There are individuals who spent some years in federal service but left federal service before they were eligible to retire.
If these individuals are married or were married to someone while in federal service and subsequently die, then the spouse or former spouse may be entitled to certain survivor benefits upon the death of this former federal employee.
This column presents benefits paid to a spouse or former spouse upon the death of a former federal employee.
CSRS/CSRS Offset Former Employee
Under CSRS/CSRS Offset, when employees separate from federal service and die before electing a refund of their lump sum contributions they made to the Civil Service Retirement and Disability Fund, or before fulfilling all the retirement eligibility requirements (including filing an application for a deferred retirement benefit) then no survivor annuity is payable to the surviving spouse. But a spouse or children may apply for a refund of the deceased former employee’s contributions to the CSRS Retirement and Disability Fund. Relatives of the deceased former CSRS/CSRS Offset employee should check with the Office of Personnel Management (OPM) to see if the deceased former employee filed Form 2808 (Designation of Beneficiary, CSRS). If the deceased former employee did, then surviving family members including spouses may be entitled to a lump sum payment of the deceased employee’s CSRS contributions.
FERS Former Employee
Upon the death of a former employee who was covered by FERS but who did not meet the requirements for entitlement to a Basic FERS annuity before death including filing an application for retirement, either the deceased former employee’s total contributions made via payroll deductions to the FERS Retirement and Disability Fund or a survivor annuity may be payable to a surviving spouse.
It is important to first define what a surviving spouse is. A widow(er) is considered a surviving spouse if he or she meets one of the following requirements: (1) the surviving spouse and the former employee were married for at least nine months before the death of the former employee; or (2) a child was born from the marriage including (a) a child born posthumously to the deceased former employee and spouse; (b) a child born to the deceased former employee and spouse before they were married; and (3) a child of a prior marriage between the deceased former employee and former spouse.
Survivor Annuity Requirement
The surviving spouse is entitled to a Basic FERS survivor annuity based on the former employee’s FERS service, if the following conditions are met:
- the surviving spouse met the definition of a spouse (see above);
- the surviving spouse was married to the former employee on the date of his or her separation from federal service; and
- the former employee had: (1) at least five years of civilian service covered by FERS deductions or deposits and (2) a total of at least 10 years of creditable service. The 10 years of creditable service includes civilian and military service for which deductions or deposits are in the former employee’s retirement account, and civilian service prior to Jan. 1, 1989 for which the surviving spouse made a deposit.
Any survivor annuity is payable to a surviving spouse, or to a former spouse instead, if required by a court order. If a court order awards the entire survivor annuity to a former spouse, then the current surviving spouse will not receive anything. If a former spouse was awarded only a portion of the survivor annuity, then the current surviving spouse can receive the remaining portion. If the former spouse subsequently loses entitlement to the survivor annuity due to death or remarriage before age 55, then the surviving current spouse will begin to receive the full survivor annuity.
A spouse or former spouse who is not eligible for a spousal survivor annuity may instead receive a lump sum payment of the deceased former employee’s contributions to the FERS Retirement and Disability Fund. The spouse or former spouse should have been designated as beneficiary of these monies via Form SF 3102 (Designation of Beneficiary, FERS).
Survivor Annuity Upon Death of Former Employee – When Does It Start and When Does It End?
The surviving spouse or former spouse can choose to have the survivor annuity begin on:
- the day the deceased former employee would have been eligible for an unreduced (deferred annuity) which is the decedent’s 62nd birthday if the decedent had less than 20 years of service or the decedent’s 60th birthday if the decedent had 20 or more years of service; or
- the day after the date of death of the former employee.
Note that the exception to which date the survivor annuity can start is the case of a survivor spouse whose entitlement to a survivor annuity depends on the birth of a posthumous child. In this case, the earliest date the benefits can begin is on the day after the child is born.
A survivor annuity to a widow(er) ends on the last day of the month preceding the month in which the widow(er) dies or remarries prior to age 55. However, if the widow(er) remarries before age 55 but was married at least 30 years to the individual on whose service the annuity is based, then the survivor annuity will not be terminated. The following example illustrates:
Clara was married to Steve, a deceased former FERS employee with 20 years of service. Clara started receiving a FERS survivor annuity in 2015, the year in which Steve would have become age 60. On February 10, 2019, Clara died. Clara’s FERS survivor annuity ceased as of January 31, 2019.
