McCabe was fired 48 hours before his 50th birthday, and it could have a huge effect on his pension — here's how a pension works

Former FBI Deputy Director
Now McCabe may not be able to receive his pension benefits as expected.
A pension is a defined benefit retirement plan most commonly seen for US government employees, in which an employee contributes to the plan during their tenure and an employer guarantees a post-retirement payout.

Deputy FBI Director Andrew McCabe was fired last week, just two days before he was set to retire early at age 50. His firing could pose a significant risk to his pension benefits and financial future.

McCabe, a 21-year veteran of the bureau, was forced out of the FBI earlier this year amid an internal investigation by the Office of the Inspector General (OIG) into his approval of unauthorized disclosures to the media in October 2016 related to the bureau's Hillary Clinton email probe.

Under the Federal Employees Retirement System (FERS) — a retirement plan for government employees — McCabe was set to receive a pension payout of around $60,000 a year, according to an estimate by CNN. This is a "special 'enhanced' rate" based on his 20-plus years of service as a member of law enforcement and his high annual salary. Since his dismissal, his ability to take the law enforcement calculation has been compromised.

Now McCabe is at risk of losing access to his pension until he's age 56 and eight months. In addition to not receiving monthly payments during this period, McCabe would also lose out on health insurance coverage for himself and his family.

CNN law enforcement analyst James A. Gagliano, a retired FBI supervisory special agent, tweeted that loss of lifetime medical benefits is perhaps "the most significant 'damage' to a separated FBI employee."

What is a pension?

Pensions are defined benefit retirement plans offered through an employer. They're most commonly seen for US government employees, but traditionally they have been offered for union jobs through major corporations.

In a defined benefit plan like a pension, employees pay into the plan over the course of their tenure at the employer. Their payments guarantee a payout from their employer after they retire — either monthly annuity payments or a lump sum. The amount for both of these is determined by how long they worked for a government agency and how much they earned in their position.

In a pension plan, the employer manages the investments for the contributions, and assumes the risk and responsibility of making the payments to retired employees. In recent years, the 401(k) plan replaced the pension at many employers, moving that risk and responsibility to the employees in what's called a defined contribution plan, which doesn't guarantee a given amount in its payouts.

The pension affected by McCabe's dismissal is the FERS retirement plan, which has three elements: the Basic Benefit Plan, Social Security, and the Thrift Savings Plan.

Each pay period, deductions are taken from the employee's paycheck for the Basic Benefit Plan and Social Security.

The Thrift Savings Plan is similar to a 401(k) retirement plan. Contributions are made each pay period by the government agency equal to 1% of the employee's paycheck. An employee can also make contributions to the Thrift Savings Plan, which their employer can match. It's all done on a pre-tax basis.

Post-retirement annuity payments are calculated based on length of service and "high-3" average salary, or the highest average pay earned during any three consecutive years of service.

McCabe may be able to recover his pension

Had McCabe's "involuntary separation," or firing, happened after his 50th birthday, he would have still received a reduced early retirement payout until just before his 57th birthday. Now it's unclear how much of his pension he'll receive before he turns 57, if any.

Since McCabe was short of a few days of federal work to to become eligible for his pension under early retirement, reported

According to one former official who knows about retirement rules and spoke to the Post, short-term employment should be enough to guarantee McCabe his pension.

But another former law enforcement official, Bob Ballentine, threw cold water on the suggestion on Twitter, reported Business Insider's Michal Kranz.

"Unfortunately, you cannot just hire him as a federal employee for 3 days to save his pension," Ballentinewrote. "It has to be a primary law enforcement position, or else he has to work another 10 years." Ballentine added that McCabe can file an appeal since it appears there will be no criminal charges related to the firing.

McCabe was fired 48 hours before his 50th birthday, and it could have a huge effect on his pension — here's how a pension works

What is a pension?

McCabe may be able to recover his pension

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