MSPB has published an analysis of laws governing the payment of federal employee retirement benefits that calls into question whether proposals in Congress to dock the annuities of employees who are fired would pass legal muster.
Several proposals raised in Congress last year, and one recently reintroduced in the House, aim to address criticisms that federal employees in effect get away with misconduct or poor performance by retiring or resigning rather than face discipline, and then continuing to be eligible for full retirement benefits.
In particular, a House bill would allow the VA to reduce the annuity of senior executives who are found to have committed certain job-related misconduct, by reducing the years of service credited in their annuity calculations. That bill, like many other proposals arising out of the VA scandal, is widely seen as a precedent for wider application to other agencies and other levels of employees.
MSPB in a recent newsletter that entitlement to a federal retirement benefit is based on a combination of age and years of service, and “it is only when a federal employee is convicted of a particular kind of crime, such as espionage, treason, or advocating the overthrow of the government, that he or she forfeits his or her pension. Thus, a retirement-eligible federal employee who resigns after being informed that he or she will be fired is not vitiating any existing law. The firing, if carried out, would not have affected his or her pension.
“The situation in the private sector is no different. An employee who meets the applicable vesting requirements under a private pension plan does not lose his or her pension when his or her employer fires the employee for cause,” it said.
