Hi, I have been retired from active duty since 2006, after…

YOUR QUESTION:
I have been married for 11 years to an US Air Force Reservist who started in the enlisted ranks in 1990. He became an officer in 2004, and now holds the rank of Captain. He plans to stay in the reserves until he serves 10 years as an officer. We are getting divorced. My lawyer asked me if I knew how to figure out how much pension he will be entitled to if he retires in 2015 as say a Major.

ANSWER:
This can be a bit tricky. And you want to be sure your lawyer knows the military retirement system as it intertwines with divorce law. I am very much concerned about your lawyer asking YOU if you know how to figure out how much pension your husband will be enteitled to if he retire in 2015 as a major, etc. Clearly indicates to me that the lawyer is not very conversant with the topic. (It is the LAWYER who should be telling YOU how much pension there will be. Consider changing lawyers, perhaps.)

That being said..... you need to obtain a copy of your spouse’s most recent annual annual “points statement.”

To the extent your spouse has acquired DURING THE YEARS OF MARRIAGE an entitlement (or potential entitlement) to a military pension (military retired pay), it will be treated as a marital property asset upon divorce. Your spouse is generally recognized as have a legitimate claim to one-half (50%) of the “marital portion” of the retired pay that you receive (if any), to be paid to your former spouse on an “if and when” basis.

Keep in mind that the pension entitlement is uncertain at this point. There may NEVER be an actual pension benefit received. So some flexibility needs to be included in the planning. The divorce judgment should set forth a formula that will be applied later on down the line, upon spouse’s actual commencement of receipt of benefits, when the dollar amount of the monthly benefit check is known. You then receive a PERCENTAGE of each month benefit amount, usually being 50% of the “marital portion” of the monthly benefit.

In essence, the divorce court establishes a “FORMULA” to be implemented and applied IF AND WHEN --- if ever --- your spouse becomes entitled to --- and actually commences --- receipt of military retired pay. The formula for dividing reserve military retirements is based upon the same principle as active duty retirements, with one change - it utilizes retirement points, rather than months.

The former spouse of a reservist is entitled to one-half of the marital portion of the servicemember's disposable retired pay, calculated as one-half (or 50%) of a fraction, the numerator of which is the total retirement points accumulated during the marriage and the denominator of which is the total retirement points at retirement. Illustrated as follows:

-----> Numerator: Retirement points accumulated during the marriage
-----> Denominator: Total retirement points at retirement

Divide the numerator by the denominator. The product of that faction results in the “marital portion” of the pension entitlement. Convert to a percentage, divide in half, and multiply by the dollar amount of disposable retired pay (doing so when retire occurs and actual amount of the retirement benefit is known, even if 27 years down the line). And that is what retiree’s former spouse will ultimately receive. But, of course, if the servicemember never gets a dime, the servicemember’s former spouse never gets a nickel; not even a penny.

Also, of course, the reservist must have at least 20 years of qualifying service (50 or more retirement points earned in the year) to be eligible for retirement, with the payment to actually commence when the servicemember attains age 60.

In dividing reserve retirement rights upon divorce, the "marital fraction" should be computed twice: once using marital years of service over total years of service, and then again using marital retirement points over total retirement points. The results may be different, to the advantage, or disadvantage, to one spouse of the other.

While the reservist who has at least 20 years of qualifying service (50 or more retirement points earned in the year) is eligible for retirement, but the payments do not begin until the servicemember's 60th birthday.

A reserve servicemember can find out the retirement points acquired during marriage, depending upon his/her branch of service. For more information, see:

ARMY RESERVE. ARPC Form 249-2-E (Chronological Statement of Retirement Points) sent annually to reserve soldiers within 2 months of their Retirement Year Ending Date, and accessible online by at the U.S. Army Human Resources Command My Record Portal.

AIR RESERVE. The paper version of AF 526 has been discontinued, but retirement point credit information is available at the Virtual MPF.

NAVY RESERVE. Annual Retirement Point Record is not in paper format, but accessible online at BUPERS Online.

NATIONAL GUARD. NGB 23 (Retirement Points History Statement). Applies to the Army National Guard and Air National Guard.

HELPFUL WEBSITES:
http://retiredpay.com/retirement-planning/mil-pay/intro-to-reserve-component-retirement-calculation-and-valuation/

http://www.texasfamilylawinfo.com/docs/Higdon-Military_Retirement_Divorce.pdf

http://www.dfas.mil/militarypay/garnishment/Speech5.pdf

http://www.military.com/benefits/military-pay/retired-pay/military-reserve-component-retirement-overview

http://usmilitary.about.com/od/guardandreserve/a/earlyretirement.htm

http://usmilitary.about.com/od/reserveretirmentpay/a/reserveretire.htm


The “set dollar amount” of the spouse’s share of the marital portion of disposable retired pay will normally be determined by a formula award, as discussed hereinbelow.

Under the divorce laws of every state in the nation, including Maryland, the entitlement to the present or future receipt of military disposable retired pay, to the extent the entitlement was acquired during the years of marriage, is treated as a property asset of the marriage (i.e., marital property) and is subject to division incident to dissolution of marriage.

(NOTE: Under applicable federal law, 10 USC § 1408(e)(1), “The total amount of the disposable retired pay of a member payable under all court orders * * * may not exceed 50 percent of such disposable retired pay.” So 50% of disposable retired pay is the absolute maximum that can be awarded by the divorce court to the former spouse.)

