Reply to 2 Feds, Divorce and Pension

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[quote=Anonymous][quote=Anonymous]17:42- I agree, I don't think it works how I think it works! It's confusing and especially with us both being feds. I need to find someone here who understands FERS.

I guess what I am imagining happening is- say I retire and my pension is $1000 (just using a round number for clarity).

I retire. 
I get $500 per month. He gets my other $500.

If he retires, same.

What if he, or I , retire first? Or die? 
[/quote]
What does the court order say?  Because while I can guess based on the OPM sites, I'm kind of curious how it works in practice.

In theory, I think you're right that if the court order splits your benefits 50/50, if your benefit is $1000/month then you get $500 and he gets $500.  And if his is $1000/month, then you get $500 and he gets $500.  So you both get $1000—if you both retire at the same time at the same benefit amount.

But what if you retire at 62 and he doesn't retire until, say, 77?  Does he get $500/mo. for the 15 years when he's still working?  Or do his benefits only start once he retires too—in which case you'd get $1000/mo until he retires, at which point you get $500/mo (inflation-adjusted) plus half of his pension (which would be higher, since has more years in his benefits calculation), and he gets $500/mo plus the other half of his pension?   The latter seems fairer, but I have no idea what really happens.

Then there's the spousal benefit aspect.  Normally, electing a survivor benefit takes 10% off your own benefit amount.  So if your pension would be $1000/month without a survivor benefit, you could get $900/month in exchange for your spouse getting $450/month after you die.  (Or you could take a 5% hit for a 25% benefit.) A court order is needed to set up a survivor benefit for ex-spouses.  I assume that includes the 10% or 5% hit to benefits (otherwise you could set up a pension for an ex-spouse for free, which would be a nice gesture, but odd).  But if that's combined with splitting the pension, does the reduction happen to both sides of the split?  In other words, if you take a "full" survivor benefit for your ex spouse and the pension is split, does that mean you split $900 two ways ($450 each)?

Lots of questions, and I don't know the answers.  But what I am sure of is that if you changing the 50/50 split or survivor benefit, someone is going to be better off and someone is going to be worse off.  For example, what if your pension ends up at $1000 and his is $1500?  Once you're both retired, you'd each be getting $1500/month.  Good for you, sucks for your ex.  If you're both retired for 30 years, that's an extra $180,000, not adjusting for inflation or COLA increases.  Is the simplicity of each of you having your own pension worth that much to you?  OTOH, maybe he's the one who would get the extra $180,000.  Or maybe it's more.  Or less.  My point: you should figure out the numbers before you make a decision, because the difference could be big.[/quote]

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