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FEDERAL RETIREMENT SYSTEMS
FEDERAL DISABILITY RETIREMENT BENEFITS
FEDERAL EMPLOYEES HEALTH BENEFITS PROGRAM

Caveat:

Prior to dealing with the subject matter of this article we think it useful to alert the practitioner to the significance of assigning to a non-lawyer the preparation of a Domestic Relations Order or related legal documents. It is emphasized that our Domestic Relations Orders are attorney prepared. Consider the practitioner's exposure when he or she retains a non-lawyer to prepare a legal document (QDRO). We carry malpractice insurance, clearly the non-lawyer (a/k/a "QDRO Specialist") does not. It useful that the practitioner realize the significance of assigning to a non lawyer the preparation of a Domestic Relations Order or related legal documents. The preparation of a Domestic Relations Order constitutes the preparation of a legal instrument. Should you delegate a legal function to a non lawyer it is suggested that you confirm with your malpractice carrier that such delegation of duty does not limit/nullify your policy coverage.


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The intent of this article is to furnish the practitioner with the information required to effectively negotiate and draft Domestic Relations Orders regarding the assignment of retirement benefits to a Former Spouse* based on the retirement benefits accumulated by a Federal Employee.

* Former Spouse: Note that the Federal and Military Retirement Systems do not reference the spouse of a plan participant as "Alternate Payee". For these systems the attorney will reference the non-participating spouse as "Former Spouse".

This article covers both the Civil Service Retirement System (CSRS) and the Federal Employees' Retirement System (FERS). These two systems contain major sub-systems, e.g. Air Traffic Controllers, Law Enforcement, Foreign Service for which the drafting parameters can be different. It is incautious to view the federal retirement system as monolithic. Be clear on the specific sub-system that is the subject of your matter. Know its unique features and only when in possession of the requisite specifics regarding this sub-system should you begin negotiations and drafting.

The members of each system may be referenced as "employee" or "participant". Both terms will be used herein to reference members of the respective retirement systems.

Regarding the term "Pension", the reader will note that the federal literature generally references a federal employee's "pension" as "annuity". For purposes of this article unless otherwise noted the terms "pension" and "annuity" are interchangeable. This article uses the term "pension" to describe the monthly retirement payments to a retired federal employee because it is a more familiar term to family practitioners.

Advisory: Determining if the Participant is a CSRS or FERS Employee.
Participant's in CSRS are generally employees who were first hired prior to January 1, 1984. Participant's in FERS are generally employees who were hired subsequent to December 31, 1983. However, a procedure exists pursuant to which members of CSRS are periodically given an opportunity to transfer to FERS. No option exists for FERS members to transfer to CSRS. Such transfers occur during an "open enrollment" period. No such transfer opportunity has been offered for several years. For actuarial reasons, as the CSRS population ages this transfer option becomes less attractive (CSRS generally results in a greater benefit for the long service employee). Nevertheless, the alert practitioner in a matter involving a FERS employee will routinely check to determine if the participant has any prior credited service with CSRS (which may increase the size of his or her final retirement annuity).

DRAFTING ADVISORY:
If CSRS credited service time exists (for a FERS participant) then the practitioner must determine the extent of the marital/community component of the respective pensions. Generally, failure to conduct this investigation will be to the detriment of a Former Spouse, because the size of the actual benefit payable at retirement will be understated. Regarding responsibility for any determination of "dual service" the Former Spouse's attorney is the burdened attorney as he or she has the duty to discover any potentially enhanced benefit that could be payable to his or her client.


THERE IS ANOTHER FEDERAL RETIREMENT PLAN

This other federal retirement plan is the THRIFT SAVINGS PLAN (TSP). All FERS employees participate in TSP. Participation is voluntary for CSRS employees. This separate and distinct plan will be covered in a separate article on the Troyan, Inc. website.

TWO USEFUL DEFINITIONS

Court Order (OPM Definition): any judgment or property settlement issued by or approved by any court of any State in connection with, or incident to, the divorce or annulment of marriage of a Federal employee or retiree.
(COAP) Court Order ACCEPTABLE for Processing (OPM Definition): a court order that meets the requirements of 5 C.F.R. 838 (and applicable subparts) providing for the division of an employee's annuity (read pension) and or an award of a Former Spouse survivor annuity.

Q. Does the Employee Retirement Income Security Act (ERISA) apply to Civil Service Retirement System (CSRS) pensions and Federal Employees Retirement System (FERS) pensions?

A. No. Sections 1003(b)(1) and 1051 of title 29, United States Code, exempt CSRS and FERS from ERISA. Both CSRS and FERS are "governmental plans" as defined in section 1001(23) of title 29, United States Code. Because CSRS and FERS are exempt from ERISA, in order to assign a portion of an employee's retirement or survivor benefits to a Former Spouse the applicable form of Order will not be a "Qualified Domestic Relations Order" (QDRO), rather the required form is a "Court Order Acceptable for Processing" (COAP).

Q. Which Federal Benefits are subject to division upon divorce by a state Court's Order?

A. A court order related to a divorce or separation may assign the following
Federal Benefits to a Former Spouse or require the indicated action:

Annuity Benefits of a Civil Service Retirement System (CSRS) or Federal Employees' Retirement System (FERS) participant,

A refund of a CSRS or FERS participant's retirement contributions,

A Former Spouse Survivor Annuity payable upon the death of an employee or retiree,

Require an employee or retiree to assign his or her Federal Employees' Group Life Insurance (FEGLI) coverage to a Former Spouse or children,

Require an employee to name his or her Former Spouse or children as irrevocable beneficiaries under FEGLI.

Permit a Former Spouse to continue coverage under the Federal Employees Health Benefits (FEHB) program.
Q. Does OPM require specificity in a COAP regarding employee benefits to be assigned to a Former Spouse?

A. Yes. Depending on the scope of an award to a Former Spouse a COAP may require as many as three separate provisions, each provision distinctly addressing one of the types of benefits that a court pursuant to the federal statutes may assign to a Former Spouse. This requirement for specificity cannot be overstated. The practitioner must be clear that his or her COAP should specify as applicable to your matter the items indicated immediately below:

One: assignment of pension (annuity) benefits to a Former Spouse (these are benefits that will be paid to a Former Spouse over the lifetime of the retiree.

