ST45-1 Tennessee Pension (January 2008)

Tennessee Law Runs Afoul of Federal Law on Pension Credit for Military Service

By CAPT Samuel F. Wright, JAGC, USN (Ret.)

Tennessee law provides as follows concerning state retirement credit for military service time that interrupts the careers of employees of the state and its political subdivisions:

"(a) Any member who left the employ of an employer participating in the Tennessee consolidated retirement system in order to perform military service in the armed forces of the United States, and who is reemployed by such employer within six months of honorable discharge from such service, shall have the option of establishing retirement credit for the military service under the following conditions:

"(1) The member must be entitled to reemployment with such employer pursuant to the Federal Veterans Reemployment Rights Act, compiled in 38 U.S.C. ?? 2021-2027;

"(2) The member must not be able to establish the military service in any other retirement system;

"(3) The member must redeposit any amount the member withdrew from the retirement system upon leaving the employ of such employer, plus interest at the rate provided in ? 8-37-214(a); and

"(4) The member must make a back payment equal to the amount of employee contributions the member would have made had the member remained continuously employed with the employer during the period of military service claimed. Such contributions shall be based upon the earnable compensation the member was earning at the time the member left employment to enter the military. Notwithstanding anything in this subdivision (a)(4) to the contrary, if the military service was during the Persian Gulf War, the service shall be credited without charge to the member, unless the member is an employee of a political subdivision. If the member is an employee of a political subdivision, the service shall be credited without charge to the member; provided, that the political subdivision accepts the liability therefor. 'Persian Gulf War' means the period from and including Aug. 2, 1990, to the date thereafter prescribed by presidential proclamation or by federal law.

"(b) (1) Any member or retired member who served in the armed forces of the United States during any period of armed conflict, as defined in subdivision (b)(2), shall be entitled to establish retirement credit for such military service without charge under the following conditions:

"(A) The member was honorably discharged from such military service;

"(B) The member cannot establish the military service in any other retirement system; and

"(C) The military service credit cannot be used in determining any rights under the retirement system prior to the member becoming vested.

"(2) 'Period of armed conflict' means:
"WW I 4/7/17 - 11/11/18
"WW II 12/7/41 - 12/31/46
"Korean War 6/27/50 - 1/31/55
"Vietnam Era 2/28/61 - 5/7/75

"(c) (1) Any member or retired member who performed peacetime military service in the armed forces of the United States at any time from Oct. 15, 1940, through May 7, 1975, shall be entitled to establish retirement credit for such military service on the basis of one (1) day of creditable service for each two (2) days of military service rendered. Any such member shall be subject to the conditions set forth in subdivisions (b)(1)(A)-(C) and shall pay employee contributions for the service claimed based on a contribution rate of nine percent (9 percent). Such rate shall be applied to the member's earnable compensation at the time of the claim or, if not in service at the time of the claim, the member's earnable compensation at termination of employment.

"(2) Any member or retired member who established peacetime military service under subdivision (c)(1) shall be entitled to establish an additional six months of retirement credit for any peacetime military service rendered in the armed forces of the United States which was performed during the period specified in subdivision (c)(1) and for which the member or retired member did not receive retirement credit under subdivision (c)(1). Any such member shall be subject to the conditions set forth in subdivisions (b)(1)(A)-(C), and shall pay employee contributions for the service claimed based upon a contribution rate of 12 percent. Such rate shall be applied to the member's earnable compensation at the time of the claim or, if not in service at the time of the claim, the member's earnable compensation at termination of employment.

"(d) Any member who was honorably discharged as a result of 100 percent permanent total disability from any service-connected, combat-related cause as determined by the United States veterans administration whose permanent total disability existed on the date of discharge shall not be deemed to have military credit in any other retirement system, unless the member retired from the military with 20 or more years of service.

"(e) The provisions of subsections (b)-(d) shall be optional to political subdivisions in accordance with ? 8-35-217.

"(f) For part-time members, earnable compensation shall be increased to the corresponding full-time earnable compensation.

"(g) In no case shall the total amount of retirement credit granted for military service under subsections (b)-(d) exceed four years." (Tennessee Code, section 8-34-605.)

