The Voluntary Separation Incentive (VSI)
Key Points
  • Voluntary Separation Incentive (VSI) is an early retirement benefit that may be offered to military members whose careers are not advancing.
  • This is a severance benefit and it must be determined if the separation is voluntary or involuntary in order to be classified in a divorce.
  • The voluntary Separation Incentive is a periodic payment while Special Separation Benefits (SSB) is a lump sum payment. These benefits are considered alternative forms of retirement and are still divisible in divorce.

The VSI is a particular kind of military retirement benefit that sometimes enters into military divorce settlements.

VSIs are one of the two main types of military early retirement programs. VSIs and Special Separation Benefits (SSBs) are two ways the military eliminates officers whose careers are not advancing.

For divorce purposes, the single most important distinction in classifying military severance benefits is determining whether they are voluntary or involuntary. If an officer leaves the military voluntarily, his severance benefits are often considered lost retirement benefits; when he or she leaves involuntarily, his benefits are more likely to be considered compensation for lost future wages.

VSIs are periodic payments over time; SSBs are lump-sum payments. Both the VSI and SSB are voluntary, and "[f]or this reason, most court decisions to date have held that VSIs and SSBs are essentially alternative forms of retirement pay, and as such are divisible by state courts."

Both VSIs and SSBs are alternative forms of retirement, but that in itself does not mean they are always marital. If the owning spouse accumulated the benefits with service before marriage, his or her retirement benefits are partly non-marital.

A service person who leaves the military with less than 20 years of service receives no retirement benefits. When an officer leaves involuntarily, his benefits are considered compensation for lost future wages.

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Suggested Reading
Divorce & the Military II Divorce & the Military II
DIVORCE AND THE MILITARY II is the newly published comprehensive guide for military members (active duty, reserve/guard, and retired), spouses, and their attorneys, on the Uniformed Services Former SpousesŐ Protection Act (USFSPA). The USFSPA is the federal law that permits the award of military retired pay in a divorce.

Author: Marsha L. Thole and Frank W. Ault

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