What is the “Bangs formula”?

If you are getting divorced in Maryland and you or your spouse has a pension, you may hear your attorney talk about the “Bangs formula.” What is the Bangs formula? And why does it matter?

To begin, pensions are different from retirement accounts like 401(k)s.  A 401(k) (and other defined contribution plans) are similar to bank accounts in that they have an account balance. Mr. Smith might have, for example, $100,000.00 in his 401(k).

A pension is different. Instead of having a pot of money with a particular balance, the employee generally earns the right to receive a monthly benefit when he or she retires. Complicating matters, pensions are based on years of service. But some of those years of service might have occurred before the marriage. For example, if Mr. Smith started working for Coca-Cola in 2001 and married in 2006, the first five years of service are not marital, while the years since (2006-2026) are marital. Finally, Mr. Smith is still working for Coca-Cola so it’s not even clear how much the monthly benefit will be.

The problem is figuring out how much of the pension belongs to the marriage. Some of the pension was earned before the marriage, some was earned during the marriage, and Mr. Smith may keep earning more after the divorce. On top of that, we do not yet know exactly how much the pension will pay when he retires.

Enter the Bangs formula.

The Bangs formula is named after the Maryland case Bangs v. Bangs. In its simplest form, the formula looks something like this:

Monthly payment × (Years of Marital service ÷ Total service at retirement) × Percentage awarded

Let’s apply that formula to the case of Mr. Smith and Ms. Smith.

Recall:

• Smith started working for Coca-Cola in 2001.
• Smith and Ms. Smith married in 2006.
• They divorce in 2026.

And let’s add:

• Smith will get $5000/month when he retires.
• And let’s assume that Mr. Smith eventually retires in 2031. He worked for Coca-Cola for 30 years.

Of Mr. Smith’s 30 years of service, twenty of those years—from 2006 through 2026—occurred during the marriage. That means two-thirds of the pension is marital:

$5,000 × (20 ÷ 30) = $3,333.33

If Ms. Smith is awarded 50% of the marital portion, she would receive:

$3,333.33 × 50% = $1,666.67 per month

Mr. Smith would receive the rest of the pension.

Of course, the Bangs formula does not answer every question about dividing a pension. Pension plans may also include survivor benefits, cost-of-living increases, early retirement benefits, and other benefits that need to be addressed. For that reason, when a pension is going to be divided in a divorce, it is often worthwhile to speak with a QDRO drafter before the Marital Settlement Agreement is finalized. The formula itself may be simple, but making sure that the agreement and eventual retirement order accomplish what the parties intend can be considerably more complicated.

For that reason, when a pension is going to be divided in a divorce, it is often worthwhile to speak with a QDRO drafter before the Marital Settlement Agreement is finalized. The Bangs formula may look like a fairly simple fraction, but making sure that the agreement and eventual retirement order actually accomplish what the parties intend can be considerably more complicated.

At Weinberg & Schwartz, we regularly prepare retirement orders and assist attorneys and parties with the division of pensions and other retirement benefits. If you have questions about the Bangs formula or the division of a pension in divorce, please feel free to contact us.