The following is a glossary of terms related to pensions and retirement plans, which are often significant assets in a divorce case.

SOURCE: Pension Appraisers

1983 Group Annuity Mortality Tables (GAM 83) – Probability tables used to measure the lifespan of the pensionholder during present value calculations.

Accrued Benefit – Benefit earned under a Defined Benefit Plan as of a specific date.

Actuarial – Calculation or analysis based upon expected lifespan of an individual.

Actuarial Adjustment – Used in Separate Interest QDROs to transform the amount awarded to the Alternate Payee to a benefit payable for his/her lifetime.

Alimony – Spousal support paid by one party to the other pursuant to the terms of the divorce.

All Property Model – All property owned by one or both parties on the date the marriage ended is subject to division in the divorce.

Alternate Payee – Term used in QDROs to distinguish the spouse who is awarded benefits under the Order.

Annuity – A payment made at specific intervals for a specified period of time. Example: Pension paid monthly for the life of the pensionholder.

Antialienation Provision – A clause contained in ERISA which prevents pension benefits from being assigned to another party, such as in bankruptcy or a creditor situation.

Asset – Another word for property.

Bankruptcy – A legal proceeding which can absolve a debtor of financial obligation.

Civil Service Retirement System (CSRS) – One of two defined benefit plans established for employees of the Federal Government.

Community Property – Another term that can be used to describe marital property. States which follow the guidelines for community property typically call for a 50/50 division of all marital property.

Contributory Plan – A pension plan in which contributions are made by both the employer and employee.

Cost-of-Living Adjustment (COLA) – A cost-of-living adjustment is a small incremental increase in retirement benefits, granted to retirees by a plan in an attempt to keep such benefits in line with inflation.

Court Order Acceptable for Processing – A court order directing payment of benefits to another person other than the employee under the Civil Service Retirement System or Federal Employees Retirement System. This is the title used instead of a QDRO.

Coverture Method – Method of valuing defined contribution plans.

Coverture Fraction – A tool used in valuing pensions to determine that portion of the benefits which were accumulated during the period of marriage.

(CPI) Consumer Price Index – A gauge used by the government to measure inflation.

Cut-Off Date – Another term for "Date of Classification" or "Date Marriage Ended." This is the date that marital property rights relative to the pension terminate. This date is usually dictated by case law in a particular state.

Date Marriage Ended – Another term for "Date of Classification" or "Cut-Off Date." This is the date that marital property rights relative to the pension terminate. This date is usually dictated by case law in a particular state.

Date of Classification – Another term for "Date Marriage Ended" or "Cut-Off Date." This is the date that marital property rights relative to the pension terminate. This date is usually dictated by case law in a particular state.

Defense Finance and Accounting Service (DFAS) – Benefits department of the military.

Deferred Compensation – Payment for service performed now, that is made at a date in the future.

Deferred Distribution Method – No immediate division of retirement benefits is made, instead, the Court determines the percentage or dollar share to be paid in the future when benefits are received by the employee.

Deferred Offset Award – Combination of the Immediate Offset Method and the Deferred Distribution Method.

Defined Benefit Plan – A pension plan in which the amount of benefits received by an employee is defined by a formula, usually considers years of service and salary.

Defined Contribution Plan – A pension plan in which the amount of benefits payable to an employee is determined by the amount contributed to the employee’s account and any growth on such contributions.

Disability Benefit – A benefit paid to any employee due to a work-related injury.

Discount – The mathematical process which uses an interest rate to convert future payments to present worth.

Dual Property Model – Provides that only property which was accumulated by either party during the period of the marriage would constitute marital property subject to division.

Earliest Retirement Age – The age at which an employee may retire and begin receiving reduced benefits.

Early Retirement Subsidy – This is a bonus for retiring early. A subsidy may reflect additional years of service added to the pension or may provide for an early retirement due to satisfaction of a specific age and service requirement.

Early Withdrawal Penalty – Penalty assessed for plan distribution from a defined contribution plan which happens before the employee is eligible.

Employee Retirement Income Security Act of 1974, as amended (ERISA) -Federal statute established to protect the interests of employees who participate in employer sponsored pension plans.

Equitable Distribution – A term used to describe the process of dividing marital property. States which follow the guidelines of equitable distribution typically divide marital property in the manner deemed equitable based upon the circumstances of the parties.

ERISA-Qualified Plan – Any plan which falls under the guidelines, rules and regulations of ERISA.

Federal Employees Retirement System (FERS) – One of two defined benefit plans established for employees of the Federal Government.

Forfeiture Discount – A step in the valuation process of a defined benefit plan which adjusts the present value for the vesting status of the employee.

Future Benefit Plan – Any plan which provides benefits in the future as compensation for service performed at the present time.

GATT Method – As used by Pension Appraisers, Inc., it is a method of determining the present value of a defined benefit plan which employs Mortality Tables and the rate on the 30-Year Treasury bond.

Immediate Offset Method – The spouse is awarded cash or other property at the time of the divorce in lieu of a portion of the pension benefits as they are paid to the employee.

Individual Retirement Account (IRA) – An account established by an individual with a bank or other financial institution which is funded by the individual to save for retirement. IRAs are not employer related.

