B-153772, MAY 5, 1964, 43 COMP. GEN. 719

B-153772, MAY 5, 1964, 43 COMP. GEN. 719

PAY - RETIRED - ANNUITY ELECTIONS FOR DEPENDENTS - COST DEDUCTIONS - CONSTRUCTIVE SERVICE EFFECT THE COST OF THE ANNUITY ELECTED UNDER THE RETIRED SERVICEMAN'S FAMILY PROTECTION PLAN, 10 U.S.C. 1431-1446, BY AN AIR FORCE MAJOR APPOINTED UNDER THE ACT OF DECEMBER 28, 1945 IS FOR COMPUTATION ON THE BASIS OF HIS DISABILITY RETIREMENT UNDER 10 U.S.C. 1201 AND 1372--- SERVICE OF AT LEAST 18 BUT LESS THAN 20 YEARS FOR BASIC PAY PURPOSES--- NOTWITHSTANDING THE OFFICER PRIOR TO DISABILITY RETIREMENT HAD BEEN CREDITED WITH CONSTRUCTIVE SERVICE PURSUANT TO THE 1945 ACT AND CONSIDERED FOR MANDATORY RETIREMENT UNDER 10 U.S.C. 8913, AND THE LAW UNDER WHICH A MEMBER RETIRES GOVERNING HIS RETIRED STATUS AND DETERMINING HIS RIGHTS AND OBLIGATIONS, THE OFFICER RETIRED FOR PHYSICAL DISABILITY AND NOT ELIMINATED FROM THE SERVICE IS SUBJECT TO THE ANNUITY COST TABLE PRESCRIBED FOR PERSONS RETIRED FOR DISABILITY WITH AT LEAST 18 BUT LESS THAN 20 YEARS' SERVICE, AND THE COUNTING OF CONSTRUCTIVE SERVICE FOR BASIC PAY PURPOSES NOT BEING AUTHORIZED, THE OFFICER'S CONSTRUCTIVE SERVICE MAY NOT BE USED TO REDUCE THE MONTHLY RATE OF THE ANNUITY COST TO HIM.

TO MAJOR J. H. WEBB, DEPARTMENT OF THE AIR FORCE, MAY 5, 1964:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED FEBRUARY 17, 1964, REQUESTING AN ADVANCE DECISION ON THE PROPRIETY FOR PAYMENT OF A VOUCHER FOR $187.74 IN FAVOR OF MAJOR NORMAN P. HUARD, USAF, RETIRED, REPRESENTING THE DIFFERENCE IN COST DEDUCTIONS BETWEEN $59.77 AND $38.91 A MONTH MADE FROM HIS RETIRED PAY FOR THE PERIOD MARCH 1 TO NOVEMBER 30, 1963, FOR THE PURCHASE OF THE ANNUITY HE ELECTED UNDER THE RETIRED SERVICEMAN'S FAMILY PROTECTION PLAN. YOUR LETTER WAS FORWARDED BY LETTER DATED MARCH 19, 1964, OF THE DIRECTORATE OF ACCOUNTING AND FINANCE AND WAS APPROVED FOR SUBMISSION BY THE DEPARTMENT OF DEFENSE MILITARY PAY AND ALLOWANCE COMMITTEE AS AIR FORCE REQUEST NO. 754.

