B-149534, AUGUST 9, 1962, 42 COMP. GEN. 105

B-149534, AUGUST 9, 1962, 42 COMP. GEN. 105

FOREIGN SERVICE - RETIREMENT - REEMPLOYMENT - BENEFITS ON REVERSION. FOREIGN SERVICE - RETIREMENT - REEMPLOYMENT - BENEFITS ON REVERSION. FOREIGN SERVICE - RETIREMENT - REEMPLOYMENT - CHANGE IN KIND OF RETIREMENT IN VIEW OF THE MANDATORY LANGUAGE OF SECTION 871 OF THE FOREIGN SERVICE ACT OF 1946, 22 U.S.C. 1111, WHICH PROVIDES THAT WHEN A FOREIGN SERVICE ANNUITANT WHO IS RECALLED TO DUTY REVERTS TO A RETIRED STATUS "HIS ANNUITY SHALL BE DETERMINED ANEW," A RETIRED FOREIGN SERVICE OFFICER IN RECEIPT OF AN ANNUITY PLUS PERCENTAGE INCREASES WHO IS RECALLED TO DUTY FOR A PERIOD THAT EXTENDS BEYOND JUNE 30, 1962, THE CUTOFF DATE FOR PERCENTAGE INCREASES IN ANNUITIES, MUST HAVE HIS ANNUITY DETERMINED ANEW UPON REVERSION TO A RETIRED STATUS EVEN THOUGH HIS NEW ANNUITY WITH ADDITIONAL SERVICE CREDIT IS SMALLER THAN HIS FORMER ANNUITY WITH PERCENTAGE INCREASES. TO REQUIRE REEMPLOYED FOREIGN SERVICE ANNUITANTS WHEN THEY REVERT TO RETIRED STATUS TO MAKE A NEW SURVIVOR ELECTION IS CONSISTENT WITH SECTION 871 OF THE FOREIGN SERVICE ACT OF 1946, AS AMENDED, 22 U.S.C. 1111, WHICH PROVIDES THAT WHEN THE OFFICER REVERTS TO HIS RETIRED STATUS, HIS ANNUITY SHALL BE DETERMINED ANEW, PROVIDED THAT IF THE OFFICER CHOOSES SURVIVOR BENEFITS, THE BENEFITS ARE COMPUTED ON THE BASIS OF THE FORMULA IN EFFECT ON THE NEW RETIREMENT DATE; THEREFORE, A REEMPLOYED FOREIGN SERVICE ANNUITANT ON REVERSION TO A RETIRED STATUS MAY PROVIDE FOR A SURVIVOR ANNUITY, EVEN THOUGH HE DID NOT DO SO AT THE TIME OF THE ORIGINAL RETIREMENT, OR THE OFFICER MAY ELIMINATE A PROVISION FOR A SURVIVOR IF HE HAD PREVIOUSLY PROVIDED FOR ONE. A FOREIGN SERVICE OFFICER WHO AFTER EITHER A MANDATORY OR VOLUNTARY RETIREMENT IS RECALLED TO DUTY IS NOT PRECLUDED BY ANYTHING IN THE FOREIGN SERVICE ACT OF 1946, AS AMENDED, FROM BEING RETIRED ON DISABILITY IF DURING REEMPLOYMENT HE BECOMES DISABLED.

TO THE DEPUTY UNDER SECRETARY OF STATE FOR ADMINISTRATION, AUGUST 9, 1962:

YOUR LETTER OF JULY 20, 1962, REQUESTS OUR DECISION UPON SEVERAL QUESTIONS CONCERNING THE RECALL TO DUTY OF RETIRED FOREIGN SERVICE OFFICERS AND THEIR SUBSEQUENT REVERSION TO A RETIRED STATUS AS PROVIDED IN SECTION 871 OF THE FOREIGN SERVICE ACT OF 1946, AS AMENDED, 22 U.S.C. 1111.

YOU POINT OUT THAT THE QUESTIONS ARISE BECAUSE OF THE APPLICATION OF ANNUITY INCREASES AUTHORIZED BY PUBLIC LAW 85-882, ENACTED IN 1958, 22 U.S.C. 1079H, AND PUBLIC LAW 86-612, ENACTED IN 1960, 22 U.S.C. 1079L (1958 ED., SUPP. II), WHICH RESULT IN AN OFFICER WHO RETIRED ON MAY 31, 1962, RECEIVING AN INCREASE OF 2 PERCENT ON HIS ANNUITY AS AUTHORIZED BY PUBLIC LAW 85-882 AND AN INCREASE OF 10 PERCENT ON HIS ANNUITY AS AUTHORIZED BY PUBLIC LAW 86-612.

