A-12269, A-30108, A-42691, A-51607, MARCH 23, 1936, 15 COMP. GEN. 829

A-12269,A-30108,A-42691,A-51607: Mar 23, 1936

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DISBURSING OFFICERS PAYING THE ROLL COVERING THE PERIOD WITHIN WHICH AN EMPLOYEE DIES WILL. WILL BE ON THE BASIS OF 96 1/2 PERCENT AND NOT THE GROSS AMOUNT AS UNDER THE PRESENT PRACTICE. WILL BE AMENDED ACCORDINGLY. THE QUESTION ARISES WHETHER THE 3 1/2 PERCENT OF THE RESIDUE OF SALARY IS DUE AND PAYABLE TO THE BENEFICIARY OF RECORD OR TO THE ESTATE OF A DECEASED EMPLOYEE. THERE WAS APPROVED BY THE COMPTROLLER GENERAL INSTRUCTIONS TO THE DEPARTMENTS FOR RECORDING THE RETIREMENT DEDUCTIONS. PROVIDED THERE IS NO QUESTION AS TO AMOUNT DUE. PAYMENT OF THE 3 1/2 PERCENT OF THE RESIDUE OF SALARY WAS CHANGED BY GENERAL REGULATIONS NO. 54. IT WILL BE NOTED THAT THE SUPPLEMENT NO. 3 PROVIDES FOR TWO FORMS OF HANDLING OF THE 3 1/2 PERCENT OF THE RESIDUE OF SALARY.

A-12269, A-30108, A-42691, A-51607, MARCH 23, 1936, 15 COMP. GEN. 829

CIVILIAN RETIREMENT DEDUCTIONS - DEATH OF EMPLOYEES - PROCEDURE CHANGE THE ACT OF JUNE 22, 1934, 48 STAT. 1202, AMENDING THE CIVIL RETIREMENT ACT, AUTHORIZING THE DESIGNATION OF BENEFICIARIES TO RECEIVE THE TOTAL AMOUNT OF RETIREMENT DEDUCTIONS WITH INTEREST THEREON, DISBURSING OFFICERS PAYING THE ROLL COVERING THE PERIOD WITHIN WHICH AN EMPLOYEE DIES WILL, EFFECTIVE ON AND AFTER JULY 1, 1936, MAKE THE REQUIRED RETIREMENT DEDUCTION TO DATE OF DEATH. EFFECTIVE JULY 1, 1936 PAYMENT OF COMPENSATION TO THE EMPLOYEE'S ESTATE IN CONNECTION WITH THE AMOUNT DUE AND UNPAID AT DATE OF DEATH ON DIRECT SETTLEMENT BY THE GENERAL ACCOUNTING OFFICE, WILL BE ON THE BASIS OF 96 1/2 PERCENT AND NOT THE GROSS AMOUNT AS UNDER THE PRESENT PRACTICE. GENERAL REGULATIONS NO. 54, SUPPLEMENT NO. 3, DATED JULY 27, 1931, WILL BE AMENDED ACCORDINGLY.

COMPTROLLER GENERAL MCCARL TO THE UNITED STATES CIVIL SERVICE COMMISSION, MARCH 23, 1936:

THERE HAS BEEN RECEIVED YOUR LETTER OF AUGUST 14, 1935, AS FOLLOWS:

SINCE THE PASSAGE OF THE ACT OF JUNE 22, 1934, COMMONLY KNOWN AS THE BENEFICIARY LAW, THE QUESTION ARISES WHETHER THE 3 1/2 PERCENT OF THE RESIDUE OF SALARY IS DUE AND PAYABLE TO THE BENEFICIARY OF RECORD OR TO THE ESTATE OF A DECEASED EMPLOYEE. SECTION 2, SUBDIVISION (D) OF THE ACT, COPY HEREWITH, PROVIDES FOR PAYMENT OF EMPLOYEES' CONTRIBUTIONS TO THE CIVIL SERVICE RETIREMENT AND DISABILITY FUND, AS FOLLOWS:

