Opinion ID: 1277351
Heading Depth: 1
Heading Rank: 6

Heading: pension pay status

Text: We first address Leonard's assertion, embodied in his first two assignments of error, that the trial court erred in failing to adjust the property division for the fact that Leonard's pension plan is already in pay status, while Susan does not plan to retire for several more years. Essentially, based on the assumption that both parties will live to their actuarial life expectancy and that Susan will not in fact retire until several years into the future, it is Leonard's assumption that Susan will receive many more years of her percentage share of his retirement benefit than he will of hers. Therefore, Leonard concludes that his share of the martial portion of the pension is inequitably low compared to Susan's and that the trial court should have made an adjustment to correct such inequity. Leonard explains: With respect to the parties' pensions, at the time of trial, [Leonard] was receiving a gross monthly pension payment of $3,728.75. After taxes, he received the sum of $3,010.81. According to documents obtained from Douglas County, if [Susan] retired on December 31, 2003, she would have a monthly benefit of $1,055.99 from her pension, payable at age 65. [Leonard] used this very conservative number in calculating the difference between the amounts that [Leonard] and [Susan] would receive each month if they were both retired. [Susan] acknowledged that if she waited until age 65 to retire, she would receive over $130,000 from [Leonard's] pension before [Leonard] received any funds from the Douglas County pension as an alternate payee. The trial court's decision would have the following effect on income: [Susan's] $2,735.74 per month in salary combined with the $1,121.24 she would receive from [Leonard's] pension would give her a gross monthly income of $3,856.98. In contrast, [Leonard's] gross monthly income would be reduced to $2,607.51. Brief for appellant at 6-7. Leonard relies on Dutchin v. Dutchin, 273 Wis.2d 495, 681 N.W.2d 295 (Wis.App. 2004), for his argument that the dissolution court abused its discretion in failing to embark upon his proposed income discrepancy analysis quoted above. In Dutchin, the appellate court concluded that it would not find an abuse of discretion in the trial court's decision to treat the husband's pension as income and enter a maintenance order for the wife until she reached retirement age. The evidence showed that the husband, although age 60, was unable to work due to physical and mental disability. The trial court had determined that if it were to treat the husband's pension as an asset and divide it equally, the wife would have a higher monthly income than the husband, which would result in a maintenance award being paid to him, resulting in a circular and complicated flow of money. See, also, In re Marriage of Crosby, 699 N.W.2d 255 (Iowa 2005) (upholding reduction by court of appeals in wife's share of husband's retirement benefits where husband suffered residual effects from stroke and was contemplating early retirement and had no Social Security, while 38-year-old wife continued to work and accrue both retirement and Social Security); In re Marriage of Wilson, 449 N.W.2d 890 (Iowa App.1989) (refusing to find abuse of discretion in trial court's ruling that husband, who was going to take early retirement, would not be required to divide any of his pension and Social Security benefits with wife until wife actually retired). In contrast, where the husband apparently suffered no physical or mental disability, but simply elected to retire earlier than anticipated, the court in Baker v. Baker, 268 Mich.App. 578, 710 N.W.2d 555 (2005), held that early retirement did not affect his unretired former wife's right to begin receiving her share of his pension benefits upon his receipt thereof. Accordingly, the court affirmed summary judgment against the husband in his action to recoup payments made to the wife through the automatic effectuation of the divorce judgment and eligible domestic relations order. The court explained that the pension benefits in issue were regular pension benefits, a portion of which was marital property. The husband simply elected to receive those benefits earlier than his expected retirement date. Such election in no way rendered the early retirement payments outside the scope of the marital division of the judgment of divorce and the eligible domestic relations order, and the wife properly received her coverture share of the payments. See, also, In re Marriage of Ramsey, 339 Ill.App.3d 752, 275 Ill.Dec. 106, 792 N.E.2d 337 (2003); In re Marriage of Ably v. Ably, 155 Wis.2d 