How is an Oregon PERS pension divided in a divorce?
The court orders PERS accepts, the ways a pension and IAP can be split, what the member and former spouse each end up with, and what happens to survivor benefits.
PERS divides benefits only under a court order that uses PERS's own award forms, attached as exhibits. The former spouse, called the alternate payee, can get a share as a percentage, a married-time fraction, or a flat dollar amount. Depending on the award type, the share is either paid out of the member's checks or set up as the former spouse's own account or benefit. The IAP is split separately. PERS won't act on the order until the former spouse sends form 576 with proof of their Social Security number.
The court orders PERS accepts
PERS is a governmental plan, so it divides benefits under Oregon law and PERS rules rather than the federal rules that apply to private 401(k) plans. What PERS needs is a final court order (a divorce judgment, legal separation, annulment or property settlement) that uses PERS's award forms. PERS says "the appropriate forms must be completed, labeled, and referenced as exhibits in your court order" (PERS: Divorce forms).
PERS calls an order administrable once it has reviewed it, has every required document, and has notified both parties. Some common problems:
- An order that doesn't mention PERS at all is treated as No Award, with no restrictions. The member keeps everything.
- An order that leaves out required language about employer-funded money can be rejected.
- An order can't combine a percentage and a dollar amount in one award.
The forms differ for Tier One/Tier Two, OPSRP and the IAP, and for retired and nonretired members, so the attorney drafting the order needs the right set.
Ways to divide the pension
The award types available depend on your plan and whether you've already retired (PERS: Divorce for Tier One/Tier Two members; PERS: Divorce for OPSRP members):
| Award type | How the former spouse is paid | Available to |
|---|---|---|
| Separate Account | Own PERS account, own retirement choices | Tier One/Two, not yet retired |
| Separate Benefit | Own benefit split off at retirement | Not yet retired |
| Reduction | Share of each member payment; can continue after the member dies | Retired or not |
| Deduction | Share of each payment, only while the member lives | Retired or not |
| No Award | Nothing | Retired or not |
What the former spouse gets under each
- Separate Account (Tier One/Two): the former spouse can apply for benefits once the member reaches earliest retirement eligibility (generally 55, or 50 for police and fire), even if the member keeps working. They pick from five options, but not a joint and survivor option. They can instead withdraw the account before the member is eligible to retire, but they lose any awarded employer-matching funds if they do.
- Separate Benefit: the former spouse can start benefits on or after the member's earliest retirement eligibility, and no later than the member's retirement date. In OPSRP it's paid as a single life benefit with no death benefit.
- Reduction or Deduction: the former spouse doesn't apply or choose anything. Payments start automatically when the member's benefits start, and the former spouse can't withdraw.
What the member gets
The member keeps whatever isn't awarded. With a Reduction, each person pays income tax on what they receive. With a Deduction, the member is taxed on the whole payment, including the former spouse's share. Deductions are used most often when a registered domestic partnership ends.
An order also needs to say whether the member can withdraw from PERS, and whether the award still applies if they do. If the award doesn't apply after a withdrawal, the former spouse may never receive a benefit.
How the share is measured
PERS accepts three ways to state the award:
| Method | How it works |
|---|---|
| Direct percentage | A set percent of the account or benefit |
| Married-time ratio | Service during the marriage ÷ total service, times the percent awarded (not yet retired only) |
| Flat dollar amount | A fixed dollar figure |
For OPSRP, PERS notes that a flat dollar award never gets cost-of-living raises, and that the former spouse gets a raise only when the member does.
Taylor, a made-up OPSRP member, has 24 years of service, 12 of them during the marriage. The court awards Taylor's former spouse 50% of the married-time ratio as a Reduction.
- Married-time ratio: 12 ÷ 24 = 50%.
- Former spouse's share: 50% × 50% = 25% of Taylor's pension.
- If Taylor retires with a $3,200 monthly pension, the former spouse gets $800 and Taylor gets $2,400, starting with Taylor's first payment.
