MSPB: Retirement credit for military service
We got another call today from a federal retiree on an issue that is appearing more and more frequently. The issue is the effect on a retiree’s retirement annuity if they don’t “buy-in” their post-1956 military service credits into their CSRS/FERS retirement.
Here’s how it works. A federal employee who retires after September 7, 1982 is entitled to receive credit, under both the CSRS and Social Security, for any active duty military service performed after 1956. The employee only gets this credit if he deposits an amount equal to 7 percent of his total post-1956 military pay with OPM. If the employee retires after September 30, 1993, the employee has to make this deposit before he retires.
If the employee does not make the deposit before he retires, when he becomes eligible for Social Security benefits, OPM is required to recompute the retiree’s annuity payments, to exclude the credit for his post-1956 military service. This reduction can be quite significant.
Depending on how many years of post-1956 military service the employee has, the reduction can range from hundreds to thousands of dollars per month. And the reduction hits at the worst possible time - after the retiree has become used to the higher stream of income and at the age of 62, when it is hardest to rebuild the loss of income into your pre-planned retirement nest-egg.
There is a limited opportunity under which OPM can waive the “deposit by retirement” deadline - but it is a very limited opportunity. Essentially, you have to show that you were mislead or confused by OPM as to the amount/effect of the reduction, and that that confusion or deception kept you from making the deposit. Out of the dozens of initial decisions of the MSPB that I’ve recently reviewed on this question, only a very small number of retirees can thread that needle.
Assuming you have the facts to make that limited proof, you’re still likely to have to file an appeal in the MSPB to get the waiver - and that could mean you’ll need to hire a lawyer (preferably one who has practiced before the MSPB) to ensure you can get the decision you need. Even when a retiree prevailed, they didn’t always recover their attorney fees.
Do yourself a favor - make sure you buy in your military service credits before you retire. And if you decide not to, make sure you understand exactly what the consequences will be.
If you want to talk with an MSPB attorney about any of the information you’ve read in this post, don’t hesitate to contact the Attig Law Firm, PLLC, today.
Click here to read OPM’s convoluted and un-helpful rules on the post-1956 military service credits.
Click here to read an explanation that actually makes sense.
