A-90292, NOVEMBER 26, 1937, 17 COMP. GEN. 442

A-90292: Nov 26, 1937

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INTEREST - CIVILIAN RETIREMENT DEDUCTIONS NOT TIMELY MADE - REEMPLOYMENT AFTER BREAK IN SERVICE WHERE THERE IS A BREACH IN A CIVILIAN EMPLOYEE'S SERVICE SUCH AS WOULD CONSTITUTE UNDER THE CIVIL SERVICE RETIREMENT ACT SUFFICIENT BASIS FOR REFUNDING RETIREMENT DEDUCTIONS TO AN EMPLOYEE IF TIMELY MADE FROM HIS SALARY AND A REDEPOSIT THEREOF WITH INTEREST UPON REINSTATEMENT. THE CURRENT NONDEDUCTION AND PAYMENT OF FULL SALARY IN THE PRIOR POSITION THROUGH INADVERTENCE OR ADMINISTRATIVE ERROR MAY BE CONSIDERED AS TANTAMOUNT TO A REFUND OF THE DEDUCTIONS WHICH SHOULD HAVE BEEN MADE. IS AUTHORIZED. IS AS FOLLOWS: YOUR DECISION IS REQUESTED IN THE FOLLOWING MATTER: WILLARD E. TO WHICH HE WAS APPOINTED ON NOVEMBER 2.

A-90292, NOVEMBER 26, 1937, 17 COMP. GEN. 442

INTEREST - CIVILIAN RETIREMENT DEDUCTIONS NOT TIMELY MADE - REEMPLOYMENT AFTER BREAK IN SERVICE WHERE THERE IS A BREACH IN A CIVILIAN EMPLOYEE'S SERVICE SUCH AS WOULD CONSTITUTE UNDER THE CIVIL SERVICE RETIREMENT ACT SUFFICIENT BASIS FOR REFUNDING RETIREMENT DEDUCTIONS TO AN EMPLOYEE IF TIMELY MADE FROM HIS SALARY AND A REDEPOSIT THEREOF WITH INTEREST UPON REINSTATEMENT, THE CURRENT NONDEDUCTION AND PAYMENT OF FULL SALARY IN THE PRIOR POSITION THROUGH INADVERTENCE OR ADMINISTRATIVE ERROR MAY BE CONSIDERED AS TANTAMOUNT TO A REFUND OF THE DEDUCTIONS WHICH SHOULD HAVE BEEN MADE, AND UPON REINSTATEMENT THE CHARGING OF INTEREST, FROM DATE OF REEMPLOYMENT, ON DEPOSITS TO COVER PRIOR SERVICE, IS AUTHORIZED.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE PRESIDENT, UNITED STATES CIVIL SERVICE COMMISSION, NOVEMBER 26, 1937:

YOUR LETTER OF NOVEMBER 5, 1937, IS AS FOLLOWS:

YOUR DECISION IS REQUESTED IN THE FOLLOWING MATTER:

WILLARD E. BUELL FIRST ENTERED THE SERVICE OF THE UNITED STATES ON JUNE 12, 1886, AS CLERK, TREASURY DEPARTMENT, IN WHICH POSITION HE HAD A CLASSIFIED STATUS. HE RESIGNED ON OCTOBER 31, 1914, TO ACCEPT A POSITION AS CHIEF OF DIVISION, FEDERAL RESERVE BOARD, A POSITION NOT IN THE CLASSIFIED SERVICE, TO WHICH HE WAS APPOINTED ON NOVEMBER 2, 1914, AND IN WHICH HE SERVED UNTIL AUGUST 21, 1922, WHEN THE POSITION WAS ABOLISHED, AND HE WAS SEPARATED FROM THE SERVICE WITHOUT PREJUDICE.

MR. BUELL BECAME SUBJECT TO THE PROVISIONS OF THE CIVIL SERVICE RETIREMENT LAW (ACT OF MAY 22, 1920) BY VIRTUE OF THE INTERPRETATION GIVEN THE ACT OF MARCH 27, 1922, BUT BY INADVERTENCE OR THROUGH A MISUNDERSTANDING OF HIS STATUS UNDER THE LAW NO DEDUCTIONS WERE MADE FOR RETIREMENT PURPOSES FROM HIS SALARY FOR THE PERIOD FROM MARCH 27, 1922, TO AUGUST 21, 1922, WHEN HE WAS SEPARATED FROM THE SERVICE. HE REENTERED THE CLASSIFIED SERVICE AS A CLERK IN THE TREASURY DEPARTMENT, JUNE 20, 1923, AND SERVED CONTINUOUSLY UNTIL NOVEMBER 30, 1936, WHEN HE REACHED RETIREMENT AGE AND WAS SEPARATED FROM THE SERVICE, HAVING SERVED A TOTAL PERIOD OF 49 YEARS, 7 MONTHS, AND 2 DAYS. DEDUCTIONS FROM HIS SALARY FOR RETIREMENT PURPOSES WERE REGULARLY MADE FROM THE DATE HE WAS REINSTATED IN THE SERVICE, JUNE 20, 1923, UNTIL HIS SEPARATION, NOVEMBER 30, 1936, FOR RETIREMENT.

