B-173920, DEC 29, 1971, 51 COMP GEN 384

B-173920: Dec 29, 1971

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WHOSE RETIRED PAY IS FOR COMPUTATION AT THE RATES IN PUBLIC LAW 92-129. PAY - RETIRED - INCREASES - COST-OF-LIVING INCREASES - ACTIVE DUTY RECALL SINCE THE RATES OF BASIC PAY PRESCRIBED IN PUBLIC LAW 92-129 ARE THE APPLICABLE RATES FOR THE PURPOSE OF ADJUSTING RETIRED PAY UNDER 10 U.S.C. 1401A FOR MEMBERS WHO RETIRED ON OR AFTER OCTOBER 1. MEMBERS OF THE ARMED SERVICES WHO SERVED ON ACTIVE DUTY AFTER RETIREMENT AND ARE ENTITLED TO THE RECOMPUTATION OF THEIR PAY PURSUANT TO 10 U.S.C. 1402(A) AND TO A PARTIAL COST-OF-LIVING INCREASE ADJUSTMENT UNDER 10 U.S.C. 1401AC) AND (D). ARE SUBJECT FOR THE PURPOSES OF FOOTNOTE 1 OF SECTION 1402(A). 1971: FURTHER REFERENCE IS MADE TO LETTER OF NOVEMBER 1.

B-173920, DEC 29, 1971, 51 COMP GEN 384

PAY - RETIRED - INCREASES - COST-OF-LIVING INCREASES - BASIC PAY INCREASES AND WAGE FREEZE EFFECT WHEN IN THE ADJUSTMENT OF RETIRED OR RETAINER PAY UNDER 10 U.S.C. 1401A TO REFLECT THE CONSUMER PRICE INDEX COST-OF-LIVING INCREASE EFFECTIVE JUNE 1, 1971, A HIGHER RETIRED RATE RESULTS FOR MEMBERS RETIRED ON OR PRIOR TO SEPTEMBER 30, 1971, COMPUTED AT THE RATES IN EXECUTIVE ORDER 11577, DATED JANUARY 1, 1971, THAN FOR MEMBERS RETIRING ON OR AFTER OCTOBER 1, 1971, WHOSE RETIRED PAY IS FOR COMPUTATION AT THE RATES IN PUBLIC LAW 92-129, EFFECTIVE OCTOBER 1, 1971, BECAUSE OF THE NEW RATES PRESCRIBED BY THE PUBLIC LAW AND THE EXEMPTION OF MILITARY PERSONNEL PLACED IN A RETIRED STATUS DURING THE WAGE/PRICE FREEZE PERIOD IMPOSED BY EXECUTIVE ORDER 11615, DATED AUGUST 15, 1971, ISSUED UNDER THE ECONOMIC STABILIZATION ACT OF 1970, PURSUANT TO 10 U.S.C. 1401AE), THE PAY OF A MEMBER RETIRED AFTER SEPTEMBER 30, 1971, MAY NOT BE LESS THAN IF HE HAD RETIRED ON THAT DATE. PAY - RETIRED - INCREASES - COST-OF-LIVING INCREASES - ACTIVE DUTY RECALL SINCE THE RATES OF BASIC PAY PRESCRIBED IN PUBLIC LAW 92-129 ARE THE APPLICABLE RATES FOR THE PURPOSE OF ADJUSTING RETIRED PAY UNDER 10 U.S.C. 1401A FOR MEMBERS WHO RETIRED ON OR AFTER OCTOBER 1, 1971, MEMBERS OF THE ARMED SERVICES WHO SERVED ON ACTIVE DUTY AFTER RETIREMENT AND ARE ENTITLED TO THE RECOMPUTATION OF THEIR PAY PURSUANT TO 10 U.S.C. 1402(A) AND TO A PARTIAL COST-OF-LIVING INCREASE ADJUSTMENT UNDER 10 U.S.C. 1401AC) AND (D), ARE SUBJECT FOR THE PURPOSES OF FOOTNOTE 1 OF SECTION 1402(A), TO THE STARTING DATE OF OCTOBER 1, 1971, IN DETERMINING THEIR BASIC PAY AFTER A CONTINUOUS PERIOD OF AT LEAST 2 YEARS SERVICE, OR TO THE BASIC PAY RATES PRESCRIBED BY PUBLIC LAW 92-129 IF RELEASED ON OR AFTER OCTOBER 1, 1971, AS THESE RATES REPLACED THE RATES PRESCRIBED BY EXECUTIVE ORDER 11577, EFFECTIVE JANUARY 1, 1971.

