Division of Government Pensions

Most public employees participate in some form of a pension plan. Often, it is a defined benefit pension, where a monthly amount is paid out at the time of retirement based upon years of service and earnings, though often such plans will have a defined contribution component, whereby funds are saved into an account.

These pensions are divisible like any other marital asset, however as they are governed by specific state or federal statutes, they usually require specialized orders to divide them, not merely a QDRO.

Division of PERA at Divorce

PERA, or Colorado's Public Employees' Retirement Association, is the pension plan covering most government employees in Colorado. Public employees essentially opt out of the social security system, and instead pay into PERA with an employer match.

PERA consists of two components:  a defined benefit pension plan, and a 401(k).

Defined Benefit PERA. This is the traditional PERA by which the state pledges to pay a monthly stipend upon retirement. Public employees have 8% of their salary deducted (increasing to 10% by July 2021), and there is an employer match. Upon retirement, public employees receive a monthly payment based upon their years of service and pay at the time of retirement. Note that public employees do not also receive social security, and while their PERA (funded with marital funds) is divisible at divorce, Social Security (also funded with marital funds) is not divisible at divorce.

A Colorado divorce court can divide PERA, and allocate benefits to the non-employee spouse. PERA even has a deceptively simple fill-in-the-blank order for the family law attorneys to fill out for the judge's signature. However, there is a strict 90-day deadline from the date of the decree of dissolution for PERA to receive the order, signed by the judge.  And PERA will reject the form if it contains the slightest of mistakes. So make sure your Colorado divorce lawyer is diligent, and pays attention to detail.

When a defined benefit plan is divided, the non-employee spouse will receive his/her portion of the retirement benefits only when the employee-spouse receives his/her benefits.

PERA is typically divided using the time-rule formula - months of marriage overlapping the employment divided by the employee's total months of employment at the time of retirement. And be careful if you have unique situations, such as an employee who purchased additional PERA time during the marriage - that's where having a Colorado Springs family law attorney who knows what he/she is doing will help.

PERA 401(k). PERA also contains a separate 401(k) component to it, which employees may voluntarily participate in. This is similar in concept to any other 401(k) plan, except that attorneys will need to use the standard PERA agreement and order to divide it, just as with the defined benefit component of PERA.

For information on dividing PERAs, see Divorce/Domestic Relations Orders - straight from PERA, a helpful page with information, and links to publications explaining how to divide PERA, as well as the model agreement and order to divide PERA.

Federal Employees Retirement System (FERS)

Congress created the Federal Employees Retirement System (FERS) in 1986 to replace the earlier CSRS (Civil Service Retirement System). FERS is a defined benefit pension plan administered by the Office of Personnel Management.

Like any other pension, FERS is subject to division, and as a defined benefit pension, it will be divided using the time-rule formula.

While a well-drafted separation agreement should set forth the essential provisions governing the division, the actual division itself requires a separate court order, known as a "Court Order Acceptable for Processing". This is long, and somewhat complicated, so will usually require the assistance of a specialist to draft it.

Finally, the non-employee spouse must request a copy of the FERS packet from the employee. This document sets forth the employee's work history (important to know the months of marriage vs service for calculating the marital share), as well as the retirement benefits the employee is entitled to upon reaching certain ages. The Colorado Court of Appeals reminded us in an unpublished decision that failure to present evidence of the value of the FERS means the Court cannot divide it. In In re: Marriage of Koch & Wood (2020), the husband had contributed to FERS during the marriage. However, because there was no evidence as to how much was being withheld from his paycheck, how much had been contributed to date, and how much he would receive upon retirement, the court rejected the wife's request to just divide whatever it was worth. And the Court of Appeals upheld that decision.

Thrift Savings Plan (TSP)

The TSP is a defined contribution plan, similar to a 401(k), which is offered to both federal employees and military members. It too is subject to division.

Military Retirement

Military members participate in a defined benefit retirement subject to division at retirement. However, not only is this plan divided differently than any other defined benefit plan (the 2016 “Frozen benefit” rule), but it requires meeting very specific jurisdictional grounds, and an order which meets federal requirements.

For more information, see the military retirement section of the Military Divorce Guide.

Social Security Benefits

Social Security benefits, even if earned during the marriage, are not a divisible asset at divorce. See the Division of Social Security Benefits in a Divorce article for a discussion of the relevant law.

Division of Foreign Government Pensions

If a spouse has earned retirement during the marriage from a foreign government, that country's laws may well prohibit other countries from dividing it, even though the result may appear unfair. In In re: Marriage of Lockwood, 971 P.2d 264 (Colo. App. 1998), the husband was in the military, and the wife was a German national who had worked as a teacher in Germany during the marriage and had therefore earned German retirement benefits. The trial court awarded the wife a coverture share of the husband's military retirement, but denied the husband a share of the wife's German pension, concluding they were the equivalent to Social Security, and therefore not divisible.

On appeal, the court of appeals held that even though the German pension was not a divisible asset in a divorce, it should be treated as an economic circumstance, and taken into consideration when coming up with an equitable division of the marital estate. Lockwood, 971 P.2d at 267.

Do You Need a Divorce Lawyer in Colorado Springs?

The family law attorneys at Graham.Law have years of experience helping clients through the Colorado legal system. We know Colorado family laws, inside and out, from divorce to legal separation, from annulments to military divorce issues. And we know how to divide marital property, including pension and retirement accounts. For more information about our El Paso County family law firm, click on:

• Why Graham.Law for your Colorado Family Law Case. Learn about the benefits of hiring family law specialists, and our firm in particular.
• Our family law team. The great attorneys and paralegals at Graham.Law.
• Contact Us. Reach out to see if we can help with your divorce or family law case.

Colorado family law is all we do. Period.