The judge held that the value of husband’s pension was more than his contributions. It then awarded wife only a portion of the contributions husband had made. The court said that this was the proper value of the pension for asset distribution. Wife appealed.
The trial court had stated that there was a need for expert testimony about pension valuation. But the court refused to accept wife’s expert’s testimony. There was no contrary expert testimony.
Courts have followed two basic methods in dividing these interests. The first is termed the ‘reserved jurisdiction’ method. It allows the court to delay actual division of the pension. An order is entered stating how it will be divided ‘if, as and when’ it is actually paid out.
This method is best employed where it is difficult to place a present value on a pension. Perhaps due to uncertainties regarding vesting or maturation.
The second approach is referred to as the ‘total offset’ method. This is the one the used in this case.
A trial court under this scheme must determine the actual value of the pension according to actuarial evidence. It then discounts an amount in light of the risk that the pension will not vest. Discounts also to present value. Then determining the marital portion of that amount.
Usually expert testimony will be required. The approach itself is most often used where retirement is imminent. And there are sufficient other assets to allow an offset to the ‘nonpensioner’ spouse.
The trial court did indicate that the value was considerably more than husband’s contributions. So, it was an abuse of discretion to merely accept the amount of respondent’s contributions as the value for the pension.
As a result, the valuation and distribution of the pension will be reversed. The case will be remanded for reconsideration on this question. The trial court needs to establish the marital value of the pension. Then that property should be equally distributed between the parties.
IRMO Mantei, 222 Ill.App.3d 933