TO THE SECRETARY OF DEFENSE, DECEMBER 29, 1971:

FURTHER REFERENCE IS MADE TO LETTER OF NOVEMBER 1, 1971, FROM THE ASSISTANT SECRETARY OF DEFENSE (COMPTROLLER) REQUESTING A DECISION AS TO THE RULES WHICH SHOULD BE APPLIED IN THE COMPUTATION OF RETIRED PAY OF MEMBERS OF THE ARMED FORCES UNDER SECTIONS 1401 AND 1402 OF TITLE 10, U.S. CODE, IN VIEW OF THE ENACTMENT OF PUBLIC LAW 92-129, AND THE IMPOSITION OF THE WAGE-PRICE FREEZE UNDER EXECUTIVE ORDERS 11577 AND 11627. THE QUESTIONS ARE DISCUSSED IN DEPARTMENT OF DEFENSE MILITARY PAY AND ALLOWANCE COMMITTEE ACTION NO. 459, ENCLOSED WITH THAT LETTER AND IN A COMPREHENSIVE MEMORANDUM PREPARED BY THE MARINE CORPS WHICH WAS SUBMITTED SUBSEQUENTLY.

THE QUESTIONS PRESENTED ARE AS FOLLOWS:

1. IN VIEW OF THE ENACTMENT OF PUBLIC LAW 92-129, APPROVED 28 SEPTEMBER 1971, COMPUTED AT THE RATES IN EXECUTIVE ORDER 11577, DATED JANUARY 1, 1971, 15 AUGUST 1971, WHAT RULES SHOULD BE APPLIED IN ADJUSTING RETIRED PAY OR RETAINER PAY UNDER 10 U.S.C. 1401A IN THE CIRCUMSTANCES HEREINAFTER DISCUSSED?

2. IN VIEW OF THE ENACTMENT OF PUBLIC LAW 92-129 AND THE IMPOSITION OF A WAGE/PRICE FREEZE BY EXECUTIVE ORDER 11615, WHAT RULES SHOULD BE APPLIED IN RECOMPUTING RETIRED PAY OR RETAINER PAY UNDER 10 U.S.C. 1402(A) IN THE CIRCUMSTANCES HEREINAFTER DISCUSSED?

SECTION 201 OF TITLE II OF THE ACT OF SEPTEMBER 28, 1971, PUBLIC LAW 92- 129, 85 STAT. 355, AMENDED 37 U.S.C. 203(A) TO PROVIDE FOR INCREASES IN RATES OF BASIC PAY FOR CERTAIN MEMBERS OF THE UNIFORMED SERVICES. THE BASIC PAY RATES WERE ACTUALLY CHANGED ONLY FOR MEMBERS WITH SHORT PERIODS OF SERVICE OR IN THE LOWER ENLISTED GRADES AND THE RATES PRESCRIBED IN PUBLIC LAW 92-129 FOR "CAREER" MEMBERS GENERALLY ARE THE SAME AS THE RATES PRESCRIBED IN EXECUTIVE ORDER 11577 DATED JANUARY 8, 1971, WHICH BECAME EFFECTIVE JANUARY 1, 1971. UNDER THE PROVISIONS OF SECTION 209 OF PUBLIC LAW 92-129 THE NEW PAY RATES WERE TO BECOME EFFECTIVE ON OCTOBER 1, 1971. ON OCTOBER 1, 1971, HOWEVER, AS POINTED OUT IN THE COMMITTEE ACTION, THE COST OF LIVING COUNCIL RULED THAT ALL THE INCREASES IN PAY AND ALLOWANCES AUTHORIZED FOR MILITARY PERSONNEL BY PUBLIC LAW 92-129 WERE SUBJECT TO THE WAGE-PRICE FREEZE IMPOSED BY EXECUTIVE ORDER 11615 DATED AUGUST 15, 1971.

