Pensions are often one of the assets up for division in a divorce. The marital portion of a pension plan may be divided amongst the parties. The marital portion of a plan would be the portion that accrued from the date of marriage through the date of separation. In some cases, the entire pension will be marital depending on the timing of the marriage alongside the start date of the pension plan. The marital portion will also include investment experience on the marital portion that accrues post-separation. It will not include contributions by the employee made post-separation. Parties can divide the marital portion of the plan by way of percentage or fixed dollar amount.
In a divorce, especially a long term marriage, a pension can be a very valuable asset. Assets accumulated during the marriage are marital assets, regardless of whose name the asset was accumulated in. Retirement accounts, including pensions are marital assets to the extent that they were acquired during the marriage. If a portion of the pension was accumulated prior to the marriage or after the marriage, the court will use a coverture fracture to determine the marital portion. This means the number of years married over the total years that the pension was accumulated will be marital. In addition, many pensions have a survivor benefit that should also be considered. A survivor benefit is an election when the pension is taken that reduces the monthly pension payment based on the election that is chosen. Depending on the value of the pension and the health of the parties, the divorcing spouse may want to pursue the survivor benefit whereby they secure a monthly payment in the event of pension earner's death which could be various percentages of the monthly pension depending on the election that was taken. Instead of doing a percentage of the marital portion, in some cases, it may be beneficial to have the pension appraised and the survivor benefit appraised to offset the value with other assets. Usually a private company will be hired to do this type of valuation.
Pensions already in pay status at the time of separation require additional considerations in a divorce matter. The pensions can still be divided as a marital asset however the method of valuing the total value of the pension for distribution is altered. This is because often elections for survivor benefits are made at the time the benefits commence and are usually irrevocable. Accordingly, any survivor benefit should be valued separately and set against the value of the pension itself. Pensions in pay status also present a unique issue when it comes to support.