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entitled 'Federal Pensions: Judicial Survivors' Annuities System 
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United States General Accounting Office: 
GAO: 

Report to Congressional Committees: 

Federal Pensions: 

Judicial Survivors' Annuities System Costs: 

GAO-02-763: 
	
Contents: 

Letter: 

Results in Brief: 

Background: 

History of JSAS: 

Defining Cost for JSAS: 

Objectives, Scope, and Methodology: 

Portion of JSAS Costs Covered by Judges' Contributions Varied: 

Adjustment That Would Be Needed in Judges' Contribution Rates: 

Agency Comments: 

Appendixes: 

Appendix I: Retirement Plans Available to Federal Judges: 

Appendix II: Formulas Used to Determine Judges' and the Government's 
Contributions and Lump Sum Payments: 

Tables: 

Table 1: Percentage Share of JSAS Normal Costs Borne by	Participating 
Judges and the Government, Plan Years 1999-2001: 

Table 2: Average Percentage Share of Contribution for Judges and the 
Government: 

Abbreviations: 

AOUSC: Administrative Office of the United States Courts: 

COLA: cost-of-living adjustment: 

CSRS: Civil Service Retirement System: 

FERS: Federal Employees' Retirement System: 

JSAS: Judicial Survivors' Annuities System: 

NC: normal cost: 

PVFB: present value of future benefits: 

PVFNC: present value of future normal costs PVFS present value of 
future salaries: 

[End of section] 

United States General Accounting Office: 
Washington, D.C. 20548: 

June 26, 2002: 

The Honorable Patrick J. Leahy: 
Chairman: 
The Honorable Orrin G. Hatch: 
Ranking Minority Member: 
Committee on the Judiciary: 
United States Senate: 

The Honorable F. James Sensenbrenner, Jr. 
Chairman: 
The Honorable John Conyers, Jr.
Ranking Minority Member: 
Committee on the Judiciary: 
House of Representatives: 

This report was prepared in response to the requirements of the 
Federal Courts Administration Act of 1992 (Public Law 102-572) 
specifying that we review certain aspects of the Judicial Survivors' 
Annuities System (JSAS), which is one of several survivor benefit 
plans applicable to particular groups of federal employees. JSAS 
provides annuities to surviving spouses and dependent children of 
deceased Supreme Court Justices, judges of the United States, and 
other judicial officials[Footnote 1] who participate in JSAS. 

The 1992 act enhanced the benefits available from JSAS and reduced the 
amounts that participating judges and other judicial officials were 
required to contribute toward the plan's costs. The act requires us to 
review JSAS costs every 3 years and to determine whether the judges' 
contributions represent 50 percent of the plan's costs. If the 
contributions represent less than 50 percent of these costs, we are to 
determine what adjustments to the contribution rates would be needed 
to achieve the 50 percent figure. For the purpose of the review, we 
have examined the "normal cost" of the plan. The plan's actuary using 
the plan's funding method, in this case, the aggregate cost method, 
determines the plan's normal cost. Under the aggregate cost method, 
the normal cost is the level percentage of future salaries, which will 
be sufficient, along with investment earnings and the plan's assets, 
to pay the plan's benefits. This is our third report since the passage 
of the 1992 act.[Footnote 2] 

Results in Brief: 

For the 3 years covered by our review, the judges' contributions 
represented more than the 50 percent of the JSAS normal costs for 
fiscal year 1999, but less than 50 percent for fiscal years 2000 and 
2001. The participating judges paid 61 percent of JSAS normal costs 
during fiscal year 1999 and approximately 48 percent of JSAS normal 
costs during fiscal years 2000 and 2001. On the basis of data from 
plan years 1999, 2000, and 2001, the participating judges contributed, 
on an average, approximately 52 percent of JSAS normal costs; the 
government's share amounted to, on an average, approximately 48 
percent. While the judges' contribution rate remained fixed at 2.2 
percent and 3.5 percent of salaries for active and retired judges, 
respectively, the government's contribution rate increased from 1.5 
percent of salaries in fiscal year 1999 to 2.6 percent of salaries in 
fiscal years 2000 and 2001. The increase in the government's 
contribution was a result of an increase in normal costs resulting 
from a decline in the market value of assets held in JSAS, as well as 
an increase in plan benefits being paid over the period. 

