A-66060, JANUARY 27, 1936, 15 COMP. GEN. 664

A-66060: Jan 27, 1936

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THE RIGHT OF SELECTION LAPSES AND ADJUSTMENT OF THE RATE FIXED UNDER THE FORMER LAW IS NOT AUTHORIZED. 1936: THERE WAS RECEIVED YOUR LETTER OF SEPTEMBER 30. THIS ACT WAS AMENDED BY THE ACT OF MAY 29. READS: "IN THE CASE OF THOSE WHO BEFORE THE EFFECTIVE DATE OF THIS ACT SHALL HAVE BEEN RETIRED ON ANNUITY UNDER THE PROVISIONS OF THE ACT OF MAY 22. INDICATING THEIR ELECTION TO HAVE THE RATE OF ANNUITY BASED UPON THE 5 CONSECUTIVE YEARS OF ALLOWABLE SERVICE WHICH WOULD PRODUCE THE MAXIMUM BENEFIT. IT WAS STIPULATED ON THIS SLIP THAT THE CLAIM FOR ANNUITY WOULD NOT BE READJUDICATED UNLESS THE SLIP WAS SIGNED AND RETURNED TO THE BUREAU OF PENSIONS. WAS SIGNIFIED IN SOME OTHER WAY. WAS RETIRED EFFECTIVE AUGUST 23.

A-66060, JANUARY 27, 1936, 15 COMP. GEN. 664

RETIREMENT - CIVILIAN - SELECTION OF 5-YEAR SERVICE PERIOD FOR ANNUITY COMPUTATION PURPOSES THE CIVIL SERVICE COMMISSION HAS NO AUTHORITY UNDER THE CIVIL RETIREMENT ACT TO ADJUST RETROACTIVELY THE ANNUITY RATE OF A DECEASED ANNUITANT IN ANY CASE IN THE ABSENCE OF A CLAIM BY THE HEIRS OR PERSONAL REPRESENTATIVE. WHERE, DURING HIS LIFETIME, A RETIRED CIVILIAN EMPLOYEE FAILS TO SELECT THE FIVE CONSECUTIVE YEARS OF ALLOWABLE SERVICE AUTHORIZED FOR PURPOSES OF COMPUTATION OF THE ANNUITY RATE BY SECTION 4 OF THE ACT OF MAY 29, 1930, 46 STAT. 471, THE RIGHT OF SELECTION LAPSES AND ADJUSTMENT OF THE RATE FIXED UNDER THE FORMER LAW IS NOT AUTHORIZED.

COMPTROLLER GENERAL MCCARL TO THE PRESIDENT, UNITED STATES CIVIL SERVICE COMMISSION, JANUARY 27, 1936:

THERE WAS RECEIVED YOUR LETTER OF SEPTEMBER 30, 1935, AS FOLLOWS:

SECTION 4 OF THE ACT OF JULY 3, 1926 (44 STAT. 904), PROVIDES FOR THE COMPUTATION OF ANNUITIES PAYABLE UNDER THAT ACT IN THE FOLLOWING MANNER:

"THE ANNUITY OF AN EMPLOYEE RETIRED UNDER THE PROVISIONS OF THE PRECEDING SECTIONS OF THIS ACT SHALL BE COMPUTED BY MULTIPLYING THE AVERAGE ANNUAL BASIC SALARY, PAY, OR COMPENSATION, NOT TO EXCEED $1,500 PER ANNUM, RECEIVED BY SUCH EMPLOYEE DURING THE TEN YEARS OF ALLOWABLE SERVICE NEXT PRECEDING THE DATE OF RETIREMENT, BY THE NUMBER OF YEARS OF SERVICE, NOT TO EXCEED THIRTY YEARS, AND DIVIDING THE PRODUCT BY FORTY-FIVE. IN NO CASE, HOWEVER, SHALL THE ANNUITY EXCEED $1,000 PER ANNUM. FOR THE PURPOSES OF THIS ACT ALL PERIODS OF SERVICE SHALL BE COMPUTED IN ACCORDANCE WITH SECTION 5 HEREOF, AND THE ANNUITY SHALL BE FIXED AT THE NEAREST MULTIPLE OF TWELVE.'

