Jump to Navigation
Jump to Content

Military pensions and divorce: How a bill pending in Oklahoma could affect military pensions everywhere

Earlier this month, the Pension Rights Center, along with the National Women's Law Center, sent a letter to the Oklahoma state legislature urging it to defeat a bill that could dramatically alter the way the state's divorce courts treat military pensions. 

The Oklahoma state legislature is considering legislation that would change state law and affect the ability of former military spouses to receive military retirement pay.  Currently Oklahoma law and that of virtually every other state treats military pensions as a marital asset when service members divorce, meaning that the portion of the pension earned during the marriage may be divided equitably between the two parties. 

In what would be a far-reaching change, H.B. 1053 would require Oklahoma divorce courts to consider seven factors before determining whether and how to divide a military pension in divorce.  These factors include the ability of the former spouse to support him- or herself; education and experience that the former spouse received during marriage; any "nonconformity to the military lifestyle" on the part of the former spouse; and whether or not the service member saw combat.

Using value judgments to determine how a pension should be divided is unprecedented in the modern era of no-fault divorce.  A marital asset is earned throughout the course of a marriage.  It should not be subject to confiscation or reduction due to other factors.  Just as couples no longer have to prove one party is at fault in order to get a divorce, the division of marital assets should be a matter of mutual agreement (or, in the absence of agreement, a court order) and not used to "punish" one party or the other.

The legislation would also require that benefits stop if the former spouse remarries.

As we wrote in our letter,

...this proposal could have a devastating impact upon the retirement security of military spouses, many of whom have difficulty working outside the home because military families are subject to frequent relocations, including outside the United States, or because spouses of deployed military personnel are required to fulfill the family and care-giving responsibilities that would otherwise have been shared between the spouses.

This unwarranted upheaval of Oklahoma law would not only be inequitable, run contrary to the law and public policy of the rest of the states, and have a tremendous and detrimental impact upon the retirement security of former military spouses, but could also transform Oklahoma into a divorce haven for military members seeking to deprive their spouses of what would be deemed marital property anywhere else.

In the past, similar legislation has been introduced on the federal level in the United States Congress.  Fortunately, those attempts went nowhere.  However, the passage of the Oklahoma bill would set a dangerous precedent that its supporters will no doubt try to spread to other states. 

To learn more about H.B. 1053, read the letter we sent to the Oklahoma state legislature. 

Learn more about the Women's Pension Project and issues affecting the women's retirement security of women.

Comments

If the IRS considers military retired pay as current wages, then why are military retirees issued a 1099-R every year and not a W-2? I don't have any ex-spouse issues, but recently had a civil judgment creditor pull this "current wage" stuff in efforts to garnish my retired pay. The judge agreed with my 1099-R argument. You can spin it however you choose, for all intents, retired pay is an entitlement. It more closely resemble Social Security than it does pensions. It's a stretch to call it current pay. I don't think any retirees have been recalled to active duty since perhaps World War II. As far as jail time goes, I think even in a high profile case like Duke Cunningham, it was questionable if they could strip him of his Navy retired pay. Likely this provision would be evoked only if convicted of treason.

Bottom line. Most courts treat military retired pay as pensions. To do otherwise, would created anti-alienation issues in debt collection and bankruptcy cases. As is now, only the ex-spouse and debts owed to the government can attach to military retired pay.

Good point Rob. It took me a couple of months to find work after I retired from the Navy. During that time I applied for unemployment as an interim until I landed full time employment. Guess what... Oklahoma considers military retired/retainer pay INCOME. Unemployment benifits were denied even though other sailors who left the service without retiring were entitled to unemployment benifits.

Thank you Bruce and Frank for your insight. I've been locomotive engineer since 2006 after 21 years in the Air Force and have been laid off since Jan 2009. If our retirement wasn't consider retirement pay/reduced rate or as compensation as opposed to an asset or property like the editor states then I would be entitled to unemployment. Since it is considered income, I'm not entitled to anything even though I'm doing the same job, paying the same payroll taxes and union dues as my coworkers who are all getting unemployment.

