B-166335, JUN. 4, 1969

B-166335: Jun 4, 1969

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FC: FURTHER REFERENCE IS MADE TO YOUR LETTER OF JANUARY 27. YOUR LETTER WAS FORWARDED HERE BY THE OFFICE. IT APPEARS THAT SERGEANT HOUSTON WAS RETIRED EFFECTIVE DECEMBER 1. IT IS STATED THAT HE WAS RECALLED TO ACTIVE DUTY AUGUST 1. YOU SAY THAT SERGEANT HOUSTON BECAME ENTITLED TO RETIRED PAY BASED ON THE BASIC PAY RATES THAT WERE PRESCRIBED IN THE ACT OF DECEMBER 16. HE WAS ENTITLED. TO RETIRED PAY OF $281.94 MONTHLY COMPUTED AS IN SUBSECTION (A) OF SECTION 1402 BUT UNDER THE BASIC PAY RATES THAT WERE EFFECTIVE SEPTEMBER 1. THE RATES UNDER WHICH HE WAS BEING PAID WHEN HE ENTERED ON ACTIVE DUTY. HE WAS NOT RETIRED UNDER THOSE RATES NOR WERE THEY THE CURRENT ACTIVE DUTY BASIC PAY RATES. .

B-166335, JUN. 4, 1969

TO LIEUTENANT COLONEL J. E. FARR, FC:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JANUARY 27, 1969 (FILE REFERENCE FINCS-E HOUSTON, JAMES F., RA 11 164 522, RETIRED), REQUESTING AN ADVANCE DECISION AS TO THE PROPRIETY OF MAKING PAYMENT ON A VOUCHER IN THE AMOUNT OF $3.71 FOR THE PERIOD DECEMBER 1 TO 31, 1968, IN FAVOR OF SERGEANT JAMES F. HOUSTON, RETIRED, REPRESENTING THE DIFFERENCE IN RETIRED PAY BETWEEN 57-1/2 PERCENT OF THE PAY FOR PAY GRADE E-7 WITH OVER 22 YEARS OF SERVICE FOR BASIC PAY PURPOSES, $285.32, COMPUTED UNDER THE BASIC PAY RATES EFFECTIVE OCTOBER 1, 1967, AND $289.03 COMPUTED IN THE SAME MANNER UNDER THE OCTOBER 1, 1967, RATES AS FURTHER INCREASED BY 1.3 PERCENT. YOUR LETTER WAS FORWARDED HERE BY THE OFFICE, CHIEF OF FINANCE AND ACCOUNTING UNDER DATE OF MARCH 3, 1969, AND HAS BEEN ASSIGNED D.O. NO. A- 1030 BY THE DEPARTMENT OF DEFENSE MILITARY PAY AND ALLOWANCE COMMITTEE.

IT APPEARS THAT SERGEANT HOUSTON WAS RETIRED EFFECTIVE DECEMBER 1, 1965, UNDER THE PROVISIONS OF 10 U.S.C. 3914 (LENGTH OF SERVICE) IN THE GRADE OF SERGEANT FIRST CLASS (STAFF SERGEANT) E-6, WITH 20 YEARS, 6 MONTHS AND 15 DAYS' ACTIVE SERVICE, AND 20 YEARS, 11 MONTHS AND 21 DAYS' SERVICE FOR BASIC PAY PURPOSES. IT IS STATED THAT HE WAS RECALLED TO ACTIVE DUTY AUGUST 1, 1966, FOR 2 YEARS, REVERTING TO HIS RETIRED STATUS ON AUGUST 1, 1968, WITH ENTITLEMENT TO RECOMPUTATION OF RETIRED PAY AS PRESCRIBED IN 10 U.S.C. 1402 (A) IN THE GRADE OF SERGEANT FIRST CLASS E-7, WITH 22 YEARS, 6 MONTHS AND 15 DAYS' ACTIVE SERVICE AND 22 YEARS, 11 MONTHS AND 21 DAYS' SERVICE FOR BASIC PAY PURPOSES.

