State Employees Retirement System | Law Office of Elizabeth McMahon
Learn how the State Employees Retirement System works, including SERS benefits, survivor options, and QDRO considerations for attorneys and mediators.
State Employees Retirement System
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State Employees Retirement System (SERS) Survivorship Options for Former Spouses

This guide outlines the rules and procedures for the State Employees Retirement System (SERS) regarding divorce and the division of benefits.

Overview: Shared Payment Only

The SERS only allows for the division of the stream of payments. It does not actuarially adjust the benefit for the former spouse’s lifetime.

  • Timing: Payments to the former spouse are made “if, as, and when” the state employee receives them.
  • Duration: Unless survivor benefits are specifically assigned, payments end upon the first death (either party). The separation agreement should address what happens if the employee dies prior to retiring and what happens if the employee dies after retiring.
  • Restoration: In any event, if the former spouse dies first, the full payment amount is restored to the state employee.

Hazardous Duty Employees

Hazardous-duty employees see a significant increase in benefits after 20 years of service.

  • Vested: The separation agreement can require the assigned benefit be calculated using the hazardous duty multiplier.
  • Non-Vested: If hazardous duty does not vest, the benefit is calculated as a normal retirement.

Defining the Assigned Benefit

When defining payments while the state employee is alive, you have three primary options. Always specify if Cost of Living Adjustments (COLAs) are included.

Option Description
Fixed Amount A specific dollar amount per month.
Marital Coverture (at Divorce) (Service during marriage) ÷ (Service through date of divorce).
Marital Coverture (at Retirement) (Service during marriage) ÷ (Service through date of retirement).

Benefit Commencement

Payments only begin when the employee retires. In contentious cases, consider an order requiring the employee to pay the former spouse directly if they choose not to retire by a certain age.

Death Benefits

  1. Pre-Retirement Death
  • The Benefit: A lump sum of the contributory portion. If there are no contributions, or if the employee is remarried, no preretirement benefit is payable to the former spouse.
  • The Statutory Survivor: If the employee has been remarried for at least one year, the current spouse is the statutory survivor. No benefit can be paid to the former spouse.
  • Requirement: A Domestic Relations Order (DRO) is not enough. The employee must file a beneficiary designation form with their personnel office.
  1. Post-Retirement Death

The employee cannot select a survivor option until the moment of retirement. Once chosen, it cannot be changed.

  • Option B (50% or 100% Survivor): Provides the former spouse a lifetime annuity. This causes a reduction in the monthly payment while the employee is alive. Only one “co-member” is allowed.
  • Option C (10 or 20-Year Period Certain): Guarantees payments for a set term. If the employee dies during this term, the beneficiary receives the remaining payments. Multiple beneficiaries are allowed.
  • Option D (Straight Life Annuity): Payments for the employee’s life only; no reduction in benefits.

State Employees Retirement System

[IMPORTANT]

Remarriage: If an employee remarries before retirement, the new spouse must sign a waiver to allow a former spouse to be named as a survivor. To protect the former spouse, consider awarding $1/year alimony, modifiable only if the employee fails to make the required survivor election.

Sample Separation Agreement Wording

General Division

“Party A (Former Spouse) is assigned, via DRO, 50% of the marital portion of Party B’s (Employee) SERS pension earned through the date of divorce. The ‘marital portion’ is determined by dividing months of service credited during marriage by total service credited through the date of divorce. Assignment includes a proportionate share of COLAs.”

Hazardous Duty Employees

  • Option A (Hazardous Duty Applies): If the employee’s hazardous duty benefits vest, the assigned benefit will be calculated using the hazardous duty rate.
  • Option B (No Hazardous Duty): The assigned benefit will be calculated using the normal pension factors, even if the Employee’s hazardous duty rate vests after the divorce.

Post-Retirement Survivor Options (Choose One)

  • Option A (No Survivor Annuity): “The SERS does not have a survivor annuity tailored to the assigned benefit. No survivor annuity is assigned; payments end on the first death.”
  • Option B (50% Survivor Annuity): Use this judiciously – the survivor annuity cannot be tailored to the assigned benefit, rather it will include benefits earned after the divorce because the survivor annuity is based on the total pension at retirement.

“At retirement, the employee shall elect a survivor option providing the former spouse a 50% survivor annuity. The parties understand this is based on the total pension at retirement. To ensure compliance, the Former Spouse is assigned $1/year alimony, modifiable only if the employee fails to make this election.”

Final Recommendation

The decree should name a neutral law firm to prepare the Domestic Relations Order (DRO) to ensure neither party is given an unfair advantage.

Suggested Wording:

“The DRO will be prepared by CTQDROs.com, with the parties sharing the cost equally.”