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Women’s Private Pension Reforms

The Pension Protection Act of 2006 provides two new protections for women who are entitled to a portion of their current or former spouse’s private pension.

Clarification of divorced spouse rights

Private retirement plans are required to pay private retirement plan benefits to former spouses only if the former spouses submit a special kind of court order to the plan specifying the amount, form, and timing of payments.  If the court order does not meet all of the requirements of a “Qualified Domestic Relations Order” (QDRO), it will not be honored by the retirement plan.

The Pension Protection Act of 2006 clarifies that if a couple did not obtain the right kind of order at the time of their divorce, and the state domestic relations court permits them to go back to court to get a QDRO, a plan must honor the order regardless of when it is issued.

New survivors benefit options

The law requires private pension plans to automatically give married couples a reduced lifetime monthly pension for the retiree’s life plus a widows benefit equal to at least 50 percent of the retiree’s pension for the lifetime of the surviving spouse. The law also says that the couple can choose to have the entire benefit paid to the retiree during his lifetime with no benefits going the surviving spouse. However under prior law there was no requirement that plans allow couples to make any other choices, for example, an option to provide widows benefits that are greater than 50 percent.

The Pension Protection Act requires all private pension plans to offer an additional option that will allow couples the choice of providing a larger survivors benefit for widows if they agree to a greater reduction in the retiree’s lifetime benefit. For example, if a plan already provided for an automatic 50 percent “joint and survivor option,” the PPA requires that the plan also give couples the choice of taking a 75 percent joint and survivor option.

This provision goes into effect for most plans starting on January 1, 2008.  However, collectively bargained plans do not have to change their rules until the expiration of the current union contract or January 1, 2009, whichever comes first.

Both the divorce and survivors provisions apply equally to women and men.

Read Section 1001 on the clarification of divorced spouse rights and Section 1004 on the new survivor benefit options in the Pension Protection Act of 2006 (Public Law 109-280).