A-80346, SEPTEMBER 15, 1936, 16 COMP. GEN. 245

A-80346: Sep 15, 1936

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THAT ACCREDITED SERVICE OF AN EMPLOYEE IS TO BE CONSIDERED AS AN ENTIRETY FOR THE PURPOSE OF ADJUDICATING CLAIMS FOR REFUND OF RETIREMENT DEDUCTIONS. THE CHARACTER OF THE LAST SEPARATION ONLY TO BE CONSIDERED IN DETERMINING WHETHER THE TONTINE IS TO BE WITHHELD OR REFUNDED. IS APPLICABLE ONLY TO CASES WHERE THERE WAS NO WITHDRAWAL FROM THE RETIREMENT FUND UPON A PRIOR SEPARATION. IF THERE WERE SUCH WITHDRAWAL. WHERE REDEPOSIT OF THE FULL AMOUNT WITHDRAWN IS MADE AFTER REENTRY INTO THE SERVICE. IN THE ADJUDICATION OF CLAIMS FOR REFUND WHERE TWO OR MORE PERIODS OF SERVICE WERE INVOLVED. WAS ADMINISTRATIVELY DETERMINED THAT A FORMER EMPLOYEE'S RIGHT TO THE AMOUNT CREDITED TO HIS INDIVIDUAL ACCOUNT IN THE RETIREMENT FUND OR TO THE TOTAL DEDUCTIONS.

A-80346, SEPTEMBER 15, 1936, 16 COMP. GEN. 245

RETIREMENT - CIVILIAN - TONTINE DISPOSITION INVOLVING TWO PERIODS OF SERVICE THE RULE IN 11 COMP. GEN. 481, THAT ACCREDITED SERVICE OF AN EMPLOYEE IS TO BE CONSIDERED AS AN ENTIRETY FOR THE PURPOSE OF ADJUDICATING CLAIMS FOR REFUND OF RETIREMENT DEDUCTIONS, THE CHARACTER OF THE LAST SEPARATION ONLY TO BE CONSIDERED IN DETERMINING WHETHER THE TONTINE IS TO BE WITHHELD OR REFUNDED, IS APPLICABLE ONLY TO CASES WHERE THERE WAS NO WITHDRAWAL FROM THE RETIREMENT FUND UPON A PRIOR SEPARATION, OR, IF THERE WERE SUCH WITHDRAWAL, WHERE REDEPOSIT OF THE FULL AMOUNT WITHDRAWN IS MADE AFTER REENTRY INTO THE SERVICE.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE PRESIDENT, UNITED STATES CIVIL SERVICE COMMISSION, SEPTEMBER 15, 1936:

CONSIDERATION HAS BEEN GIVEN TO YOUR LETTER OF AUGUST 27, 1936, AS FOLLOWS:

SECTION 12 (B) OF THE CIVIL SERVICE RETIREMENT ACT OF MAY 29, 1930, READS IN PART AS FOLLOWS:

"IN THE CASE OF ANY EMPLOYEE TO WHOM THIS ACT APPLIES WHO SHALL BE TRANSFERRED TO A POSITION NOT WITHIN THE PURVIEW OF THE ACT, OR WHO SHALL BECOME ABSOLUTELY SEPARATED FROM THE SERVICE BEFORE BECOMING ELIGIBLE FOR RETIREMENT ON ANNUITY, THE AMOUNT CREDITED TO HIS INDIVIDUAL ACCOUNT SHALL BE RETURNED TO SUCH EMPLOYEE TOGETHER WITH INTEREST AT 4 PERCENTUM PER ANNUM COMPOUNDED ON JUNE 30 OF EACH YEAR: PROVIDED, THAT WHEN ANY EMPLOYEE BECOMES INVOLUNTARILY SEPARATED FROM THE SERVICE, NOT BY REMOVAL FOR CAUSE ON CHARGES OF MISCONDUCT OR DELINQUENCY, THE TOTAL AMOUNT OF HIS DEDUCTIONS WITH INTEREST THEREON SHALL BE PAID TO SUCH EMPLOYEE.'

