Pension rights can be one of the largest assets in divorce. While it may feel unjust to the working spouse who earned the pension, the marital community owns the pension rights attributable to work during the marriage. In the event of divorce, a QDRO or qualified domestic relations order may be required to divide the pension rights such as a CalPERS pension.
Vested vs Non-Vested
Pension rights such as rights in a CalPERS pension can be categorized into two: vested and non-vested. Vested pension rights are those which survive after the termination of the employment while non-vested pension rights do not. As a general rule, pension rights earned during the marriage in the course of employment belong to the marital community and are community property.
In case both the separate property and the community property has interests in the pension proceeds, then division and allocation of the proceeds must be done in a reasonable manner that reflects the relative contributions of the parties.
Length of Service
The time-rule is applied if the length of time served by an employee is a substantial factor in computing the amount of retirement benefits. In this instance, the community share will equal to a percentage based on:
- The length of service performed during the marriage but before separation, divided by
- The total length of service necessary to earn those benefits.