Pension, Divorce and Government or Public School Teachers Plans
These plans apply to employees of the state and local governments or public school teachers throughout the country:
Examples: Connecticut State Employees Retirement System, District of Columbia Police Officers & Fire fighters Retirement Plan, New Jersey Teachers Pension & Annuity Fund.
When a Domestic Relations Order is drafted, monthly benefits will commence to the Alternate Payee when the Participant retires, and continue for the lifetime of the Participant. Under some plans, the Alternate Payee may be designated as the beneficiary of a survivor annuity under a specific benefit option. The benefit option must be specified in the order, otherwise, typically all payments to the Alternate Payee cease upon the Participant's death.
Some Key Facts to Remember:
Some plans will only pay a benefit to an Alternate Payee for as long as the Participant is alive. This should be investigated with the plan.
If benefits are only payable for the lifetime of the Participant, a life insurance policy may be an appropriate tool to ensure that the Alternate Payee receives benefits for his/her lifetime.
Resources & Tools
MANY MODELS -- Pension and retirement plans come in a bewildering array, with many diverse provisions; however, the two basic models are: the defined benefit or defined contribution. The defined benefit plan is generally a retirement annuity, wherein the employee contributes nothing and the employer sets aside benefits for all employees in a pool; the defined contribution plan is an individual or separate account in the employee-spouse's name, whereby he or she contributes pretax dollars to his or her account that are matched to a certain amount by the employer's contribution.
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