THE COMMITTEE ACTION STATES THAT THE ENACTMENT OF PUBLIC LAW 92-129 AND THE ATTENDANT WAGE-PRICE FREEZE HAS CREATED A NEED TO ESTABLISH PRECISELY THE MEANING AND INTENT OF CERTAIN LANGUAGE CONTAINED IN 10 U.S.C. 1401A AND 10 U.S.C. 1402(A), PERTAINING TO ADJUSTING AND RECOMPUTING RETIRED PAY.

BY EXECUTIVE ORDER 11615 DATED AUGUST 15, 1971, ISSUED UNDER THE ECONOMIC STABILIZATION ACT OF 1970, PUBLIC LAW 91-379, 84 STAT. 799, AS AMENDED, 12 U.S.C. 1904 NOTE, THE PRESIDENT STABILIZED PRICES, RENTS, WAGES, AND SALARIES FOR A PERIOD OF 90 DAYS FROM THAT DATE. THE ORDER ESTABLISHED A COST OF LIVING COUNCIL AND DELEGATED TO IT BROAD AUTHORITY TO ACT FOR THE PRESIDENT IN CARRYING OUT ITS PROVISIONS. THE COST OF LIVING COUNCIL DELEGATED TO THE DIRECTOR, OFFICE OF EMERGENCY PREPAREDNESS, RESPONSIBILITY AND AUTHORITY TO IMPLEMENT, ADMINISTER, MONITOR, AND ENFORCE THE STABILIZATION OF PRICES, RENTS, WAGES, AND SALARIES AS DIRECTED BY THE EXECUTIVE ORDER.

UNDER THE ABOVE CITED AUTHORITY, THE COST OF LIVING COUNCIL DETERMINED, AS SET FORTH IN PARAGRAPH 502(16) OF ECONOMIC STABILIZATION CIRCULAR NO. 101, 36 FR 18739, 18744, SEPTEMBER 21, 1971, WITH CERTAIN EXCEPTIONS THAT "MILITARY PAY IS SUBJECT TO THE TERMS AND CONDITIONS OF THE PRESIDENT'S FREEZE ON WAGES." CONCERNING MEMBERS OF THE UNIFORMED SERVICES PLACED IN A RETIRED STATUS DURING THE FREEZE PERIOD, A FURTHER DETERMINATION WAS MADE BY THE COUNCIL IN THE SAME PARAGRAPH THAT "IN ADDITION, BENEFITS FOR MILITARY PERSONNEL PLACED IN A RETIRED STATUS DURING THE FREEZE PERIOD WILL BE COMPUTED AND PAID AS IF THE FREEZE WERE NOT IN EFFECT ON THE DATE OF THEIR ESTABLISHING THAT STATUS." IT APPEARS THAT ON OCTOBER 1, 1971, THE COUNCIL SPECIFICALLY DETERMINED THAT "MILITARY PAY AND BENEFIT INCREASES AUTHORIZED BY PUBLIC LAW 92 129 MAY NOT BE IMPLEMENTED DURING THE FREEZE."

IT WAS FURTHER DETERMINED BY THE COUNCIL THAT "PAY AND BENEFIT INCREASES AUTHORIZED UNDER STATUTES ENACTED PRIOR TO PUBLIC LAW 92-129 FOR PERSONNEL EXEMPTED UNDER OEP ECONOMIC STABILIZATION CIRCULAR NO. 101, PARAGRAPH 502(16), ARE NOT AFFECTED BY THIS RULING AND MAY BE PAID TO EXEMPTED PERSONNEL." SEE PARAGRAPH 502(26) OF ECONOMIC STABILIZATION CIRCULAR NO. 102, 36 FR 20482, 20490, OCTOBER 22, 1971. IN A PRESS RELEASE DATED NOVEMBER 12, 1971, THE DIRECTOR OF THE COST OF LIVING COUNCIL ANNOUNCED THAT THE COST OF LIVING COUNCIL HAD DECIDED THAT PAY FOR FEDERAL EMPLOYEES AND THE MILITARY SERVICES WILL NOT BE SUBJECT TO GENERAL POST-FREEZE WAGE CONTROLS. THE FREEZE COVERED THE PERIOD AUGUST 15 TO NOVEMBER 13, 1971.

