New York City Police Pension Fund
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DRO Frequently Asked Questions

Frequently Asked Questions Regarding Domestic Relations Orders

Disclaimers:

- This guide is intended to answer the most common questions that matrimonial attorneys have concerning equitable division of a pension and Domestic Relations Orders (DRO). As a public pension plan, the New York City Police Pension Fund is not bound by the ERISA provisions governing these matters as are private pension systems.

- Although this FAQ is available to anyone on the Police Pension Fund's Web site, it is NOT intended to provide legal advice to participants in the Fund or to their former spouses. Participants and their former spouses are strongly encouraged to seek the legal counsel of a matrimonial attorney regarding any information present on this web page. Matrimonial attorneys can click here for a sample DRO (in PDF).

- All information is based upon the current understanding of the law by the Legal Division of the Police Pension Fund. These laws and rules may be subject to change, therefore, please conduct any necessary legal research in addition to the information provided here.

- All general information regarding retirement benefits, options and the Variable Supplement Funds is in no way confidential and can be found in the Summary Plan Description or on the Police Pension Fund's Web site. Confidential information regarding a specific participant's pension information will not be released to anyone, except the participant, without a court order or a release from the member.



Frequently Asked Questions (FAQ)

1) Is the New York City Police Pension Fund subject to the Employees' Retirement Income Security Act (ERISA)?

Many private plans, subject to the Employees' Retirement Income Security Act (ERISA), are required to accept Qualified Domestic Relations Orders (QDRO) to equitably divide a pension should a pensioner get divorced. As a governmental plan, the Police Pension Fund is not subject to ERISA and does not accept QDROs. The Fund will, however, accept an Approved Domestic Relations Order (ADRO) that will equitably divide a participant's pension under the terms described throughout this FAQ.

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2) Why is a police officer's pension considered marital property?

The New York State Court of Appeals in Majauskas v. Majauskas (61 N.Y.2d. 481, 474 N.Y.S.2d 699) concluded that a participant's vested but unmatured rights to a pension that were accrued during the marriage are to be considered marital property. A public pension fund will thus honor an Approved Domestic Relations Order (ADRO) issued by a court of competent jurisdiction in the state of New York. This is not a QDRO as accepted in the private sector.

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3) What role does the Police Pension Fund have with a DRO?

The Police Pension Fund's Legal Department is available to answer questions regarding a DRO and its impact on member benefits. Attorneys should submit proposed DRO language to the Fund's Legal Department for its review prior to seeking court approval. A failure to do so could result in additional court proceedings if a DRO is not acceptable and could delay the alternate payee's receipt of benefits. Please note, however, that it is not the role of the Fund to comment on the terms of a proposed or final DRO, except to the extent those terms either fail to comply with applicable law or rules or cannot be implemented by the Fund. The Fund will find a proposed or final DRO acceptable to the Fund, so long as it can be implemented by the Fund and is in accordance with the laws governing the Fund pursuant to §13 of the Administrative Code of the City of New York and applicable provisions of the Retirement and Social Security Law (RSSL). The Fund assumes that the terms of a DRO submitted for review represent the terms which have or will be negotiated by the parties and their attorneys or which have been or will be ordered by the court, as applicable. Any questions as to the fairness of the terms contained in a DRO must be addressed by the parties' respective counsel.

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4) Can a former spouse claim benefits without a DRO?

Generally not; member benefits are exempt from attachment, garnishment or any other form of legal process pursuant to §13-264 of the Administrative Code of the City of New York. However, Civil Practice Law and Rules §5241 and §5242 does provide for income executions to enforce court orders of support, and may, in some circumstances, be implemented by the Fund.

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5) Can a member and his or her spouse agree upon a division of the member's benefit entitlements without being divorced?

No. Current law only provides for a division of a member's benefit when a marriage has been terminated and the Fund has received a certified signed DRO, directing the Fund to pay a share of the member's benefits to the member's former spouse.

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6) Is it necessary for a divorce always to result in a division of a member's retirement benefits?

No. There is no requirement that the equitable division of the marital estate upon the parties' divorce result in the division of a member's retirement benefit. Although a member's retirement benefits may be considered marital property subject to equitable distribution, the parties could determine to divide the marital estate in a way which does not involve the division of a member's retirement benefit.

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7) As a former spouse of a police officer and an alternate payee will I be considered a member in the Police Pension Fund?

