B-202507, APR 22, 1981

B-202507: Apr 22, 1981

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

HOUSE OF REPRESENTATIVES: REFERENCE IS MADE TO YOUR LETTER DATED MARCH 9. ONE OF THE ISSUES RAISED IN THOSE PROCEEDINGS IS WHETHER MONTHLY RETAINER PAY OF A MEMBER OF THE FLEET MARINE CORPS RESERVE IS SUBJECT TO EQUITABLE DISTRIBUTION UNDER NEW JERSEY LAW AS IS THE CASE WITH MILITARY RETIRED PAY. IT APPEARS THAT THE TERM "PENSION" AS USED THEREIN WAS INTENDED TO INCLUDE MILITARY RETIRED PAY. THE DISTINCTION BETWEEN "RETIRED PAY" AND "PENSION" UNDER FEDERAL LAW IS DEMONSTRATED IN THE CASE OF LEMLY V. THE COURT WENT ON TO SAY: "WHEN A PERSON IS PENSIONED 'OFF' BY THE GOVERNMENT. HE IS ACTUALLY ALL THROUGH SERVING THE GOVERNMENT AND YET HE RECEIVES HIS PENSION AS LONG AS HE LIVES.". IS STILL A MEMBER OF THE SERVICE FROM WHICH RETIRED AND SUBJECT TO RECALL.

B-202507, APR 22, 1981

PRECIS-UNAVAILABLE

JAMES J. FLORIO, HOUSE OF REPRESENTATIVES:

REFERENCE IS MADE TO YOUR LETTER DATED MARCH 9, 1981, REQUESTING A REPORT ON MATTERS MENTIONED IN A LETTER DATED FEBRUARY 20, 1981, TO YOU FROM D. RUSSELL YOUNG, JR., ESQUIRE, CONCERNING THE QUESTION AS TO THE DIFFERENCE, IF ANY, BETWEEN THE TERMS "RETAINER PAY" AND "PENSION" AS USED IN FEDERAL LAW.

IT APPEARS THAT MR. YOUNG REPRESENTS ONE OF THE PARTIES IN A DIVORCE PROCEEDING IN THE NEW JERSEY SUPERIOR COURT. ONE OF THE ISSUES RAISED IN THOSE PROCEEDINGS IS WHETHER MONTHLY RETAINER PAY OF A MEMBER OF THE FLEET MARINE CORPS RESERVE IS SUBJECT TO EQUITABLE DISTRIBUTION UNDER NEW JERSEY LAW AS IS THE CASE WITH MILITARY RETIRED PAY. KRUGER V. KRUGER, 73 N. J. 464, 375 A. 2D 659 (1977).

FROM A READING OF THE KRUGER CASE, IT APPEARS THAT THE TERM "PENSION" AS USED THEREIN WAS INTENDED TO INCLUDE MILITARY RETIRED PAY. THE DISTINCTION BETWEEN "RETIRED PAY" AND "PENSION" UNDER FEDERAL LAW IS DEMONSTRATED IN THE CASE OF LEMLY V. UNITED STATES, 109 CT.CL. 760 (1948). IN THAT CASE, THE COURT, AT PAGE 762, IDENTIFIED A PENSION AS BEING A PAYMENT MADE IN GRATUITOUS RECOGNITION OF A MORAL OR HONORARY OBLIGATION OF THE GOVERNMENT AFTER THE SERVICE HAS BEEN PERFORMED, WITHOUT REGARD TO THE ACTUAL PERFORMANCE OF SERVICE. THE COURT WENT ON TO SAY:

"WHEN A PERSON IS PENSIONED 'OFF' BY THE GOVERNMENT, THAT GOVERNMENT NO LONGER HAS ANY CONTROL OVER HIS SERVICES. HE IS ACTUALLY ALL THROUGH SERVING THE GOVERNMENT AND YET HE RECEIVES HIS PENSION AS LONG AS HE LIVES."

