In New York and other jurisdictions, the so-called Majauskas Formula determines the division of a defined pension in a divorce. When Plan participation pre-dates the marriage, this common method employs what is called the Majauskas formula, which takes it name from Majauskas v. Majauskas, 61 NY2d 481, 491-492.
The Majauskas formula is most often a percentage of a fraction, defined as having a numerator equal to the total number of months of pension benefits accrued during the course of the marriage, and the denominator of which is equal to the total number of months of pension benefits accrued by the participant. The Majauskas formula defines the marital portion of a pension as a percentage of the full pension.
The Majauskas formula only defines the marital portion that is eligible to be split between the spouses, and the couple decides whether they want to divide the marital portion between them, and if so, how. They can split it 50/50 or in any other way they agree upon.
For example, Rufus and Rhonda are married for 12 years. Rhonda was a teacher for all of those 12 years, and her pension rules say her pension will be 60% of her final salary. Rhonda decides to retire after 30 years of working as a teacher when her final salary is $80,000 and an annual pension of $48,000, which is of $80,000). Rufus and Rhoda decide to split the marital portion of her pension 50/50.
The marital portion of Rhonda’s pension is the number of years she worked as a teacher during the marriage, which is 12, divided by the total years she worked, which is 30 — or 40 percent. Rhonda’s full pension is $48,000 and the marital portion is $19,200. Rufus is then eligible to receive half of the $19,200, or $9,600, annually for the rest of Rhonda’s life, and she receives $38,400 annually for the rest of her life.
By electing a survivor benefit, Rufus reduces his share of the marital portion by a certain amount but insures that he will receive his share of the marital portion for the rest of his life versus the rest of Rhonda’s life.
The Majauskas formula, like many pension division routines, applies the coverture fraction, a tool used by an appraiser to separate that portion of the benefits earned during the marriage, from that portion of the benefits earned outside of the period of marriage. The coverture fraction represents that portion of the value of the benefits attributable to the marriage and subject to division. The numerator of the fraction is the total period of time the pensionholder participated in the plan during the marriage, and the denominator is the total period of time the pensionholder participated in the plan as of the cut-off date.
