B-192117, SEPTEMBER 24, 1979, 58 COMP.GEN. 795

B-192117, SEPTEMBER 24, 1979, 58 COMP.GEN. 795

PAY - RETIRED - SURVIVOR BENEFIT PLAN - SPOUSE - SOCIAL SECURITY OFFSET THE WIDOW OF A SURVIVOR BENEFIT PLAN (SBP) PARTICIPATOR, WHO HAD SOME POST-1956 SOCIAL SECURITY COVERED MILITARY SERVICE, BECAME ENTITLED TO SOCIAL SECURITY PAYMENTS BASED ON THE DECEASED MEMBER'S TOTAL SOCIAL SECURITY COVERED EARNINGS, INCLUDING THE COVERED MILITARY SERVICE. FOR THE PURPOSE OF THE REDUCTION IN HER SBP ANNUITY REQUIRED BY 10 U.S.C. 1451(A) FOR SOCIAL SECURITY PAYMENTS ATTRIBUTABLE TO MILITARY EARNINGS, IT IS NOT NECESSARY THAT THE MEMBER ACQUIRE A FULLY INSURED STATUS BASED SOLELY ON SOCIAL SECURITY COVERED MILITARY EARNINGS. SINCE GENERALLY SOCIAL SECURITY PAYMENTS RECEIVED ARE ENHANCE BY MILITARY COVERED QUARTERS, THE SBP ANNUITY IS TO BE REDUCED BY THE AMOUNT OF THE SOCIAL SECURITY PAYMENT BASED ON THE MEMBER'S MILITARY SERVICE.

IN THE MATTER OF MRS. MARJORIE S. NESTER, SEPTEMBER 24, 1979:

THE QUESTION TO BE DECIDED HERE IS WHETHER THE SOCIAL SECURITY OFFSET OF A SURVIVOR BENEFIT PLAN (SBP) ANNUITY IS REQUIRED BY 10 U.S.C. 1451(A) BASED ON THE MEMBER'S SOCIAL SECURITY COVERED MILITARY EARNINGS ALTHOUGH THE MEMBER DID NOT ACQUIRE HIS SOCIAL SECURITY INSURED STATUS BASED ON THE MILITARY COVERED EARNINGS ALONE. THE ANSWER IS YES.

THE MEMBER IN THE CASE BEFORE US. LIEUTENANT COLONEL NORMAN W. NESTER, USAR, WAS RETIRED EFFECTIVE AUGUST 1, 1965, UNDER THE PROVISIONS OF 10 U.S.C. 1331-1337, HAVING ELECTED SURVIVOR COVERAGE FOR SPOUSE ONLY UNDER THE RETIRED SERVICEMAN'S FAMILY PROTECTION PLAN (RSFPP). ON DECEMBER 1, 1972, COLONEL NESTER ELECTED INTO THE THEN NEWLY ENACTED SURVIVOR BENEFIT PLAN, 10 U.S.C. 1447-1455, TO PROVIDE MAXIMUM COVERAGE FOR HIS SPOUSE, AND CANCELED HIS RSFPP COVERAGE.

COLONEL NESTER DIED DECEMBER 2, 1973, AND AN SBP ANNUITY WAS ESTABLISHED FOR HIS WIDOW, MARJORIE S. NESTER, EFFECTIVE DECEMBER 3, 1973. HOWEVER, PURSUANT TO 10 U.S.C. 1451(A), SINCE COLONEL NESTER HAD SOCIAL SECURITY COVERED EARNINGS AS A RESULT OF THE PERFORMANCE OF ACTIVE MILITARY SERVICE AFTER 1956, MRS. NESTER'S SBP ANNUITY WAS REDUCED.

MRS. NESTER EXPRESSES THE VIEW THAT HER ANNUITY SHOULD NOT BE REDUCED. IT IS HER CONTENTION THAT IN ORDER FOR HER ANNUITY TO BE REDUCED BY SOCIAL SECURITY BENEFITS RECEIVED, HER DECEASED HUSBAND HAD TO HAVE ACQUIRED A FULLY INSURABLE SOCIAL SECURITY STATUS BASED SOLELY ON HIS MILITARY SERVICE AND THAT ANY COVERAGE EARNED OUTSIDE HIS MILITARY SERVICE IS NOT TO BE TAKEN INTO ACCOUNT IN ESTABLISHING THAT OFFSET. ACCORDING TO MRS. NESTER, HER HUSBAND WOULD NEED 19 QUARTERS OF COVERAGE TO BE ELIGIBLE FOR SOCIAL SECURITY COVERAGE BASED SOLELY ON HIS MILITARY EARNINGS. IT IS HER POSITION THAT SINCE HE HAD ONLY FOUR MILITARY COVERED QUARTERS, THERE IS NO BASIS FOR REDUCING HER SUP ANNUITY.

THE ARMY FINANCE CENTER, ON THE OTHER HAND, CONTENDS THAT 10 U.S.C. 1451(A), WHICH REQUIRES OFFSET, IS TO BE APPLIED WHENEVER A WIDOW IS ENTITLED TO SOCIAL SECURITY BENEFITS. HOWEVER, THE COMPUTATION FOR THE OFFSET IS BASED ONLY ON THE MILITARY EARNINGS PORTION OF THE SOCIAL SECURITY COVERAGE.

