A-33287, NOVEMBER 19, 1930, 10 COMP. GEN. 226

A-33287, NOVEMBER 19, 1930, 10 COMP. GEN. 226

RETIREMENT - DEDUCTIONS - WITHHOLDING OF $1 PER MONTH OR MAJOR FRACTION THEREOF THE WORDS "MAJOR FRACTION THEREOF" APPEARING IN SECTION 12 (A) OF THE CIVIL RETIREMENT ACT, AS AMENDED BY THE ACT OF MAY 29, 1930, 46 STAT. 476, REQUIRING THE WITHHOLDING OF CREDIT FROM THE INDIVIDUAL ACCOUNTS OF RETIREMENT DEDUCTIONS OF "$1 PER MONTH OR MAJOR FRACTION THEREOF" HAS REFERENCE TO THE MAJOR FRACTION OF A MONTH AND NOT TO THE MAJOR FRACTION OF $1. THE WITHHOLDING OF CREDIT OF $1 PER MONTH OR MAJOR FRACTION THEREOF FROM THE INDIVIDUAL ACCOUNTS OF RETIREMENT DEDUCTIONS, UNDER SECTION 12 (A) OF THE CIVIL RETIREMENT ACT, AS AMENDED BY THE ACT OF MAY 29, 1930, 46 STAT. 476, SHOULD BE BASED ON THE CALENDAR OR FISCAL MONTH RATHER THAN THE SERVICE MONTH, AND ONLY WHEN THE EMPLOYEE IS IN A PAY STATUS. THE $1 SHOULD NOT BE WITHHELD FROM THE REFUND OF RETIREMENT DEDUCTIONS TO AN EMPLOYEE WHO ONLY SERVES THE MINOR FRACTION OF TWO SUCCESSIVE CALENDAR MONTHS AND RESIGNS. CREDIT FOR THE $1 SHOULD NOT BE WITHHELD FROM THE INDIVIDUAL ACCOUNT OF RETIREMENT DEDUCTIONS FOR ANY CALENDAR MONTH DURING THE MAJOR FRACTION OF WHICH THE EMPLOYEE IS IN A NONPAY STATUS. IF AN EMPLOYEE SERVES FOR A MAJOR FRACTION OF A MONTH AND THE TOTAL RETIREMENT DEDUCTIONS AMOUNT TO LESS THAN $1, THE TOTAL AMOUNT DEDUCTED WILL GO TO THE CREDIT OF THE RETIREMENT FUND WITHOUT ANY CREDIT TO THE EMPLOYEE'S INDIVIDUAL ACCOUNT. IF THE AMOUNT DEDUCTED IS IN EXCESS OF $1, AN AMOUNT EQUAL TO SUCH EXCESS WOULD BE CREDITED TO THE INDIVIDUAL ACCOUNT.

COMPTROLLER GENERAL MCCARL TO THE PRESIDENT OF THE CIVIL SERVICE COMMISSION, NOVEMBER 19, 1930:

THERE HAS BEEN RECEIVED YOUR LETTER OF AUGUST 30, 1930, REQUESTING MY DECISION OF CERTAIN QUESTIONS ARISING UNDER THE AMENDATORY RETIREMENT ACT OF MAY 29, 1930, 46 STAT. 476, AS FOLLOWS:

SECTION 12 (A) OF THE ACT APPROVED MAY 29, 1930 (46 STAT. 476), AMENDING THE RETIREMENT ACT, IS AS FOLLOWS:

"UNDER SUCH REGULATIONS AS MAY BE PRESCRIBED BY THE CIVIL SERVICE COMMISSION THE AMOUNTS DEDUCTED AND WITHHELD FROM THE BASIC SALARY, PAY, OR COMPENSATION OF EACH EMPLOYEE FOR CREDIT TO THE "CIVIL-SERVICE RETIREMENT AND DISABILITY FUND," CREATED BY THE ACT OF MAY 22, 1920, COVERING SERVICE DURING THE PERIOD FROM AUGUST 1, 1920, TO THE EFFECTIVE DATE OF THIS ACT, SHALL BE CREDITED TO AN INDIVIDUAL ACCOUNT OF SUCH EMPLOYEE, TO BE MAINTAINED BY THE DEPARTMENT OR OFFICE BY WHICH HE IS EMPLOYED AND THE AMOUNTS DEDUCTED AND WITHHELD FROM THE BASIC SALARY, PAY, OR COMPENSATION OF EACH EMPLOYEE FOR CREDIT TO THE "CIVIL-SERVICE RETIREMENT AND DISABILITY FUND" COVERING SERVICE FROM AND AFTER THE EFFECTIVE DATE OF THIS ACT, LESS THE SUM OF $1 PER MONTH OR MAJOR FRACTION THEREOF, SHALL SIMILARLY BE CREDITED TO SUCH INDIVIDUAL ACCOUNT.'