Another perspective
=
U.S. Article VI enforcing 38 USC 5301
=
The law which you consider supreme over any other in enforcing 38 USC 5301? “…and shall not be liable to attachments, levy, or service by or under any legal or equitable process whatever, either before or after receipt by the beneficiary.”
=
How for decades the Veterans Administration, in processing State court orders, administratively garnish a veterans’ disability compensation as alimony. In doing so, refer to VA guidelines that supersede and override the linchpin of the Constitution, “The Supremacy Clause, Article VI of the United States Constitution. “This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.”
=
Yes, this you know. However! The key word here is, “notwithstanding” which means, in spite of, despite. “[N]otwithstanding” also appears where State courts go to direct the VA by court order, the consent to enforcement and justify the taking of your, as well as thousands upon thousands veterans’ disability compensation as alimony awards. Using that exact same word, and then reference 5301 in order to make it quite clear any such waiver is not possible. “Notwithstanding” is found in Title 42 USC 659. “Consent by the United States to income withholding, garnishment, and similar proceedings for enforcement of child support and alimony obligations.”
=
Enforcement of 42 USC 659 is also embedded in 10 USC 1408. “Nothwitstanding any other provision of law.. payable by the Secretary…under all court orders pursuant to this section and all legal processes pursuant to section …42 USC 659.”
=
Briefly; 42 USC 659(a) Consent to enforcement.
Nothwithstanding any other provision of law (including section 407 of this title and section 5301 of title 38)…moneys.. due from, or payable by, the United States…to any individual, including members of the Armed Forces of the United States, shall be subject…to withholding in accordance with State law…to enforce the legal obligation of the individual to provide child support or alimony.”
=
(h)(V) By the Secretary of Veterans Affairs as compensation for a service-connected disability paid by the Secretary to a former member of the Armed Forces who is receipt of retired or retainer pay if the former member has waived a portion of the retired or retainer pay in order to receive such compensation.”
=
I went to a law professor looking for an answer to this question. I asked, I think I know the answer, however, I cannot pinpoint it to any particular reference of law other than the Supremacy Clause of Article VI of the United States Constitution. I would like your opinion on the Article VI “notwithstanding” and the use of “Notwithstanding in any other provision of law ” found elsewhere in the United States Code.”. I would think Article VI prevails, would you agree? He replied, “Yes, the US Constitution always trumps any other form of law. “
=
Here, your question is, or should be, which is it going to be enforcing 38 USC 5301? Either the United States Constitution Article VI “notwithstanding” , 42 USC 659 administrative law “notwithstanding” or 10 USC 1408 “notwithstanding“? Here… there is the legal certainty. Which is it going to be?

In comment to the Editor's note to Frank's Oct 3rd, 10:04 AM posting - Please notice in the GAO report - and your own words - military retired pay is not called a "military pension" - because there is no such aminal ! For a clearer explanation of why mil ret pay isn't a traditional pension, please visit www.ulsg.org and click on the link, "Did you know...MRP is NOT a pension?" - There 18 True/False statements solidly proving that mrp is reduced pay for reduced service!

Title 10, USC 1408 states
(2) Notwithstanding any other provision of law, this section does not create any right, title, or interest which can be sold, assigned, transferred, or otherwise disposed of (including by inheritance) by a spouse or former spouse.
So how does Military retired pay even pass the test of property? Property can be sold,traded,inherited. Payments stop to the former spouse when they die and revert back to the retired service member. If the retired service member dies, all payments stop to the former spouse. The former spouse cannot "will" the payments to their new spouse or anyone else. It's not property.
Regarding the retroactive changes to 1981, current Oklahoma law allows former spouses to collect retroactive military retired payments back to 1981. This has literally destroyed veterans by forcing them into bankruptcy as a result of current legistlation. HB 1053 would retroactively TERMINATE payments to a REMARRIED former spouses. Not entitle a veteran to collect retroactive payments. Can you see the fairness in HB 1053 ? Another provision with this bill would be to protect VA Disability compensation from garnishment as mandated by Federal Statute. To many veterans have had their VA Disability awarded to former spouses in violation of federal law. Why should an attorney and former spouse profit off the lifelong injuries of a veteran? Why should a REMARRIED former spouse be supported for life by the veteran? The CIA, FSA and Social Security terminate payments to a REMARRIED former spouse, even Oklahoma state employees to include Legislators and Judges are allowed to terminate payments to a REMARRIED former spouse thru OPERS. So what gives? Military members are held to obligations and restrictions to recieve retired pay. Why not the former spouses? HB 1053 is fair and equitable for both parties.

