Divorce Support Forums: pension...do you get it back if spouse dies

I think you're confusing alimony (based on inocome) and the cash flow from an asset (your "pension"). Your pension is an asset, similar to your house - except that you cannot "sell" your pension and get cash now for it.

Think of it this way: If you were to purchase a perpetual fixed annuity by paying into it for a certain # of years. (This is basically an investment contract by which in exchange for your paying into it, or investing a lump sum, it agrees to pay you $X per month starting at some point in the future, until you die. This future stream of cash flows (the monthly pension you will receive when you reach a certain age) has a current lump-sum value. It is an asset. In theory, if you had it today, you could invest this lump sum into one of the above-described complex annuity contracts, and it would pay you out a certain amount in the future.

There are complex formulas that can be used to figure out what your future pension is worth in lump-sum terms today, and this is what you owe half of to your soon to be ex.

Your employer may be able to give you some guidance as to what this is worth today, or you could consult a financial advisor and/or insurance person.

Note: The way most pensions work is that the longer you work for a company, the more you get in your monthly payment. If you have worked for them for a number of years, you are likely "vested" at a certain amount, meaning you get this even if you quit. It is only this amount that she is entitled to half of. If you continue to work for the same employer for the next 15-20 years, you would get a higher monthly payment. It is silly to think she would be entitled to half of that, as a good portion of it would relate to services rendered for years after your divorce.

It really is in your best interests to "lump sum" her - even if it means paying out a little more of your 401K.

Another thing to consider - what's happening all over is that employers are getting out of pensions they promised employees. They in essence "buy out" the employee's interests and invest the funds in 401k's. Yes, this has even happened to state employees in some areas. The last thign you want is to get a big lump of cash some day in the future, and have her show up to claim half at that point! Or worse, owe her some previously promised amount monthly once you retire....

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