IN THE ADJUDICATION OF CLAIMS FOR REFUND WHERE TWO OR MORE PERIODS OF SERVICE WERE INVOLVED, WAS ADMINISTRATIVELY DETERMINED THAT A FORMER EMPLOYEE'S RIGHT TO THE AMOUNT CREDITED TO HIS INDIVIDUAL ACCOUNT IN THE RETIREMENT FUND OR TO THE TOTAL DEDUCTIONS, INCLUDING TONTINE, WAS DEPENDENT ON EACH INDIVIDUAL SEPARATION. IT APPEARED TO BE THE INTENT OF THE LAW THAT AN INVOLUNTARY SEPARATION NOT FOR CAUSE ON CHARGES OF MISCONDUCT OR DELINQUENCY VESTED IN THE EMPLOYEE A RIGHT TO THE RETURN OF THE $1.00 PER MONTH FOR THE PERIOD INVOLVED, REGARDLESS OF THE REASON FOR SEPARATION FROM SOME SUBSEQUENT POSITION, AND THAT THIS TITLE WAS NOT AFFECTED BY A VOLUNTARY SEPARATION OR DISCHARGE FOR CAUSE FROM THE LATTER SERVICE. FURTHERMORE, IT WAS NOT APPARENT THAT THE WITHDRAWAL OR NON- WITHDRAWAL OF THE REFUND UPON THE FIRST SEPARATION WOULD HAVE ANY BEARING ON THIS MATTER.

IN THE CASE OF EDITH M. STROPE, WHO WAS INVOLUNTARILY SEPARATED DUE TO REDUCTION IN FORCE ON MARCH 16, 1931; REEMPLOYED FROM JUNE 12, 1931 TO NOVEMBER 7, 1931, WHEN SHE RESIGNED, PAYMENT WAS MADE IN THE USUAL MANNER, RETURNING THE TONTINE FOR THE FIRST PERIOD OF SERVICE AND WITHHOLDING SAME COVERING THE SECOND PERIOD. IN THE AUDIT OF THE ACCOUNTS OF J. B. SCHOMMER, DISBURSING CLERK, VETERANS' ADMINISTRATION, EXCEPTION WAS TAKEN TO SO MUCH OF THIS REFUND AS REPRESENTED THE TONTINE UP TO MARCH 16, 1931. IN HIS DECISION REGARDING THIS CASE DATED JUNE 13, 1932 (11 COMP. GEN. 481) COMPTROLLER GENERAL MCCARL HELD:

"ALL PERIODS OF ACCREDITED SERVICE, WHETHER CONTINUOUS OR NOT, MAY BE INCLUDED IN COMPUTING LONGEVITY UNDER THE CIVIL RETIREMENT ACT, AND IT IS SPECIFICALLY REQUIRED THAT TO RECEIVE BENEFITS OF RETIREMENT AN EMPLOYEE SEPARATED FROM THE SERVICE WHO IS REINSTATED OR REEMPLOYED, SHALL RETURN THE RETIREMENT DEDUCTIONS PREVIOUSLY REFUNDED WITH INTEREST BEFORE SUCH EMPLOYEE MAY DERIVE ANY BENEFITS UNDER THE ACT, WITH CERTAIN EXCEPTIONS NOT HERE INVOLVED. THEREFORE, WHEN AN EMPLOYEE UPON SEPARATION DOES NOT WITHDRAW THE DEDUCTIONS OR IF WITHDRAWN SUBSEQUENTLY DEPOSITS THEM UPON REENTERING THE SERVICE, THE ENTIRE ACCREDITED SERVICE IS TO BE CONSIDERED AS AN ENTITY WHEN ADJUDICATING CLAIMS FOR REFUND OF RETIREMENT DEDUCTIONS UPON A SUBSEQUENT SEPARATION FROM THE SERVICE OTHER THAN FOR RETIREMENT, AND THE CHARACTER OF THE LAST SEPARATION FROM THE SERVICE, ONLY, IS MATERIAL IN DETERMINING WHETHER THE $1 PER MONTH, OR TONTINE, SHOULD BE REFUNDED TO THE EMPLOYEE OR RETAINED AND LEFT TO THE CREDIT OF THE CIVIL SERVICE RETIREMENT AND DISABILITY FUND. FOR INSTANCE, IN THIS CASE, AS EDITH M. STROPE, CAME WITHIN THE PURVIEW OF THE RETIREMENT ACT UNDER HER SECOND PERIOD OF SERVICE OR EMPLOYMENT, THE CHARACTER OF HER LAST SEPARATION, OR VOLUNTARY RESIGNATION, ONLY SHOULD HAVE BEEN CONSIDERED IN DETERMINING THE DISPOSITION OF THE $1 PER MONTH, OR TONTINE, ON WHICH BASIS REFUND TO HER OF THE $1 PER MONTH COVERING SERVICE FROM JULY 1, 1930, TO MARCH 16, 1931 SHOULD NOT HAVE BEEN MADE.'

