1 / 44

Military Pension Division

Military Pension Division. Kaitlin S. Kober Sullivan & Tanner, PA Raleigh, NC. Covering the Basics . Uniformed Services Former Spouse’s Protection Act – 10 U.S.C. § 1408 A state may only exercise jurisdiction over a servicemember’s pension rights if:

melvind
Download Presentation

Military Pension Division

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Military Pension Division Kaitlin S. Kober Sullivan & Tanner, PA Raleigh, NC

  2. Covering the Basics • Uniformed Services Former Spouse’s Protection Act – 10 U.S.C. § 1408 • A state may only exercise jurisdiction over a servicemember’s pension rights if: • That state is his or her domicile, OR • The SM consents to the exercise of the jurisdiction, OR • The SM resides there (for reasons other than military assignment in that state or territory)

  3. The Military Pension • Active Duty Pension: 20 years of creditable service • Pension = (high-3) x (2.5%)(years of service) • Ex: John Doe is an E-7 and has a total of 21 creditable years. He retires in 2016 and his “high-3” (retired pay base) is $4,423.80. John’s retired pay multiplier is 21 years of service x 2.5% = 52.5%. This means that he would receive retired pay based on 52.5% of his high three basic pay, or $2,322.50 per month. • Payments begin immediately • Reserve Pension: 20 “satisfactory years” (>50 points) • Pension = (high-3) x (2.5%) • Ex: Roberta Roe is an E-7 and has a total of 21 satisfactory years. She retires in 2016 and her “high-3” is $4,423.80 for her retired pay base. Roberta earned 1,365 retirement points. Her points divided by 360 equals 3.79 – this is the equivalent of active-duty time. Roberta’s retired pay multiplier is 3.79 years of service x 2.5% = 9.475%. This means she would receive retired pay based on 9.475% of her high 3 basic pay, or $419.16 per month. • Payments delayed until age 60

  4. 10/10 Rule 10/10 RULE: 10 YEARS OF MARRIAGE OVERLAPPING 10 YEARS OF MILITARY SERVICE DIRECT PAYMENTS

  5. *Fixed Dollar Amount *Formula Clause *Percentage *Hypothetical Four Ways to Divide Pension

  6. Three New Developments

  7. Frozen Benefit Rule December 23, 2016

  8. Sec. 641, Nat. Defense Aut. Act 2017

  9. Frozen Benefit Rule • Benefit to be divided is frozen • As of date of divorce • Ret’d pay centers locked into that Disposable Retired Pay • As if SM retired then

  10. Frozen Benefit Rule Data required for MPDO – • HI-3 as of date of divorce • Also years of service [or, for Guard/Reserve members, # of retirement points] at divorce

  11. High-3 • The “high-3” is highest average basic pay earned during any 3 consecutive years (36 months) of service. • Issues with getting data from the pay center.

  12. Total Retirement Points • Annual retirement points statement • Secure portal at Guard/Reserves HQ • Use of discovery • Release/Court order

  13. Frozen Benefit Rule • Applies – • when divorce is filed after 12/23/16 & • and member not yet getting ret’d pay • Regardless of agreement of parties otherwise • Big reduction in share of FS

  14. 10 years of marriage, div. at 20-yr. mark, ret. at 30 yrs TIME RULE: “Final ret’d pay” ($6,000), marital share ($2,000), FS share $1,000) FROZ. BENEFIT: Hypo ret’d pay ($2,000), marital share ($1,000), FS share $500)

  15. Restoring the Balance for the FS • Alimony consent order • Alimony supplement • TIME RULE – still available? Use it, with order for indemnification“John Doe is responsible for any shortfall”

  16. Restoring the Balance for the FS • Fixed percentage (since ‘fixed amount’)?? • Present value set-off • Unequal division of property • Continuing conundrums

  17. “Frozen Benefit Rule” RESOURCES • DFAS: Revised rule June ‘17, DODFMR, Vol. 7b, Ch. 29; Sample Order • Silent Partner: “Fixing the Frozen Benefit Rule” and “All Clauses Considered: Writing the Frozen Benefit Award” • www.nclamp.gov > For Lawyers > Add’l Resources)

  18. Indemnification May 15, 2017

  19. HOWELL V. HOWELLU.S. SUPREME COURT137 S.Ct. 1400 (2017) • Issue = indemnification for “VA waiver” • VA waiver: • When retiree elects VA disability compensation • for svc-connected wound, illness, injury or condition…

  20. HOWELL V. HOWELLU.S. SUPREME COURT137 S.Ct. 1400 (2017) • Issue = indemnification for “VA waiver” • VA waiver: • When retiree elects VA disability comp. • for svc-connected wound, illness, injury or condition • Dollar-for-dollar waiver of ret’d pay IF… • VA rating < 50%, or • Receiving CRSC [Combat-Related Special Compensation]