APPLYING THE FORMULA IN SUBSECTION (A) OF SECTION 1402, YOU SAY THAT SERGEANT HOUSTON BECAME ENTITLED TO RETIRED PAY BASED ON THE BASIC PAY RATES THAT WERE PRESCRIBED IN THE ACT OF DECEMBER 16, 1967, PUBLIC LAW 90- 207, 81 STAT. 649, MADE EFFECTIVE OCTOBER 1, 1967, COMPUTED AT 57-1/2 PERCENT OF THE PAY OF GRADE E-7 WITH OVER 22 YEARS' SERVICE, OR $285.32 MONTHLY. YOU FURTHER STATE THAT UNDER THE PROVISIONS OF SUBSECTION (E) OF SECTION 1402 AS ADDED BY SECTION 2 OF PUBLIC LAW 90 207, HE WAS ENTITLED, AT HIS ELECTION, TO RETIRED PAY OF $281.94 MONTHLY COMPUTED AS IN SUBSECTION (A) OF SECTION 1402 BUT UNDER THE BASIC PAY RATES THAT WERE EFFECTIVE SEPTEMBER 1, 1965, AS PRESCRIBED IN THE ACT OF AUGUST 21, 1965, PUBLIC LAW 89-132, EFFECTIVE SEPTEMBER 1, 1965, THE RATES UNDER WHICH HE WAS BEING PAID WHEN HE ENTERED ON ACTIVE DUTY, INCREASED BY CONSUMER PRICE INDEX ADJUSTMENTS OF 3.7 PERCENT EFFECTIVE DECEMBER 1, 1966, AND 3.9 PERCENT EFFECTIVE APRIL 1, 1968.

YOU REFER TO OUR DECISIONS OF DECEMBER 8, 1967, AND JULY 16, 1968, B- 162829, 47 COMP. GEN. 327 AND 48 COMP. GEN. -----, AND TO THE HOLDING IN DECISION OF OCTOBER 17, 1968, B-164762, 48 COMP. GEN. ---- , AND YOU SAY THAT: "* * * THE COMPUTATION OF SGT HOUSTON'S PAY REVERTED TO THE 1 OCTOBER 1967 PAY RATES UPON HIS RELEASE 1 AUGUST 1968, AFTER 1 APRIL 1968 AND AFTER 1 JULY 1968. HE WAS NOT RETIRED UNDER THOSE RATES NOR WERE THEY THE CURRENT ACTIVE DUTY BASIC PAY RATES. ,DOUBT EXISTS AS TO WHETHER SGT HOUSTON WOULD BE ENTITLED TO THE SAME PAY UPON RELEASE FROM ACTIVE DUTY, IRRESPECTIVE OF WHEN RECOMPUTATION IS MADE, AS A MEMBER WHO PREVIOUSLY REVERTED TO THE SAME BASIC PAY RATES UPON RELEASE FROM ACTIVE DUTY ALTHOUGH UNDER SUBSECTIONS (B) AND (D), IN THE INTEREST OF UNIFORMITY, EQUITY AND GOOD CONSCIENCE.' WHILE NOT ENTIRELY CLEAR, YOUR QUESTION SEEMS TO ASK WHETHER THE FORMULA USED IN COMPUTING INCREASES IN RETIRED PAY UNDER THE CONSUMER PRICE INDEX AS SET FORTH IN THE CITED DECISIONS MAY ALSO BE USED IN SERGEANT HOUSTON'S SITUATION.

UNDER THE PROVISIONS OF SUBSECTION (B) OF SECTION 1401A OF TITLE 10 (AS AMENDED EFFECTIVE OCTOBER 1, 1967, BY PUBLIC LAW 90-207), THE RETIRED PAY AND RETAINER PAY OF MEMBERS OR FORMER MEMBERS OF THE ARMED FORCES IS REQUIRED TO BE ADJUSTED WHEN THE CONSUMER PRICE INDEX HAS SHOWN FOR 3 CONSECUTIVE MONTHS AN INCREASE OF AT LEAST 3 PERCENT OVER THE BASE INDEX (THAT USED AS THE BASIS FOR THE MOST RECENT ADJUSTMENT). SUBSECTION (C) OF SECTION 1401A, PROVIDES THAT MEMBERS OR FORMER MEMBERS OF THE ARMED FORCES WHO BECOME ENTITLED TO RETIRED PAY OR RETAINER PAY BASED ON ACTIVE DUTY PAY PRESCRIBED IN 37 U.S.C. 203 (A) THAT BECAME EFFECTIVE AFTER THE LAST DAY OF THE MONTH OF THE BASE INDEX, SHALL, WHEN THE NEXT CONSUMER PRICE INDEX ADJUSTMENT IS MADE, BE INCREASED:

"* * * ONLY BY THE PERCENT (ADJUSTED TO THE NEAREST ONE-TENTH OF 1 PERCENT) THAT THE NEW BASE INDEX EXCEEDS THE INDEX FOR THE CALENDAR MONTH IMMEDIATELY BEFORE THAT IN WHICH THE RATES OF MONTHLY BASIC PAY ON WHICH HIS RETIRED PAY OR RETAINER PAY IS BASED BECAME EFFECTIVE.'

SUBSECTION (D) OF SECTION 1401A PROVIDES THAT THOSE MEMBERS OR FORMER MEMBERS WHO BECOME ENTITLED TO RETIRED OR RETAINER PAY ON OR AFTER A CONSUMER PRICE INDEX ADJUSTMENT BUT BEFORE THE EFFECTIVE DATE OF THE NEXT INCREASE IN ACTIVE DUTY PAY RATES, ARE ENTITLED TO HAVE THEIR RETIRED OR RETAINER PAY INCREASED EFFECTIVE ON THE DATE THAT THEY BECOME ENTITLED TO THAT PAY:

"* * * BY THE PERCENT (ADJUSTED TO THE NEAREST ONE-TENTH OF 1 PERCENT) THAT THE BASE INDEX EXCEEDS THE INDEX FOR THE CALENDAR MONTH IMMEDIATELY BEFORE THAT IN WHICH THE RATES OF MONTHLY BASIC PAY ON WHICH HIS RETIRED PAY OR RETAINER PAY IS BASED BECAME EFFECTIVE.' BY ITS OWN TERMS, SUBSECTION (E) OF SECTION 1401A IS APPLICABLE ONLY WHEN RETIREMENT BECOMES EFFECTIVE ON OR AFTER OCTOBER 1, 1967. SEE B 164762, OCTOBER 17, 1968. SINCE SERGEANT HOUSTON INITIALLY RETIRED DECEMBER 1, 1965, HIS RETIRED STATUS DOES NOT COME WITHIN THE PURVIEW OF SUBSECTION (E).

UNDER THE PROVISIONS OF SUBSECTION (A) OF SECTION 1402, TITLE 10, U.S.C. (AS AMENDED BY THE ACT OF OCTOBER 2, 1963, PUBLIC LAW 88-132, 77 STAT. 210, 214) A MEMBER OF AN ARMED FORCE WHO HAS BEEN RETIRED OR HAS BECOME ENTITLED TO RETIRED PAY AND WHO THEREAFTER SERVES ON ACTIVE DUTY, IS ENTITLED UPON RELEASE FROM THAT ACTIVE DUTY TO RECOMPUTE HIS RETIRED PAY BY MULTIPLYING THE MONTHLY BASIC PAY (SUBJECT TO FOOTNOTE 1) OF THE GRADE IN WHICH HE WOULD BE ELIGIBLE TO RETIRE IF HE WERE RETIRING UPON THAT RELEASE FROM ACTIVE DUTY, BY 2-1/2 PERCENT FOR EACH OF THE YEARS OF SERVICE CREDITED TO HIM IN COMPUTING RETIRED PAY, PLUS HIS YEARS OF ACTIVE SERVICE AFTER BECOMING ENTITLED TO RETIRED OR RETAINER PAY. FOOTNOTE 1 OF SECTION 1402A READS AS FOLLOWS:

"FOR A MEMBER WHO HAS BEEN ENTITILED, FOR A CONTINUOUS PERIOD OF AT LEAST TWO YEARS, TO BASIC PAY UNDER THE RATES OF BASIC PAY IN EFFECT UPON THAT RELEASE FROM ACTIVE DUTY, COMPUTE UNDER THOSE RATES. FOR A MEMBER WHO HAS BEEN ENTITLED TO BASIC PAY FOR A CONTINOUS PERIOD OF AT LEAST TWO YEARS UPON THAT RELEASE FROM ACTIVE DUTY, BUT WHO IS NOT COVERED BY THE PRECEDING SENTENCE, COMPUTE UNDER THE RATES OF BASIC PAY REPLACED BY THOSE IN EFFECT UPON THAT RELEASE FROM ACTIVE DUTY. FOR ANY OTHER MEMBER, COMPUTE UNDER THE RATES OF BASIC PAY UNDER WHICH THE MEMBER'S RETIRED PAY OR RETAINER PAY WAS COMPUTED WHEN HE ENTERED ON THAT ACTIVE DUTY.'