IT IS OUR VIEW THAT, UNDER THE ABOVE DETERMINATIONS BY THE COST OF LIVING COUNCIL, MEMBERS OF THE UNIFORMED SERVICES WHO RETIRED DURING THE WAGE- PRICE FREEZE ARE ENTITLED TO HAVE THEIR RETIRED OR RETAINER PAY COMPUTED ON THE BASIS OF THE RATES OF BASIC PAY WHICH WOULD BE APPLICABLE IN COMPUTING THEIR ACTIVE DUTY PAY AT THE TIME OF THEIR RETIREMENT IN THE ABSENCE OF THE WAGE FREEZE. IN OTHER WORDS, INSOFAR AS THE WAGE-PRICE FREEZE IS CONCERNED, A MEMBER INITIALLY RETIRING ON OR PRIOR TO SEPTEMBER 30, 1971, WOULD HAVE HIS RETIRED PAY COMPUTED AT THE RATES OF BASIC PAY PRESCRIBED IN EXECUTIVE ORDER 11577 EFFECTIVE JANUARY 1, 1971, AND A MEMBER INITIALLY RETIRING ON OR AFTER OCTOBER 1, 1971, WOULD HAVE HIS RETIRED PAY COMPUTED ON THE RATES SET FORTH IN PUBLIC LAW 92-129. THIS IS SO NOTWITHSTANDING THAT THE PAY RATES SET FORTH IN THE BASIC PAY SCHEDULE WHICH, BY ITS TERMS, WAS EFFECTIVE OCTOBER 1, 1971, ARE, IN LARGE PART, THE SAME RATES THAT WERE IN THE SCHEDULE IN EFFECT ON SEPTEMBER 30, 1971. THIS BASIS WILL BE APPLIED IN ADJUSTING AND RECOMPUTING RETIRED OR RETAINER PAY UNDER SECTION 1401A AND 1402(A) OF TITLE 10, IN THE CIRCUMSTANCES DISCUSSED BELOW.

SECTION 1401A OF TITLE 10, U.S. CODE, PROVIDES FOR ADJUSTMENT OF RETIRED AND RETAINER PAY BASED ON INCREASES IN THE COST OF LIVING AS REFLECTED BY THE CONSUMER PRICE INDEX PUBLISHED BY THE BUREAU OF LABOR STATISTICS. SECTION 1402(A) OF TITLE 10 PROVIDES FOR RECOMPUTATION OF RETIRED PAY TO REFLECT ACTIVE DUTY PERFORMED AFTER RETIREMENT.

SUBSECTIONS (B), (C), (D), AND (E), OF SECTION 1401A (AS AMENDED, EFFECTIVE OCTOBER 31, 1969, BY PUBLIC LAW 91-179), ARE AS FOLLOWS:

(B) THE SECRETARY OF DEFENSE SHALL DETERMINE MONTHLY THE PERCENT BY BY WHICH THE INDEX HAS INCREASED OVER THAT USED AS THE BASIS (BASE INDEX) FOR THE MOST RECENT ADJUSTMENT OF RETIRED PAY AND RETAINER PAY UNDER THIS SUBSECTION. IF THE SECRETARY DETERMINES THAT, FOR THREE CONSECUTIVE MONTHS, THE AMOUNT OF THE INCREASE IS AT LEAST 3 PER CENTUM OVER THE BASE INDEX, THE RETIRED PAY AND RETAINER PAY OF MEMBERS AND FORMER MEMBERS OF THE ARMED FORCES WHO BECOME ENTITLED TO THAT PAY BEFORE THE FIRST DAY OF THE THIRD CALENDAR MONTH BEGINNING AFTER THE END OF THOSE THREE MONTHS SHALL EXCEPT AS PROVIDED IN SUBSECTION (C), BE INCREASED, EFFECTIVE ON THAT DAY, BY THE PER CENTUM OBTAINED BY ADDING 1 PER CENTUM AND THE HIGHEST PER CENTUM OF INCREASE IN THE INDEX DURING THOSE MONTHS, ADJUSTED TO THE NEAREST ONE-TENTH OF 1 PER CENTUM.