Computation of a Survivor Annuity Upon the Death of a Former Federal Employee
The amount of a survivor annuity to a spouse or former spouse of a deceased former employee depends on when the surviving spouse or former spouse elects to receive the survivor annuity. There is the unreduced and the reduced spousal survivor annuity which are now discussed.
Survivor Benefits Paid to a Spouse or Former Spouse of a Deceased Former Federal Employee
Unreduced FERS Spousal Survivor Annuity Computation
A spousal survivor annuitant may receive an unreduced survivor FERS annuity no earlier than the age at which the deceased former FERS-covered employee would have been eligible for a Basic FERS deferred annuity. Computing the unreduced monthly survivor annuity is as follows:
- The deceased former employee’s annual Basic Annuity is computed, unreduced for survivor benefits, as if he or she became entitled to receive an unreduced deferred annuity.
- The former employee’s Basic annuity is multiplied by 50 percent to obtain the unreduced annual survivor benefit.
- The unreduced annual survivor benefit computed in #2 is divided by 12 and rounded to the next lower dollar to obtain the unreduced monthly survivor benefit payable to the surviving spouse when the former employee would have reached the age for deferred retirement benefits.
The following example illustrates:
Peter was born November 15, 1959 and died in 2010. At the time of his death Peter had 25 years of federal service. His high-3 average salary at the time of death was $100,000. Peter was married to Renee at the time of his death.
Peter would have become age 60 had he been alive on November 15, 2019. Renee’s spousal survivor annuity is computed as follows:
25 years times one percent times $100,000 times 0.50, or $12,500 per year
($12,500/year)/12 equals $1,042 per month.
Reduced FERS Spousal Survivor Annuity Computation
If the surviving spouse elects to have the survivor annuity begin on the day after the former employee’s death, then the spousal survivor annuity is actuarially reduced as follows:
- The deceased former employee’s annual FERS Basic annuity (unreduced for survivor benefits) is computed as if he or she had become entitled to receive an unreduced deferred annuity.
- The former employee’s Basic annuity is multiplied by 50 percent to obtain the unreduced annual survivor benefit.
- The unreduced annual survivor benefit is multiplied by the appropriate Present Value Conversion Factor (PVCF), see charts 1, 2 and 3.
- The reduced annual survivor benefit is divided by 12 and rounded to the next lower dollar to obtain the monthly reduced survivor benefit.
The following table, together with Charts 1, 2 and 3 show how the reduced FERS survivor annuity is computed:
The following two examples illustrate the procedure for computing a reduced spousal survivor annuity based on the service of a deceased former FERS-covered employee.
Example 1. Frank, born Feb. 3, 1962, separated from federal service in 2010 while covered under FERS. He died in 2013 at age 51 with a high-three average salary of $60,000 and 22 years of creditable service. Frank was married at the time of death to Julie. Julie chose to receive a survivor annuity beginning the day after Frank’s death. Julie’s spousal survivor annuity is computed as follows:
Note the following: (1) if Julie chooses to receive an unreduced survivor annuity starting the month Frank would have become age 60 (2022), her unreduced survivor annuity would be $13,200 times 0.50, or $6,600 per year, or $550 per month; and (2) if Julie chooses the reduced survivor annuity, then her survivor annuity is eligible for cost-of-living adjustments (COLAs). The unreduced survivor annuity is also eligible for annual COLAs.
Example 2. Wendy, born March 1974, died in April 2019 at age 45 with 12 years of federal service under FERS. Wendy actually separated from federal service in April 2017. At that time, her high-three average salary was $100,000. Wendy’s surviving spouse, Joseph, decided to receive a spousal survivor annuity starting in April 2019, His survivor’s annuity is computed as follows:
Note the following: (1) if Joseph chooses to receive an unreduced annuity starting the month Wendy would have become age 62 (March 2036), his unreduced survivor annuity would be $6,000 per year or $500 per month; and (2) both the reduced and unreduced spousal survivor annuity is eligible for COLAs.