UNDER SUBSECTIONS (B) AND (C) OF SECTION 1402 OF TITLE 10, A MEMBER WHO INCURS A PHYSICAL DISABILITY WHILE SERVING ON ACTIVE DUTY AFTER RETIREMENT MAY ELECT TO RECEIVE EITHER (1) THE RETIRED PAY TO WHICH HE BECAME ENTITLED WHEN RETIRED, INCREASED BY ANY APPLICABLE ADJUSTMENTS IN THAT PAY UNDER SECTION 1401A OF TITLE 10 AFTER HE INITIALLY BECAME ENTITLED TO THAT PAY, OR (2) RETIRED PAY COMPUTED AS THERE STATED ON THE HIGHEST MONTHLY BASIC PAY THAT HE RECEIVED WHILE ON ACTIVE DUTY AFTER RETIREMENT.

IN OUR DECISION OF JULY 16, 1968, B-162829, THE ENLISTED MAN ELECTED, UNDER 10 U.S.C. 1402 (B), TO RECEIVE RETIRED PAY EFFECTIVE FROM MARCH 24, 1967, THE DATE HE REVERTED TO THE RETIRED LIST, RECOMPUTED AS PRESCRIBED IN CLAUSE (2) OF SECTION 1402 (D) ON THE BASIS OF THE PERCENTAGE OF HIS PHYSICAL DISABILITY. IN THE LIGHT OF THE SPECIFIC LANGUAGE IN SECTION 2 (B) OF PUBLIC LAW 90-207 APPROVED DECEMBER 16, 1967--WHICH PROVISION HAD NOT BEEN ENACTED INTO LAW WHEN OUR DECISION OF DECEMBER 8, 1967 (B-162829) WAS WRITTEN--WE CONCLUDED, FOR THE REASONS THERE STATED, THAT THE ENLISTED MAN WAS ENTITLED TO THE 3.7 PERCENT CPI INCREASE (WHICH BECAME EFFECTIVE DECEMBER 1, 1966) AS OF MARCH 24, 1967, SINCE HE DID NOT INITIALLY BECOME ENTITLED TO RECOMPUTE HIS RETIRED PAY ON THE BASIS OF THE JULY 1, 1966, RATES OF ACTIVE DUTY PAY UNTIL AFTER NOVEMBER 30, 1966, AND BEFORE OCTOBER 1, 1967.

IN DECISION OF OCTOBER 17, 1968, B-164762, THE ENLISTED MAN REVERTED TO AN INACTIVE STATUS ON THE RETIRED LIST EFFECTIVE MARCH 15, 1968 (AFTER HAVING INCURRED A PHYSICAL DISABILITY AFTER RETIREMENT AND WHILE ON ACTIVE DUTY) AND BECAME ENTITLED TO RECOMPUTE HIS RETIRED PAY UNDER 10 U.S.C. 1402 (D) ON THE BASIS OF THE HIGHEST MONTHLY BASIC PAY HE RECEIVED WHILE ON ACTIVE DUTY, NAMELY, THE ACTIVE DUTY PAY RATES PRESCRIBED IN PUBLIC LAW 90-207, EFFECTIVE OCTOBER 1, 1967. IN SUCH CIRCUMSTANCES, WE SAID THAT HIS RETIRED PAY MAY BE VIEWED AS COMING WITHIN THE PURVIEW OF SUBSECTION (C) OF 10 U.S.C. 1401A. COMPUTED UNDER THE FORMULA IN SUBSECTION (C), WE SAID THAT SINCE THE CPI INCREASE OF 3.9 PERCENT, WHICH BECAME EFFECTIVE APRIL 1, 1968, WAS BASED ON THE CPI INDEX FOR THE 3-MONTH PERIOD ENDING WITH THE MONTH OF JANUARY 1968, AND SINCE THIS REPRESENTED AN INCREASE OF 1.3 PERCENT AS THERE INDICATED OVER THE CPI FOR THE PRIOR INDEX PERIOD OF SEPTEMBER 1967, THE ENLISTED MAN WAS ENTITLED TO AN INCREASE IN HIS RETIRED PAY EFFECTIVE APRIL 1, 1968, OF 1.3 PERCENT.

