The City of Phoenix Employees Retirement System (COPERS) is a defined benefit pension plan designed to provide retirement security for municipal employees of Phoenix, Arizona, operating as a government plan exempt from the Employee Retirement Income Security Act (ERISA). Established under Chapter XXIV of the Phoenix City Charter, COPERS delivers a guaranteed monthly benefit based on a formula incorporating years of credited service, a multiplier (typically 2% per year for most tiers), and final average salary, with options for straight-life or joint-and-survivor annuities that influence payout structures. Unlike ERISA-governed private-sector plans, which rely on federal standards and Qualified Domestic Relations Orders (QDROs), COPERS falls under Arizona state law and local ordinances, aligning with the state’s community property framework that entitles a former spouse to a share of pension benefits accrued during marriage. This non-ERISA status introduces unique administrative rules overseen by the COPERS Retirement Board, requiring a Domestic Relations Order (DRO) tailored to its specific requirements rather than a standard QDRO—though the term “QDRO” may be used colloquially in legal discussions. The plan’s distinctiveness extends beyond its governance, as COPERS often pairs with supplemental defined contribution accounts, such as 457(b) deferred compensation plans, creating a multifaceted retirement portfolio that demands careful evaluation during divorce proceedings. For participants and alternate payees, understanding these foundational elements is critical to ensuring an equitable division that complies with COPERS’ policies and Arizona law.
One of COPERS’ most striking features is its allowance for separate interest orders under certain circumstances, a rarity among government pension plans that sets it apart from counterparts like the Arizona State Retirement System (ASRS) or Public Safety Personnel Retirement System (PSPRS), which typically restrict divisions to shared interest orders. A shared interest order splits the monthly pension payment between the member and former spouse during the member’s lifetime, often as a percentage of the marital portion (e.g., 50% of benefits earned during marriage), ceasing upon the member’s death unless survivor benefits are secured. In contrast, a separate interest order assigns the former spouse their own distinct pension benefit, calculated actuarially based on their share of the marital portion, payable over their lifetime—independent of the member’s survival or retirement elections. This option, permissible under COPERS’ rules if the member has not yet retired and the DRO meets stringent criteria, offers greater financial autonomy for the alternate payee but requires precise drafting to account for factors like life expectancy, discount rates, and the member’s accrued service at divorce. For example, a 20-year marriage during a 30-year career might entitle the former spouse to 33.3% of the total benefit (20/30 × 50%), which could beconverted into a separate annuity rather than a shared stream. This flexibility is not automatic—circumstances like the member’s retirement status, annuity choice, or prior DROP participation (if applicable) must warrant it, and COPERS’ administrators must approve the order. A QDRO attorney must weigh the pros and cons—separate interest may reduce disputes over survivor benefits but complicates valuation—ensuring the DRO aligns with COPERS’ unique provisions while safeguarding both parties’ interests.
The presence of accompanying defined contribution plans, such as 457(b) accounts, alongside the COPERS pension adds another layer of complexity, necessitating a comprehensive approach from a skilled QDRO attorney to evaluate and explain both components during division. The COPERS pension, as a defined benefit plan, offers a predictable income stream, but its value hinges on service credits, salary history, and elected options, requiring careful calculation of the marital portion—typically the fraction of service years overlapping with the marriage. Meanwhile, the 457(b) plan, a tax-deferred savings vehicle akin to a 401(k), accumulates based on employee contributions (and occasional employer matches), with its value driven by investment performance rather than a fixed formula. Dividing the 457(b) requires a separate order from the DRO, as COPERS treats it as a distinct asset, and factors like premarital contributions or loans against the account must be isolated to determine the divisible marital share. For instance, a $100,000 457(b) balance with $20,000 contributed before marriage might leave $80,000 as community property, split equitably unless offset elsewhere. The attorney must also address COPERS-specific issues, such as pre- and post-retirement death benefits—if a member dies before retiring, a refund or survivor pension may apply, while post-retirement benefits depend on annuity choices—and ensure the DRO preserves the former spouse’s rights where applicable. Timing is critical: addressing both plans before finalizing a divorce decree allows for integrated planning, potentially avoiding post-judgment revisions if COPERS or the 457(b) administrator rejects an order for noncompliance. With expertise in these dual systems, our team can clarify the intricacies—whether separate vs. shared interest orders or coordinating pension and defined contribution divisions—ensuring a thorough, equitable resolution tailored to your case.