Two: assignment of survivor benefits to a Former Spouse

Three: provision for a Former Spouse to receive all or a portion of any refund of a participant's contributions

Drafting Advisory:

The submission of your Certified COAP must be accompanied by a "certified" (or your jurisdiction's equivalent) copy of the Final Judgment of Divorce. Anything provided for in the COAP must have a clear basis in the Final Judgment of Divorce If awards delineated the COAP are not specified in the Final Judgment of Divorce, OPM will, depending on the degree of contradiction, either ignore such award or find your Order "not acceptable for processing". As is emphasized in many of these Drafting Advisories, the key document is the Property Settlement Agreement. Failure to clearly and specifically incorporate each award to a Former Spouse into this instrument may result in loss of entitlement to a Former Spouse. Troyan, Inc. suggests that you consult with your pension attorney prior to crafting the allocation of pension benefits sections of your Property Settlement Agreement. This is especially the case with some of the more complex sub-systems, e.g. Foreign Service, C.I.A.

DRAFTING ADVISORY:

TRANSFERRING FROM CSRS TO FERS

An employee can transfer from CSRS to FERS without the consent of his or her current spouse. However, if the participant has a Former Spouse and such Former Spouse is entitled, by court order, to a portion of the participant's CSRS annuity or CSRS survivor benefits (it need not be both), then the transfer rules (to FERS) are different, provided each of the following apply:

A COAP is on file at OPM,
The Former Spouse has not remarried before reaching age 55,
The Former Spouse is still living.

If all of the above apply, then a participant cannot transfer to FERS without his or her Former Spouse's consent. Such consent must be by Form SF 3110 (Former Spouse's Consent to FERS election)

Loss of Benefits Drafting Advisory: The experienced practitioner is aware that if a participant elects to receive a refund of his or her retirement contributions then his or her right to an annuity is terminated. This termination is mandated by statute.

What must be clear to the attorney representing a Former Spouse is the difference in value between a lump sum election and an annuity election. For long service participants the present cash value of the annuity will substantially exceed the lump sum value. Hence, an attorney representing a Former Spouse must routinely insert language into the Property Settlement Agreement prohibiting such lump sum election by a participant. Failure to make such an insertion will be to the economic detriment of a Former Spouse.

The participant may elect a refund of his or her contributions or an annuity. Not both. This is an "all or nothing"* election. A participant may not elect a partial refund and the balance in the form of an annuity. If an attorney representing a Former Spouse seeks to protect the Former Spouse from such lump sum election by the member it is the obligation of this attorney to make clear to a court that language should be inserted into the Order to prevent an election by a participant to a refund of retirement contributions. However, such language without an additional insertion is not sufficient. Pursuant to 5 C.F.R. 838.501, it is not sufficient for a court to simply insert language into the Order that bars the participant from making the refund election. For such prohibition to be acceptable to OPM, a court must in addition grant a survivor annuity or a portion of the participant's retirement annuity to a Former Spouse. The award to a Former Spouse of even $1.00 of survivor annuity benefits is sufficient to bar a refund election by a participant. At the outset of negotiations it is useful for the practitioner to be mindful of the impact of a refund election and the procedures necessary to bar such option election by a participant.

*There is an exception to this "all or nothing" election. An "Alternative Annuity Option" is available to a participant who qualifies under all of the following:\

The participant has a life-threatening or other critical medical condition,
The participant is retiring but not on disability,
The participant does not have a Former Spouse entitled to court ordered benefits.

If all of the above three criteria are met then a participant may elect a lump sum payment equal to his or her contributions to the retirement system and an actuarially reduced monthly pension.

Divorce Subsequent to Retirement:

Drafting Advisory: A unique issue regarding the interests of the Former Spouse arises when a divorce action commences close to or subsequent to the retirement of the employee. From the point of retirement up to the implementation of a COAP, all retirement payments will be paid to the retiree. The attorney representing the Former Spouse must recognize this issue and take the necessary action to minimize this loss of "income" to his or her client. For an attorney representing a Former Spouse's to take effective action he or she should have knowledge of and act upon the fact that OPM will honor an "interim order". See 5 C.F.R. 838.236(b):

Except as otherwise provided in this subpart, OPM will honor court orders acceptable for processing that direct OPM to pay the employee annuity to the court, an officer of the court acting as a fiduciary, or a State or local government agency during the pendency of a divorce or legal separation proceeding.

When a participant is currently receiving a pension, this "interim order" may direct OPM to pay the pension benefits to the court, an officer of the court acting as a fiduciary, or a State or local government agency (during the course of a divorce or legal separation action). This "interim order" need not be deemed inequitable to the titled-spouse. Should the court determine or the parties agree to a lesser benefit for the Former Spouse then the "excess" deposits placed with the court will be returned to the retiree.

The purpose of the "interim order" is to avoid an arrearage issue. It is suggested that an attorney representing a Former Spouse make prompt use of an "interim order" during the course of a divorce action involving an employee in retired status. We consider it a mandate to act on the part of the Former Spouse's attorney in order to avoid loss of benefit payments to his or her client for the period beginning with a point shortly after the Former Spouse retains counsel through to OPM's acceptance and implementation of an Order. Absent use of this temporary Order, a Former Spouse may be required to bargain for that which would otherwise have been due to him or her. Moreover, failure to employ this procedure and a further failure on the part of a Former Spouse's attorney to incorporate arrearage language into a Property Settlement Agreement may result in permanent economic loss to his or her client.

Q. Will OPM accept a COAP calling for retroactive payments to a Former Spouse?

A. No. All payments are prospective. However, earlier pension payments made to a retiree and not shared with a Former Spouse or other arrearages attributable to the participant/retiree could be recognized in a "two-tier" payment scheme. However, it has been Troyan, Inc.'s experience that "two-tier" formats present complex drafting issues. A simpler method of dealing with arrearages is to convert the sum of the arrearages into an "actuarially equivalent" monthly benefit and increase the pension otherwise payable to a Former Spouse by this amount (this is not complex, but, for practitioners seeking guidance on this procedure please contact Troyan, Inc.). What is essential is that the Final Judgment of Divorce provide a foundation for this remedy by specifically addressing the possibility of an arrearage and clearly indicating the remedy (the Former Spouse is to have his or her benefit increased by the actuarial equivalent of any arrearage). If properly crafted OPM will not oppose arrearage language. OPM deems its functions as ministerial and will follow the "plain language" of the settlement. This arrearage language need not be offensive to OPM provided a proper foundation for this procedure is found in the Property Settlement Agreement. The COAP simply gives effect to the language of the Property Settlement Agreement. The existence of an accrued arrearage is thus recognized and resolved in the COAP. An "arrearage" COAP simply incorporates the increase in the benefit due to the Former Spouse as determined by the actuarial equivalence of the arrearage. Because the enabling language was clearly provided for in the Property Settlement Agreement OPM has no reason to object to an "actuarially enhanced" award to a Former Spouse. Moreover, as part of the Property Settlement Agreement it is suggested that the fees and other expenses related to implementing this remedy be paid by the participant. If your Property Settlement Agreement contains requisite anticipatory language, failure to pay such fees can be added to the gross arrearage attributable to non-receipt of pension benefits. SEE APPENDIX "A" FOR AN ILLUSTRATON OF "ACTUARIAL EQUIVALENCE".

