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Valuing Pension for Divorce

Why Voit?
Accurate and Impartial Evaluations
Actuarial Methods
Service Fees

Why Voit Econometrics Group?

Voit Econometrics does not provide you with just a number or a computer generated form letter, rather, Voit will provide all the pertinent text, and supporting statements, necessary to enhance your negotiating position. Although we will not alter the present values by altering assumptions, we will emphasize certain points of interest that can result in substantial savings for your client. For instance:

IF YOU REPRESENT THE PARTICIPANT who did not contribute to social security during their employment with the government or as a municipal worker for example, consider subtracting the social security element out of those plans.

IF YOU REPRESENT THE PARTICIPANT who is already receiving their pension, determine whether your client elected their soon-to-be ex-spouse as a survivor at the time of retirement, since this election is irrevocable, then subtract the value of the survivor annuity the non-participant will receive upon the participant's death from the overall present value.

IF YOU REPRESENT THE NON-PARTICIPANT, be certain that if the plan applies cost-of-living adjustments to the retirement benefits that, whoever the evaluator may be, incorporates this into their calculations. Cost-of-living-adjustments (COLA) can increase the present value up to 40% or more, depending on the size of the COLA.

IF YOU REPRESENT THE NON-PARTICIPANT, you may emphasize the present value at the earliest retirement age since this could result in a present value larger than the present value at the normal retirement age. Our studies have shown that when the early retirement benefit is more than approximately 42% of the normal retirement benefit, the present value will be larger at the earlier retirement age. An argument for emphasizing the earliest retirement age, aside from the fact that several state judicial systems will only consider the earliest retirement age, is eligibility, where the participant has the non-forfeitable right to retire at that point.

Other factors that come into play and should be accounted for include:

  • Marriage Coverture, 3 methods (length of marriage vs. length of service)
  • Lack of Vesting
  • Projected Earnings Capacity
  • Non-Qualified Deferred Compensation

Consider Voit Econometrics Group when valuing City, County, Federal, or State Retirement System Plans.

Accurate and Impartial Evaluations

Our goal is to provide accurate and impartial evaluations. It is not our firm's goal to manipulate pension calculations solely for the purpose of artificially increasing or decreasing the end result. Pension valuation parameters are uniform and the procedure is standardized, yet able to account for any individual anomalies.

Actuarial Methods

Pension Valuations are not required to be performed by actuaries nor does the Pension Benefit Guarantee Corporation (PBGC) recognize the use of it's actuarial tables for valuing pension benefits pursuant to a divorce. This is important since the use of PBGC rates in determining a value for the divorcing parties can often times be deficient. Actuarial methods tend to determine the cost, liability, or funding requirements to the company sponsoring the plan, not necessarily the value to the parties in a divorce, whereas an economic based valuation determines a more realistic value. The assumptions made, and tables used, which when altered, can change the final present value of the participant's pension plan dramatically.

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