To cover 50 percent of JSAS estimated future normal costs, the judges' 
contributions would need to increase by 0.1 percentage point above the 
2.2 percent of salaries currently paid by active and senior judges and 
the 3.5 percent of retirement salaries paid by retired judges. This 
would result in adjusted contribution rates of 2.3 and 3.6 percent, 
respectively. However, increasing required contributions could reduce 
the judges' rate of participation, while increasing participation was 
one of the major reasons for enhancing JSAS benefits and reducing the 
judges' contributions in 1992. In part, because of the small number of 
participants, short-term variability can be expected in normal costs 
and therefore a long-term view is important when evaluating the 
portion of normal costs covered by judges. Since enactment of the 1992 
Federal Courts Administration Act, the annual share of normal costs 
covered by judges' contributions has been approximately 47 percent on 
average. 

Background: 

Most federal civilian employees are covered by the Civil Service 
Retirement System (CSRS) or the Federal Employees' Retirement System 
(FERS). Both of these retirement plans include survivor benefit 
provisions. Three separate retirement plans apply to various groups of 
judges in the federal judiciary, with JSAS being available to 
participants in all three retirement plans to provide annuities to 
their surviving spouses and children. Appendix I provides additional 
information regarding retirement plans that are available to federal 
judges. 

History of JSAS: 

JSAS was created in 1956 to provide financial security for the 
families of deceased federal judges. It provides benefits to eligible 
spouses and dependent children of judges who elect coverage within 
either 6 months of taking office, 6 months after getting married, or 
during an open season authorized by statute. Active and senior judges 
currently contribute 2.2 percent of their salaries, and retired judges 
generally contribute 3.5 percent of their retirement salaries to JSAS. 
Upon a judge's death, the surviving spouse is to receive an annual 
annuity that is equal to 1.5 percent of the judge's average annual 
salary during the 3 highest consecutive paid years (commonly known as 
the "high 3") times the judge's years of creditable service. The 
annuity may not exceed 50 percent of the high 3 and is guaranteed to 
be no less than 25 percent. Separately, an unmarried dependent child 
under age 18, or 22 if a full-time student, receives a survivor 
annuity that is equal to a maximum of 10 percent of the judge's 3 
highest paid years or 20 percent of the judge's 3 highest paid years 
divided by the number of children, whichever is smaller. JSAS 
annuitants receive an annual adjustment in their annuities at the same 
time, and by the same percentage, as any cost-of-living adjustment 
(COLA) received by CSRS annuitants. Spouses and children are also 
eligible for Social Security survivor benefits. 

Since its inception in 1956, JSAS has changed several times. Because 
of concern that too few judges were participating in the plan (74 
percent of federal judges participated in 1985, which was down from 90 
percent in 1976), Congress made broad reforms effective in 1986 with 
the Judicial Improvements Act of 1985 (Public Law 99-336). The 1985 
Judicial Improvement Act (1) increased the annuity formula for 
surviving spouses from 1.25 percent to the current 1.5 percent of the 
high 3 for each year of creditable service and (2) changed the 
provisions for surviving children's benefits to relate benefit amounts 
to judges' high 3 rather than the specific dollar amounts provided by 
the Judicial Survivors' Annuities Reform Act of 1976 (Public Law 94-
554). In recognition of the significant benefit improvements that were 
made, the 1985 Judicial Improvements Act increased the amounts that 
judges were required to contribute from 4.5 percent to 5 percent of 
their salaries, including retirement salaries. 

The 1985 Judicial Improvements Act also changed the requirements for 
government contributions to the plan by specifying that the government 
would contribute whatever amounts were necessary (up to a maximum of 9 
percent of participating judges' salaries or retirement salaries) to 
keep the plan fully funded. Under the 1976 Judicial Survivors' 
Annuities Reform Act, the government matched the judges' contributions 
of 4.5 percent of salaries and retirement salaries. Despite the 
benefit improvements in the 1985 Judicial Improvements Act, the rate 
of participation in JSAS continued to decline. In 1991, the rate of 
participation was about 40 percent overall and 25 percent for newly 
appointed judges. 

