If you are a woman facing divorce, it’s vital for you to find out certain information before your divorce becomes final. This is particularly true when pension benefits come into play in any settlement negotiations.
The reason for this is clear. You cannot possibly get the optimum settlement amount to which you may be entitled if you do not have all of the information available to you about the benefits. Below are some important considerations.
— What type of pension(s) is/are involved?
— How is the pension funded?
— How are the pension benefits paid out?
Keep in mind that pension plan participants usually must work a minimum of five years in order to be eligible to receive benefits. Governmental agencies, however, may have different rules in place governing eligibility of participants and their spouses, so make sure this is clarified.
Couples who have been married for decades often qualify for multiple pension plan benefits if the participant spouse had two or more employers that offered retirement plans.
Your attorney can determine the exact benefit amount that your soon-to-be ex-spouse accrued under each retirement pension by contacting the pension plan administrator. He or she will provide your attorney with your spouse’s most up-to-date yearly benefit statement. Attorneys can also ask for the summary plan description (SPD) outlining the regulations and main features of the pension plan. This is helpful during property settlement negotiations, as you will know whether or not cost of living adjustments are factored into plan disbursements.
Sometimes it might be worthwhile to get the pension benefits valuated by an accountant or an actuary. You might discover the true value is more complex than it initially appears.
You also need to make sure that the Qualified Domestic Relations Order (QDRO) stipulates that you are to receive survivor benefits in the event that your ex-spouse predeceases you. These benefits usually are half of the amount received by the plan participant. If the QDRO fails to specify that an ex-spouse is the recipient of survivor’s benefits, any benefits may terminate upon your ex’s death.
Source: Women’s Institute For A Secure Retirement, “7 Key Questions You Need To Ask BEFORE Your Divorce Is Finalized,” accessed June 30, 2017