No, the former spouse of the participant will NOT be considered a participant of the Police Pension Fund. This is because the Police Pension Fund is a common fund, with no participant having a separate account. A pension is a legal relationship created by statue between the Fund and the participant. There is no such legal relationship between the Fund and the alternate payee. Since the alternate payee is not considered a participant of the Police Pension Fund, they are in no position to elect a retirement option or designate a beneficiary.

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8) Does a divorce nullify a member's designation of the former spouse as the beneficiary of his/her death benefit?

Maybe. Chapter 173 of the Laws of 2008 (amended EPTL 5-1.4) revokes a member's prior designation of a former spouse as a beneficiary in the event of a subsequent divorce, annulment or judicial separation for certain death benefits and retirement options, except as provided by the express terms of a governing instrument such as a Domestic Relations Order (DRO) on file with the PPF.

The designations impacted by Chapter 173 include the pre-retirement death benefit and any lump sum retirement option under which the member is permitted to change the beneficiary. Chapter 173 does not apply to designations that are irrevocable by law, such as the beneficiary designation of a joint and survivor retirement option, or designations that are required under a certified domestic relations order on file with the PPF.

For Chapter 173 to apply PPF must receive written notice of the divorce, annulment or judicial separation before it issues payment of the death benefit. To ensure benefits are distributed as intended, it is important for divorced members to review their beneficiary designations with PPF, and if necessary, file a new Designation of Beneficiary (in PDF).

Chapter 173 also revokes a former spouse's right to serve as a personal representative , executor, guardian, attorney-in-fact or any other fiduciary role for marriages ended on or after July 7, 2008 - the day Chapter 173 was enacted.

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9) As an alternate payee, am I entitled to a death benefit?

An alternate payee is not entitled to a death benefit unless he or she is the lawfully designated beneficiary. The New York State Court of Appeals held in Caravaggio v. The Retirement Board of the Teachers' Retirement System of the City of New York (36 N.Y.2d 348, 368 N.Y.S.2d 275) that the right to designate a beneficiary cannot be "bargained away." Mandated by statue and case law, the Police Pension Fund is obligated to pay the last duly designated beneficiary regardless of the participant's contractual obligation by separation agreement or otherwise to designate a former spouse.

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10) May a DRO specify that a member must elect a particular form of post-retirement survivor benefit?

Yes. The default form of a retirement benefit paid by the Fund to a retired member is an annuity payable for the life of the retired member only. (The single life annuity is commonly referred to as the Maximum benefit.) New York law, however, allows a Fund member to elect, in lieu of the Maximum benefit, an optional form of retirement benefit (an option) which involves the payment of a lower retirement benefit during the retired member's lifetime but also provides some form of post-retirement survivor benefit upon the death of the retired member. If the election of a post-retirement survivor benefit in favor of the alternate payee is required as a result of the division of the member's retirement benefit through equitable distribution, the DRO must clearly set forth that the member is required to elect that survivor benefit at the time of retirement. On the other hand, if there is no requirement that the member elect a post-retirement survivor benefit in favor of the alternate payee, then the DRO should be silent about the matter of post-retirement survivor protection. In that event, the member is free to take the default single life annuity or elect any available optional form of retirement benefit providing for the payment of a survivor benefit.

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11) How will a DRO affect a retired member's entitlement to cost-of-living adjustments?

Pursuant to Administrative Code §13-696 there is a cost-of-living adjustments (COLA) on the first $18,000 of a retired member's retirement benefit. The COLA is paid to all retired members who have attained age sixty-two and have been retired for five years; all retired members who have attained age fifty-five and have been retired for ten years; all members who retired for disability regardless of age who have been retired for five years; and all recipients of an accidental death benefit regardless of age who have been receiving such benefit for five years.
As a general matter, when a DRO requires the Fund to pay a percentage of the retiree's benefit to an alternate payee, the Fund will use the same percentage to pay the alternate payee a share of any COLA adjustments as well, unless the DRO expressly provides that the alternate payee is not to share in the COLA adjustments. On the other hand, as a general matter, when the DRO requires the Fund to pay a specific dollar amount to the alternate payee, the alternate payee will not share in any COLA adjustments.
Practice Pointer: Under law, COLAs are only payable during the retiree's lifetime and are not payable to any beneficiary under any form of post-retirement survivor protection, except in the limited case where the retiree's current spouse is entitled to receive a survivor annuity under a joint and survivor option. Accordingly, any payments of a share of the retiree's COLA to an alternate payee will cease upon the death of the retiree, even where the alternate payee is entitled to receive survivor annuity benefits under an option which the retiree was required to elect at retirement. Thus, in the case of an alternative option, under which the alternate payee is to receive the same amount following the death of the retiree as the alternate payee was receiving during the retiree's life, the Fund would continue to pay the alternate payee the share of the benefit the alternate payee commenced receiving at the time of retirement, not the share as increased by the alternate payee's share of any COLA to which the retiree subsequently became entitled.

