FAQs

Question: Why is the pension income not correct?

Answer: There are several reasons why the income from a defined benefit pension plan that you see on the Budget Report may not be what you expect.

1. There may not have been any pension allocation between the parties.

In order for the software to know how to carry the pension payments, you must specify how the pension asset is to be divided between the parties (50/50, 100/0, etc.). The pension benefit flows to the parties in the same proportion as the asset is divided. In this connection, please also see the next item in this list.

2. You may have allocated only the marital portion.

If you divide the pension 50/50, that is dividing only the marital portion. If the coverture fraction is less than 100%, then the participant has some separate property. This separate property is not allocated by your "% to party" allocation.

For example, suppose the coverture fraction is 80% and the payments are $1,000 per month. Suppose that the marital portion is divided 50/50.

Then, the marital portion of the payment is 80% of $1,000, or $800. The non-participant will receive 50% of $800, or $400 (not $500). The participant will receive $600 (again, not $500).

Normally, the participant keeps all the separate portion. There is a way to allocate the separate portion to the non-participant.

You would scroll down on the pension "more info" screen until you see the line asking about the separate amount to be allocated to the non-participant. This is referring to a dollar amount of value, not a percent. If you enter the full separate amount, as shown on the screen, then that will allocate 100% of the participant's separate benefit to the non-participant.

3. The pension income may have been double-entered.

You should enter the pension either with the Defined Benefit Pension asset, or with Wage-Like Income, but not both. If you have entered the pension income in both locations, that will be double-counting.

4. The pension may be in its initial year.

If the year you are considering in the Budget Report is the initial year of the pension, payments will be made only for a part of the year, starting at the relevant birthday.

For example, if the participant was born on October 1, then in the initial year of pension payments, he or she will receive only 25% of the annual amount of the pension benefit.

The Budget Report in "monthly" view will average the payments over the year, so will show 25% of the pension benefit.