B-173862, OCT 1, 1971

B-173862, OCT 1, 1971

CIVILIAN EMPLOYEE - REEMPLOYED ANNUITANT DENIAL OF CLAIM OF MR. FRANCIS X. ALEXANDER FOR THE AMOUNT BY WHICH HIS BASIC SALARY RATE WAS REDUCED DURING THE PERIOD FROM MARCH 1, 1971, TO JUNE 12, 1971, WHILE HE WAS SERVING AS A REEMPLOYED CIVIL SERVICE ANNUITANT. SINCE MR. ALEXANDER'S CASE WAS TREATED IN STRICT COMPLIANCE WITH THE APPLICABLE REGULATIONS, THERE IS NO BASIS FOR ENTITLEMENT TO A REFUND OF THE AMOUNT WITHHELD.

TO NATIONAL AERONAUTICS AND SPACE ADMINISTRATION:

THIS REFERS TO YOUR LETTER DATED AUGUST 13, 1971, FORWARDING FOR ADVANCE DECISION THE CLAIM OF MR. FRANCIS X. ALEXANDER FOR THE AMOUNT BY WHICH HIS BASIC SALARY RATE WAS REDUCED DURING THE PERIOD FROM MARCH 1, 1971, THROUGH JUNE 12, 1971, WHILE HE WAS SERVING AS A REEMPLOYED CIVIL SERVICE ANNUITANT.

THE RECORD SHOWS THAT ON AUGUST 1, 1970, MR. ALEXANDER WAS GRANTED AN ANNUITY OF $930 PER MONTH ON THE BASIS OF HIS INVOLUNTARY SEPARATION FROM HIS POSITION WITH THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION ON JULY 31, 1970, DUE TO REDUCTION IN FORCE. EFFECTIVE MARCH 1, 1971, HE WAS GIVEN A TEMPORARY APPOINTMENT AS AN ADMINISTRATIVE SPECIALIST, GS 13-6, AT A SALARY RATE OF $20,721 PER ANNUM REDUCED BY THE AMOUNT OF $11,160, ANNUAL ANNUITY RATE, TO $9,561 PER ANNUM, NOT TO EXCEED MAY 29, 1971, AS A REEMPLOYED ANNUITANT. THE APPOINTMENT WAS EXTENDED TO JUNE 12, 1971. OF JUNE 1, 1971, THE SALARY RATE WAS FURTHER REDUCED TO $9,057 PER ANNUM DUE TO THE 4 1/2 PERCENT COST-OF-LIVING INCREASE IN THE ANNUITY.

AT THE TIME OF MR. ALEXANDER'S RETIREMENT HIS TOTAL CONTRIBUTION TO THE RETIREMENT FUND AMOUNTED TO $15,937. UNTIL ANNUITY PAYMENTS EQUAL THE AMOUNT OF HIS CONTRIBUTIONS TO THE FUND, WHICH WILL OCCUR SHORTLY AFTER DECEMBER 31, 1971, THE AMOUNTS RECEIVED AS ANNUITY ARE TAX FREE SINCE HE HAD PREVIOUSLY PAID INCOME TAX ON SUCH CONTRIBUTIONS. HE CONTENDS THAT UNTIL SUCH TIME AS THE COST OF HIS ANNUITY IS RETURNED HE IS ENTITLED TO THE FULL SALARY FOR THE GRADE AND STEP TO WHICH HE WAS TEMPORARILY APPOINTED. THE THRUST OF HIS ARGUMENT IS THAT UNTIL THE AMOUNT OF HIS TOTAL CONTRIBUTIONS IS EXHAUSTED, THAT AMOUNT IS BEING "REFUNDED IN MONTHLY INSTALLMENTS OF PREVIOUSLY EARNED SALARY." THUS, HE REASONS THAT HE DOES NOT BECOME AN "ANNUITANT" UNTIL HE HAS RECEIVED BACK ALL OF HIS OWN MONEY.

IN 5 U.S.C. 8331(9), IT IS PROVIDED THAT AN "ANNUITANT" MEANS A FORMER EMPLOYEE OR MEMBER WHO, ON THE BASIS OF HIS SERVICE, MEETS ALL THE REQUIREMENTS OF SUBCHAPTER III OF CHAPTER 83 FOR TITLE TO ANNUITY AND FILES CLAIM THEREFOR. UNDER THE PROVISIONS OF 5 U.S.C. 8336(D) AN EMPLOYEE WHO IS INVOLUNTARILY SEPARATED FROM THE SERVICE, EXCEPT BY REMOVAL FOR CAUSE ON CHARGES OF MISCONDUCT OR DELINQUENCY, AFTER COMPLETING 25 YEARS OF SERVICE OR AFTER BECOMING 50 YEARS OF AGE AND COMPLETING 20 YEARS OF SERVICE IS ENTITLED TO A REDUCED ANNUITY.

WHERE AN ANNUITANT IS REEMPLOYED IN THE CIVIL SERVICE, 5 U.S.C. 8344(A) REQUIRES, WITH CERTAIN EXCEPTIONS NOT HERE MATERIAL, THAT "AN AMOUNT EQUAL TO THE ANNUITY ALLOCABLE TO THE PERIOD OF ACTUAL EMPLOYMENT SHALL BE DEDUCTED FROM HIS PAY." IN OTHER WORDS, A REEMPLOYED ANNUITANT IS ENTITLED TO CONTINUE TO RECEIVE HIS ANNUITY AND MAY BE PAID BY THE EMPLOYING AGENCY ONLY THE DIFFERENCE BETWEEN SUCH ANNUITY AND HIS SALARY.

SECTION S15-6 OF SUBCHAPTER S15, FEDERAL PERSONNEL MANUAL, SUPPLEMENT 831 -1 (ALSO SEE 5 CFR 831.801) RELATING TO THE REEMPLOYMENT OF ANNUITANTS WHOSE RETIREMENT WAS BASED ON INVOLUNTARY SEPARATION PROVIDES IN PERTINENT PART AS FOLLOWS:

"C. IF REEMPLOYMENT IS NOT SUBJECT TO THE RETIREMENT SYSTEM. REGARDLESS OF HIS AGE, IF THE ANNUITANT IS REEMPLOYED ON OR AFTER NOVEMBER 15, 1958:

"(1) ANNUITY CONTINUES;

"(2) THE EMPLOYING AGENCY REDUCES HIS PAY BY THE AMOUNT OF ANNUITY ALLOCABLE TO THE PERIOD OF ACTUAL EMPLOYMENT;

"(3) THE EMPLOYING AGENCY DOES NOT WITHHOLD RETIREMENT DEDUCTIONS FROM HIS PAY;

"(4) FICA DEDUCTIONS ARE MADE UNLESS THE EMPLOYMENT IS EXCLUDED FROM SOCIAL SECURITY COVERAGE;

"(5) ANNUITY IS NOT REDETERMINED UPON TERMINATION OF THE REEMPLOYMENT."

IT IS APPARENT THAT MR. ALEXANDER'S CASE WAS TREATED IN STRICT ACCORDANCE WITH THE ABOVE REGULATIONS. WE SEE NO BASIS FOR NOT REGARDING HIM AS AN ANNUITANT UNDER THE DEFINITION PREVIOUSLY REFERRED TO. CONSEQUENTLY, HE IS NOT ENTITLED TO ANY ADDITIONAL SALARY.

THE VOUCHER, WHICH IS RETURNED HEREWITH, MAY NOT BE CERTIFIED FOR PAYMENT.