Editor's response:
You ask why retired military retired pay is considered property. As you point out, retired military pay cannot be sold or passed down in a will like most property. Pensions are a unique form of property in that they are specifically designed to provide for the retirement of the worker and his or her spouse. As such, pensions have limits on how long they pay out and to whom benefits are paid. Both private and federal defined benefit pensions, including retired military pay, cannot be sold or passed down in a will. Instead, these pensions pay a lifetime benefit to the worker and his or her surviving spouse or surviving former spouse.

Comment # 4 - (M.W.C.) - Your 1st paragraph makes a statement that should have been researched before posting it - "........which is the same bill that has been lobbed into the US Congress annually since 1982......" - If you "did your homework", you'd see that there has NEVER been a "annual" submission of "the same" bill - there have been various bills submitted, some back-to-back, but not with the "same" words.

If both "sides" would prefer to learn from an intelligent, thoroughly researched resource, please visit - www.americanretirees.org - and order the book "Divorce and the Military" shown on that website's homepage. After you've read the whole book and understand its contents, you are welcome to express your thoughts.

I would have to agree with Bruce and pose the questions:

Why is it required for one party (military Retiree) to be held accountable to restrictions and legal obligations I.E. recall, UCMJ, employment restrictions, criminal activity/ abuse, Citizenship to recieve Retired pay? Why is NOT required for a non-military former spouse to be held accountable for the same restrictions and legal obligations? Is this equitable and just? Isn't this a form of discrimination?

The editor mentioned that "any length of service short of 20 years results in a forfeiture of benefits." Why is a former spouse eligble for lifetime benefits for LESS than 20 years? Is this equitable and just? Why are former spouses exempt?

I beg to differ about "private employer sponsored defined benefit pensions are generally not “portable” and are designed to reward long term employees".

Fidelity, Charles Schwab,CSRS,FERS,Firefighters, Law Enforcement just to name a few that allow a cash out option or rollover with a new employer. The point, Military Retired pay is not a pension plan. There is no rollover or cash out option. It does not accrue. It can not be sold,traded,disposed of ,passed on as an inheritence. It is reduced current pay for reduced current service subject to restrictions and obligations of the Military member..not the former spouse.

Congress passed bad legislation (USFSPA) as a rider of a another bill in the early morning hours and Reagan signed the bill 2 years later making it retroactive back to June 25 1981...One day previous to the USSC decision of McCarty. Hows that for legislative alchemy.

Article I, Section 9, Clause 8, of the United States Constitution prohibits any person holding any Office of Profit or Trust under the United States from accepting any present, office or title, of any kind whatsoever, from a foreign government without the consent of Congress. Because you retain status as a service member , thus continuing to hold an office of trust, this constitutional prohibition applies to only the military member. As a result, the comptroller General has permitted DFAS to withhold retirement pay in an amount equal to the payments received from a foreign government if the member accepts employment from that foreign government without the consent of Congress . The logic of this restriction clearly demonstrates the need of the service member to fulfill continued requirements in order to receive payment. Ironically, no such requirement of continued service exists for former spouses receiving pay as division of property in a divorce decree. This begs the question as to how, under the law, military retirement pay can be considered equitably distributable asset or community property. The point is it is not earned during the marriage it is reduced pay for a continued obligation to serve. When you remove the obligations, then you would only have to overcome the inequity of combat service to convince me that it is a noncontributory defined benefit plan. As it is now it appears only one party is continuing to contribute for life. Also, if you can find the words pension or defined benefit plan anywhere in the USFSPA I will agree with you. If it is a defined benefit plan why has congress failed to use that language. Also, I think military retired pay is a Federal entitlement not a benefit.

United States vs Tyler, 105 U.S. 244 (1882). The Tyler court characterized such pay as Compensation..which continued at a reduced rate.

The United States Supreme Court -- McCarty vs McCarty 1981. The military retirement system confers no entitlement to retirement pay upon the retired members spouse, and does not embody even a limited community property concept.

.The I.R.S. Code 26 C.F.R. S 31. 3401 (a)1(b) (1) (ii) states that military retired pay is a Current Wage..

