Murray Requests Oversight of Process for Dividing Retirement Assets in Divorce

Murray asks Government Accountability Office to look into process of obtaining paperwork required to divide pensions or retirement accounts following a divorce

Women’s economic security is negatively impacted by divorce, and women are more likely to face poverty in retirement

In 2015, Senator Murray released a report detailing the systemic challenges that contribute to stark gender retirement gap

Murray asks for study on process for dividing retirement assets that looks at the timeline, costs, barriers, opportunities for improvement, and impacts on various segments of the population.  

In efforts to address retirement gap, Senator Murray has introduced legislation focused on challenges that disproportionately affect women and legislation to enhance Social Security benefits for divorcees and widows

Murray: “Ensuring divorcees receive the retirement benefits they are entitled to is particularly important for women’s economic security, as divorce can have a clear adverse effect on their income and women already are more likely to face poverty in retirement.”

Washington, D.C – Yesterday, Senator Patty Murray (D-WA), Ranking Member of the Senate Health, Education, Labor and Pensions (HELP) Committee, sent a letter to Government Accountability Office (GAO) Comptroller General Gene Dodaro requesting a study on the process for obtaining a Qualified Domestic Relations Order (QDRO) which allows for pensions or retirement accounts to be divided following a divorce or legal separation. In her letter, Senator Murray noted that women—who already are more likely to face poverty in retirement—have been shown to have their economic security negatively impacted by divorce. Senator Murray requested GAO examine the typical process of obtaining a QDRO, including: how long it takes; what its common “pain points” are; what sort of cost and fees it involves; how it impacts different segments of the population including lower income women, women of color, and victims of domestic violence; and how it might be improved by industry and government action.

“I write today to request that the U.S. Government Accountability Office examine the process by which pensions or retirement accounts are divided following a divorce or legal separation. I understand that it is an expensive and complex process to obtain a Qualified Domestic Relations Order (QDRO). Though the divorce rate has leveled out, approximately 40 percent of all marriages still end in a divorce. I understand that these factors may result in many people leaving money on the table and those people are disproportionately women.  Ensuring divorcees receive the retirement benefits they are entitled to is particularly important for women’s economic security, as divorce can have a clear adverse effect on their income and women already are more likely to face poverty in retirement,” wrote Senator Murray.

The action is the latest in Senator Murray’s ongoing efforts to address the retirement gap women face as they prepare for their financial futures. Earlier this month Senator Murray reintroduced the Women’s Pension Protection Act (WWPA), a package of solutions to help strengthen women’s retirement security by addressing some of the challenges that disproportionately affect women. She also introduced the Stronger Safety Net Act (SSN) earlier this year, legislation which included provisions to enhance Social Security benefits for divorcees and windows.

The text of the letter to GAO is below and the PDF is HERE.

September 19, 2018

The Honorable Gene Dodaro

Comptroller General

U.S. Government Accountability Office

441 G Street, N.W.

Washington, D.C. 20548

Dear Mr. Dodaro,

I write today to request that the U.S. Government Accountability Office examine the process by which pensions or retirement accounts are divided following a divorce or legal separation.  I understand that it is an expensive and complex process to obtain a Qualified Domestic Relations Order (QDRO).  Though the divorce rate has leveled out, approximately 40 percent of all marriages still end in a divorce. I understand that these factors may result in many people leaving money on the table and those people are disproportionately women.  Ensuring divorcees receive the retirement benefits they are entitled to is particularly important for women’s economic security, as divorce can have a clear adverse effect on their income and women already are more likely to face poverty in retirement.

A 2012 GAO study found that women’s household income and assets, on average, fell by 41 percent with divorce, with the income decline being almost twice the size of the decline that men experienced. One protection available to women is the QDRO, which creates or recognizes the existence of a right to receive a share of retirement benefits. DOL issued interim regulations governing QDROs in 2007, with final regulations issued in 2010.  Since that time, there have been concerns that the current QDRO process has not been wholly effective in protecting the rights of alternate payees, especially women. There has also been little oversight to consider how accessible QDROs are and whether some communities might be disadvantaged by the current process. Specifically I am requesting GAO to examine the following issues:

1.      How does the QDRO process typically work in practice?  For example, for the typical middle income household, how complex is the process for securing a QDRO?  How much time does a typical QDRO take from initiation to final resolution? What are some of the key “pain points” or complications in the current process? 

2.      What are the types and levels of fees and overall costs for the parties involved?  Are these fees generally contemplated by a state authority at the point a judgment, decree, or order is made pursuant to state domestic relations law?

3.      What is the impact of the current process on certain segments of the population, for example, lower income women, women of color, and victims of domestic violence?  Who is disadvantaged because of the expense, complexity, and time-consuming nature of the current process?

4.      What role can retirement plans and retirement plan providers play in facilitating the QDRO process or reducing its costs? 

5.      What are possible legislative or regulatory options that could improve this process or ease the financial burdens associated with obtaining a QDRO?

I appreciate GAO’s assistance with this study. If you have any questions concerning this request, please contact Kendra Isaacson, Senior Pensions Counsel, at (202) 224-6572. Thank you for your attention to this matter.

Sincerely,                   

Patty Murray                                                  

United States Senator                                                

###