"/D) IN CASE AN EMPLOYEE SHALL DIE WITHOUT HAVING ATTAINED ELIGIBILITY FOR RETIREMENT OR WITHOUT HAVING ESTABLISHED A VALID CLAIM FOR ANNUITY, THE TOTAL AMOUNT OF HIS DEDUCTIONS WITH INTEREST THEREON SHALL BE PAID, UPON THE ESTABLISHMENT OF A VALID CLAIM THEREFOR, IN THE FOLLOWING ORDER OF PRECEDENCE:

"FIRST , TO THE BENEFICIARY OR BENEFICIARIES, DESIGNATED IN WRITING BY SUCH EMPLOYEE AND RECORDED ON HIS INDIVIDUAL ACCOUNT;

"SECOND, IF THERE BE NO SUCH BENEFICIARY, TO THE DULY APPOINTED EXECUTOR OR ADMINISTRATOR OF THE ESTATE OF SUCH EMPLOYEE;

"THIRD, IF THERE BE NO SUCH BENEFICIARY OR EXECUTOR OR ADMINISTRATOR, PAYMENT MAY BE MADE, AFTER THE EXPIRATION OF THIRTY DAYS FROM THE DATE OF DEATH OF THE EMPLOYEE, TO SUCH PERSON OR PERSONS AS MAY APPEAR IN THE JUDGMENT OF THE CIVIL SERVICE COMMISSION TO BE LEGALLY ENTITLED THERETO, AND SUCH PAYMENT SHALL BE A BAR TO RECOVERY BY ANY OTHER PERSON.'

SECTION 10 OF THE ACT OF MAY 29, 1930, READS, AS FOLLOWS:

"BEGINNING AS OF JULY 1, 1926, THERE SHALL BE DEDUCTED AND WITHHELD FROM THE BASIC SALARY, PAY, OR COMPENSATION OF EACH EMPLOYEE TO WHOM THIS ACT APPLIES A SUM EQUAL TO 3 1/2 PERCENTUM OF SUCH EMPLOYEE'S BASIC SALARY, PAY, OR COMPENSATION. THE AMOUNTS SO DEDUCTED AND WITHHELD FROM THE BASIC SALARY, PAY, OR COMPENSATION OF EACH EMPLOYEE SHALL, IN ACCORDANCE WITH SUCH PROCEDURE AS MAY BE PRESCRIBED BY THE COMPTROLLER GENERAL OF THE UNITED STATES, BE DEPOSITED IN THE TREASURY OF THE UNITED STATES TO THE CREDIT OF THE CIVIL-SERVICE RETIREMENT AND DISABILITY FUND CREATED BY THE ACT OF MAY 22, 1920.'

UNDER DATE OF JANUARY 13, 1927, A-16616, THERE WAS APPROVED BY THE COMPTROLLER GENERAL INSTRUCTIONS TO THE DEPARTMENTS FOR RECORDING THE RETIREMENT DEDUCTIONS, WHICH READS IN PART, AS FOLLOWS:

"15. APPLICATIONS MAY BE SUBMITTED TO THE COMMISSIONER OF PENSIONS FOR PAYMENT IRRESPECTIVE OF WHETHER OR NOT CLAIM FOR RESIDUE OF SALARY HAS BEEN FILED OR SETTLED, PROVIDED THERE IS NO QUESTION AS TO AMOUNT DUE. THE 3 1/2 PERCENT OF UNPAID BASIC PAY SHOULD BE INCLUDED IN CERTIFICATE.'

FOR SOME REASON, UNKNOWN TO THE OFFICE ADMINISTERING THE RETIREMENT LAW, PAYMENT OF THE 3 1/2 PERCENT OF THE RESIDUE OF SALARY WAS CHANGED BY GENERAL REGULATIONS NO. 54, SUPPLEMENT NO. 3, APPROVED BY THE COMPTROLLER GENERAL JULY 27, 1931, EFFECTIVE JULY 1, 1931.

