All or part of an OCERS retirement benefit may be subject to California’s Community Property laws. It is important to remember that the Board of Retirement and OCERS staff cannot give legal advice as to how a divorce may impact a retirement benefit. In fact, it will be up to the Family Court to decide what interest a member’s spouse and a former spouse have in any retirement allowance and other OCERS benefits.
OCERS’ role in the process is to see if any divorce orders violate our plan requirements. As long as a divorce order does not violate our plan, OCERS will not take a position on any divorce issues affecting a retirement benefit.
The information on our website is for general purposes only and is not designed to address the specific circumstances of your case. Also, issues regarding retirement benefits divided by a Domestic Relations Order may involve complex Community Property laws, other marital or domestic partner rights, and tax issues. OCERS strongly encourages you to seek independent legal advice.
What is Community Property?
In California, community property is defined as all the assets and earnings a couple acquires during marriage or a registered domestic partnership except things acquired by gift or inheritance.
Are Pension Benefits Community Property?
To the extent that a married person or registered domestic partner accumulates an interest in a retirement plan during the marriage or registered partnership, it is community property and subject to division in the Dissolution.
How are Community Property Pension Benefits Divided?
The law requires that the community estate be divided equally if there is no written agreement to the contrary. However, the law does not require that each asset be equally divided between both spouses or registered domestic partners. Rather, all the law requires is that the “net value” of the assets received by each spouse or registered domestic partner is equal.
This means that from the total fair market value of the community assets, the joint obligations of the parties are subtracted, yielding the net community estate. Unless agreed otherwise, each spouse or registered domestic partner must receive ½ of the net community estate.
Division of pension and retirement benefits presents special problems. Where the benefits are attributable to employment both before and during marriage or registered domestic partnership, and/or before and after separation, an apportionment between the separate property and community property interests in the pension will be required. An enhanced early retirement may also be subject to such apportionment to the extent that the enhanced benefits derive from retirement benefits that accrued during marriage or registered domestic partnership and before separation.
Since benefits attributable to post-separation employment are separate property, the community interest is determined as of the date of separation. However, if the court retains jurisdiction, valuation of each spouse’s or registered domestic partner’s share can be made at date of retirement.
A common approach is for the court to allocate the pension under the Time Rule. In this case the court awards the former spouse or registered domestic partner a percentage of each pension check. This percentage is calculated by dividing the years when the spouses or registered domestic partners lived together either as married or as registered domestic partners while the member was participating in the Pension Plan by the total number of years of service credit that the member has accrued while participating in the Plan
Since OCERS does not split accounts, OCERS will not begin direct payments to the former spouse or registered domestic partner of his or her share of the retirement allowance until such time as the member actually retires and begins to receive a benefit. This is true even if the former spouse or registered domestic partner has a court order that allows for a pre-retirement payment from the member. In such cases, the member and former spouse or registered domestic partner must arrange for the pre-retirement payment themselves.
If a Domestic Relations Order or other Family Law Judgment does not identify a specific percent interest that a former spouse or registered domestic partner will receive, please consult with a qualified Family Law attorney.
How does OCERS Process a Payment to my Former Spouse or Registered Domestic Partner?
OCERS will not make any payments to a member or a former spouse/registered domestic partner until the member either retires from employment or terminates employment and cashes-out his or her retirement contributions. To pay a former spouse or registered domestic partner directly, a Joinder will need to be filed in Family Court listing OCERS as a party to the divorce case and we will require a Domestic Relations Order.
The necessary Joinder documents may be obtained directly from the Family Court in the County where the Dissolution case was filed. Below is general information about the OCERS Sample Domestic Relations Orders.
Sample Domestic Relations Orders (DROs)
The OCERS Sample Domestic Relations Orders have not been designed to address any specific legal situation. These samples are in response to the most common requests we receive regarding what language in a divorce order is acceptable to OCERS. Members and former spouses or registered domestic partners should not rely on the Sample in lieu of independent legal advice. Also, OCERS has the right under the California Family Code to file a motion in Court to modify or strike any DRO that does not meet our plan requirements. Please make sure to send any DRO to OCERS before the DRO is filed with the Family Court. Sample Domestic Relations Orders can be viewed from our Forms page.
OCERS ADVERSE INTEREST POLICY
California law requires OCERS to withhold part of any payment, whether the member is receiving a monthly retirement allowance or seeking to withdraw contributions, when we either have a Joinder on file or if there is a Notice of Adverse Interest from your former spouse or registered domestic partner.
For the Joinder, it does not matter if the member or former spouse/registered domestic partner filed the Joinder documents. Once a Joinder has been served on OCERS, we are required to withhold a percent of any check based on the division of community property referenced above. OCERS will not release any funds being withheld until we receive a Domestic Relations Order or the Joinder is dismissed.
Also, a former spouse or registered domestic partner can assert an Adverse Interest in any retirement allowance or return of contributions. The California Family Code allows a former spouse or registered domestic partner to send written notice directly to OCERS that he or she is asserting an interest in your retirement benefit without going through Family Court. Once OCERS receives this written notice from a former spouse/registered domestic partner or his or her representative, OCERS is required to withhold the percent of interest the former spouse or registered domestic partner is claiming. Like the Joinder, we will not release any withheld funds under a Notice of Adverse Interest until we receive either a Domestic Relations Order or if the former spouse/registered domestic partner waives his or her adverse interest.
While OCERS cannot recommend a specific resource for your divorce and retirement concerns, you may want to visit the following Web sites:
Eligible Spouse/Domestic Partner/Remarriage Survivor Benefits
Your spouse or registered domestic partner is considered an Eligible Spouse or Qualified Domestic Partner if you have been married or registered as a Qualified Domestic Partner at least one year prior to your date of retirement and you remain continuously married to that spouse or registered to that domestic partner up to the time of your death.
If you divorce that spouse or registered partner after retirement and later remarry that spouse/partner or remarry another or register another domestic partner you must be continuously married/registered at least two years prior to the date of your death and are married/registered to that spouse/Qualified Domestic Partner at the time of your death, and your spouse or Qualified Domestic partner is at least 55 years old.
For complete details about your OCERS membership and benefit plan, consult your Summary Plan Description.
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