Post-retirement survivorship can be obtained through the two very different types of pension QDROs: Separate Interest and Shared Payment. To understand a Separate Interest QDRO, think of a plan administrator telling the plan participant:

You have earned 400 pounds of hamburger in your pension. Because your soon-to-be ex-spouse was married to you the entire time, we are giving your former spouse 200 pounds of the hamburger you earned as the marital share of your pension. We are putting it in to your ex’s refrigerator. However, because your former spouse is 10 years younger, it is clear that the half-pounders your ex was expecting to eat will have to be reduced to 6-ounce hamburgers so the hamburger will last for your former spouse’s expected lifetime.

Separate Interest QDROs

You can always tell a Separate Interest QDRO because the measuring life is that of the alternate payee. Because the payment is now tied to the mortality of the alternate payee it is actuarially reduced if the alternate payee is younger. Keep in mind that Title VII of the Civil Rights Act of 1964, the Fourteenth Amendment and U.S. Supreme Court cases like Supreme City of Los Angeles Dept. of Water & Power v. Manhart[1] and Arizona Governing Committee v. Norris[2] gender is not a consideration when adjusting the pension payments for either the plan participant or the alternate payee. Gender-neutral/unisex mortality tables are now the standard. Clearly, no post-retirement survivor language is necessary in a Separate Interest because once her payments start, she gets them for life, even if the participant predeceases her. She already has the hamburger in her freezer and is getting ready to make somewhat smaller patties to last her lifetime. The death of the plan participant has no impact on the hamburger in her freezer. Interestingly, if she dies before beginning payments, most plans return the hamburger to the plan participant. This is known as “reversion.” Some plans do have a Draconian interpretation in cases where the alternate payee dies before she starts to receive her benefits. The plan will go into her freezer upon her death, confiscate all the hamburger and give it back to the plan. Suffice it to say that we do not always recommend Separate Interest QDROs, especially in cases where the pension will be forfeited upon the death of the alternate payee before commencement.

Shared Payment QDROs

Shared Payment QDROs are quite different from Separate Interest QDROs, because the benefits payable to the alternate payee remain based on the participant’s life expectancy. This means, however, that her payments will stop if the participant predeceases her. It also means that the alternate payee’s share of the benefits will always revert to the participant upon her death, even if she dies after her benefit commencement date. While there is no actuarial adjustment made to the alternate payee’s benefits, it is necessary to include both pre and post-retirement survivor language in the QDRO in the event the participant predeceases the alternate payee either before or after she has commenced her benefits. We just wish the same could be said of Military Court Orders where the system has a flight of hurdles to negotiate in order to secure survivor protection for the former spouse. It is much easier to guarantee survivorship in ERISA-governed plans.

[1] 435 U.S. 702, 98 S. Ct. 1370 (1978).

[2] 463 U.S. 1073 (1983).