even within the executive, we have separate retirement systems, and people have legally and properly earned entitlement, and then they move over to the other system, and they might earn entitlement. It is an extremely difficult issue to deal with from an equity standpoint, and also involves a multiplicity of jurisdictional questions for the Congress, because you will have the Armed Services Committee involved; you would have the Judiciary Committee involved, you would have the Foreign Affairs Committee involved, and it is extremely difficult.

But we are going to look after some of these situations, and find where equity really lies.

Mr. TAYLOR. Mr. Chairman, I would certainly hope that before you leave office, that you would submit to this committee a list of the inequities that now exist in our retirement system as you see them. I think Chairman Henderson certainly expressed the same hope. These things just do not jump out at you all of a sudden. I am sure they were there, and I think that our committee would certainly like to have the benefit of research by the Commission on these inequities as you view them.

Mr. HENDERSON. Will the gentleman yield another moment? Several years ago, I had a case arise involving a constituent of mine, and how you view this story depends on how you look at retirement, generally. This constituent retired with 30 years in the Postal Service. He had been the postmaster of the largest post office in my district. He had also been a general in the North Carolina National Guard, and had two retirements; and after his retirement, was employed as a director of one of the poverty programs in North Carolina.

Now, he was performing service there. But if you looked at the income he received from the two retirements and from that position he was then serving in, he was drawing more money than he had ever drawn in active service.

Now, I can see his argument that he earned his postal retirement. He earned his National Guard retirement, because he had served well in both instances. And then, in the instance of his employment at that time, he certainly was earning a salary less than he probably could have gotten in other areas. But it seems to me that as you look at the various retirement opportunities, it is not at all unusual if a man plans it, or takes advantage of these various retirement benefits through his lifespan.

Mr. TAYLOR. This brings on quite a bit of criticism from people that look out there and see people who want to go into Government service, and cannot get into it; and yet, you have these retired people who have obviously earned their retirement, but they are already in. so to speak. This is not to say that they have not earned it. They certainly have. But I think it something that is a little hard to explain down at the forks and creeks sometimes.

Mr. HENDERSON. One of the things we have to keep in mind with respect to this legislation or any other changes in retirement benefits that we may consider is the Commission's recommendation to make such changes prospectively. If we do make them prospectively, then we can say to the military man that comes in, "Yes, you will earn

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military retirement. But if you then go into civil service, you may have a portion of the miltiary retirement suspended, or all of it suspended. And finally, you will collect only one retirement that takes into account all of your service."

So, the point I am making is that I think that Congress can be wise in handling this legislation, and perhaps as we attempt to correct these various retirement overlappings in the future, to do so prospectively. Then we would be in a position to say that the rules are known at the time the man enters into the employment, or military service, or various programs that do have retirement benefits.

Does counsel have any questions?

Mr. MCCLUSKEY. Mr. Chairman, I would like to ask one question to clarify something for the record.

Mr. Hampton, none of these judges, up until this recent ruling, have been receiving any annuities, have they?

Mr. HAMPTON. That is correct.

Mr. MCCLUSKEY. And so none of these judges, who have taken the bench have really been receiving anything, or really expecting anything?

Mr. HAMPTON. I think there has been an expectation. I think it has been a matter of context. I think that the judges who raised this issue most recently, and who did not take out their retirement because they did not accept the interpretations of the law

Mr. MCCLUSKEY. Since 1922?

Mr. HAMPTON. I do not know about since 1922. But the point is that it has been understood for quite some time. In fact, the Justice Department, as I understand it, advised individuals who were out of the Justice Department and going to the bench to withdraw their retirement funds. We certainly have provided that advice to the individuals.

Mr. MCCLUSKEY. So nobody has really drawn any annuity until this ruling; and therefore, nobody has drawn any annuity until what, last January?

Mr. HAMPTON. January 1976.

Mr. TINSLEY. That is right. If I might comment on that?

Mr. MCCLUSKEY. Yes.

