What hap­pens with Pen­sion in Di­vorce?

A di­vorcee may be en­ti­tled to a por­tion of their for­mer spouses pen­sion.  

How pen­sions are han­dled upon di­vorce may de­pend on a po­ten­tially im­por­tant dis­tinc­tion. What hap­pens with pen­sion in di­vorce may de­pend whether it is a “vested” or a “non-vested” pen­sion. A pen­sion is gen­er­ally con­sid­ered vested if the re­cip­i­ent can­not lose the pen­sion by be­ing fired. 

If a pen­sion is vested it is usu­ally con­sid­ered mar­i­tal prop­erty.

How­ever, if a pen­sion is non-vested, whether or not it is mar­i­tal prop­erty will vary in only a few states. Most state courts are will treat non-vested ben­e­fits as mar­i­tal prop­erty that is sub­ject to di­vi­sion upon di­vorce. But a few states find that non-vested pen­sions are too spec­u­la­tive to be in­cluded as mar­i­tal prop­erty.

Mis­souri has held that if con­tin­ued em­ploy­ment is is re­quired for pen­sion to vest, it should not be di­vided upon di­vorce. In­di­ana courts have also stated that the non-vested por­tion of the pen­sion is not mar­i­tal prop­erty that’s di­vis­i­ble upon di­vorce. But these states are in the mi­nor­ity.

Most other states, in­clud­ing Cal­i­for­nia, find just the op­po­site. In states that do con­sider non-vested pen­sions as mar­i­tal prop­erty de­ter­min­ing the value of that prop­erty can be a prob­lem. A com­mon so­lu­tion is to award each spouse a por­tion of the pen­sion as and when it is paid.

An­other im­por­tant fac­tor is whether the fed­eral gov­ern­ment is pay­ing the pen­sion. Fed­eral law can trump state law.  

Fre­quently fed­eral ben­e­fits are not sub­ject to di­vi­sion by state di­vorce court.

For those in the mil­i­tary what hap­pens with pen­sion in di­vorce may be dif­fer­ent. That’s be­cause the Uni­formed Ser­vices For­mer Spous­es’ Pro­tec­tion Act sets forth spe­cific pa­ra­me­ters that must be met be­fore a ben­e­fit can be di­vided to a spouse upon di­vorce. This in­cludes that the mar­riage must have lasted for at least ten years.

How do courts di­vide a pen­sion?

If a non-vested pen­sion is go­ing to be di­vided upon di­vorce, de­ter­min­ing the pen­sion value can be chal­leng­ing for the di­vorce court. Some fac­tors that are of­ten con­sid­ered are: One, how long un­til the ben­e­fits do be­come vested; Two, how many years the spouses have been mar­ried; and three, whether con­tri­bu­tions have been made to the pen­sion by the spouses. Some courts will also post­pone any dis­tri­b­u­tion of the non-em­ployee spouse’s share un­til af­ter the pen­sion ben­e­fits start.