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RECENT CALIFORNIA SUPREME COURT RULING ADDRESSES THE DIVISION OF STATE AND MUNICIPAL PENSIONS AND RETIREMENT BENEFITS DURING DIVORCE PROCEEDINGS

California is a community property state, which means that when a couple divorces, property acquired during the marriage is divided equally between the former spouses. Generally, this includes pension and retirement benefits acquired during the course of the couple’s marriage. However, there are a number of specific laws regarding how retirement and pension benefits are handled when a couple divorces.
For example, a recent California Supreme Court ruling may impact the way state or municipal pensions are handled when a marriage ends. According to one of the attorneys involved in the case, the California Supreme Court’s ruling will affect many government employees whose retirement or pension benefits are administered by a California state plan. These plans include: the California Public Employees’ Retirement System (CalPERS) and the State Teachers’ Retirement System.
Husband purchased credits for time served in the armed forces prior to the couples marriage through CalPERS using marital funds.
The California Supreme Court case involved an East Bay couple that married in 1992 and divorced in Contra Costa County in 2008. Prior to the marriage, the husband served in the United States Air Force for 4 years. Subsequently, in 1989, he took a job as a firefighter with an agency that is now part of the Alameda County Fire Department. The husband’s retirement plan was administered through CalPERS, and allowed him to purchase credit for the four years he served in the armed forces. The husband purchased these credits on a 15 year installment plan, which he began paying in 2002. By the time the couple separated, the husband had paid over $11,000 towards the installment payments using marital funds. divorce.png
Wife argued that she was entitled to future pension increases resulting form the purchase of credits using marital funds.
During the couple’s divorce proceedings, the wife argued that she should be entitled to a share of her former spouse’s pension increases, reasoning that the premiums were paid using community property. The case was taken to the California Court of Appeals, where the Court ruled in the wife’s favor.
California Supreme Court rules that the wife is not entitled to pension increases because the husband’s time served in the military occurred prior to the couple’s marriage.
Last week, the California Supreme Court overturned the California Court of Appeal’s ruling in a 7-0 decision. According to the California Supreme Court’s decision, the husband earned his increased pension as a result of his service in the armed forces, which occurred prior to the couple’s marriage. As such, the California Supreme Court found that the wife was only entitled to half of the premiums, which amounted to $6,700 plus interest.
However, several Justices recognized that the California Supreme Court may have ruled differently if the couple had been married when the husband began working in the firefighter position which brought him under the CalPERS plan and entitled him to the credits.
If you are considering filing for divorce and either you or your spouse have a California state or municipal pension plan, you should contact an attorney immediately. An attorney will be able to review the facts of your case and provide you with advice to help guide you through the divorce process.
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