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12) Does the Police Pension Fund determine a present value for a member's future retirement benefits?

No. The Fund does not do present value calculations of members' future benefits. The Fund can only give information about a member's current benefit accruals and estimates of a member's future benefit at retirement. The parties will need to consult with an actuary or other financial professional if they desire to have a present value calculated for a member's future benefit. While the Fund can provide estimates of a particular member's retirement benefit in specified circumstances, the Fund does not accept inquiries more than once in a twelve month period.

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13) How is service which is purchased by a member accounted for in a Majauskas-type formula?

This depends upon the language in the DRO. However generally speaking, where the numerator of the Majauskas fraction is the service credit that has been accrued between two dates (such as the date of the marriage and the date of the commencement of the matrimonial action), the Fund will only include credit for service which has been rendered between the two dates and, if purchased, has been purchased by the member between those two dates. If the service was rendered outside the two dates or was purchased outside the two dates, it will not be included in the numerator.

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14) Is there a specific form for the DRO?

The Police Pension Fund does not mandate a specific form of DRO. The Fund does however have a sample that is strongly recommended for use. A sample DRO can be found here (in PDF).

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15) What can be ordered by a DRO?

The Fund may be directed by a DRO to pay a portion of a member's retirement benefits directly to the member's former spouse (known as the “alternate payeeâ€). If the member has not retired or the period for electing an optional form of retirement benefit following retirement has not lapsed, the DRO may direct the member to elect a specific option for a retirement benefit. The DRO can also direct the Fund to pay a portion of a death benefit to the alternate payee if a death benefit is payable following the death of the member, whether before or after retirement. In DeLuca v. DeLuca, 736 N.Y.S.2d 651, the Court ruled that the Variable Supplement Fund (POVSF and PSOVSF) are martial property subject to equitable distribution. While the Fund does not require a separate DRO for the VSF, any distributions must be addressed separately from the monthly retirement allowance and must state the alternate payee's share with particularity.

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16) What cannot be ordered by a DRO?

In general, a DRO may not order the Fund to take an action which is not permitted under the law and rules governing the Fund. A DRO may not order the Fund to pay a benefit to an alternate payee when no moneys are otherwise payable. A DRO cannot order the Fund to provide an optional form of retirement benefit which is not permitted under law or cannot be administered by the Fund.

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17) The Court signed the DRO, now what?

When a DRO has been signed by a court, a certified copy of the DRO should be promptly sent to the Fund's Legal Department. The Fund is under no legal obligation to take any action directed by a DRO unless and until a certified copy of a court-signed DRO has been filed with the Fund and approved by the Fund's Legal Department. If the Legal Department determines that it can be honored by the Fund, it will be placed in the member's file for immediate implementation at the time of retirement or death or will be transmitted to the appropriate departments within the Fund for implementation if the member has already retired. If a certified copy of a DRO is not filed with the Fund, the Fund must pay benefits as otherwise required by law and the rules governing the Fund. Thus, a failure to file a DRO on a timely basis may cause the alternate payee to lose benefits to which s/he may be entitled under the DRO.

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18) What happens when a certified copy of a signed DRO is filed with the Fund after the member has begun receiving retirement benefits?

If a member has already retired when the DRO is received by the Fund and the DRO was signed by the court in the month in which it is received (and does not contain any provision for retroactive payments), the DRO will be given effect on the date the DRO was signed.

If a member has already retired when the DRO is received by the Fund and the DRO was signed by the court prior to the month in which it is received (and does not contain any provision for retroactive payments), the DRO will be given effect on the date the DRO was received by the Fund. Retroactive provisions in DRO's will be implemented to the extent permitted by applicable law and rules and to the extent they are capable of administration by the Fund.

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19) What happens to an alternate payee's share of a retirement benefit if the retired member predeceases the alternate payee?

Payments of a retired member's retirement benefit cease upon the retired member's death. Payments of a share of that retirement benefit to the alternate payee accordingly cease as well. In order for an alternate payee to continue to receive payments from the Fund, the retired member must have elected a survivor benefit at the time of retirement in favor of the alternate payee.

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20) What happens to an alternate payee's share of a retirement benefit if the alternate payee predeceases the retired member?