IN FOLLOWING THE ABOVE DECISION, NO DIFFICULTIES ARE PRESENTED IN CASES WHERE THE DEDUCTIONS WERE PERMITTED TO REMAIN IN THE RETIREMENT FUND UPON PREVIOUS SEPARATIONS. COMPLICATIONS AND INEQUITIES, HOWEVER, ARISE WHEN REDEPOSIT HAS BEEN MADE, AND IT BECOMES NECESSARY TO SUBSEQUENTLY REFUND THE AMOUNT DUE BASED ON ANOTHER REASON FOR TERMINATION OF SERVICE.

THE ABOVE RULING REQUIRES IN THE CASE OF AN EMPLOYEE WHO WAS REFUNDED TOTAL DEDUCTIONS UPON ONE OR MORE INVOLUNTARY SEPARATIONS AND WHO SUBSEQUENTLY REDEPOSITED SAME, THAT TONTINE BE WITHHELD COVERING ALL SUCH PERIODS SHOULD THE LAST SEPARATION BE VOLUNTARY OR BY REASON OF DISCHARGE FOR CAUSE ON CHARGES OF MISCONDUCT OR DELINQUENCY. CONVERSELY, AN INVOLUNTARY SEPARATION FROM THE LAST POSITION HELD WOULD ENTITLE THE EMPLOYEE TO A RETURN OF THE $1 PER MONTH COVERING ALL PRIOR PERIODS WHEN THE TONTINE WAS WITHHELD, PROVIDED REDEPOSIT OF THE AMOUNTS PREVIOUSLY REFUNDED HAD BEEN MADE.

IT APPEARS INEQUITABLE AND CONTRARY TO THE INTENT OF THE RETIREMENT LAW THAT AN EMPLOYEE SHOULD, BECAUSE HIS LAST EMPLOYMENT, HOWEVER SHORT, WAS TERMINATED INVOLUNTARILY, HAVE RETURNED TO HIM THE TONTINE WITHHELD ON PREVIOUS OCCASIONS WHEN HE RESIGNED OR WAS DISCHARGED FOR CAUSE. SIMILARLY, A RESIGNATION FROM THE LAST POSITION SHOULD NOT NULLIFY THE EMPLOYEE'S RIGHT TO THE TONTINE WHICH WAS PAID HIM UPON PREVIOUS INVOLUNTARY SEPARATIONS.

SUCH PROCEDURE ALSO GIVES THE EMPLOYEE AN OPPORTUNITY TO ANTICIPATE A FUTURE SEPARATION AND MAKE REDEPOSIT ONLY IN CASE IT WILL BE MATERIALLY TO HIS ADVANTAGE. REDEPOSIT IS NOT A CONDITION PRECEDENT TO REINSTATEMENT AND NEED NOT BE MADE UNLESS OR UNTIL THE EMPLOYEE BECOMES ELIGIBLE FOR RETIREMENT ON ANNUITY. INTEREST IS OF COURSE CHARGED THROUGH ALL PERIODS OF EMPLOYMENT THAT PAYMENT IS DEFERRED, BUT IF THE EMPLOYEE IS SEPARATED PRIOR TO THE TIME TITLE TO ANNUITY ATTACHES, HE NEED NEVER MAKE THE REDEPOSIT.

THE QUESTION NATURALLY ARISES AS TO WHAT METHOD SHOULD BE FOLLOWED WHERE NO REDEPOSIT HAS BEEN MADE UPON REINSTATEMENT. THERE WOULD IN SUCH CASES BE TO THE EMPLOYEE'S CREDIT IN THE FUND ONLY THE DEDUCTIONS COVERING THE LAST SERVICE AND THE APPLICATION OF THE RULE LAID DOWN IN DECISION OF JUNE 13, 1932, WOULD PRODUCE INSTANCES WHERE THIS AMOUNT IS INSUFFICIENT TO SATISFY THE TONTINE CHARGE FOR PAST PERIODS. SUCH RULE MIGHT NECESSITATE THE SETTING UP OF A CHARGE AGAINST THE EMPLOYEE TO COVER THE BALANCE INVOLVED.

A FURTHER QUESTION ARISES IN CASE AN EMPLOYEE WHO IS MAKING A DEPOSIT OR REDEPOSIT IN INSTALLMENTS IS SEPARATED FROM THE SERVICE BEFORE THE PARTIAL PAYMENTS ARE COMPLETED. SHOULD THE TONTINE BE PRORATED ACCORDING TO THE PORTION OF THE TOTAL DEPOSIT PAID, OR SHOULD THE AMOUNT DEPOSITED OR REDEPOSITED BE RETURNED TO THE EMPLOYEE INTACT? NO CREDIT MAY, OF COURSE, BE ALLOWED FOR THE PERIOD INVOLVED OR ANY PORTION THEREOF UNTIL THE PAYMENT IS COMPLETED.

