PART TWO OF SERIES: What Every Woman Needs to Knokw about MONEY AND RETIREMENT - A GUIDE TO PENSION

How can I get the most out of my company's retirement plan?

Read the pension-plan booklet carefully, and make a list of any terms or rules you do not understand. Once a year, you may request an individual benefit statement from your pension plan. Pay particular attention to the type of formula that will be used to compute your benefit. Make an appointment with the plan administrator - usually someone in your human resources department - to discuss any questions you have.

What do I need to know about survivor's benefits? If you are married when your husband retires, you are normally entitled to a widow's benefit if he dies before you - unless you agree to sign away your rights to a survivor's benefit. The widow's benefit is called a "joint and survivor annuity," and it ordinarily guarantees you half the pension the two of you were receiving.

Before your husband retires, he will be asked whether he wants to receive his pension in that form or some other form, such as a "lifetime benefit" or a single payment (lump sum). If he opts for the "lifetime benefit" or the single payment - both of which eliminate the widow's benefit - he must have your consent. You will be asked to sign a "spousal-consent form." Read this form carefully. It can be quite confusing. You might even want to consult with a lawyer.

Often the spousal-consent form will list a series of options for you and your husband to consider. The so-called lifetime benefit usually provides the highest monthly benefit, so people are often tempted to select it. But remember, it will be paid only while your husband is alive. And if the pension includes retiree health benefits, these may stop, too, if you are widowed.

The joint and survivor annuity offers a somewhat smaller monthly payment. But it guarantees a steady stream of income for two lifetimes (the husband's and the wife's). For women who expect to depend on their husband's pension as a source of income in retirement, this is generally the better option. Under a lifetime benefit, for example, while your husband is alive, the pension might be $1,600 a month, while under a joint and survivor annuity, the benefit might be $1,300 a month. By this formula, when he dies, your benefit would be $650 a month.

Do not assume that your husband understands his choices or the spousal-consent form. He also may not realize that, statistically, you are likely to outlive him.

The last chance you have to make sure you receive a survivor's pension is at the time your husband retires, so don't sign away your rights unless you understand what you are giving up.

Public Employees Take Note:

• Reductions in Social Security benefits. If you are receiving a pension based on your work in a federal, state, or local government job and that work was not covered by Social Security, then the benefits you would receive from Social Security as a widow may be reduced. Contact the Social Security Administration for more information.
  
• Joint and Survivor benefit. If your husband worked for a federal, state, or local government that does not require the payment of Social Security taxes, make sure he selects a joint and survivor annuity option for his pension, guaranteeing you a survivor's benefit. Unless you have your own Social Security and pensions benefits, the spousal benefit is all you would be entitled to, with the possible exception of SSI.
  

What should I do to protect my pension rights if I'm getting a divorce?

Under the divorce laws of every state, a pension earned during a marriage is considered to be the marital property of both husband and wife. But the laws do not automatically require that pension assets be divided at divorce. In order to receive a portion of your husband's pension(s), you must ask for your share at the time of divorce-not later when your husband retires. The court should then award you a share as part of the divorce or legal separation proceedings. If your husband has more than one benefit plan - for instance, a 401(k) plan and a traditional pension - your settlement must refer to each plan in order to get benefits from both.

• Obtain as much information as possible from your husband's company benefits office. Usually your lawyer will have to write a letter to obtain this information, but the law does consider you a beneficiary with the right to receive information. Notifying the pension-plan administrator in writing that you are in the process of a divorce may temporarily prevent the plan from paying out your share of the pension of your husband.
  
• A pension may be divided in many ways. However, if you want to receive a survivor's pension, you will need to ask for it specifically, since it must be mentioned separately in the same divorce decree or property settlement. If your husband previously chose a survivor's benefit for you, you are entitled to receive it regardless of the divorce (unless it's a government pension).
  
• To make sure the pension plan recognizes your right to a portion of your husband's pension after the divorce you need to obtain a separate court order. This special order is called a "qualified domestic-relations order" or QDRO (pronounced quadrow). When the court issues a domestic relations order awarding you a share of your husband's pension, a copy must be sent to the pension plan immediately. Generally, the plan will want to make sure of two things:
  
  
  
  1. That the court order contains all the necessary information so the plan can determine who, what, and when to pay; and
     
  2. That the court order does not require the plan to pay you in a form or at a time that would not otherwise be permitted.
     
  
  For example, a court cannot order a plan to pay you your share in a lump-sum payment if the plan does not allow employees to draw their pensions this way.
  
• As soon as the divorce proceedings begin, have your lawyer contact the plan administrator for the written QDRO procedures. Each pension plan is different, and many companies have developed their own QDRO forms to make it easier for the court and the ex-spouse. The responsibility for the preparation of the QDRO rests with your attorney.
  
• Settle all pension issues before your divorce is finalized by the court. If the pension is mentioned in your property settlement, but you do not get a QDRO at the time of your divorce, then you will have to go back to court later to obtain it. That means that you will have to pay additional legal fees-and run the risk of losing your share of the pension.
  
• Beware of trade-offs offered by your spouse. For example, your husband may want to give you the house or some other tangible asset in exchange for your giving up the rights to his pension. But the value of your share of the pension may be higher than the value of the assets you are offered.
  

What do I need to know about my rights as a second wife?

If your husband was previously married, a former wife may be eligible for a portion of his retirement benefits and savings. The rights of the former spouse are spelled out in the divorce settlement and QDRO. You'll need to check those documents to determine what you're entitled to.

If your husband's former spouse dies before your husband retires, you may be eligible for some or all of his pension benefits. Regardless of the number of times your husband was married, you qualify for survivor's benefits under Social Security.

This article originally appeared in Good Housekeeping magazine, and was prepared by Cindy Hounsell and Jeffrey R. Lewis as a project of the Teresa H. John Heinz III Foundation. It is serialized by permission.