What happens to my pension upon divorce?

Photo of attorney Melinda L. Singer

One of the most challenging aspects of a divorce, for many couples, is resolving their financial ties. That generally means splitting up any assets and debts that are part of the marital estate.

Divorce can become particularly complicated if spouses have unequal financial circumstances and that spouse’s pension becomes a topic of conversation. It’s critical that you understand what may become of your pension as your divorce discussions unfold.

How often do divorces involve pension disputes?

Today, divorces are more common than pensions. Statistics show that 20% of marriages are likely to end in the first five years, and 33% have a likelihood of dissolving in the first ten years. However, only 18% of private-sector employees now have pensions, compared to 35% in the 1990s.

Can your spouse take your pension in a divorce?

Your spouse isn’t entitled to all of your pension, no. Whether a spouse qualifies to receive part of your pension is a complicated question. A retirement plan, like most assets, is often considered a joint marital asset if it began during the marriage. If you had your pension already started when you married, however, you may be able to claim at least part of that money as your separate assets.

New Jersey is an equitable distribution state, which means that judges are concerned with fairness — and that doesn’t necessarily mean a 50/50 split of the assets. Instead, the court is likely to weigh each couple’s contributions to the marriage — both financial and in-kind — and take that into account when dividing up a pension.

Federal legislation such as the Employee Retirement Security Act of 1974 (ERISA) and the Retirement Equity Act of 1984 protect pension holders. Any spouse looking to stake a claim to their ex’s pension must generally initiate a qualified domestic relations order (QDRO) to do so. A spouse must take this step when the divorce is taking place, not when the spouse is retiring.

How can you protect your assets in a divorce?

The percentage of the total amount of your pension a spouse may receive is often negotiable. A divorce attorney can advise you about the many different settlement options you may have when a pension is a concern. 

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