B-149076, SEPTEMBER 7, 1962, 42 COMP. GEN. 153

B-149076, SEPTEMBER 7, 1962, 42 COMP. GEN. 153

PAY - RETIRED - ANNUITY ELECTIONS FOR DEPENDENTS - PAY CHANGES A MEMBER OF THE UNIFORMED SERVICES WHO, AFTER QUALIFYING FOR RETIREMENT UNDER 10 U.S.C. 1331, CONTINUES ON ACTIVE DUTY AND PAYS THE MONTHLY COST OF A SURVIVOR ANNUITY ELECTED FOR HIS WIFE UNTIL PLACEMENT ON THE DISABILITY RETIRED LIST MUST HAVE THE TERMS OF THE SURVIVOR ANNUITY PURCHASE CONTRACT UNDER 10 U.S.C. 1436 REGARDED AS FIXED AT THE TIME HE FIRST BECAME ENTITLED TO RETIRED PAY UNDER 10 U.S.C. 1331 AND THE INCREASED RETIREMENT BENEFITS ACCRUING UPON RELEASE FROM ACTIVE DUTY FOR DISABILITY DO NOT CHANGE THE ORIGINAL ANNUITY COMPUTATION; THEREFORE, A RECOMPUTATION OF THE ANNUITY AT THE TIME OF PLACEMENT ON THE DISABILITY RETIRED LIST IS NOT AUTHORIZED AND COLLECTION OF THE COST OF THE ANNUITY DURING THE TIME THE MEMBER WAS RETAINED ON ACTIVE DUTY WAS PROPER.

TO COLONEL WEBSTER MILLS, DEPARTMENT OF THE ARMY, SEPTEMBER 7, 1962:

THE OFFICE OF THE CHIEF OF FINANCE, DEPARTMENT OF THE ARMY, HAS FORWARDED WITH FIRST ENDORSEMENT DATED MAY 31, 1962, YOUR LETTER OF APRIL 18, 1962, AND ENCLOSURES, IN WHICH YOU REQUEST AN ADVANCE DECISION AS TO WHETHER A NEW COMPUTATION OF SURVIVORS' ANNUITY COST IS REQUIRED IN THE CASE OF MAJOR GENERAL HEBER L. EDWARDS, 10172673, WHO WAS RETIRED FOR PHYSICAL DISABILITY AFTER HAVING QUALIFIED FOR RETIRED PAY UNDER CHAPTER 67, TITLE 10 OF THE UNITED STATES CODE, AND, IF SO, WHETHER THE MEMBER WOULD BE ENTITLED TO A REFUND OF ANY PORTION OF THE AMOUNT DEPOSITED FOR COST ON THE ANNUITY BASED ON THE FIRST RETIREMENT. YOUR REQUEST WAS ASSIGNED DO NO. 648 BY THE DEPARTMENT OF DEFENSE MILITARY PAY AND ALLOWANCE COMMITTEE.

IT IS REPORTED THAT GENERAL EDWARDS WAS PLACED ON THE ARMY OF THE UNITED STATES RETIRED LIST ON JUNE 30, 1957, UNDER THE PROVISIONS OF SECTIONS 1331-1337 OF TITLE 10 OF THE U.S.C. (FORMERLY TITLE III OF THE ACT OF JUNE 29, 1948, CH. 708, 62 STAT. 1087) AND THAT HE SERVED ON ACTIVE DUTY WITH HIS CONSENT AND BY ORDER OF THE SECRETARY OF THE ARMY CONTINUOUSLY FROM THAT DATE UNTIL HIS RETIREMENT FOR DISABILITY ON JANUARY 20, 1962. GENERAL EDWARDS WAS REMOVED FROM THE ARMY OF THE UNITED STATES RETIRED LIST EFFECTIVE JANUARY 19, 1962, AND PLACED ON THE PERMANENT DISABILITY RETIRED LIST EFFECTIVE JANUARY 20, 1962, UNDER THE PROVISIONS OF 10 U.S.C. 1201 AND 1372 BY REASON OF 40 PERCENT DISABILITY AND IT IS STATED THAT HE WAS ELIGIBLE FOR RETIRED PAY AT THAT TIME COMPUTED UNDER 10 U.S.C. 3911 AND FORMULA B OF 10 U.S.C. 3991.

