Social Security Benefits to Offset Public Pension

Obar v. Obar
2010-Ohio-1333
Fifth District
Ashland County
-Social security benefits evaluated in relation to the other party’s interest in a public pension

Plaintiff-Appellant, Richard Don Obar appeals from the Decree of Divorce entered by the Ashland County DR Court. The appellant raised two assignments of error, but for the purposes of this review, we will only discuss the social security offset.

Appellant argues that the trial court erred by not considering the hypothetical Social Security offset against appellants PERS pension. Specifically, appellant argues that because appellee’s social security retirement benefits are not subject to division then the fact that appellant’s PERS is subject to division, and was, in fact, divided by the trial court, such division would obviously be unfair unless the PERS value is adjusted for the discrepancy.

After determining that "illumination of this issue is warranted," the court examines several approaches to considering social security benefits when dividing a public pension. The court examined Cornbleth v. Cornbleth, 580 A.2d 369, 372 (calculation of a hypothetical social security benefit to deduct from the public pension), Neville v. Neville, 791 N.E.2d 434 (the trial court may consider the parties’ future Social Security benefits in relation to all marital assets) and R.C. 3105.171(F)(9).

The trial court’s decision was upheld on the basis of R.C. 3105.171(F)(9) which, when enacted in April of 2009, made it clear that the trial court has discretion as to whether to consider social security benefits in dividing a public pension.

From the Opinion:

{¶18} "In the leading case of Cornbleth v. Cornbleth (1990), 397 Pa.Super. 421, 427, 580 A.2d 369, 372, the court stated:
{¶19} "’To facilitate a process of equating [public pension participants] and Social Security participants we believe it will be necessary to compute the present value of a Social Security benefit had the [public plan] participant been participating in the Social Security system. This present value should then be deducted from the present value of the [public pension] at which time a figure for the marital portion of the pension could be derived and included in the marital estate for distribution purposes. This process should result in equating, as near as possible, the two classes of individuals for equitable distribution purposes.'

{¶20} "This formula, which calculates a ‘hypothetical Social Security benefit’ for a party who has, in reality, participated in a public retirement plan, not Social Security, and then deducts that hypothetical amount from the public pension, has been adopted by several appellate districts in Ohio.

{¶21} "[T]he Cornbleth method seems to be both the most thorough and the most equitable under the circumstances presented herein. Specifically, this method appears to give both parties comparable credit in terms of the years of participation in their respective programs, whereas, in practice, the other methods may well penalize the PERS participant by subjecting a larger proportionate share of that spouse's retirement to division as a marital asset. On remand, the trial court should apply the Cornbleth formula of calculation* * *." Id. at 30-32.

{¶25} "However, as appellant concedes, the Ohio Supreme Court has not mandated the Cornbleth approach as the preferred method of addressing these types of private/public retirement benefit scenarios. Moreover, our most recent ruling in this realm can be found in Back v. Back (Dec. 29, 1999), Richland App. No. 99 CA 46, unreported. In that case, appellant wife was employed by the City of Mansfield and participated in PERS, the public employees' retirement plan. Appellee husband worked for a waste management company, participating in social security but not in any pension plans. We held: Upon reconsideration, we find the trial court did not abuse its discretion in calculating the division of retirement benefits on remand even though the trial court did not follow the mandate of this court. We conclude, as did the trial court, the proper division of retirement benefits is to subtract appellee's potential social security benefit from appellant's potential PERS benefit and divide the remaining portion of the potential monthly PERS benefit equally between the parties. Id. at 2." Id at 2.

{¶27} The cases appellant cites pre-date the Ohio Supreme Court's decision in Neville. In Neville, the Court held that "to make an equitable distribution of marital property, [the trial court] may consider the parties' future Social Security benefits in relation to all marital assets." (Emphasis added.) Id at paragraph 11. As noted by the court in Rorick v. Rorick, Lorain App. No. 09CA009533, 2009-Ohio-3173. "Neville clearly does not mandate that the trial court consider Social Security benefits when equitably dividing marital assets." Id at paragraph 12.

{¶28} Subsequent to Neville, R.C. 3105.171(F)(9) was adopted, effective April 7, 2009. It states, "In making a division of marital property and in determining whether to make and the amount of any distributive award under this section, the court shall consider all of the following factors: …. (9) Any retirement benefits of the spouse, excluding the social security benefits of a spouse except as may be relevant for purposes of dividing a public pension,…" While Neville allowed social security benefits to be considered against all martial assets, this section limits social security benefits to be considered "as may be relevant" in dividing public pensions. This statute took effect only days before the decree in this case. And this statute still seems to leave it to the
discretion of the trial court as to whether to consider said benefits in dividing a public pension. In addition, the statement of this assignment of error by the appellant specifically argues for the Cornbleth method, not the procedure set forth by us in Bourjaily or by the Ohio Supreme Court in Neville or by R.C. 3105.171(F)(9).

{¶29} We find, therefore, that the trial court did not err in refusing to consider appellant’s ypothetical social security offset against appellant’s PERS pension.