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Author: acprg Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75339  
Subject: Re: PENSION SURVIVORSHIP Date: 9/27/1999 7:13 PM
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WARNING: LONG POST

Just to clarify and flesh out a couple of points that have been made:

First, there are two issues with respect to your ex-husbands pension plan. The first is how much you receive of his regular pension, and the second is how much you receive after his death in the form of a surviving spouse's benefit. In addition, you must take great pains to get a proper Qualified Domestic Relations Order, or everything else could be in vain (more about that later).

Regular Pension Amount:

This should be a percentage of his "accrued benefit" (annual benefit payable at age 65 that he had earned during the time you were married). Note that you don't have to wait until he starts his pension to get yours; you can start at least as early as the first date he would be eligible to start payments. The plan should give you a choice of how you want your pension paid.

For example, suppose the divorce settlement provides for you to get 50% of the benefit he accrued while you were married and the earliest he can get his pension is when he is both age 55 and has 5 years of service. If he meets these requirements on, say, 2/1/2000, then you can start your pension on that date regardless of whether or not he retires and starts his.

Now for the sticky part. Do you want 50% (in this example) or 50% of the value? Depending on your relative ages, it can make a big difference. Note that if you choose 50% of the value, you will still probably have to take it as a monthly benefit unless the plan has a lump sum option. In this case, try to get the plan to take your disability into account when it converts from the lump sum to the annuity as it should result in a higher monthly benefit.

The plan will be bound by whatever you end up agreeing on if you file a proper Qualified Domestic Relations Order with it (see below).

Surviving Spouses Benefit:

As has been noted, all defined benefit pension plans are required by law to pay benefits in the form of a 50% joint and survivor annuity unless the spouse agrees, in writing, to another form of payment. This is independent of anything you agree to with respect to splitting the benefit he accrued while you were married.

Unfortunately, most pension plans do not have good records regarding marital history, so making sure you get your benefit can be problematic. Here, again, get it in the Qualified Domestic Relations Order!

Qualified Domestic Relations Orders (QDROs):

The QDRO should be written by an attorney and signed by the court. It should tell the plan EXACTLY what you are to get from the pension plan.

Unfortunately, many if not most divorce attorneys don't really know how to write a solid QDRO; it's extremely technical. As someone recommended, get a competent pension actuary to help you translate what you and your ex-husband agree to into precise calculation language that can be included in the QDRO. The actuary can get information on how the pension plan works and help make sure you get what you're intending to get; in the world of pension math, "50% of his benefit" may not mean what you think it does!

When you have a good QDRO, make sure the plan gets it as soon as it has been signed, and make sure the plan advises you as to whether or not it is a valid QDRO. If you've had competent advice it should be, but you don't want all your hard work down the drain on some technicality. If the plan says that it's deficient in some way, you'll need to go back to the court with a revised QDRO.

Finally, TheBadger pointed out that you may want to forgo the actual pension benefit in favor of getting the value in some other form. This is definately worth considering, given the problems associated with QDROs. Also, depending on your health status given your disability, you are probably better off with anything that "front loads" benefits to you. Your ex-husbands pension plan may or may not take disability into account in its calculations; if not, your value will be converted to an annuity using the expected mortality of a healthy person, resulting in smaller payments to you and a loss of payments if you die before the healthy person would.

Sorry for the length and technical issues. Unfortunately, QDROs are sticky, sticky, sticky; you need good technical expertise to get it done right.
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