THIS ACT WAS AMENDED BY THE ACT OF MAY 29, 1930 (46 STAT. 468), AND SECTION 4 OF THE AMENDATORY ACT PROVIDES IN PART:

"THE ANNUITY OF AN EMPLOYEE RETIRED UNDER THE PROVISIONS OF THE PRECEDING SECTIONS OF THIS ACT SHALL BE A LIFE ANNUITY, TERMINABLE UPON THE DEATH OF THE ANNUITANT AND SHALL BE COMPOSED OF: (1) A SUM EQUAL TO $30 FOR EACH YEAR OF SERVICE NOT EXCEEDING THIRTY: PROVIDED, THAT SUCH PORTION OF THE ANNUITY SHALL NOT EXCEED THREE-FOURTHS OF THE AVERAGE ANNUAL BASIC SALARY, PAY, OR COMPENSATION RECEIVED BY THE EMPLOYEE DURING ANY FIVE CONSECUTIVE YEARS OF ALLOWABLE SERVICE AT THE OPTION OF THE EMPLOYEE; AND (2) THE AMOUNT OF ANNUITY PURCHASABLE WITH THE SUM TO THE CREDIT OF THE EMPLOYEE'S INDIVIDUAL ACCOUNT AS PROVIDED IN SECTION 12 (A) HEREOF, TOGETHER WITH INTEREST AT 4 PERCENTUM PER ANNUM COMPOUNDED ON JUNE 30 OF EACH YEAR, ACCORDING TO THE EXPERIENCE OF THE CIVIL-SERVICE RETIREMENT AND DISABILITY FUND AS MAY FROM TIME TO TIME BE SET FORTH IN TABLES OF ANNUITY VALUES BY THE BOARD OF ACTUARIES: PROVIDED, THAT THE TOTAL ANNUITY PAID SHALL IN NO CASE BE LESS THAN AN AMOUNT EQUAL TO THE AVERAGE ANNUAL BASIC SALARY, PAY, OR COMPENSATION, NOT TO EXCEED $1,600 PER ANNUM, RECEIVED BY THE EMPLOYEE DURING ANY FIVE CONSECUTIVE YEARS OF ALLOWABLE SERVICE AT THE OPTION OF THE EMPLOYEE, MULTIPLIED BY THE NUMBER OF YEARS OF SERVICE, NOT EXCEEDING THIRTY YEARS, AND DIVIDED BY FORTY: * * *.'

SECTION 8 OF THE ACT OF MAY 29, 1930, READS:

"IN THE CASE OF THOSE WHO BEFORE THE EFFECTIVE DATE OF THIS ACT SHALL HAVE BEEN RETIRED ON ANNUITY UNDER THE PROVISIONS OF THE ACT OF MAY 22, 1920, OR SAID ACT AS AMENDED, OR AS EXTENDED BY EXECUTIVE ORDERS, THE ANNUITY SHALL BE COMPUTED, ADJUSTED, AND PAID UNDER THE PROVISIONS OF THIS ACT, BUT THIS ACT SHALL NOT BE SO CONSTRUED AS TO REDUCE THE ANNUITY OF ANY PERSON RETIRED BEFORE ITS EFFECTIVE DATE, NOR SHALL ANY INCREASE IN ANNUITY COMMENCE BEFORE SUCH EFFECTIVE DATE.'

SECTION 17 OF THE ACT OF MAY 29, 1930, RELATES TO THE ADMINISTRATION AND AUTHORIZED THE COMMISSIONER OF PENSIONS UNDER THE DIRECTION OF THE SECRETARY OF THE INTERIOR TO PERFORM OR CAUSE TO BE PERFORMED ANY AND ALL ACTS AND TO MAKE SUCH RULES AND REGULATIONS AS MAY BE NECESSARY AND PROPER FOR THE PURPOSE OF CARRYING THE PROVISIONS OF THE SAID ACT INTO FULL FORCE AND EFFECT. PURSUANT TO THIS AUTHORITY, THE COMMISSIONER OF PENSIONS WITH THE APPROVAL OF THE SECRETARY OF THE INTERIOR REQUIRED PERSONS RETIRED PRIOR TO JULY 1, 1930, TO SIGN A SLIP, COPY INCLOSED, GIVING THEIR POST- OFFICE ADDRESS AND NUMBER OF THEIR CLAIMS, INDICATING THEIR ELECTION TO HAVE THE RATE OF ANNUITY BASED UPON THE 5 CONSECUTIVE YEARS OF ALLOWABLE SERVICE WHICH WOULD PRODUCE THE MAXIMUM BENEFIT. IT WAS STIPULATED ON THIS SLIP THAT THE CLAIM FOR ANNUITY WOULD NOT BE READJUDICATED UNLESS THE SLIP WAS SIGNED AND RETURNED TO THE BUREAU OF PENSIONS, OR THE OPTION PROVIDED IN SECTION 4 OF THE ACT OF MAY 29, 1930, WAS SIGNIFIED IN SOME OTHER WAY.

