What happens to my pension if I get divorced?

Pension Benefits

I have been getting so many questions about the topic of divorce and your pension, I decided to let you know some quick facts.

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 so as to comply with the provisions of the 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 willingly 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, that 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, because there is a statute in New Jersey that basically says that even if the beneficiary information lists your former spouse or relatives of your former spouse as beneficiaries, they cannot receive the benefit. (N.J.S.A 3B:3.14) The pension and/or 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 can sign and file a designation of beneficiary for after the final date of judgment that names your ex-spouse or relatives of your ex-spouse as your pension and/or life insurance beneficiary.

When you have reached retirement, the qualified domestic relations order (QDRO)/divorce decree regarding your retirement will take effect once you begin receiving your monthly retirement allowance. The court order can designate a specific dollar amount, a 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 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. So let’s hope for your sake that you outlive your former spouse in retirement.

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.