Military Divorce Retirement, Pension Rules Change

Military Divorce Retirement, Pension Rules Change http://wp.me/p1d7d0-9TV

A change included in a new law governing the Defense Department alters military divorce retirement rules, making things more fair for the divorcing service member while still protecting the financial interests of the divorcing spouse.

Military pensions are considered a “marital asset” by law and often split 50-50 during a military divorce, even if the service member has not yet retired and the existence of a pension assumes that the military member makes it to retirement at all. The current rules base the split on whatever the pension is worth when retirement happens. That means that even if you divorce as an O-3 with 10 years of service, how much your former spouse gets in retirement when you leave the military in 20 years is based on your rank after 20 years — only 10 of which you were married. 

And it doesn’t stop there. The split is irrevocable, meaning that whatever the court settles for the retirement at the time of divorce is what’s in play until the service member dies (at which time military pensions stop). Even if the service member remarries and is with that spouse for the majority of his or her life, half of the retirement still could be paid to a long-ago spouse from a comparatively short marriage.

Does that seem fair to you? 

The military divorce retirement change

But a measure in the new 2017 National Defense Authorization Act puts a cap on how much of that pension a former spouse can receive.

Rather than granting spouses 50 percent of military pensions based on their service members’ ranks at retirement, the new rule ties the payouts to service members’ pay grades and years of service at the time of divorce, adjusted by a cost-of-living calculation.

That means if you’re an O-3, for example, and divorce after 10 years of service, any future pension is included in the settlement and then make it to retirement, your former spouse will only be able to cash in on an O-3 with 10 years of service (plus the COLA adjustment) value, not the total value of your retirement.

One important note: the change will be not retroactive to military divorce retirement settlements that occurred prior to the measure becoming law.  As it stands the measure must still be given final approval by the House and Senate and signed by the President. 

 

About the Author

Amy Bushatz
Amy is the editor in chief of Military.com’s spouse and family blog SpouseBuzz.com. A journalist by trade, Amy also covers spouse and family news for Military.com where she is the managing editor of spouse and family content. An Army wife and mother of two, Amy has been featured as a subject matter expert on CNN.com, NPR, Fox News, NBC, CBS, ABC and BBC as well as in the New York Times, Wall Street Journal and Washington Post. Follow her on twitter @amybushatz.