If the plan participant was married the entire time while accruing the pension and elected a 50% J&S benefit, we believe there would be no survivorship issue because it is clear public policy that a pension is meant to be a lifetime of income for a married couple. For example, a plan participant who accrued a $2,000 a month pension might see the benefit cut to $1,800 a month to provide a 50% J&S annuity. The plan participant and his spouse would share the $1,800 a month benefit. If the plan participant died before the non-participant, the $1,800 a month pension would end and the survivorship benefit would begin which would provide $900 a month for the remaining lifetime of the non-participant. If the former spouse is a female and two years younger than the participant, the "tail" of the pension would likely last for another eight years. The cost for extending the pension for another eight years following the death of the plan participant was the $200 a month reduction to the single life annuity.

Let us reemphasize that our default position is that survivorship is an intrinsic element of a property right to a pension. We do not subscribe to the position that a pension can be "unbundled" into a stream of income and survivorship elements and that the plan participant in their largesse then bestows an additional piece of property to the non-participant.

However, when the plan participant is married for only part of the time spent earning the pension, as in this case, and elects a 50% (or more!) survivorship form of benefit, there is an issue of "excess" survivorship. There would also be a question of "excess" survivorship if the party was married the entire time the pension was being accrued and a survivorship greater than 50% was elected.

Please note that the value of this "excess" survivorship should not simply be added to the column of marital assets for the non-participant spouse. Instead, the marital assets of both participant and non-participant should be determined and then the size of the payment from one spouse to the other to equalize their assets must be calculated. At this point the value of the excess survivorship is considered. Keep in mind that the present value of the "excess" survivorship is, in essence, just another form of payment to the non-participant from the separate property of the participant previously paid for by the decrease in monthly benefits at retirement. For example, if the marital value of the pension is $250,000 and the value of the "excess" survivorship is $35,000, the participant would owe the non-participant $125,000 to level their assets but since there has already been a payment in the form of the survivorship election the actual payment still owed to the non-participant is $90,000 ($250,000/2 = $125,000 - $35,000 = $90,000). This is mathematically and theoretically different from subtracting the excess before dividing! ($250,000 - $35,000 = $215,000/2 = $107,500 vs $90,000).

A second scenario crops up when the value of the "excess" survivorship exceeds the payment from the participant spouse. In that case, the non-participant would need to pay back the overage. Assume, from our previous example, that as a result of other assets, the participant owed the non-participant just $15,000. In that case, the non-participant's "excess" survivorship would be $20,000 greater than the money owed and would thus owe $20,000 back to the participant. (($250,000 - $220,000)/2 =$15,000 owed to non-participant; $15,000-$35,000=-$20,000 or $20,000 owed back to the participant)

The last scenario - a more uncommon one at that - would occur when the non-participant owes money to the pension participant before the present value of the "excess" survivorship is examined. In that case the value of the excess survivorship would be added to the payment to the plan participant. Thus, if the non-participant spouse owes the participant $70,000 and the value of the "excess" survivorship is $35,000, the payment would increase to $105,000 ($35,000 + $70,000).

If a plan participant elected a 50% Joint and Survivor (J&S) form of benefit. This election causes a reduction in the size of the single life annuity to pay for a survivor "tail" for the second life being insured. Incidentally, when we refer to the "tail" of a pension, we are talking about the survivor annuity payable to an eligible surviving spouse upon the death of the plan participant. In virtually all ERISA defined benefit pension plans, once a participant retires and elects a form of benefit option, such as a 50% J&S annuity, the election is irrevocable.

For example: We have determined that the value of the "excess" survivorship is $17,000.00. That "excess" value was calculated in the following way. While the plan participant elected a 50% J&S annuity, half of the marital portion of the pension would normally have resulted in just a 40% J&S election (50% times coverture). The difference between the actual elected survivor benefit and the expected survivor benefit is 10% (50% minus 40%). Thus, 10%/50% or 20% of the value of the full survivor benefit of $85,000 would be "excess" survivorship. This amount is to be considered as a pre-existing payment already made to the non-participant by the participant from separate property as a result of the survivorship election.