ON PAGE 763 OF THE LEMLY CASE, THE COURT CHARACTERIZED RETIRED PAY AS BEING IN THE NATURE OF A CONTINUATION OF A SERVICE MEMBER'S ACTIVE DUTY PAY, BUT ON A REDUCED BASIS. SUCH AN INDIVIDUAL, ALTHOUGH RETIRED FROM ACTIVE DUTY, IS STILL A MEMBER OF THE SERVICE FROM WHICH RETIRED AND SUBJECT TO RECALL.

WHILE TECHNICALLY RETAINER PAY IS NEITHER OF THE FOREGOING, IT IS MORE SIMILAR TO RETIRED PAY. IT IS A MONTHLY PAYMENT AUTHORIZED BY 10 U.S.C. SEC. 6330 TO BE MADE TO QUALIFIED INDIVIDUALS OF THE NAVY OR MARINE CORPS, PLACED IN THE FLEET RESERVE OR FLEET MARINE CORPS RESERVE, AND BASED AT LEAST PARTIALLY ON CONSIDERATION OF THEIR OBLIGATION TO REMAIN READY TO RESPOND TO A CALL TO SERVICE IN THE EVENT OF WAR OR NATIONAL EMERGENCY. SEE 10 U.S.C. SEC. 6405 AND MURPHY V. UNITED STATES, 165 CT.CL. 156, 160 (1964), CERT. DENIED 379 U. S. 922. FEDERAL LAW REQUIRES A MINIMUM OF 20 YEARS OF CREDITABLE SERVICE IN ORDER FOR AN INDIVIDUAL TO QUALIFY FOR FLEET RESERVE OR FLEET MARINE CORPS RESERVE STATUS. UPON COMPLETION OF 30 YEARS OF SERVICE A MEMBER OF THE FLEET RESERVE MAY THEN BE TRANSFERRED TO THE RETIRED LIST AND RECEIVE RETIRED PAY. SEE 26 COMP. DEC. 384 (1920), AND COMPARE 41 COMP.GEN. 337 (1961) AND 43 COMP.GEN. 149 (1963), COPIES ENCLOSED. ALSO, SEE MULHOLLAND V. UNITED STATES, 139 CT.CL. 507 (1957); AND STEELMAN V. UNITED STATES, 162 CT.CL. 81 (1963).

MR. YOUNG MAY ALSO BE INTERESTED TO KNOW THAT THE ISSUE OF WHETHER STATE LAW MAY REQUIRE MILITARY RETIRED PAY TO BE TREATED AS PROPERTY SUBJECT TO DIVISION BETWEEN HUSBAND AND WIFE IN DIVORCE SETTLEMENTS IS NOW PENDING BEFORE THE SUPREME COURT OF THE UNITED STATES IN THE CASE OF MCCARTY V. MCCARTY, S. CT. NO. 80-5.

WE TRUST THIS INFORMATION WILL BE HELPFUL TO YOUR CONSTITUENT.

DIGEST

UNDER FEDERAL LAW A DISTINCTION IS MADE BETWEEN "PENSION" "RETIRED PAY," AND "RETAINER PAY". RETIRED PAY IS IN THE NATURE OF A CONTINUATION OF ACTIVE DUTY PAY BUT ON A REDUCED BASIS, BASED ON PAST SERVICE WITH THE RECIPIENT REMAINING A MEMBER OF THE SERVICE. A PENSION IS A GRATITUOUS PAYMENT BASED ON THE EXISTENCE OF PAST SERVICE, BUT THE RECIPIENT DOES NOT HAVE ANY PRESENT OR FUTURE SERVICE OBLIGATIIONS. RETAINER PAY, UNLIKE EITHER A PENSION OR RETIRED PAY, IS A PAYMENT MADE TO SERVICE MEMBERS TRANSFERRED TO THE FLEET OR FLEET MARINE CORPS RESERVE (10 U.S.C. 6330), BASED ON THEIR ASSUMED OBLIGATION TO RESPOND TO A CALL TO FUTURE SERVICE AND IS NOT COMPENSATION FOR PAST SERVICES. SEE DECISIONS CASES CITED. CONGRESSMAN FLORIO.