Q. Apart from pension (annuity) and survivor benefits are there other benefits that are available to a Former Spouse?

A. Yes. If format and eligibility criteria have been met a Former Spouse may be eligible for Federal Employees Health Benefits (FEHB) and Federal
Employees Group Life Insurance (FEGLI).

THE ASSIGNMENT OF PENSION BENEFITS TO A FORMER SPOUSE DURING THE LIFETIME OF A FEDERAL EMPLOYEE.

Q. What are the specific federal requirements that must be met for a court order assigning retirement benefits to a Former Spouse to constitute a COAP?

A: The former spouse is a living person whose marriage is subject to divorce.

The former spouse was married to the participant for more than 9 months.
The participant must have performed at least 18 months of civilian service covered by CSRS or FERS.
The marriage was terminated prior to the death of the employee.

Q. What are the specific types of pension (annuity) that may be paid to a retired employee?\

A. Self-Only Annuity

Gross Annuity

Net Annuity

Self-only annuity: the recurring unreduced payments under CSRS or FERS to a retiree with no survivor annuity payable to anyone.

Gross annuity: the amount of monthly annuity payable after reducing the self only annuity to provide survivor annuity benefits, if any, but before any other deduction.

Drafting Advisory: If a Former Spouse has not been awarded a Former Spouse Survivor Annuity then the attorney representing said Former Spouse should insert into the Property Settlement Agreement that the type of annuity to be used in computing the benefit to be paid to a Former Spouse is the Self-Only Annuity. The reason for this suggestion is: should the participant subsequently remarry and elect a survivor annuity with a new spouse, the retiree's pension will be reduced to recognize the cost of this election of a surviving spouse annuity with his or her then current spouse. The attorney representing the Former Spouse does not want this Former Spouse to participate in paying the cost of a survivor spouse annuity for a subsequent spouse. To avoid this type of reduction to the pension payable to a Former Spouse be sure to insert into your Property Settlement Agreement that the basis for any computation of a Former Spouse's benefit will be the self-only annuity. When you use the required language to insulate a Former Spouse from pension reduction, a subsequent remarriage and survivor annuity election will be without effect on the pension payable to a Former Spouse.

Net annuity: the amount of monthly annuity payable after deducting from the gross annuity any amounts that are


(1) owed by the retiree to the United States,

(2) deducted for health benefits premiums

(3) deducted for life insurance premiums

(4) deducted for Medicare premiums,

(5) properly withheld for Federal income tax purposes, provided the amounts withheld are not greater than they would be if the retiree claimed all dependents to which he or she was entitled,

(6) properly withheld for State income tax purposes, provided the amounts
withheld are not greater than they would be if the retiree claimed all dependents to which he or she was entitled.

Q. For a court order to comply with COAP rules must the practitioner clearly specify the type of pension that is to be used for purposes of computing a Former Spouse's part of such pension?

A. It is not necessary. Nevertheless, it is suggested that the type of annuity
you intend to be the basis for OPM's computation of the Former Spouse's
pension be inserted into your Order to avoid subsequent surprise and likely
dismay. Pursuant to relevant sections of the CFR, unless a court order specifies
"net annuity" or "self-only annuity", OPM will apply the formula, percentage, or
fraction; to the participant's gross annuity [5 C.F.R. 838.306(b)]. Recall, from the above discussion of annuity types that the size of a pension award to a Former Spouse is determined by the type of annuity used to compute said Former Spouse's pension benefit. The standard types of annuity to which OPM can use for purposes of this computation are covered in a prior question. If you are not sure which type is applicable (in the best interest of your client) consult with your pension attorney.

Drafting Advisory: Regarding federal retirement benefits it is essential to use
terms as they are understood by OPM. The following is intended to provide
OPM synonyms for the various types of annuity (5 C.F.R. 838.625):

Net Annuity:

Disposable Annuity
Retirement Check

Self-Only Annuity:

Unreduced Annuity
Life Rate Annuity

Drafting Advisory: An attorney representing a Former Spouse must be alert to any attempt to insert into a Property Settlement Agreement and then into a
COAP the term "net annuity". If the "net annuity" is the basis for the computation of a Former Spouse's annuity it is likely that this Former Spouse's portion of the retirement annuity will be significantly reduced due to the many permitted reductions under this type of annuity.

Drafting Advisory:

Once you have correctly delineated the type of annuity to be used, the next step is to insert into the COAP sufficient instructions and information for OPM to compute the amount of the Former Spouse's share of the participant's pension.

Regarding this computation process you may specify:

A Fixed Percentage of the pension

A Fixed Amount of the pension

A Formula Award.

If you opt for a Formula Award your COAP must not contain any variables whose values are not readily ascertainable from the text of the COAP or from the "normal OPM files". Data generally available in the OPM file includes:

The dates of employment for all periods of creditable civilian and military service,
The rate of basic pay for all periods of creditable civilian service,
The annual rates of basic pay for each grade and step under the General Schedule,
The provision of law under which a retiree has retired,
Whether the retiring participant has elected to provide survivor benefits for a current spouse, former spouse. \

Q. Is it prudent to assume that OPM will compute the marital/community portion of a CSRS or FERS pension in a manner that is consistent with the procedures applied in your jurisdiction?

A. Please be patient with this answer. It was necessary to provide some foundation language to make the response meaningful

OPM uses the term "service computation date" (SCD) to indicate the first day of credited service for pension purposes (this is generally the employee's actual date of hire). If military service time is added to regular civilian service the OPM simply adjusts the SCD for the period of military service.

For example assume an individual began civilian service on February 1, 1990. Also assume this person was credited with five years of military service, which was rendered from 1975-1980. This prior military service would be recognized by OPM' adjusting the SCD from February 1, 1990 to February 1, 1985. Assume this individual was married on January 31, 1985. Based on this scenario the actual SCD and the adjusted SCD are both within the marital/community period. An uninformed attorney for an employee might permit inclusion of this service into the marital/community component when in fact this service was rendered prior to marriage. Due to OPM's methodology all of this employee's service will appear as service rendered during the marriage. To exclude such service from the marital/community component it is necessary for the attorney representing the titled-spouse to investigate to determine the nature of the service included within any SCD. OPM will if questioned provide such clarification.

