When dividing pensions during a divorce, what are the most common errors to look out for?

The first most common error is that people don’t realize they have a pension. It used to be that lots of people had pensions in the private sector, but honestly, once IBM took away its pension plan and converted it to a 401(k), most of the big companies stopped having pension plans. The phone companies still do. GE does. Lockheed Martin does. Big ones do.

Oftentimes people don’t know they’re on retirement benefits, but for the practitioner and for the participants, you look at your pay stub. If you’re contributing to a retirement account, you need to find out if it’s a 401(k) or a pension. On a W2, you won’t necessarily see a deduction, but the box marked “retirement plan” will be checked, and that means generally that there is a pension. You need to look for the pension, first of all.

You need to try to obtain the plan documents and see what the pension allows for before you sign the agreement. You also need to have the correct dates of service. Sometimes people work for a company prior to a marriage, so they have pension credits that have accrued prior to the marriage. It’s only the marital share that is generally subject to division.

You need to know the dates of employment for everyone, both sides, and when the pension started. Also, sometimes pension credits don’t start accruing until you work for a company for a while. You have to make sure you adjust the formula division for that. There’s also generally survivor benefits available on pensions. That’s an amount of money that’s paid to the spouse once the employee dies, even in retirement.

Make sure you determine if you want a survivor benefit for a long-term marriage and you have a large share of your pension. You generally want a survivor benefit, but you have to pay for it. The Survivor Benefit Premium is generally deducted from the pension at the time it’s paid, not before. It’s subject to negotiation between the parties as to who pays for it, whether it comes off the top – which basically means everybody pays a share of it – or whether it’s allocated just to the spouse who is receiving the survivor benefit, which most private pensions will allow you to do.

Carolyn Grimes is a family lawyer at the law firm of Wade Grimes Friedman Sutter & Leischner PLLC in Alexandria, Virginia. To learn more about Grimes and her firm, visit www.oldtownlawyers.com.