Pensions and Parting Ways
Video Transcript: Hello, everybody. This is Dustin Peterson and I am an Oklahoma lawyer. Continuing today our segment on equitable property division, this one will pertain to a very common aspect of divorces, pension plan distributions.
Many employees do have pension plans that they pay into during their career and will collect upon retirement from career. But if a divorce should happen prior to the time that the employee becomes entitled to those benefits, what happens to them in the divorce?
Well, the courts have two basic distribution methods used here in Oklahoma. One is called the present value or immediate offset method, the other is called deferred distribution. The courts here prefer present value. That is where the employee in the divorce is awarded the pension and the non-employee spouse will be awarded compensatory other marital property or money.
The advantage of this is, of course, that it prevents the necessity of any future contact between the parties, and makes a very clean finality in the decree. But there are a couple of disadvantages as well.
One is that there must be a present ascertainable value of the pension, and of course, even if there is, what if there’s an insufficient amount of other marital property to offset that value?
The other distribution method is deferred distribution, and that is where the non-employee spouse would share in the benefits of the pension plan at the time that the employee spouse becomes entitled to them. And there, the court can calculate what percentage of those benefits would be shared by the non-employee spouse. And that can be done at the time as the other marital property is being divided as well.
An advantage to this is that no present value need be determined at that moment, but of course a disadvantage would be that the divorce decree isn’t quite finalized as far as what those exact benefits for the non-employee spouse would be.
If you have any questions about the pension plan distribution methods in Oklahoma during divorce, give me, an Oklahoma City divorce attorney, a call at (405) 888-5400, or look me up online at theoklahomacityattorney.com.
