Generally speaking, retirement benefits that are earned during the marriage are considered marital property under the Illinois Marriage and Dissolution of Marriage Act. However, determining the amount of spousal retirement benefits that are marital property is often times a central issue to the division of the marital estate upon divorce. In particular, retirement benefits such as a defined benefit plan or a pension can be more complicated to value at the time of divorce, especially where the employee spouse is not yet eligible for retirement.
A defined benefit plan is a type of retirement plan that accrues benefits usually pursuant to some formula. This formula often will take into account several variables such as salary, length of service, and a multiplier. Because of these variables, the exact amount of the benefit that the employee will receive cannot actually be determined until they retire and the variables become fixed. Sometimes, after a certain number of years of employment, the pension plan may be able to produce an estimate of what the employee will receive upon retirement. However, the accuracy of the benefit amount depends on how close the employee is to actually retiring. Generally, under a defined benefit plan, the benefits are not considered to be “mature” because they depend upon the employee spouse reaching a certain age and they cannot be immediately paid to the other spouse (or “alternate payee” under the plan) at the time of divorce or entry of the Qualified Domestic Relations Order (“QDRO”). So, what do courts do when an employee is not yet eligible for retirement, but a portion (or all) of the pension or defined contribution plan is marital and subject to division upon divorce?