Can a Military Retiree Lose Their Pension?

A military pension is a defined benefit provided to eligible service members upon retirement, offering a consistent monthly income. Military pensions are generally secure, designed to provide economic stability for former service members. While typically reliable, specific, severe circumstances can lead to forfeiture. This article clarifies these conditions.

Circumstances Leading to Forfeiture

Military pension forfeiture is rare, typically occurring only under specific, severe conditions involving convictions for serious offenses against the United States. One primary category involves crimes related to national security. Under 38 U.S. Code § 6104, a person found guilty of mutiny, treason, sabotage, or rendering assistance to an enemy of the United States or its allies will forfeit all accrued or future gratuitous benefits administered by the Secretary. The law specifies that such forfeiture applies to all benefits under laws administered by the Secretary.

Another set of circumstances leading to forfeiture is detailed in 5 U.S. Code § 8312. This statute mandates the forfeiture of federal annuities, including military retired pay, for convictions of certain offenses. These offenses include, but are not limited to, disclosure of classified information, espionage, sabotage, treason, misprision of treason, rebellion or insurrection, and seditious conspiracy. The statute also covers felonies related to the acceptance of bribes or illegal gratuities while holding a federal office.

Pension forfeiture under 5 U.S. Code § 8312 is triggered by a final conviction for these offenses. The conviction must be for a crime committed while the individual was a federal employee, which includes military service members.

Fraud specifically related to the pension or other benefits can also lead to forfeiture. Under 38 U.S. Code § 6103, an individual who knowingly makes or procures a false or fraudulent statement concerning any claim for benefits under laws administered by the Department of Veterans Affairs (VA) shall forfeit all rights, claims, and benefits.

The forfeiture for fraud under 38 U.S. Code § 6103 encompasses all benefits except those relating to insurance. Only convictions directly involving national security, public trust, or fraud against the benefit system itself typically result in pension forfeiture.

Impact on Other Beneficiaries

When a military retiree’s pension is forfeited, it can raise questions about continued financial support for former spouses and other beneficiaries. For former spouses, the Uniformed Services Former Spouses’ Protection Act (USFSPA) allows state courts to treat military retired pay as marital property for divorce settlements. While the retiree’s personal entitlement may be forfeited due to misconduct, a former spouse’s direct payment, if previously ordered by a court, is generally carved out of the retiree’s “disposable retired pay.” Disposable retired pay is the gross retired pay minus certain deductions.

However, the specific impact on a former spouse’s share can depend on the nature of the forfeiture and the wording of the original court order. Some interpretations of the USFSPA suggest that a former spouse’s direct payment may be protected or subject to different rules, particularly if the forfeiture is due to actions occurring after the divorce or unrelated to the former spouse. Forfeiture for severe offenses like treason may be viewed differently than other types of forfeiture, potentially affecting all related benefit streams. The USFSPA does not create a federal right to any portion of military retired pay on behalf of the former spouse but instead recognizes that states may divide it as marital property.

The Survivor Benefit Plan (SBP) provides a separate annuity to eligible survivors, such as spouses and children, after the retiree’s death. Retirees elect SBP coverage and pay premiums from their gross retired pay. The SBP is designed to continue a portion of the military pay to survivors, ensuring financial security.

A retiree’s pension forfeiture due to their post-retirement misconduct generally does not automatically terminate an SBP annuity already in effect for survivors. SBP is typically considered a separate election and benefit, distinct from the retiree’s direct pension payments. The SBP provides a guaranteed monthly income to the surviving spouse for their lifetime. While the retiree loses their income, the separate SBP election is usually protected for the beneficiaries.

Process for Implementing Forfeiture

The process for implementing military pension forfeiture is administrative, initiated once the conditions for forfeiture are met. It involves relevant government agencies responsible for disbursing military retired pay, primarily the Defense Finance and Accounting Service (DFAS) and, in some cases, the Department of Veterans Affairs (VA).

Forfeiture is not an automatic action; it requires official notification and processing. The agency responsible for the pension, such as DFAS, must receive official confirmation of the conviction or qualifying event. This typically involves legal documentation from the civilian court or military court-martial system. The VA, for instance, is notified when a person is indicted or convicted of an offense that could lead to forfeiture of benefits it administers.

Once the conviction is confirmed, the administering agency initiates the process to cease payments. This includes notifying the retiree of the impending cessation of their pension. The agency will process the change in the retiree’s pay records, halting future payments. The forfeiture itself is a direct consequence of the legal conviction.