THE FOLLOWING ARE THE PERTINENT FACTS AS REPORTED BY YOU. MAJOR HUARD RETIRED DECEMBER 21, 1961, UNDER THE PROVISIONS OF 10 U.S.C. 1201 AND 1372 WITH 30 PERCENT DISABILITY. AT THAT TIME HE HAD COMPLETED 19 YEARS, 8 MONTHS AND 29 DAYS' SERVICE FOR BASIC PAY PURPOSES. IT APPEARS THAT HE WAS APPOINTED IN THE REGULAR AIR FORCE UNDER THE PROVISIONS OF THE ACT OF DECEMBER 28, 1945, CH. 601, 59 STAT. 663, 10 U.S.C. 505 (1946 ED.). THE BASIS OF THE CONSTRUCTIVE SERVICE CREDITED TO HIM UNDER SECTIONS 5 AND 7 OF THAT ACT, 10 U.S.C. 505C AND 552C (1946 ED.), RESPECTIVELY, FOR THE PURPOSE OF DETERMINING HIS GRADE AND ELIGIBILITY FOR PROMOTION, HE HAD OVER 21 YEARS OF ACTUAL AND CONSTRUCTIVE SERVICE FOR RETIREMENT WHEN HE WAS INFORMED IN JUNE 1961 THAT HE WOULD BE PROCESSED FOR MANDATORY RETIREMENT. DURING THE COURSE OF SUCH PROCESSING HE WAS FOUND TO BE 30 PERCENT DISABLED AND HE WAS RETIRED FOR DISABILITY WITH RETIREMENT PAY COMPUTED ON THE BASIS OF 2 1/2 PERCENT OF THE YEARS OF SERVICE CREDITED TO HIM UNDER 10 U.S.C. 1208 TIMES HIS MONTHLY BASIC PAY. HIS ACTUAL AND CONSTRUCTIVE SERVICE AT THE TIME OF RETIREMENT WAS 21 YEARS, 6 MONTHS AND 21 DAYS.

MAJOR HUARD ON OCTOBER 14, 1959, ELECTED OPTIONS 1 AND 4 WITH ANNUITY PAYABLE AT ONE-HALF OF HIS REDUCED RETIRED PAY UNDER THE RETIRED SERVICEMAN'S FAMILY PROTECTION PLAN, 10 U.S.C. 1431-1446. COST OF COVERAGE WAS COMPUTED ON THE FACTOR USED FOR OVER 20 YEARS FOR BASIC PAY PURPOSES ESTABLISHED AT $38.91. HOWEVER, EFFECTIVE MARCH 1, 1963, DEDUCTIONS WERE ESTABLISHED AT THE MONTHLY RATE OF $59.77 BASED ON THE FACTOR OF OVER 17 AND LESS THAN 20 YEARS AND THE OFFICER WAS DETERMINED TO BE INDEBTED IN THE AMOUNT OF $298.30 FOR UNDERDEDUCTIONS OF ANNUITY COST FROM DECEMBER 22, 1961.

MAJOR HUARD HAS PROTESTED THIS ACTION ON THE BASIS THAT UNDER THE FACTS OF HIS CASE THE ANNUITY COST SHOULD BE COMPUTED AS THOUGH HE HAD OVER 20 YEARS OF SERVICE, SINCE BY REASON OF THE CONSTRUCTIVE SERVICE CREDITED UPON HIS APPOINTMENT IN THE REGULAR AIR FORCE, HE WAS BEING CONSIDERED FOR MANDATORY RETIREMENT AS AN OFFICER WITH OVER 20 YEARS' SERVICE UNDER 10 U.S.C. 8913, AT THE TIME OF HIS RETIREMENT FOR DISABILITY. ALTHOUGH THE CHIEF ACTUARY HAS RULED IN FAVOR OF THE OFFICER, YOU STATE THAT SOME DOUBT EXISTS AS TO WHETHER THE COST SHOULD BE BASED ON MANDATORY RETIREMENT WITH OVER 20 YEARS OF SERVICE OR DISABILITY RETIREMENT WITH LESS THAN 20 YEARS OF SERVICE FOR BASIC PAY PURPOSES.

PARAGRAPH 2, SECTION I OF DOD PAMPHLET 6-18, APRIL 1962, PROVIDES IN PERTINENT PART AS FOLLOWS:

2. SELECTION OF APPLICABLE COST TABLE

ALWAYS INSURE THAT THE PROPER COST TABLE IS USED, SINCE ONE OF THREE COST TABLES WILL BE USED FOR RETIREMENTS ON OR AFTER 4 OCTOBER 1961. THESE TABLES, IN THE ORDER IN WHICH THEY APPEAR IN THIS PUBLICATION, ARE IDENTIFIED AS FOLLOWS:

A. COST TABLE A. RETIREMENT ON OR AFTER 4 OCTOBER 1961 WITH 20 OR MORE COMPLETED YEARS OF SERVICE FOR PAY PURPOSES. THIS TABLE IS USED FOR MEMBERS WHO RETIRE ON OR AFTER 4 OCTOBER 1961 AND HAVE AT LEAST 20 COMPLETED YEARS OF SERVICE FOR PAY PURPOSES.