Informal Offset – The retirement benefits of the two parties are approximately equal, therefore, they are offset against each other.

Joint & Survivor Annuity – The pensionholder retires and receives less than the maximum monthly retirement benefit so that upon his/her death, a survivor annuity is paid to the designated survivor annuity for the remainder of that person’s lifetime. This type of benefit option is often referred to as a Husband-and-Wife benefit and is typically payable under a defined benefit plan.

Life Expectancy Method – As used by Pension Appraisers, Inc., it is a method of determining the present value of a defined benefit plan which employs Life Expectancy Tables derived from Mortality Tables and the rate on A-Rated General Obligation Municipal bonds.

Liquidation – The process of cashing out a pension.

Marital Property – That property which is determined to have been accumulated during the marriage, and is therefore, divisible upon divorce.

Matured Plan – A plan which is presently providing benefits to the employee.

Mortality Discount – A modification to a present value figure to account for the chance that the pensionholder will die before receiving benefits.

Non-vested Benefit – A benefit which will not be paid by the plan unless the vesting requirements are met by the employee.

Noncontributory Plan – A benefit plan which is funded completely by contributions from the employer.

Normal Retirement Age – The age at which a pensionholder can retire and receive an unreduced benefit. This age is usually dictated by the terms of the Plan.

Office of Personnel Management (OPM) – The human resource department of the federal government.

Participant – Term used in QDROs to distinguish the spouse whose pension is being divided under the Order.

Passive Appreciation – An increase in the value of a defined contribution plan which is attributable to only investment experience, and does not include any contributions made to the account on the employee’s behalf.

PBGC Actuarial and Mortality Table Method – As used by Pension Appraisers, Inc., it is a method of determining the present value of a defined benefit plan which employs Mortality Tables and the PBGC interest rates.

Pension Benefit Guaranty Corporation (PBGC) – A government agency which was established by ERISA to protect or guarantee a certain portion of a plan participant’s benefits in case of voluntary or involuntary plan termination.

Pensionholder – The individual who has the pension plan. Also referred to as the employee or the Participant.

Present Value – Refers to the lump sum value of receiving a benefit at a specific point in the future for a specified period of time.

Property – Something that is certain and carries the characteristics of transferability.

Qualified Alternate Payee – Under ERISA, a "Qualified Alternate Payee" is a spouse, former spouse, child or other dependant of the Participant.

Qualified Domestic Relations Order (QDRO) – A written set of instructions which explains to the plan administrator that a portion of an employee’s benefit is subject to distribution due to a divorce. In order to qualify, it must be in the form of a court order and meet various other requirements.

Qualified Pre-Retirement Survivor Annuity – This is a benefit which is paid under a qualified plan to a beneficiary on behalf of the pensionholder/participant, in the event such pensionholder/participant should die prior to retirement. Often addressed in QDROs as a type of insurance for the alternate payee.

Reserved Jurisdiction Method – The Court decides the portion of the employed spouse’s pension to be paid to the spouse at a later date.

Retirement Equity Act of 1984, as amended (REA) – Created a limited exception to the antialienation provisions of ERISA which provided for the creation of QDROs.

Segregation Method – A method of valuing defined contribution plans used by Pension Appraisers, Inc. which separates the pre-marital account balance and all growth on such account balance from the account balance on the date the marriage ended.

Separate Interest Approach – A way of drafting a QDRO against a defined benefit plan which establishes a "separate interest" for the Alternate Payee. This separate interest provides the Alternate Payee with the ability to choose a benefit commencement date, and to receive payment of benefits for his/her lifetime.

Separate Property – Property that is owned by only one party, and is not considered marital property subject to division.

Severance Package – Compensation given to an employee upon termination in an attempt to prevent financial hardship until other employment can be obtained.

Shared Interest Approach – A way of drafting a QDRO against a defined benefit plan which provides for the Alternate Payee and Participant to "share" the Participant’s benefits. This shared approach provides the Alternate Payee with the right to commence benefits when the Participant actually retires and begins receiving benefits, and to receive payment for only the lifetime of the Participant.

Social Security Offset – A calculation that would be performed during a pension valuation if the pensionholder participates in a plan which does not allow for him/her to contribute towards social security.

Stock Options – The right given to an employee by a corporation to purchase a set number of shares of the corporation’s stock during a specific period of time at a fixed purchase price.

Subtraction Method – A method of valuing defined contribution plans used by Pension Appraisers, Inc. which subtracts the account balance on the date of the marriage from the account balance on the date the marriage ended.

Survivor Annuitant – The designated person who will receive a survivor annuity upon the death of the employee.

Uniform Services Former Spouse Protection Act – This was effective on February 1, 1983, and established the former spouse’s ability to receive a portion of the member’s retired pay through a court order.

Unmatured Plan – A plan that has not begun paying benefits to an employee.

Unvested (Non-vested) Plan – A plan in which the employee would lose his/her rights to the benefits in the event of a termination of employment.

Valuation Date – The date which dictates the interest rate to be used in determining present value, thereby establishing value as of such date.

Vested Plan – A plan in which the employee would not lose his/her rights to the benefits in the event of a termination of employment.

Withdrawal Value – Similar to liquidation value or cash-out value.