Labor & Employment Law Daily Wrap Up, PUBLIC EMPLOYEES—Fed. Cir.: OPM cannot divide divorced federal retiree’s annuity supplement except by express court order, (Oct 14, 2025)

By Jason Albright, J.D.

The plaintiff, who retired at 47, was entitled to and received an annuity supplement, under 5 U.S.C. § 8421, until he would have access to Social Security benefits.

In a case involving a divorced former air traffic controller, the Federal Circuit held that the Office of Personnel Management may apportion a federal retiree’s annuity supplement only when expressly provided for in a court order. 5 U.S.C. § 8421(c), which sets forth a rule for apportioning the annuity supplement, provides that the annuity supplement “shall... be treated in the same way” as the basic annuity amount, and the basic annuity, under 5 U.S.C. § 8467(a), is apportioned to another person only if apportionment is “expressly provided for” in a court order, the appeals court found (Director of the Office of Personnel Management v. Moulton, No. 2024-1774 (Fed. Cir. Oct. 10, 2025)).

The annuity supplement. Some federal employees, the appeals court initially explained, retire before the age of 62 and thus do not have access to their Social Security benefits immediately upon retirement. As a result, they may receive an annuity supplement until they reach the minimum age to qualify for Social Security benefits. The supplement, in turn, is approximately the same value as the Social Security benefit a retiree may receive starting at age 62. See 5 U.S.C. § 8421.

Air traffic controller. The plaintiff is a former air traffic controller with the Department of Transportation. He divorced his wife in July 2004.

Divorce decree. A Colorado state court issued a “Decree of Dissolution of Marriage” stating, in relevant part, that his wife was entitled to a “pro[ ]rata share” of his “gross monthly annuity” and “any benefit [he] earn[ed] based on [his] special [Air Traffic Controller] service.” However, the divorce decree did not explicitly mention allocation of his annuity supplement.

Retired at 47. He retired in May 2010 at age 47, and because he was younger than 62, he was entitled to and received an annuity supplement under 5 U.S.C. § 8421.

Letter from OPM. On August 25, 2016, however, the Office of Personnel Management (OPM) issued a letter to him informing him that it had miscalculated the amount owed to his ex-wife and that he owed her nearly $25,000. The letter stated that his payments would be reduced by $250 per month going forward, except the final installment, which would be reduced by $35.30.

Reconsideration denied. He requested reconsideration, but OPM affirmed its initial decision.

Administrative judge’s interpretation. He eventually challenged OPM’s decision before the Merit Systems Protection Board (MSPB), and an administrative judge (AJ) rejected OPM’s reinterpretation, concluding that Section 8421(c) requires OPM to divide an annuity supplement only if expressly provided for in a court order.

OPM’s petitions for review. OPM petitioned the MSPB for review, and the Board denied its petition, affirming the AJ’s decision. OPM then timely petitioned the Federal Circuit for review.

No express provision. Affirming, the appeals court first observed that 5 U.S.C. § 8421(c) sets forth a rule for apportioning the annuity supplement. It refers to two different amounts, using two different phrases: “[a]n amount under this section,” i.e., an annuity supplement, and “an amount computed under section 8415,” which governs the computation of the basic annuity. The statute then establishes the relationship between these two amounts: the annuity supplement “shall... be treated in the same way” as the basic annuity amount.

The basic annuity, in turn, under 5 U.S.C. § 8467(a), is apportioned to another person only if apportionment is “expressly provided for” in a court order. Thus, to treat annuity supplements “in the same way” means that the supplement may be apportioned only if expressly provided for in a court order, the Federal Circuit found.

That was not the case here, and the decision of the MSPB was accordingly affirmed.

The case is No. 2024-1774.

Judge: Prost, S.

Attorneys: Kyle Shane Beckrich, U.S. Department of Justice, for Director of the Office of Personnel Management. Evan Jennings Mann (Munger, Tolles & Olson) for Ronald L. Moulton. DeAnna Schabacker, Office of the General Counsel, for Merit Systems Protection Board.

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