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As a result of Public Law 112-141 (''Moving Ahead for Progress in the 21st Century Act'' or ''MAP–21''), beginning November 6, 2014 federal employees will be able to apply for a new Federal Program, "PHASED RETIREMENT". It is estimated that more than 40% of eligible employees above age 55 may apply for this new federal retirement option. [1]

Phased Retirement impacts on Florida divorce settlements involving members of both Civil Service Retirement System (CSRS) and Federal Employees Retirement System (FERS).

ALERT: Employees Not Eligible for Phased Retirement:

  • Air Traffic Controllers
  • Foreign Service Employees
  • Law Enforcement & Firefighters

Goal of Phased Retirement.

To enhance mentoring and training of the employees who, but not for Phased Retirement would be filling the positions of more experienced employees who would otherwise have opted for full retirement. A major objective of this Program is to avoid a significant depletion of the performance capabilities of the federal government through loss of its most experienced employees. Toward that end experienced workers are encouraged not to leave federal service. Instead this experienced cohort is encouraged to remain, as part-time employees (mentors) during this transition period.

Among the immediate concerns of the family practitioner who has represented clients who are federal employees, is the fact that based upon an election of Phased Retirement, your former client may be startled to find her or his retirement annuity significantly reduced as a result of Phased Retirement. As is developed in this Newsletter, the outcome of previously settled matter that used the Boyett formula (703 So. 2d 451) can be most adverse to your former federal employee client when she or he enters Phased Retirement. This fact alone should cause you to review your files to evaluate the possible ramifications of a Federal Employee's post-divorce entry into Phased Retirement.

Simplified Explanation of Phased Retirement.

Upon entering Phased Retirement, the participant's pension will be calculated and then reduced by 50%. This "pension" is then paid for the Phase Period (generally 60 months). In addition the participant will receive 50% of her or his pay.

At the end of the Phased Retirement Period and upon entry into "Composite" retirement, the retiree's pension is computed as follows:

  • Traditional Retirement Annuity Calculated
  • Traditional Retirement Annuity Reduced by 50%
  • Phased Retirement Annuity is increased by COLA
  • Sum of Half of Traditional Annuity and COLA adjusted Phased Retirement Annuity is the Composite Annuity Paid

Existing Settlements and a Federal Employee's entry into Phased Retirement after November 6, 2014. A Devastating Outcome and an Angry Former Client. [2] The following is an attempt to Illustrate this Adverse Impact to the Federal Employee/Retiree.


Federal Employee Listajo Pacaro

Spouse of Federal Employee Jane Pacaro

Listajo's Date of Birth 12/1/1955

Listajo's Date of Marriage 12/1/1987

Listajo's Date of Hire 12/1/1981

Date Action Commenced 12/1/2013

Age When Action Commenced 58.00

Normal Retirement Age 60

Marital Years of Service (YOS) @ 12/1/2013 26

Total YOS @ 12/1/2013 32

Coverture Fraction on 12/1/2013 81%

Listajo's High Three Yr. Pay @ 12/1/2013 $74,000.00

Total Monthly Annuity @ 12/1/2013 $3,715.32

Monthly Marital Annuity @12/1/2013 $3,018.78

Based on the above Statistics, the Pacaro divorce is finalized on December 1, 2013.

Jane Pacaro is awarded 50% of the marital monthly benefit: $1,509.39 [3]


Note this is a "Boyett" settlement. Jane has been awarded a specific monthly annuity benefit. Listajo relied upon his attorney's advice in settling the case in December 2013. He is confident that his attorney's advice was reliable. This reliance becomes significant when Listajo enters Phased Retirement.

The Bad Experience Arrives.

On December 1, 2015 Listajo enters Phased Retirement. The statistics relied upon for this discussion are found at Appendix A.

It is Listajo's understanding that since his Phased Retirement Annuity is 50% of his total annuity, that Jane's award will also be reduced by 50%.

Listajo's Understanding of the Distribution of the Phased Retirement Annuity.

Total Annuity Payable at start of Phased Retirement $2,026.95

Since this is half of the "Regular Annuity", Listajo believes Jane's annuity will also be reduced by half. No! The C.O.A.P. is clear. Jane's monthly annuity is $1,509.39. There is no language in the Court Order Acceptable for Processing (C.O.A.P) regarding any reduction to Jane's award. Based on the "plain language" of the COAP, Jane will be paid the stated monthly amount.

Listajo's Bad Experience (and perhaps his attorneys).

Phased Annuity for 60 months $2,026.95

Listajo Believes Actual 60 months Annuity

Jane's annuity $754.69 $1,509.39

Listajo's Annuity $1,272.26 $517.57

Total Monthly Annuity 60 months $2,026.95 [4]

Listajo's loss as Percentage -59.32%

Listajo 60 month Loss in Dollars $45,281.40

Based on this scenario it is suggested that Florida attorneys who settled a Federal Employee's Retirement Benefits by application of the Boyett format revisit these files.

One Possible Bad Experience for the attorney representing Former Spouse.

A Phased Retirement participant is not treated as a retiree. Rather this program permits the employee to transition from full time employment to part time employment and at the end of the "Phase" to full retirement. THE PARTICIPATING EMPLOYEE IS TREATED AS A PART TIME EMPLOYEE. [5]

The Office of Personnel Management (OPM) further opined: [6]

How Will Survivor Benefits Work in a Phased Retirement annuity (emphasis mine)?

To make this workable and avoid intractable administrative problems, no survivor benefits can be based upon a Phased Retirement annuity. If the individual dies prior to full retirement, survivor benefits will be those applicable for an employee who died in service, with provision for minor computational adjustments necessitated by the unique nature of Phased Retirement.

The meaning of the above language is less than lucid. A question exists at this time as to whether the death of the Phased Retiree in the 60 month phased period obviates any Former Spouse Survivor Annuity designation in the COAP. We are closely following OPM's Benefits Administration Letters (BAL) to gain further insight to the treatment in the Phased period of a COAP containing a Former Spouse Survivor Annuity.



Federal Employee Listajo Pacaro

Spouse of Federal Employee Jane Pacaro

Listajo Enters Phased Retirement @ Age 60

Hi-3 Salary $75,715.05

Total Years of Service 34

Half Salary Monthly Part $3,154.79

Phased Annuity for 60 months $2,026.95

Total Monthly Phased Retirement Benefit $5,181.74

Monthly C.O.A.P. award to Jane $1,509.39

Jane's award if reduced by 50% for 60 months $754.69

(Since the pension was reduced by 50%

Listajo believes Jane's benefit will also be

reduced by 50%)

[1] Based on a hire date prior to 1/1/1984, virtually all CSRS employees are eligible for Phased Retirement on November 6, 2014.

[2] This Newsletter is limited to Phased Retirement's impact on a CSRS employee/retiree.

[3] Payable upon Listajo's retirement.

[4] Rounding accounts for the slight differences.

[5] 5 C.F.R. 831.1715(g) and 5 C.F.R. 848.205(i)

[6] This citation was taken directly from the OPM website.