To protect military spouses in a divorce, they are entitled to some of the service member's retirement benefits under the Uniformed Services Former Spouse's Protection Act. However, a lot of confusion exists regarding what percentage of the retirement a spouse is entitled to. For a former military wife, it may be helpful to sit down with a legal adviser who specialises in military advice, who will calculate the allotment of the retirement pay based on the military service points system.
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While military retirement pay is often termed a "pension," in a pension you have a chunk of money sitting in an account somewhere. In a military retirement, no such account exists. Rather, the retired military member receives pay based on a points system. The retiree then keeps getting paid until he dies.
During a service member's time in the military, he accumulates points for each year worked. At 20 years, the service member has accumulated enough points to receive about 50 per cent of his base pay for the rest of his life if he decides to retire. Generally, after the 20 year marker, he receives more points than the previous years, enabling him to earn up to 75 per cent of his base pay upon retirement. These points are used to calculate the amount of retirement pay a spouse is entitled to upon divorce. The spouse only receives half of the points from the years that she was married to the service member. Therefore, if a service member was married for only five of his 20 years of service, she would receive half of 25 per cent, which is 12.5 per cent of the service member's retirement pay.
Survivor's Benefit Plan
Under the Survivor's Benefit Plan, a spouse or former spouse continues to receive a portion of the service member's retirement pay after the service member has died through an insurance policy that protects the former spouse's flow of income. The premium is subsidised by the Federal government, and deducted straight from the service member's retirement funds; therefore, the payments are not taxable. A service member must complete a DD Form 2656, Data for Payment of Retired Personnel form when he retires. A former spouse may elect former spouse coverage independently by filing the DD Form 2656-10, Survivor Benefit Plan (SBP)/Reserve Component (RC) SBP Request for Deemed Election within one year of the military member's filing of DD Form 2656.
The laws regarding the disbursement of the retirement funds to an ex-spouse vary by state. Either the ex-spouse begins receiving benefits upon the service member's eligibility for retirement at the 20-year mark or when the service member actually retires. It is vital to check with your lawyer to understand the laws in your state.
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