But It Isn’t Fair. How Government Pension Holders Lose Out In Divorce

BUT IT ISN’T FAIR!

What happens in divorce here in California when one spouse contributes to a government pension and the other spouse contributes to Social Security? The answer creates what is arguably an inequitable result.

The case directly on point is In re Marriage of Peterson (2016) 243 Cal.App.4th 923: The genders of the parties are irrelevant, so I am not using the words “Husband” or “Wife.”

Here’s basically what happened: You are eligible to receive a government pension, which means you did not pay into Social Security. You are barred from contributing to Social Security pursuant to the Windfall Elimination Provision of the Social Security Act and the Government Pension Offset. You therefore will not receive Social Security. Your ex-spouse paid into Social Security. If you are getting divorced here’s what happens:

Your ex-spouse gets their community property share of your government pension, and you get none of your ex-spouse’s Social Security retirement, because Social Security is separate property under Federal law. That may not be fair, but Federal law preempts California law, so your ex-spouse’s Social Security is their retirement alone.

Here’s where it gets even worse: The current law in California does not even allow you to obtain a credit or offset from your ex-spouse’s Social Security retirement, which would potentially reduce or eliminate your ex-spouse’s interest in your government pension.

So, your ex-spouse gets what many believe is a windfall…their community property share of your government pension and all of their Social Security to boot, even though your ex-spouse paid into Social Security using income earned during the marriage, which was community property. In this situation, the community acquired no interest in your ex-spouse’s Social Security retirement.

This leaves you living on your share of your government pension, usually one-half of the full amount, and your ex-spouse gets to live on all of their Social Security retirement and their community property interest in your government pension.
The only current way to equalize this would be through spousal support payable by your ex-spouse to you, but that is problematic at best.

The Court of Appeal in Marriage of Peterson said the California legislature could craft a statute to direct family law courts to assign a portion of community assets to one spouse when the other spouse’s retirement is classified as separate property under federal law. Congress could also change the Social Security Act to eliminate this provision. The Court of Appeal said, however, that whether California or federal law should be changed to address the challenges presented here is a legislative policy decision that is beyond the purview of the Court of Appeal.