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COMPTROLLER GENERAL OF THE UNITED STATES

WASHINGTON, D.C. 20348

B-157469

March 18, 1976

The Honorable David N. Henderson,

Chairman
Committee on Post Office and Civil

Service
United States House of Representatives

Dear Mr. Chairman:

This replies further to your letter of February 10, 1976, requesting our comments on H.R. 11738, 94th Congress, a bill to amend chapter 83 of title 5, United States Code, to bar Civil Service annuity payments for periods with respect to which an annuitant is entitled to receive salary as a justice or judge of the United States, and for other purposes.

Our views on this bill were expressed by Mr. Paul G. Derabling, General Counsel of the General Accounting Office, at the hearing before the Subcommittee on Retirement and Employee Benefits on March 11, 1976. A copy of his testimony is enclosed.

Sincerely yours,

Pokrsten

Deputy Comptroller General

of the United States

Enclosure

UNITED STATES CIVIL SERVICE COMMISSION

WASHINGTON, D.C. 20415

March 3, 1976

Honorable David N. Henderson
Chairman
Committee on Post Office

and Civil Service House of Representatives Washington, D. C. 20515

Dear Mr. Chairman:

This is in further reply to your request for the Commission's views on H.R. 11738, a bill "To amend chapter 83 of title 5, United States Code, to bar civil service annuity payments with respect to periods in which an annuitant is entitled to receive salary as a justice or judge of the United States, and for other purposes." Enactment of the bill would correct a legislative oversight in the 1956 amendments to the Civil Service Retirement Act, Public Law 84-854. The 1956 amendments resolved a fifteen year dispute between the Commission and the Judicial Conference of the United States by providing that justices and judges of the United States were not employees covered by the provisions of the Civil Service Retirement System. These amendments further provided that an annuitant who became reemployed as a justice or judge would earn no supplemental or recomputation of annuity benefit during his service as justice or judge. The amendments contained no specific provision, however, concerning the treatment to be given an annuitant's annuity in the event he became a justice or judge. The 1956 amendments did generally provide, though, as had the February 24, 1948, amendments to the Civil Service Retirement Act, for the reduction of pay by an amount equivalent to the amount of annuity upon reemployment in Federal service. The Commission interpreted the January 28, 1942 amendments to the Civil Service Retirement Act as making justices and judges subject to the Act's provisions. Until 1956, however, the Judicial Conference refused to permit any deductions to be taken from the pay of justices or judges, either as employees or as annuitants, as the Commission believed was required by the retirement law. As a result, payment of annuity to one annuitant who became a judge in 1949 was suspended in lieu of his pay being reduced. In the first case of an annuitant becoming a justice or judge following the enactment of the 1956 amendments, the Comptroller General of the United States ruled on January 5, 1966 (45 Comp. Gen. 383) that a justice's or judge's salary is barred from being diminished during his term of office under section 1, Article III of the U.S. Constitution. Thus, the requirement for reduction of pay by an annuity equivalent was found to be clearly unenforceable in cases where annuitants became justices or judges.

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In the Comptroller General's 1966 opinion, however, he went on to say, that "although there may be no statutory prohibition in a particular case against the payment of retirement annuity to a person reemployed by, and receiving salary from, the Federal Government, dual payment of retirement annuity and salary is inconsistent with the basic policies regarding such dual payment expressed in civilian retirement legislation and is without authority of law." The Commission took this decision to compel the suspension of annuity when an annuitant became a justice or judge, in lieu of reducing his salary by the amount of his annuity and has since suspended the payment of annuity in three cases where an annuitant is serving as a judge of the United States. Suspension of annuity in lieu of reducing pay by an annuity equivalent upon reemployment was entirely consistent with the legislative history of the Civil Service Retirement law. The suspension of annuity during reemployment in a position not covered by the Civil Service Retirement System had, in fact, been required generally by the provisions of the Civil Service Retirement Act Amendments of January 24, 1942. The Commission had, however, found it administratively inconvenient to suspend annuity every time an annuitant became reemployed---even for a few days---and proposed legislation which was enacted as the Civil Service Retirement Act Amendments of February 28, 1948 and provided generally for the alternative action of reducing pay by an annuity equivalent upon reemployment. Over the years since payment of their annuities was suspended, the affected judges have continued to assert their right to payment. As a result of the judges' discussions with the General Counsel of the General Accounting Office, that General Counsel wrote the Commission's General Counsel in 1974 and advised him that the Comptroller General's decision in 1966 exceeded the Comptroller General's authority in advising that payment of the annuity to justices and judges was barred. The Commission's General Counsel brought his views to the attention of the Director of the Commission's Bureau of Retirement, Insurance and Occupational Health and both individuals subsequently advised the Civil Service Commissioners early in 1975 that there was no authority of law upon which to base the continued suspension of annuity payments to annuitants who served as justices or judges of the U.S. The Commissioners asked the General Counsel to get an opinion from the Justice Department. Later in 1975, the Acting Assistant Attorney General, Office of Legal Counsel, advised the Commission that he was "unable to find any bar to payment of Civil Service annuities during such service; nor any authority to withhold them".

