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Washington, D.C.

The subcommittee met at 9:15 a.m., in room 304, Cannon House Office Building, Hon. Richard C. White (chairman of the subcommittee) presiding.

Mr. WHITE. The subcommittee will come to order.

The subcommittee has reconvened today to continue hearings and deliberations on H.R. 11738, a bill introduced by Congressman David N. Henderson. Further hearings are scheduled on this subject for next Thursday, March 11, in this room at 9:15 a.m., at which time the subcommittee will receive testimony from the General Accounting Office.

As I understand the situation, this bill presently affects only those Federal retirees who have had their civil service annuities suspended while being reemployed by the Federal Government by reason of their acceptance of an appointment to the Federal bench. Under present law, Federal annuitants who accept reemployment with the Federal Government must have their salaries reduced by the amount of their annuity. However, the civil service retirement law only provides for reduction of salaries, and not for suspension of annuities.

A preliminary question, if we accept the assumption that it is proper to reduce a reemployed annuitant's salary by the amount of his annuity, is whether or not it is equitable not to include under the law any class of reemployed annuitants who are able to draw full salary as active employees, appointed or not, of the Federal Government.

Our witness this morning is Hon. Robert E. Hampton, Chairman of the U.S. Civil Service Commission. Accompanying Chairman Hampton is Mr. Thomas A. Tinsley, Director of the Commission's Bureau of Retirement, Insurance, and Occupational Health. We are delighted to have you here this morning, Mr. Hampton. We have been rather active on this committee, as I am sure you have noticed, with the legislation we have promoted. You have a very able representative in Mr. Tinsley, who has frequently been before us and has been very elucidating on all phases of the retirement program.



Mr. HAMPTON. Thank you, Mr. Chairman.

Mr. Chairman and members of the subcommittee, I appreciate this opportunity to appear before your subcommittee to amplify the Commission's views on H.R. 11738, a bill to bar the payment of annuity to individuals who are in receipt of pay or retired pay for service as a justice or judge of the United States. The Commission's views are contained in greater detail in our report on this bill addressed to the Honorable David N. Henderson, chairman of the Committee on Post Office and Civil Service.

The Commission has always believed that as a matter of general policy, no individual should receive both retirement pay from a civilian retirement system and salary for active Federal service during the same period of time. The Congress, with few exceptions, has also followed such a general policy in considering and passing retirement legislation. Therefore, the Commission's recent decision to pay annuities which had been suspended when an annuitant was serving as a judge or justice was reached only after long and careful deliberation. Various provisions in the civil service retirement law have specifically barred the dual payment of retirement annuity and payment of salary for active service during the same period since 1922. Prior to 1948, the civil service retirement law contained various provisions for either the suspension or termination of annuity upon reemployment in Federal service, so as to bar the dual payment of retirement annuity and pay for active service. Since the 1948 amendments to the retirement law, the law has provided for the reduction of pay by an annuity equivalent upon reemployment. The Commission proposed the provisions for reduction of pay in lieu of suspension of annuity upon reemployment because it was administratively difficult to drop annuitants from retirement payment status every time they became reemployed for periods as short as 1 day. No substantive changes were intended.

The dual payment of retirement annuity and salary is still effectively prohibited, since through the reduction of salary by an annuity equivalent, the reemploved annuitant receives only the salary of the reemployment position. Since the provision requiring reduction of pay by the amount of annuity was put into the retirement law, the Commission adopted a policy and has actually suspended claims by judges for payment of annuity. Because the pay of a justice or judge could not be reduced, the Commission took the alternative action of suspending payment of their annuities so as to still avoid the dual payment of retirement annuity and salary.

In 1966, the Comptroller General supported this view when he ruled that the pay of judges or justices could not be reduced under section 1, article III of the U.S. Constitution, but also stated that the dual payment of retirement annuity and salary was inconsistent with the basic purposes of civilian retirement legislation and was without authority of law.

Within the last year or so, however, the General Counsel of the General Accounting Office, the General Counsel of the Civil Service Commission, and the Acting Assistant Attorney General, Office of Legal Counsel, Department of Justice, have reviewed the question of payment of annuity to annuitants who became justices or judges and have concluded that such suspensions are without authority of law. Legal counsel has pointed out that the Comptroller General exceeded his authority in commenting in the 1966 decision that the dual payment of retirement annuity and salary was inconsistent with the basic purposes of civilian retirement legislation and without authority of law.

Faced with such legal arguments, the Commission reached the conclusion that as a matter of law, we had no alternative but to pay the annuity payments which we have been suspending to annuitants who are serving as justices or judges of the United States.

I should point out, however, that this decision is applicable only in those cases where the annuity is based on prior service in the executive branch of the Government. Payment of annuity is still barred, however, to members of Congress who are serving as justices or judges. Under the provision of section 8344 (b) of title V, United States Code, the payment of annuity to member annuitants is generally discontinued during reemployment and resumed in the same amount on termination of the reemployment.

We have no way of estimating the exact cost of paying annuity benefits as a result of this decision. There are 497 active justices and judges and 163 retired justices and judges who are receiving continuation of pay. At least 90 of these individuals have more than 5 years of prior civil service, and a possible claim to at least a deferred annuity at age 62. The amount of annuity payable, though, will vary with each individual case.

Back annuity totaling more than $200,000 is being paid to the four judges whose annuities have actually been suspended; 11 more judges have vested title to deferred annuity which will be paid upon application for it; 70-some judges have a vested title to deferred annuity based on more than 5 years of creditable service before they became a judge, but they technically voided their annuity title by taking a refund upon being appointed a judge. To the extent that they relied on our advice that payment of annuity to which they might become entitled at age 62 would be suspended during their active service as judge, the refunds might be held to be erroneous. But it is at best very questionable as to whether the Commission has any legal authority to permit them to make a redeposit and reestablish title to deferred annuity. It appears at present that we do not.

