An employee’s disability retirement annuity was properly terminated when his income exceeded 80 percent of his previous salary, the Federal Circuit ruled last week.

In this case, a City Carrier retired from his position in April 1986 and received monthly disability retirement payments. On May 11, 2006, after learning from the City Carrier that his income was more than $37,000 in 2005, which exceeded 80 percent of the base salary of his position pay at retirement, OPM gave notice that his disability annuity would end on June 30, 2006. The City Carrier requested reconsideration, stating that the annuity was an unofficial settlement of a racial discrimination claim and therefore that the payment should be continued. OPM did not accept this reason. The City Carrier then appealed to the MSPB, but the MSPB found that the City Carrier’s earned income for 2005 was undisputed, and that he had himself provided the amount of income. He then appealed to the Federal Circuit.

The Federal Circuit began its decision by explaining that an annuitant receiving disability retirement payments before age 60 is considered restored to earning capacity upon re-employment by the government or upon receiving income that exceeds 80 percent of the current pay rate of the position he occupied immediately before retiring. When an annuitant is restored to earning capacity, his entitlement to annuity payments terminates. Brogdon vs OPM (PDF)

source: FEDmanager