THE QUESTIONS PRESENTED ARE AS FOLLOWS:

QUESTION 1: OFFICER A, WHO RETIRED MAY 31, 1962 ON AN ANNUITY OF $8,000, PLUS 2 PERCENT, PLUS 10 PERCENT (TOTAL $8,976), IS EXPECTED TO BE RECALLED SEPTEMBER 1 FOR A PERIOD OF ABOUT FOUR MONTHS. UPON HIS SECOND RETIREMENT, ACCORDING TO SEC. 871 OF THE ACT, HE WOULD BE ENTITLED TO ADD THIS FOUR MONTHS OF SERVICE TO HIS TOTAL CREDITABLE SERVICE (PROVIDED HE HAS NOT ALREADY RECEIVED CREDIT FOR THE MAXIMUM OF 35 YEARS), AND HIS HIGH -FIVE AVERAGE SALARY COULD CONCEIVABLY BE INCREASED BY A VERY SMALL AMOUNT BY THESE ADDITIONAL FOUR MONTHS OF SERVICE. HOWEVER, IT IS OBVIOUS THAT ANY INCREASE IN ANNUITY BECAUSE OF THE ADDED FOUR MONTHS OF SERVICE AND A POSSIBLE HIGHER AVERAGE SALARY, WOULD NOT BE SUFFICIENT TO OFFSET THE 12 PERCENT INCREASE RECEIVED ON MAY 31 WHEN THE OFFICER RETIRED. (A) MAY THE OFFICER ELECT, UPON RECALL AND SUBSEQUENT RETIREMENT, TO RETAIN THE HIGHER ANNUITY (THAT WHICH HE RECEIVED AT HIS FIRST RETIREMENT ON MAY/? (B) MAY AN OFFICER ALSO INDEPENDENTLY TAKE ADVANTAGE OF THE PROVISION OF SEC. 871 TO PROVIDE FOR A SURVIVOR, ASSUMING THAT HE DID NOT DO SO AT TIME OF RETIREMENT? (C) OR, CONVERSELY, COULD HE ELIMINATE A PROVISION FOR A SURVIVOR IF HE HAD PREVIOUSLY PROVIDED FOR ONE? (D) IF HE IS ALLOWED THE PRIVILEGE OF PROVIDING FOR A SURVIVOR, WOULD SUCH SURVIVOR BENEFIT BE BASED ON HIS COMPUTED ANNUITY AS OF MAY 31, OR ON THE COMPUTED ANNUITY AT TIME OF SECOND RETIREMENT TAKING INTO ACCOUNT THE ADDITIONAL SERVICE AND POSSIBLE HIGHER AVERAGE SALARY?

QUESTION 2: A RELATED QUESTION ARISES IN THE CASE OF AN OFFICER WHO RETIRED PRIOR TO THE 1960 AMENDMENTS TO THE FOREIGN SERVICE ACT WHO HAS RECEIVED ANNUITY INCREASES UNDER (P.L. 85-882 AND P.L. 86-612) AND WHO IS RECALLED TO DUTY. BY WAY OF EXPLANATION, SEC. 821 OF THE FOREIGN SERVICE ACT PRIOR TO OCTOBER 16, 1960 WHEN THE AMENDMENTS INCLUDED IN P.L. 86-723 BECAME EFFECTIVE, PROVIDED THAT A RETIRING PARTICIPANT IN THE FOREIGN SERVICE RETIREMENT SYSTEM COULD ELECT AN ANNUITY FOR A WIDOW, NOT TO EXCEED TWENTY-FIVE PERCENT OF HIS HIGH FIVE AVERAGE SALARY, AT A COST TO HIM OF 50 PERCENT OF THE AMOUNT HE CHOSE TO DESIGNATE FOR HER TO RECEIVE, AS ILLUSTRATED ELOW:

CHART FOREIGN SERVICE OFFICER B:

RETIRED---------------------------------- MAY 31, 1960

SERVICE---------------------------------- 34 YEARS

HIGH-FIVE AVERAGE SALARY----------------- $12,000

FULL ANNUITY----------------------------- 8,160

MAXIMUM ANNUITY FOR WIDOW---------------- 3,000

COST TO ANNUITANT------------------------ 1,500

REDUCED ANNUITY-------------------------- 6,660

INCREASE P.L. 85-882--- 6 PERCENT-------- 399

INCREASE P.L. 86-612--- 10 PERCENT------- 705

CURRENT ANNUITY RATE--------------------- $7,764

RECALLED--------------------------------- JULY 1, 1962

RETIRED---------------------------------- DEC. 31, 1962

SERVICE---------------------------------- 34 YEARS 6 MONTHS

HIGH-FIVE AVERAGE SALARY----------------- $12,100

FULL ANNUITY----------------------------- 8,349

MAXIMUM ANNUITY FOR WIDOW---------------- 4,174

COST TO ANNUITANT------------------------ 654

REDUCED ANNUITY-------------------------- $7,695

IF SEC. 871 IS APPLIED ON THE THEORY THAT ANY PREVIOUS RETIREMENT OR ANNUITY IS IGNORED, THE OFFICER'S ANNUITY WOULD BE $69 LESS THAN HIS ANNUITY AT TIME OF RECALL. HOWEVER, THE MAXIMUM SURVIVOR ANNUITY WOULD BE $1,174 MORE THAN UNDER HIS PREVIOUS RETIREMENT. SINCE THE ADDED SERVICE WOULD NOT OFFSET ENTIRELY THE TWO INCREASES IN ANNUITY, THE QUESTION ARISES AS TO WHETHER THE OFFICER MAY RETAIN THE ANNUITY RATE ORIGINALLY ESTABLISHED AND AT THE SAME TIME PROVIDE FOR HIS WIDOW UNDER THE CURRENT PROVISIONS OF SEC. 821, WHICH WOULD PERMIT A LARGER SURVIVOR ANNUITY AT LESS COST TO THE OFFICER. AS ILLUSTRATED ABOVE, THE PRESENT COST TO THIS ANNUITANT TO PROVIDE THE MAXIMUM ANNUITY OF $3,000 (25 PERCENT OF HIS HIGH -FIVE AVERAGE SALARY) FOR HIS WIDOW IS 1,500; UNDER SEC. 871 OF THE ACT WHICH WOULD ALLOW HIM TO RETIRE ANEW, HE COULD PROVIDE THE MAXIMUM ANNUITY OF $4,174 ( 1/2 OF HIS ANNUITY) FOR HIS WIDOW AT A COST TO HIM OF $654.

QUESTION 3: ANOTHER TYPE OF CASE IS THAT OF AN OFFICER WHO RETIRES VOLUNTARILY OR MANDATORILY, IS LATER RECALLED TO DUTY, AND DURING THE PERIOD OF RECALL BECOMES DISABLED. IN ADDITION TO THE QUESTION OF THE ANNUITY RATE WHICH HE MAY RECEIVE (ALREADY PRESENTED IN THE FOREGOING QUESTIONS), MAY HE BE RETIRED FOR DISABILITY UNDER SEC. 831 OF THE ACT DURING THE PERIOD OF RECALL) THIS QUESTION IS PARTICULARLY PERTINENT BECAUSE OF THE SPECIAL INCOME TAX EXEMPTION APPLYING TO SUCH DISABILITY ANNUITIES PROVIDED IN 26 U.S.C. 104 (A) (4), WHICH WAS PROVIDED BY A 1960 AMENDMENT (SEC. 51 OF P.L. 86-723).

QUESTION 4: IF A RECALLED ANNUITANT, UPON SUBSEQUENT RETIREMENT, ELECTS HIS BENEFITS AS OF THE DATE OF ORIGINAL RETIREMENT, THERE WOULD APPEAR TO BE SOME QUESTION OF THE DISPOSITION OF THE 6 1/2 PERCENT OF BASIC SALARY DEDUCTED DURING THE PERIOD OF RECALL UNDER SECTIONS 811 (A) AND 871 OF THE ACT. IT COULD BE CONCLUDED THAT HE WOULD BE ENTITLED TO A REFUND OF HIS CONTRIBUTIONS WITH INTEREST UNDER SECTION 841 (A), OR, ALTERNATIVELY, THAT HE WOULD FORFEIT SUCH CONTRIBUTIONS BY HIS ELECTION OF THE BENEFITS AS OF THE EARLIER DATE.

SECTION 871 OF THE FOREIGN SERVICE ACT OF 1946, AS AMENDED BY SECTION 43 OF THE ACT OF SEPTEMBER 8, 1960, 22 U.S.C. 1111, PROVIDES AS FOLLOWS:

ANY ANNUITANT RECALLED TO DUTY IN THE SERVICE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 915 (B) OF THIS TITLE OR REINSTATED OR REAPPOINTED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 1081 (B) OF THIS TITLE SHALL, WHILE SO SERVING, BE ENTITLED IN LIEU OF HIS ANNUITY TO THE FULL SALARY OF THE CLASS IN WHICH HE IS SERVING. DURING SUCH SERVICE, HE SHALL MAKE CONTRIBUTIONS TO THE FUND IN ACCORDANCE WITH THE PROVISIONS OF SECTION 1071 OF THIS TITLE. WHEN HE REVERTS TO HIS RETIRED STATUS, HIS ANNUITY SHALL BE DETERMINED ANEW IN ACCORDANCE WITH THE PROVISIONS OF SECTION 1076 OF THIS TITLE.

