Dividing a Pension in Divorce – The Time Rule

A pension earned during marriage is community property in California, even if the employee has not yet retired and even if the benefit has not vested. That has been the rule since the California Supreme Court’s decision in In re Marriage of Brown (1976) 15 Cal.3d 838.

Most defined benefit pensions, including Teamsters and other union plans, are divided using the time rule. The community’s share is the fraction of the employee’s plan credit that was earned between the date of marriage and the date of separation, divided by the total credit earned in the plan. Each spouse receives half of that community share; the rest belongs to the employee spouse.

There are two main ways to carry the division out. The employee can keep the whole pension and the other spouse is compensated with other assets of equal value, which requires an actuarial valuation of the pension. Or the pension itself is divided by a court order directed to the plan, as California Code Family Code § 2610 authorizes, so that each spouse receives his or her share when benefits are paid. Under In re Marriage of Gillmore (1981) 29 Cal.3d 418, a nonemployee spouse may also elect to begin receiving his or her share once the employee is eligible to retire, even if the employee keeps working.

Union plans have their own rules about how orders must be written and what survivor benefits are available. Getting those details right at the time of the judgment is far easier than fixing them years later at retirement.