Divorce Tips Database

Autumn Harvest

By: Marvin Snyder

For the Fall of the Year we offer an Autumn harvest of pension topics for your selection.

  1. In September 1992, PBGC announced the lowest interest rates ever - up to that time - with a primary rate of 5.75%. These rates continued into October, and they have no matching "Set" designator, such as Set A or Set B, or whatever. An administrative problem accompanied those new low rates: there is no published PBGC table that contains them. Further, these rates depart from the usual internal structure so those computer programs that were able to produce prior PBGC rates have to be reprogrammed to pattern the rates in use now.
  2. The Pennsylvania appellate court added a new dimension to a prior ruling that dealt with federal employees who were not covered by Social Security. In Cornbleth [580 A.2d 369], a hypothetical Social Security benefit is subtracted to arrive at the pension available as marital property because the employee in question was not covered by Social Security. This was elaborated in Elhajj [605 A.2d 1268] in which case both husband and wife were employees of the federal government with neither covered by Social Security, so the subtraction for hypothetical Social Security benefit was not appropriate. However, not commented on was the possible situation where one spouse has never worked and therefore was never covered by Social Security while the employed spouse worked for the federal government not covered by Social Security. Does Elhajj apply in this type of case?
  3. We have been trying out different examples and analogies to explain the difference between pension benefits and values, and how they change over time. Try this one:
  4. An employee's pension plan consists of an annual deposit of apples each year during work. The plan keeps a figurative basket for each employee into which the apples are placed.

    The employee earns a number of apples each year depending on pay and service as set forth in a plan document and explained in a booklet. The higher the pay and the more service, the more apples are accumulated. The number of apples in the basket represents the employee's accrued pension benefit. Each year the employee gets a fancy benefit statement on gold bordered paper that states the number of apples available in the individual's record keeping basket.

    Then comes the sad day when the employee has a marital separation. Some time goes by while attorneys are engaged, papers are filed, and court dates are set. A list of property is drawn up, and then the question of the pension arises. The employer writes a letter telling the employee how many apples were in the basket at the date of marital separation and how many are presently in the basket now.

    All parties now know how many apples there were and how many there are now, but they don't know how to translate apples into values. What are these baskets worth? And, do we care what they were worth when the marital separation occurred, or what they are worth now?

    The price of apples has changed with the passage of time. They keep getting more expensive. A basket with a fixed number of apples in it now costs more than the same basket with the same number of apples cost a few years ago.

    Here are some possibilities of how to figure out the marital property in this matter:

    • The price then of the basket of apples at separation.
    • The price now of the basket of apples at separation.
    • The price now of the basket of apples now.

    Discard "A" because that old value is outdated.

    Discard "C" because that includes apples added after the date of marital separation.

    Use "B" because that limits the number of apples in the basket to the ones that were there on the date of marital separation, but determines the real life value of them now.

    Note: for convenience the apples story deals with the date of marital separation, but the ideas apply as well to date of filing of divorce complaint or any other appropriate cut-off date for marital property.

  5. Many times both the husband and wife have pensions, or one of them has more than one pension to be valued. We have a modified fee structure to accommodate such cases. Call for information and details on how we can serve you economically.
PAC provides pension valuations, QDROs and actuarial reports for divorce attorneys and marriage dissolution mediators nationwide. Our Philadelphia offices are located in the suburb of Elkins Park, Pennsylvania, from where we serve the needs of legal professionals nationally, including east coast states such as New York, New Jersey, Virginia, North Carolina, Florida, Washington, D.C., and Maryland. Our Florida office located in Coral Gables, FL serves Florida family attorneys.
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Pension Analysis Consultants, Inc.

Contact Us For Specific Information About Your Case:

P.O. BOX 7107
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E-Mail: pac1@pensionanalysis.com


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