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Supplemental funds available to retired New York Police Department officers outside of the normal pension system are not marital assets subject to equitable distribution in divorce, a New York Appellate Division, 2nd Department panel has ruled in a case of first impression. The ruling concerned the Police Superior Officers’ Variable Supplements Fund, created by the New York Legislature to collect earnings of police pension funds in excess of the fund’s obligations to retirees. Money paid from the fund to retired officers does not constitute pension benefits, the panel said in a unanimous opinion. The funds are not deferred compensation subject to equitable distribution, but rather a legislative reward designed to persuade officers to serve for 20 years, when their interest in the fund vests. The right to collect payments from the Variable Supplements Fund does not accrue incrementally during the period that an officer is a member of the police department, as it does in a pension fund. Therefore, an officer who retires after the end of a marriage, having put in 20 years of police service, has not accrued the benefit during the marriage, the justices agreed. In DeLuca v. DeLuca, 1999-09098, 2000-00512, the four-justice panel, led by Justice Daniel F. Luciano, reversed a Queens Supreme Court referee who ruled that the supplemental fund was effectively an enhanced pension benefit. Trial courts have split on the issue, and the 2nd Department is the first appellate court in New York state to hand down a decision on the Variable Supplements Fund. Crescenzo DeLuca, the ex-husband, retired as a police detective in February 1998, nearly two years after filing for divorce from his ex-wife, Maria DeLuca, in July 1996. Mr. DeLuca was entitled to a payment of $110,000 from the Police Superior Officers’ Variable Supplements Fund, reflecting excess earnings on the pension contributions withheld from his paycheck. The panel members reasoned that the state Legislature, in creating the fund, declared that it “shall not be construed to constitute … a pension or retirement system or fund … . “ But even more importantly is the method of calculating supplements fund payments, the justices said. “A review of the statutory formula unquestionably indicates that the variable supplements fund payments are not calculated on the basis of credit earned through a police officer’s employment,” Justice Luciano wrote. “The sole requirement for eligibility for such benefits is the completion of 20 years of service, but entitlement matures only upon retirement.” The formula for the payments does not change based on service beyond 20 years, the justices also observed. “The Legislature has eliminated any subjective interpretation by the clarity of its enabling statute,” Luciano concluded. Concurring in Luciano’s opinion were Justices William C. Thompson and Robert W. Schmidt. Justice Sandra J. Feuerstein concurred in the result reached by Luciano, but would adopt the reasoning in Lazarus v. Lazarus, a Queens Supreme Court decision reaching the same conclusion. That court defined Supplements Funds payments as “a benefit which police officers earn in their 20th year of employ,” and which is separate property if earned after the end of the marriage. Alexander Potruch of Mineola, N.Y., represented Mr. DeLuca. Robert A. Ross of Kew Gardens, Queens, represented Mrs. DeLuca.

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