Pension Credit Dispute Resolved

Although a husband’s payment for state pension credit for premarital military service came from community property assets, he is not required to share the pension with his ex-wife, the California Supreme Court ruled Monday.  His ex-wife is entitled to recover her half of the payments made to buy the credit, but the much larger pension share is the husband’s separate property.

Timothy Green paid the California Public Employees’ Retirement System (CalPERS) for pension credit for four years of U.S. Air Force service, to the tune of $185 a month, during his marriage with Julie Green, even though his military service was before they were married.

Once they decided to divorce, Timothy argued the credit for his military service was separate property because it came before the marriage.  Julie maintained the credit for the pension share was paid out of community funds and she is entitled to a share.  The high court sided with Timothy and said the trial court apportioned the community property and separate property fairly.

The ruling reverses a May 2012 decision by the First District Court of Appeals, which held Julie was entitled to the share of Timothy’s military pension covering the four years of his service.

But the state Supreme Court unanimously overturned the decision and sent the case back to the trial judge to allocate Timothy’s separate pension benefits to him, while deciding how much of the monthly payments for the credit should go to Julie.

CalPERS permits employees to buy credit for up to four years of military service and apply it toward a final pension benefit. Timothy paid $185 per month during the marriage for the credit.  He contributed $11,500 of community funds in the installment payments during the marriage.

The complex legal question prompted the appeals court to invite the American Academy of Matrimonial Lawyers, Northern California Chapter (AAML) to weigh in on the topic last year.  Even the AAML was split over how to handle it.

Case:  In re Marriage of Green, No. A129436

Supreme Court  case No. S203561