B-10463, JUNE 14, 1940, 19 COMP. GEN. 987

B-10463, JUNE 14, 1940, 19 COMP. GEN. 987

RETIREMENT - CIVILIAN - VOLUNTARY DEPOSITS - REFUNDS VOLUNTARY DEPOSITS MADE FOR THE PURCHASE OF ADDITIONAL ANNUITY UNDER SECTION 4 OF THE ACT OF AUGUST 4, 1939, 53 STAT. 1202, AMENDING THE CIVIL SERVICE RETIREMENT ACT, MAY NOT BE REFUNDED TO THE EMPLOYEE AT THE TIME OF HIS RETIREMENT.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE PRESIDENT, UNITED STATES CIVIL SERVICE COMMISSION, JUNE 14, 1940:

I HAVE YOUR LETTER OF MAY 15, 1940, AS FOLLOWS:

SECTION 4 OF THE ACT OF AUGUST 4, 1939 (53 STAT. 1200), AMENDING SECTION 10 OF THE CIVIL SERVICE RETIREMENT ACT OF MAY 29, 1930 (46 STAT. 468), READS AS FOLLOWS:

"ANY EMPLOYEE MAY AT HIS OPTION AND UNDER SUCH REGULATIONS AS MAY BE PRESCRIBED BY THE CIVIL SERVICE COMMISSION DEPOSIT ADDITIONAL SUMS IN MULTIPLES OF $25 BUT NOT TO EXCEED 10 PERCENTUM PER ANNUM OF HIS ANNUAL BASIC SALARY, PAY, OR COMPENSATION, FOR SERVICE RENDERED SINCE AUGUST 1, 1920, WHICH AMOUNT TOGETHER WITH INTEREST THEREON AT 3 PERCENTUM PER ANNUM COMPOUNDED AS OF JUNE 30 OF EACH YEAR, SHALL, AT THE DATE OF HIS RETIREMENT, BE AVAILABLE TO PURCHASE, AS HE SHALL ELECT AND IN ACCORDANCE WITH SUCH RULES AND REGULATIONS AS MAY BE PRESCRIBED BY THE CIVIL SERVICE COMMISSION WITH THE APPROVAL OF THE BOARD OF ACTUARIES, IN ADDITION TO THE ANNUITY PROVIDED BY THIS ACT, AN ANNUITY ACCORDING TO THE EXPERIENCE OF THE CIVIL-SERVICE RETIREMENT AND DISABILITY FUND AS MAY FROM TIME TO TIME BE SET FORTH IN TABLES OF ANNUITY VALUES BY THE BOARD OF ACTUARIES BASED ON AN INTEREST RATE OF 4 PERCENTUM. IN THE EVENT OF DEATH OR SEPARATION FROM THE SERVICE OF SUCH EMPLOYEE BEFORE BECOMING ELIGIBLE FOR RETIREMENT ON ANNUITY, THE TOTAL AMOUNT SO DEPOSITED WITH INTEREST AT 3 PERCENTUM PER ANNUM COMPOUNDED ON JUNE 30 OF EACH YEAR SHALL BE REFUNDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 12 OF THIS ACT.'

UNDER THE AUTHORITY CONTAINED IN THIS ACT, THE COMMISSION HAS PRESCRIBED CERTAIN REGULATIONS OUTLINING THE TYPES OF ANNUITIES WHICH MAY BE PURCHASED BY THE VOLUNTARY DEPOSITS AND HAS SUBMITTED THESE REGULATIONS TO THE BOARD OF ACTUARIES FOR THEIR APPROVAL AS REQUIRED, AND COPY THEREOF IS ENCLOSED HEREWITH. THE BOARD OF ACTUARIES DECLINED TO APPROVE THE REGULATIONS AS SUBMITTED BY THE COMMISSION AND SUGGESTED AN AMENDMENT TO THE REGULATIONS WHICH WOULD PERMIT AN EMPLOYEE AT RETIREMENT TO ELECT TO RECEIVE A LUMP-SUM PAYMENT OF THE AMOUNT OF HIS VOLUNTARY DEPOSITS WITH INTEREST, SAID AMENDMENT TO READ AS FOLLOWS:

"AT THE TIME OF RETIREMENT, IN LIEU OF THE PURCHASE OF AN ADDITIONAL ANNUITY, ANY EMPLOYEE MAY ELECT TO RECEIVE THE RETURN IN CASH OF THE AMOUNT OF HIS ADDITIONAL CONTRIBUTIONS WITH THE INTEREST PREVIOUSLY CREDITED THEREON.'

SINCE THE STATUTE SPECIFIES THE PURPOSE FOR WHICH THESE VOLUNTARY DEPOSITS SHALL BE AVAILABLE, NAMELY, TO PURCHASE AN ANNUITY, AND ALSO SPECIFIES THE CONDITIONS UNDER WHICH REFUND OF SUCH DEPOSITS MAY BE MADE, THAT IS, DEATH OF THE EMPLOYEE OR SEPARATION FROM SERVICE PRIOR TO BECOMING ELIGIBLE FOR RETIREMENT ON ANNUITY, THE COMMISSION IS DOUBTFUL OF ITS AUTHORITY TO ADOPT THE AMENDMENT PROPOSED BY THE BOARD OF ACTUARIES.

YOUR DECISION AS TO WHETHER YOUR OFFICE WOULD BE REQUIRED TO OBJECT TO ANY PAYMENT MADE UNDER THE PROPOSED ADDITIONAL REGULATION IF ADOPTED IS REQUESTED.

THE PURPOSE FOR WHICH THE REFERRED-TO VOLUNTARY DEPOSITS SHALL BE AVAILABLE AND THE CONDITIONS UNDER WHICH REFUND OF SUCH DEPOSITS MAY BE MADE ARE AS INDICATED IN THE PENULTIMATE PARAGRAPH OF YOUR LETTER. PERMIT THE ELECTION BY AN EMPLOYEE TO RECEIVE SUCH DEPOSITS IN A LUMP SUM AT THE TIME OF RETIREMENT, AS SUGGESTED BY THE BOARD OF ACTUARIES, WOULD BE TANTAMOUNT TO TREATING SUCH DEPOSITS AS A "SAVINGS FUND" ACCOUNT--- A PURPOSE WHICH IS IN NOWISE MANIFESTED BY THE STATUTE.

YOU ARE ADVISED, THEREFORE, THAT PAYMENTS IN ACCORDANCE WITH THE "PROPOSED ADDITIONAL EGULATION" WOULD NOT APPEAR TO BE AUTHORIZED UNDER EXISTING LAW.