(C) NOTWITHSTANDING SUBSECTION (B), IF A MEMBER OR FORMER MEMBER OF AN ARMED FORCE BECOMES ENTITLED TO RETIRED PAY OR RETAINER PAY BASED ON RATES OF MONTHLY BASIC PAY PRESCRIBED BY SECTION 203 OF TITLE 37 THAT BECAME EFFECTIVE AFTER THE LAST DAY OF THE MONTH OF THE BASE INDEX, HIS RETIRED PAY OR RETAINER PAY SHALL BE INCREASED ON THE EFFECTIVE DATE OF THE NEXT ADJUSTMENT OF RETIRED PAY AND RETAINER PAY UNDER SUBSECTION (B) 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.

(D) IF A MEMBER OR FORMER MEMBER OF AN ARMED FORCE BECOMES ENTITLED TO RETIRED PAY OR RETAINER PAY ON OR AFTER THE EFFECTIVE DATE OF AN ADJUSTMENT OF RETIRED PAY AND RETAINER PAY UNDER SUBSECTION (B) BUT BEFORE THE EFFECTIVE DATE OF THE NEXT INCREASE IN THE RATES OF MONTHLY BASIC PAY PRESCRIBED BY SECTION 203 OF TITLE 37, HIS RETIRED PAY OR RETAINER PAY SHALL BE INCREASED, EFFECTIVE ON THE DATE HE BECOMES 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.

(E) NOTWITHSTANDING SUBSECTIONS (C) AND (D), THE ADJUSTED RETIRED PAY OR RETAINER PAY OF A MEMBER OR FORMER MEMBER OF AN ARMED FORCE RETIRED ON OR AFTER OCTOBER 1, 1967, MAY NOT BE LESS THAN IT WOULD HAVE BEEN HAD HE BECOME ENTITLED TO RETIRED PAY OR RETAINER PAY BASED ON THE SAME PAY GRADE, YEARS OF SERVICE FOR PAY, YEARS OF SERVICE FOR RETIRED OR RETAINER PAY PURPOSES, AND PERCENT OF DISABILITY, IF ANY, ON THE DAY BEFORE THE EFFECTIVE DATE OF THE RATES OF MONTHLY BASIC PAY ON WHICH HIS RETIRED PAY OR RETAINER PAY IS BASED.

IT IS STATED IN THE COMMITTEE ACTION THAT THE MONTH CURRENTLY FORMING THE BASIS (THE "BASE INDEX" MONTH) FOR THE LATEST CONSUMER PRICE INDEX (CPI) ADJUSTMENT IN RETIRED AND RETAINER PAY UNDER 10 U.S.C. 1401A IS MARCH 1971. THE LATEST CPI ADJUSTMENT TOOK EFFECT ON JUNE 1, 1971, AND IT IS STATED THAT ALL MEMBERS INITIALLY RETIRED ON AND AFTER JUNE 1, 1971, ARE ENTITLED TO AN IMMEDIATE .6 PERCENT CPI INCREASE (THE PERCENT BY WHICH THE NEW BASE INDEX EXCEEDS THE INDEX FOR DECEMBER 1970), UNLESS THAT ENTITLEMENT HAS BEEN DISTURBED BY ENACTMENT OF PUBLIC LAW 92-129.

WHILE ONLY MEMBERS IN LOWER GRADES OR WITH SHORT PERIODS OF SERVICE BENEFIT FINANCIALLY UNDER THE NEW RATES PRESCRIBED IN PUBLIC LAW 92 129, MEMBERS RETIRING ON OR AFTER OCTOBER 1, 1971, ARE ENTITLED TO HAVE THEIR RETIRED OR RETAINER PAY COMPUTED UNDER THE RATES OF BASIC PAY PRESCRIBED BY THAT LAW.

