## Facts

- Marilyn J. Gram Hanson and Allen E. Gram married in 1960 and separated in 1981.
- Allen worked for the San Diego Union‑Tribune and accrued pension benefits under the Copley Press, Inc. retirement plan.
- In 1983, the parties executed a marital termination agreement giving the superior court continuing jurisdiction over the community interest in Allen’s employment benefits and adopting a time-rule formula: (service during marriage ÷ total service at retirement) × monthly benefit = community share; Marilyn would receive one-half of the community share.
- In 1991–1992, in connection with a newspaper merger and planned workforce reduction, the employer offered voluntary termination incentives, including an enhanced early-retirement option.
- The enhanced early-retirement option increased the pension calculation by adding up to five years of credited service (capped) and up to five years of age (capped) solely for computing the early-retirement pension; actual age and service governed other benefits.
- Allen elected the enhanced early-retirement option, resulting in a higher monthly pension than ordinary early or regular retirement.
- Marilyn sought an order characterizing the enhanced portion of the early-retirement pension as community property subject to the time-rule allocation; the trial court characterized the enhancement as Allen’s separate property.

## Issues

1. Whether the enhanced portion of Allen’s early-retirement pension produced by added age and service credits is community property subject to time-rule apportionment or Allen’s separate property as consideration for a post-separation employment/termination decision.

## Decision

- The Court of Appeal reversed.
- The court held the enhanced early-retirement benefit, including the enhanced portion, is a retirement benefit subject to community property apportionment under the parties’ time-rule formula.
- The matter was remanded for further proceedings consistent with treating the entire enhanced pension as subject to the agreed allocation.

## Legal Principles

- Retirement benefits earned through employment spanning marriage and post-separation service are apportioned between community and separate interests using the time rule: marital service ÷ total service at retirement, with the nonemployee spouse receiving one-half of the community share.
- An employer-provided enhancement that increases pension payments by adjusting age and service credits within the retirement plan is characterized as part of the retirement benefit, not as a separate severance-type payment, absent a showing it primarily replaces post-separation earnings.
- A post-separation election to retire under an available plan option generally affects the form and timing of receipt of pension benefits and does not permit the employee spouse to recharacterize the community’s pension interest as separate property.
- Where parties’ dissolution agreement grants continuing jurisdiction over employment benefits and specifies a time-rule allocation, the court applies that formula to the pension benefit as paid, including plan-based enhancements.

## Conclusion

The appellate court concluded that the enhanced early-retirement credits functioned as a modification of the pension calculation within the existing retirement plan and therefore increased a divisible retirement asset; the enhanced payments must be apportioned under the time rule, rather than excluded as the employee spouse’s separate property.


In re Marriage of Gram, 25 Cal. App. 4th 859 (Cal. Ct. App. 1994)