NEITHER WHEN HE REENTERED THE SERVICE, JUNE 20, 1923, NOR THEREAFTER UNTIL HE FILED APPLICATION FOR RETIREMENT BENEFITS WAS HE REQUESTED OR REQUIRED TO DEPOSIT IN THE UNITED STATES TREASURY TO THE CREDIT OF THE RETIREMENT FUND THE SUM OF MONEY WHICH, THROUGH INADVERTENCE OR ADMINISTRATIVE ERROR, WAS NOT DEDUCTED FROM HIS SALARY DURING THE PERIOD OF HIS SERVICE FROM MARCH 27, 1922, TO AUGUST 21, 1922, OR INTEREST THEREON. HOWEVER, WHEN HE SUBMITTED APPLICATION FOR RETIREMENT ON ACCOUNT OF AGE UNDER THE CIVIL SERVICE RETIREMENT LAW (ACT OF MAY 29, 1930), HE WAS ADVISED BY THE CIVIL SERVICE COMMISSION THAT HE MUST DEPOSIT THE AMOUNT OF $41.01, WHICH SHOULD HAVE BEEN DEDUCTED DURING THE PERIOD, MARCH 27, 1922, TO AUGUST 21, 1922, TOGETHER WITH INTEREST THEREON FROM JUNE 20, 1923, THE DATE HE REENTERED THE CLASSIFIED SERVICE, AMOUNTING TO $27.86. THESE SUMS MR. BUELL PAID, BUT THE INTEREST PAYMENT HE MADE UNDER PROTEST AND HAS ASKED RECONSIDERATION OF THE ACTION REQUIRING PAYMENT OF INTEREST ON DEDUCTIONS FROM HIS SALARY NOT TIMELY MADE THROUGH INADVERTENCE OR ADMINISTRATIVE ERROR. IN SUPPORT OF HIS PROTEST HE CITES THE DECISION OF THE COMPTROLLER GENERAL OF JUNE 11, 1926 (5 COMP. GEN. 974.)

IN ADDITION TO THE DECISION CITED BY MR. BUELL, ATTENTION IS INVITED TO THE COMPTROLLER GENERAL'S DECISIONS OF FEBRUARY 14, 1923 (2 COMP. GEN. 506), JULY 23, 1926 (6 COMP. GEN. 69), AND AUGUST 4, 1926 (6 COMP. GEN. 100).

THESE DECISIONS, HOWEVER, RELATE TO PERSONS WHO HAVE BEEN CONTINUOUSLY EMPLOYED, WHEREAS IN THE CASE OF MR. BUELL THERE WAS AN ABSOLUTE SEPARATION FROM SERVICE FOLLOWING THE PERIOD DURING WHICH RETIREMENT DEDUCTIONS WERE NOT TIMELY TAKEN AND A SUBSEQUENT REEMPLOYMENT IN A POSITION UNDER THE ACT.

SECTION 12 OF THE RETIREMENT ACT OF MAY 29, 1930, PROVIDES FOR REFUNDS OF DEDUCTIONS UPON ABSOLUTE SEPARATION FROM SERVICE PRIOR TO BECOMING ELIGIBLE FOR RETIREMENT, AND FURTHER PROVIDES THAT ANY MONEY SO REFUNDED MUST UPON REEMPLOYMENT IN A POSITION WITHIN THE PURVIEW OF THE ACT BE REDEPOSITED WITH INTEREST BEFORE THE EMPLOYEE MAY DERIVE ANY BENEFITS UNDER THE ACT. WHILE MR. BUELL WAS NOT PAID A REFUND, AS SUCH, NEVERTHELESS HE HAD BEEN PAID AT A 100 PERCENT RATE OF SALARY AND HAD RECEIVED ALL THAT WAS DUE HIM FROM THE GOVERNMENT AT THE TIME OF HIS SEPARATION ON AUGUST 21, 1922.

