Which statement is accurate about the PAO's effect on retirement benefits?

• A. The PAO can only affect the member's own benefits
• B. The PAO can divert all or part of retirement benefits to a designated beneficiary
• C. The PAO applies to all benefits including state pensions automatically
• D. The PAO cannot be used in divorce cases

Answer: (B)

The key idea is that a PAO (Pension Assignment Order) lets a court or administrator direct retirement benefits to be paid to someone else, not just to the member who earned them. It can be for the entire pension or just a portion, depending on what the order specifies. In practice, this means retirement benefits can be redirected to a designated beneficiary—the ex-spouse, a former partner, a child, or another dependent—as part of a divorce or separation settlement. The order must be registered with the pension plan and carried out according to the plan’s rules, and it applies to the retirement benefits that fall under the PAO, not automatically to every other type of benefit or to state pensions unless the PAO explicitly covers them. It’s also a tool commonly used in divorce cases to enforce financial settlements or maintenance.

So, the statement that best reflects this is that the PAO can divert all or part of retirement benefits to a designated beneficiary.