Retired public employees cannot unilaterally change their pension plans to prevent their ex-spouses from receiving benefits, the Colorado Supreme Court ruled last week.
Robert J. Mack of Colorado Springs, who retired from government in 2012 and named his then-wife the beneficiary of his retirement benefits, argued in the Supreme Court that the trial judge overseeing his divorce was essentially obligated to honor his change request. his pension plan and allow the benefits to accrue directly to Mack.
But in an April 11 opinion, Chief Justice Brian D. Boatright said that while a retiree can apply, Colorado law “does not require the court to carry out the retiree’s wishes.”
There are three options under the Colorado Public employees‘ Retirement association allowing workers to choose the structure of their retirement benefits. Option 1 directs the benefits to the retiree only and the benefits cease on that person’s death. Option 2 allows the designation of a beneficiary who receives half of the lifetime benefit after the retiree’s death. Option 3 is similar, except the beneficiary receives the full amount on the retiree’s death.
In Options 2 and 3, if the beneficiary dies first, the retiree’s plan switches to Option 1. If a retiree goes through a divorce, a judge”will have jurisdiction to order or authorize” the retiree to remove their spouse and convert the plan to Option 1. Mack’s divorce judge, however, determined that PERA benefits under Mack’s Option 3 plan were marital property to be divided between the couple.
Mack, who took the unusual step of representing himself in the Supreme Court, argued that the trial court should either honor an agreement between the spouses to change the plan or, where the spouses disagree , accept the retiree’s request and issue an order for PERA to remove the ex-spouse.
“There is nothing in the statute or anywhere else in the statute that says there is a limitation on that right as granted by the legislature to the retiree,” Mack said during oral argument. “This is a situation where the legislature has chosen to grant limited jurisdiction to the court to do one of two things: permit or order the retiree to remove the spouse as beneficiary.”
“Are you saying that at the time it is requested, the court must order or authorize?” asked Judge Monica M. Márquez. Mack answered in the affirmative.
The lawyer for Mack’s ex-wife countered that nothing in the law gave judges a directive to automatically approve a retiree’s wishes.
Boatright, in the court’s view, agreed that the statute’s statement that judges “have jurisdiction” merely indicated that the courts had the discretion to order a change to the plan.
“If, as Husband requests,” Boatright wrote, “should” state that the court was obligated to bid on the pensioner, the law would more naturally read: “On request of the pensioner, the court would make an order authorizing the retiree to remove ex-spouse as co-beneficiary and convert to Option 1 benefits.’ This is of course not how the statute reads.”
The deal is In re Marriage of Mack.