NEW DIVORCE RULING IMPACTS PERS BENEFITS

            Although it is not something that we like to think about, a divorce will most likely impact your PERS benefits.  Under Ohio law, retirement benefits acquired by a spouse during marriage are marital property and must be divided between the spouses if their marriage ends.  Currently, a spouse of a PERS member or recipient could not receive their portion of a PERS benefit as marital property division directly from PERS.

 

            Substitute House Bill 535 modifies Ohio domestic relations and public retirement law.  Those involved in divorce, dissolution, annulment, or legal separation will have access to PERS benefits found to be marital property when one of the spouses is a PERS member.  This legislation, which will be effective January 1, 2002, permits a court to issue a Division of Property Order (DPO) allowing PERS to make direct payments to a former spouse from either a monthly benefit or a lump sum when the benefit is paid to the member. 

 

            There are other provisions of the legislation.  The DPO remains in effect until the death of the PERS member or recipient, the death of the former spouse, or at the termination of benefits.  HB 535 also affects the release of a member's account information during court proceedings.  Currently, a member's or recipient's written authorization is necessary to release this account information.  Beginning Jan. 1, 2002, PERS may release account information, with a court order, if the information is necessary to determine the amount of the member's or recipient's account for a DPO.  A Division of Property Order also permits PERS, upon written request, to provide the former spouse with information relative to the amount payable and the status of any amounts payable to the former spouse. 

 

            A DPO is not a Qualified Domestic Relations Order (QDRO).  Generally only private retirement accounts are subject to QDROs.  A QDRO is a court order issued to the couple and the private retirement plan when the termination of the marriage is final.  Government plans, like PERS, are not subject to QDROs the way private retirement plans are.  There are a number of differences between a QDRO and a DPO.  A DPO does not establish a separate account for a former spouse.  Under a DPO, the former spouse may only receive funds from PERS when the member or recipient receives a benefit or a lump sum payment.  Survivorship rights for the former spouse are not provided under a Division of Property Order.

 

            You are advised to seek the advice of independent legal counsel if you are contemplating divorce, dissolution, annulment, or legal separation to see how this new legislation will affect your PERS benefit or refund.  Legal counsel also can help you determine if an entry which was final before January 1, 2002 may be modified under the new law.