Technicalities surrounding division of military pensions can be a technical minefield.
If you or your spouse are currently receiving military retired pay, or will become entitled to receive it at some point in the future, then the question of how to divide that pay can be a significant issue in the divorce. This summary is not an exhaustive explanation of everything you may need to know, but it will touch on the basics to help you get started.
The Military Pension Division Order
Once you enter into a written agreement as to how to divide the retired pay, or a court enters an order dividing it, the next step will be to send what is typically referred to as a Military Pension Division Order to the Defense Finance and Accounting Service (DFAS). The Military Pension Division Order may be a separate order from your divorce order, or your divorce order may have all the information that DFAS needs, making a separate order unnecessary. The Military Pension Division Order is sent to DFAS along with a completed form DD 2293 requesting former spouse payments from retired pay.
Note that for the former spouse to receive “direct pay” of his or her share of retirement benefits from DFAS, the marriage must have lasted at least ten years, with at least ten years of military service by the member taking place during the marriage.
The order will direct DFAS to make payment of a portion of the military retired pay to the “alternate payee” (i.e. the spouse who is not the actual retiree). Typically the order will do this by either directing DFAS to pay a certain percentage of retired pay, or by directing DFAS to pay a specific dollar amount.
In many cases, the alternate payee will get a percentage (often 50%, but it does not necessarily have to be) of the marital share of the retired pay. The marital share is a percentage of the retired pay that is calculated by determining the ratio of creditable military service during the marriage, to creditable military service either before the marriage or after the parties’ date of separation.
The Survivor Benefit Plan (SBP)
Military retired pay ends upon the death of the servicemember, even if the servicemember’s spouse is still alive. To address this, the military offers a Survivor Benefit Plan or SBP.
Generally, the servicemember elects to obtain (or decline) SBP coverage at the time of retirement. There are varying levels of coverage with varying levels of cost. (It is not uncommon for retirement counselors to suggest that retirees purchase life insurance coverage, rather than SBP since the costs associated with SBP can be somewhat significant.)
Some important facts regarding SBP to keep in mind:
If you are married at the time of retirement, the servicemember must obtain his or her spouse’s signature reflecting that the spouse is aware that SBP is being declined.
In cases where divorce is involved, the parties must agree on the SBP coverage available to the alternate beneficiary, or a judge can make the decision.
DFAS must be given notice of the intent to enroll in former spouse coverage within one year. This declaration is made using form DD 2656-1 which is sent to DFAS once completed.
If the former spouse remarries before age 55, then SBP coverage is suspended. If this subsequent marriage ends through divorce or death, SBP coverage can then be resumed.
As long as a former spouse covered under SBP is alive, the servicemember cannot name a new spouse as beneficiary of the SBP unless the former spouse consents in writing.