MR. EDWARD E. SPARHAWK, FORMER EMPLOYEE OF THE CUSTOMS SERVICE, TREASURY DEPARTMENT, WAS RETIRED EFFECTIVE AUGUST 23, 1925, UNDER THE PROVISIONS $504.00 PER ANNUM. THIS RATE WAS INCREASED IN ACCORDANCE WITH THE ACT OF JULY 3, 1926, TO $691.44 PER ANNUM, EFFECTIVE JULY 1, 1926. MR. SPARHAWK DIED ON OCTOBER 25, 1934. HE DID NOT RECEIVE THE INCREASED ANNUITY AS PROVIDED FOR UNDER SECTION 8 OF THE ACT OF MAY 29, 1930, INASMUCH AS HE FAILED (1) TO SIGN THE SLIP SENT HIM BY THE COMMISSIONER OF PENSIONS, OR (2) TO SIGNIFY IN SOME OTHER WAY THE OPTION PROVIDED FOR IN SECTION 4 OF SAID ACT. HAD HE DONE EITHER OF THESE THINGS THE PENSION OFFICE WOULD HAVE ADJUDICATED HIS CLAIM UNDER SECTION 8 OF THE ACT OF MAY 29, 1930, WHICH WOULD HAVE RESULTED IN AN ANNUITY OF $855.60 PER ANNUM, EFFECTIVE FROM JULY 1, 1930.

A CIRCULAR LETTER DATED JUNE 3, 1930, AND APPROVED BY THE SECRETARY OF THE INTERIOR ON JUNE 5, 1930, WAS ADDRESSED TO ALL ANNUITANTS ON THE RETIREMENT ROLL, AND IT IS PRESUMED THAT THIS LETTER REACHED THIS ANNUITANT. A COPY OF THIS CIRCULAR LETTER IS ENCLOSED HEREWITH. UNDER DATE OF JUNE 19, 1931, A SECOND LETTER WAS ADDRESSED TO THE ANNUITANT, INVITING HIS ATTENTION TO HIS FAILURE TO SIGN THE ELECTION SLIP IN ORDER TO RECEIVE THE BENEFITS OF THE ACT AS AMENDED BY THE ACT OF MAY 29, 1930. THIS LETTER READS AS FOLLOWS:

"A REVIEW OF YOUR ADMITTED CLAIM FOR ANNUITY, CERTIFICATE NO. R 22684, DISCLOSES THE FACT THAT YOUR CLAIM HAS NOT AS YET BEEN READJUDICATED UNDER THE TERMS OF THE ACT OF MAY 29, 1930, DUE TO YOUR FAILURE TO RETURN TO THIS BUREAU DULY SIGNED AND DATED, THE ELECTION SLIP MAILED YOU SOON AFTER THE PASSAGE OF THE AMENDATORY ACT.

"IN ORDER THAT YOU MAY RECEIVE THE BENEFITS OF THE NEW LAW, IT IS DEEMED ADVISABLE TO AGAIN CALL ATTENTION TO THE MATTER WITH THE SUGGESTION THAT YOU FILL OUT THE ELECTION SLIP AND FORWARD THE SAME TO THIS BUREAU.

"IT WILL NOT BE NECESSARY FOR YOU, OF COURSE, TO INDICATE THE 5 YEARS OF SERVICE ON WHICH YOU DESIRE THE RATE OF ANNUITY COMPUTED AS THAT MATTER WILL BE TAKEN CARE OF TO YOUR ADVANTAGE IN THIS BUREAU WHEN THE SLIP AUTHORIZING THE BUREAU TO SELECT THE 5 YEARS OF SERVICE MOST ADVANTAGEOUS TO YOU HAS BEEN RECEIVED. YOU REALIZE, OF COURSE, THAT WHATEVER INCREASE MAY BE DUE UNDER THE NEW ACT WILL RUN FROM JULY 1, 1930, THE EFFECTIVE DATE OF THE ACT.

"PLEASE INDICATE AS SOON AS POSSIBLE WHAT ACTION YOU DESIRE TO HAVE TAKEN WITH REFERENCE TO THE READJUDICATION OF YOUR CLAIM UNDER THE NEW LAW.'

NO REPLY WAS RECEIVED TO EITHER OF THE ABOVE LETTERS, NOR WAS THERE ANY EXPRESS ELECTION MADE BY MR. SPARHAWK.

