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. A member and ex-spouse may establish a pension benefit distribution. The most common 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 the part of a member’s pension that was earned during the marriage.
The Majauskas Formula
The first step in the Majauskas formula determines what percentage of the member’s pension was earned during the marriage (marital share) by dividing years of service credit accrued during the marriage (numerator) by total service credit at retirement (denominator). Then, that percentage is multiplied by 50%, so that the member and ex-spouse each receive one half of the marital share percentage.
|
1. |
Years of service credit accrued during marriage (numerator) |
= marital share |
|
Total service credit at time of retirement (denominator) |
||
|
2. |
Marital share × 50% |
= ex-spouse’s portion |
For example, if the member accrued 18 years of service while married and retires with 30 years of total service:
|
1. |
18 years of service credit earned while married |
= 60% (marital share) |
|
30 years of total service credit at retirement |
||
|
2. |
60% × 50% |
= 30% (ex-spouse’s portion) |
NYSLRS will calculate the precise service credit accrued during the marriage when the numerator is written as an open date field, for example:
Total service credit accrued between the date of marriage (xx/xx/xxxx) and the date of commencement of the divorce action (xx/xx/xxxx).
The numerator may also be written as a fixed number of months or years of service credit (for example, 120 months or 10 years of service credit).
The Majauskas formula may be modified by the court or by agreement between the member and ex-spouse. NYSLRS does not require use of this formula. There are other ways to distribute pension benefits.
Other equitable distribution choices:
- A flat dollar amount. The ex-spouse will receive a fixed dollar amount per month. While available for active members, this is more commonly seen in DROs filed after a member has retired and is receiving a monthly pension benefit. Unless the DRO explicitly states otherwise, the ex-spouse will not receive their proportionate share of the retiree’s cost-of-living adjustment (COLA).
- A flat percentage. The ex-spouse will receive a set percentage of the member’s pension benefit.
- A modification of the standard Majauskas formula (see above). Parties can negotiate the factors of the Majauskas equation, for example, change the member or ex-spouse’s portion percentage.
- A share based on a hypothetical retirement benefit. NYSLRS can calculate a hypothetical retirement benefit using a member’s final average earnings and service credit as of a specific date, most commonly the commencement date of the divorce action. This ensures that increases in earnings and service credit will not be used in the calculation of the ex-spouse’s benefit. In this case, NYSLRS first calculates a hypothetical retirement benefit using salary and service as of the date specified, using pension factors and age reductions that will be applied to the member’s benefit at retirement. Next, NYSLRS determines the ex-spouse’s share based on the equitable distribution formula provided in the DRO. Finally, that percentage is applied to the hypothetical benefit, resulting in the monthly benefit amount that will be paid to the ex-spouse.
When using Majauskas as a basis for the equitable distribution formula, the denominator of the fraction is total service credit as of the specific date. While this results in a larger equitable distribution percentage, it generally provides the ex-spouse with a smaller portion of the member’s actual retirement benefit.
Rev. 2/23