On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Bergen County, Docket No. FM-02-265-06.
The opinion of the court was delivered by: Grall, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 18, 2007
Before Judges Coburn, Fuentes and Grall.
A final judgment divorcing plaintiff Michael Sternesky and defendant Ana Cecilia Salcie-Sternesky was entered on June 16, 2006. Although the parties were able to resolve many of the issues, they could not agree on equitable distribution of plaintiff's accidental disability retirement allowance awarded by the Board of Trustees of the Police and Fire Retirement System (PFRS) or on the amount of child support. Those questions were tried to and decided by a judge of the Family Part, who determined that plaintiff's pension allowance was nondistributable income and set child support based on defendant's current income and plaintiff's retirement allowance plus imputed income. Defendant appeals. For reasons stated in Section I of this opinion, it is clear that there is a component of plaintiff's pension allowance that is subject to equitable distribution. Accordingly, we reverse and remand. Defendant's objections to the child support order and the relevant evidence are discussed in Section II of this opinion.
The judgment we review was entered prior to this court's decision in Larrison v. Larrison, 392 N.J. Super. 1 (App. Div. 2007), which addresses distribution of an ordinary disability retirement allowance awarded to a member of PFRS. Previously, in Avallone v. Avallone, 275 N.J. Super. 575 (App. Div. 1994), this court confronted the problem of equitably distributing a disability retirement pension upon divorce. In both cases, we recognized that a disability retirement allowance has two components -- one that represents a retirement allowance and is subject to equitable distribution to the extent attributable to marital efforts and another that represents compensation for disability and belongs to the disabled spouse alone. Larrison, supra, 392 N.J. Super. at 16-18; Avallone, supra, 275 N.J. Super. at 584. In Larrison, we encouraged the Board of Trustees of PFRS to provide information that would permit courts to identify the components of a disability pension. 392 N.J. Super. at 18. The Board has not done so. In Larrison and Avallone, we stressed the need for parties to present evidence that permits segregation of the component of a disability pension that is a retirement asset and part of the marital estate from the component that is designed to compensate the disabled spouse and is part of his or her individual property. Larrison, supra, 392 N.J. Super. at 16-18; Avallone, supra, 275 N.J. Super. at 584. In this case, the attorneys argued for the all-or-nothing approach that favored their respective clients. Recognizing the difficulty of the position of a trial judge who is left to equitably distribute an accidental disability retirement allowance awarded to a member of PFRS without guidance from the Legislature or the Board of Trustees or evidence from the parties, we provide a formula, inferable from the statutory scheme and decision of our courts addressing equitable distribution of retirement assets, that a judge should apply in the absence of official guidance or relevant evidence.
The following facts are pertinent to equitable distribution of plaintiff's pension. When the parties married in 1998, both had college degrees. Plaintiff was employed in a job he had held since 1996, dispatcher for the Englewood Fire Department. He was enrolled in PFRS. Defendant was employed in her field. In April 2000, Englewood appointed plaintiff to the position of firefighter. In December 2003, plaintiff was hospitalized as a consequence of injuries he sustained while fighting a fire. Although he sought counseling to address post-traumatic stress, when he visited a firehouse or the scene of a fire, he was too anxious to remain. Plaintiff commenced this action for divorce in July 2005, and he was awarded an accidental disability retirement allowance effective December 1, 2005. Plaintiff is thirty-eight years of age, and defendant is thirty-five.
The parties agreed to a division of their marital assets and personal property, other than plaintiff's retirement allowance. They divided the equity in the marital residence equally.
Peter Gorman, an executive assistant with the Division of Pensions in the Department of Treasury, testified on defendant's behalf. Gorman described the various pensions available to members of PFRS. His description provided little information beyond what is disclosed by a review of the statutes authorizing pensions for members of PFRS. Gorman noted that plaintiff's accidental disability pension was not divided into separate components consisting of retirement benefits and funds intended as compensation for traumatic injury and the resulting disability. He explained that this retirement allowance is the same, two-thirds of the member's final salary, regardless of the member's age, years of service or contributions to the pension fund. According to him, the benefit is not taxed by the federal government because it is treated as if it were a worker's compensation benefit. Gorman reported that plaintiff contributed "roughly" $28,000 to the pension fund before his retirement and did not qualify for a pension allowance based on age or years of service.
The trial judge determined that plaintiff's pension is income and not a marital asset subject to equitable distribution. In the alternative and after considering the statutory factors relevant to division of martial property, N.J.S.A. 2A:34-23.1, the trial judge determined that even if a portion of the pension allowance were deemed to be an asset subject to equitable distribution, defendant would not be entitled to a share.
The basic principles governing the identification of retirement assets that are part of the marital estate and subject to equitable distribution are clear. In general, the portion of a pension that is "legally or beneficially acquired" during a marriage is subject to equitable distribution. Larrison, supra, 392 N.J. Super. at 14; see N.J.S.A. 2A:34-23(h). The marital portion of a pension is identified from the "perspective of when and how the pension was earned or acquired." Whitfield v. Whitfield, 222 N.J. Super. 36, 44 (App. Div. 1987). "[A] pension plan [is] a form of deferred compensation for services rendered." Id. at 45. Because both spouses contribute to the earning of pension rights by participating in the marriage, "both justifiably expect to share the future enjoyment of the pension benefits . . . ."
Id. at 46. The fact that the employee's right to a pension has not vested or matured at the time of divorce does not extinguish the non-pensioner's interest in the portion of this asset earned during the marriage. Moore v. Moore, 114 N.J. 147, 156-57 (1989). Nor are pension benefits attributable to work during the marriage shielded from equitable ...