OIG Report: OPM Changed its Policy Regarding Dividing FERS Annuity Supplement Without Proper Notice.
Updated: Jul 8, 2018
On February 5, 2018, the U.S. Office of Personnel Management (OPM)'s Office of Inspector General (OIG) issued Report Number L-2018-1 which detailed its findings, conclusions and
recommendations regarding the change in how OPM handles the division of FERS Annuity Supplements for former spouses pursuant to state-court orders. The OIG initiated this review upon receipt of a complaint filed by the Federal Law Enforcement Officers Association (FLEOA). The FERS Annuity Supplement provides a benefit that acts as a Social Security replacement for eligible FERS Annuitants who retire prior to becoming eligible for Social Security. Since FERS Annuity Supplement began approximately 30 years ago, OPM viewed this provision as one dealing with a Social Security benefit and thus presumptively not to be divided between an employee and a former spouse. However, OPM changed its internal practices and interpretation of the statute regarding the division of the FERS Annuity Supplement and began applying this new interpretation retroactively to eligible annuitants whose supplement had already been divided. The OIG Report found that this internal policy change equated to nonpublic rulemaking and recommended that OPM cease this new practice and go through the public notice and comment rulemaking procedure. OPM did not agree with these recommendations and instead takes the position that its new internal policy more accurately reflects the language of section 8421(c), which OPM asserts requires it to treat the supplemental annuity in the same fashion that it treats the basic annuity for the purposes of court orders dividing employee annuities. For Federal employees who are eligible for the FERS Annuity Supplement and who have or will have a state-court order dividing their pension, this is an important issue to follow. As it stands currently, unless the court order dividing your pension specifically excludes it, OPM will divide both the basic annuity and the supplement.
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