A classic pension is most often seen with public employees like teachers, law enforcement officers, court employees, mail carriers or military personnel. It provides for a monthly payment upon retirement based upon a number of factors, including length of service and the salary at the time of retirement.
In New York, the marital portion of the pension is divided upon divorce or separation, which means we first determine how much of the pension was earned during the marriage. This is done by creating a fraction. The top number of the fraction, the numerator, is the amount of service credit accrued during the marriage. In other words, during the marriage, how many months or years did the employee contribute to the pension? This is divided by the total amount of service credit at the time of retirement. If the employee has not retired by the time of the divorce, we won’t know the denominator, but we can define it as the total amount of service credit at the time of retirement.
So, if the employee contributed to a pension for 20 years during the marriage and retired after 30 years, the marital portion of the pension is 2/3. The other spouse will likely receive half the marital portion, so in this example they will get 1/3 of the monthly benefit.
There are many other things to consider, such as preretirement death benefits, post-retirement death benefits, single life annuities, joint and survivor annuities, cost-of-living adjustments, pop-up benefits, shared interest or separate interest divisions – in other words way too many to address here, so reach out so we can talk about the particular terms of the pension plan in your separation or divorce.