If you and your spouse have decided to end your marriage, property division and the equitable distribution of pension benefits may be on your mind.
In the state of New York, the Majauskas formula comes into play, but are there other pension distribution options to consider?
A little background
If your spouse earned pension benefits during your marriage, you are entitled to receive a share of those benefits. The equitable distribution formula for a public pension that is most often used in a divorce is the Majauskas formula. The State Court of Appeals created this standard in Majauskas v. Majauskas, hence the name. The numerator is “50% x years of service credit accrued during marriage.” The denominator is “divided by total service credit at time of retirement.”
However, you do not have to use this formula as is. You and your spouse can negotiate the benefit amount using the factors involved. In addition, the court may modify the formula. You also have other choices for equitable distribution of pension benefits.
The flat dollar amount approach
You can decide on a fixed dollar amount that will not change if your spouse, as the pension participant, receives a significant raise in salary before retiring. Keep in mind that this will affect your right to a share of any cost-of-living adjustment your spouse might receive.
Distribution calculated on a specific date
Another option is to allow the Retirement System to calculate a retirement benefit on your behalf. The amount derives from the pension holder’s average salary and years of service as of a certain date. The date your divorce action begins is the one that is most often used. Be aware that this option may net you a smaller portion of your spouse’s retirement benefit.
Next to your home, the pension benefits you will share with your soon-to-be ex might carry the most weight when it comes to property division. Your divorce attorney can help you understand how best to proceed, because the share for which you are eligible will become an important part of a stable financial future.