Fortunate people get married and live happily ever after with each other.
And, if you are eligible for a federal retirement pension and get divorced, you may find that you will continue to interact with your former spouse long after the divorce has become effective. Money and divorce undoubtedly involve strong emotions. You could find that part of your retirement income will be used to pay for a lawyer to represent your interests if you battle with a former spouse about the disposition of a portion of your retirement benefits. With a triangle of interests that can be involved, there may be winners and losers.
Even with the assistance of a good attorney, there is frequently room for disagreement in interpreting an agreement between a divorcing couple. Here is one case.
Back in 1989, two federal employees who were married to each other signed a separation agreement. It read, in part, "…each party shall retain each other as a listed survivor on their annuity, which states that the survivor listed shall rec[ei]ve 55% of the pension upon the death of the pension owner, but only 25% upon remarriage." (Dodd v. OPM, 2008 MSPB 27 (2008) )
This agreement was incorporated into the final divorce papers. This agreement can be interpreted more than one way and the passage of time illuminated some of the possible interpretations.
The husband (Eric) subsequently remarried. When he retired in 2006, he elected a maximum survivor annuity for Karen, his new wife.
OPM issued decisions informing Carolyn, his first wife, that she was now only entitled to receive 25 percent of the maximum survivor annuity benefit and that her survivor annuity would be reduced by about $2300 per month.
The first wife disagreed with reconsideration decision by the Office of Personnel Management (OPM) and she filed an appeal. She claimed she was entitled to a 55 percent survivor annuity as long as she did not remarry. The administrative judge concluded that the Agreement was ambiguous with regard to whose remarriage would trigger a reduction in the appellant’s survivor annuity, but that it was clear the appellant was at least entitled to a 25 percent survivor annuity. The administrative judge affirmed the final decision by OPM.
In effect, said the Merit Systems Protection Board (MSPB), the agreement provides a survivor annuity for the first wife. The issue is whether the amount of the survivor annuity should be reduced upon the remarriage of the first wife or upon the remarriage of her former spouse. (¶9 at page 5 of the MSPB decision.)
But, after looking at this complex series of events and agreements, the MSPB concluded that if the husband wanted to reduce survivor annuity for his first wife (Carolyn) after his remarriage, he should have obtained an acceptable court order to reduce Carolyn’s survivor annuity when he elected survivor annuity benefits for his second wife (Karen) and not when he remarried.
The separation agreement did not contain a provision reducing Carolyn’s survivor annuity when he elected survivor annuity benefits for his new wife (¶12 on page 8 of the MSPB decision). Therefore, the decision awarded the 55 percent survivor annuity to the first wife because "the Agreement has not been affected by Eric Dodd’s remarriage or election of survivor annuity benefits for his subsequent spouse."