Pending Federal legislation could have a huge impact on how judges will divide military pensions during a divorce. In a previous post, I discussed how starting in 2018 military retirement will be changing: benefiting both the military and non-military spouse.
Currently, if the parties agree to (or if the Family Court Judge elects) the “if, as and when” approach to dealing with retirement and pensions, 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 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 this bill would have a tremendous influence on the retirement pension payments of both retired service members and their former spouses.
Here’s an example of how this legislation currently works and would potentially work:
Joe and Kim were divorced in 2015. At that time, Joe 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 Joe’s 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, in our example, Kim would receive the benefit of an additional 14 years of Joe’s 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 Kim had little or nothing to contribute to these post-divorce achievements.
The Proposed House Version
Kim would be entitled to a share of Joe’s pension based on his 15 service years and rank of Major as of the date of the divorce. Kim would not receive any pay adjustments resulting from Joe’s post-divorce accomplishments.
The Proposed Senate Version
Kim would be entitled to a share of Joe’s 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. Kim and Joe both benefit by the upward “cost of living” adjustment to the rank pay scale. However, Kim doesn’t benefit from either the post-divorce service years or Joe’s advanced rank.
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 a former military spouse.
Service members and their former spouses would be well-advised to consult with competent attorney to analyze the impact of this proposed legislation on their military pensions and retirement.