IT IS OUR VIEW THAT IN ADJUSTING RETIRED OR RETAINER PAY UNDER SECTION 1410A FOR MEMBERS RETIRED ON OR AFTER OCTOBER 1, 1971, AND PRIOR TO THE EFFECTIVE DATE OF THE NEXT SUBSEQUENT LAW OR EXECUTIVE ORDER PRESCRIBING A NEW SCHEDULE OF BASIC PAY RATES, THE RATES OF BASIC PAY PRESCRIBED IN PUBLIC LAW 92-129 MUST BE CONSIDERED THE APPLICABLE RATES "THAT BECAME EFFECTIVE AFTER THE LAST DAY OF THE MONTH OF THE BASE INDEX" FOR PURPOSES OF SUBSECTION (C). IT FOLLOWS THAT A MEMBER WHO RETIRES (ETC.) ON OR AFTER OCTOBER 1, 1971, AND BECOMES ENTITLED TO RETIRED OR RETAINER PAY BASED ON RATES OF MONTHLY BASIC PAY THAT BECAME EFFECTIVE ON OCTOBER 1, 1971 (EXCEPT FOR THE WAGE-PRICE FREEZE) WOULD BE ENTITLED UNDER SECTION 1401AC) TO A PARTIAL INCREASE IN RETIRED PAY, COMPUTED AS THEREIN INDICATED, AT THE TIME OF THE NEXT CPI ADJUSTMENT IN RETIRED OR RETAINER PAY, PROVIDED THAT THE EFFECTIVE DATE OF ANY SUCH ADJUSTMENT PRECEDES ISSUANCE OF ANOTHER AUTHORITATIVE PAY SCHEDULE FIXING NEW RATES OF BASIC PAY. FOR PURPOSES OF SUBSECTION (D), MEMBERS RETIRING ON OR AFTER OCTOBER 1, 1971, WOULD NOT BE CONSIDERED AS HAVING BEEN RETIRED "AFTER THE EFFECTIVE DATE OF AN (CPI) ADJUSTMENT OF RETIRED PAY AND RETAINER PAY *** BUT BEFORE THE EFFECTIVE DATE OF THE NEXT INCREASE IN RATES OF BASIC PAY."

AS INDICATED ABOVE, THE NEW RATES OF BASIC PAY PRESCRIBED IN PUBLIC LAW 92-129 HAD THE EFFECT OF CHANGING THE METHOD OF ADJUSTING RETIRED OR RETAINER PAY FOR PURPOSES OF SUBSECTIONS (C) AND (D) OF SECTION 1401A IN THE CASE OF MEMBERS RETIRED ON OR AFTER OCTOBER 1, 1971, AS COMPARED TO THOSE MEMBERS RETIRED ON OR PRIOR TO SEPTEMBER 30, 1971. WITHOUT APPLYING THE PROVISIONS OF SUBSECTION (E) OF SECTION 1401A, THIS COULD RESULT IN SITUATIONS WHERE PERSONS RETIRING ON OR AFTER OCTOBER 1, 1971, IN THE SAME GRADE AND BASIC PAY WOULD RECEIVE LESS THAN CERTAIN INDIVIDUALS IN THE SAME CIRCUMSTANCES RETIRING PRIOR TO OCTOBER 1, 1971.

