Dividing military retirement benefits in divorce (Part 2: Dividing the pension)

Part 1 of this series explored how to find the necessary documentation, rules and system to divide military pay in a divorce.

This part will briefly detail the process of dividing a military pension in a divorce. Dividing a military pension is tricky and fraught with potential traps. For example, if the servicemember has not yet retired, the court order must state that the servicemembers rights under the Servicemembers Civil Relief Act have been honored.

The military pension is not divided by a "QDRO", as with a civilian retirement plan. Instead, it is divided via a Military Pension Division Order ("MPDO"). This is because a military pension is a statutory retirement program and not a "qualified plan", under the law.

A MPDO does not divide the total retirement benefit. Instead, it divides the Disposable Retired Pay ("DRP") of the servicemember. The DRP consists of the gross retirement pay, minus any VA disability waiver, any premium for the SBP (if coverage is for the spouse at issue) and any other money owed to the US government. A MPDO can only divide the DRP, no matter what the MPDO says.

The military pension is divided by the Defense Finance Accounting System (otherwise knowns as "DFAS"). DFAS is the retired pay center for Army, Navy, Air Force, Marines Corps, Reserve Units and the Army and Air National Guard. The Coast Guard uses a separate system, just to be difficult.

For a pension based on active duty service, there are 4 acceptable methods of division. (1) a fixed dollar amount (2) a percentage (3) a formula clause or (4) a hypothetical award. There are advantages and pitfalls to each process. And some are generally better for the servicemember while some are generally better for the spouse.

A cost-of-living adjustment is usually applied to retired pay in January and is automatically included in the retirement payments made to the spouse, unless the MPDO specifically provides a flat dollar amount. This is another area where a mistake can be costly.

Remember that this is just a brief and general description of the process. You must consult with your attorney to determine the right process, route and language for you. Dividing a military pension is extremely complicated, so it is vital to find an attorney who can conclude the process properly.