Therefore, based on the advice of legal counsel in the Commission, the General Accounting Office and the Justice Department, the Civil Service Commissioners concluded in January 1976 that they had no alternative left but to pay annuity payments which had heretofore been suspended upon an annuitant's reemployment as a judge. The three judges whose annuities have been suspended during the last several years are being paid back annuity payments which totaled $219,076.60 through December 31, 1975. Six more judges are eligible for deferred annuity payments, retroactive several years, if they apply for annuity benefits. At least four judges become eligible for deferred annuity payments in the next four years.

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Seventy some judges had a yested 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 erroneous 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 the Commission has no authority to permit them to make a redeposit and reestablish title to deferred annuity unless they return to employment covered by the retirement law.

H.R. 11738 would remedy the oversight in the 1956 amendments to the retirement law by barring, with respect to annuities for months beginning after the date of enactment or October 1, 1976, whichever is later, the payment of annuity for any period during which a former employee is entitled to receive compensation on the basis of service as a justice or judge. The bill would similarly bar the payment of annuity for any period during which a former Member is entitled to receive compensation on the basis of service as justice or judge. Any justice or judge who did not wish to leave his 1 ump-sum credit in the Civil Service Retirement and Disability Fund as a result of the enactment of such a bar to the payment of annuity would be authorized to obtain a refund, notwithstanding the fact that he might already have become eligible for annuity payments and would otherwise be barred from obtaining such a refund under the provision of 5 V.S.C. 8342(a).

The provisions of the bill are apparently designed to bar the payment of annuity to an annuitant or Member annuitant who becomes a justice or judge, both during periods in which he is in receipt of salary for active judicial service and for periods during which he is in receipt of continued salary following resignation or retirement from active judicial service. In the past, annuity payments to annuitants or Member annuitants were suspended only during active service as a justice or judge and were reinstated upon the judge's electing to become a retired justice or judge by resignation or retirement under provisions of 28 U.S.C. 371 and 372. Annuity payments to Member annuitants, it should also be noted, are terminated during reemployment service as a justice or judge, but resumed in the same amount upon termination of such reemployment service as is generally required by 5 U.S.C. 8344(b) where Member annuitants are reemployed. As indicated earlier in this report, the Commission believes that the omission in the Civil Service Retirement law of any authority to suspend payment of annuity to annuitants who become reemployed as judges was essentially a matter of legislative oversight in the July 31, 1956 amendments to the Civil Service Retirement Act. The plain language of the 1956 amendments required the reduction of pay by an annuity equivalent upon reemployment, but such a provision was later held to be unenforceable with respect to annuitants who became justices or judges of the United States since the U.S. Constitution prohibited the dimunition of the salary of such justices and judges during their tenure in office.

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As a matter of general policy, the Commission believes that no individual should receive both retirement pay from a Federal civilian retirement system and salary for active Federal service during the same period of time. The dual payment of retirement annuity and salary has been declared to be inconsistent with the basic purpose of Federal civilian retirement laws by several Comptroller General decisions (10 Comp. Gen. 309, 14 Comp. Gen. 295, 16 Comp. Gen. 121, and 45 Comp. Gen. 383). The payment of annuity to annuitants who become reemployed as justices or judges appears to be clearly inconsistent with this basic policy and purpose. Consequently, the Commission supports in principle 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 (1) 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 was barred by the retirement law, and (2) that any legislative bar to payment of annuity to justices and judges be made applicable only to justices and judges appointed after enactment or after October 1, 1976, whichever is later. If Section 1 of H.R. 11738 were so modified to bar the payment of annuity to active justices and judges, the Commission would support its enactment. Section 1 of H.R. 11738 would also, for the first time, bar the payment of annuity to justices and judges who have resigned or retired and are in receipt of continuation of pay under 28 U.S.C. 371, 372. The simultaneous payment of two retirement benefits based on different periods of Federal service has not up to now been barred under Federal retirement legislation. Whenever an individual completes enough service (usually 5 or more years) under a particular retirement system for the payment of retirement benefits to vest upon reaching retirement age, we believe that he is entitled to payment of his vested benefit. The fact that the vested right to judicial retired pay is unusually generous among Federal retirement systems should not alter the fact that vested retirement benefits should be paid, except during active reemployment service. Consequently, the Commission opposes enactment of section 1 of H.R. 11738 insofar as it would bar the payment of annuity to justices and judges who, after completion of 10 to 15 years of judicial service, resign or retire and claim their vested right to continuation of judicial salary. The device of suspending annuity payments to annuitants and Member annuitants who become justices or judges, it should be noted, permits them to preserve their title to annuity payments in the event they leave their position as justice or judge before they reach age 65 to 70 and complete the 10 to 15 years (except for disability) of service required before they may resign or retire with the right to continuation of their salary (one-half their salary if retired for disability with less than

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