THE STATEMENT IN HOUSE REPORT NO. 2104, 86TH CONGRESS, CONCERNING THE EFFECT OF SECTION 871 OF THE ABOVE ACT IS AS FOLLOWS:

SECTION 41 (LATER CHANGED TO SECTION 43 IN CONFERENCE) AMENDS SECTION 871 OF THE ACT BY ALLOWING FOR THE RECOMPUTATION OF ANNUITIES FOR ANNUITANTS RECALLED, REINSTATED, OR REAPPOINTED IN THE SERVICE. IT WILL PERMIT THE ANNUITANT UPON TERMINATION OF HIS SERVICES, TO MAKE A NEW ELECTION WITH RESPECT TO SURVIVOR BENEFITS IF HE SO CHOOSES. IN SUBSTANCE, IT WILL PERMIT THE OFFICER TO RETIRE AGAIN.

REFERRING TO QUESTIONS 1 AND 2, WE DO NOT VIEW THE STATEMENTS IN HOUSE REPORT NO. 2104 AS SUFFICIENT TO OVERCOME THE MANDATORY LANGUAGE OF THE STATUTE WHICH STATES THAT WHEN THE OFFICER REVERTS TO A RETIRED STATUS "HIS ANNUITY SHALL BE DETERMINED ANEW.' WHILE THE RESULT IS RATHER INCONGRUOUS WITH THE GENERAL PURPOSE OF THE PROVISION, NAMELY, TO EXTEND A GREATER BENEFIT TO A RECALLED ANNUITANT, WE NOTE THAT A SIMILAR SITUATION PREVAILS WHEN THE ANNUITY OF AN OFFICER RETIRED PRIOR TO JULY 1, 1962, IS COMPARED WITH THE ANNUITY OF ANOTHER RETIRING FOR THE FIRST TIME AFTER JULY 1, 1962, ASSUMING THE HIGH 5-YEAR AVERAGE SALARY AND LENGTH OF SERVICE ARE APPROXIMATELY THE SAME. IN OTHER WORDS, BECAUSE OF THE CUTOFF DATE OF JUNE 30, 1962, FOR THE PERCENTAGE INCREASES IN ANNUITIES, AN OFFICER RETIRING INITIALLY AFTER THAT DATE MAY EXPECT TO RECEIVE A SMALLER ANNUITY THAN THE OFFICER RETIRED PRIOR THERETO WHO HAS RECEIVED THE BENEFIT OF THE PERCENTAGE INCREASES. THAT SITUATION WOULD PREVAIL UNTIL SUCH TIME AS SERVICE AND HIGHER SALARY RATES OFFSET THE PERCENTAGE INCREASES. TO REMEDY THESE INEQUITABLE SITUATIONS WE BELIEVE THE DEPARTMENT SHOULD SEEK CORRECTIVE LEGISLATION, RATHER THAN FOR OUR OFFICE TO ATTEMPT TO READ SOMETHING IN THE STATUTE THAT IS NOT THERE OR TO ASCRIBE AN INTENT TO SUCH STATUTE THAT IS NOT FULLY SUPPORTED BY THE LEGISLATIVE HISTORY THEREOF. HOWEVER, AS TO SURVIVOR ANNUITIES WE THINK THE LEGISLATIVE HISTORY IS ENTIRELY CONSISTENT WITH THE LANGUAGE OF THE STATUTE SO AS TO REQUIRE A RECALLED ANNUITANT UPON SUBSEQUENT RETIREMENT TO ELECT ANEW WHETHER HE DOES OR DOES NOT WANT SURVIVOR BENEFITS; ALSO, THAT IF HE CHOOSES SURVIVOR BENEFITS THE BENEFITS ARE REQUIRED TO BE BASED ON THE FORMULA IN EFFECT ON THE DATE OF HIS NEW RETIREMENT. QUESTIONS 1 AND 2 ARE ANSWERED ACCORDINGLY.

AS TO QUESTION 3, WE FIND NOTHING IN THE FOREIGN SERVICE ACT OF 1946 AND ITS AMENDMENTS OR THE LEGISLATIVE HISTORY THEREOF TO PRECLUDE A RECALLED OFFICER PREVIOUSLY RETIRED EITHER MANDATORILY OR VOLUNTARILY FROM BEING RETIRED FOR DISABILITY. IN VIEW THEREOF, AND IN LIGHT OF THE ANSWERS TO THE PREVIOUS QUESTIONS, THIS QUESTION IS ANSWERED IN THE AFFIRMATIVE.

NO ANSWER TO QUESTION 4 IS DEEMED NECESSARY BECAUSE OF THE ANSWERS TO QUESTIONS 1 AND 2.