Moreover, absent attorney clarification, OPM is likely to include this pre-military service in the marital/community component. The informed attorney will provide clear instruction to OPM on this point.

Drafting Advisory: Regarding SCD, the burdened attorney is the attorney representing the employee. It is the obligation of this attorney to understand how OPM determines an employee's SCD. This attorney must then clearly delineate in the Final Judgment of Divorce how to credit (if at all) military service for marital/community property purposes. If this attorney instructs OPM not to include military service rendered prior to marriage as marital/community property, OPM will comply and the award to a Former Spouse will be reduced to reflect military service which in fact was rendered prior to marriage.

Q. How is an existing court order that awarded a Former Spouse a portion of a Military pension treated when there is subsequent service in CSRS or FERS and the participant retires from civilian service.

A. First the practitioner should know that receipt of military retired pay generally prevents adding such military service to CSRS or FERS civilian service unless the retiring civilian employee elects to waive his or her military retired pay, and have the military service added to his or her civilian service when computing the civilian pension.

Q. Can flawed language lead to an expanded benefit for a Former Spouse?

A. Yes. If a practitioner intends to limit the award to a Former Spouse to a fixed benefit confirm that your language supports such an interpretation.

Drafting Advisory: This language of limitation must be clear and not implied. On point is Perry v. OPM, 243 F.3d 1337. In this case the division of the participant's federal benefits was clearly at variance with Florida's Supreme Court (Boyett v. Boyett, 703 So. 2d 451). The position of the U.S. Court of Appeals for the Federal Circuit in the Perry case made clear that the presumed intent of the parties does not, in the federal courts view, rise to the level of a mandate. Such intent will not be a factor in federal deliberations. OPM, pursuant to Perry was found to be correct in disregarding a state's family law and the plea of the Husband that the COAP was at variance with the intent of the parties. The Federal Circuit agreed that OPM's interpretation of the COAP was in compliance with the federal guidelines.

Drafting Advisory:

CSRS and FERS pensions are increased annually by a post-retirement COLA. For CSRS see: 5 USCA 8340. For FERS see: 5 USCA 8462. A flawed view on how this post-retirement COLA is interpreted by OPM may cause the attorney for a participant embarrassment. Such attorney may believe that failure to provide for such COLA in the settlement results in loss of entitlement by a Former Spouse and the retention of the entire post-retirement COLA by the participant. The practitioner is directed to 5 C.F. R 838.241 which essentially provides as follows:

Unless specifically denied to a Former Spouse in the court order, post-retirement cost-of-living adjustments will be effected for a Former Spouse at the same time and at the same percentage rate as the cost-of-living adjustment of the retiree.

Q. When do pension payments to a Former Spouse begin?

A. Pension payments to a Former Spouse begin on the first day of the second month after OPM receives the court order (provided the participant is receiving a pension.

Drafting Advisory:

Unlike ERISA plans, payments to a Former Spouse may not begin prior to the actual retirement of the participant. It is suggested that the practitioner avoid crafting an Order mandating payments to a Former Spouse prior to the actual retirement of a participant.

Q. What is the maximum pension benefit that may be awarded to a Former Spouse?

A. Payment to a Former Spouse pursuant to a COAP may not exceed the net annuity of the retiree. See 5 C.F.R.838.211(b). Thus, the maximum pension that may be paid to a Former Spouse is 100% of the participant's "net annuity". This position was clearly expressed in the DeMelo decision (143 Fed. Appx. 344):\

if the court awards a Former Spouse 100% of the participant's "gross annuity", the actual award as implemented by OPM will be 100% of the "net annuity."

Drafting Advisory: Do not be misled by the term "net annuity" when representing a Former Spouse, that term should be avoided. When it is your intent to award to a Former Spouse the maximum annuity (pension) payable then your Property Settlement Agreement and subsequent instruments will simply provide for a Self-Only. If survivor rights are given it is likely that the type will be "Gross Annuity". To avoid mandating an amount in excess of the maximum payable to a Former Spouse, provide that the annuity awarded to said Former Spouse shall not be greater than 100% of the net annuity otherwise payable to the participant.

Q. Is any portion of a participant's pension received tax free? (FROM CSRS ONLY. THIS Q&A IS LIMITED TO CSRS)

A. Yes. Pursuant to 26 USCA 72(b), 26 USCA 72(m)(10) the federal government creates an "exclusion ratio" at the time the participant retires. Pursuant to the cited statutes a portion of each retirement payment is attributed to a participant's after tax employee contributions and thus not subject to a federal income tax (when the benefits are received) on the basis that the tax has already been paid. A Former Spouse by operation of law is entitled to his or her percentage of this "exclusion ratio". Though not developed herein this "exclusion ratio" may be applicable to state and municipal plans that require an equivalent employee "after tax" contribution.

FEDERAL EMPLOYEES - DISABILITY RETIREMENT

The purpose of this section is to enable the practitioner to negotiate and draft in a proficient manner regarding a participant's possible retirement for disability from either of the two major Federal Retirement Systems. Additionally, we suggest that the prudent attorney discuss this potential for an unanticipated disability retirement with his or her client. Such discussion will be of sufficient detail and clarity to establish that the client was fully informed and understood the outcomes resulting from a participant's retirement for disability. This prudent action by the family practitioner should help minimize the likelihood of a future claim being lodged against the practitioner for failure to address a potential for disability retirement and to make clear to his or her client the impact of the subsequent disability retirement of the member.

Q. Will OPM divide a pension based on retirement for disability?

A. Yes. A CSRS participant may qualify for a disability pension based on 5 USCA 8337. A FERS participant may qualify for a disability pension based on 5 USCA 8451.

COMMENTARY:

In a practical sense the fact that a participant may retire pursuant to a disability retirement statute will rarely be the basis for a family law issue. Rather, the issue for the practitioner will frequently be:

Was disability retirement clearly a subject of the negotiations, settlement, Final Judgment of Divorce, a COAP?

If the answer to the above question is yes, the immediate issue becomes; was the issue treated with sufficient clarity and specificity to enable OPM to divide the pension in compliance with the "plain language" of the Agreement?

