§8420 Insurable interest reductions

Summary

When a worker or Member retires under sections 8412, 8413, or 8414 and the Office finds them in good health, they may choose to reduce their own annuity so someone with an insurable interest can get a survivor annuity. The retiree must name that person in writing. The retiree’s annuity is cut by 10%, plus 5% for each full 5 years the named person is younger than the retiree, but the total cut can’t be more than 40%. If the named person dies, the retiree’s annuity is refigured and paid as if no cut had been made, starting the first day of the month after that death. If the named person is the retiree’s spouse, the spouse must waive any right to a survivor annuity under section 8416(a) for the election to be allowed. That waiver rule does not apply if the retiree has a former spouse who would become entitled to survivor benefits under section 8445.