Laing v. Laing
741 P.2d 649 (Alaska 1987)


  • Kenneth and Marla Laing were married on November 16, 1964 and divorced 20 years later.
  • Kenneth had a nonvested pension.
  • The trial court awarded Kenneth his pension with a present value of $27,000 and awarded Marla offsetting marital assets.
    • Kenneth challenged the award on the grounds that there was insufficient evidence to support the $27,000 figure and that Marla’s share should not have been awarded in a lump sum.

(1) Whether a nonvested pension is marital property.
(2) If so, what is the proper method for valuing and dividing the pension benefits?

(1) Yes.
(2) “Reserved Jurisdiction” approach.
Case reversed and remanded.

(1) Nonvested Pension

  • “The contingent nature of a nonvested pension presents simply a valuation problem, not bearing on nonemployee spouse’s entitlement to a just share of marital assets.”
  • Thus, consistent with the public policy of “just division of marital assets,” courts should not exclude such a substantial asset.

(2) Method for Valuing and Dividing Pensions

  • Courts have used two primary methods of valuing and dividing pension benefits, whether vested or nonvested, upon divorce:
    • Present Value: The court determines a fraction of the present value representing the marital contribution to the accrued pension benefits – i.e., the number of years the pension has accrued during the marriage over the total number of years the pension accrued.
      • Here, contingencies to collection are factored in.
    • Reserved Jurisdiction: The court retains jurisdiction and orders the employee spouse to pay to the former spouse a fraction of each pension payment actually received.
      • Here, the trial court doesn’t consider the pension when it makes the initial division at the time of divorce. Instead, it returns to the issue once the pension actually vests.
  • In this case, the court adopted the reserved jurisdiction approach because the present value approach is inherently unfair.
    • Under the present value approach, “since the non-employee spouse receives his or her share in a lump sum at the time of the divorce, the method unfairly places all risk of possible forfeiture on the employee spouse.”
    • “Thus, we are willing to accept a degree of continued financial entanglement insofar as that may be necessary to effect a just division of nonvested pension rights.”
      • Note: A possible solution this entanglement is the Retirement Equity Act of 1984 (REACT). Under REACT, a “qualified domestic relations order” (QDRO) can be filed with the administrator of the employee spouse’s pension plan.
      • If and when the employee spouse’s pension vests and matures, the plan administrator makes appropriate payments directly to the non-employee former spouse in accordance with the QDRO.

Today, the vast majority of courts consider unvested pensions to be marital property if they accrued during the marriage.

Rule: Pensions accumulated during marriage are martial assets subject to equitable distribution upon divorce.

Rule: The reserved jurisdiction approach is the proper method for valuing and dividing pension benefits.