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Future Military Retirement Pay In Danger
By Heather Wayman
December 13, 2001

In June 1981, the U.S. Supreme Court ruled in McCarty vs. McCarty that military retirement pay should not be divisible as community property. The Supreme Court Justices asserted and acknowledged that military retainer/retirement pay were different enough from federal and civilian retirement plans and therefore should not be treated the same in divorce situations. However, the Supreme Court did acknowledge that the need existed to help these former spouses and therefore left the door wide open for Congress to enact the Uniformed Services Former Spouse Protection Act (USFSPA). The USFSPA became law (Public Law 97-252) on September 8, 1982 and was made retroactive to June 21, 1981. The retroactive effective date served to nullify the Supreme Court's decision. The USFSPA was not applied just prospectively, therefore allowing tens of thousands of former spouses to return to court and reopen community property settlements many years after divorce.

The USFSPA may have had good intentions as it was originally enacted to keep former spouses from being desolate after a long-term marriage. Not all states had alimony laws in place at the time and this was designed as a protection, hence the name "Former Spouse Protection Act". At that time, many spouses did not work outside the home and were not formally educated to enable them to support themselves. However, times have changed drastically and women now make up a significant percentage of the workforce. Also, military bases are located near many institutions of higher learning therefore, enabling even military spouses to become educated. Retirement accounts are now portable allowing spouses to accrue retirement benefits and transfer them to another employer when necessary.

To date, every state in the union has child support and alimony/spousal support available as a means of support. Military members are subject to those laws. The USFSPA is a unique set of laws that only apply to the Uniformed Services. If military retainer/retirement pay is so similar to civilian retirement accounts, why is it necessary to have a USFSPA to divide them? The answer is, the two are not the same and the USFSPA should be repealed.

Civilian retirement accounts differ widely from military retirement benefits in that there are no monetary assets contributed (marital or otherwise), no employer matching funds, and the benefit has no readily ascertainable value to divide at any given time even after retirement. Military retainer/retirement is reduced pay for reduced services. This benefit is earned solely by the efforts of the military member and the member's 20 or more years of service to the government. When it is divided, very often the most commonly used formula awards much more than just half of the marital share to the former spouse. This is not in keeping with community property laws of any state. Personal case in point follows:

I am the second wife of a Marine Lieutenant Colonel. My husband was married to his first wife for two years before joining the U.S. Marine Corps. After 8 years of service, he was presented with divorce papers. They were married a total of 10 years. During the marriage his former spouse earned a Master's Degree and has since earned a Ph.D., is gainfully employed working on her own retirement and remarried. Marital assets were evenly divided upon their divorce EXCEPT his FUTURE retainer/retirement pay. Keep in mind that at the time of his divorce he still had an additional 12 years of service left to reach retainer/retirement eligibility. If he left the service one day prior to 20 years, there would be no retainer/retirement to divide. So, in effect, the court divided something that wasn't in existence, had no monetary value, and wasn't built with any marital funds (and still isn't as my husband must serve 3 1/2 more years before becoming eligible at 20 years of service).

Although the division of something that my husband earned solely with his own efforts and work is distasteful to say the least, one of the most egregious issues of the USFSPA is the formula that is commonly used to calculate the award to the former spouse. This formula gives his former spouse a division of his ENTIRE 20+year career. His former spouse was awarded a percentage of his retainer/retirement pay based on the rank he will have achieved by the time of retirement. This award includes all of the promotions earned and years served AFTER his divorce, not just what he earned during the marriage. Accordingly, the community property state did not end at the time of the divorce with regard to my husband's military retainer/retirement pay.

The Department of Defense recently finished a report that was ordered by Congress to be completed and presented by September 30, 1999. This report was finally completed in June of this year, almost 3 years late. It's non-completion is the reason many Congresspersons and Senators refused to visit previous bills before them to reform the USFSPA. Now the report is available to Congress and even before the events of September 11th, no one wanted to touch this hot potato. It seems that it's too politically risky to do the right thing and has garnered only lip service from legislators. Now Congress is sending troops into harm's way to defend our freedom. What kind of welcome will they get when they return? Will their spouses be waiting for them with divorce papers at which time our government will allow state judges to continue to commit legal larceny under the guise of the USFSPA?

The DoD references in their report the division of pay based on rank at divorce vs. rank at retirement. The report states "This treatment of military retired pay is inconsistent with the treatment of other marital assets in divorce proceedings - only those assets that exist at the time of divorce or separation are subject to division. Assets that are earned after a divorce are the sole property of the party who earned them." However, the report goes on to recommend to Congress that changes be made only on a "prospective basis" meaning that only future divorces would benefit from these changes, not those already affected by this unjust law. This would create yet another class of veterans being discriminated against. These former spouses have already reaped the benefits of higher payments for years in some cases. Some have not begun to receive payments as in my husband's case and the pay could simply be re-calculated at the rank he was at the time the divorce occurred.

Another terribly egregious aspect of the USFSPA is this law creates a form of permanent alimony that continues for the life of the former spouse, even after remarriage. No other federal retirement plan continues payments to a former spouse upon their remarriage. In addition, many state courts are ordering that the military member designate the former spouse as the beneficiary through the Survivor Benefit Plan so that they will continue to receive payments after the member dies. Since only one beneficiary can be named, this leaves the member's current spouse unprotected and unable to receive that benefit. When a former spouse dies, the payments revert back to the retiree who earned it until the retiree dies. At that point, the benefit payments cease altogether. If it were property, it could be passed on to future generations.

With a defined value account, when the money is completely distributed, that's it, it's over. However, with military retainer/retirement pay, like the Energizer Bunny, the veteran keeps paying and paying and paying.

I challenge Congress to treat our country's military members and retirees with the dignity and respect they deserve. There is far more honor in doing what is right than doing only what is good for one's political aspirations. Congress should repeal this antiquated law now!

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