YOU SAY THAT ON APRIL 29, 1954, GENERAL EDWARDS EXECUTED AN ELECTION TO RECEIVE A REDUCED AMOUNT OF RETIRED PAY TO PROVIDE AN ANNUITY FOR HIS WIFE UNDER THE RETIRED SERVICEMAN'S FAMILY PROTECTION PLAN, 10 U.S.C. 1431- 1446, WHICH ELECTION TOOK EFFECT JULY 1, 1957, AND THAT THE MONTHLY COST, BASED ON THE OFFICER'S AGE OF 60 AT THE TIME OF RETIREMENT AND HIS WIFE'S AGE OF 52, WAS COMPUTED AT $104.86 WITH AN ANNUITY PAYABLE OF $219.23. WHILE HE CONTINUED ON ACTIVE DUTY, HE PAID THE MONTHLY COST OF THE ANNUITY IN ACCORDANCE WITH 10 U.S.C. 1438. BY LETTER DATED FEBRUARY 24, 1962, HE STATED THAT WHILE AWAITING RETIREMENT IN 1962 HE WAS INFORMED THAT THE REDUCTION IN HIS RETIRED PAY WOULD BE RECOMPUTED AND THAT HIS WIDOW WOULD RECEIVE A GREATER ANNUITY. HE ALSO ASKED TO BE INFORMED AS TO WHAT WILL BECOME OF THE $5,767.30 ALREADY DEDUCTED.

YOU STATE THAT THE ANNUITY COST UNDER THE FAMILY PROTECTION PLAN BASED ON THE OFFICER'S AGE OF 65 AS OF JANUARY 20, 1962, HIS WIFE'S AGE OF 56 AND THE INCREASED RETIRED PAY AT THE RATE OF $1,012.50, WOULD RESULT IN A MONTHLY COST OF $241.99 WITH AN ANNUITY PAYABLE OF $385.26. YOU REPORT THAT RECOMPUTATION ON THAT BASIS HAS BEEN ACCOMPLISHED SINCE THE PLACEMENT OF THE OFFICER'S NAME ON THE DISABILITY RETIRED LIST IS VIEWED AS CONSTITUTING A NEW RETIREMENT BASED ON NEW CIRCUMSTANCES. IT APPEARS THAT IF THE FIRST RETIREMENT WAS NOT TERMINATED BY THE LATER RETIREMENT AND THE INCREASED RETIREMENT BENEFITS ACCRUING TO GENERAL EDWARDS CONSTITUTED ONLY A SUBSEQUENT CHANGE (INCREASE) IN THE AMOUNT OF RETIRED PAY, RECOMPUTATION WOULD NOT BE REQUIRED UNDER THE RULE IN 33 COMP. GEN. 491. YOU EXPRESS THE OPINION THAT IN ANY EVENT REFUND IS NOT CONSIDERED DUE UNDER 10 U.S.C. 1439.

SECTION 1436 OF TITLE 10, U.S. CODE, PROVIDES THAT THE REDUCTION IN THE RETIRED OR RETAINER PAY OF ANY PERSON WHO ELECTS AN ANNUITY UNDER THE RETIRED SERVICEMAN'S FAMILY PROTECTION PLAN SHALL BE COMPUTED BY THE ARMED FORCE CONCERNED AS OF THE DATE WHEN THE PERSON BECOMES ELIGIBLE FOR THAT PAY. THAT SECTION IS A CODIFICATION WITHOUT SUBSTANTIVE CHANGE--- BY THE ACT OF AUGUST 10, 1956, CH. 1041, 70A STAT. 110--- OF SECTION 4 (C) OF THE UNIFORMED SERVICES CONTINGENCY OPTION ACT OF 1953, APPROVED AUGUST 8, 1953, CH. 393, 67 STAT. 503 (NOW RETIRED SERVICEMAN'S FAMILY PROTECTION PLAN). IN CONSIDERING THAT SECTION, COUPLED WITH THE PROVISIONS OF SECTIONS 3 AND 4 (A) OF THAT ACT, WE HELD, IN OUR DECISION B-118480 OF APRIL 19, 1954, 33 COMP. GEN. 491, 492, AS FOLLOWS:

THESE STATUTORY PROVISIONS CLEARLY INDICATE THAT ONLY ONE COMPUTATION OF THE AMOUNT OF REDUCTION IN RETIRED PAY IS CONTEMPLATED, AND THAT THE AMOUNT OF THE ANNUITY TO BE PAID TO THE DESIGNATED DEPENDENTS OF THE MEMBER MAKING THE ELECTION--- EXPRESSED AS A PERCENTAGE OF THE AMOUNT OF RETIRED PAY LEFT AFTER DEDUCTING THEREFROM THE AMOUNT SO COMPUTED, PER SECTION 4 (A) OF THE ACT--- IS TO BE BASED ON THE RETIRED PAY OF THE MEMBER AT THE TIME SUCH COMPUTATION IS MADE. HENCE, IT APPEARS THAT IN ENACTING THE STATUTE THE CONGRESS INTENDED TO PROVIDE A MEANS BY WHICH EACH "RETIRED MEMBER," AS DEFINED IN SECTION 2 (D), 67 STAT. 501, MAY PURCHASE AN ANNUITY FOR HIS DESIGNATED DEPENDENTS AND THAT THE AMOUNT OF THE DEDUCTION AND AMOUNT OF THE ANNUITY FINALLY ARE TO BE DETERMINED AND FIXED IN EACH CASE ON THE BASIS OF THE AMOUNT OF HIS RETIRED PAY (WHICH TERM INCLUDES RETAINER PAY) AT THE TIME OF THE COMPUTATION PROVIDED IN SECTION 4 (C). OF THE THREE METHODS MENTIONED ABOVE, ONLY METHOD (2) MEETS THE REQUIREMENTS OF THE ACT IN THAT RESPECT AND THAT METHOD IS FOR APPLICATION IN ALL CASES. THE COMMITTEE'S QUESTIONS 1, 2, 3B AND 4 ARE ANSWERED ACCORDINGLY, THE REASON FOR ANY INCREASE OR DECREASE IN THE RETIRED PAY OR RETAINER PAY AFTER THE ORIGINAL COMPUTATION NOT BEING MATERIAL.

GENERAL EDWARDS BECAME ENTITLED TO RETIRED PAY UNDER 10 U.S.C. 1331, ON JULY 1, 1957, AND THE REDUCTION IN THE RETIRED PAY HE WOULD HAVE RECEIVED, EXCEPT FOR THE FACT THAT HE WAS RETAINED ON ACTIVE DUTY UNDER 10 U.S.C. 676, WAS PROPERLY FOR COMPUTATION AS OF THAT DATE AND COLLECTION OF THE MONTHLY COST OF THE ANNUITY DURING THE TIME HE WAS RETAINED ON ACTIVE DUTY WAS LIKEWISE PROPER. WE REGARD THE PLAN AS PROVIDING A MEANS BY WHICH A MEMBER MAY PURCHASE AN ANNUITY PAYABLE TO HIS DEPENDENTS UPON HIS DEATH. WHEN HE MAKES AN ELECTION UNDER THE PLAN AND BECOMES ENTITLED TO RETIRED PAY, THE TERMS OF THE CONTRACT OF PURCHASE BECOME FIXED AND NO PROVISION IS CONTAINED IN THE APPLICABLE PROVISIONS OF LAW WHICH PERMITS A CHANGE IN THE CONTRACT EXCEPT TO THE EXTENT PROVIDED IN 10 U.S.C. 1439, 1436 (B) AND 1445, WHICH ARE NOT APPLICABLE HERE. HAVING MADE THE ONE COMPUTATION WHICH LEGALLY MAY BE MADE UNDER THE TERMS OF THE PLAN, THERE IS NO AUTHORITY FOR RECOMPUTATION OF THE REDUCTION OF GENERAL EDWARDS' RETIRED PAY BASED ON THE NEW RATE TO WHICH HE BECAME ENTITLED UPON HIS RELEASE FROM ACTIVE DUTY ON JANUARY 19, 1962, BY REASON OF PHYSICAL DISABILITY.

ACCORDINGLY, THE VOUCHER, WHICH IS ENCLOSED, MAY BE PAID, AFTER CORRECTION OF THE PAYEE'S NAME--- NOW SHOWN AS HELEN L. EDWARDS--- IF OTHERWISE CORRECT.