Your CalPERS Benefits and Divorce after Retirement
While younger married couples are less likely to divorce than they were 40 years ago, the rate of divorce for older couples has actually risen. This phenomenon is known as “gray divorce” and comprises couples over the age of 55. Divorce is always a difficult and complicated process, and even more so for older couples who have spent their lives working and accumulating assets and benefits to see them through retirement. And, if the “gray divorcee” happens to have worked in the public sector, he or she will need to figure out what happens to a public pension in a divorce.
CalPERS Law on Divorce after Retirement
In keeping with California law, CalPERS considers contributions made and service credits accrued or purchased during a marriage to be community property. The California Public Employees’ Retirement Law generally prevents people with public pensions from changing their beneficiary if they divorce after retirement, even if the ex-spouse is entitled to only a small portion. This means that CalPERS benefits would be divided in a divorce, a fact that comes as an unwelcome surprise to many CalPERS retirees. Furthermore, if you were to die prior to your ex, he or she is eligible to begin receiving a large portion of your pension.
CalPERS recently posted a summary of their 45-page guide detailing how pensions are divided in a divorce, and how to change a beneficiary after retirement.
Length of Marriage Affects Benefit Share in a Divorce
If a worker and the worker’s spouse divorce prior to the worker’s retirement, each could name a different beneficiary for their respective share of the pension upon the worker’s retirement.
The length of a marriage while a public employee accrues service credits largely determines the amount of retirement benefit the worker’s spouse is entitled to receive upon a divorce. If, for instance, the worker and spouse were married only a short time prior to the worker’s retirement, the spouse would only be entitled to a small fraction of the pension.
Keeping Your CalPERS Pension after Divorce
If a worker retains 100 percent of his pension in the divorce proceedings, he or she would have had more options.
When a public sector worker contemplates retirement, there are several options to consider with respect to pension benefit distribution. If no beneficiary is designated, a larger monthly payout is available. That is because monthly payments stop upon the death of the worker.
If a spouse or someone else is selected as a beneficiary, monthly payments are reduced because, presumably, payments will continue to the spouse after the death of the worker. Actuaries calculate and determine amounts under each scenario using predictions of how long each party might live, their age at retirement, and their gender.
The reason CalPERS doesn’t allow a change in beneficiaries after retirement is that to do so would throw off the calculations. For instance, an older woman could marry a younger man, and upon her death, that young man could inherit years, if not decades of pension payments.
Changing CalPERS Law on Divorce
While appealing to CalPERS is an option, generally the agency will not make a change in beneficiary without a court order. And courts are reluctant to issue such an order. In one case, the court refused because there had been too much time between when the worker had filed for divorce and when he sought the beneficiary change.
This issue has been considered by California Senator Jim Nielsen, R-Tehama, who in 2014 agreed that the issue merited further research. However, up to the present time, no lawmakers have initiated a change to the law.
CalPERS Disability Retirement Attorneys
Cantrell Green is one of the few California law firms that maintain specialization in CalPERS Retirement Disability cases. The firm has obtained millions of dollars in CalPERS disability retirement benefits for our clients. We know that you worked hard to earn those benefits, and we want to be sure you get what you deserve.
Cantrell Green attorneys have assisted hundreds of police officers, firefighters, teachers, administrators, corrections employees, transportation workers and other public sector employees in applying for CalPERS retirement benefits, and have successfully appealed denials as well.
If you are considering a divorce and are either retired or close to retirement age, do yourself a favor and schedule a consultation with our attorneys to be sure you understand your options, and make decisions that will lead toward the best outcome for you. Give us a call us today for a free consultation.
This article applies to members of California Public Employees’ Retirement System (CalPERS); and does not reflect the rules, laws or regulations governing how other public retirement systems are administered. If you have question about another public employee retirement system, find your system, below – or call our attorneys at: 562-622-4800
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