Example Calculations
Marital portion benefits
Let’s assume that according to a court order on file, the former spouse is entitled to one-half the marital portion of the member’s benefit, and the member is to select the 50 percent Survivor option for the marriage period. It is also assumed both parties are to share the cost of the Survivor option.
The marital portion covers 10 years of service, and the member has a total of 20 years of service at retirement. Thus, 50 percent (10 years /20 years = 50 percent) of the total service is the marital portion. The PERA member is age 55, and the former spouse is age 53. The Single-life pension is estimated at $2,000 per month.
The calculation of the pension amount to be awarded to the former spouse is as follows:
$2,000
x 50%
$1,000 (marital portion)
$1,000
x 92% (reduction for 50% option)
$ 920
$ 920
x 50% ( of marital option)
$ 460 per month to former spouse
The member would receive the remainder of the pension:
$ 460 ( of marital option)
+1,000 (Single-life—non-marital portion)
$1,460 per month to member
Instead of the Single-life pension ($1,000) for the non-marital portion of the pension, the member may choose to name a second survivor for that portion of the benefit. If the member selected the 100 percent Survivor option with an individual who is age 55 as the survivor, that portion would be reduced to $860 per month. In this case, the member’s portion would amount to:
$1,000
x 86% (reduction for 100% option)
$ 860
$ 460 ( of martial portion)
+ 860 (non-marital portion—survivor reduction)
$1,320 per month to PERA member
If the former spouse is to bear the full cost of the survivor option, the former spouse’s pension is computed as follows:
$1,000
x 92% (reduction for survivor option)
$ 920
$920
– 500 ( of Single-life benefit to member)
$420 per month to former spouse
If the member should die, the former spouse would receive $460 per month thereafter (the 50 percent Survivor option).
In turn, if the former spouse bears the full cost of the option, the member’s monthly pension would be computed as follows:
$ 500 (marital portion)
+1,000 (Single-life—non-marital portion)
$ 1,500 payable to the member
Present value of pension benefits
Occasionally, language in the court order states the former spouse is to receive one-half of the present value in the account plus interest in an amount specified in the court order. Payments are to be made when the member retires, over the anticipated life span of the former spouse, in accordance with IRS tables. PERA will not accept this type of language, as it appears to refer to a defined contribution plan and not a defined benefit plan. Because Minnesota law prevents PERA from making payments to the former spouse after the member’s death if the former spouse is not named as the survivor, the estate must provide for any payments still due the former spouse when the participant dies.
If a specific dollar amount is awarded to the former spouse, the court order must clearly indicate how PERA is to make payments once benefits begin. Payments may be spread over a certain number of years in an amount indicated in the court order or as a percent of the member’s payment. In the event the payment term has not been fulfilled at the time of the member’s death and no member deductions remain, the remaining payments are no longer payable from PERA funds and must be paid by the member’s estate.
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