How does a teacher’s pension get treated in a divorce?

Divorce can appear in many ways: “quick, ugly, obvious, manipulative, or sad.” No matter the circumstances or process for divorce, an Illinois teacher’s pension can be treated in numerous ways and have many nuances as to how it can be separated.

Divorce

Left as is: It may be the case that the spouse of a teacher earns more money, or that the judge decides that other assets can be split in a divorce and not the pension. In that case, the pension of the teacher is left as is, and all benefits will defer to the teacher.

 

It is split up at retirement: It may be the case that the pension will need to be divided between spouses. For many retirement assets that these individuals hold, a QDRO (Qualified Domestic Relations Order) is put in place. This is a court document that determines when, how and how much of certain retirement assets are split up and paid to either party. The Illinois TRS system does not recognize a QDRO document – it only recognizes a QILDRO (Qualified Illinois Domestic Relations Order). A QILDRO is a court order that is specific to Illinois pension systems and requires it’s own unique process to be executed.

   


 

Acceleration of benefits: In most cases, the QILDRO is executed with TRS for the collection of benefits when a teacher retires or passes away. In no circumstances can benefits be accelerated and be paid out to the “alternate payee” before the TRS member.

 

Unvested benefits: If the teacher is unvested in their pension (less than 5 years of service), all contributions will be refunded and then split according to the QILDRO – at or after retirement.

 

Refundable benefits: When a teacher retires, there are certain benefits that may have been overpaid, unused, or can be refunded based on circumstances. These benefits will be split according to the QILDRO. These refundable benefits can include:

  • Survivor benefit contributions (if there are no dependent beneficiaries who could receive them)
  • Service credit contributions over 34 years of after July 1, 1998 if not upgraded to 2.2
  • Refunded payments as associated with 2.2 upgrades
  • Refund of contributions for excess optional service and unused ERO contributions

 

What is not covered under the QILDRO? The QILDRO only covers the pension benefits offered by TRS – the ex-spouse cannot get access to health insurance, disability insurance, or monthly survivor benefits. In addition, TRS will honor the beneficiary form on file in awarding survivor benefits in the case of a member passing, it will not consult the QILDRO. If it is required that the same beneficiaries listed in the QILDRO receive the pension benefits, the pension beneficiaries should be updated to reflect this.