IT WILL BE NOTED THAT THE SUPPLEMENT NO. 3 PROVIDES FOR TWO FORMS OF HANDLING OF THE 3 1/2 PERCENT OF THE RESIDUE OF SALARY. PARAGRAPH 3 PROVIDES IN PART THAT "WHERE PAYMENT IS TO BE MADE BY DIRECT SETTLEMENT OF A CLAIM THROUGH THE GENERAL ACCOUNTING OFFICE, THE CLAIM SHOULD BE STATED AND SETTLED IN THE GROSS AMOUNT EARNED.' THIS REGULATION APPLIES TO ALL OF THE DEPARTMENTS AND INDEPENDENT ESTABLISHMENTS, EXCEPT THE POST OFFICE DEPARTMENT, SECTION 12 PROVIDING,"THAT THIS SUPPLEMENT SHALL NOT BE HELD TO APPLY TO THE POSTAL SERVICE.' THE STATISTICAL RECORDS OF THE COMMISSION SHOW THAT MORE THAN FIFTY PERCENT OF THE EMPLOYEES WITHIN THE PURVIEW OF THE RETIREMENT ACT ARE IN THE POSTAL SERVICE. NATURALLY, NO DIFFICULTY HAS BEEN EXPERIENCED IN CONNECTION WITH THE SETTLEMENT OF CLAIMS IN THE CASE OF POSTAL EMPLOYEES. HOWEVER, OTHER DEPARTMENTS HAVE MORE OR LESS FREQUENTLY, AND CONTRARY TO INSTRUCTIONS IN GENERAL REGULATIONS NO. 54, SUPPLEMENT NO. 3, INCLUDED IN THE REPORT TO THE COMMISSION 3 1/2 PERCENT OF THE DEDUCTIONS MADE FROM THE FINAL SALARY. AVOID POSSIBLE OVERPAYMENT UNDER THE PRESENT REGULATION IT IS OBVIOUSLY NECESSARY TO ASCERTAIN BY CORRESPONDENCE BETWEEN THE COMMISSION, THE DEPARTMENTS, AND THE GENERAL ACCOUNTING OFFICE WHETHER FINAL SALARY HAS BEEN CERTIFIED TO THE GENERAL ACCOUNTING OFFICE IN THE GROSS.

IN VIEW OF THE FACT THAT THE RESIDUE OF SALARY IS PAID BY THE GENERAL ACCOUNTING OFFICE UNDER ONE LAW AND THE RETIREMENT DEDUCTIONS WITH INTEREST IS PAID BY THE COMMISSION UNDER ANOTHER LAW, THE PAYMENTS IN A GIVEN CASE FREQUENTLY BEING MADE TO DIFFERENT PERSONS, IT IS SUGGESTED THAT STEPS BE TAKEN TO HAVE THE 3 1/2 PERCENT ACCREDITED TO THE PROPER ACCOUNT. AS THAT PORTION OF GENERAL REGULATIONS NO. 54, SUPPLEMENT NO. 3, INSTRUCTING THAT WHERE PAYMENT IS TO BE MADE BY DIRECT SETTLEMENT OF A CLAIM THROUGH THE GENERAL ACCOUNTING OFFICE THE CLAIM SHOULD BE STATED AND SETTLED IN THE GROSS AMOUNT EARNED, DOES NOT PERMIT ACCREDITING TO THE PROPER ACCOUNT OF THE 3 1/2 PERCENT OF SALARY DUE AND UNPAID AT THE DEATH OF AN EMPLOYEE, AN AMENDMENT TO THE REGULATIONS IS NECESSARY. IT IS REQUESTED THAT AN AMENDMENT BE ISSUED AT THE EARLIEST DATE PRACTICABLE UNDER WHICH REPORTS TO THE CIVIL SERVICE COMMISSION BY ALL DEPARTMENTS WOULD INCLUDE THE 3 1/2 PERCENT OF RESIDUE OF SALARY IN CONFORMITY WITH THE LETTER AND THE SPIRIT OF SECTION 10 OF THE ACT OF MAY 29, 1930.

