Commission and in 1978 received a letter saying she had a right to sue. Unable to afford a lawyer, she went to the Arizona Center for Law in the Public Interest, which sued the state, claiming the benefit program violated Title 7 of the Civil Rights Act.
The federal District Court in Arizona and the Ninth Circuit Court of Appeals agreed, and the portion of the plan that discriminated was struck down. The state of Arizona, which contends that it is not to blame because it is merely contracting with an insurance company for the plan and that all the life insurance companies use sex-based actuarial tables, appealed the case to the U.S. Supreme Court, which has agreed to hear it March 28. The decision could have a profound impact on the insurance industry as well as on numerous pending suits involving sex-based rate tables.
The insurance industry argues that it is proper to give smaller monthly benefits to women than to men since women live longer than men. It is an argument similar to that used in setting auto insurance rates, for example, where the industry sets higher premium rates for male drivers under the age of 25 since they have substantially higher accident rates than young women.
At hearings before the Senate Commerce Committee last July, industry representatives argued that sex-based actuarial tables are the fairest way of determining risk classification and that to abolish them would cost consumers hundreds of millions of dollars.
Eight actuaries have filed a friend-of-the-court brief in the Norris case, however, saying that the industry "would not be revolutionized" if sex-based tables were abolished. They said the uncertainty the industry faces in its financial structure has more to do with investment returns than with mortality of annuitants.
Following the defeat of the Equal Rights Amendment, which the National Organization for Women blamed partly on the insurance industry, a number of civil liberties and women's groups began lobbying for federal legislation to abolish sex-based rate tables. They are getting results: a House hearing is scheduled next week and another Senate hearing is expected this spring.
Judy Schub, legislative director for the National Federation of Business and Professional Women's Clubs, which has filed a friend-of-the-court brief in the Norris case, says: "There is a very basic principle here. The civil rights philosophy in this country says you don't treat an individual differently because of their membership in a certain protected class. What we're saying is you cannot take an individual woman and say because some women live longer, you can classify all women as living longer."
The median income for males 65 years old and over in 1981 was $8,173, according to the Census Bureau, while for females it was $4,757. Nearly 19 percent of women over 65 -- or nearly 2.8 million women -- are living below the poverty level.
Amy Gittler, Norris' lawyer, says Norris' benefit would be $320.11 a month at age 65, $33.95 less than a man retiring under the exact same set of circumstances. It may not seem like enough money to make a Supreme Court case out of, but to Nathalie Norris' everlasting credit, she didn't ignore it. She understood that for some retired women, $33.95 can mean the difference between eating decently at the end of the month and not.