As a general rule, and in the absence of substantial reasons for not doing so, the “marital portion” military spouse’s present or future entitlement to receive military disposable retired pay is deemed and treated as “marital property” for divorce purposes and is subject division between the spouses incident to the dissolution of the parties' marriage. Typically, as part of the division of marital property incident to dissolution of marriage, the nonmilitary spouse is awarded 50% of the “marital portion” of military spouse’s entitlement to disposable retired pay.

The “marital portion” of the servicemember’s disposable retired pay entitlement is typically determined by a “formula award” expressed in the divorce decree in terms of a “marital fraction” (or “coverture fraction”).

The numerator of the fraction is the period of the parties’ marriage while the military spouse was performing creditable military service, up to a specified “cut-off” date, such as the date of the t parties' separation from one another, or the date of filing of a divorce petition, or the date of the parties' divorce, or some other date as determined by agreement or by applicable state law. (NOTE: Most states use either the date of separation or the date of divorce.)

The denominator of the fraction covers the military spouse’s total period of military service creditable for military retirement entitlement. In cases where divorce occurs while the military spouse is still on active duty or still performing reserve duty, the denominator necessarily awaits future determination. The divorce decree resolves that problem by using a “formula award.”

The “formula award” provides the basis for making the future determination of the specific “marital portion” of the military spouse’s disposable retired pay entitlement. Divorce decree language would typically read as follows: “The former spouse is awarded a portion of the member’s future disposable military retired pay, said portion to be computed by multiplying 50% times a fraction, the numerator of which is ______ [months of service time during marriage, or number of retirement points acquired during marriage], divided by the denominator, being the member’s total number of months of creditable military service [or total retirement points] as determined at the time of retirement.”

When the military spouse ultimately separates from military service, the denominator of the marital fraction is determined. The calculation is then made by dividing the marital fraction’s numerator by the denominator, resulting in the specific “marital portion” percentage. In accord with the formula set forth in the divorce judgment, when the retiree commences actual receipt of disposable retired pay, the retiree’s former spouse will then receive one-half (i.e., 50%) of the calculated “marital portion” of the retiree’s monthly amount of disposable retired pay.

For example, assume the military spouse accumulates a total of 240 months (20 years) of creditable military service for retirement purposes, of which 132 months (11 years) [assume June 1, 1997, to May 31, 2008) coincided with the years of marriage. Assume military spouse ultimately receives disposable retired pay of $2,800 p/m based on 20 years of military service. Applying the formula as spelled-out in the divorce decree, the “marital portion” would be determined by dividing the total number of months of marriage (132) by the total months of creditable military service (240). Thus, the “marital portion” would be 132/240, which is 55.0%, one-half of which is 27.5%. Typically, most divorce courts would then award the nonmilitary spouse an interest in the military spouse’s entitlement to disposable retired pay, the specific amount thereof being one-half (50%) of the “marital portion” (to be paid at such time as the military spouse commences actual receipt of disposable retired pay). Assuming the marital portion to be 55% of $3,000, the nonmilitary spouse would then receive $835 per month, being one-half (50%) of the marital portion (55%) of $3,000. Stated differently, the nonmilitary spouse receives 27.5% of the military spouse’s $3,000 monthly disposable retired pay benefit, as adjusted in the future to include a proportional amount of COLAs..

Where the entitlement to military disposable retired pay is based on service in the military reserves (or a combination of reserve service and active duty service), the calculation of the marital fraction becomes a bit tricky, particularly when the marriage and the service career do not exactly overlap. Depending on how active a reservist is, the reservist could accumulate more points before marriage than are accumulated during marriage, even though the reservist has spent more calendar time as a married reservist than as an unmarried one.

In such cases, two projections of the marital fraction should be computed --- once using marital service time divided by total service time (stated in terms of months) for retirement purposes, and then again using reserve points acquired during marriage divided by total retirement points qualifying for retirement benefits --- to determine which computation will be most advantageous. Under either calculation, the nonmilitary spouse usually receives one-half (50%) of the marital fraction times the retiree’s dollar amount of disposable retired pay.

NOTE: Typically, under the laws and procedures in most states, the “cut-off” date for determination of the marital interest acquired during the marriage is the date of the parties’ separation (cessation of marital cohabitation) or the date of divorce. However, if the parties agree, any other date can be used, such as the date the of filing of the petition for dissolution of marriage.

NOTE: Time during the marriage that the parties lived apart from one another, regardless of reasons, is irrelevant. What counts is the duration of the marriage (up to the date of separation, under Pennsylvania law, irrespective of prior periods of noncohabitation.

OK. That should do it. I wish you well and trust the information provided here answers you questions and concerns.
================================
If your question has been satisfactorily answered, please acknowledge by clicking the green “ACCEPT” button in the upper right hand corner of your screen. That’s the only way I get paid for answering your question. After you’ve accepted, we can then engage in further dialogue if needed to clarify or elaborate. Also, your positive FEEDBACK comments are important, so be sure to add a few words as requested. And I thank you in advance. http://ldgorin.justia.net/index.html

P.S. -- If you have future questions that you would like me in particular to answer, just begin your question with “FOR MR. GORIN --” or ask your question through my profile at:
http://www.justanswer.com/profile.aspx?PF=8848811&FID=0