Death and the "Self-Only" Annuity

By on September 2, 2005 in Current Events with 0 Comments

A surviving spouse of a federal employee was unsuccessful in convincing the MSPB and a court that she should be allowed to set aside her deceased husband’s election of a full retirement annuity and replace it with one permitting a survivor annuity. Kievenaar v. Office of Personnel Management (Federal Circuit Court of Appeals, No. 05-3048, September 1, 2005)

Joan Kievenaar’s husband, Peter, was a 32-year employee with the Department of Navy who filled out his retirement application papers, electing a self-only annuity. He included the necessary “Spouse’s Consent to Survivor Election,” in which his wife acknowledged that she freely consented to her spouse’s annuity election and that she understood that her consent was final. She also signed a notarized form as evidence of her consent to her husband’s election “to provide no survivor annuity.” Of course, the self-only annuity meant that Peter would receive a higher retirement annuity payment, which is presumably why he took this approach. (Opinion p. 2)

Sadly, Peter died unexpectedly just three weeks after the effective date of his retirement. Mrs. Kievenaar petitioned OPM to provide her a survivor annuity. OPM denied her petition and she appealed to the Merit Systems Protection Board.

Mrs. Kievenaar advanced three basic arguments to the MSPB: (1) at the time of his retirement application, Peter and she had no real understanding of retirement ins and outs and the Navy did not properly counsel him regarding the consequences of a self-only annuity election; (2) she should have been allowed to change the election within 30 days after the first regular annuity payment; and (3) because her husband died before OPM’s final adjudication on his application, then 5 C.F.R. section 831.2203(f) applied and would operate to deem her husband to have elected a survivor “alternative form of an annuity” (AFA). All three arguments were rejected by the AJ. (Opinion pp. 3-4). When appealed to the full Board, there were two Board members. They upheld the AJ on arguments one and two, but they disagreed on the third argument and therefore on this third point the AJ’s decision became the final Board decision. Mrs. Kievenaar appealed that final decision to the Federal Circuit Court of Appeals.

The regulation cited in the third argument would almost appear to provide a slam-dunk victory for Mrs. Kievenaar. Here is what that provision says:

“Except as provided in paragraph (g), an annuitant who dies before the date of final adjudication is deemed to have made an affirmative election under paragraph (a) with a fully reduced annuity to provide a current spouse annuity, regardless of any election completed under § 831.614 [for a self-only annuity], and the lump-sum credit will be paid in accordance with the order of precedence established under 5 U.S.C. 8342(c).”

Unfortunately, OPM, the AJ, one MSPB Board member and the court all agreed on one important proviso to this regulation—it did not apply to Kievenaar’s husband. The court pointed out that in 1993 Congress passed a law that limited availability of these “AFA’s” to “a small group of individuals who suffered from a life-threatening affliction or other critical medical condition” and eliminated it for all other employees. (Opinion, p. 8)

While the regulation cited by Mrs. Kievenaar was not so limited, because it was in conflict with law, the regulation “must necessarily yield.” (Opinion p. 9)

The court expressed its sympathy with Mrs. Kievenaar’s position but pointed out that it had no alternative but to make this ruling denying her appeal. (Opinion p. 11).

This decision is particularly tough since there was an apparently legitimate regulation on the books that supported Mrs. Kievenaar’s petition. Unfortunately, the regulation had not caught up with some changes made in the law and the court had no choice but to enforce the law. This means in making retirement decisions, employees, and the agencies that advise them, have to be extra careful of these kinds of legal pitfalls.

© 2016 Susan McGuire Smith. All rights reserved. This article may not be reproduced without express written consent from Susan McGuire Smith.


About the Author

Susan McGuire Smith spent most of her federal legal career with NASA, serving as Chief Counsel at Marshall Space Flight Center for 14 years. Her expertise is in government contracts, ethics, and personnel law.