In response to concerns that required contributions of 5 percent may 
have created a disincentive to participate, Congress enacted the 1992 
Federal Courts Administration Act. Under this act, participants' 
contribution requirements were reduced to 2.2 percent of salaries for 
active and senior judges and 3.5 percent of retirement salaries for 
retired judges. Another significant change was an increase in benefits 
for survivors of retired judges. This increase was accomplished by 
including years spent in retirement in the calculation of creditable 
service and the high 3 salary averages.[Footnote 3] 

The 1992 Federal Courts Administration Act also allowed the judges to 
stop contributing to the plan if they ceased to be married and granted 
benefits to survivors of any judge who died in the interim between 
leaving office and the commencement of a deferred annuity.[Footnote 4] 
As of September 30, 2001, there were 1,256 active and senior judges, 
203 retired judges, and 260 survivor annuitants covered under JSAS 
compared to 1,284 active and senior judges, 136 retired judges, and 
241 survivor annuitants as of September 30, 1998. 

Defining Cost for JSAS: 

JSAS is financed by judges' contributions and direct appropriations in 
an amount estimated to be sufficient to fund the future benefits to 
current participants.[Footnote 5] The government's contribution is 
approved through an annual appropriation and is not based on a rate or 
percentage of judges' salaries. An enrolled actuary engaged by the 
Administrative Office of the United States Courts (AOUSC) calculates 
the annual amount of funding needed based on the difference between 
the present value of the expected future benefit payments to 
participants and the present value of net assets in the plan. Appendix 
II provides more details on the formulas used to determine the 
participants' and the government's contributions and lump sum payments. 

The cost of a retirement or survivor benefit plan is typically not 
measured by annual expenditures for benefits. Such expenditures are 
not an indicator of the overall long-term cost of a plan. The more 
complete and acceptable calculation of a plan's cost is the projected 
future outlays to retirees or survivors, based on the current pool of 
participants, with such costs allocated annually. This annual cost 
allocation is referred to as the normal cost. Normal cost 
calculations, prepared by an enrolled actuary, are estimates and 
require that many actuarial assumptions be made about the future, 
including mortality rates, turnover rates, return on investments, 
salary increases, and COLA increases over the life spans of current 
and future participants. The plan's actuary using the plan's funding 
method, in this case, the aggregate cost method, determines the plan's 
normal cost. Under the aggregate cost method, the normal cost is the 
level percentage of future salaries, which will be sufficient, along 
with investment earnings and the plan's assets, to pay the plan's 
benefits. There are many acceptable actuarial methods for calculating 
normal cost. Regardless of which cost method is chosen, the expected 
total long-term cost of the plan should be the same; however, year-to-
year costs may differ, depending on the cost method used. 

Objectives, Scope, and Methodology: 

Our objectives were to determine whether participating judges' 
contributions for the 3 years ending in fiscal year 2001 accounted for 
50 percent of the JSAS costs and, if not, what adjustments in the 
contribution rates would be needed to achieve the 50 percent figure. 

To satisfy our objectives, we examined the normal costs reported in 
the JSAS annual report submitted by AOUSC to the Comptroller General 
for plan years[Footnote 6] 1999 through 2001. We also examined 
participants' contributions and other relevant information in the 
annual report. An independent accounting firm hired by AOUSC audited 
the JSAS financial and actuarial information, included in the JSAS 
annual report, with input from an enrolled actuary regarding relevant 
data such as actuarial present value of accumulated plan benefits. An 
enrolled actuary[Footnote 7] certified those amounts that are included 
in the JSAS annual report. We also discussed the contents of the JSAS 
reports with officials from AOUSC for the 3 fiscal years (1999 through 
2001). We did not independently audit the JSAS annual report or the 
actuarially calculated cost figures. 