IN ADJUDICATING THIS CASE THE COMMISSION FOLLOWED THE RULE OF PROCEDURE WHICH HAD PREVIOUSLY BEEN AGREED UPON, WHICH READS:

"IN CASES WHERE THROUGH ADMINISTRATIVE OVERSIGHT DURING PERIODS OF SERVICE WITH RETIREMENT STATUS DISBURSING OFFICERS HAVE FAILED TO TAKE DEDUCTIONS TIMELY AND HAVE MADE SALARY PAYMENTS ON 100 PERCENT BASIS, THE RETIREMENT DEDUCTIONS ERRONEOUSLY OMITTED SHALL CONSTITUTE A DEBT OWING TO THE RETIREMENT FUND, AND WHEN COLLECTED, SHALL NOT BE SUBJECT TO AN INTEREST CHARGE EITHER THROUGH THE PERIOD THAT THEY WERE CURRENTLY OMITTED OR FOR ANY SUBSEQUENT PERIOD THAT COLLECTION IS DEFERRED; PROVIDED, HOWEVER, THAT SHOULD THE EMPLOYEE BECOME ABSOLUTELY SEPARATED FROM THE GOVERNMENT SERVICE SO AS TO BECOME ELIGIBLE FOR REFUND BEFORE THE INDEBTEDNESS HAS BEEN LIQUIDATED, THE UNPAID DEDUCTIONS, UPON SUBSEQUENT REINSTATEMENT, WILL THEN HAVE THE STATUS OF REFUNDS THAT HAVE BEEN CORRECTLY PAID, THE REDEPOSIT OF WHICH WILL BE PRESENTLY OPTIONAL BUT MANDATORY BEFORE RETIREMENT. IN SUCH CASE INTEREST WILL BE A PROPER CHARGE FROM DATE OF REEMPLOYMENT.'

YOUR DECISION IS REQUESTED ON THE QUESTION OF WHETHER UPON A PERSON'S REEMPLOYMENT IN A POSITION UNDER THE RETIREMENT ACT AFTER A BREAK IN SERVICE INTEREST IS CHARGEABLE FROM THE DATE OF REEMPLOYMENT ON DEPOSITS TO COVER PRIOR SERVICE WHERE THROUGH INADVERTENCE OR ADMINISTRATIVE ERROR DEDUCTIONS WERE NOT TIMELY TAKEN, SUCH DEPOSITS BEING MANDATORY BEFORE THE ALLOWANCE OF ANY ANNUITY BENEFITS.

THERE IS NOTHING SPECIFIC IN THE CIVIL RETIREMENT ACT AS ORIGINALLY ENACTED OR AS AMENDED REGARDING THE COMPUTATION OF INTEREST ON RETIREMENT DEDUCTIONS NOT TIMELY TAKEN FROM THE SALARY OF EMPLOYEES AS A RESULT OF ADMINISTRATIVE ERROR. THE QUESTION HAS BEEN THE SUBJECT OF A NUMBER OF DECISIONS RENDERED BY THE FORMER COMPTROLLER GENERAL WHICH HAVE BEEN CITED IN YOUR LETTER. IN ALL OF THE CASES CONSIDERED, INVOLVING EMPLOYEES WHO HAD HAD NO BREAK IN SERVICE SUBJECT TO THE RETIREMENT ACT, ALTHOUGH THERE HAD BEEN TRANSFERS FROM ONE POSITION TO ANOTHER AND RESIGNATION AND REEMPLOYMENT, THE RULE WAS CONSISTENTLY STATED THAT NO INTEREST ON SUCH DEDUCTIONS DELAYED THROUGH ADMINISTRATIVE ERROR WOULD BE REQUIRED. HOWEVER, IT WAS SUGGESTED IN ONE OR MORE OF THE DECISIONS THAT THE RULE WOULD NOT NECESSARILY HAVE BEEN THE SAME HAD THERE BEEN A BREAK IN SERVICE. FOR INSTANCE, THE FOLLOWING IS QUOTED FROM DECISION OF JUNE 11, 1926, 5 COMP. GEN. 974, 975:

* * * THE BASIS FOR THE CONCLUSION THAT REFUND OF INTEREST ON RETIREMENT DEDUCTIONS NOT TIMELY TAKEN FROM THE SALARY OF EMPLOYEES IN THE CLASSIFIED CIVIL SERVICE WAS THAT THE BASIC STATUTE MADE NO SUCH REQUIREMENT NOR PROVIDED FOR SUCH A PROCEDURE. IT CAN ONLY BE REITERATED THAT SECTION 10 OF THE CIVIL RETIREMENT ACT, DATED MAY 22, 1920, 41 STAT. 618, ON WHICH THE SECRETARY OF THE INTERIOR BASES HIS CONCLUSION, RELATES EXCLUSIVELY TO EMPLOYEES WHO ARE TRANSFERRED "FROM AN UNCLASSIFIED TO A CLASSIFIED STATUS, OR UPON THE REINSTATEMENT OF A FORMER EMPLOYEE.' THIS PLAIN PROVISION MAY NOT BE BROADENED BY CONSTRUCTION TO INCLUDE EMPLOYEES WHO ARE IN THE CLASSIFIED CIVIL SERVICE AND HAVE NEVER LEFT SUCH SERVICE. THE PURPOSE AND INTENT OF SECTION 10 IS TO RETURN TO THE RETIREMENT FUND THE AMOUNT OF DEDUCTIONS WITH INTEREST FOR THE PERIOD OF PAST SERVICE IN THE CLASSIFIED CIVIL SERVICE WHEN AN EMPLOYEE REENTERS THAT SERVICE AFTER HAVING BEEN IN AN UNCLASSIFIED POSITION OR OUT OF THE GOVERNMENT SERVICE ENTIRELY. 27 COMP. DEC. 623; ID. 686.

