military pensions

Pending Federal legislation could have a huge impact on how judges will divide military pensions during a divorce. In a previous post, I discussed at length how military pension plans currently could be divided in the context of a Massachusetts divorce matter. Massachusetts Probate and Family Court judges generally have the discretion to either divide a pension as an asset or to divide the income resulting from the plan “if, as, and when” it entered pay status.

If the parties agree to (or if the Family Court Judge elects) the “if, as and when” approach, the service member’s pension pay would be divided between the service member and the former spouse based on the rank and years of service of the service member at the time of retirement. However, the pending federal legislation proposed by Representative Steve Russell would instead direct state judges to divide military pensions based on the rank and years of service at the time of the divorce. The enactment of such a bill would hugely influence the retirement pension payments of both retired service members and their former spouses.

Significantly, there are two different versions of the bill. The Senate version of the bill includes language that provides for an adjustment to the formula based on rank and years at the time of the divorce, with the rank rate of pay adjusted to time of retirement.

Here’s an example.

Assume the parties were divorced in 2015. At that time the service member was a Major with 15 service years. Let’s also assume there was an agreed upon (or Court ordered) “if, as and when” division of the retirement pay. Fast-forwarding, let’s assume the service member retires in 2029 as a Colonel with 29 years of service.

Current Situation of Military Pensions

The application of the current law (Uniformed Services Former Spouse Protection Act) often results in a so-called “windfall” to former spouses. It’s not uncommon that, upon the service member’s retirement, the former spouse would take a portion of the service member’s pension at 29 service years and his rank of Colonel at the current pay scale. Basically, the former spouse receives the benefit of an additional 14 years’ of service and the corresponding upward pay rate adjustment that goes along with the higher rank which occurred post-divorce. Proponents of the proposed bill would argue that the former spouse had little or nothing to contribute to these post-divorce achievements.

The Proposed House Version

  • The former spouse would be entitled to a share of the pension based on the service member’s 15 service years and rank of Major as of the date of the divorce. The former spouse would not receive any pay adjustments resulting from the members’ post-divorce accomplishments.

The Proposed Senate Version

  • The former spouse would be entitled to a share of the pension based on 15 service years and the rank of Major at the current pay scale for the rank of major at the time of retirement. The former spouse (as well as the service member) benefits by the upward “cost of living” adjustment to the rank pay scale. However, the former spouse doesn’t benefit from either the post-divorce service years or the advanced rank of the service member.

The Senate version of the bill would have a lesser impact than the version proposed in the House. In the majority of cases, the enactment of either is likely to significantly reduce the pay benefit for the former spouse.

Service members and their former spouses would be well-advised to consult with competent counsel to analyze the impact of the proposed legislation on their military pensions and retirement.

My very best to you and yours,
Ron