MSPB: Designated Beneficiary Can Not Overcome Minor Child Entitlement to Annuity
The MSPB affirmed the Office of Personnel Management’s decision to deny a lump-sum payment of retirement contributions to an adult designated beneficiary due to the existence of a minor child entitled to monthly annuity payments.
A federal employee retired in 2008, and designated his daughter as the sole beneficiary of “any lump-sum benefit payable after his death.” When the employee died in 2009, he was also the father to a minor child, living with his former spouse. The designated beneficiary filed an application with OPM for death benefits, but OPM denied the application, finding that the lump-sum payment could not be paid when there exists a child who is entitled to monthly annuity payments. OPM also found that in this matter, there was a child entitled to payments. The designated beneficiary asked for reconsideration, and OPM issued a reconsideration decision several years later affirming its initial decision.
The designated appealed the reconsideration decision to the Merit Systems Protection Board, and claimed that the minor child was entitled to a child annuity, but that the child annuity should not preclude concurrent payment of a lump-sum benefit pursuant to 5 U.S.C. § 8342(c). An MSPB administrative judge, after a hearing, found that the designated beneficiary had not met her burden to establish entitlement to the lump-sum benefit, and held that the designated beneficiary could not receive a lump-sum payment unless or until the minor child’s annuity entitlement terminated prior to the expenditure of the entirety of the employee’s lump-sum Civil Service Retirement and Disability Fund credit. The designated beneficiary petitioned the full Board for review, arguing that the administrative judge had abused her discretion by failure to comply with required procedures.
The Board stated that while it was true that designated beneficiaries “come first in the order of precedence,” this position in the hierarchy only holds true if there is no survivor who is “entitled to monthly survivor annuity benefits on the death of the former employee.” According to the Board, “[i]f an employee dies after retiring under CSRS and is survived by a former spouse who is the natural or adoptive parent of a surviving child of the employee, that surviving child is entitled to a survivor annuity.”
The Board found that the designated beneficiary’s claims concerning the denial of requested witnesses and the administrative judge’s refusal to grant sanctions against the agency for its failure to submit a narrative response and a prehearing statement did not establish a basis for review, and also found that although the designated beneficiary claimed she was denied discovery, there was no motion to compel discovery in the record, and no information that would have changed the outcome was identified.
For the above stated reasons, the Merit Systems Protection Board affirmed OPM’s reconsideration decision.
Read the full case: McDaniel v. OPM
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