IT IS REQUESTED THAT A REVIEW BE MADE OF THESE QUESTIONS AND INSTRUCTIONS ISSUED IN REGARD TO THE PAYMENT OR NONPAYMENT OF TONTINE UNDER THE CIRCUMSTANCES CITED.

IT IS PRESUMED YOU ARE FAMILIAR WITH THE RULE WHICH REQUIRES THAT THE DECISION OF THE FORMER COMPTROLLER GENERAL OF THE UNITED STATES, DATED JUNE 13, 1932, IN THE CASE OF EDITH M. STROPE, FROM WHICH YOU QUOTE, MAY NOT BE RECONSIDERED BY ME AS TO THAT PARTICULAR CASE IN THE ABSENCE OF NEW AND MATERIAL EVIDENCE OR TO CORRECT A MANIFEST MISTAKE OF FACT OR FOR FRAUD OR COLLUSION, NONE OF WHICH CONDITIONS ARE HERE INVOLVED.

DECISION

I AM IN AGREEMENT WITH THE GENERAL RULE AS QUOTED BY YOU FROM THE DECISION OF THE FORMER COMPTROLLER GENERAL. IT IS TO BE NOTED, HOWEVER, THAT SAID RULE TO THE EFFECT THAT THE ENTIRE ACCREDITED SERVICE IS TO BE CONSIDERED AS AN ENTIRETY FOR THE PURPOSE OF ADJUDICATING CLAIMS FOR REFUND OF RETIREMENT DEDUCTIONS, THE CHARACTER OF THE LAST SEPARATION ONLY TO BE CONSIDERED IN DETERMINING WHETHER THE TONTINE IS TO BE WITHHELD OR REFUNDED, IS MADE APPLICABLE ONLY IN THOSE CASES WHERE THERE WAS NO WITHDRAWAL FROM THE RETIREMENT FUND FOLLOWING THE FORMER SEPARATION OR, IF THERE WAS SUCH WITHDRAWAL, WHERE REDEPOSIT OF THE FULL AMOUNT WITHDRAWN WAS MADE AFTER REENTRY INTO THE SERVICE. IN SUCH CASES IT IS CLEAR THAT THE ENTIRE SERVICE, THAT IS, THE AGGREGATE OF THE PERIODS OF SERVICE, MUST BE CONSIDERED AS AN ENTIRETY FOR PURPOSES OF RETIREMENT, AND THERE APPEARS NOTHING IN THE LAW TO WARRANT THE APPLICATION OF A DIFFERENT RULE IN ADJUDICATING CLAIMS FOR REFUND OF DEDUCTIONS.

THE LAST PROVISO OF SECTION 12 (B) OF THE RETIREMENT ACT AS AMENDED BY THE ACT OF MAY 29, 1930, 46 STAT. 476, PROVIDES AS FOLLOWS:

* * * AND PROVIDED FURTHER, THAT ALL MONEY SO RETURNED TO AN EMPLOYEE MUST, UPON REINSTATEMENT, RETRANSFER, OR REAPPOINTMENT TO A POSITION COMING WITHIN THE PURVIEW OF THIS ACT, BE REDEPOSITED WITH INTEREST BEFORE SUCH EMPLOYEE MAY DERIVE ANY BENEFITS UNDER THIS ACT, EXCEPT AS PROVIDED IN THIS SECTION, BUT INTEREST SHALL NOT BE REQUIRED COVERING ANY PERIOD OF SEPARATION FROM THE SERVICE.

REFERRING TO THE LAST PORTION OF YOUR LETTER, AS EMPLOYEES WHO MAKE NO REDEPOSITS, OR ONLY PARTIAL REDEPOSITS, OF PRIOR WITHDRAWALS FROM THE RETIREMENT FUND ARE NOT WITHIN THE PURVIEW OF THE RETIREMENT ACT OTHER THAN FOR THE PURPOSE OF REFUNDING TO THEM THE DEDUCTIONS MADE CURRENTLY DURING THE LAST PERIOD OF SERVICE ALL PRIOR PERIODS OF SERVICE ARE TO BE DISREGARDED IN ADJUDICATING THE CLAIM FOR REFUND OF DEDUCTIONS AND ONLY THE CHARACTER OF THE LAST DISCHARGE DETERMINES WHETHER THE TONTINE IS TO BE WITHHELD, OR REFUNDED.