How Deaths Can Affect Divorce Provisions

Q.: I am retired and have a Domestic Relations Order (DRO) on file with the retirement system. When my ex-spouse dies, how would I get my full pension back if I don't know that she died, since we do not keep in contact? C.T.

A.: The next of kin or other responsible party of your exspouse will notify the retirement system of the death of your ex-spouse. At that time you will be entitled to an increase in your retirement allowance equal to the portion your ex-spouse was receiving.

 

Q.: As the ex-spouse of a member of the New York City Employees' Retirement System. I am entitled to receive 30 percent of the member's retirement allowance. A Domestic Relations Order is on file with the system. Upon my death I want my sister to continue to receive the same income as I will be receiving from the system for the balance of her life. Can this be arranged? F.K.

A.: I believe it can. Assume your 30 percent represents $15,000. The $15,000 is the maximum allowance available from the system. Should you elect this option, all payments will cease upon your death. There is no provision for a beneficiary. Because income is guaranteed for just one lifetime— yours—it is called the "single life option."

In order to guarantee a continuation of the same income to your sister should she survive you, you must be willing to accept less income during your lifetime. Assume you are age 59 and your sister is age 64 when you start to receive your share of your ex-spouse's retirement allowance. The City Actuary tells us that you will be entitled to 87.3 percent of $15,000, or $13,095. You will be guaranteed $13,095 per year for the remainder of your life. If upon your death your sister is still alive, she will continue to receive the $13,095 per year for the remainder of her life. Upon your sister's death all payments stop. There is no provision for a beneficiary. Should your sister die before you, you will continue to receive the $13,095 for the remainder of your life. All payments will cease upon your death. There is no provision for a beneficiary.

Tip: Have a firm understanding of all of the options available to you, as the exspouse, prior to the retirement of your ex-spouse. Make sure the Domestic Relations Order identifies the option upon which the system will rely in the calculation of your share of your ex-spouse's retirement allowance. In the above example, the system will require proof of your sister's date of birth.

Q.: The Pregnancy Discrimination Act became law in 1979. Why does the New York State Retirement System not credit maternity leave toward retirement?

A.: For many women a pregnancy may be certified medically as a short-term disability/ illness. Prior to 1979, many women who chose to obey their doctor's orders and not work during all or a portion of their pregnancy found they had no job to return to after giving birth. Additionally, it was common for their employer-provided health insurance not to cover medical expenses related to the pregnancy. Yet if the same woman was injured in a car accident, she knew that her job was waiting for her after her recovery and the related medical expenses would be paid by her health insurance.

This is the kind of discrimination the 1979 Act made illegal. It treats a woman's pregnancy like any other shortterm disability or illness. The Pregnancy Discrimination Act of 1979 requires an employer to give an employee who misses work due to pregnancy the same benefits it gives an employee who misses work for other reasons, such as a disability. 42 U.S.C. § 2000e(k). Example: If retirement credit is granted to an employee for a leave of absence due to a car accident, it must be granted to a woman who was granted a leave of absence due to pregnancy.

Unlike private pension plans, a member of a public-employee retirement system in New York earns retirement credit for period(s) of time worked. One does not receive retirement credit for periods of time not worked, regardless of the particular circumstances. Unlike private employment, retirement credit is not granted for leaves of absence on account of a short-term disability/illness, regardless of its nature. Because the same policy applies to all types of disability/illness Leaves of Absences, the New York State Retirement System has not violated the Pregnancy Discrimination Act of 1979.

Mr. Frank is a fee-only Retirement Financial Planner and a retired city high school Teacher of Accounting. He can be reached by telephone at (732) 536-9472, or via e-mail at rollover@optonline.net.