This section refers to the Veterans' Reemployment Rights (VRR) law, formerly codified at 38 U.S.C. 2021-2027. In 1994, Congress enacted the Uniformed Services Employment and Reemployment Rights Act (USERRA), 38 U.S.C. 4301-4334. USERRA is a complete rewrite of the VRR law, which can be traced back to 1940. See Law Review 104 for a comprehensive summary of the federal reemployment statute. The Tennessee Legislature amended section 8-34-605 in 1997 and 2000, after the enactment of USERRA, but apparently no attempt was made to bring the state law into compliance with federal law.

Section 8-34-605 conflicts with USERRA in several important respects and is therefore void. Section 4302(b) of USERRA [38 U.S.C. 4302(b)] provides that USERRA overrides a state law that purports to limit USERRA entitlements or that imposes an additional prerequisite upon the exercise of federal rights under USERRA. The U.S. Constitution provides: "This Constitution, and the laws of the United States which shall be made in pursuance thereof; and all treaties made, or which shall be made, under the authority of the United States, shall be the supreme law of the land; and the judges in every state shall be bound thereby, any thing in the Constitution or laws of any state to the contrary notwithstanding" (Article VI, Clause 2). This is commonly referred to as the "Supremacy Clause."

Early in our nation's history, the Supreme Court decided that the Supremacy Clause means exactly what it says-that federal law trumps conflicting state law. See Gibbons v. Ogden, 22 U.S. 1 (1824).

Section 8-34-605 provides, as one of the eligibility criteria for state retirement credit for military service, that "The member must not be able to establish the military service in any other retirement system" (Tennessee Code, section 8-34-605(a)(2)). This provision runs afoul of USERRA and also of section 12736 of Title 10, U.S. Code, which provides as follows: "No period of service included wholly or partly in determining a person's right to, or the amount of, retired pay under this chapter may be excluded in determining his eligibility for any annuity, pension, or old-age benefit, under any other law, on account of civilian employment by the United States or otherwise, or in determining the amount payable under that law, if that service is otherwise properly credited under it."

When section 12736 refers to "this chapter," it is referring to the chapter of Title 10, U.S. Code, that provides for retirement benefits starting at age 60 based on a combination of full-time military service and part-time service in the National Guard or Reserve. To qualify for that kind of military retirement, an individual must have at least 20 "good years" for military retirement-a good year is a year in which the individual earned at least 50 retirement points. If the individual meets that threshold, the amount of the individual's monthly retirement check, starting at age 60, is based on a formula that includes the total number of retirement points the individual earned in his or her entire career.

Let's take the hypothetical but entirely realistic Mary Smith, employed by the state of Tennessee for 30 years, from September 2000 to September 2030. Ms. Smith enlisted in the Army Reserve in October 2001, after the terrorist attacks of Sept. 11, 2001. She retires from the Army Reserve in October 2021, with 20 years of service, and she starts drawing the monthly Army Reserve retirement check in July 2036, when she turns 60. Ms. Jones was called to active duty for two years, from September 2003 to September 2005. Those two years of active duty qualify as "good years" for retirement purposes, and she also earns one retirement point for each day of active duty. Thus, her two-year active duty period counts in determining both her qualification for the Reserve retirement pay and also in determining the amount of her Reserve retirement pay at age 60. Denying her state retirement credit for that two-year period runs afoul of USERRA, 10 U.S.C. 12736, and also the Supremacy Clause of the U.S. Constitution.

It has been held that 10 U.S.C. 12736 invalidates state laws which deny state retirement credit for periods of military service that help individual employees qualify for Reserve retirement benefits at age 60. See Cantwell v. County of San Mateo, 631 F.2d 631 (9th Cir. 1980), cert. denied, 450 U.S. 998 (1981); Almeida v. Retirement Board of Rhode Island, 116 F. Supp. 2d 269 (D.R.I. 2000). I also invite the reader's attention to Law Reviews 2, 15, 16, 21, and 57. More than 20 years ago, the Tennessee Attorney General acknowledged that the "no double dipping" rule in section 8-34-605 violates federal law and is invalid under the Supremacy Clause. See Opinion No. 87-82, 1987 Tennessee AG LEXIS 115 (May 5, 1987).

Previous Page
Back to top of page