“Honey, I Forgot To Give My Former Wife A Survivor Annuity”

The federal retirement system can be complex and confusing. Add a divorce into the mix, and the confusion and complexity increase. Here is a recent case that shows how confusing the issue of a survivor annuity can become as a result of a divorce.

The federal retirement system can be complex and confusing. And getting a divorce can make it even more complex and confusing.

Some readers may think they have sole access to their retirement benefits. That may be true. But, if you are a federal employee who gets divorced, that retirement benefit isn’t necessarily all yours to keep.

As an example, here is a listing from OPM on the impact a court order can have on your retirement benefits:

  • Divide a Civil Service Retirement System (CSRS) or Federal Employees’ Retirement System (FERS) annuity;
  • Divide a refund of CSRS or FERS employee retirement contributions;
  • Provide a survivor annuity payable upon the death of an employee or retiree;
  • Permit a former spouse to continue coverage under the Federal Employees Health Benefits (FEHB) program; and
  • Require an employee or retiree to assign his or her Federal Employees’ Group Life Insurance (FEGLI) coverage to a former spouse or children. Require an employee to name his or her former spouse or children or beneficiaries under FEGLI.

A new case decision from the Federal Circuit provides an example of how a divorce settlement can impact your retirement benefits. And, perhaps unfortunately, the case also demonstrates why proper legal advice may be in order when working out a divorce settlement. In this case, the former couple apparently worked out the settlement themselves at the time of their divorce.

An employee from the Department of Agriculture retired in 1994. When he retired, he elected to take a smaller annuity payment in order for his wife to continue to receive benefits in the event of his death.

After retiring, he and his wife divorced after having been married since 1965. In the divorce settlement, he provided that his former wife would receive “Fifty percent (50%) of benefits available on the date of the divorce.” The divorce settlement did not specifically reference whether his former wife would receive a survivor annuity.

The Office of Personnel Management ruled that this former wife of a federal employee was not entitled to a survivor annuity under the circumstances. She appealed the OPM decision to the Merit Systems Protection Board which upheld OPM’s determination.

The issue went to the Federal Circuit Court of Appeals.

The court noted that a former spouse is entitled to a survivor annuity if the former spouse has elected to provide this benefit or if it is approved in a court order or court-approved settlement agreement.

In this case, the retiring federal employee had elected the survivor benefit when he retired and before they were divorced. But, decided the court, there was no specific reference to the survivor benefit in the divorce settlement and OPM and MSPB were correct in deciding the retiree’s spouse was not entitled to this benefit.

But the decision was not a complete wash-out for the annuity seeker. The court held that “OPM failed to provide (the retired federal employee) with sufficient notice regarding the option of electing to reinstate a survivor annuity for his former spouse after the divorce.”

Since the former fed is still alive, the court concluded that he should be given the option of providing a survivor annuity for his former wife, despite the expiration of applicable time limits, since he had not been notified by OPM of his options in this regard after his divorce.

And, as the court noted, if the former fed has remarried, he will have to have his new wife’s consent to provide a survivor annuity for his former wife. No doubt, that would make for an interesting conversation over dinner.

Warren v. OPM, 04-3397 (May 16, 2005), Court of Appeals for the Federal Circuit

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. Follow Ralph on Twitter: @RalphSmith47