WE BELIEVE THAT THE POSITION TAKEN BY THE ARMY FINANCE CENTER IS THE CORRECT INTERPRETATION TO BE GIVEN THE OFFSET PROVISION. SECTION 1451(A) PROVIDES FOR THE REDUCTION (OFFSET) IN THE SBP ANNUITY BASED ON THE SOCIAL SECURITY BENEFIT IN PART AS FOLLOWS:

* * * THE MONTHLY ANNUITY SHALL BE REDUCED BY AN AMOUNT EQUAL TO THE AMOUNT OF THE SURVIVOR BENEFIT, IF ANY, TO WHICH THE WIDOW * * * WOULD BE ENTITLED * * * BASED SOLELY UPON (MILITARY) SERVICE BY THE PERSON CONCERNED * * * .

ON PAGE 30 OF SENATE REPORT 92-1089, 92D CONG., 2D SESS., THE FOLLOWING STATEMENT IS MADE REGARDING THE SOCIAL SECURITY OFFSET:

* * * WHEN THE WIDOW REACHES AGE 62, HER (SBP) ANNUITY BASED ON HER HUSBAND'S MILITARY RETIRED PAY WOULD BE OFFSET BY THE EQUIVALENT OF THE SOCIAL SECURITY PAYMENT WHICH IS ATTRIBUTABLE TO HER HUSBAND'S MILITARY SERVICE.

AND ON PAGE 31, IT IS EXPLAINED FURTHER THAT:

THERE IS NO REDUCTION BECAUSE OF THE SOCIAL SECURITY BENEFITS THAT MAY HAVE BEEN EARNED AS A RESULT OF THE HUSBAND'S EMPLOYMENT IN HIS POST- RETIREMENT YEARS * * * . IT CANNOT BE OVEREMPHASIZED THAT THE ONLY SOCIAL SECURITY PAYMENTS WHICH ARE TAKEN INTO ACCOUNT IN THIS INTEGRATION OF BENEFITS ARE THE PAYMENTS TO THE WIDOW BASED ON HER HUSBAND'S SOCIAL SECURITY EARNED AS A RESULT OF ACTIVE DUTY IN MILITARY SERVICE.

SEE ALSO THE SIMILAR STATEMENTS IN HOUSE REPORT NO. 92-481, 92D CONG. 1ST SESS., PAGES 14-15.

ENACTMENT OF THE SBP DID NOT MODIFY SOCIAL SECURITY ENTITLEMENTS. HOWEVER, THE SBP WAS INTENDED TO BE INTEGRATED WITH SOCIAL SECURITY AND, THEREFORE, IT PROVIDES FOR REDUCTION IN SBP PAYMENTS ON ACCOUNT OF THE PORTION OF SOCIAL SECURITY PAYMENTS PREDICATED ON THE MEMBER'S MILITARY SERVICE. IT WAS ALSO RECOGNIZED THAT IN MANY CASES THE MEMBER WOULD HAVE OTHER SOCIAL SECURITY COVERED EARNINGS WHICH ARE NONMILITARY AND WHICH WOULD NOT SUBJECT THE SBP ANNUITY TO FURTHER REDUCTION. SEE GENERALLY 57 COMP.GEN. 339(1978).

WHEN AN INDIVIDUAL, SUCH AS MRS. NESTER, BECOMES ELIGIBLE FOR A WIDOW'S SOCIAL SECURITY BENEFIT, ALL QUARTERS OF HER DECEASED HUSBAND'S COVERAGE, BOTH MILITARY AND NONMILITARY, WOULD BE TAKEN INTO ACCOUNT BEFORE THE AMOUNT OF THE SOCIAL SECURITY BENEFIT TO WHICH SHE IS ENTITLED IS ESTABLISHED AND PAID. GENERALLY, WHEN MILITARY COVERED QUARTERS ARE INCLUDED, THE SOCIAL SECURITY BENEFIT RECEIVED IS ENHANCED, WHETHER OR NOT THE MILITARY COVERED EARNINGS WOULD BE SUFFICIENT, ALONE, FOR THE MEMBER TO HAVE ACHIEVED INSURED STATUS. IT IS THAT ENHANCEMENT TO WHICH THE SECTION 1451(A) REQUIRED REDUCTION IS DIRECTED. SEE 53 COMP.GEN. 733(1974) AND 57 ID. 339, 341-343, SUPRA.

THUS, IT IS OUR VIEW THAT THE SBP ANNUITY MUST BE REDUCED BY THE AMOUNT OF A WIDOW'S SOCIAL SECURITY PAYMENT BASES ON THE DECEASED MEMBER'S POST- 1956 MILITARY SERVICE.

ACCORDINGLY, DEDUCTIONS SHOULD CONTINUE TO BE MADE FROM MRS. NESTER'S SBP ANNUITY, IF OTHERWISE CORRECT.