Costello vs. United States, Constitutional law 278.6 (1), Military retirement pay is not deferred compensation for past services but , like active duty pay, is pay for continuing military service and as such, can be prospectively altered without offending due process. U.S. C. A. Cont . Amend. 5.2

Lemly vs. United States (1948 )... Retirement pay is a continuation of active pay on a reduced basis. Even though an officer is retired from active duty and is receiving retirement pay, he is still subject to call to active duty as long as his physical condition will permit. He is still an officer in the services of his country even though on the retired list.

Did someone say "As for supporters of the bill, no reputable legal scholar or organization supports the dreadful bill'.?

If I was in the military for 18 years how would I go about transferring that deferred comp in that "funded, noncontributory defined benefit plan" to my current plan at IBM.? What about all my friends who were married and died on active duty, how will their widows get their “noncontributory defined benefit plan" What about my divorced active duty friends who died on active duty and who's X-spouse remarried and lost their SBP option. How do they then get that noncontributory defined benefit plan you spoke of. Give me a break. One party is subject to continued service and one is not. Call it what it is "Current Wages" and award it as alimony.

Editor’s Comment:

Bruce,
You ask if you can transfer your 18 years of military service to your current plan with IBM. Unfortunately you will not be able to make such a transfer. First of all, the military retirement system has the longest vesting requirement of federal, state, or private pensions. It requires someone to serve for 20 years in order to earn a benefit and any length of service short of 20 years results in a forfeiture of benefits. Secondly, military retirement benefits as well as private employer sponsored defined benefit pensions are generally not “portable” and are designed to reward long term employees. Therefore, your work with your new employer will allow you to start accruing new benefits, but you will be unable to combine benefits earned from prior employment. Finally as an employee of IBM you are probably already aware that effective January 1, 2008 IBM froze its defined benefit pension plan. To find out other companies that have frozen their defined benefit pension plans, see Pension Rights Center's list.

In addition, the Supreme Court case McCarty v. McCarty (mentioned in your comment above) ruled that military retirement pay could not be divided at divorce. Since the ruling, Congress passed the Uniformed Services Former Spouses’ Protection Act which changed the law governing military retirement pay and said that military retirement pay could be divided at divorce. Regardless of how you wish to characterize military retirement pay, the law states that it is a benefit that if earned during a marriage is divisible at divorce just as a private pension benefit earned during a marriage is divisible at divorce.

It is the soldier, not the reporter,
who has given us freedom of the press.

It is the soldier, not the poet,
who has given us freedom of speech.

It is the soldier, not the campus organizer,
who has given us the freedom to demonstrate.

It is the soldier, not the lawyer,
who has given us the right to a fair trial.

It is the soldier,
who salutes the flag,
who serves under the flag,
and whose coffin is draped by the flag,
who allows the protester to burn the flag.

By Father Dennis Edward O'Brien, USMC

Prior to the enactment of USFSPA (at the behest of then-Rep. Patricia Schroeder), the Supreme Court of the United States had ruled that military retirement was not considered a pension and was therefore not subject to division in divorce. This bad law needs to be overturned, but like any flawed federal statute (or program), once enacted it becomes difficult to correct. Lawmakers in Oklahoma have shown courage in examining this matter with a view toward correcting inequity.

Thank you Pension Rights Center for shedding a valuable perspective on the dreadful special interest bill in the Oklahoma legislature, which is just the same bill that has been lobbed into the U.S. Congress annually since 1982 and has been rejected over and over again.

The list of reputable legal scholars and organizations who object (or have objected in the past) to provisions in the bill continues to get longer: The Oklahoma Bar Association Family Law Section, the American Bar Association, the American Academy of Matrimonial Lawyers, the U.S. Congress, the U.S. Department of Defense, and now the Pension Rights Center and the National Women's Law Center.

As for supporters of the bill, no reputable legal scholar or organization supports the dreadful bill. Just a small subset of divorced military service members who either do not, or do not want to, understand that in the year 2009, every occupation in the nation has both parties' retirements divided as marital property upon divorce. A bill that would preferential treatment to just one occupation in the nation is a very bad idea. Preferential treatment to any small class of persons on any issue is a very bad idea and is indefensible.

Keep up your good work for fairness and equality! It is so incredibly important that organizations with valuable expertise such as the Pension Rights Center exist.

It is also extremely important that the values and principles upon which our country prides itself are not made a mockery just to appease a small class of divorced service members seeking preferential treatment through any state's legislature.

