Dividing pension benefits and divorce in Michigan: A defined benefit plan is a pension where a retiree is entitled to collect a defined amount of money every month and is subject to division in a divorce. It is quite common for a spouse to be entitled to 50% of the benefit earned during the marriage.
There are three methods for calculating the benefit and they are not equal.
The first method is the prospective coverture method. This method generally produces the largest marital pension benefit.
The second method is the tracking method. This method produces an intermediate marital pension benefit.
The third method is the coverture method. This method generally produces the smallest marital pension benefit and is the most commonly used method for determining the marital portion.
Just because you have been awarded 50% of the marital portion is not good enough. The methodology should be included in the Judgment Divorce to ensure that the division is fair.
Ok, here are the formulas for the different methods for those so inclined:
Prospective Coverture monthly benefit = (Alternate payee’s awarded % multiplied by the accrued benefit at the date of first commencement multiplied by credited service earned during the marriage) divided by Credited Service at the date the benefits first commence.
Tracking method monthly benefit = (Alternate payee’s awarded %) multiplied by the accrued benefit at division date subtracted by the pre-marital accrued benefit)
Coverture method monthly benefit = Alternate payee’s awarded % multiplied by the (Credited service earned during the marriage divided by Credited Service at the division date.)
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