IN CONNECTION WITH THE $1 PER MONTH OR MAJOR FRACTION THEREOF WHICH IS NOT CREDITED TO THE INDIVIDUAL ACCOUNT OF EMPLOYEES, THE FOLLOWING QUESTIONS HAVE BEEN PROPOUNDED WHICH SEEM PROPERLY FOR CONSIDERATION BY YOUR OFFICE:

1. DOES THE PHRASE "MAJOR FRACTION THEREOF" HAVE REFERENCE TO THE MAJOR FRACTION OF $1 OR THE MAJOR FRACTION OF ONE MONTH? IN THE QUESTIONS FOLLOWING, THE PHRASE IS ASSUMED TO MEAN THE MAJOR FRACTION OF A MONTH.

2. SHOULD THE $1 PER MONTH BE BASED ON A CALENDAR MONTH OR SHOULD IT BE BASED UPON THE NUMBER OF DAYS' SERVICE WHICH WOULD BE EQUIVALENT TO ONE MONTH? FOR EXAMPLE, AN EMPLOYEE IS APPOINTED ON JULY 20 AND RESIGNS ON AUGUST 10. HE HAS NOT SERVED THE MAJOR FRACTION OF EITHER THE MONTH OF JULY OR AUGUST, BUT THE ACTUAL NUMBER OF DAYS' SERVICE WOULD AMOUNT TO THE MAJOR FRACTION OF A MONTH. SHOULD $1 BE WITHHELD OR SHOULD THE WHOLE AMOUNT OF DEDUCTIONS BE RETURNED TO THE MPLOYEE?

3. IF THE TOTAL DEDUCTIONS IN ANY ONE MONTH ARE LESS THAN $1, BUT THE EMPLOYEE SERVES FOR A MAJOR FRACTION OF A MONTH, WILL THE AMOUNT DEDUCTED BE CREDITED TO THE EMPLOYEE'S INDIVIDUAL ACCOUNT OR WILL IT GO TO THE SO- CALLED TONTINE FUND?

4. SHOULD PERIODS OF LEAVE WITHOUT PAY BE EXCLUDED? THAT IS, DOES ANY PERIOD IN EXCESS OF 15 DAYS DURING WHICH THE EMPLOYEE WAS ON THE ROLLS OF THE DEPARTMENT BUT DURING PART OF SUCH PERIOD HE WAS IN LEAVE WITHOUT PAY STATUS CONSTITUTE THE MAJOR FRACTION OF A MONTH?

5. IN CASE AN EMPLOYEE IS ON THE ROLLS FOR LESS THAN 15 DAYS IN ANY ONE MONTH, IS $1 CREDITED TO THE TONTINE FUND?

6. IN CASE AN EMPLOYEE IS ON LEAVE WITHOUT PAY FOR THE ENTIRE MONTH AND, THEREFORE, NO DEDUCTIONS ARE MADE FOR THAT MONTH, SHOULD THE EMPLOYEE BE CHARGED WITH THE $1? IF SO, FROM WHAT SOURCE WOULD IT BE DRAWN?

THE QUESTIONS WILL BE ANSWERED IN THE ORDER PRESENTED:

1. THE PHRASE "MAJOR FRACTION THEREOF" HAS REFERENCE TO THE MAJOR FRACTION OF A MONTH.

2. THE EVIDENT PURPOSE OF THE STATUTE IS TO ESTABLISH AN ACCOUNT WITH EACH INDIVIDUAL EMPLOYEE WHICH WILL DISCLOSE AT ALL TIMES HIS SHARE IN THE CIVIL SERVICE RETIREMENT AND DISABILITY FUND AND WHICH WILL FORM THE BASIS FOR THE ACTION BY THE EMPLOYING OFFICER AND THE VETERANS' ADMINISTRATION IN THE SETTLEMENT OF CLAIMS ARISING UNDER OTHER PROVISIONS OF THE STATUTE. TO SUCH ACCOUNT SHALL BE CREDITED, FROM AND AFTER THE EFFECTIVE DATE OF THE ACT, THE AMOUNTS DEDUCTED AND WITHHELD FROM THE BASIC SALARY, PAY, OR COMPENSATION OF EACH EMPLOYEE LESS THE SUM OF $1 PER MONTH OR MAJOR FRACTION THEREOF. THE DEDUCTING AND WITHHOLDING OF AMOUNTS FOR CREDIT TO THE FUND ARE BASED ON PAY STATUS AND, THEREFORE, THE STATUTES, RULES AND REGULATIONS GOVERNING SALARY, TC., SHOULD, SO FAR AS APPLICABLE, GOVERN THE COMPUTATION OF, AND ACCOUNTING FOR, SUCH DEDUCTIONS. SALARY, PAY, OR COMPENSATION OF AN EMPLOYEE MAY BE PAID ON THE BASIS OF THE HOUR, THE DAY, A FISCAL MONTH OF 30 DAYS (ACT OF APRIL 28, 1904, 33 STAT. 513), AND A FISCAL MONTH OF 28, 29, 30, OR 31 DAYS (ACT OF MARCH 4, 1911, 36 STAT. 1339), OR A SPECIFIED NUMBER OF DAYS PER ANNUM (ACT OF FEBRUARY 28, 1925, 43 STAT. 1053), AND IT IS THEREFORE APPARENT THAT THE REFERENCE IN THE ACT IS TO A FISCAL MONTH INSTEAD OF A SERVICE MONTH, AND IT MUST BE SO HELD. IN CASE OF THE EXAMPLE GIVEN, AN EMPLOYEE WHO WORKS LESS THAN THE MAJOR FRACTION OF A MONTH IN EACH OF TWO CONSECUTIVE MONTHS IS NOT SUBJECT TO THE RETENTION OF $1 FROM THE AMOUNT OF RETIREMENT DEDUCTIONS WITHHELD, AND THE ENTIRE AMOUNT SO WITHHELD MAY, IF OTHERWISE CORRECT, BE PAID TO HIM UPON HIS RESIGNATION FROM THE SERVICE.

