Don’t leave decisions to courts

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Don’t leave decisions to courts

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Lim Chae-woong

The Supreme Court so far has declined to include severance or retirement funds as divisible marital assets if they are to be paid at an unspecified time in the future. Yet that doesn’t mean the high court underestimates the value of retirement benefits in a marriage. The court counted them as “other factors” that cannot be specifically determined at the time of a couple’s separation.

At first glance, the equivocation in the definition might be seen as unreasonable. But in court, the customary practice did not cause much of a dispute. However, more people are challenging the high court, and some lower family courts have recognized severance and retirement packages as divisible community property, leading the Supreme Court to an open trial to gauge public opinion.

In other countries, laws have been established to guarantee divorcing spouses equal shares of retirement benefits regardless of whose name appears on the policy. The Retirement Equity Act of 1984 in the United States affirms that each person in a marriage has a right to benefit from the other’s pension, the Matrimonial Causes Act of 1973 in Britain and the Gesetz ueber den Versorgungsausgleich in Germany are the best-known laws. In the United States, a divorcing spouse is entitled to half of the pension of the receiving spouse if they were married 10 years or more. The Japanese court has ruled that severance and retirement packages are divisible when received within five years of the divorce. If the employment termination is longer, it is not subject to division.

I am not opposed to severance pay being included as a marital asset. But if it is split, it must be based on definitive legal grounds. Whether or not - and how - it can be divided should not be left entirely in the hands of a family court judge.

I have my reasons to demand legal revision before court practice. Divorce courts usually determine what assets are divisible and in what ratios according to the contribution and role of the husband and wife toward each asset. Divorcing parties each are allocated a share of community property based on the value estimated by the court. In other words, the court has too much say in the division.

Even a veteran legal counselor cannot determine exactly which party has contributed more in building the property during marriage and clearly decide on the ownership of a certain property upon separation.

The problem is that lump-sum severance pay is typically the only post-retirement savings for most of the working population. Predictability is, therefore, essential in post-retirement savings. If retirement funds are recognized as community property in marriage subject to equitable distribution, it is hard to decipher how much money one is entitled to. Retirement planning for divorcees would be wrecked.

If pensions become divisible, the benefits that are paid out in installments over many decades or years must be divided between the couple many years after their divorce. It also is unfair to demand that retirement plans built over many decades be divided as a lump sum. Asking a person to whom severance pay is the only post-retirement means of survival to divide the money in a lump sum would be like telling him or her to seek loans to pay alimony. Is this reasonable for ordinary people?

There are other discretions that need to be taken into account. Divorce cases have immense social repercussions. Korea has one of the world’s fastest-aging populations. Because people live longer, they remarry more easily. The unpredictability of severance and retirement plans can get in the way of remarriage. Before any change in court practice, the National Assembly must come up with relevant laws. More harm than good can be done if decisions about dividing retirement packages are left to the court.

Divorce trials must reflect social realities and changes. The debate on severance and retirement package must pave the way for livelier and deeper discussions of divorce.

Translation by the Korea JoongAng Daily staff.

*The author is a lawyer.

By Lim Chae-woong




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