B-164074, MAY 31, 1968, 47 COMP. GEN. 694

B-164074, MAY 31, 1968, 47 COMP. GEN. 694

COMPENSATION - PREMIUM PAY - BASIC COMPENSATION DETERMINATION - RETIREMENT AND LIFE INSURANCE CONTRIBUTIONS THE RETROACTIVE COLLECTION OF INCREASED RETIREMENT AND LIFE INSURANCE DEDUCTIONS TO COVER STANDBY PREMIUM PAY WHICH WAS MADE PART OF BASE PAY BY PUBLIC LAW 89-737, APPROVED NOVEMBER 2, 1966, AND IMPLEMENTED BY CIVIL SERVICE REGULATION ON MARCH 3, 1967, MAY BE WAIVED FOR SEPARATED EMPLOYEES WHO ARE NOT ANNUITANTS, UNLESS DEMAND FOR INCREASED BENEFITS IS MADE AT SOME FUTURE TIME, BUT MAY NOT BE WAIVED FOR RETIREES AND EMPLOYEES STILL ON THE ROLLS WHO ARE ENTITLED TO THE INCREASED BENEFITS ARISING FROM THE INCLUSION OF PREMIUM PAY WITHIN THE TERM "BASIC PAY" AND, THEREFORE, COLLECTION OF DEDUCTIONS FOR THE PREMIUM PAY RECEIVED BY RETIREES AND CURRENT EMPLOYEES SHOULD BE INSTITUTED TO GO BACK TO THE EFFECTIVE DATE OF THE ACT.

TO THE SECRETARY OF AGRICULTURE, MAY 31, 1968:

THIS IS IN REPLY TO THE LETTER OF YOUR ASSISTANT SECRETARY FOR ADMINISTRATION DATED APRIL 17, 1968, REGARDING THE DIFFICULTY OF COLLECTING RETIREMENT AND LIFE INSURANCE DEDUCTIONS RETROACTIVELY ARISING FROM THE FAILURE TO RECOGNIZE THAT PUBLIC LAW 89 737, APPROVED NOVEMBER 2, 1968, 80 STAT. 1164, 5 U.S.C. 8114 (E), MADE STANDBY PREMIUM PAY A PART OF BASE PAY.

YOU STATE THAT THE EFFECT OF THE LAW WAS OVERLOOKED UNTIL THE CIVIL SERVICE COMMISSION ISSUED FPM LETTER 550-24 ON MARCH 3, 1967, INDICATING THAT INCREASED CONTRIBUTIONS WERE REQUIRED SINCE THE DEFINITION OF BASIC PAY UPON WHICH THE BENEFITS WERE BASED HAD BEEN EXPANDED. YOU POINT OUT THAT THE PERTINENT FPM SUPPLEMENTS FOR RETIREMENT (831-1) AND LIFE INSURANCE (870-1) WERE NOT AMENDED UNTIL AUGUST 1967. WE HAVE INFORMALLY BEEN ADVISED THAT PUBLIC LAW 89-737 AND FPM LETTER 550-24 WERE NOT IMPLEMENTED IN THE DEPARTMENT UNTIL FEBRUARY 11, 1968.

IN CONNECTION WITH THE FOREGOING YOU ASK THE FOLLOWING QUESTIONS:

1. HOW FAR BACK DO WE HAVE TO GO TO COLLECT RETIREMENT AND INSURANCE DEDUCTIONS? NEED WE TAKE ACTION BEFORE THE DATE ON WHICH THE CIVIL SERVICE COMMISSION CHANGED ITS REGULATIONS? UNDER SIMILAR CONDITIONS, IT WAS HELD IN COMPTROLLER GENERAL DECISION B-161293, MAY 8, 1967, THAT THE DATE ON WHICH THE COMMISSION ISSUED INSTRUCTIONS IN REGARD TO THE CHANGE COULD BE USED AS THE CUT-OFF DATE.

