Denial of one's Pension due to no DRO

[Edie]

My apologies for interrupting a previous forum on another topic line.  I am currently trying to find a resolution to a current problem. During the month of August 2018 my father passed away ,he was collecting his social security benefits as well as his full pension of which all began during 2003 and of course ended during his death of August 2018.  He was employed by the city of New York as a New York City Hospital Police Officer.  His retirement pension is through NYCER, "New York City Employee Retirement.  My parents married in 1971 divorced in 2008. During August 2018 my mother was awarded a one time death benefit through my fathers pension retirement organization NYCER.  Thereafter, she was informed she would receive my fathers annuity funds and informed my mother that she was listed as his primary and only benificuary to collect his pension.  My mother was directed to complete some documents and to submit a death certificate.  Thereafter, she was notified she was not elegiable to collect my fathers pension nor was she entitled to my fathers remaining annuity funds because there divorced. NYCER is requesting a DRO of which my mother does not have.  There divorce was an uncontested divorce drawn up in the state of Florida by an attorney or my father who failed to include any and all of my fathers financial information regarding my fathers pension or his social security benefits he was collecting but remember my fathers pension is from New York City of which my mother resides in.  Can any thing be done about this?? At this present time NYCER continues to send letters regarding my fathers Annuity funds which has not been disbursed accordingly and there is NO administrator of his estate.  There are three surviving children including myself.  Please advise.  Thank you.

[QDROphile]

Sorry, this is out of my league.  This appears to be a government plan and government plans live mostly  by their own rules, complicated by use of unique terminology, which among other things, prevents you from translating the government planspeak into information that might be useful for analysis.  You need a professional, probably a lawyer, who is familiar with the NYCER plan to unravel this.

[fmsinc]

If your father was retired before the divorce, it may be that your mom's pension benefits were locked in at retirement and no QDRO would have been required.  On this point see Vanderkam v. Vanderkam, a case decided on January 20, 2015, by the United States Court of Appeals, District of Columbia Circuit,  No. 13-5163. The holding in that case confirmed that when a Participant in an ERISA qualified plan retires, his then wife will immediately become irrevocably vested in her entitlement to a QJSA.  The only way the Alternate Payee can lose this entitlement is via a waiver previously executed by her within 180 days prior to the commencement date of the Participant’s retirement annuity.   See 1055 §§(c)(1)(A)(I) and (c)(7)(A).   During that 180 day period, the Alternate Payee may also revoke such waiver.  See 29 U.S.C.  §1055(c)(1)(A)(iii).  A waiver executed prior to the applicable election period is void.  
    It is also clear that if the retired Participant and his wife later divorce, it is not  necessary to prepare a QDRO confirming her entitlement to a survivor annuity.  While a QDRO would be required to award a share of the Participant’s retirement annuity, and while it might be a good idea to confirm the Alternate Payee’s entitlement to a survivor annuity, this is not essential.  Note that Federal laws like ERISA preempt Maryland law and will provide a survivor annuity benefit to the former spouse of a Participant who retired from an ERISA qualified plan prior to divorce.  Maryland courts cannot change that outcome.  Read the underlying District Court decision -   Vanderkam v. PBGC, 943 F.Supp.2d 130 (USDC - DC Cir. 2014).      
    Read also the well written opinion of the United States District Court for the District of South Carolina in Setzer v. Michelin Retirement Plan  - C.A. No. 3:13-cv-00192-MGL.   In this case the parties were married when the husband retired and was required by ERISA to elect a joint and survivor benefit for his wife.  The only way for him to make another election would have been with the consent of his wife.  Five years later, after their divorce, Mr. Setzer asked the Plan to permit him to change the survivor annuity election and to name his new wife as the beneficiary. Said the Court:
         “In his benefit claim, Setzer requests that in light of his divorce, 1) he be permitted to change the Joint and Survivor annuity (50%) form of pension benefit which he elected at the time he was married to Jessica and prior to his retirement and Annuity Commencement Date; 2) Jessica receive no Surviving Spouse Benefits if she survives him; and 3) he be allowed to name a new spouse beneficiary of his pension benefit should he remarry. (AR 19, 38.) As discussed fully below, ERISA and interpreting Fourth Circuit case law preclude Setzer's request.

        * * * * 
        “In Hopkins v. AT&T Global Information Solutions Co., 105 F.3d 153 (4th Cir. 1997), the Fourth Circuit directly addressed the question of when a surviving spouse benefit vests in a participant's spouse. The Fourth Circuit concluded that under ERISA, "the Surviving Spouse Benefits vest in the spouse married to the participant on the date of retirement." Id. at 156. The Court went on to conclude that "nless the form of benefit is properly changed prior to retirement, the participant is locked into the joint and survivor annuity upon retirement . . . [and] cannot change the form of benefit, even with the current spouse's consent." Id. at 157. Here, the vesting of the Surviving Spouse Benefits occurred on December 1, 2004, the date of Setzer's retirement and commencement of benefits. Consequently, as a matter of law, Setzer cannot change the Joint and Survivor form of benefit, even though Jessica purported to waive any claim or interest she might have in Setzer's pension benefits.”

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If the NY plan is an ERISA qualified play, it is possible to have the court enter a post-mortem QDRO under the Pension Protection Act of 2006.  Even if the NY Plan is NOT ERISA qualified, it may be possible to have a post mortem QDRO entered.  There is also a concept of nunc pro tunc QDROs that might apply.  On these issues give your attorney the research Memo attached.   

Post Mortem and Nunc Pro Tunc QDROs.pdf

[david rigby]

It seems obvious (to me) that a plan sponsored by NYC is not ERISA-qualified.  As QDROphile states, "government plans live...  by their own rules", sometimes influenced by state-mandated standards, but not by federal-mandated standards. 

IMHO, the first thing to do is check the provisions of the elected form of payment.  It may provide a "joint-and-survivor" payment that pays a portion to the surviving spouse (and this may or may not apply to a divorced spouse).  Alternatively, the payment form may provide a different form of survivor payment, or none.  You (surviving child) can probably check this before engaging any legal counsel.