The Commission is pleased that legislation has been promptly introduced to give the Commission the authority which it lacked to suspend payment of annuity to justices and judges of the United States. Although the Comptroller General's comment in 1966 that the dual payment of retirement annuity and salary was inconsistent with the basic purposes of civilian retirement legislation was not binding as a matter of law, it did state the fact of the matter correctly. The Commission does believe that the dual pay of retirement annuity and pay ought to be barred one way or another, and therefore the Commission supports

the enactment of legislation which would bar the payment of annuity to active justices and judges.

In the interest of equity to present and former justices and judges, however, the Commission recommends, one, that it be given authority to accept redeposit of refunds paid to active or retired justices and judges who obtained those refunds based on the Commission's erroneous advice that payment of annuity to them would be barred by the retirement law; and two, that any legislative bar to payment of annuity to justices and judges be made applicable only to justices and judges appointed after enactment.

In addition to barring the payment of annuity to active justices and judges of the United States, section 1 of H.R. 11738 proposes to bar for the first time the payment of annuity to retired justices and judges. The simultaneous payment of two retirement benefits based on different periods of Federal service under separate retirement systems has not in the past been barred under all Federal retirement legislation. The fact that the vested right to judicial retired pay is unusually generous among Federal retirement systems should not by itself alter the fact that vested retirement benefits should be paid, except during active reemployment service.

There is also a second section of H.R. 11738 which does not relate specifically to this problem concerning judges' annuities. Section 2 of H.R. 11738 would give annuitants who were remarried at the time of retirement, but married at the time the second spouse law-Public Law 91-658-was enacted on January 8, 1971, another 1-year opportunity to elect a reduced annuity with spouse survivor benefit if they certify to the Commission that they did not receive notification of the previous opportunity to make such an election within 1 year from January 8, 1971.

The Commission opposes enactment of section 2, since it would set a precedent for paying benefits any time an individual claimed that he did not receive notice of a particular benefit within the prescribed time limit for electing it. Any unmarried annuitant who remarries today, it should be recognized, also has a period of 1 year after he remarries in which to write the Commission and elect a reduced annuity with spouse survivor benefit. There is no provision for waiving this time limit.

Mr. Chairman, that concludes my testimony. Mr. Tinsley and I would be pleased to answer any questions the subcommittee may have. Mr. WHITE. Mr. Hampton, from your testimony, it would appear that there has been some shifting of position, at least in the thinking of the Civil Service Commission. We understood previously-at least I did that in the opinion of the Commission no judges should receive any annuity, regardless of whether they were active on the bench or retiring, since they also received a retirement benefit for their Federal judicial service. Was I mistaken in this?

Mr. HAMPTON. Well, initially, when this problem came up, what the Commission was interested in was having authority to withhold payment of annuity for active judges. We really had not addressed ourselves to the fact that after they had retired that they would be barred from getting their annuity. But when we looked at the question and as this was discussed within the Commission, on seeing that here is an

individual who has a vested right under an existing law in which he has paid a contribution, the Government has paid a contribution, and had every right to expect that entitlement, that we knew of no comparable situation where, in law or otherwise, there was a provision to take it away.

I do not think we had really hardened our position. I think it was that we did not think it all the way through.

Mr. WHITE. I see.

So, in other words, it boils down to certain principles. No. 1, any law that we pass should allow any judges who were advised to go ahead and withdraw their retirement moneys to redeposit this and enter into the program as if they never did withdraw the funds?

Mr. HAMPTON. That is correct, sir; that is, if they wish to do so. Some may not wish to do so, because if they had 5 years, some years back, redoposited what they may receive for that, and age and other things we are not really sure how many of those individuals are alive today, nor are we really sure if there are some widows who may be entitled to a survivor annuity. That is one thing we did not address in our testimony.

Mr. WHITE. Well, I was just going to ask you that. Now, suppose a judge has died, and he had withdrawn, and he leaves a widow. Are you going to also provide that that money can be reinvested, so that she can draw the widow's annuity?

Mr. HAMPTON. We were discussing that in the Commission. We had agreed that we would discuss that with the staff of the subcommittee, since we omitted it in our testimony. But in discussion my testimony with the other Commissioners, and thinking this through, we felt that if an individual had vested in the system, but upon the advice of the Justice Department and the Civil Service Commission-which I think was almost an automatic thing; he just took it out-and he has deceased, and the widow would be entitled to some benefit had he left that in on the proper advice, we think that they also should be covered under that provision.

Mr. WHITE. Suppose there is a judge who has retired from the active bench, who then is allowed to reinvest his moneys into the program. Does he then receive a lump sum payment as if he had been receiving his annuity all along?

Mr. HAMPTON. The way I would see it is, if he redeposits, we would have to compute when he would have been eligible for deferred annuity under the existing statutes, as interpreted by Justice and the Comptroller General, and our General Counsel. And their annuity would be based upon when actual entitlement came. And in the case of a widow, I think Tom had better explain that a little bit more thoroughly.

Mr. WHITE. The question I had was, do you then present them with a lump sum for all otherwise-accepted annuity payments that they would have received?

Mr. TINSLEY. Yes, sir, we would, Mr. Chairman.

Mr. WHITE. OK. Let's say Judge a has withdrawn his fund on advice. He has invested that fund, which has been drawing interest, or perhaps drawing an income of some sort, whether it be in property or stock or savings accounts. You are not going to concern yourself

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