EXCEPTION: THIS TABLE IS ALSO USED FOR INDIVIDUALS WHO HAVE LESS THAN 20 YEARS OF SERVICE FOR PAY PURPOSES, BUT WHO ARE RETIRED FOR REASONS OTHER THAN PHYSICAL DISABILITY. EXAMPLE: NAVY PERSONNEL TRANSFERRED TO THE FLEET RESERVE UPON COMPLETION OF 19 YEARS AND 6 MONTHS OF SERVICE, AND ARMY AND AIR FORCE PERSONNEL RETIRED WITH CREDIT FOR 20 OR MORE YEARS OF CONSTRUCTIVE SERVICE.

B. COST TABLE B. DISABILITY RETIREMENT ON OR AFTER 4 OCTOBER 1961 WITH AT LEAST 18 BUT LESS THAN 20 COMPLETED YEARS OF SERVICE FOR PAY PURPOSES. THIS TABLE IS APPLICABLE TO PERSONS WHO HAVE COMPLETED AT LEAST 18 BUT LESS THAN 20 YEARS OF SERVICE FOR PAY PURPOSES, AND ARE RETIRED BY REASON OF PHYSICAL DISABILITY.

IT IS THE LAW UNDER WHICH A MEMBER IS RETIRED WHICH GOVERNS HIS RETIRED STATUS AND DETERMINES HIS RIGHTS AND OBLIGATIONS. ALTHOUGH MAJOR HUARD WAS A "DEFERRED OFFICER" WHO HAD FAILED OF SELECTION FOR PROMOTION AND WAS BEING PROCESSED FOR ELIMINATION FROM THE SERVICE AT THE TIME HIS DISABILITY WAS DISCOVERED, HE WAS NOT SO ELIMINATED BUT INSTEAD WAS RETIRED FOR DISABILITY. HIS RETIRED PAY IS BEING PAID ON THE BASIS OF THE ACTIVE DUTY PAY OF A MAJOR WITH OVER 18 YEARS OF SERVICE AND HE IS RECEIVING THE BENEFIT OF HIS CONSTRUCTIVE SERVICE SOLELY BY VIRTUE OF THE PROVISIONS OF 10 U.S.C. 1401 AND 1208 WHICH PERMIT HIM CREDIT FOR "THE SERVICE THAT HE IS CONSIDERED TO HAVE FOR THE PURPOSE OF SEPARATION OR MANDATORY ELIMINATION FROM THE ACTIVE LIST" IN DETERMINING THE PERCENTAGE MULTIPLIER USED IN COMPUTING HIS RETIRED PAY. THERE APPEARS TO BE NO LANGUAGE IN THE ACT OF DECEMBER 28, 1945, WHICH PERMITS THE COUNTING OF THE CONSTRUCTIVE SERVICE THERE AUTHORIZED, FOR BASIC PAY PURPOSES. SEE 25 COMP. GEN. 718. AS MAJOR HUARD HAS COMPLETED AT LEAST 18 BUT LESS THAN 20 YEARS OF SERVICE FOR PAY PURPOSES AND HAS BEEN RETIRED FOR PHYSICAL DISABILITY,THE APPLICABLE COST TABLE TO BE USED IN COMPUTING THE REDUCTION OF HIS RETIRED PAY FOR THE PURPOSE OF HIS ELECTED ANNUITY IS COST TABLE B.

ACCORDINGLY, NO AUTHORITY EXISTS FOR REFUND OF THE DIFFERENCE IN COST DEDUCTIONS FOR THE PERIOD MARCH 1 THROUGH NOVEMBER 30, 1963, AND THE VOUCHER WILL BE RETAINED HERE. IT IS ASSUMED THAT APPROPRIATE STEPS WILL BE TAKEN TO COLLECT THE ADDITIONAL AMOUNT WHICH SHOULD HAVE BEEN DEDUCTED FROM THE OFFICER'S RETIRED PAY FOR THE PERIOD DECEMBER 22, 1961, TO FEBRUARY 28, 1963.