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Public Employee Retirement Systems (PERS) in divorce


This article/blog was written for the purpose of providing a general understanding of how the Public Employees Retirement System (PERS) works in Nevada. PERS is the public pension program for Nevada state employees. The system is a defined benefit program. That means that it operates like an annuity upon retirement of the member. The beneftit is thus paid in monthly installments continuously until the date in which the member passes away.

The amount of benefit received by a member depends on how many years of service they that member has accrued and additionally is dependent on the value of the member's highest three years of salary. Such that a member earns 2.5% credit towards their highest average compensation for their highest three salaried years for each given year of work prior to July 2001. The rate then goes up to 2.67% for each year of credit earned post July 2001. Members who began work prior to 1985 can earn up to 90% of their average compensation while those who began service after 1985 can earn up to 75% of their average compensation.

Generally speaking, participant's benefits vest after working for a period of five years. However, these members can't actually begin receiving their retirement benefits until they reach the age of 65 years. However if the participant has ten years of work experience under the PERS system then the member can retire at age 60 years. If the member has accrued 30 years of service then the member can retire at any age. There are some exceptions to this rule however. For instance, police and firefighters can retire at age 55 with ten years of experience, at age 50 with 20 years of experience, or at any age with 25 years of experience. Be advised that members can take an early retirement in the PERS system. However, if a member takes an early retirmement then the member can expect to receive a 4% reduction for each year that the member retires prior to reaching full retirement age.

Keep in mind that under the PERS system there are provisions for cost of living adjustments (COLA). These are adjustments that increase the value of the retirement as the years pass. The purpose of the COLA is to make adjustments for inflation so as to prevent a devaluation of the benefit over time.

Be advised that there are particular rules applicable specifically to division of PERS retirement in divorce. One of those rules is that the divorce court can order that the benefit not be paid before the date of actual retirement. This however is in direct contraction to some of Nevada case law such as Gemma v. Gemma, 105 Nev. 458, 778 P.2d 429 (1989) as well as other Nevada cases which provide that a participant spouse cannot defeat the non-member's interest in receiving this benefit by simply deferring his or her retirement. These cases provide that if the member-spouse wishes to continue working beyond the date of retirmeent after a property division of this benefit has already been ordered, then this member must come out of pocket directly to pay the non-member spouse his or her community interest as long as the member spouse has vested in their benefit.

Be advised that there is no language in the statute which requires support orders to be final orders. Thus it stands to reason that temporary orders are enforceable as long as the member has vested or retired. Again, if the member is vested but not retired such payments will have to come from the member directly. If the member has retired then such payments can come directly from the plan. Additionally, keep in mind that there is no percentage of benefit payment limitation. For instance, in the military context a non-member is typically only entitled to receive up to 50% of the member spouse's interest in a retirement or 65% if such non-member is collecting upon arrears.

Remember that Nevada is a community property state. This means that all property aquired after the date of marriage is presumed to be community property. Additionally, all community property is to be divided equally unless there is a compelling reason to distribute this property otherwise. Thus, PERS benefits will be divided equally just as any othe property interest would be. To determine the community interest you would simply look at how many years of marraige overlap with years of service. The entire amount of this overlapping period is community and thus that interest is community property. To divide this interest a qualified domestic realtions order will need to be prepared and submitted to the plan administrator of the Pension.

Categories: Family Law