A major revision of the 2017 National Defense Authorization Act excludes post- divorce promotions when dividing military retirement pensions during divorce.
Instead of allowing the states to decide how to divide military retired pay and what formula or methodology to use, Congress imposed a single uniform method of pension division on all the states, a hypothetical scenario in which the military member retires on the day that the pension division order is filed.
Example: 20 Years of Service at Dissolution of Marriage
Let's assume that at the time of dissolution, a couple was married for exactly 20 years, and the servicemember was a Major (O-4) with 20 years of marriage overlapping the service. That same Major then went on to serve 10 more years after dissolution, retiring as a Colonel with 30 years of service.
Under the coverture ("time rule") formula currently used by most other states, the marital share of the retirement would be 20/30, or 66.67%, and the former spouse's share would be 33.33% of whatever the servicemember actually received at retirement.
A Colonel with 30 years of service has a base pay in 2017 of $11,328/mo, would receive approximately 75% of that in retirement, or $8496/mo. Prior to this Act, the former spouse's share would be 33.33% of that, or $2831/mo.
However, under the new definition, the marital share would be based upon 20 years of marriage divided by 20 years of service, or 100% x the retired pay of an O-4 at 20 years, and the former spouse's share would be half of that, or 50%.
A Major with 20 years of service has a base pay in 2017 of $7685/mo, and would receive a 50% of that in retirement, or $3843/mo.
The former spouse's share would be half of that, or $1922/mo. That spouse, by losing the benefit of post-divorce promotions and longevity increases, has lost $909/mo. And the greater the promotion after the divorce, the more the disparity.
Example: 5 Years of Service at Dissolution of Marriage
This new language would have the greatest impact on spouses who divorce early-on in the service member's career. For example, let's assume that at divorce, the couple had 5 years of marriage, and the servicemember was a SGT (E-5) with 5 years of service.
While an E-5 can obviously not retire with just 5 years of service, we would need to calculate the hypothetical retirement of that servicemember. An E-5 with 5 years of service has a base pay of $2669/mo in 2017. Retirement benefits accrue at the rate of 2.5% per year, so the retirement would be 12.5% x $2669, or $334/mo. The spouse's share would be 1/2 of that, or $167/mo, once the servicemember retires.
By contrast, let's look at what happens to the retirement under the pre-2017 retirement division if the E-5 ended up retiring as a Sergeant Major (E-9) with 28 years of service, and a base pay of $6776 at retirement. The service member's retirement would be 70% x $6776, or $4743/mo.
The marital share would be 5/28, or 17.86%, and the former spouse's share 1/2 of that, or 8.93%, which comes to $423/mo.
The former spouse under the new system would only get 40% of the retirement of a former spouse under the pre-2017 system.
Should you be in the midst of a military divorce or contemplating divorce, contact the Law Offices of Renee Lazar either through email or telephone 978-844-4095 to schedule a FREE one hour no obligation consultation.