Most fired employees remain eligible for annuities

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A frequent question from employees faced with adverse actions because of misconduct, poor performance or criminal conviction is whether these adverse actions can lead to the loss of federal annuity eligibility. The general rule, subject to some exceptions, is that even if you are fired under these circumstances, you are eligible to receive your annuity, assuming you have met the years of service and age requirements. There are nuances.

The first is the distinction between being eligible for regular retirement and being eligible for discontinued service retirement when an adverse action ends your federal employment. The Office of Personnel Management has decided that an involuntary separation because of job abolishment, reduction in force, poor performance or refusal to accept a geographic reassignment (assuming your job does not come with a mobility agreement) will result in eligibility for discontinued service retirement. This means that even if you have not met the normally applicable age and service requirements, you may retire early if you have 20 years of service and are age 50 or have 25 years of service at any age. This is especially important to someone who faces removal because of poor performance. OPM has rules clarifying that the misconduct or delinquency that normally would prevent someone who is fired for misconduct from receiving early discontinued service retirement does not apply to a removal based solely on poor performance.

An additional nuance is that even if you are separated for poor performance before meeting the eligibility for discontinued service retirement, you still have the right to receive a deferred annuity at age 62, assuming you have five years of creditable service. To receive a deferred annuity, you have to keep your contributions deposited and cannot withdraw them. Deferred annuitants, however, are not eligible to carry health insurance into retirement. The right to have health insurance in retirement is based on retiring and taking an immediate annuity, either regular retirement or discontinued service retirement, and having your health insurance in place continuously for the five years preceding retirement.

Another concern with a deferred annuity, and the survivor annuity to a spouse that goes along with the deferred annuity, is that the prospective annuitant must live to age 62 and then claim the annuity to receive it and be eligible for a survivor annuity. Otherwise, the survivor is only eligible for a return of contributions.

While no federal employee expects to be criminally convicted, the reality is that criminal convictions, particularly job-related convictions, do occur. There are numerous newspaper articles about federal employees being convicted of procurement irregularities and being sentenced to prison terms. It is difficult, if not impossible, to continue federal employment in the face of a criminal conviction.

Congress in legislation has concluded that federal employees who are convicted of certain crimes will forfeit their annuities. These crimes are limited to categories related to treason, espionage, sabotage, terrorism, helping the enemy and similar offenses. For example, if someone is convicted of making a false statement in connection with allegations against them concerning espionage, that person loses eligibility for an annuity. That person would be entitled only to a refund of contributions already made.

The rules on forfeiture of pensions because of criminal convictions were expanded a few years ago to include convictions for members of Congress for conduct connected to bribery, perjury and several other job-related crimes. This forfeiture provision applies only to time served as a member of Congress and specifically was not expanded to rank-and-file federal employees. But it shows Congress can change the rules as it sees fit. For now, the only risk of loss of an annuity because of a conviction is for serious espionage- and terrorism-related offenses.

The employee who is convicted of other types of offenses, such as theft of government property, is still eligible for an annuity, if that person has the age and years of service, or a deferred annuity. Ë

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