There is still a material misunderstanding among even the most long-term and knowledgeable federal workers that they could lose their retirement (annuity) if they are fired, and so they think they must resign or retire before being fired to preserve their retirement benefits. Wrong.
Here’s how I hear it generally plays out. A federal employee is told by human resource and/or management that a proposed removal is about to issue and that he/she could resign to avoid being fired for cause. Sure that’s true, and doing so (resigning) has very little practical value, but that’s for another column. Somehow, the employee also hears that resigning before the proposal issues will protect his/her federal retirement annuity. Is HR/management saying this directly, implying it, or is the employee too upset to hear correctly? Not sure, but it happens a lot that federal workers somehow believe that if they are fired, they will lose their retirement.
In a recent Merit Systems Protection Board decision involving the Navy, an employee did resign after he says he was told that a decision to remove him had been made and would issue, and “if you take termination you will lose all your benefits and retirement,” and that his retirement had to be effective immediately to avoid issuance of the removal decision and loss of his retirement. If the employee was really told this, it is simply untrue, as the MSPB pointed out when it granted his appeal. Of course when the employee heard this he tendered his retirement. But he later learned that the information he was told was untrue, and filed an appeal with the MSPB to get his job back.
For most any federal worker who is fired for poor performance or for cause, you will not lose your retirement eligibility. If you’re fired and eligible at the time of termination for an “immediate” retirement annuity, you can also file for your retirement annuity after termination, or instead at the time of termination you can simply retire in lieu of being fired. The SF-50 will be coded to reflect that you retired in lieu of being fired to indicate that an adverse action was pending against you when you retired. If you are not eligible for an immediate annuity at the time of termination, you do not lose your eligibility for a “deferred” annuity just like any other federal worker who leaves federal service short of being fully eligible to collect a retirement annuity. Your annuity will be deferred until you reach the age eligibility to collect a deferred annuity.
There are a few statutory exceptions such that being fired under this limited circumstance will indeed cause you to lose your retirement eligibility. Those exceptions are for an employee convicted of a crime against the national security of the United States. The crimes are enumerated at 5 USC section 8312. Here’s a smattering of the crimes enumerated: gathering or delivering defense information to aid a foreign government; harboring or concealing the enemy; disclosure of classified information; espionage; sabotage against the U.S.; treason, rebellion or insurrection; seditious conspiracy; advocating the overthrow of the U.S. government; activities to harm the U.S. armed forces during war.
Let me repeat: For a termination to affect your retirement annuity, you must be convicted of one of those crimes.
Some members of Congress have been complaining for a few years, since the age of the media-proclaimed “scandal,” that federal workers should lose their retirement if terminated for cause — any misconduct in the performance of job duties. Interestingly, the same federal statute that grants retirement benefits to the executive branch grants the same benefits to members of Congress in the legislative branch. It should be no surprise here that no one on the Hill is saying that the law should be changed to disenfranchise a member of Congress from his/her federal retirement if he or she engages in an ethics violation or other misconduct that costs them their jobs.
Indeed, Congress is now considering legislation that would cut part or all of federal retirement benefits to Department of Veterans Affairs employees.
That legislation (if passed) surely is the test case for the rest of the federal workforce, excluding, of course, members of Congress.
Debra L. Roth is a partner at the law firm Shaw Bransford & Roth, a federal employment law firm in Washington, D.C. She is general counsel to the Senior Executives Association and the Federal Managers Association, host of the “FEDtalk” program on Federal News Radio, and a regular contributor to Federal News Radio’s “Federal Drive” morning show. Email your legal questions to firstname.lastname@example.org.