286, 455 N.W.2d 632 (Wis.App.1990). That portion of a pension which is earned during the marriage is part of the marital estate. See, Neb.Rev.Stat. § 42-366(8) (Reissue 2004); Shockley v. Shockley, 251 Neb. 896, 560 N.W.2d 777 (1997); Reichert v. Reichert, 246 Neb. 31, 516 N.W.2d 600 (1994). In dissolution proceedings, the trial court has broad discretion in valuing and dividing pension rights between the parties. Sonntag v. Sonntag, 219 Neb. 583, 365 N.W.2d 411 (1985); Rockwood v. Rockwood, 219 Neb. 21, 360 N.W.2d 497 (1985). In Polly v. Polly, 1 Neb.App. 121, 487 N.W.2d 558 (1992), the Nebraska Court of Appeals explained that the most widely accepted method of valuing and dividing a pension plan upon a dissolution is to determine a fixed percentage of the future benefits to be paid to the spouse if and when they are payable to the owner of the plan. (Citing Bloomer v. Bloomer, 84 Wis.2d 124, 267 N.W.2d 235 (1978)). See, also, Kullbom v. Kullbom, 209 Neb. 145, 306 N.W.2d 844 (1981); Paulone v. Paulone, 437 Pa.Super. 130, 649 A.2d 691 (1994). This is described as the coverture fraction and was the method utilized by the dissolution court in this case. See, e.g., Menake v. Menake, 348 N.J.Super. 442, 792 A.2d 448 (2002). While pension benefits actually received can be considered when determining alimony, see, e.g., Carruth v. Carruth, 212 Neb. 124, 321 N.W.2d 912 (1982) and McBride v. McBride, 211 Neb. 459, 319 N.W.2d 72 (1982), we are somewhat perplexed by Leonard's income analysis of the respective pension benefits when neither party ultimately requested an alimony award in this case. As stated in part in Neb.Rev.Stat. § 42-365 (Reissue 2004), While the criteria for reaching a reasonable division of property and a reasonable award of alimony may overlap, the two serve different purposes and are to be considered separately. With property division, the purpose is to distribute the marital assets equitably between the parties. § 42-365. No matter which party has the larger pension, courts have determined that the value of that pension which was acquired during the marriage should be divided relatively equally. Both parties contributed to the earning of the pensions by their participation in the marriage and expected to be mutually protected by the pension benefits. See Menake v. Menake, supra . By this standard, it would be incongruous to reduce one party's equitable share in the other's pension simply because one has elected to retire early, while the other continues to work. This is especially true because by electing to continue working, the working spouse generally increases the overall benefit in which his or her former spouse is to share. This is the case because generally speaking, the longer the employed party remains employed after the divorce, the more the retirement payments increase. See Stouffer v. Stouffer, 10 Haw.App. 267, 867 P.2d 226 (1994). As the court in Holland v. Holland, 403 Pa.Super. 116, 588 A.2d 58 (1991), explained, to compensate for the postponement of the working spouse's benefit, the spouse is permitted to enjoy increases in value occasioned by continued employment of the worker. Here, the Douglas County employee retirement summary confirms that the longer Susan waits to retire, the larger her retirement benefit will be. The case law relied on by Leonard for his proposition that an adjustment should be made for the disparity in the expected years of payout of the parties' respective pension benefits generally deals with the unique circumstance of the pay status party's having been forced into early retirement because of a disability. In those cases, courts have crafted an approach to the equitable division of the property to accommodate this circumstance. As Baker v. Baker, 268 Mich.App. 578, 710 N.W.2d 555 (2005), illustrates, however, the fact that one party simply elects to enter into pay status early, without any compelling reason to do so, does not mandate that early retirement be considered in the equitable division of those benefits. See, also, Ward v. Ward, 502 So.2d 477 (Fla.App.1987) (although forced retirement may establish changed circumstances permitting a modification, voluntary retirement will not), disapproved on other grounds, Pimm v. Pimm, 601 So.2d 534 (Fla.1992). Here, Leonard offered no evidence that he was unable to work or was otherwise forced to retire early. In fact, Leonard could presumably find other employment while at the same time drawing his early retirement benefit, thereby significantly altering the income analysis upon which Leonard wishes this court to rely. We conclude the trial court did not abuse its discretion by not adjusting for Leonard's pension pay.