Back in 2008, I wrote a series of articles on what happens to your benefits if you:
- die after retirement;
- die while still working for the federal government; and
- leave federal service before you retire.
Some of the comments on those articles asked about what would happen in certain circumstances if a retired individual had elected a survivor annuity and there were changes. In this article we will look at what will happen if a CSRS or FERS annuitant has elected a survivor benefit and
- the designated survivor dies before the annuitant; or
- the retiree divorces after retirement. We will also look at what happens if a retiree marries after retirement.
If you have elected a survivor annuity for a spouse and your spouse dies before you, you can be restored to a full and unreduced annuity after providing OPM with proof of your spouse’s death. You will not receive a refund of any of the money you had contributed for the survivor annuity.
If you divorce after retirement, the provisions of the divorce decree will determine what happens to the survivor annuity. Federal pensions are not governed by ERISA (they are governed by Title 5 of the United States Code), so special care needs to be taken when going through a divorce. Many divorce attorneys are not familiar with the title 5 rules, so divorcing federal retirees (or employees) should consult (or have their attorneys consult) with an expert in federal retirement rules.
If you marry after retirement and choose to elect a survivor annuity for your new spouse, you may do so within two years of the marriage. The survivor annuity will not be effective until the marriage has lasted 9 months (sorry Kim and Britney). You will have to make back payments to cover the period of time where survivor benefits were not in effect.
For example, if you are a FERS retiree and were retired for five years, got married and elected a full survivor benefit, you would be responsible for 10% of the annuity payments you received over that five year period, plus 6% interest compounded annually. As most retirees will not have that kind of money sitting around, the payment is made by a permanent actuarial reduction to the retiree’s FERS or CSRS annuity. According to OPM, in most cases the actuarial reduction is less than 5% of the employee’s annuity.