Dividing the IAP
The IAP needs its own award, using the IAP forms (PERS: Divorce and the IAP):
- Not yet retired: the award can be a percentage or a dollar amount, and goes into a separate IAP account in the former spouse's name. It's figured from the balance on December 31 of the year before the award date. The former spouse can withdraw before the member is eligible to retire, or take a distribution once the member reaches earliest retirement eligibility.
- Already retired: only a percentage is accepted, applied to the balance when the former spouse's account is set up. The former spouse must take an immediate one-time lump sum.
- Leave some items out: PERS says an order shouldn't try to award or exclude target-date funds, the Employee Pension Stability Account or voluntary contributions; doing so can make the order unadministrable.
For more on how the IAP pays out, see IAP payout options.
Survivor benefits and beneficiaries
Divorce affects survivor protection in ways that are easy to miss:
- Old beneficiary forms: for a Tier One/Two pension, a beneficiary form naming the former spouse stays in effect unless the order has PERS-specific language changing it. For the IAP, it's the reverse: without restrictions in the order, a designation naming the former spouse is treated as if that spouse died before the member.
- Death before retirement: the order can name the former spouse as beneficiary for a percentage or a married-time share of death benefits. If it doesn't, the former spouse gets nothing from them. OPSRP's preretirement death benefit can be paid to a former spouse under a court order.
- Retirees with a survivor option: if you chose Option 2A or 3A (or an OPSRP Increase option) and your former spouse is the beneficiary, you can ask to move up to the single life amount. For divorces on or after January 1, 2006, the change is effective the first of the month after the divorce, unless the order restricts it.
- Changing the survivor beneficiary: a retiree with a survivorship option can name a new beneficiary only if the order specifically allows it and gives the former spouse an award (even $1). It's a one-time change that can't be undone, and the benefit is recalculated, possibly much lower if the new beneficiary is younger. You can't do both a beneficiary change and a pop-up.
See PERS survivor options for how the options work. Legal separation doesn't end a spouse's rights: the spouse must still consent to your option choices unless the separation order waives it with form 763.
What to send PERS
- The final court order, with the correct PERS award forms completed and referenced as exhibits.
- Form 576 (Alternate Payee Information Verification) from the former spouse, plus a document verifying their Social Security number. This is waived if the former spouse is a PERS member too.
- Any restriction forms (595 for Tier One/Two, 594 for OPSRP, 593 for the IAP) if beneficiary restrictions apply.
Send questions in writing to Oregon PERS, Attn: Divorce Unit, PO Box 23700, Tigard, OR 97281-3700, or fax 503-598-0561. For estimates, nonretired Tier One/Two members with a divorce-related account use form 599; PERS says not to rely on Online Member Services estimates, which can't reflect a divorce award.
What to do next
- Get the right forms from the PERS divorce forms page before the order is drafted.
- Work with a family law attorney who has drafted PERS orders; the forms are technical.
- Address the IAP, survivor benefits and beneficiaries explicitly in the order.
- Request a post-divorce estimate from PERS before planning your retirement date.
After a divorce, rerun your plan with your share of the pension to see when retirement still works.
Estimate my PERS pensionCommon questions
Does Oregon PERS accept a QDRO?
PERS divides benefits under a court order that uses its own award forms as exhibits, under Oregon law. An order written for a private plan without those forms may not be administrable.
Can my ex-spouse get PERS benefits before I retire?
Under a Separate Account or Separate Benefit award, yes, once you reach earliest retirement eligibility. Under a Reduction or Deduction, payments start only when yours do.
Is my IAP divided automatically with my pension?
No. The IAP needs its own award form. If the order doesn't mention the IAP, PERS treats it as no award.
Can I remove my ex-spouse as my survivor beneficiary after I retire?
Only if you chose a pop-up option (2A, 3A or an OPSRP Increase option), or the order allows a beneficiary change and gives your former spouse an award.
Who pays tax on my ex-spouse's share?
With a Reduction, each person is taxed on what they receive. With a Deduction, the member is taxed on the full payment.
What happens if the order doesn't mention PERS?
PERS treats it as No Award with no restrictions.
General information, not legal advice. We aren't part of Oregon PERS. For your account, contact the PERS Divorce Unit or Member Services at 888-320-7377, and have a family law attorney draft the order.