Distribution of Pensions in Divorce Under Virginia Law

Non-Titled Spouse is Entitled to Percentage Award:
In Virginia (as in most states) a pension is distributed in divorce though a percentage award of the benefits. This helps avoid the expensive and burdensome process of requiring a calculation of the pension's present value. When the pension is in pay status, both spouses receive their respective shares of the payments.

Determining the Percentage Award:
The percentage award to the non-titled spouse is determined by multiplying the marital share (which is generally defined as the number of years of creditable retirement service during the marriage) multiplied by a percentage (not to exceed 50%). The foregoing number is then multiplied by the pension benefits.

Court's Authority to Direct that Spouse be Designated as Beneficiary:
Virginia courts also have the authority to order the titled spouse (also known as the participant spouse) to designate the non-titled spouse/former spouse as a beneficiary during the life of the beneficiary of all or a portion of any survivor or annuity plan. However, the Court's authority is subject to any limitations or rules under federal ERISA statutes. The Court's authority to direct designation of the non-participant spouse as beneficiary is specifically set forth in the Section 20-107.3(G)(2), which states as follows:

To the extent permitted by federal or other applicable law, the court may order a party to designate a spouse or former spouse as irrevocable beneficiary during the lifetime of the beneficiary of all or a portion of any survivor benefit or annuity plan of whatsoever nature, but not to include a life insurance policy. The court, in its discretion, shall determine as between the parties, who shall bear the costs of maintaining such plan.

Preparation/Submission of QDRO Forms:
The distribution of pension benefits is effectuated through a specific type of order: the Qualified Domestic Relations Order (QDRO). Even if the parties enter into a marital settlement agreement that provides for a division of pension benefits, the non-titled spouse must ensure that a QDRO is entered by the Court and submitted to the Plan Administrator. It is recommended that a proposed QDRO be submitted to the Plan Administrator for review and approval prior to the entry of an equitable distribution order. Thereafter, it is important for the non-titled spouse to obtain written confirmation from the Plan Administrator after receipt of a certified copy of the QDRO. At bottom, a non-titled spouse should make every effort to ensure that the QDRO terms are acceptable to and will be honored by the plan.