Congress made a big change to the Former Spouse’s Protection Act in 2017. This is a big one. Basically, in a divorce, military retired pay is to be calculated as if the military member retired when the divorce started. Under the old law, if the divorce happened when the service member was an E-5, but retired as an E-9, the former spouse could get a share of the retired pay at the E-9 rate. To many this was unfair. The question was “Why should my ex get a share of my E-9 pension? When we divorced I was only an E-5.” Now, the law addresses it. Ok, this was the basics. We are going to dive a bit deeper and I’ll provide some examples.
“The Former Spouses Protection Act,” had been amended by the National Defense Authorization Act of 2017 (NDAA). Under the prior law, state courts were given jurisdiction to divided military retired pay in accordance with the laws of that particular state. So that in New York the military retired pay would be divided in accordance with DRL 236 B and the Court of Appeals decision in Majauskas v. Majauskas, 61 NY2d 481 (1984).
Military retired pay is calculated by first determining the total number of years of service. Each year of service translates into 2.5% of the base pay. This number is the retired pay percentage. Twenty years of service (20 * 2.5%) yields a retired pay percentage of 50%. Therefore, a person who serves 20 years would receive 50% of his/her base pay. While a person who served 25 years would receive 62.5% of the base pay (25*0.025=0.625). A person who served only ten years would only be entitled to 25% of his/her base pay (10*0.025=0.25) . Since a person cannot normally retire with less than 20 years of service, the Defense Finance and Accounting Service (DFAS) refers to any time less than 20 years as the “hypothetical retirement.”
Finally, to calculate retired pay, the retired pay percentage is applied to the pay chart under what is call “HIGH 36.” Assume for example that the service member retired after 20 years of service as a lieutenant colonel. Assume that according to the pay charts that his/her average base pay over the last 36 months of service was $8000 per month. His/her retired pay percentage is 50% (20 years multiplied by 2.5%). The monthly retired pay would be $8000 multiplied by 50% which yields $4,000 per month as his/her retired pay.
Under the previous version of the statute, the court could issue an award based upon the service member’s final years of service and his/her final rank. Thus, if the service member was a captain with 10 years of service at the time of divorce, with 10 years of marital overlap but then retired after 20 years of service as a lieutenant colonel, under Majauskas the marital coveture would be calculated as 10 divided by 20 or 50%. The spouse would receive half, or in this example, 25% of the base pay that the service member would receive on retirement. In this example, the spouse would receive 25% of the $4,000 per month calculated above. This number is $1000 per month.
Under the 2017 amendments, this is no longer the case. Now, the court must calculate the retired pay as if service member retired on the date the judgment of divorce was issued. This is the hypothetical retirement.
Using the above example again, the amount of the service member’s retired pay would be capped. The parties divorced after 10 years of marriage and service. The service member later retires after 20 years. Under the Majauskas formula, the marital coveture would still be 50% and the spouses share would still be 25%.
However, assume that as a captain with 10 years of service his monthly base pay is only $5,000. First, we have to determine the retired pay percentage. Ten years multiplied by 2.5% is 25%. Next, we take the retired pay multiplier and apply it to the base pay of $5,000. When $5,000 is multiplied by 25% the number yielded is $1,250. Under Majauskas the spouse will receive 25% of the $1,250 or $312.50 per month.
Further, under the prior law, if the service member remained longer in the military then final retired pay would increase resulting in the spouse’s share increasing. However, under the new law with the base pay remaining static, as the Majauskas percentage increases the spouse’s share decreases. Again, using the above example, 20 years of service yields a marital coveture of 50%. While 25 years of marriage years of a marital coveture of only 40% and 30 years yields a marital coveture of 33.34%. Yet, those figures are all assessed against the same $1,250.
|Years of Service at time of divorce||10|
|Retirement pay percentage per year||0.025||For each of service 2.5% is added|
|Retired pay percent||0.25||10 years multiplied by 2.5%|
|Member’s hypothetical base pay at time of court order||$5,000.00|
|Member’s hypothetical retirement pay at time of court order||$1,250.00||Hypothetical base pay multiplied by retired pay percentage|
|Majauskas formula for 20 years||0.5||10 years of marriage divided by 20 years of service|
|Majauskas formula for 25 years||0.40||10 years of marriage divided by 25 years of service|
|Spouse’s percentage 20 years of service||0.25||One half of the marital coveture 20 year of service|
|Spouse’s percentage 25 years of service||0.20||One half of the marital coveture 25 year of service|
|Spouse share of retired pay 20 year of service||$312.50||Spouse’s percentage multiplied by hypothetical retirement 20 years|
|Spouse share of retired pay 25 year of service||$250.00||Spouse’s percentage multiplied by hypothetical retirement 25 years|
I would note that the American Academy of Matrimonial Lawyers Board of Governors adopted a resolution opposing this new law. They stated, “that [the change] would alter state divorce law in the majority of states by requiring the states to divide military retirements – as opposed to every other kind of defined benefit pension plan – in accordance with rank and grade at the moment of divorce rather than in accordance with the Time Rule [basing the division on rank and years of service at retirement.]”
My friend and mentor, Mark Sullivan, a retired Army colonel in the Judge Advocate General’s Corps who is a family law attorney in Raleigh, North Carolina, and specializes in military divorce, and is a member of the ABA Matrimonial Section’s Military RoundTable described the proposed change as a “radical rewrite” of the Uniformed Services Former Spouse Protection Act. He noted that the old system allowed division of the retirement pay based on state law, and that now there is no federal formula, giving states more latitude to deal with individual divorce cases.
He has pointed out that by freezing the benefit to be divided at divorce, rather than the actual retired pay of the service member, this new law would cause great harm to spouses and former spouses going through separation and divorce, people that have sacrificed their careers and their own retirement, with the hope of sharing the military member’s final retired pay — or, upon divorce — of getting a fair share of that actual retired pay, not a benefit frozen in time for years before.
The bottom line is that the military service member, whether Army, Navy, Air Force or Marine will benefit from this change in the law.