We performed our review in Washington, D.C., from August 2001 through 
May 2002,[Footnote 8] in accordance with generally accepted government 
auditing standards. We requested comments on a draft of this report 
from the Director of AOUSC or his designee. On June 10, 2002, the 
Deputy Associate Director of AOUSC provided technical comments, which 
we incorporated into the report where appropriate. 

Portion of JSAS Costs Covered by Judges' Contributions Varied: 

For JSAS plan years 1999 through 2001 under the Federal Courts 
Administration Act of 1992, the participating judges paid more than 50 
percent of the JSAS normal costs in the first year and less than 50 
percent in the remaining 2 years. In fiscal year 1999, the 
participating judges contributed approximately 61 percent of JSAS 
normal costs, and in fiscal years 2000 and 2001, the participating 
judges contributed approximately 48 percent of the JSAS normal costs. 

On the basis of data from plan years 1999, 2000, and 2001, the 
participating judges contributed, on an average, approximately 52 
percent of JSAS normal costs; the government's share amounted to, on 
an average, approximately 48 percent. Table 1 shows the judges' and 
government's contribution rates and shares of JSAS normal costs (using 
the aggregate cost method, which is discussed in appendix II) for the 
period covered in our study. 

Table 1: Percentage Share of JSAS Normal Costs Borne by Participating 
Judges and the Government, Plan Years 1999-2001: 

JSAS normal cost rates and shares: 

Source of contributions: Judges; 
1999 Rate[A]: 2.36%; 
1999 Share[B]: 61.1%; 
2000 Rate[A]: 2.37%; 
2000 Share[B]: 47.7%; 
2001 Rate[A]: 2.36%; 
2001 Share[B]: 47.6%; 
1999-2001 Average share[C]: 52.1%. 

Source of contributions: Government; 
1999 Rate[A]: 1.50%; 
1999 Share[B]: 38.9%; 
2000 Rate[A]: 2.60%; 
2000 Share[B]: 52.3%; 
2001 Rate[A]: 2.60%; 
2001 Share[B]: 52.4%; 
1999-2001 Average share[C]: 47.9%. 

Total normal costs: 
1999 Rate[A]: 3.86%; 
1999 Share[B]: 100.0%; 
2000 Rate[A]: 4.97%; 
2000 Share[B]: 100.0%; 
2001 Rate[A]: 4.96%; 
2001 Share[B]: 100.0%; 
1999-2001 Average share[C]: 100.0%. 

[A] Normal cost expressed as a percentage of salaries. 

[B] Percentage of total normal cost. 

[C] This represents the average of the annual share of JSAS normal 
costs. 

Source: JSAS actuarial reports, 1999-2001. 

[End of table] 

The judges' and the government's contribution rates for each of the 3 
years, shown in table 1, were based on the actuarial valuation that 
occurred at the end of the prior year. For example, the judges' 
contribution of 2.36 percent and the government's contribution of 2.60 
percent in fiscal year 2001 were based on the September 30, 2000, 
valuation contained in the fiscal year 2001 JSAS report. 

The judges' share of JSAS normal costs in the above table decreased 
from approximately 61 percent in fiscal year 1999 to approximately 48 
percent in fiscal years 2000 and 2001, while the government's share of 
JSAS normal costs increased from approximately 39 percent to 
approximately 52 percent. During those same years, the judges' 
contribution rates remained constant, while the government's 
contribution rate increased from 1.5 percent of salaries in fiscal 
year 1999, based on the September 30, 1998, valuation, to 2.6 percent 
of salaries in 2000 and 2001. The increase in the government's 
contribution was primarily a result of the increase in total normal 
costs determined by the actuary from 3.86 percent of salaries in 
fiscal year 1999, based on the September 30, 1998, valuation, to 4.97 
percent of salaries in fiscal year 2000. The increase in normal costs 
resulted from a decline in the market value of assets held in JSAS, as 
well as an increase in plan benefits being paid out over the period. 

