The Foreign Service Journal, July-August 2024

THE FOREIGN SERVICE JOURNAL | JULY AUGUST 2024 53 Preserving the Annuity Exception AFSA NEWS RETIREE VP VOICE | BY JOHN K. NALAND AFSA NEWS Contact: On Jan. 2, 1975, at the recommendation of White House Chief of Staff Donald Rumsfeld, President Gerald Ford signed a letter to a Foreign Service widow expressing the government’s “deepest regret” at the circumstances surrounding her husband’s death. The president also expressed his hope that corrective measures that “came about as a result of this tragedy will prevent reoccurrences of this kind in the future.” The tragedy was the suicide of FSO Charles Thomas. In 1969 Thomas was separated from the Foreign Service without a pension because he did not receive a promotion before the expiration of his time-inclass (TIC) at a grade equivalent to today’s FS-2. He was 46 years old with 18 years in the Service—short of the age 50 and 20-year service requirement to qualify for an immediate annuity. After his separation, Thomas despaired at not being able to financially provide for his family. He died by suicide in 1971. Problems were belatedly discovered with his file that several promotion boards reviewed. A highly laudatory Inspector’s Evaluation Report had been temporarily misfiled in another officer’s file. Thomas had not been allowed to see and rebut the single negative evaluation report in his file. As documented in presidential briefing materials, now archived in the Gerald R. Ford Presidential Library, the State Department established the annuity exception as one of the corrective measures taken in or before February 1974 to prevent similar tragedies. Currently found in 3 FAM 6213.6, the annuity exception provides that the TIC for a career member of the Foreign Service who is not eligible for voluntary retirement or for an immediate annuity will not expire until the member is eligible for an immediate annuity. The policy applies to State Department FS-2s and below, excluding those separated for relative performance. FS-1s and above whose TIC expires retire on an immediate annuity even if they do not meet standard age and service requirements. Had the annuity exception existed in 1969, Thomas could have worked until age 50 to qualify for a lifetime pension with a survivor benefit for his spouse and continued FEHB health insurance coverage for himself, his wife, and young daughter. The annuity exception has now been in place for more than a half century. Its legal basis is the authority given to the Secretary of State by the Foreign Service Act to, by regulation, increase the maximum allowable TIC as the needs of the Service may require. Nevertheless, in 2019, AFSA learned that some officials in the State Department’s Office of the Legal Advisor were questioning the appropriateness of the provision. AFSA then sent the first of two letters to State officials detailing the historical background and stressing that the annuity exception continues to be a vital safeguard. Boom and bust Foreign Service hiring and promotion cycles in recent decades have several times slowed promotions, leaving a large cohort of employees stalled at FS-2 who in other eras would have risen to FS-1. Despite serving well and honorably, they found their promotion opportunities limited during one of the recurring cycles of lower promotion rates. Those who reach their FS-2 TIC prior to age 50 would thus face separation without a pension were it not for the annuity exception. AFSA’s second letter noted that the U.S. military, on whose procedures the Foreign Service “up-or-out” system has been modeled since the Foreign Service Act of 1946, has its own version of the annuity exception. Military officers at grades O-1 to O-4 (equivalent to FS-6 to FS-3) who are passed over for promotion are kept in service for up to two additional years if needed to qualify for an immediate annuity. The Department of Defense obviously does not view that policy as violating the military’s “up-or-out” personnel system. After reviewing AFSA’s letters and holding in-person discussions with AFSA, the department wrote to AFSA in 2020 saying, in part: “We are not contemplating any change of policy.” AFSA was able to draw on the deep institutional knowledge of its legal staff and its network of former AFSA presidents to highlight for the department the history and justification of the annuity exception to help preserve this vital personnel policy. n Those who reach their FS-2 TIC prior to age 50 would thus face separation without a pension were it not for the annuity exception.