Riverside Divorce Attorneys Guiding You Through CalPERS, Military And Government Pension Division

For many Californians, their pensions and retirement plans are one of their most significant assets. During a divorce, these can be one of the most complicated and contested topics during the division of property – mostly because different government pension and retirement plans each have their own specific rules and requirements to follow. 

To ensure your financial future is secure, it’s important to work with legal counsel who has experience with divorce cases that involve CalPERS, military and government retirement plans. At Cullen Family Law Group, our attorneys not only have a deep understanding of these complex property division rules, but also how to protect your long-term financial security. Whether you earned the pension through your job or have the right to a portion as a former spouse, we work hard to protect your financial interests. 

Understanding California’s Community Property Laws And Pension Division

In the Golden State, all retirement benefits earned during a marriage are community property. This means both spouses have equal rights to these assets, no matter whose name is on the account. This rule applies to private pensions, CalPERS accounts, military retirement pay and federal government retirement plans.

Courts often apply the “time rule” or “Brown formula” to figure out each spouse’s share of a pension. Here’s how it works:

• They look at the years worked during the marriage
• They then divide it by the total years worked
• They multiply the result by the monthly pension benefit

For example, if someone worked 12 years while married out of a total of 25 years, the community property interest in the pension is 48%. The spouse who didn’t work could get up to half of that amount, which would be about 24% of the entire pension. 

The date when the valuation occurs plays a significant role in how the court divides the pension. Usually, the date of separation is when the community property interest stops growing. However, figuring out this exact date can sometimes be difficult. Moreover, how the pension is valued – whether it’s based on contributions made during the marriage or the current value of future benefits – can influence the outcome. It’s important to work with an attorney who can help you make a strong case for the right valuation method in court.

What Happens To Your CalPERS Pension During Divorce

If you are an active member of the California Public Employees’ Retirement System (CalPERS), there are two main ways your pension benefits may be divided during a divorce. The first one is through the time rule formula. For those still working, this payment happens when the employee retires. For those already retired, the payment comes from the current benefits.

The other method is through the separation of accounts (Model Order A). As the name suggests, this option creates a separate account for the spouse who isn’t the employee. They can receive their share of the contributions and service credit through this account, allowing them to manage their portion independently. Once they qualify, they can withdraw funds or receive retirement benefits on their own. Take note that this option is only open to active members. Retired members are only limited to using the time rule formula.

The Rules Of Dividing Military Pension

While the Uniformed Services Former Spouses’ Protection Act (USFSPA) authorizes state courts to treat military retirement pay as divisible property in divorce, there are specific limitations that don’t apply to civilian pensions. One of the limitations you need to take note of is the “10/10 rule.” 

If a marriage lasted at least 10 years that overlapped with 10 years of military service, former spouses (civilian) can receive payments directly from the Defense Finance and Accounting Service (DFAS). If a marriage did not meet this threshold, the military ex-spouse must make payments directly to the former spouse. 

There is also the “frozen benefit rule” of the 2017 National Defense Authorization Act. Before this law, when military couples divorced, the nonmilitary spouse typically received a percentage of the service member’s final retirement pay. This includes all promotions and pay increases that occur after the divorce. 

With the frozen benefit rule, the military pension is “frozen” at its value on the divorce date. The court calculates what the pension would be worth if the service member retired on that day. The former spouse receives their share based on this “frozen” amount, not the larger final retirement amount.

Dividing Federal Government Pensions Requires Special Court Orders

When federal government employees go through a divorce, their retirement benefits are divided according to specific rules depending on whether they are part of the Federal Employees Retirement System (FERS) or the older Civil Service Retirement System (CSRS). These rules are different from those for private-sector retirement plans.

For example, instead of using Qualified Domestic Relations Orders (QDROs) like private pensions do, federal retirement plans need Court Orders Acceptable for Processing (COAPs). These orders require precise wording to meet the requirements set by the Office of Personnel Management (OPM). 

COAPs specify if the benefits will be paid as a percentage of the employee’s annuity or as a fixed dollar amount. They also have to address survivor benefits, ensuring the former spouse continues to receive income if the employee passes away first. Even small mistakes in COAP language can lead to rejections and delays in payments, so it’s crucial to work with a divorce attorney who is experienced in handling property division cases involving government pensions.

Get The Clarity You Need: Call Cullen Family Law Group Today

The division of property during divorce can be complicated and daunting, especially if it involves government pensions and retirement plans. Don’t hesitate to get the answers you need. Our CalLPERS division attorneys are ready to discuss your situation and help you explore your options. Call 951-715-4632 or fill out our contact form to schedule a consultation today.