Without advance notice or a court order, the Office of Personnel Management changed its 30-year policy and increased the money paid to divorced spouses from the annuity payments of certain federal employees.
Then, when OPM’s Office of Inspector General criticized the practice, OPM officials tried to quash the inspector general’s management advisory, issued this week. OPM officials also rejected all the IG’s recommendations. The IG took the case following a complaint from the Federal Law Enforcement Officers Association (FLEOA).
For nearly three decades, OPM applied court orders granting a “marital share” of the former employees’ retirement to only their basic annuity, which is the gross monthly amount. But in July 2016, OPM decided to also apply the share to the annuity supplement, according to the report. The supplement is paid to federal law enforcement officers and some other feds who retire before they can collect Social Security benefits. The officers are required to retire by age 57, which is before Social Security eligibility.
To make matters worse for annuitants, after not attaching their supplements for decades, OPM decided it would do so retroactively — again without warning.
Instead of providing notice, “retirees and the former spouses learned of OPM’s decision only when their annuity amounts changed — many years after the parties had divorced, after a state court had ordered a former spouse’s marital share, and after OPM had accepted the state court order for processing,” the IG found.
OPM’s new policy “improperly changes previously litigated final state court orders,” the inspector general said, and “has been causing immediate financial disruption to annuitants.”
In response, Kenneth J. Zawodny Jr., OPM’s associate director for retirement services, and Kathie Ann Whipple, OPM’s acting general counsel, told the IG that under the law’s “express and unambiguous language” and OPM regulations, “both the basic and supplemental components are to be divided, when a court orders the division of the employee annuity.”
Furthermore, Zawodny and Whipple urged the IG’s office not to publish its report. The annuity issue is under litigation, they argued, and “the Inspector General’s alert essentially lays out arguments that could be used by annuitants in appeals from the agency’s decisions, but these annuitants’ interests are in conflict with other private individuals, i.e. the annuitants’ spouses.”
FLEOA President Nathan R. Catura strongly disagrees, saying the IG’s report “confirms that the Office of Personnel Management has, in effect, quietly inserted itself into federal retirees’ private divorce proceedings. OPM has decided, as if by fiat, and without any judicial or Congressional input, that divorced federal retirees must part with a larger portion of their hard-earned retirement funds.”
For Eric Simon, a former postmaster in Perrysburg, Ohio, OPM’s new interpretation of the rules means he has to work again, after retiring in 2012. “Because of this, I have returned to work as a security guard earning $10 per hour working three days a week,” he said, allowing him “to live day to day.”
Simon divorced in 1992. His former wife’s share of his monthly annuity was $336.44. In 2016, he said, OPM informed him that with the additional hit on his annuity supplement, the total granted to his former spouse was increasing to $640.17. A letter from OPM said the “adjustment is in keeping with the provisions of your court order and the statutory provisions authorizing that your Federal Employees Retirement System (FERS) annuity supplement benefit is to be treated the same way as your FERS basic annuity.”
An OPM letter to another former postal employee, who did not want to be named, increased the amount of her monthly annuity payment going to her former husband from $499.04 to $712.85, over 36 months. “This very significant cut in benefits, without warning, will significantly impact my life and that of my children,” she told OPM in her appeal letter.
Ron Moulton, a retired air traffic controller in the Denver center, objects not only to having his “retirement hijacked 6 and a half years after retirement” but also to OPM’s response to his complaints. “The OPM took money and re-apportioned my annuity without any notice,” he said by email. “They took retro-active back pay without any notice. They failed to answer phone calls and emails. I wrote 4 certified letters and heard nothing from the OPM for 6 months.”
The IG report, signed by Robin M. Richardson, an acting assistant inspector general, rebuts OPM’s interpretation of the law, stating flatly: “OPM’s assertion that it is required ‘by law’ to effect this change is incorrect. The language of the statute simply does not mandate the conclusion that the Basic Annuity and the Annuity Supplement should be deemed to be one and the same.”
If the law can be interpreted in more than one way, the IG said, “OPM is neither equipped nor empowered to resolve any such ambiguity.”
The report said OPM acknowledged that the new practice amounts to a new rule. But in the federal government, new rules and regulations require advance notice and comment periods, which OPM did not provide. Even if its new interpretation were correct, “OPM lacks the authority to apply its new interpretation retroactively,” OIG found.
OPM rejected the IG’s three recommendations, including that the agency “take all appropriate steps to make whole” the retirees affected by the change in policy.
For Catura, “it is absolutely breathtaking that an agency which has repeatedly failed to meet such basic obligations as protecting the personal information of federal employees or processing retirement claims in a timely fashion could find a new way to harm federal law enforcement officers.”