Pensions, although not as common as they used to be, are considered marital property in Texas. That means if one spouse worked and the workplace contributed to a pension, when the couple divorces, that pension belongs to both spouses.
The pension will be divided either during mediation or by a judge if the divorce goes to trial. This process is known as a “pension sharing order.” The split will usually be 50-50 if the pension funds were all earned during the course of the marriage. If the pension was earned before the marriage this can complicate the process. The pension amount earned prior to the marriage is typically considered separate property. If the pension cannot be split evenly then a pension offsetting may be required. Pension offsetting means that one spouse retains the pension and the other spouse gets an asset of equal value, such as the house or portion of the house or other asset.
In some cases a lump sum payment of the pension or retirement account is an option. If this is not an option then the pension-earner may pay the other spouse the lump sum value or portion, either up-front or in monthly installments.
Who still gets a pension?
Only about 17% of people working in the private sector still get a pension, according to the Bureau of Labor Statistics data. While pensions are much less common today than they were 50 years ago, some professions still include a pension. A few of the more notable jobs that offer a pension are:
- Police officers and law enforcement
- Government and military
- Transportation provider
- Union/Teamsters worker
- Oil worker
It is important to note that pension payments are lifelong. Computing a pension’s value can be more complicated that it appears at first blush. Whether the plan is a defined benefit and whether it is a defined contribution plan will affect the computed value.
Pension plans require a Qualified Domestic Relations Order (QDRO) to determine how to divide the plan. Not all attorneys handle QDROs. Confirm with your attorney that this is a facet of divorce they can undertake if you or the other spouse have a pension.