THE QUESTION IS RAISED IN THE COMMITTEE ACTION WHETHER SUBSECTION (E) OF SECTION 1401A, QUOTED ABOVE, WAS ENACTED FOR USE ON A ONE-TIME BASIS FOR THE 1967 SITUATION ONLY OR WHETHER THE SUBSECTION IS A PERMANENT PART OF TITLE 10. LIKE SUBSECTIONS (C) AND (D), SUBSECTION (E) OF SECTION 1401A WAS ADDED BY SECTION 2 OF THE ACT OF DECEMBER 16, 1967, PUBLIC LAW 90-207, 81 STAT. 652, WHICH BECAME EFFECTIVE OCTOBER 1, 1967. THE LEGISLATIVE HISTORY OF SUBSECTION (E) OF SECTION 1401A, AS EXPLAINED ON PAGE 19 OF SENATE REPORT NO. 808 (TO ACCOMPANY H.R. 13510 WHICH BECAME PUBLIC LAW 90- 207 LENDS SOME WEIGHT TO THE VIEW THAT THIS PROVISION WAS INTENDED TO CORRECT A ONE-TIME SITUATION THEN IN EXISTENCE. HOWEVER, SINCE THE SITUATION IS A RECURRING ONE AND IN THE LIGHT OF THE SPECIFIC LANGUAGE IN SUBSECTION (E) THAT "NOTWITHSTANDING SUBSECTIONS (C) AND (D), THE ADJUSTED RETIRED PAY OR RETAINER PAY OF A MEMBER *** RETIRED ON OR AFTER OCTOBER 1, 1967, MAY NOT BE LESS THAN IT WOULD HAVE BEEN HAD HE BECOME ENTITLED TO RETIRED PAY OR RETAINER PAY *** ON THE DAY BEFORE THE EFFECTIVE DATE OF THE RATES OF MONTHLY BASIC PAY ON WHICH HIS RETIRED PAY OR RETAINER PAY IS BASED," IT IS OUR VIEW THAT THE PROVISIONS OF SUBSECTION (E) ARE AN INTEGRAL PART OF SECTION 1401A FOR THE PURPOSE OF ADJUSTING RETIRED OR RETAINER PAY TO REFLECT CHANGES IN THE CONSUMER PRICE INDEX. HAD CONGRESS INTENDED THE PROVISIONS OF SUBSECTION (E) OF SECTION 1401A TO OPERATE AS A ONE TIME BASIS, THERE WOULD HAVE BEEN NO NEED OR REASON TO INCORPORATE IT AS A PERMANENT PART OF CHAPTER 71 OF TITLE 10. MOREOVER, WHEN THE CHANGES TO THE CPI LAW WERE UNDER CONSIDERATION, THE DEPARTMENT OF DEFENSE SUBMITTED A PROPOSED AMENDMENT SUGGESTING THE LANGUAGE OF SUBSECTION (E) AND THAT SUCH SUBSECTION BE ADDED AFTER SECTION 1401AD). SEE PAGE 28 OF THE SENATE REPORT NO. 808 MENTIONED ABOVE.

CONCERNING THE EFFECT OF SECTION 1401AE) OF TITLE 10, TO PARTICULAR SITUATIONS, THE COMMITTEE ACTION REFERS TO THE SPECIAL RATES OF BASIC PAY PRESCRIBED FOR A MEMBER WHO IS SERVING AS CHAIRMAN OF THE JOINT CHIEFS OF STAFF, CHIEF OF STAFF OF THE ARMY, CHIEF OF NAVAL OPERATIONS, CHIEF OF STAFF OF THE AIR FORCE; OR COMMANDANT OF THE MARINE CORPS. IT IS STATED THAT PUBLIC LAW 92-129 PRESCRIBES A BASIC PAY RATE OF $3,000 PER MONTH FOR SUCH MEMBERS WHICH IS THE SAME PAY RATE PRESCRIBED FOR THEM IN EXECUTIVE ORDER 11577 OF JANUARY 8, 1971, AND IN EXECUTIVE ORDER 11525 OF APRIL 15, 1970. IT IS POINTED OUT THAT HAD A MEMBER ENTITLED TO THE SPECIAL RATE OF PAY RETIRED ON DECEMBER 31, 1970, HE WOULD HAVE BECOME ENTITLED TO RETIRED PAY OF $2,250 PER MONTH BASED ON THE BASIC PAY RATES PRESCRIBED IN EXECUTIVE ORDER 11525. HE WOULD HAVE SIMULTANEOUSLY BECOME ENTITLED TO A CPI INCREASE OF 2.5 PERCENT UNDER 10 U.S.C. 1401AD) BASED ON THE AUGUST 1, 1970, ADJUSTMENT OF RETIRED PAY UNDER 10 U.S.C. 1401AB). IT IS FURTHER STATED THAT ON JUNE 1, 1971, HE WOULD HAVE RECEIVED AN ADDITIONAL 4.5 PERCENT CPI INCREASE UNDER 10 U.S.C. 1401AB), AND HIS CURRENT RATE OF RETIRED PAY WOULD THUS BE $2,410.03 PER MONTH.

