One important issue you will want to negotiate when dividing a Defined Benefit Plan (Pension) in a divorce case concerns survivorship benefits. Without the survivorship language (both pre-retirement and post-retirement) in the QDRO, the former spouse’s portion of the pension that was awarded in the property settlement will terminate upon the participant's death. Including survivorship language in the QDRO will guarantee that the pension benefit will continue to the former spouse for his/her lifetime.
The cost of survivorship benefits generally reduces the pension benefit by about ten percent. Both parties share in the reduction as applied to their share of the monthly income. Language in the QDRO, however, can provide that either party absorb the total cost.
Because there is a cost involved, survivor benefits have a property component that should be included in the property settlement agreement. Having language in the property settlement agreement about the division of the pension without addressing survivor benefits is becoming more and more problematic.
In New York there is case law (Irato v. Irato, 288 AD2d 952, NY 2001) holding that anything not included in a property settlement agreement cannot be awarded to the other party, after the fact, without the permission of both parties. The issue in contest was whether survivorship benefits could be included in a Domestic Relations Order if they were not awarded to the non-participant spouse in the property settlement agreement. The Appellate Court disallowed the benefits.
