Dividing military pensions during a divorce can be challenging. There are unique rules for dividing these pensions (governed by the Uniformed Services Former Spouses Protection Act) as well as multiple methods.
Four specific methods exist for dividing pensions during a military divorce: the coverture fraction formula, the stated dollar amount, the percentage amount and the delayed order option.
The most common way to divide retirement pay is through the coverture fraction formula. This formula divides the number of years of creditable service at the time of divorce by the total years at retirement. The fraction represents the former spouse’s time married to the service member.
A major drawback to this approach is the uncertainty associated with retirement. Upon retirement, the former spouse could be entitled to more than was anticipated during the divorce. However, certain language in a divorce agreement can limit these potential increases. Cost of living adjustments also apply to this approach.
The stated dollar amount is the simplest way to divide military retirement assets. The former spouse receives a stated amount of money, with no cost of living adjustments. The amount is simply added to the service member spouse’s retired pay. As a result, any cost of living adjustment goes to the spouse.
Under the percentage amount, the spouse receives a percentage, usually 50 percent, of the retirement pay. However, this method may be undesirable for service member spouses who do not know how long they will remain in the service.
For example, a service member who decided after divorce to stay in the service three extra years would accrue additional retirement benefits, 50 percent of which would go to the former spouse under this method. The former spouse’s future interest in a percentage of the pay may be higher than anticipated at the time of divorce. The percentage amount is preferable where a service member knows the numbers are not subject to change.
Finally, the deferred percentage method postpones final division until the date of retirement, at which time a court determines the division of benefits. This method applies only when the parties cannot come to agreement using the above methods. Service members stand to lose under this method because it requires additional fees and creates more uncertainty.
In short, each method of dividing military retirement pay has advantages and disadvantages. A divorce lawyer experienced in military divorce can help you determine which one is appropriate for your divorce.
Source: Military.com, “Getting a Divorce? How to Divide Military Pension,” Garrick G. Zielinski
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