Mr. TINSLEY. I think what you have to keep in mind here is what was occurring over a period of years, the past 30 years, even back to 1922. You had the Commission taking a position, an interpretation. You then had a series of amendments to this law occurring with the same period of time. The critical point in time is 1956, when the Congress settled one controversy between the interpretation by the Commission and an opposing view by the judiciary at that point in time.

There is a provision in that law that was overlooked. That was the provision about the fact that you could not reduce a judge's salary. And the suspension question was left open.

Mr. MCCLUSKEY. My whole point, Mr. Tinsley, was that nobody received any money up until 1976.

Mr. TINSLEY. They felt they were entitled to it, and they think that they have been entitled to it. Now, everyone is agreed as to what the law was and is, and as a result, I do not know if anybody-even though you may have been telling them that they were not going to get it or

were entitled to it; they held a different view—I do not know if anybody under our system can now turn around and tell those people, "Well, fine. You have won your legal battle, but you are still not going to get your annuity."

Mr. MCCLUSKEY. Well, they have not won a legal battle in court. It has just been an interpretation of the law by an agency.

Mr. TINSLEY. I think the three general counsels opinions concluded pretty well on that point of law. Shortly after, this decision was made, before we notified the judges, Judge Bennett filed suit. The advice of the General Counsel of the Civil Service Commission, the General Counsel of the General Accounting Office and the Justice Department-their views are in agreement with the judges. There is no doubt in my mind that if that case ever got to court, that is if you could find someone to defend our position, that the courts would have decided that way, so I do not think there is any question here—you know, the issue of whether they did not expect

Mr. MCCLUSKEY. I just wanted to clarify the point. No judge, up until January of 1976, has received any annuity?

Mr. TINSLEY. That is correct.

Mr. MCCLUSKEY. Thank you, Mr. Chairman.

Mr. HENDERSON. Well, one point of further clarification. If we do not provide an opportunity for those who were advised by Justice, or the Commission, of the old interpretation of the law, to come back in, we would also have an inequity, would we not? We have got to make some provision for them to pay back in and to be made whole, have we not, as a matter of justice and equity?

Mr. TINSLEY. Yes, Mr. Chairman.

I would also suggest it, for this reason. The possibility would be very strong that what would happen here is, if Congress does not speak to the issue, we will wind up again in some kind of a litigation situation where someone will want to file suit. So I would strongly suggest that the Congress resolve the issue. And to resolve it equitably, I believe that they should permit these individuals to pay back in. Mr. HENDERSON. Thank you, gentlemen. If there are no further questions, the subcommittee will now adjourn.

[Whereupon, at 10:30 a.m., the hearing was adjourned, to reconvene at 9:15 a.m. on Thursday, March 11, 1976.]

CIVIL SERVICE ANNUITY PAYMENTS TO JUSTICES

AND JUDGES

THURSDAY, MARCH 11, 1976

U.S. HOUSE OF REPRESENTATIVES,

COMMITTEE ON POST OFFICE AND CIVIL SERVICE,

SUBCOMMITTEE ON RETIREMENT AND EMPLOYEE BENEFITS,

Washington, D.C.

The subcommittee met at 9:20 a.m., in room 304, Cannon House Office Building, Hon. Herbert E. Harris (acting chairman of the subcommittee) presiding.

Mr. HARRIS. 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. As I understand the situation, this bill presently affects only those Federal retirees who have had their civil service annuities suspended upon 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.

On January 5, 1966, the Comptroller General made the statement that:

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 aw.

Thereafter, as a result of continuing discussions by the judges with the General Counsel of GAO, the General Counsel wrote the Commission's General Counsel in late 1974 and advised him that the Comptroller General's decision of 1966 exceeded the Comptroller General's authority in advising the payment of an annuity to Federal retirees appointed to the Federal bench is barred.

Our witnesses this morning are Mr. Paul G. Dembling, General Counsel of GAO; accompanied by Mr. F. Henry Barclay, Associate General Counsel; Mr. John S. Emery, Assistant Director, Federal Personnel and Compensation Division; and Mr. Bob Shelton, Supervisor-Auditor, Federal Personnel and Compensation Division. I look forward to your testimony. You may begin.