Pension Values, LLC
Specializing in community-interest buy-out valuations of retirement plans
Pension Values, LLC
Specializing in community-interest buy-out valuations of retirement plans
FAQ's
Why should I obtain a "buy-out" valuation of the community-interest in retirement plan benefits?
If either or both spouses would like to consider “trading” his or her interest in the other’s retirement benefits, it is necessary to have a current value of that pension interest. In order to evaluate an offer such as “How about you keep your teachers’ pension and I’ll take the two sports cars?”, it is necessary to have an idea of how much the sports cars and the spouse’s pension interest are worth. Our specialty is valuing the community-interest in retirement benefits.
Are such valuations always needed to complete a division of the spouses’ community property?
No, if both parties agree that the retirement benefits are to be divided in-kind, by means of a Domestic Relations Order (DRO) or a Qualified Domestic Relations Order (QDRO), with both spouses receiving a share of the retirement plan’s benefits, then, in most cases, no present community-interest valuation will be needed. Two possible exceptions to this would be a defined-contribution plan [e.g.: a 401(k)], where there were pre-marital contributions and accumulations, and plans in which there are survivors’ benefits that need to be valued [per California Family Code Section 2610] in arriving at an equal division of the community property.
I have a statement that gives a dollar contributions balance, is that the value of my pension?
No. The annual member statement you are referring to only provides the current balance of employee (“member”/ “participant”) contributions and, if applicable, interest. In nearly all cases, the value of the monthly pension benefits you have earned is greater, sometimes substantially greater, than your member contributions balance. Your employer’s contributions which, along with your own, cover the full cost of your pension benefits, are typically not shown.
If we separated two years ago, why do I have to provide the most recent statements and pay-stub?
The dates of marriage and marital separation are needed in order to establish how many years, months and days of Service Credit or Credited Service are community-property. Any pre-marriage-date and/or post-marital-separation-date Service Credit is the separate property of the plan member. However, these pension plans’ benefit formulae are “final average”; the member’s career-highest twelve-month or thirty-six-month average base salary (usually, but not always, the most recent twelve-months’ or thirty-six months’ pay rates) are used. Accordingly, post-separation-date increases in salary are included in valuing the present community-interest. In this regard, we are following CA Family Code Section 2552(a).
If I retire on an Industrial Disability Retirement Allowance, does my spouse get a share?
After you have reached the age at which your retirement plan pays monthly Service Retirement Allowance benefits to healthy/not-disabled members, your spouse is entitled to a share, from that point on, of the monthly benefits you would have been receiving, had you not been disabled, had you merely quit your job on the date you went on disability. Where the disabled spouse went out on disability in his/her twenties, thirties or early forties, there is often a substantial difference between the more-generous disability pension formula and the less-generous not-disabled pension formula. Thus, much of the monthly disability pension is not a divisible community-property asset; it’s separate property, with the community only sharing in the lesser would-have-been-payable-absent-disability service retirement benefit.