Many pension plans issue yearly individual benefit statements to each participant, although it is not required by law to do so. While it is possible to obtain a monthly figure, as if the employee will retire at a given date, this is not the marital present value of the employee’s pension.
Depending on the occurrence of retirements, the employee’s age and years of service, there are different types of possible benefits. The primary benefit is the pension paid when the employee retires at the plan’s normal retirement age. This is known as the Projected Benefit. During active employment, the employee is earning vesting credit per the plan’s vesting schedule. This is the employee’s Vested Benefit.
A pension becomes due and payable at normal retirement age. When employment ends before normal retirement age, the vested benefit may be paid out as an early retirement pension with various formulas operating, according to the provisions of the plan.
At any point in time, unaffected by the form of payout or the timing of the payout, the Actuarial Value of an employee’s accrued benefit may be computed using actuarial science. The Actuarial Present Value of the Marital Portion is the value of your pension plan as a marital asset. This value is used in your distribution determination of how to apportion equitable division between the parties. But no plan is required to inform a participant of this marital present value, and in the majority of plans that information is simply not available.
To value your pension for divorce purposes, you may request a benefit statement from your plan showing your normal retirement age benefit, accrued as of the agreed upon date of marriage dissolution for your state’s jurisdiction or the benefit accrued as of current date, in states that use the coverture method. You can then retain an actuary who specializes in pensions in divorce to determine the marital asset worth of your pension benefit.
Mark K. Altschuler, M.S., Actuary, is President of Pension Analysis Consultants Inc., of Elkins Park, PA. and has prepared over twelve thousand marital pension valuations and draft QDRO’s for counsel. He is well-versed in the complex arena of equitable distribution in marital dissolution matters. Mr. Altschuler, has over fifteen years experience as an actuary in the pension and property/casualty areas, and is an affiliated member of the American Society of Pension Professionals and Actuaries (ASPPA).