THE COMMITTEE ACTION FURTHER STATES THAT HAD THE ABOVE MEMBER RETIRED ON SEPTEMBER 30, 1971, AND IF THE PROVISIONS OF 10 U.S.C. 1401AE) ARE APPLICABLE TO HIM, HE WOULD BECOME ENTITLED TO ADJUSTED RETIRED PAY OF $2,410.03 PER MONTH, SINCE HIS RETIRED PAY COULD NOT BE LESS THAN IT WOULD HAVE BEEN HAD HE BECOME ENTITLED TO RETIRED PAY ON THE DAY BEFORE THE EFFECTIVE DATE OF THE RATES OF MONTHLY BASIC PAY ON WHICH HIS RETIRED PAY IS BASED. IT FOLLOWS, AS THE COMMITTEE ACTION STATES, THAT UNDER SECTION 1401AE), THE RETIRED PAY OF SUCH A MEMBER WHO IS RETIRED AFTER THE EFFECTIVE DATE OF THE BASIC PAY RATES PRESCRIBED IN PUBLIC LAW 92-129 CANNOT BE LESS THAN THE RETIRED PAY HE WOULD HAVE RECEIVED IF HE HAD RETIRED ON SEPTEMBER 30, 1971. WE CONCUR WITH THE VIEWS STATED IN THE COMMITTEE ACTION IN THIS RESPECT.

THE ABOVE RULES ARE FOR APPLICATION IN ADJUSTING RETIRED OR RETAINER PAY UNDER 10 U.S.C. 1401A. QUESTION 1 IS ANSWERED ACCORDINGLY.

WITH RESPECT TO QUESTION 2, 10 U.S.C. 1402(A) PROVIDES, IN PART, THAT A MEMBER OF AN ARMED FORCE WHO HAS BECOME ENTITLED TO RETIRED PAY OR RETAINER PAY AND WHO THEREAFTER SERVES ON ACTIVE DUTY, IS ENTITLED UPON RELEASE FROM THAT ACTIVE DUTY TO RECOMPUTE HIS RETIRED OR RETAINER PAY ON THE BASIS OF THE RATE OF BASIC PAY IDENTIFIED IN FOOTNOTE 1 OF SECTION 1402AA), WHICH READS AS FOLLOWS:

FN1 FOR A MEMBER WHO HAS BEEN ENTITLED, 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 CONTINUOUS 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.

SINCE IT HAS BEEN DETERMINED THAT THE RATES OF BASIC PAY PRESCRIBED IN PUBLIC LAW 92-129 ARE THE APPLICABLE RATES FOR THE PURPOSE OF ADJUSTING RETIRED PAY UNDER 10 U.S.C. 1401A FOR MEMBERS WHO RETIRE ON OR AFTER OCTOBER 1, 1971, AND SINCE MEMBERS COVERED BY 10 U.S.C. 1402(A) ARE ENTITLED TO A PARTIAL CPI ADJUSTMENT UNDER 10 U.S.C. 1401AC) AND (D) (SEE 50 COMP. GEN. 232 (1970)), IT WOULD BE INCONSISTENT TO ADOPT A DIFFERENT RULE IN RECOMPUTING RETIRED PAY OR RETAINER PAY FOR SECTION 1402(A) MEMBERS. IT IS OUR VIEW THAT FOR THE PURPOSES OF THE FIRST SENTENCE OF FOOTNOTE 1 THE STARTING DATE IS OCTOBER 1, 1971. FOR PURPOSES OF THE SECOND SENTENCE OF THE FOOTNOTE THE BASIC PAY RATES PRESCRIBED BY PUBLIC LAW 92-129 ARE THE RATES IN EFFECT AT THE TIME OF RELEASE (ON OR AFTER OCTOBER 1, 1971) AND THE RATES PRESCRIBED BY EXECUTIVE ORDER 11577 EFFECTIVE JANUARY 1, 1971, ARE THE RATES REPLACED.

THE ABOVE RULES ARE FOR APPLICATION IN RECOMPUTING RETIRED OR RETAINER PAY UNDER 10 U.S.C. 1402(A). QUESTION 2 IS ANSWERED ACCORDINGLY.