In Re Marriage of Lehman

Summary

Husband's PG&E pension rights accrued partly during the marriage, which ended by separation in 1977. In 1993 PG&E offered an early retirement incentive that added three putative service years and waived the 18 percent early retirement reduction, and Husband retired under it. The California Supreme Court held that Wife's community interest in the pension reached the benefits as enhanced, because the enhancement derived from the pension right that accrued during marriage. It upheld the trial court's time rule apportionment (17.39 years of marital service over 32.67 total years, or 53.23 percent community), held that putative years are not added to the time-rule fraction, disapproved In re Marriage of Gram to that extent, and affirmed.

What it means for the financial analysis

For pension apportionment schedules, the case supports running the time rule on actual years of service during marriage before separation and total actual years of service, without adding employer-credited putative years to either the numerator or the denominator. The court treated this as a characterization holding on a defined benefit plan enhancement derived from the existing plan, and noted it was not deciding cases where the right to an enhancement is not derivative of the marital-period accrual.

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