When pension assets exist in a marriage, the portion of these
benefits which were accumulated during the marriage are considered
marital assets, and therefore, are subject to equitable distribution.
Replacing Lost Benefits
In matrimonial actions, the basic logic behind the need for determining
the present value of an individual's accrued pension benefit is
to determine the replacement cost of that benefit. While the parties
were married, there was an expectation that they would share in
this benefit at retirement. Now, upon divorce, since marital assets
must be distributed equitably between the parties, there is a
need to determine the value of each of these assets, including
the replacement cost of the pension benefit. Once the values of
all assets are determined, the parties can offset the values of
these assets so that they are distributed equitably.
Determining Present Value
When calculating the present value of pension benefits, many
factors affect the ultimate determination of this value. In
general, if a person is young, has many years of deferral until
the commencement of pension benefits and the payments begin
at a later age, such as age 65, these factors will result in
a lower present value.
Conversely, if the person is close to retirement age and can
begin collection of benefits at a relatively young age (such
as a 40 year old police officer with 18 years of service and
a 20 year retirement), the value would tend to be higher because
the payments commence earlier and continue for many more years.
Disability Benefits
The valuation of disability pensions is also a source of concern
for matrimonial attorneys. Most jurisdictions hold that only
that portion of the disability pension which was accrued due
to service is subject to equitable distribution. Therefore,
it is imperative to obtain all the necessary salary and credited
service time from the Plan in order to calculate the non-disability
portion of the pension benefit.
Accurate Information
It is important that the fields on our Online Submission Page
are filled in as accurately as possible. The exact names and
addresses of the plans to be valued are necessary, including
the names and locations of any additional savings, profit sharing
or 401(k) plans. Any additional information or documentation
such as Summary Plan booklets, or individualized benefit statements,
would be helpful.
|