If the retirement of the participant for disability was not negotiated and addressed at the time of divorce, how will OPM divide (if at all) the participant's post-divorce disability pension?

Will the division of a pension attributable to disability as implemented by OPM cause one or both of the parties to the action to cry foul as a result of an unanticipated and unfavorable outcome? Is the degree of dismay on the part of a disadvantaged party to the action sufficient for that party to call into question attorney competence regarding his or her knowledge and skills as they relate to the division of retirement benefits incident to a retirement for disability?

Regarding disability pensions, OPM's administrative guidelines as found at Appendix A to Subpart J of Part 838 may be of little help to the drafting practitioner. This section of the C.F.R. provides in relevant part:

OPM will not divide disability retirement benefits when such a division would be contrary to State law unless the order expressly directs division of "disability" benefits.

Troyan, Inc.'s concern is that reliance on the above part of the C.F.R. could leave the division of a participant's disability pension up to OPM's interpretation of the applicable law of your state. See Levy v. Office of Personnel Management, 1992 U.S. App. LEXIS 17615 It is strongly suggested that practitioners recognize disability retirement as an essential subject for negotiation.

At the time of negotiation and divorce the parties are assumed to be healthy. Thus , the need to address at the time of divorce pension benefits resulting from a disability retirement may appear unnecessary to the inexperienced practitioner. Troyan, Inc. views a settlement that fails to recognize the possibility of a future disablement and retirement (on the basis of such disablement) as flawed. Statistically, the probability of disablement before retirement is greater than the probability of death prior to retirement. The possible disablement and receipt of a disability pension by the participant is an essential subject of negotiation in a divorce action involving a federal employee. Language giving full recognition to this hazard should be considered integral to a properly crafted settlement. It is a professional obligation that attorneys have the requisite content knowledge and are able to negotiate and draft effectively regarding disability pensions. Before a practitioner can effectively draft on the issue of disability retirement he or she should have a clear understanding of the process to compute both a CSRS and a FERS disability retirement benefit. Alternatively, note that Troyan, Inc. can provide informed support on this issue.

BASICS: COMPUTATION PROCEDURES REGARDING CSRS AND FERS DISABILITY RETIREMENT
ANNUITIES (PENSIONS).

CSRS DISABILITY RETIREMENT ANNUITY

CSRS requires at least five years of creditable civilian service before a participant can qualify for a disability retirement benefit. If a participant has more than 21 years and 11 months of credited service at the time of disablement he or she will receive their accrued benefit as of the date of disablement. Thus, for the long service CSRS employee, retirement for disability provides the same pension as the pension for a traditional retirement (5 USCA 8339).

What follows is relevant to CSRS participants with less than twenty-one years and eleven months of credited service.

COMPUTATIONS:
The annuity of an employee or participant retired for disability pursuant to 5 USCA 8337, is the greater of Method A or Method B.

Method A:
The participant's actual earned annuity as of the date of disablement based on service performed to that date or

Method B
the lower of -
(1) 40 percent of final average pay (FAP) as of the date of separation (read retirement); or
(2) the sum obtained after increasing the participant's credited service by the period elapsing between the date of separation and the date he or she becomes 60 years of age.

Method A,
This method computes the participant's "earned annuity" as of disablement.
The rates of benefit accrual for a CSRS pension are;
1.5% multiplied by the first 5 yrs. of service multiplied by FAP*
1.75% multiplied by the next 5 yrs. of service multiplied by FAP*
2% multiplied by the remaining yrs. of service multiplied by FAP*
*FAP means Final Average Pay

Fact pattern for illustration:
Participant's age at disablement 45
Participant's service at disablement 16 years
Participants FAP $38,000.00

Method A benefit:
At 16 years the percent of accrual is: 28.25%
$38,000.00 multiplied by 28.25% = $10,735 (annual)

Method B:
The applicable outcome is the lower of the First or Second Format.

First Format:
40% multiplied by $38,000 = $15,200.00 (annual)

Second Format:
31* yrs. multiplied by the applicable rates of accrual shown above and then
multiplied by $38, 000 = $22,135.00 (annual)

* This assumed 16 years of service prior to disablement. Thus 16+ (time from disablement at age 45 to age 60 = 15 years) 15 = 31 years.

Conclusion: We now compare outcomes to find the benefit to be paid to the disabled employee. Method B, First Format, produced the applicable pension. Thus, the annual pension initially paid to the participant in this scenario is $15,200.00 annually or 1,266.67 monthly.

FOR ADDITIONAL ILLUSTRATIONS OF THIS CALCULATION PROCESS SEE APPENDIX "B"

Drafting Advisory:
One of our aims in preparing Appendix "B" was to establish that a mathematically derived calculation procedure that will accurately compute a prospective disability benefit to be paid to the future disabled retiree is not available at the time of settlement. What is essential is that the practitioner is clear on this "time of divorce unknown" and thus applies a strategy that is protective of his or her client's interests.

FERS DISABILITY RETIREMENT ANNUITY

FERS requires 18 months of civilian service before a participant can qualify for disability retirement.

CAUTION:
The amount of detailed knowledge the practitioner must possess to negotiate and draft against the hazard of a participant's post-divorce retirement for disability from FERS is greater and more complex than the information required to draft against a CSRS disability participant because:

The determination of a FERS disability pension is unlike the clear formulas used for CSRS disabled retirees. Quite the contrary, there is no clear single set of rules that apply. Rather there are many separate and distinct calculations, based upon a participant's age and the amount of credited service accumulated up to the point of disablement (retirement).

Moreover, the practitioner is urged to recognize that for many FERS disability retirees the disability pension is not a single sum payable for the lifetime of the retired member. Rather the FERS disability pension is recomputed after the first 12 months of benefits payments and again upon the disabled retiree attaining age 62 (assuming the participant was under age 62 at the time of disablement).

Drafting Advisory:
A traditional formula or time line formula (both are formulas that rely on marital/community years over total years of service) is difficult if not impossible to apply to an award to a Former Spouse of a portion of a FERS disability retirement pension since the language for the Property Settlement Agreement is crafted prior to the disablement of the participant. The prior sentence assumed a length of service at the time of divorce of less than twenty years of service. This differs from CSRS where the equivalent statistic is 21 years and eleven months..

