Military Pensions: How the “Frozen Benefit Rule” Applies in Divorce Cases
Nov 10, 2017 | Written by: | Share
On December 23, 2016, the National Defense Authorization Act (NDAA 2017) was signed into law. This new rule, sometimes referred to as the “Frozen Benefit Rule,” affects the law on military pensions for almost everyone, and also affects equitable distribution of military pensions in divorce cases. This applies to those still serving who divorce after December 23, 2016.
The Act contains a significant change to the formula once used to divide military pensions. States are no longer free to decide how to divide military pay. Instead, Congress created a single, uniform method.
Where pensions were historically divided using a coverture fraction (marital service divided by total service) times the disposable retired pay as of retirement, the Act now “freezes” the benefit as of the date the order is entered. In other words, the share of the former spouse is now frozen as of the date of the divorce, freezing the rank and years of service at that point in time rather than at actual retirement, resulting in a “discount” to the pension holder.
Military pensions are extremely complicated. If you are contemplating a divorce where these issues may be present, make sure your attorney understands the nuance to include these provisions in your negotiations and ultimate settlement agreement. Your attorney should have access to experts and actuaries who specialize in these matters.
Important Tips:
- Generally, the Uniformed Services Former Spouses' Protection Act (USFSPA)[1], 10 U.S.C. 1408, accomplishes two things: 1) it recognizes the right of state courts to distribute military retired pay to a spouse or former spouse (hereafter, the former spouse), and 2) it provides a method of enforcing these orders through the Department of Defense.
- The USFSPA does not automatically entitle a former spouse to a portion of the member's retired pay. A former spouse must have been awarded a portion of a member's military retired pay as property in their final court order.
- Military retirement benefits are not handled the same as private pension plans, which are governed by ERISA (Employee Retirement Income Security Act).
- There must be 10 years of marriage overlapping 10 years of military service for the former spouse to get pension payments directly from the pay center, otherwise you may be reliant upon your former spouse to pay directly upon his/her retirement.
- A Military Court Order may only allow for one survivor to be named. If you are owed support or retirement benefits, it is important to understand how this will work.
If you find yourself in a divorce situation involving military pensions, please feel free to contact me for legal guidance.
Diana Fredericks, Esq., is a partner with Gebhardt & Kiefer, PC and devotes her practice solely to family law matters. She is a Certified Matrimonial Attorney and was named to the NJ Super Lawyers Rising Stars list in the practice of family law by Thomson Reuters in 2015, 2016 and 2017, and to the New Leaders of the Bar list by the New Jersey Law Journal in 2015. Contact Ms. Fredericks for a consultation at 908-735-5161 or via email.
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