Specifically, the total plan assets decreased from $366.7 million in 
fiscal year 1998 to $363.6 million in fiscal year 1999. At the same 
time, the accumulated plan benefit obligations increased from $311.9 
million in fiscal year 1998 to $329.3 million in fiscal year 1999. The 
increase in the JSAS normal costs reflects the combined effect of the 
decrease in the value of plan assets and increase in the estimates of 
plan benefit obligations. Although the judges' contribution rate 
remained fairly constant, the judges' share of normal costs decreased 
to approximately 48 percent in fiscal years 2000 and 2001 because the 
total normal costs increased. In fiscal year 2001, the normal costs 
covered by the judges' and government's contributions remained 
constant because the percentage change in asset value was 
approximately 6.5 percent, which was in line with the 7.0 percent rate 
of return on investments that was assumed by the plan actuary. 

Adjustment That Would Be Needed in Judges' Contribution Rates: 

On the basis of the information contained in the JSAS actuarial report 
as of September 30, 2001, we determined that the participating judges' 
future contributions would have to increase a total of 0.1 percentage 
point above the current 2.2 percent of salaries for active and senior 
judges and 3.5 percent of retirement salaries for retired judges in 
order to cover 50 percent of JSAS costs. If the increase were 
distributed equally among the judges, those contributing 2.2 percent 
would have to increase to 2.3 percent, and those contributing 3.5 
percent would have to increase to 3.6 percent. 

A potential effect of increasing the contribution rates could be a 
decline in the participation rate for JSAS, which would run counter to 
the goal of increasing participation—a major reason for the changes 
made to JSAS in 1992. However, this potential impact appears to be 
less likely as compared with our findings from 3 years ago, when we 
reported that an increase of 0.3 percentage points would have been 
needed to achieve the 50 percent contribution goal. Since fiscal year 
1998, the participating judges increased from 1,420 to 1,459 as of 
September 30, 2001. However, increasing the contribution rates now 
could affect the judges' decision to participate in JSAS.[Footnote 9] 

Even if contribution rates are adjusted to the levels currently 
estimated to cover 50 percent of future normal costs, the future 
normal costs are estimates that could change in any given plan year. 
During the course of any year, certain events, such as the number of 
survivors or judges who have died, the number of new judges electing 
to participate, or the number of judges who decide to retire, as well 
as the value of and the rates of return on assets in the plan could 
create normal statistical variances that would affect the annual 
normal costs of the plan. Since the plan only has 1,459 participants-
both active and retired judges-and 260 survivor annuitants, such 
variances can have a significant effect on the expected normal costs 
and lead to short-term variability. 

Therefore, the long-term view is important when evaluating the 
expected judges' contributions of 50 percent of the normal costs. As 
shown in table 2, the average of the annual share of judges' 
contributions since enactment of the 1992 Federal Courts 
Administration Act has been approximately 47 percent. 

Table 2: Average Percentage Share of Contribution for Judges and the 
Government: 
									
Plan year: 1993; 
Aggregate normal costs[A]: 3.15%: 
Governments contribution rate[A]: 0.80%: 
Judges' contribution rate[A]: 2.35%: 
Judges' share[B]: 74.6%: 
Governments share[B]: 25.4%. 

Plan year: 1994; 
Aggregate normal costs[A]: 5.94%: 
Governments contribution rate[A]: 3.70%: 
Judges' contribution rate[A]: 2.24%: 
Judges' share[B]: 37.7%: 
Governments share[B]: 62.3%. 

Plan year: 1995; 
Aggregate normal costs[A]: 6.53%: 
Governments contribution rate[A]: 4.30%: 
Judges' contribution rate[A]: 2.23%: 
Judges' share[B]: 34.2%: 
Governments share[B]: 65.8%. 

Plan year: 1996; 
Aggregate normal costs[A]: 6.26%: 
Governments contribution rate[A]: 4.00%: 
Judges' contribution rate[A]: 2.26%: 
Judges' share[B]: 36.1%: 
Governments share[B]: 63.9%. 

Plan year: 1997; 
Aggregate normal costs[A]: 5.77%: 
Governments contribution rate[A]: 3.50%: 
Judges' contribution rate[A]: 2.27%: 
Judges' share[B]: 39.3%: 
Governments share[B]: 60.7%. 