3. IF AN EMPLOYEE SERVES FOR A MAJOR FRACTION OF A MONTH, AND THE TOTAL RETIREMENT DEDUCTIONS COVERING THE PERIOD SO SERVED AMOUNT TO LESS THAN $1, THE TOTAL AMOUNT DEDUCTED WILL GO TO THE CREDIT OF THE RETIREMENT FUND WITHOUT ANY CREDIT TO THE EMPLOYEE'S INDIVIDUAL ACCOUNT. IT FOLLOWS THAT IF THE AMOUNT DEDUCTED IS IN EXCESS OF $1, AN AMOUNT EQUAL TO SUCH EXCESS WOULD BE CREDITED TO THE INDIVIDUAL ACCOUNT.

4. SINCE THE RETENTION OF $1 PER MONTH OR MAJOR FRACTION THEREOF IS PREDICATED UPON THE RECEIPT OF SALARY, PAY, OR COMPENSATION FROM WHICH 3 1/2 PERCENT HAS BEEN DEDUCTED FOR RETIREMENT PURPOSES, SERVICE DURING A MONTH SHOULD BE COMPUTED ON A PAY BASIS WHEN MAKING AND ACCOUNTING FOR RETIREMENT DEDUCTIONS. PARTS OF A MONTH IN WHICH AN EMPLOYEE IS CARRIED ON THE ROLLS IN A NONPAY STATUS SHOULD BE REGARDED AS FRACTIONS OF A MONTH AND THE $1 RETENTION SHOULD BE COMPUTED ACCORDINGLY. SEE 2 AND 3 ABOVE.

5. AN EMPLOYEE WHO IS ON THE ROLES IN PAY STATUS FOR A MINOR FRACTION OF A MONTH IS ENTITLED TO RECEIVE CREDIT IN HIS INDIVIDUAL ACCOUNT FOR THE FULL AMOUNT OF RETIREMENT DEDUCTIONS WITHHELD FROM HIS SALARY, PAY, OR COMPENSATION FOR SUCH FRACTIONAL PERIOD.

IN CONNECTION WITH THIS QUESTION IT IS NOTED THAT REFERENCE IS MADE TO THE CREDITING OF $1 TO THE "TONTINE FUND.' THERE IS NO AUTHORITY FOR CREATING SUCH A FUND TO WHICH SHALL BE CREDITED THE $1 PER MONTH, RETAINED FROM RETIREMENT DEDUCTIONS TO BE CARRIED TO THE CREDIT OF INDIVIDUAL ACCOUNTS OF EMPLOYEES. THE $1 PER MONTH FORMS A PART OF THE TOTAL DEDUCTIONS TO BE CREDITED TO THE CIVIL SERVICE RETIREMENT AND DISABILITY FUND IN EACH CASE, BUT, UNDER THE LAW, ITS RETENTION OPERATES TO REDUCE THE AMOUNT TO BE CREDITED TO AN EMPLOYEE'S INDIVIDUAL ACCOUNT WITH THE FUND.

HOWEVER, IT IS ESSENTIAL THAT THE TRUE OBLIGATION OF THE UNITED STATES BE DISCLOSED, FIRST AS TO THE ANNUITY PURCHASE ACCUMULATIONS, AND SECOND AS TO THE SO-CALLED "TONTINE" AND OTHER ACCUMULATIONS, WHICH MAY BE ACCOMPLISHED THROUGH AN ADEQUATE SYSTEM OF REPORTING TO THE COMMISSION BY THE DEPARTMENTS AND ESTABLISHMENTS; THE FISCAL DATA TO BE RECORDED IN THE CONTROL AND OTHER ACCOUNTS REFERRED TO IN MY LETTER OF AUGUST 22, 1930.

6. REFERRING TO ANSWERS TO QUESTIONS 4 AND 5, THERE CAN BE NO QUESTION OF "CHARGING" AN EMPLOYEE OR REDUCING THE RETIREMENT DEDUCTIONS MADE FROM HIS SALARY, PAY, OR COMPENSATION IN THE SUM OF $1 PER MONTH OR MAJOR FRACTION THEREOF, WHEN HE IS ON LEAVE WITHOUT PAY FOR THE ENTIRE MONTH AND THEREFORE RECEIVED NO SALARY, PAY, OR COMPENSATION DURING THE MONTH FROM WHICH RETIREMENT DEDUCTIONS COULD BE MADE.