Pensions are considered marital property in Michigan, which means they can be divided in a divorce, just like a house, bank account, or retirement plan. This division can happen two ways:

Sharing future payments: 

In this approach, each time the employee spouse receives a pension check in the future, the other spouse receives their share directly. The court uses a special order (usually called a Qualified Domestic Relations Order, or QDRO) to instruct the pension administrator to divide payments. This method ties both spouses to the pension until it’s fully paid out.

A buyout or offset:

Instead of waiting for future payments, the pension is valued as of the divorce. One spouse may “buy out” the other’s share by giving them other marital assets of equal value (for example, cash, investments, or equity in the house). This method provides a clean break—each spouse goes forward without being financially tied to each other’s retirement.

Which option works best depends on the type of pension, the ages of the spouses, and the overall balance of the marital estate. Because pensions are often one of the largest assets in a divorce, it’s important to have experienced legal and financial guidance in valuing and dividing them.

What about service before or after the marriage?

Often, one spouse started earning their pension before the marriage, or will keep earning service credits after the divorce. In those cases, Michigan courts typically use what’s called a coverture fraction to figure out the marital share.

Here’s how it works in plain English:

• Imagine the pension is like a pie.
• The size of the pie is based on the total years of service.
• The “marital portion” is the slice earned during the marriage—from the wedding date to the date of valuation (commonly the filing date or date of divorce, depending on the circumstances).
• The coverture fraction is a simple fraction: years of service during the marriage ÷ total years of service.
• That fraction is applied to the pension benefit to calculate the part considered marital property.

For example, if your spouse worked 20 years total, but only 10 of those years were during your marriage, the marital portion would be 10/20, or half of the pension. Using this same example, if the monthly pension is $2,000 and the marital fraction is 10/20 (50%), the marital portion is $1,000/month. That $1,000 is then divided between spouses–$500 each.