It has long been held that in order to equitably distribute a State pension (or other defined benefit pension), you apply a percentage of the coverture fraction to determine what the non-employed spouse shall receive upon the employed spouse’s retirement. The coverture fraction is determined with the numerator being the number of years and months the spouse was employed during the marriage, and the denominator is the number of years and months that the spouse is employed in total. Then, the equitable distribution percentage is applied to that fraction.
For example, if the Husband worked for the State of New Jersey during the marriage for 11 years, but works an additional 25 years after the marriage, the numerator would be 11 and the denominator would be 36 (11+ 25). If the ex-Wife is entitled to 50% of this fraction, she would be entitled to 15% (11/36 x 50%) of the Husband’s ultimate monthly pension benefit upon retirement.
A question has arisen in the case of Krupinski v. Krupinski as to whether the ex-Husband still has to pay alimony once he retires and his ex-Wife starts receiving her portion of his pension. Under the facts of this case, the Husband was earning $46,000 at the date of the divorce and was obligated to pay the Wife $100 per week in alimony. Twenty years later, when the Husband retired, he was earning over $132,000 based on his further education and experience over those post-marital years. His monthly pension benefit is based on his highest three years of salary which came well after the divorce. As a result of applying the coverture fraction, the ex-Wife was entitled to $1,871 per month from the ex-Husband’s pension. The Husband applied to the court to terminate his alimony obligation, and the lower court denied his application, stating that he had to continue to pay the alimony.
The ex-Husband appealed this ruling. It must be noted that in accordance with New Jersey law, “when a share of a retirement benefit is treated as an asset for purposes of equitable distribution, the court shall not consider income generated thereafter by that share for purposes of determining alimony.” In this particular case, the ex-Husband argued that much of the pension benefit awarded to the Wife in equitable distribution came from his post-divorce efforts.
The Appellate Division acknowledged that it’s not an easy determination to calculate what piece of the pension is attributable to pre-divorce, and what piece is attributable to post-divorce. The pre-divorce amount would have grown if invested during the post-divorce years, and the ex-Husband’s increase in salary over the years was in some part attributable to his efforts during the marriage.
The Appellate Division remanded the case back to the trial court for further discovery and to determine whether a hearing would be necessary. In order to determine if the ex-Husband’s alimony obligation should be terminated, he must prove that a portion of the pension payment received by the ex-Wife is a result of his post-divorce efforts. If the Husband can prove this amount, it will be considered income to the ex-Wife (as opposed to equitable distribution), and the Court will then have to determine whether she no longer needs alimony because of this income.