Traditional benefit allocation formulas deal with ascertainable (future) pensions based on a non-disability retirement. What must be avoided is OPM making a calculation of what it finds to be the pension benefits due to each of the spouses. This avoidance is due to the fact that there is no certainty that OPM's division will comply with the intent of the parties as it existed at the time of divorce. To craft an anticipatory FERS disability retirement allocation to the respective spouses presents counsel with challenging issues that may not be resolvable at the time of crafting a Property Settlement Agreement due to the fact that a Social Security offset is applied as is discussed immediately below. This offset is not ascertainable at the time of divorce. Moreover, the Coverture Fraction (time line) is at issue due to statutory method of computing the post age 62 disability retirement benefit. This issue of the Coverture Fraction (time line) and the division of a FERS disability retirement pension will be found at Appendix "C".

Disability Pension for FERS Participants Retiring Prior to Age 62.

Part One: The disability pension paid up to age 62.

For the first 12 months immediately subsequent to disability retirement the benefit is 60% of the participant's Final Average Pay reduced by 100% of any benefits payable as a result of entitlement to Social Security Disability Benefits.

After the first 12 months, and prior to attaining age 62. The pension is 40% of the participant's Final Average Pay reduced by 60% of any benefits payable as a result of entitlement to Social Security Disability Benefits.

AFTER ATTAINING AGE 62, the pension will be recomputed as follows:
Step I.
Determine the total years of service assuming the participant had continued working to age 62 and retired under the non-disability pension provisions.
Step II.
Adjust the participant's FAP by all "pre-retirement COLA pay increases" from the time of his or her disablement to age 62.
Step III.
Apply the FERS basic annuity formula to Steps I & II.

Drafting Advisory:
The practitioner must recognize that there is an alternative to the procedure indicated above. If the participant would have a larger retirement benefit using the benefit formula applicable to a healthy person then the disabled participant may elect this formula. This option must be recognized in your settlement and Order. We again emphasize the need for clarity when dealing with OPM, hence, the pension to be paid to a Former Spouse under this scenario must leave nothing to the discretion of OPM.

Disability Pension for FERS Participants Retiring Subsequent to attaining age 62.

If at the time of disablement the participant is age 62 or meets the age and service requirements for Immediate Retirement, then the computation is as follows:

If the participant had less than 20 years of service, upon attaining age 62 the pension will be 1% multiplied by years of service multiplied by FAP.

If the participant had at least 20 years of service upon attaining age 62, the pension will be 1.1% multiplied by years of service multiplied by FAP.

APPENDIX "C" IS PROVIDED TO ILLUSTRATE THIS COVERTURE FRACTION (TIME LINE) ISSUE.

Q. For federal income tax purposes, how does the Internal Revenue Service treat disability retirement?

A. The information provided in this Q&A is based on IRS Publication 721, Tax Guide to U.S. Civil Service Retirement Benefits (2005 edition). Based on the information found at Part III of this publication:

If a participant retires from either CSRS or FERS under the disability retirement statutes, the disability retirement annuity is "taxable wages" up to the age the participant attains his or her minimum retirement age. Thereafter, payments are treated as a retirement annuity. The significance in the different treatment of the payments is; when the payments are deemed a retirement annuity an employee can begin to recover the cost of his or her annuity (employee contributions) under the annuity exclusion rules found at 26 USCS 72(b). The attorney representing a Former Spouse is again reminded of 26 USCS 72(m)(10) which allocates this tax advantaged distribution between the retiree and a Former Spouse.

DEATH AND SURVIVOR BENEFITS


Q. Do CSRS and FERS provide its members with identical death and survivor benefits?

A. No. There are significant differences in payments resulting from the death of a federal employee that must be understood by the attorney crafting the settlement. As is shown below there are three possible sources for the FERS Death/Survivor Benefit. For the CSRS survivor there is one source the "survivor annuity" (with a single qualification explained below). The magnitude of the benefits do not differ greatly, but the form of the payments do. Hence, it is necessary for the practitioner to clearly delineate the source and form(s) of death/survivor benefits to be paid to a Former Spouse.

Q. What are the CSRS death benefits?

Drafting Advisory: Generally, a death benefit is not payable as a result of the death of a CSRS retiree who was receiving an annuity. However, a lump-sum payment may be made when the survivors' annuities end, provided the survivors have received in annuities an amount less than the member's contributions to the Retirement Fund, plus any applicable interest. However, no interest is payable if the member had paid into the Retirement Fund for less than one year.

Q. When does a Former Spouse become eligible for Former Spouse Survivor Benefits?

A. A Former Spouse becomes eligible for Former Spouse Survivor Benefits when an employee has completed at least 18 months of service, and the Former Spouse was married to the employee for at least 9 months or has a child born of the marriage. If death is accidental then the 18 months of service requirement is deemed satisfied. .

Q. How does the death of a Participant or a Retiree effect payments to a Former Spouse?

A. Payments to a former spouse from a retiree's annuity end upon the retiree's death. Be absolutely clear on this point. For a former spouse to receive payments after the retiree's death, the retiree must elect, or a court order must clearly and specifically provide for a Former Spouse survivor annuity. If your Property Settlement Agreement and ensuing COAP failed to provide both retirement benefits and survivor benefits then all payments to a Former Spouse end upon the death of the participant. Note, the language awarding a Former Spouse Survivor Annuity MUST appear in both instruments (the Final Judgment of Divorce (or Property Settlement Agreement) and the COAP). For emphasis we repeat: Assuming survivor annuity benefits are a part of your settlement: be sure to insert a Former Spouse survivor annuity award in both the Final Judgment of Divorce and the COAP. The divorce instrument varies with jurisdictions. In some the Property Settlement Agreement is incorporated or merged into a Final Judgment of Divorce. Our intent is to alert the practitioner to the necessity of inserting necessary and proper language in the operative underlying document (divorce instrument).

Q. How does the death of a Former Spouse effect the retirement benefit payments (annuity) that would otherwise have been paid to said spouse? Note this question is not a discussion survivor annuities.

A. Unless a COAP expressly provides otherwise, a Former Spouse's share of the participant's retirement annuity (his or her pension) terminates on the last day of the month before the death of the Former Spouse, and the Former Spouse's share of the annuity reverts to the retired participant. If it is your intent that this annuity stream not end upon the death of the Former Spouse then it becomes an obligation of the attorney representing a Former Spouse to provide language to avoid such termination and reversion to the retiree. If you are unclear on the language necessary to prevent such reversion to the retiree, contact your pension attorney.