THE FOLLOWING IS QUOTED FROM DECISION OF AUGUST 4, 1926, 6 COMP. GEN. 100, 101:

SECTIONS 10 AND 11, CIVIL RETIREMENT ACT OF MAY 22, 1920, 41 STAT. 618 AND 619, DEAL RESPECTIVELY WITH DEPOSIT OF DEDUCTIONS WHEN AN EMPLOYEE IS TRANSFERRED FROM AN UNCLASSIFIED TO A CLASSIFIED STATUS, OR UPON REINSTATEMENT OF A FORMER EMPLOYEE, AND REDEPOSIT BY AN EMPLOYEE WHO IS TRANSFERRED TO AN UNCLASSIFIED STATUS OR SEPARATED FROM THE SERVICE, PAID HIS RETIREMENT DEDUCTIONS, AND LATER REINSTATED IN A CLASSIFIED STATUS. IN NEITHER SECTION IS THERE ANY PROVISION MADE TO COVER CASES IN WHICH THE EMPLOYEE HAS BEEN IN A CLASSIFIED STATUS SINCE THE ENACTMENT OF MAY 22, 1920, OR FROM THE TIME HE ENTERS THE SERVICE, AND, DUE TO INADVERTENCE OR ERROR ON THE PART OF THE ADMINISTRATIVE OFFICE, TIMELY RETIREMENT DEDUCTIONS AS REQUIRED THEREUNDER WERE NOT MADE FROM HIS PAY. IN SUCH CASES THE PAYMENT OF THE DEDUCTIONS IN ARREARS CAN BE CONSIDERED NEITHER A DEPOSIT UNDER SECTION 10 NOR A REDEPOSIT UNDER SECTION 11 FOR THE REASON THAT THE STATUS OF THE EMPLOYEE HAS NOT CHANGED, AND THERE IS NO PROVISION IN THE CIVIL RETIREMENT ACTS REQUIRING HIM TO PAY INTEREST UPON THE DELAYED DEDUCTIONS.

THE PROVISIONS OF SECTIONS 10 AND 11 OF THE ORIGINAL RETIREMENT ACT OR MAY 22, 1920, CONSIDERED IN THE QUOTED DECISIONS, HAVE BEEN REENACTED INSOFAR AS HERE MATERIAL IN SUBSTANTIALLY THE SAME TERMS BY SECTION 12 OF THE AMENDATORY ACT OF MAY 29, 1930, 46 STAT. 476.

IN CASES WHERE THERE IS A BREAK IN SERVICE SUCH AS WOULD CONSTITUTE UNDER THE RETIREMENT LAW SUFFICIENT BASIS FOR REFUNDING THE RETIREMENT DEDUCTIONS TO THE EMPLOYEE IF TIMELY MADE FROM HIS SALARY, AND A REDEPOSIT OF THE SAME WITH INTEREST UPON REINSTATEMENT THE NONDEDUCTION OR CURRENT PAYMENT OF SUCH DEDUCTIONS MAY BE CONSIDERED AS TANTAMOUNT TO A REFUND OF THE SAME IN SUCH CASES, AND UPON REINSTATEMENT THE CHARGING OF INTEREST AUTHORIZED. THE RULE STATED IN YOUR LETTER APPEARS TO COVER EXCEPT THAT THE WORDS "AND THERE HAS BEEN A BREAK IN SERVICE" SHOULD BE INSERTED BETWEEN THE WORD "LIQUIDATED" AND THE WORDS "THE UNPAID DEDUCTIONS.'

ACCORDINGLY, THE QUESTION IN YOUR CONCLUDING PARAGRAPH IS ANSWERED IN THE AFFIRMATIVE. AS THERE WAS A BREAK IN SERVICE IN THE CASE OF WILLIAM E. BUELL, HERE PRESENTED, FROM AUGUST 21, 1922, TO JUNE 19, 1923, THE COMMISSION WAS CORRECT IN CHARGING INTEREST ON THE AMOUNT OF DEDUCTIONS NOT TIMELY TAKEN THROUGH ADMINISTRATIVE ERROR DURING THE PERIOD MARCH 27, 1922, TO AUGUST 21, 1922.