Payments of an alternate payee's share of a retirement benefit cease upon the alternate payee's death. Following the death of the alternate payee, the entire retirement benefit is thereafter paid to the retiree. An alternate payee has no right to designate a beneficiary for her share of the retirement benefits. If the alternate payee had been designated the beneficiary of a joint and survivor benefit at retirement, no payments are made following the death of the retired member. On the other hand, if the alternate payee had been designated the beneficiary of a guaranteed or lump sum option, the retired member may designate another beneficiary or other beneficiaries to receive any payment, if any, is made upon the subsequent death of the retired member.

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21) What happens if the member returns to active service?

If a retiree returns to active public service in New York, New York law requires the payment of the retiree's benefit to be suspended during the return to service. See Civil Service Law §150, RSSL §211, 212 and Charter §1117. If the payment of a retiree's benefit is suspended due to a return to service, the payment of the alternate payee's share of that benefit would cease as well. It should be noted, however, that a suspension is only required if the retiree returns to public employment in New York and is not required if the retiree goes to work in the private sector, in public service in another state or in federal government service. There are also rules which allow retirees to work in public service in New York without a suspension of pension benefits in certain circumstances. Refer to the Police Pension Fund's Summary Plan Description (SPD) section “Return to Service After Leaving Employment for more information.

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22) What if a member dies prior to retiring?

When a member dies prior to retirement, the Fund pays whatever death benefit is provided for under the law to the member's designated beneficiary or beneficiaries. Under law, an alternate payee is not entitled to receive a share of the member's death benefit and accumulated contributions unless the DRO expressly provides that the alternate payee is to share in the death benefit and the member has named the alternate payee as his/her designated beneficiary. Language in a DRO dividing a member's retirement benefit is not sufficient under law to require a division of the member's death benefit.

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23) What if a member withdraws from the Fund?

A member may resign his or her position with the NYPD at any time and thus withdraw from the Police Pension Fund. Withdrawal from the Fund is accomplished by the member requesting a withdrawal of their accumulated contributions, if any. A withdrawal of membership extinguishes any benefit entitlements the member may have. Accordingly, any right, if any that an alternate payee may have to share in such member's benefits would be extinguished as well. Typically members will withdraw if their accumulated service affords no entitlement to any retirement benefit or if it is possible for them to obtain retirement credit in some other public retirement system for the service credited in NYCPPF.

The Fund will permit a member to withdraw his/her accumulated contributions, if any, and thereby terminate his/her membership in NYCPPF unless the DRO on file with the Fund contains specific language prohibiting the member from withdrawing his/her accumulated contributions. The alternate payee may also receive a portion of said contributions if the DRO specifically provides for such division.

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24) What if a member retires for disability?

The law governing the Fund permits eligible members who are permanently disabled to retire for disability. When a member is retired for disability, the Fund will apply the provisions of a DRO requiring an alternate payee to receive a share of a member's retirement benefit, unless the DRO expressly provides that the alternate payee is not to share in the member's disability retirement benefit. This is consistent with New York law which regards the portion of a disability retirement benefit earned during a marriage as marital property unless the recipient demonstrates the contrary. This is common in accidental disability cases, where the member is disabled due to a Line of Duty incident and thus he bears the burden of the disability. In such cases, the Fund separates out the disability portion of the benefit and calculates the alternate payee's share based on the participant's earnings and length of service only, as long as this is stipulated in the DRO.

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25) What if a member fails to repay a loan?

A failure to repay a loan has consequences for the benefit to which the member may be entitled to at retirement. If the member has not repaid the loan at the time of retirement, the member is treated as having received a distribution of the outstanding amount of the loan at retirement. In either case, the distribution reduces the member's accumulated contributions available at retirement to provide an annuity based upon those contributions. As a general matter, unless a DRO contains specific language prohibiting a member from taking a loan or transferring or encumbering his/her retirement benefit, the Fund will place no restriction on the member's right to obtain a loan. If a member was not restricted by a DRO from obtaining a loan, the alternate payee's share of the member's accumulated contributions in the ASF at retirement, if any, will be calculated using only the remaining balance of the ASF, unless the DRO expressly provides otherwise.

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26) Will the Police Pension Fund disclose information in a member's or retiree's file?

The Police Pension Fund is not permitted by law to release non-public information regarding a member's file unless the Fund has authorization. An authorization, including a subpoena, must specifically reference the Police Pension Fund and must be dated. Authorizations executed more than 12 months prior to the date on which information is sought are considered stale and will not be implemented by the Fund.

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