You may have spent 25 years plowing state roads or working corrections shifts, or perhaps your spouse did. Now that you are divorcing, that pension may be the most valuable asset you share. A state pension does not split like a 401(k), so knowing the basics can help you protect the retirement income you are counting on.
Treat the pension as marital property
Connecticut courts divide property based on fairness, which does not always mean 50/50. Under Connecticut’s property division statute, judges look at factors such as the length of the marriage and each spouse’s age, income and contributions.
Both vested and unvested pension benefits generally count in an equitable division of marital property, and years worked before the wedding may count too. Teachers and members of some other state retirement plans follow different rules.
Choose an offset or shared payments
Once the pension is on the table, you and your spouse decide how to divide it. With an offset, the employee keeps the full pension, and the other spouse receives other assets of similar value, such as more equity in the house.
With shared payments, the former spouse receives a set dollar amount or a percentage of each monthly check after the employee retires. Each option affects your finances differently, especially if retirement is only a few years away.
Get a court order the state will accept
Shared payments only happen if the state agrees to make them. The State Employees Retirement System (SERS) is a government plan, so it does not follow the federal rules that cover most private pensions. Instead, SERS requires a court-certified Qualified Approved Domestic Relations Order (QDRO) that meets the state’s QDRO guidelines.
The state reviews the order only to confirm it can carry out the terms, not to decide whether the split is fair. If the order asks for something the plan does not offer, such as a lump-sum payout, the state may reject it.
Plan for retirement timing and survivor benefits
Even an accepted order has limits. A former spouse generally receives nothing until the employee actually retires, and the order cannot force an earlier retirement date. Payments also stop when the employee dies unless the employee names the former spouse under a survivor option at retirement. Other events, such as a remarriage or a disability retirement, can also change what each of you receives.
Protect your retirement income in the settlement
A Connecticut state pension is usually divisible, and the way you divide it shapes the income each of you will rely on later. The order must also fit SERS rules before the state pays anything. Because the payment option cannot change once retirement begins, settle survivor and timing terms before your divorce becomes final.