2. IS IT POSSIBLE TO OBTAIN A WAIVER OF ANY RETROACTIVE COLLECTION ACTION ON SEPARATED EMPLOYEES? IF THIS IS NOT POSSIBLE, COULD A WAIVER BE OBTAINED FOR ALL BUT RETIRED EMPLOYEES? IF A WAIVER IS NOT OBTAINED, TWO SITUATIONS WILL GIVE US TROUBLE: (A) WE EXPECT THAT A SEPARATED EMPLOYEE WILL OBJECT TO PAYING AN ADDITIONAL PREMIUM FOR LIFE INSURANCE WHICH HE DID NOT USE; AND (B) IT WOULD SEEM ILLOGICAL TO COLLECT ADDITIONAL RETIREMENT DEPOSITS FROM AN EMPLOYEE WHO HAS ALREADY RECEIVED A REFUND. WE HAVE NO WAY OF KNOWING WHETHER A SEPARATED EMPLOYEE HAS OR HAS NOT APPLIED FOR OR RECEIVED A REFUND FOR RETIREMENT DEPOSITS. MOREOVER, NONE OF OUR AGENCIES WOULD NECESSARILY HAVE THIS INFORMATION FOR EMPLOYEES WHO HAD WAITED MORE THAN 30 DAYS TO SUBMIT THEIR APPLICATIONS FOR REFUND.

YOU ALSO POINT OUT THE DIFFICULTIES OF PROCESSING ADJUSTMENTS RETROACTIVELY INSOFAR AS EMPLOYEES STILL ON THE ROLLS ARE CONCERNED BECAUSE OF CHANGES IN THEIR HOURS OF WORK AND DUTY STATUS. YOU REQUEST THAT THE REQUIREMENT OF COLLECTING LIFE INSURANCE AND RETIREMENT DEDUCTIONS RETROACTIVELY BE LIMITED AND POINT OUT THAT THE COSTS OF SUCH COLLECTIONS MAY BE PROHIBITIVE.

FOR THE REASONS SPECIFIED IN "2" ABOVE IT DOES NOT APPEAR TO BE NECESSARY TO INSTITUTE ANY COLLECTION OF RETIREMENT DEDUCTIONS FOR THE PREMIUM PAY RECEIVED BY EMPLOYEES NOW SEPARATED FROM THE SERVICE WHO ARE NOT RETIREMENT ANNUITANTS. MOREOVER, SINCE THE COST OF COLLECTING THE RELATIVELY SMALL AMOUNT OF LIFE INSURANCE DEDUCTIONS FROM SUCH FORMER EMPLOYEES WOULD PROBABLY EXCEED THE SUM COLLECTED THE COLLECTION THEREOF LIKEWISE MAY BE WAIVED. IF AT SOME FUTURE TIME A SEPARATED EMPLOYEE SHOULD DEMAND INCREASED BENEFITS THEN AN ADJUSTMENT TO REFLECT THE INCREASED DEDUCTIONS SHOULD BE MADE.

INSOFAR AS RETIREES (ANNUITANTS) ARE CONCERNED SINCE THEY ARE RECEIVING OR ENTITLED TO RECEIVE ADDITIONAL ANNUITIES AND LIFE INSURANCE BENEFITS BECAUSE OF THE INCREASE IN BASIC PAY BUT THE REQUIRED DEDUCTIONS HAVE NOT BEEN MADE, THEY SHOULD BE IDENTIFIED, THEIR BENEFITS RECOMPUTED AND COLLECTION OF THE AMOUNTS DUE INITIATED THROUGH THE BUREAU OF RETIREMENT AND INSURANCE OF THE CIVIL SERVICE COMMISSION. THIS COLLECTION OF DEDUCTIONS SHOULD GO BACK TO THE EFFECTIVE DATE OF THE ACT. THIS PROCEDURE HAS BEEN INFORMALLY APPROVED BY THE CIVIL SERVICE COMMISSION. IT MAY BE THE DEPARTMENT WOULD DESIRE TO SEEK FORMAL APPROVAL ON THIS POINT BY THE COMMISSION.

AS TO EMPLOYEES STILL ON THE ROLLS, WE NOTE THAT THEY ALSO WOULD BE ENTITLED TO INCREASED BENEFITS ARISING FROM THE INCLUSION OF PREMIUM PAY WITHIN THE TERM "BASIC PAY.' THUS, THE COLLECTION OF THE DEDUCTIONS FOR THE PREMIUM PAY RECEIVED BY THIS GROUP SHOULD LIKEWISE GO BACK TO THE EFFECTIVE DATE OF THE ACT.