Plan year: 1998; 
Aggregate normal costs[A]: 5.07%: 
Governments contribution rate[A]: 2.80%: 
Judges' contribution rate[A]: 2.27%: 
Judges' share[B]: 44.8%: 
Governments share[B]: 55.2%. 

Plan year: 1999; 
Aggregate normal costs[A]: 3.86%: 
Governments contribution rate[A]: 1.50%: 
Judges' contribution rate[A]: 2.36%: 
Judges' share[B]: 61.1%: 
Governments share[B]: 38.9%. 

Plan year: 2000; 
Aggregate normal costs[A]: 4.97%: 
Governments contribution rate[A]: 2.60%: 
Judges' contribution rate[A]: 2.37%: 
Judges' share[B]: 47.7%; 
Governments share[B]: 52.3%. 

Plan year: 2001; 
Aggregate normal costs[A]: 4.96%: 
Governments contribution rate[A]: 2.60%: 
Judges' contribution rate[A]: 2.36%: 
Judges' share[B]: 47.6%: 
Governments share[B]: 52.4%. 

Plan year: Average share[C]; 
Aggregate normal costs[A]: 100.0%: 
Governments contribution rate[A]: [Empty]; 
Judges' contribution rate[A]: [Empty]; 
Judges' share[B]: 47.0%: 
Governments share[B]: 53.0%. 

[A] Normal cost expressed as a percentage of salaries. 

[B] Percentage of total normal cost. 

[C] This represents the average of the annual share of JSAS normal 
costs. 

Source: JSAS actuarial reports, 1999-2001. 

[End of table] 

Agency Comments	We requested comments on a draft of this report from 
the Director of AOUSC or his designee. On June 10, 2002, the Deputy 
Associate Director of AOUSC provided technical comments, which we 
incorporated into the report as appropriate. 

We are sending copies of this report to AOUSC. Copies of this report 
will be made available to others upon request. This report will also 
be available at no charge on the GAO Web site @www.gao.gov. Should you 
or your staffs have any questions concerning our review, please 
contact me at (202) 512-9406 or Hodge Herry, Assistant Director, at 
(202) 512-9469. You can also reach us by e-mail at franzelj@gao.gov or 
herryh@gao.gov. Key contributors to this report were Joseph Applebaum, 
Jacquelyn Hamilton, Meg Mills, Charles Ego, and Deborah Silk. 

Signed by: 

Jeanette M. Franzel: 
Acting Director: 
Financial Management and Assurance: 

[End of section] 

Appendix I: Retirement Plans Available to Federal Judges: 

AOUSC administers three retirement plans for judges in the federal 
judiciary. 

* The Judicial Retirement System automatically covers United States 
Supreme Court Justices, federal circuit and district court judges, and 
territorial district court judges and is available, at their option, 
to the Administrative Assistant to the Chief Justice, the Director of 
AOUSC, and the Director of the Federal Judicial Center. 

* The Judicial Officers' Retirement Fund is available to bankruptcy 
and full-time magistrate judges. 

* The United States Court of Federal Claims Judges' Retirement System 
is available to the United States Court of Federal Claims judges. 

Also, except for judges who are automatically covered under the 
Judicial Retirement System, judges and judicial officials may opt to 
participate in FERS[Footnote 10] or elect to participate in the 
Judicial Retirement System for Bankruptcy Judges, Magistrate Judges, 
or United States Court of Federal Claims Judges. 

Judges who retire under any of the three judicial retirement plans 
generally continue to receive the full salary amounts that were paid 
immediately before retirement, assuming the judges met the age and 
service requirements.[Footnote 11] Retired territorial district court 
judges generally receive the same COLA that CSRS retirees receive, 
except that their annuities cannot exceed 95 percent of an active 
district court judge's salary. United States Court of Federal Claims 
judge retirees continue to receive the same salary payable to active 
United States Court of Federal Claims judges. 

