In re Marriage of Mack 2022 CO 17 (Colo. April 11, 2022) - Colorado Public Employees Retirement Benefits Program

In re Mack involves the Public Employees’ Retirement Association (PERA) benefits program beneficiary designation in divorce AKA dissolution. Generally, a retiree’s beneficiary election is final and cannot be changed. However, there is an exception during divorce. If you are a spouse of a State of Colorado employee, you should always ask to be made a beneficiary of the retirement program’s survivor benefit plan, if that is an option giving the timing of the retirement. If this provision is not in a court order, then you may lost the income stream if your spouse dies.

PERA covers more than 400 state entities. In addition to the state government, the plan also covers many local governments, teachers, state university employees, and judges. PERA benefits take the place of Social Security and the benefits are pre-funded, which means that members and the employer contributes a percentage of pay into the plan for the specific employee.

PERA has a survivor benefit program, which provides income to survivors when the retiree dies. A survivor could receive monthly payments or a one time lump sum payment. The cost to add a survivor is paid through reduced monthly benefits to the retiree.

When applying for retirement benefits, a public employee can elect from three benefits options. Option 1 offers a higher monthly payment, but no survivor benefit plan. Options 2 and 3 offer a lower monthly payment with a survivor benefit plan. When the survivor benefit plan is elected, it allows the designated survivor to be paid what the retiree would have received should the retiree die before the beneficiary. PERA allows an employee to remove a previously elected spouse at divorce and then to receive the higher benefit payment.

The case was about whether the Court has the authority to order a retiree to continue designation of former spouse as beneficiary at divorce, or whether the retiree had the absolute right to remove the spouse because PERA offers the option. The Supreme Court decided that the trial courts have authority to order that the former spouse be marinated as beneficiary because the trial courts have the authority to award the pension as marital property.

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