  21. VA Waiver means… • Share of the F.S. is also reduced • Without court approval • Without consent of the F.S.

  22. Before Any Waiver . . . 50 – 50 Division $2,000 $1,000 $1,000 W H

  23. VA Waiver means . . . Tax-Free VA Dis. Compensation 50 – 50 Division With 40% VA Rating $2,000 $2,000 $1,000 $1,000 $700 $700 $600 W H H H W

  24. Howell - Facts • 1991 – divorce in AZ, 50-50 pens. division • 1992 – H retired fm USAF • 13 yrs later, diagnosis of VA disability • 20% rating = $250/mo • Military pension = $1,500/mo • Reduction for ex-W = $125/mo

  25. Howell - Facts • Ex-W moved for enforcement • Judge ordered indemnification • Upheld in AZ Ct. of App., Supreme Ct. • Reversed by US Supreme Court

  26. Howell - Ruling & Rationale • USFSPA [Uniformed Services Former Spouses’ Protection Act]* exempted VA disability comp. from division • Mansell case** barred div’n of waived military ret. pay as marital property upon divorce • This case involves, in effect, div’n of waived mil. ret. pay = INDEMNIFICATION BARRED *10 U.S.C. 1408 **U.S. Sup. Ct. 1989

  27. Howell – Return to the Facts • No contractual indem. clause • No prior court order for indemnification

  28. REMEDIES FOR THE F.S. • Agreement to indemnify • Insert in the settlement: “If H does anything which reduces W’s share or amt. of the military pension, he will promptly indemnify her as to any losses she suffers in consequence thereof.” • Indemnification allowed: by contract

  29. REMEDIES FOR THE F.S. • If prior S/A or MSA [incorporated into div. decree] w/ indem. clause - OR - • If prior order w/ “indemnify provision” • AND no appeal - • Indemnification allowed: by res judicata

  30. Alternatives for the Judge • Justice Breyer’s thoughts – ??

  31. Alternatives for the Judge • Justice Breyer’s thoughts – • “Take possibility of reduced ret. pay into acct. in valuing the property” • What does this mean? • HOW do you calculate the chance of later VA election when John Doe is still on active duty? • Or retired but 13 yrs away from getting VA rating?

  32. Alternatives for the Judge • Justice Breyer’s thoughts – • “Well, there’s always alimony…” • Since when is alimony the re-work shop for property division? • What is the spouse waived alimony? Or is not eligible for it due to her own income? • Can the court award thru spousal support the amount of pension share that the FS has been shorted?

  33. Alternatives [cont’d] • Present value setoff – John gets the pension, Jane gets the house! • Unequal div’n of property to acct. for award to F.S. of “unstable asset” • Re-open the property division (if VA dis. comp. taken after init.div’n)? • Reservation of alimony ??

  34. Blended Retirement System January 1, 2018

  35. Blended Retirement System • 2016 NDAA • January 1, 2018 Start Date • Military Compensation and Retirement Modernization Commission (MCRMC)

  36. Defining the Benefit • At Present – All or Nothing • Defined Benefit Plan v. Defined Contribution Plan

  37. Defining the Benefit ACTIVE DUTY: Constant x years of service x HI-3 2.5% x years of service x HI-3 2.5% x 20 x $4,000 = $2,000/mo. GUARD/RESERVE: # points ÷ 360 = equiv. yrs. of svc Rest of equation is same as above

  38. On Dec 31, 2017… Not in Service < 12 Years ≥ 12 Years

  39. On Dec 31, 2017… Not in Service < 12 Years ≥ 12 Years OLD PLAN or NEW PLAN OLD PLAN – No Choice!!!! NEW PLAN – No Choice!!!! BUT WAIT! THERE’S MORE!

  40. 4 POINTS 4 ALL - Newbies & Opt-Ins… Enhanced Thrift Savings Plan (TSP) Reduced defined benefit plan Mid-career incentive bonus (or continuation pay) Option to receive immediate partial lump sum payment against the defined benefit upon retirement.

  41. An enhanced TSP… Now 2018 • SM can open a TSP • Uncle Sam contributes nothing • TSP belongs to SM • TSP will be “issued” to SM. • Uncle Sam contributes 1% (after 60 days) • Uncle Sam matches up to 3% (after 2 years) • Uncle Sam matches ½ from 3 – 5%. • TSP belongs to SM after 2 years of service.

  42. A reduced defined benefit plan 0.025 x total years x “HI-3 base pay” 0.020 x total years x “HI-3 base pay”

  43. Mid-Career Bonus [“Continuation Pay”] X 2.5% of base pay = minimum X up to 13% = maximum

  44. Advance on Ret’d Pay One-half One-quarter 25% lump or 50% lump Reduced retirement Full retirement restored at age 67

More Related