Reference your "Editor's Note" to my previous posting:

Your info about military retirement benefits being paid for the life of any surviving spouse of a deceased military retiree is INcorrect with ONE Exception - IF the retiree subscribed to the Survivor's Benefit Plan (SBP) at a deducted (enormous ! ) cost from their retired pay with about a 55 % return on their retired pay amount to thier surviving spouse. Please check your facts before you print them !

Pension Rights Center response:
Members of the military who are married are automatically signed up for the Survivor’s Benefit Plan (SBP). A military member may only waive the SBP with consent from his or her spouse. Therefore, the SBP is the default form of benefit for members with spouses. To learn more about the benefits provided by the SBP as well as the costs associated with covering two individuals with annuities for their lifetimes, read Your Guide to Survivor Benefits published by the Defense Finance and Accounting Service (DFAS) in March 2009.

I'm not really sure if the Retired Military Almanac is endorsed or an official publication that clearly states information from Congress, DOD, US Comptroller, DFAS, IRS or other goverment agencies pertaining to Military retired pay. Is there an instruction,regulation or statute that supports the information on page 7 of the Almanac? I'm pretty sure there is no fund set aside for retirees and surviving spouses for life.

It is clear, state judges are violating the Law of the Land when they make such rulings. A point requiring interpretation and a clear understanding is the erroneous statement that a military retirement/retainer entitlement is a ?pension.? The USFSPA lists military retirement/retainer pay 65 times and the word pension, zero (0). Supporting the official government contention that military retirement/retainer pay is not a pension is also found in the Department of Defense Report to Congress in September 2001, Page 71. It reads, ?The military retirement system, however, is unlike any private sector retirement plan. The member makes no contribution to the plan, the member has no vested interest in the plan until he or she becomes eligible to retire, and even after becoming eligible to retire, the member can be divested of retired pay through punitive action based upon the member?s misconduct. Even after retiring, the member can be recalled to active duty, can forfeit retired pay because of misconduct, and face certain post retirement employment restrictions.

To receive retirement pay a retired military member must abide by the Uniform Code of Military Justice (UCMJ). A retiree can lose the pay if he / she, 1) refuses recall to active duty, 2) is incarcerated for a certain period of time, 3) renounces US citizenship and (4) becomes a citizen of another country.

The former spouse is not morally or legally obligated to any of these conditions.

Defense Finance Accounting Service, Garnishment Instructions of Retired Pay for Attorneys, Page 3
"Since military retired pay is a Federal entitlement, and not a qualified pension plan,
there is no requirement that a Qualified Domestic Relations Order (QDRO) be used."

Editor's Note: Thank you for your comment. To answer your question, Public Law 98-94, which was passed by Congress and signed by the President, required that the Military Retirement System be funded with plan assets held in a trust. Here you may view a GAO report summarizing features of the federal pension systems. On page 12 of the report (page 33 of the PDF) you will see that the GAO describes the military retirement system as a, “funded, noncontributory defined benefit plan.” On page 14 of the report (page 35 of the PDF) you will see an explanation about how the plan is funded.

Your stance would be correct - IF - military retired PAY was a TRUE "pension" - BUT military retired PAY is NOT a traditional "pension"; therefore your stance doesn't hold a drop of water! It is reduced income for reduced service. There is no tangible "fund" with the retirees name on it that can be completely withdrawn at any time. It just doesn't exist without Congress legislating it in the Defense budget every year. It stops when the retiree deceases (why would an employer continue to pay a dead person?) Please understand that the retiree is still on (reduced) duty after they have completed the minimum 20 years and are released from continuing to show up for their military duty every day. Does this help to confirm that military retired pay is NOT a "pension" ?

Editor’s note:

Thank you for your comment. According to the Retired Military Almanac, the military retirement system is “a funded, noncontributory defined benefit plan.” (2009 Retired Military Almanac, Ronald S. Hunter, 32nd edition, p. 7). Like other defined benefit pension plans, military pay is funded by the employer, the assets are held in a trust fund, and the benefits are paid out over the life of the employee (military member) and for the life of any surviving spouse. Also, like other pensions, employees are not required to contribute to the plan in order to earn benefits, and funds generally cannot be withdrawn for non-retirement purposes.

Post new comment

The content of this field is kept private and will not be shown publicly.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Allowed HTML tags: <a> <em> <strong> <cite> <code> <ul> <ol> <li> <dl> <dt> <dd>
  • Lines and paragraphs break automatically.
print