Divorce and Your Benefits
The Ex-spouse’s Share
According to New York State law, pension benefits earned during a marriage are marital assets subject to equitable distribution in the event of a divorce. The ex-spouse is entitled to a share of the Participant’s retirement benefit. A Participant and ex-spouse may establish a retirement benefit distribution that is satisfactory. The most commonly used equitable distribution formula for a public pension was established by the State Court of Appeals in Majauskas v. Majauskas. This formula provides an ex-spouse with one-half of that part of a Participant’s pension earned during the marriage.
The Majauskas Formula
50% × years of service credit accrued during marriage (numerator) ÷ total service credit at time of retirement (denominator)
For example, if the Participant accrued 15 years of service while married, and retires with 30 years of total service, the ex-spouse’s share will be 25 percent of the pension (50 percent × 15/30). The Majauskas formula may be modified by the court, or by agreement between the Participant and ex-spouse. The Retirement System does not require use of this formula. There are other ways to distribute your pension benefit.
- A flat dollar amount. This “locks in” an amount for the ex-spouse that will not vary if the Participant’s salary rises significantly prior to retirement. It will also affect the ex-spouse’s right to a share of the Participant’s cost-of-living adjustment (COLA).
- A modification of the standard Majauskas formula (see above). Parties can negotiate the factors of the Majauskas equation.
- A share calculated as of a specific date. The Retirement System can calculate a hypothetical retirement benefit using a Participant’s final average salary and service credit as of a specific date. The date most commonly used is the commencement date of the divorce action. An ex-spouse’s distribution can be calculated using the hypothetical retirement benefit. Any pension factor and age reductions applied to the Participant’s benefit upon retirement will also be applied to ex-spouse’s distribution. Any post-divorce salary and service increases will not be used in the calculation of the ex-spouse’s distribution. This generally provides the ex-spouse with a smaller portion of the Participant’s actual retirement benefit.
If the intent is to freeze the ex-spouse’s share of the pension to the salary and service levels in place at the time of the commencement date of the divorce action, the following paragraphs should appear in the Domestic Relations Order:
ORDERED, that at such time as PARTICIPANT has retired from and is actually receiving a retirement benefit from the Retirement System; the Retirement System, in accordance with the formula devised in the case of Majauskas v. Majauskas, 61 NY2d 481(1987), is hereby directed to calculate a hypothetical service retirement, based on the PARTICIPANT’S earnings and years of credited service as of the date of commencement of the action for divorce. The retirement benefit shall be calculated in the same manner as a normal service pension would be calculated using the factors in place when calculating the PARTICIPANT’S actual retirement benefit. From this hypothetical service retirement, the Retirement System is hereby directed to pay to the ALTERNATE PAYEE that portion of the PARTICIPANT’S monthly retirement benefit, which is equal to 50 percent of a fraction; and it is further
ORDERED, that the numerator of the fraction shall be _______ months [must provide the specific number of months] and the denominator shall be the total number of months of service credit which the PARTICIPANT had as of the commencement of the action for divorce. The term “retirement benefit” as used herein, shall be deemed to include any annuity as well as supplemental retirement benefits which are paid by the System to PARTICIPANT;