LOCAL, PERSONABLE & KNOWLEDGEABLE

Northern Kentucky Bar Association - Lex Loci, Pub. Date June 2015

COLAS are the Real Thing, Eileen Zell

What is a Cost-of-Living Adjustment (COLA)?

A COLA is an incremental change in one’s monthly pension benefit to account for increasing prices. COLAs help to ensure that a pensioner’s purchasing power remains the same no matter how long he or she may live, and how quickly prices might rise.

May COLAs Allocated to the “Marital Portion” of a Pension be Subject to Division?

The theme of my blog posts and speaking engagements is always getting QDROs out of academia and into something more practical – such as the practitioner’s everyday caseload. This article is no different, and focuses on how a family law practitioner might handle pension COLAs in his or her everyday practice. Specifically, when faced with a defined benefit retirement plan in a dissolution matter, the practitioner must:

• Understand the overall substantive effect that COLAs can have on a pension benefit,

• Identify early on, in each case, whether COLAs are indeed part of the pension that is being divided,

• Express the intended distribution of COLAs, if any, whether by agreement or trial order, and

• Ensure the expressed distribution is properly implemented through the property division order, if assignment of the pension is by deferred distribution.

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