IN CARRYING OUT THE ABOVE RECOMMENDATION, IT IS RESPECTFULLY SUGGESTED THAT TO AVOID CONFUSION BY REASON OF POSSIBLE MISUNDERSTANDING, THE NECESSARY ORDER BE PROMULGATED IN ADVANCE, TO BECOME EFFECTIVE ON THE FIRST DAY OF A SPECIFIED MONTH IN THE FUTURE, IN ORDER THAT NOT ONLY THE OFFICIALS WHO ARE RESPONSIBLE BUT ALSO THE CLERKS WHO PREPARE THE REPORTS, MAY BE POSTED AS TO THE CHANGE OF PRACTICE TO GO INTO EFFECT ON THE SPECIFIED DATE.

THE LAST SENTENCE OF PARAGRAPH 3 OF SUPPLEMENT NO. 3, GENERAL REGULATIONS NO. 54, DATED JULY 27, 1931, 11 COMP. GEN. 540, THE PORTION OF THE REGULATION HERE IN QUESTION, PROVIDES AS FOLLOWS:

WHERE PAYMENT IS TO BE MADE BY DIRECT SETTLEMENT OF A CLAIM THROUGH THE GENERAL ACCOUNTING OFFICE, THE CLAIM SHOULD BE STATED AND SETTLED IN THE GROSS AMOUNT EARNED.

THIS REGULATION WAS JUSTIFIED UNDER THE THEN EXISTING LAWS REQUIRING SETTLEMENT IN FAVOR OF THE ESTATE OF AN EMPLOYEE, BOTH OF COMPENSATION EARNED AND UNPAID AT DATE OF DEATH AND OF RETIREMENT DEDUCTIONS WITH INTEREST TO THE CREDIT OF THE EMPLOYEE IN THE CIVIL-SERVICE RETIREMENT AND DISABILITY FUND. WHILE IT WAS RECOGNIZED BY THIS OFFICE IN DECISION OF JANUARY 21, 1930, A-12269, THAT UNDER THE PROVISIONS OF SECTION 10 OF THE CIVIL RETIREMENT ACT OF MAY 29, 1930, 46 STAT. 475, RETIREMENT DEDUCTIONS ARE REQUIRED TO BE MADE FROM THE COMPENSATION OF EMPLOYEES COVERING PERIOD BETWEEN LAST PAYMENT AND DATE OF DEATH, AS THE ESTATES OF THE EMPLOYEES WERE ENTITLED TO THE GROSS AMOUNTS IN ANY EVENT, WHETHER PAID AS EARNED COMPENSATION BY THIS OFFICE, OR AS RETIREMENT DEDUCTIONS BY THE PENSION OFFICE, THIS OFFICE ADOPTED THE PRACTICAL PROCEDURE OF MAKING SETTLEMENT IN FAVOR OF THE ESTATES OF EMPLOYEES FOR COMPENSATION IN THE GROSS AMOUNT EARNED, INCLUDING RETIREMENT DEDUCTIONS.

