I have previously written articles and blogged on the issue of how a former spouse’s portion of a pension is calculated, and in particular, how a military retirement differs from other, civilian retirement vehicles.
Most defined benefit plans are divided based upon a “coverture fraction” which takes into account the number of years during employment that the working spouse is married. This has always been the best available way to calculate the former spouse’s share. However, while most pensions are (as a general rule) calculated based upon an average of the worker’s last three years of salary. A military retirement is calculated with far more specificity, utilizing a “points” based system, which take into account factors such as rank, days if service and whether a member was an active duty member or a reservist ( or a combination thereof). It may be therefore, possible to more accurately calculate a former spouse’s entitlement to the military employee’s retirement. Indeed, several states have adopted a view which calculates the amount using a “points based system.”
Recently, the New Jersey Appellate Division decided the case of Leins v. Leins, which acknowledges that there are differences in members who are retiring from active duty and those who are retiring from reservist duty, as the Defense Finance and Accounting Service calculates those retirements differently.
The calculation of a former spouse’s entitlement to a defined benefit plan is often, but not always, a simple calculation. It is critical to make sure that, while a divorce action is pending, all plan documents are obtained and reviewed in order to protect both the pensioned and non-pensioned spouse, and to avoid litigation later.