Could I Lose My Federal Pension?

March 20, 2018 George Ray

by George Ray

Late last week we learned that former FBI Deputy Director Andrew McCabe was fired by Attorney General Jeff Sessions. Almost immediately, the press began to report that McCabe had lost his pension—something that he had worked towards for more than 20 years. So, here’s a question (several actually) that came to me from a reader. Could I lose my Federal pension?

The answer is generally no. In most cases, it’s highly unlikely that you would lose your pension, with a few exceptions. Mr. McCabe will likely not lose his either. Although he may not be able to retire at age 50 (his 50th birthday was on March 18, 2018) with 20 or more years of service (as a Law Enforcement Officer) as he was planning, he may still be eligible to receive his pension when he meets the age and service requirements for a regular FERS retirement (although to be honest, we’re not quite sure what caused his removal as the Inspector General’s findings have not yet been made public.) Because at this time it appears that he was fired, we should be more concerned (as should he) about the potential permanent loss of his health and life insurance benefits. It may be too early to tell how all this will affect him. Of course, he has an attorney so there may be a lawsuit which could change the outcome. We wish him well, and I have the feeling he’s going to come out of this just fine, but let’s focus on you.

You likely know that there are age and service requirements that you must satisfy to receive your pension at retirement. But what if you don’t make it to retirement (like Mr. McCabe)? Well, as soon as you begin making contributions from your pay into the Civil Service Retirement and Disability Trust Fund you begin to accrue Creditable Service. Once you’ve accrued a minimum of five years of service, you are fully vested in your pension benefit. This means that if you were to leave service at that time, the Federal government would still owe you a pension, although you may not be able to collect it for many years— likely at age 62 with your five years of service. If you’re covered under the Federal Employees Retirement System (FERS), you also must be a FERS on your last day of service, but regardless, the government still owes you a ‘deferred’ pension benefit. So, once you’ve accrued or earned the benefit, it’s yours to keep and to collect (once you can) even after you’ve voluntarily left Federal service. If you didn’t make it to five years when you left (like Anthony Scaramucci, who only needed another 4 years and 355 days), they don’t owe you anything. Sorry, Mooch.

“But what if I don’t leave voluntarily?” Not everyone does. Lately, we’re seeing more Voluntary Early Retirement Authority (VERA) offers and Voluntary Separation Incentive Payments (VSIPs) or buyouts being made to employees. These are incentives designed to make an involuntary offer to leave (due to lack of funds, a reduction in force, transfer of function, etc.) feel a bit more voluntary. If you accept a VERA, you’re not losing your pension. Instead, your agency has been given permission to temporarily modify the eligibility requirements to let you (likely not just you) take your benefit early. Employees who are (or about to be) separated for cause on charges of misconduct, poor performance, or delinquency are not eligible for a discontinued service annuity, like a VERA, but may still be eligible for a deferred benefit once they qualify for it. If you accept a VSIP or cash buyout only, then you’re in a similar situation to the one we talked about above. If you have five or more years of service, you’ll get your pension someday once you qualify under the age and service requirements. By taking a VSIP, without a VERA, they essentially paid you off to accept a deferred retirement (although there are some exceptions made to allow you to keep some of your other benefits.) If you want more information about VERA and VSIPs, I can recommend a video called “The Employees Guide to VERA and VSIPs”.

“Okay, sure. But what I meant was, what if I really have to leave involuntarily? Like, I heard I could lose my pension if I get fired.” That’s a common misconception among Feds. In fact, there have been cases where employees who are to be removed from service are wrongly told that they should resign rather than being fired for cause so that they won’t lose their pension. If you’re fired and eligible at the time of termination for an “immediate” retirement annuity, you could simply retire rather than being fired. If you retire, your Standard Form 50 (SF-50) will be coded to reflect that you retired rather than being fired (and indicating that an adverse action was pending against you). You can also file for your retirement annuity after termination, it’s still yours. But if you don’t resign, although it won’t affect your ability to get your pension, your adverse record could affect your ability to get another job in Federal service. So how you leave is not so much about your retirement check as it is about your stellar reputation (or more likely a lack of one).

“Okay, George, so what’s the bottom line? Is it actually possible to lose my pension?” Yes, but you must be a very, very bad person. The primary way to lose your pension is to be convicted of a crime against the national security of the United States (you’ll find a listing of these types of crimes under 5 USC Section 8312). As an example, they include things like gathering or delivering defense information to aid a foreign government, the disclosure of classified information, espionage, sabotage against the U.S., advocating the overthrow of the U.S. government, harboring or concealing the enemy, and activities to harm the U.S. armed forces during war. In other words, if you are found guilty of performing extremely heinous acts against the US government, none of us believe you should be awarded a retirement check from the government for the rest of your life. Nope, we don’t care if you’ve got your five years of service accrued or not. No pension for you.

Interestingly, there could be some other folks who may need to be more concerned about these rules lately than you. You see the same section also says that if you falsely testify before a Federal grand jury or a congressional committee that your pension benefit could be taken from you.

Could you lose your Federal pension? The answer for most Federal employees is no. The vast majority of Federal employees perform useful and valuable services for the United States and its citizens, even including helping people and organizations who aren’t US citizens located throughout the world. If you leave service before you’re eligible for an immediate retirement, whether voluntarily or involuntarily, chances are you’ll eventually get your retirement check. But if you are someone who does very bad things, then, yes, you deserve to lose your Federal pension.