Drafting Advisory:
Most deaths are untimely. A Former Spouse may leave dependents who subsequent to a Former Spouse's death are without sustenance. Because, this abrupt termination of payments may not have been anticipated by a Former Spouse or his or her heirs the attorney representing said spouse may be confronted with issues and burdens not anticipated at the time of divorce. Such heirs upon learning that this loss of payments could have been avoided by skillful drafting may be inclined to seek a litigated remedy. This is a fertile area for malpractice. The termination of payments described in this Q&A, could have been avoided by an appropriately crafted order.

Drafting Advisory (more a hope than an advisory):
When this circumstance arises, consider the following. it is possible to resolve a confrontation with heirs if the retiree consents to an "amended order". Such amended Order can provide for the continuation of payments to:
the estate of the Former Spouse*
the children of the Former Spouse (natural children and adopted children, but not stepchildren).*
* These payments end upon the death of the retiree.

CSRS SURVIVOR ANNUITY BENEFITS

Q. What is the procedure to award a Former Spouse a Survivor Annuity?
A. A monthly survivor annuity may be payable to a former spouse after the death of the employee or annuitant if clearly and specifically provided for by a court order. Additionally, a retiring employee may voluntarily elect a fully or partially reduced annuity to provide a former spouse survivor annuity. However, if the employee has remarried, any election to provide a Former Spouse Survivor Annuity may only be made if the current spouse consents to such election. This Q&A assumes a live employee.


Q. Is there a length of marriage requirement that must be met to provide a Former Spouse Survivor Annuity?

A. A court-ordered survivor annuity is not available unless the marriage lasted at least 9 months.

Q. When does a Former Spouse Survivor Annuity Begin?

A. A Former Spouse survivor annuity that is based on a COAP begins on whichever day is later: the day after the employee or retiree dies or the first day of the second month after OPM receives a certified copy of the entire court order (along with required supporting documentation).


Q. Is the Former Spouse Survivor Annuity provided by CSRS and FERS identical?

A. No, there are significant differences between the two. Under CSRS, a survivor annuity is payable. Under FERS, a lump sum death benefit is payable, and a survivor annuity is also payable if the employee has 10 years of creditable service.
If death occurs as an employee, a court-ordered survivor benefit is payable to a former spouse if the employee completed at least 18 months of creditable civilian service, and dies while under the Civil Service Retirement System (CSRS) or Federal Employees Retirement System (FERS) retirement coverage.

- Under CSRS, a survivor annuity is payable.
- Under FERS, a lump sum death benefit is payable, and a survivor annuity is also payable if the employee has 10 years of creditable service.
If a separated former employee dies before retirement under CSRS, no survivor annuity can be paid to a former spouse, despite the terms of the court order. In certain limited circumstances, under FERS, a survivor annuity for a former spouse may be payable if a separated former employee dies before retirement.

Q. What is the Effect of Court-Ordered Benefits Awarded to a Former Spouse on Survivor Benefits availability for a Current Spouse?

A. The maximum possible combined total of all current and former spouse survivor annuities equals 55 percent of the rate of a self-only annuity under the Civil Service Retirement System. The maximum possible annuity is 50 percent under the Federal Employees Retirement System. A court order awarding a survivor annuity to a former spouse reduces the maximum that can be paid to a subsequent spouse married to the annuitant at the time of death.

Q. Are there Restrictions on Modification of Survivor Benefits after Retirement?

A. It is very important that provisions intended to award a survivor annuity both reflect the intent of the parties and conform to law and regulations. While orders can be changed before the employee retires or dies, absent special circumstances survivor annuity benefit payments cannot be modified to affect survivor benefits after the employee retires or dies.


Q. How are the costs of a Former Spouse survivor annuity allocated?

A. This is negotiable. The following options exist:

Former Spouse pays the full cost of the Former Spouse survivor annuity.

The employee pays the full cost of the Former Spouse survivor annuity.

The cost of the Former Spouse survivor annuity is proportionately allocated between the parties.

The allocation of the Former Spouse survivor annuity cost is otherwise negotiated between the parties.

Drafting Advisory:
The practitioner will recognize that the term "cost of a Former Spouse survivor annuity" may be misleading. The parties do not "pay" in a strict sense for this benefit, rather the cost is realized by a reduction in benefit.


Q. Does OPM interpret ambiguous language, supply missing provisions or clarify a state court's intent by researching the state law of the issuing state?

A. No. OPM is required to honor the clear instructions of a state court. Such instructions must be specific and unambiguous. OPM does not supply missing provisions, interpret ambiguous language, or clarify the court's intent by researching individual State laws. The practitioner must be clear that OPM performs purely ministerial actions that it deems in compliance with the applicable federal regulations. If there is disagreement between the parties concerning the validity or the provisions of the state court's order, such disagreement must be resolved by the court.

Q. When multiple court orders regarding the same Former Spouse are received how are they treated by OPM?

A. When two or more court orders relate to the same former spouse or separated spouse, the one issued last will be honored.
If the employee, separated employee, retiree, or other person adversely affected by the court order and former spouse submit conflicting court orders from different jurisdictions-

(i) If one of the court orders is from the jurisdiction shown as the employee's, separated employee's, or retiree's address in OPM's records, OPM will consider only the court order issued by that jurisdiction; or
(ii) If none of the court orders is from the jurisdiction shown as the employee's, separated employee's, or retiree's address in OPM's records, OPM will consider only the latest court order.

FERS DEATH AND SURVIVOR ANNUITY BENEFITS

Type of Death Benefits Payable:

The type of benefit(s) payable under FERS depends in part on whether the deceased was an employee, a former employee or a retiree at the time of his or her death. In addition, the amount of creditable Federal service (both civilian and military) and the relationship of the applicant to the deceased determine the type of benefit payable.

Death Prior to Completion of 18 Months of Civilian Service

If an employee dies prior to the completion of 18 months of civilian federal service no death benefit is payable and no survivor annuity is payable.

Death Subsequent to Completion of 18 Months of Civilian Service But Prior to Completion of 10 Years of Civilian Service

Part I. A lump sum payment equal to 50 percent of the employee's final annual pay (or high-3 average salary if higher),

Part II. A single sum benefit that was originally $15,000. This sum is annually adjusted annually for COLA's. The current amount is approximately $26,500.00.

Death Subsequent to the Completion of 10 Years of Civilian Federal Service


Part I above, plus

Part II above, plus

Part III:
In addition to the death benefits provided by Parts I & 11 above a current or Former Spouse is entitled to:

An annuity equal to 50% of the employee's monthly accrued benefit as of the date of said employees death (without reduction for age).

