Is a fully vested pension plan, the proceeds of which are not available to the employee until some future date, subject to equitable distribution? This is one of the few undecided questions in New Jersey in the troublesome area of the equitable distribution of pension plans incident to a divorce.
Defendant Mueller has been employed by the American Telephone & Telegraph Company, Long Lines Division, for about 22 years. He is covered by the Bell System Benefit Program. He has a fully vested noncontributory pension plan upon which he cannot draw until he attains age 65, unless he elects early retirement at age 55 or thereafter. He is now 48 years old. If he leaves the company before age 55, he could take no funds with him but he would be entitled to a pension at a reduced rate at age 65. He has been married about 19 years.
Many members of the matrimonial bar in New Jersey have assumed that a fully vested pension such as this is automatically an asset subject to equitable distribution. This court disagrees.
For an asset to be subject to equitable distribution, it must be "property * * * which was legally and beneficially acquired by them or either of them during the marriage." N.J.S.A. 2A:34-23.
The basic issue before Justice Schreiber in Kruger v. Kruger , 73 N.J. 464 (1977), was whether a pension was "property" within the meaning of the statute, as opposed to a source of income to be considered on the question of
alimony. Under its facts, the case did not involve an interpretation of when property was "legally and beneficially acquired." The husband acquired his pension during marriage, had retired and the pension was being paid. The court pointed out that
None of the decisions in this State involving pensions has considered the situation where the husband or the wife during the marriage acquired and is enjoying the pension. [at 469]
The court reviewed the four prior New Jersey cases involving pension plans: Pellegrino v. Pellegrino , 134 N.J. Super. 512 (App. Div. 1975); Scherzer v. Scherzer , 136 N.J. Super. 397 (App. Div. 1975); White v. White , 136 N.J. Super. 552 (App. Div. 1975), and Blitt v. Blitt , 139 N.J. Super. 213 (Ch. Div. 1976). Pellegrino involved the amount of the husband's contributions only. He could take these out at any time. The Appellate Division in Scherzer remanded the case so that the trial court could determine what the husband's interest was in the plan. In White the husband was not yet eligible. He had no interest that could be termed vested. Blitt, on the other hand, could take his share of the noncontributory plan out at any time. Hence, his pension was subject to equitable distribution, while White's was not.
The cases through Kruger are discussed in an article entitled "Equitable Distribution of Pension Plans," 100 N.J.L.J. 1053.
Hence, in all of the cases, including Kruger , which held the pension plan an asset subject to equitable distribution, the husband had the right to his money at the time. No future attained age, or other condition, need be met. The husband had present control over the funds. Either he could withdraw them, or they were being paid as a pension. However, the court said (73 N.J. at 469) in referring to the prior cases, ...