What if one divorcing spouse works for a private company and has a pension and will be eligible for social security and the other is a government employee? The Court will divide the marital portion of the private pension and the government pension but cannot divide the social security. Should the Court take account of that difference in expected government benefits in dividing the pension? Not in Maryland. See Pleasant v Pleasant, 97 Md. App. 711, 632 A.2d 202 (1993). In that case the Maryland Court of Special Appeals held federal law precluded treating social security benefits as marital property and affirmed the trial court’s holding that the marital portion of husband’s pension, funded by payroll deduction during the marriage, would be equally divided when received and the wife’s social security benefit, funded by payroll deduction during the marriage, would not be divided. The court made no other adjustment to the equitable distribution of marital property. Is that unfair? Of course. The law of Virginia is the same on this point. See e.g. Esposito v. Esposito, 2002 Va. Cir. LEXIS 234 (Fairfax County)
How does social security and other retirement assets factor into federal retirement plans? This is an important consideration in divorce settlements.
Most pensions, 401(k) plans, etc. are in addition to social security. They are not intended to replace social security. Employees covered by these plans earn social security credits. When these plans are equitably distributed between spouses and the spouses are left with their statutory claim, or no claim, for social security no unfairness results.
Federal retirement plans and many state government plans are not intended to supplement social security. They are intended to provide a retirement income without social security. Both the employee deduction and employer contributions are higher, no social security taxes are paid and the federal and state employees do not earn social security credits.