Reg Jones Expert's View

In the last few weeks I’ve talked about increases in income for some or all of you based on salary increases or COLAs and decreases as a result of increases in premium for Medicare Part B and/or health benefits. This time I want to talk about the amounts payable to the surviving spouse of those who die while still employed.

Under CSRS, except for your having worked longer and having a higher high-3, things don’t really change year to year. If you die your survivor spouse will receive an annuity that is 55 percent of the higher of 1) an annuity based on your high-3 average salary and years of service, including any unused sick leave or 2) a guaranteed minimum, which is the lesser of 40 percent of your high-3 or your regular annuity computed as if you had reach age 60. The first calculation is made using the standard CSRS formula (.015 x the high-3 x the first 5 years of service, plus .0175 x high-3 x the next five years, plus .02 x high-3 x all remaining years). The latter is the formula used to compute the annuities of those retiring on a disability. The “disability” benefit will usually equal the earned benefit if you had approximately 22 years of service or were age 60 or older when you died.

However, under FERS, the year-to-year changes are significant. If you had at least 18 months of service of civilian service, your surviving spouse would receive a lump sum payment of $26,584.62 (up from $25,537.58 in 2005) plus a lump sum equal to the greater of 50 percent of your annual base pay or 50 percent of your high-3, plus any Social Security benefit.

If you had 10 or more years of service, your surviving spouse would also receive a survivor annuity equal to 50 percent of what your basic annuity would have been, calculated using the standard FERS formula (.01 x high-3 x years of service), but without any age-based reduction if you were under age 62 when you died..

If there was no surviving spouse entitled to a CSRS or FERS benefit (or former spouse as spelled out in a properly executed court order filed with OPM), your retirement contributions would be paid out to the person or persons you designated as your beneficiary on a SF 2808 (CSRS) or SF 3102 (FERS). Simply putting it in your will won’t do.

If you have neither a surviving spouse nor a designated beneficiary, the money would be paid out according to the standard order of precedence, beginning with your child or children in equal shares, with the share of any deceased child being distributed among the descendents of that child. If you had no children, the money would go to your parents in equal shares or the entire amount to the surviving parent. Failing that, it would go to your duly appointed executor or administrator of your estate. Finally, if you had none of the above, it would go to your next of kin under the laws of the state in which you were living when you died.

Next time I’ll talk about the increase in benefits to the children of deceased federal employees and retirees.