UNLESS A MEMBER'S RETIRED PAY STATUS BRINGS HIM WITHIN THE PURVIEWOF EITHER SUBSECTION (C) OR (D) OF 10 U.S.C. 1401, THERE IS NO BASIS FOR A PARTIAL CPI INCREASE IN HIS RETIRED PAY UNDER THE FORMULAS PRESCRIBED IN THOSE SUBSECTIONS. THE LEGISLATIVE HISTORY OF PUBLIC LAW 90-207, WHICH ADDED THOSE SUBSECTIONS, INDICATES THAT THE PURPOSE OF THE PARTIAL ADJUSTMENT FORMULA IS TO LIMIT THE CPI INCREASE IN RETIRED PAY TO THAT PORTION OF THE INCREASE WHICH OCCURRED SINCE THE LAST STATUTORY INCREASE IN BASIC PAY ON WHICH THE MEMBER'S RETIRED PAY IS BASED.

WHEN SERGEANT HOUSTON REVERTED TO AN INACTIVE STATUS ON THE RETIRED LIST ON AUGUST 1, 1968, HE WAS ENTITLED TO HAVE HIS RETIRED PAY COMPUTED UNDER THE PROVISIONS OF SECTION 1402A OF TITLE 10. AT THAT TIME HE WAS BEING PAID ACTIVE DUTY PAY AT THE RATES PRESCRIBED IN EXECUTIVE ORDER NO. 11414 EFFECTIVE JULY 1, 1968, AND HAD RECEIVED SUCH PAY FOR LESS THAN 2 YEARS. HENCE, UNDER THE SECOND SENTENCE IN FOOTNOTE 1 OF SECTION 1402A, HE BECAME ENTITLED TO RECEIVE (RECOMPUTE) RETIRED PAY EFFECTIVE AUGUST 1, 1968, IN THE AMOUNT OF $285.32, REPRESENTING 57-1/2 PERCENT OF $496.20, THE RATE OF MONTHLY ACTIVE DUTY PAY PRESCRIBED IN SECTION 1, PUBLIC LAW 90-207, EFFECTIVE OCTOBER 1, 1967, FOR A SERGEANT FIRST CLASS, E-7, WITH OVER 22 YEARS OF CREDITABLE SERVICE.

SERGEANT HOUSTON'S SITUATION DOES NOT APPEAR TO BRING HIM WITHIN THE PURVIEW OF EITHER SUBSECTION (C) OR (D) OF SECTION 1401A SO AS TO REQUIRE APPLICATION OF ONLY A PARTIAL CPI INCREASE IN THE COMPUTATION OF HIS RETIRED PAY. UNDER SUCH CIRCUMSTANCES, IT IS OUR VIEW THAT IN THE ABSENCE OF ANY LIMITATION ON THE CPI INCREASE, HE IS ENTITLED, EFFECTIVE AUGUST 1, 1968, TO HAVE HIS GROSS RETIRED PAY OF $285.32 INCREASED BY 3.9 PERCENT UNDER THE CPI INCREASE WHICH BECAME EFFECTIVE APRIL 1, 1968. FOR THE PURPOSE OF SUCH INCREASE HIS CASE IS THE SAME AS IF HE HAD INITIALLY RETIRED ON OCTOBER 1, 1967, WITH RETIRED PAY COMPUTED ON ACTIVE DUTY PAY RATES THEN IN EFFECT. SEE DECISION DATED DECEMBER 12, 1968, B-164960, 48 COMP. GEN. -----, COPY ENCLOSED.

ACCORDINGLY, HIS RETIRED PAY SHOULD BE COMPUTED ON THE BASIS SET FORTH ABOVE. SINCE THE VOUCHER SUBMITTED WITH YOUR REQUEST IS COMPUTED ON A DIFFERENT BASIS, IT WILL BE RETAINED HERE.