Drafting Advisory:
Because of 5 C.F.R. 838.302, the practitioner must take care with the language used to award a Former Spouse a survivor benefit. Any court order directed at the employee's retirement annuity and expressly providing that the Former Spouse's portion of the employee's annuity may continue after the death of the employee or retiree, or that the former spouse's portion of the employee annuity will continue for the lifetime of the former spouse, is not a court order acceptable for processing. There must be a clear, separate assignment to a Former Spouse of a survivor annuity. Do not assume that a survivor benefit my be inferred from the language of your settlement. It is essential that your language awarding a Former Spouse survivor annuity comply with the federal requirements.

Drafting Advisory: If the employee is at the time of his or her death a "separated employee", different rules apply. Contact Troyan, Inc. for further information regarding drafting against a "separated" employee. Moreover be aware of the fact that former spouse survivor annuity ends if the former spouse remarries before becoming age 55. This remarriage and loss of benefit shall not apply if the former spouse was married for at least 30 years to the individual on whose service the survivor annuity is based.


APPENDIX A


Illustration of Actuarial Equivalence

Member retires 11/1/2004
Parties Divorced 2/1/2005

Assumed Coverture Fraction is 77%

Benefit Assumptions for this Illustration:
Benefit at retirement (mo) $3,500.00
Coverture Fraction: 77%

Thus, marital part of benefit is $2,695.00
Assume Wife Gets Half of Marital Part $1,347.50

Let us now compute the arrearage period

Member Begins Collecting on 11/1/2004

Arrearage is up to 5/1/2006

The duration of the arrearage in years 1.5
Arrearage in months 18

To determine the sum of the arrearage without accrued interest.

Monthly arrearage $1,347.50
Number of arrearage months 18
Thus the total arrearage is $24,255.00

Now let us compute the sum of the arrearage assuming
interest accrued at 5%.

with interest @ 5%
11/1/2004 $1,347.50
12/1/2004 $1,353.11
1/1/2005 $1,358.75
2/1/2005 $1,364.41
3/1/2005 $1,370.10
4/1/2005 $1,375.81
5/1/2005 $1,381.54
6/1/2005 $1,387.30
7/1/2005 $1,393.08
8/1/2005 $1,398.88
9/1/2005 $1,404.71
10/1/2005 $1,410.56
11/1/2005 $1,416.44
12/1/2005 $1,422.34
1/1/2006 $1,428.27
2/1/2006 $1,434.22
3/1/2006 $1,440.20
4/1/2006 $1,446.20
5/1/2006 $1,452.22
Total Arrearage $26,585.65


With the above information we can compute the actuarial equivalence of the arrearage for purposes of a COAP.

Additional Assumptions

Husband's age at 5/1/06 55
His life expectance at age 55 26.1

The math is not shown to convert a single sum to an equivalent monthly benefit.

What is shown is are the values you will need for your COAP

The Actuarial Equivalent monthly benefit to Wife
Assuming no interest
Single Sum Value $24,255.00
Equivalent Monthly benefit to wife $138.80
The Actuarial Equivalent monthly benefit to Wife
Assuming interest at 5%
Single Sum Value $26,585.65
Equivalent Monthly benefit to wife $152.14

So the sum inserted into the COAP is

Assuming no interest Initial Benefit Increase Adj. Benefit
$1,347.50 $138.80 $1,486.30

Initial Benefit Increase Adj. Benefi
Assuming interest $1,347.50 $152.14 $1,499.64


What is the percentage of increase in the Wife's benefit?

No interest accrued 10.30%

Interest accrued 11.29%



APPENDIX B

ILLUSTRATION OF DISABILITY PENSION BENEFITS
CIVIL SERVICE RETIREMENT SYSTEM (CSRS)

The disabled member will receive the greater of Method A or Method B.

Method A
Benefit is "earned annuity"
% Yrs. Pay Mo. Ben
150% 5 $50,000 $312.50
175% 5 $50,000 $364.58
2.00% 2 $50,000 $166.67
Total Mo. Benefit $843.75

Method B
The lesser of Parts 1 or 2 below
Part 1
40% of $50,000 $1,666.67

Part 2
Part 1 but added service to age 60.
% Yrs. Pay Mo. Ben
1.50% 5 $50,000 $312.50
1.75 5 $50,000 $364.58
2.00 26 $50,00 $2,166.67
Total Mo. Benefit $2,843.75

Based on the CSRS format the
Retiree will get each month: $1,666.67


The actual disability benefit to be received by the retiree will be
Method B, Part 1.

Second Illustration
Assumptions
Age 46
Hi-3 pay $50,000
Yrs. Of Service 24

Method A
Benefit is "earned annuity"
% Yrs. Pay Mo. Ben.
1.50% 5 $50,000 $312.50
1.75% 5 $50,000 $364.58
30 $50,000 $1,166.67
Total Mo. Benefit $1,843.75

Method B
The lesser of Parts 1 and 2 Below
Part 1
40% of $50,000 $1,666.67

Part 2
Part 1 but added service to age 60.
% Yrs. Pay Mo. Ben
1.50% 5 $50,000 $312.50
1.75% 5 $50,000 $364.58
2.00% 30 $50,000 $2,500.00
Total Mo. Benefit $3,177.08

See that the Methob B lesser benefit
was $1,666.67

But, the retiree gets the greater of Method A or B. So the
member gets teh Method A or $1,843.75




APPENDIX "C"
ILLUSTRATION OF THE COVERTURE FRACTION ISSUE REGARDING
FERS DISABILITY RETIREMENT BENEFITS

Age at disablement 46
Hi-3 Pay $50,000.00
Credited Yrs of Service 12

Assumed Coverture Fraction at Divorce 100%

Earned Mo. Benefit at Disablement $500.00

Assume wife entitled to half of marital benefit
Thus, monthly to Wife $250.00

What must be understood is that this mo.
Benefit is not paid at any time.

Moreover when the retiree attains age 62 his
monthly benefit is recomputed.

Calculation of Disability Adjusted Mo. Benefit at 62.

Time: disablement to age 62 16
Actual Service 12
Total service for adjusted disability benefit 28

The disabled member's pay is COLA adjusted
Assumed annual COLA pay adjustment 3%
Recall this adjustment would not be available
if the member was not disabled.

Thus the Mo Disability Benefit at age 62 $2,059.37

Issue is the Coverture still
100% of the initial disability benefit
or is the CF applied to the disability adjusted
age 62 benefit?

At 62 the Coverture Fraction could be 42.86%
12
28

Then the Wife would get
Marital Part $882.59
Actual to wife $442.29
Percent of increase if Wife shares in COLA 177%