Federal employee retirement benefits are often an enigma. From annuity calculations, supplemental benefits, deferrals, the role of social security, and a host of other questions we receive. However, one of the most requests we receive is whether an employee loses accumulated retirement benefits if they are fired. To be clear, federal employees who are removed from federal service (“fired”) do not normally lose any entitlement to retirement benefits already earned (accumulated) , with limited exceptions (see, 5 USC 8312). The type of retirement in this instance is sometimes erroneously referred to as a Discontinued Service Retirement, which covers involuntary separation of federal employees, including for performance reasons and such causes as “position abolishment” or directed reassignments outside the commuting area, but excluding reasons related to “misconduct” or “delinquency.” A Discontinued Service Retirement is intended to provided an immediate, possibly reduced, annuity for affected employees who may not otherwise be immediately eligible to retire. However, if you are otherwise eligible for retirement at the time of separation, you would simply initiate retirement immediately, or sometime in the future (when eligible), and would not otherwise need a Discontinued Service Retirement. Employees off the agency rolls for less than 30 days from the effective date of the involuntary separation should contact their agency to initiate retirement in such instances. Employees off the rolls more than 30 days should contact the Office of Personnel Management (OPM) to initiate a retirement application.
There are some nuances (there always are) to federal employee retirement in these circumstances and the OPM reserves final authority concerning the adjudication of the retirement application, whether CSRS or FERS, and the Merit Systems Protection Board has the authority to review all OPM decisions affecting federal retirement. Recently, we discovered, through a client, her agency was unaware she retained retirement benefits when removed from federal service as she was already eligible for retirement (minimum age and service credit). In such instances, you must either be persistent or wait until after 30 days to initiate the process through the Office of Personnel Management.
The Office of Personnel Management provides guidance in these situations through its handbook entitled, Applying for Deferred or Postponed Retirement Under the Federal Employees Retirement System (FERS). Specific guidance concerning Discontinued Service Retirement can be found in Chapter 44 of of the OPM CSRS FERS Handbook.
As with any matter affecting a personnel action in the federal service, there may be a myriad of regulations and laws that need to be considered in the context of situational variables. Be sure you contact a retirement specialist as early as possible, prior to making any decisions. You should also obtain qualified consultation.
For Additional Information
NIH Discontinued Service Retirement Handout
2010 Article from Federal Times
NASA Bulletin on Discontinued Service Retirement
OPM “Thinking About Retirement” Handbook
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