I have been getting so many questions about pension and divorce that I decided to focus this month’s column on the topic. The good news is that our pensions are usually exempt from any liens, but the bad news is that the division of pensions will honor court orders for child support, alimony or equitable distribution because of court decisions and opinions given by the New Jersey Attorney General. That means the retirement systems have allowed the implementation of matrimonial/ civil union dissolution court orders granting alimony, support or equitable distribution against a member’s monthly retirement allowance.
Just so you know, it is your responsibility to provide the Division of Pensions with copies of all court orders. Now I know what you’re thinking: if I don’t send it how will they know? I am sure your ex-spouse’s lawyer will gladly send the Division of Pensions the court order when they know that their client is entitled to a sum of money. When you are filing for divorce or a dissolution proceeding, it would be a good time for you to reassess your beneficiary designation. It may be a good idea to think about who you want to be listed as your beneficiary before, during and after the completion of the divorce proceedings. There is a statute in New Jersey that states if you designate your former spouse or relatives of your ex-spouse as beneficiaries, they cannot receive the benefit (N.J.S.A 3B:3.14). The pension and/or the life insurance proceeds become payable to your remaining primary beneficiaries, contingent beneficiaries or your estate.
As always, there are a few exceptions. One of which is if there is a court order that specifically designates your ex-spouse to receive a pension and/or the life insurance benefit, or you sign and file a designation of beneficiary for after the final date of judgement that names your ex-spouse or former relatives of your ex-spouse as pension and/or life insurance beneficiaries.
When you have reached retirement, matrimonial orders regarding your retirement will take effect once you begin receiving your monthly retirement allowance. The court order can designate a specific dollar amount, percentage or a percentage based on the number of years of pensionable service you have accrued during your marriage to be withheld from your retirement allowance. The amount of money will be sent directly from the Division of Pensions to your former spouse. Any court-ordered payment to your former spouse will stop when you die or when your former spouse dies.
If you have a question regarding this topic or
any pension related topic, you can reach me at the
NJSPBA office by phone or email.