Those in the Judicial Retirement System and the United States Court of 
Federal Claims Judges' Retirement System are eligible to retire when 
the number of years of service and the judge's age total at least 80, 
with a minimum retirement age of 65, and service ranging from 10 to 15 
years. Those in the Judicial Officers' Retirement Fund are eligible to 
retire at age 65 with at least 14 years of service or may retire at 
age 65 with 8 years of service, on a less than full salary retirement. 
Participants in all three judicial retirement plans are required to 
contribute to and receive Social Security benefits. 

[End of section] 

Appendix II: Formulas Used to Determine Judges' and the Government's 
Contributions and Lump Sum Payments: 

Aggregate Funding Method. This method, as used by the JSAS plan, 
defines the normal cost as that level percentage of future salaries, 
which will be sufficient, along with investment earnings and the 
plan's assets, to pay the plan's benefits. The formula is as follows: 

* The present value of future normal costs (PVFNC) equals present 
value of future benefits (PVFB) less net asset value. 

The present value of future normal costs is the amount that remains to 
be financed by the judges and the government. 

Normal cost percentage (NC percent) equals PVFNC divided by present 
value of future salaries (PVFS).[Footnote 12] 

Government Contribution. The following formula is used to determine 
the government's contribution amount: 

* The government contribution represents the portion of NC not covered 
by participants' contributions. 

Lump Sum Pay Out. This may occur upon the dissolution of marriage 
either through divorce or death of spouse. Payroll contributions 
cease, but previous contributions remain in JSAS. Also, if there is no 
eligible surviving spouse or child upon the death of the judicial 
official, the lump sum pay out to the judicial official's designated 
beneficiaries is computed as follows: 

* Lump sum pay out equals total amount paid into the plan by the judge 
plus 3 percent annual interest accrued less 2.2 percent of salaries 
for each participating year (forfeited amount). 

In effect, the interest plus any amount contributed in excess of 2.2 
percent of judges' salaries will be refunded. 

[End of section] 

Footnotes: 

[1] For simplicity, we will refer to the collective group of judicial 
participants as "judges" throughout this report. 

[2] U.S. General Accounting Office, Federal Pensions: Judicial 
Survivors' Annuities System Costs, [hyperlink, 
http://www.gao.gov/products/GAO/GGD-00-125] (Washington, D.C.: May 25, 
2000), and Federal Pensions: Judicial Survivors' Annuities System 
Costs and Benefit Levels, [hyperlink, 
http://www.gao.gov/products/GAO/GGD-97-87] (Washington, D.C.: June 27, 
1997). 

[3] The 1992 act changes include senior judges and judges who resign 
from their offices. 

[4] A judge who is not entitled to receive an immediate annuity upon 
leaving office, but is eligible to receive a deferred annuity at a 
later date, may remain in JSAS by contributing 3.5 percent of the 
deferred annuity that he or she would be entitled to receive. 

[5] JSAS investments are made only in U.S. Treasury securities. 

[6] Plan years are the same as fiscal years. 

[7] An enrolled actuary is an individual who has been licensed by the 
joint board for the enrollment of actuaries to perform a variety of 
actuarial tasks that the Employment Retirement Income Security Act of 
1974 mandates for private defined benefit pension plans in the United 
States. 

[8] Final numbers needed from the fiscal year 2001 JSAS report were 
provided in May 2002. 

[9] Because current statutory provisions governing participant 
contribution rates do not give AOUSC the authority to modify the 
contribution rate of participants, new legislation would be required. 
No new legislation governing participant contribution rates has been 
enacted since the 1992 Federal Courts Administration Act. 

[10] FERS is open and available to new federal employees. CSRS has 
been closed to new employees since December 31, 1983. However, a newly 
appointed judge who had prior federal service (at least 5 years of 
service before January 1, 1987) may still elect CSRS. 

[11] There is a distinction between retired judges who resign their 
offices and those who retire to a status designated as "senior." 
Judges who retire by resignation are entitled for life to the salary 
of the office at the time of resignation and may engage in private law 
practice. Judges who retire to senior status receive the current 
salary of the office—-that is, they receive salary increases that are 
approved for active judges and generally may perform reduced judicial 
duties. Senior judges may not engage in private law practice. 

[12] The JSAS plan's present value of future salaries includes 
annuitant information. 

[End of section] 

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