CalPERS & Divorce: What You Need to Know About DROs

Understanding CalPERS and Divorce

The California Public Employees’ Retirement System (CalPERS) is the largest public pension fund in the U.S., providing benefits to over 1.6 million active and retired members. If you or your former spouse is a CalPERS member, it is essential to understand how retirement benefits are divided in a divorce or legal separation.

Since California is a community property state, retirement benefits earned during the marriage are typically considered joint property, meaning they must be divided equitably in the event of a divorce. However, unlike private-sector retirement plans, which fall under the Employee Retirement Income Security Act (ERISA), CalPERS pensions are governed by California Public Employees’ Retirement Law (PERL).

To ensure proper division, the court must issue a Domestic Relations Order (DRO), which is then submitted to CalPERS for implementation.

Community Property and Governing Law

Under California Family Code 2610, CalPERS pensions are classified as community property if earned during the marriage. This means that both spouses are entitled to a fair share of the benefits.

Key laws governing CalPERS pension division in a divorce include:

California Family Code 2610 – Establishes community property rights for pension benefits.
California Public Employees’ Retirement Law (PERL) – Regulates how benefits are administered and divided.
CalPERS Community Property Regulations – Outlines procedures for processing a DRO.

Because CalPERS pensions do not allow for Qualified Domestic Relations Orders (QDROs)—which are used for private retirement plans—dividing a CalPERS pension requires a specialized DRO.

First Steps: Protecting Your Claim & Requesting Information

To safeguard the nonmember spouse’s interest in a CalPERS pension, it is crucial to take the following steps:
1. Notify CalPERS in Writing
  - Send a formal written notice to CalPERS Legal Division stating your intent to claim community property rights.
2. File a Joinder
  - A joinder is a court order that legally binds CalPERS to the divorce case.
  - It prevents the pension from being withdrawn, modified, or cashed out without addressing the nonmember spouse’s share.
  - Without a joinder, CalPERS will not process the DRO (CalPERS Joinder Instructions).
3. Request Account Information
  - The nonmember spouse may obtain pension details through:
    - A joinder request
    - A written authorization from the CalPERS member
    - A court-issued subpoena
  - CalPERS will provide information on:
    - Contributions
    - Service credit
    - Retirement options

Methods of Division: Separation of Account vs. Time Rule Formula

There are two primary methods for dividing a CalPERS pension:

Method

Separation of Account Method

Time Rule Formula

How it works

The nonmember spouse receives a separate pension account.

The nonmember spouse receives a portion of the member’s future pension payments.

Eligibility

Can only be used if the member is not yet retired.

Can be used for both retired and non-retired members.

Benefit Calculation

Based on accumulated contributions, interest, and service credit earned during the marriage. Separation of Account division usually results in a smaller award to the non-employee spouse.

Based on a percentage of the member’s total pension, determined using the Time Rule Formula (also called the Brown Formula).

Payment Start Date

Payments can begin when both parties reach minimum retirement age.

Payments begin when the member retires or passes away.

Payment Options

Monthly allowance or lump sum withdrawal/rollover.

Payments are only available as a monthly allowance.

If the CalPERS member is already retired, the only option available is the Time Rule Formula.

Additional Considerations

Elective Service Credit & Cost-of-Living Increases

If the DRO does not specify elective service credit (e.g., military service, redeposited contributions), any future service credit purchases may be considered separate property (CalPERS Service Credit Purchase Guide).

Survivor Benefits

If the CalPERS member dies before retirement, the nonmember spouse may not automatically receive survivor benefits unless explicitly specified in the DRO (CalPERS Survivor Benefits).

Waiver of Benefits

If the nonmember spouse chooses to waive CalPERS pension rights, our office can prepare a waiver of community property that satisfies both CalPERS’s requirements and formalizes the waiver for the court record.

Get Expert Legal Assistance for Your CalPERS DRO

Dividing a CalPERS pension can be complex and requires precise legal documentation. Errors in a DRO could result in delayed or denied benefits, making legal expertise essential.

At Peacock Law, we specialize in CalPERS benefit division and QDROs to ensure your retirement assets are protected.

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Laws and regulations may change, and individual cases vary. Consult an attorney for legal guidance specific to your situation.

Contact Peacock QDROs Today

Attorneys & Staff

William "willie" peacock, Esq.

Willie is an attorney licensed to practice in California since 2011. He has since added admissions in Missouri, New York, New Jersey, Iowa, Kansas, Connecticut, and North Dakota.

He was born and raised in Missouri, went to high school and college in California, and returned there after attending the prestigious Washington and Lee University, School of Law in Lexington, Virginia. He relocated to New York and relaunched his law firm in 2018, focusing exclusively on retirement—estate planning and division of retirement accounts through qualified domestic relations orders (QDROs).

He has written for Thomson Reuters, Clio, and California Lawyer, and his writings have been cited by the American Bar Association, Above the Law, and other leading legal publications.

He is currently rated a perfect 10.0 by Avvo.com, and more importantly, has a perfect 5-star rating from his past clients on all major review sites.