Having adequate resources for retirement is a top concern among adults of all ages. Even very successful professionals may worry that they do not have enough set aside for their comfort in their golden years. A pension offered by an employer may not be as common of a workplace benefit as it once was, but it is still a very valuable resource for those approaching retirement. After making regular contributions to a pension program or remaining employed by a company for a set number of years, a worker will qualify for payments from the employer after their retirement.
Pension benefits can directly influence someone’s standard of living during retirement, so people are often very protective of their pensions. The benefits accrued during the marriage are likely subject to division in an Iowa divorce. There are many ways to address pension benefits during divorce negotiations, and the two below are among the most common.
Calculate and address the marital portion of a pension
The contributions to the pension from both the worker and their employer during the marriage will be part of the marital estate. Those amounts will be subject to division in accordance with the Iowa equitable distribution statute. However, pensions are often not standalone financial accounts that people can divide like a retirement savings account.
Instead, they represent a future financial benefit someone will receive directly from an employer. Spouses who calculate the portion of the pension that is marital property can integrate that value into other property division decisions. One spouse might keep the marital home and reduce how much equity they have to pay the other spouse by factoring in the value of the pension that the other spouse will retain.
Agree to spousal support
In scenarios where the division of a pension is not feasible, it is possible for spouses to reach an agreement for one to pay the other spousal support, which many other states call alimony, once they start receiving their pension. The spouse who accrued the pension benefits through employment will make direct payments to the other spouse for as long as they continue receiving the pension. That arrangement can work well for couples who may not have separate savings for retirement, as the lower-earning or dependent spouse will then have retirement income to help them cover their basic cost-of-living expenses after the divorce.
Pensions, retirement accounts and other financial assets often lead to heated disputes during Iowa divorce proceedings. Evaluating common solutions for these high-value assets may help people minimize conflict during their divorce negotiations and reach a fair settlement accordingly.