HOWEVER, THE ACT OF JUNE 22, 1934, 48 STAT. 1202, AMENDING THE CIVIL RETIREMENT ACT, QUOTED IN YOUR LETTER, NOW AUTHORIZES THE DESIGNATION OF A BENEFICIARY OR BENEFICIARIES TO RECEIVE THE TOTAL AMOUNT OF HIS DEDUCTIONS WITH INTEREST THEREON AND ESTABLISHES AN ORDER OF PRECEDENCE GIVING PRIORITY TO THE DESIGNATED BENEFICIARY OR BENEFICIARIES OVER THE DULY APPOINTED LEGAL REPRESENTATIVE OR INDIVIDUALS CLAIMING THROUGH THE ESTATE OF THE EMPLOYEE. ACCORDINGLY, AS THE EARNED UNPAID COMPENSATION AT DATE OF DEATH MUST CONTINUE TO BE PAID TO THE ESTATE, WHEREAS THE TOTAL RETIREMENT DEDUCTIONS INCLUDING THOSE BASED ON THE COMPENSATION EARNED AND UNPAID AT DATE OF DEATH MAY BE PAYABLE BY THE UNITED STATES CIVIL SERVICE COMMISSION TO THE DESIGNATED BENEFICIARY OR BENEFICIARIES WHO MIGHT NOT OTHERWISE SHARE IN THE ESTATE, IT IS NO LONGER PROPER FOR THIS OFFICE TO MAKE DIRECT SETTLEMENT IN FAVOR OF THE ESTATE OF AN EMPLOYEE SUBJECT TO THE CIVIL RETIREMENT ACT FOR THE GROSS AMOUNT OF COMPENSATION EARNED AND UNPAID AT DATE OF DEATH.

YOU ARE ADVISED, THEREFORE, THAT THE LAST SENTENCE OF PARAGRAPH 3 OF SUPPLEMENT NO. 3, GENERAL REGULATIONS NO. 54, SUPRA, WILL BE AMENDED BY SUPPLEMENTAL REGULATION EFFECTIVE JULY 1, 1936, TO PROVIDE THAT WHERE PAYMENT IS TO BE MADE BY DIRECT SETTLEMENT THROUGH THE GENERAL ACCOUNTING OFFICE OF A CLAIM FOR COMPENSATION EARNED BY AN EMPLOYEE SINCE DECEASED, WHO WAS SUBJECT TO THE CIVIL RETIREMENT ACT, THE CLAIMS WILL BE STATED AND SETTLED ONLY IN THE AMOUNT OF 96 1/2 PERCENT OF THE GROSS AMOUNT EARNED, THE RETIREMENT DEDUCTION OF 3 1/2 PERCENT TO BE DEPOSITED IN THE TREASURY BY THE PROPER ACCOUNTABLE OFFICER--- THAT IS, THE DISBURSING OFFICER WHO PAID THE ROLL COVERING THE PERIOD WITHIN WHICH EMPLOYEE DIED--- PURSUANT TO THE PROCEDURE PRESCRIBED BY GENERAL REGULATIONS NO. 54, SUPPLEMENT NO. 6, DATED JUNE 30, 1932, AND ADMINISTRATIVE REPORT THEREOF MADE TO THE UNITED STATES CIVIL SERVICE COMMISSION AS IN ALL OTHER CASES.

IN THE SETTLEMENT OF CLAIMS BY THIS OFFICE COVERING PERIODS PRIOR TO JULY 1, 1936, FOR BALANCE DUE DECEASED EMPLOYEES WITHIN THE PURVIEW OF THE RETIREMENT ACT, IT WILL BE ASSUMED, UNLESS OTHERWISE SPECIFICALLY SHOWN, THAT RETIREMENT DEDUCTIONS HAVE NOT BEEN MADE AND SETTLEMENT WILL BE STATED FOR THE GROSS AMOUNT OF THE COMPENSATION EARNED, AND IN THE SETTLEMENT OF CLAIMS BY THIS OFFICE COVERING PERIODS ON AND AFTER JULY 1, 1936, IT WILL BE ASSUMED, UNLESS OTHERWISE SPECIFICALLY SHOWN, THAT RETIREMENT DEDUCTIONS HAVE BEEN MADE AND SETTLEMENT WILL BE STATED FOR ONLY 96 1/2 PERCENT OF THE GROSS AMOUNT EARNED.