THE QUESTION NOW PRESENTED IS WHETHER THE FAILURE OF THE ANNUITANT TO SIGN THE ELECTION SLIP OR IN SOME OTHER WAY DESIGNATE THE 5 CONSECUTIVE YEARS OF ALLOWABLE SERVICE UPON WHICH HE DESIRED HIS ANNUITY TO BE COMPUTED, CONSTITUTES A WAIVER OF THE PRIVILEGE AND PROHIBITS A RECOMPUTATION OF THE ANNUITY AT THIS TIME, OR IS SECTION 8 OF THE ACT OF MAY 29, 1930, SELF-EXECUTING AND NOT REQUIRING ANY ACTION ON THE PART OF AN ANNUITANT ALREADY ON THE ROLLS TO PUT THE INCREASE INTO EFFECT, THE COMPUTATION TO BE BASED ON THE 5 CONSECUTIVE YEARS OF ALLOWABLE SERVICE WHICH WOULD PRODUCE THE MAXIMUM BENEFIT. YOUR DECISION ON THE QUESTION PRESENTED IS RESPECTFULLY REQUESTED.

YOU DO NOT STATE THAT A CLAIM FOR ADJUSTMENT OF THE RATE OF ANNUITY UNDER THE ACT OF MAY 29, 1930, HAS BEEN FILED BY THE HEIRS OR PERSONAL REPRESENTATIVE OF EDWARD E. SPARHAWK, DECEASED. IF NO SUCH CLAIM IS NOW PENDING, ACTION BY THE COMMISSION IS NOT AUTHORIZED, BUT THE MATTER SHOULD REMAIN IN STATUS QUO UNLESS AND UNTIL A PROPER CLAIM HAS BEEN FILED. THAT IS TO SAY, THERE IS NO AUTHORITY TO ADJUST AND SETTLE AN AMOUNT DUE FROM THE GOVERNMENT TO THE HEIRS OF AN ANNUITANT IN THE ABSENCE OF A VALID CLAIM.

SECTION 4 OF THE ACT OF MAY 29, 1930, 46 STAT. 468, PRESCRIBES A BASIC FORMULA FOR FIXING THE RATE OF ANNUITY WHICH HAS TWO LIMITATIONS, ONE IN FAVOR OF THE GOVERNMENT AND ONE IN THE FORM OF A SAVING CLAUSE IN FAVOR OF THE ANNUITANT. IN EACH OF THESE LIMITATIONS THERE IS A PROVISION FOR COMPUTING THE LIMITATION ON COMPENSATION RECEIVED "DURING ANY 5 CONSECUTIVE YEARS OF ALLOWABLE SERVICE AT THE OPTION OF THE EMPLOYEE.' A CONDITION PRECEDENT TO THE COMPUTATION OF THE RATE OF ANNUITY UNDER THE STATUTE, THIS OPTION REGARDING THE SELECTION OF SAID 5 YEARS OF ALLOWABLE SERVICE MUST BE EXERCISED BY THE EMPLOYEE OR THE ANNUITANT UNDER THE FORMER RETIREMENT ACT, OTHERWISE, THERE IS NO LAWFUL BASIS ON WHICH TO COMPUTE THE ANNUITY. THIS OPTION IS PERSONAL TO THE EMPLOYEE OR FORMER ANNUITANT AND IF NOT EXERCISED DURING HIS LIFETIME, THE RIGHT LAPSES AND DOES NOT SURVIVE TO THE HEIRS OR PERSONAL REPRESENTATIVE AND THERE IS NO BASIS FOR FIXING THE RATE OF ANNUITY OR ADJUSTING THE RATE FIXED UNDER THE FORMER LAW AFTER THE DEATH OF THE EMPLOYEE OR ANNUITANT. THE RIGHT OF THE PERSONAL REPRESENTATIVE, IF ANY, WOULD BE LIMITED TO THE RETURN OF ANY UNEXPENDED BALANCE IN THE RETIREMENT FUND TO THE CREDIT OF THE DECEASED EMPLOYEE OR ANNUITANT UNDER OTHER PROVISIONS OF THE LAW.

ACCORDINGLY, ON THE BASIS OF THE FACTS PRESENTED IN YOUR LETTER, THERE IS NO LAWFUL BASIS ON WHICH TO RECOMPUTE THE ANNUITY OF EDWARD E. SPARHAWK, DECEASED, AS OF JULY 1, 1930.