Who Will Get the Retirement Annuity?

By on April 10, 2007 in Current Events, Retirement with 0 Comments

Many readers have worked for Uncle Sam for decades. You may have accumulated a pretty good retirement annuity that will pay you each month while you do whatever it is you want to do during your retirement years.

But despite careful planning and a good retirement system, some people run into unexpected problems–or at least problems that can cost the retiree–and the former spouse—a great deal of money.

The problem that can put a big crimp in your retirement planning is d-i-v-o-r-c-e. If you and your spouse split up after a few years (or many years) of marriage, what happens to your retirement annuity?

Whether you are the retiring federal employee or the spouse, you will need good legal advice. The answer to the question of "What happens to my retirement annuity?" may not be as straightforward or as simple you think it is. Here is a case that shows what can happen.

A federal employee working for the Postal Service was divorced in 1993. The divorce decree included a section headed “Division of Marital Estate”. That section stated that half of the appellant’s “retirement benefits with the U.S. Postal Service” that “accrued from September 1, 1973 until July 1, 1993,” were to be awarded to the former spouse. The decree also included additional language describing the manner in which the share of the money for the former spouse was to be calculated.

That situation makes it sound like the issue was resolved. But it was not that simple.

The lawyer representing the wife of the former fed sent a letter to the Office of Personnel Management with a copy of the divorce decree. Two years later, OPM wrote that it decided the divorce decree was acceptable for processing. It advised the attorney that the wife of the former fed would be entitled, on her husband’s retirement, to half the retirement annuity multiplied by the months of the appellant’s creditable service between September 1, 1973, and July 1, 1993, and divided by the months of the appellant’s total creditable service.

In 2003, Emmitt West retired after being in a non-pay status for a lengthy time. OPM began paying the annuity to Mr. West and it also advised him that, consistent with the divorce decree, a good portion of his annuity was being paid to his former wife. OPM also told him that a portion of his retroactive annuity payment, covering the period dating back to his last day in a pay status, would also be sent to his former wife.

This did not sit well with the now-retired Postal employee. He asked OPM to reconsider its action because his former wife was not entitled “to additional payment other than what was accumulated at the time of the divorce . . . .” He also did not want her to get to a share of his retroactive annuity payment.

The case went to the Merit Systems Protection Board. The administrative judge (AJ) hearing the case issued a decision that was not going to make the former fed very happy. The AJ concluded that his former wife should get 46.12% of the annuity, rather than the 31.74% directed by OPM.

OPM then appealed the decision to the full Board. To make the case even more complex than it already was, OPM said its initial decision was wrong. OPM now took the position that it made a mistake when it decided that the divorce decree was a court order acceptable for processing and that the administrative judge should have gone back to the state court that issued the initial decision.

Probably to no one’s surprise, the Merit Systems Protection Board concluded that the initial decision of the court was not clear and specific. The MSPB concluded that "the court order purportedly awarding the intervenor a proportion of the appellant’s annuity does not meet the requirements of 5 C.F.R. § 838.302(a)(1) and (2)." In other words, the former wife is out of luck–for the moment at least.

The former wife may still get a substantial portion of the retirement annuity. MSPB noted that "she may ask the court that issued the order for clarification concerning the portion of the appellant’s annuity that she is entitled to receive." Moreover, an appeal can be filed with the Court of Appeals for the Federal Circuit.

One thing is clear: A good portion of the money will go to the lawyers. (Emmitt M. West v. OPM and Lila West, 2007 MSPB 94 (March 30, 2007)


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

About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources.