Pension Benefits

"Pension Benefits" refers to the division of that portion of a pension or retirement plan that is marital property.

Because marital property is to be divided fairly or equitably, a person going through divorce has a right to a fair share of the marital portion of any pension or retirement plan of the other party.

If the entire pension or retirement plan was earned during the span of the marriage, then the entire amount is marital property. If the party owned such plan prior to the marriage, then the value of it prior to the marriage is individual or separate property, and is not subject to division by the Court. In this case only the portion that was earned or invested after the date of the marriage is marital and therefore subject to division by the Court.

The general rule is that the appreciation value of any separate or individual property is marital property. This rule applies to any asset that is titled solely in one party's name, such as real estate, stock, bonds, bank accounts and pension or retirement plans.

There are two kinds of pension plans: defined benefit plans and defined contribution plans.

Most plans I am running into these days are defined contribution plans, such as a 401(k) or an I.R.A.

Defined contribution plans as a rule are easier to divide, because the amount each side is to receive is relatively obvious.

Defined benefit plans are more difficult to divide.

Sometimes a financial expert may be needed to be able to divide a pension. Sometimes the Court will reserve jurisdiction until a later time, before dividing such a plan. This may occur when the person is not yet retired, and it is unclear how such plan is to be divided. "Reserve jurisdiction" simply means that the Court retains the authority to divide the plan at a later date, generally when the person retires, and will at that time divide the plan.

In certain circumstances it may be to a person's advantage to waive or give up his or her right to a portion of the other party's pension, in return for added value to his or her side of the asset division. For example suppose a wife has to wait another fifteen years to receive her portion of her husband's defined benefit pension; it may be more financial advantageous for her to accept from him at the time of the divorce more from his stocks or bonds or from the marital home, and then give up her right to any part of his pension. Wife may do this, because she may have a more urgent need to have money now.

You may look up Colorado Revised Statutes (C.R.S.) Title 14, Article 10, Section 113, for further information.