B-134298, NOV. 27, 1957

B-134298, NOV. 27, 1957

TO LIEUTENANT COLONEL E. P. HANNA, F.C., FINANCE AND ACCOUNTING OFFICER:

BY FIRST INDORSEMENT DATED OCTOBER 29, 1957, THE OFFICE OF THE CHIEF OF FINANCE, DEPARTMENT OF THE ARMY, TRANSMITTED HERE YOUR LETTER OF AUGUST 13, 1957 (FINCS-D 201 DEMOREST, WALTER A.), REQUESTING AN ADVANCE DECISION AS TO WHETHER YOU ARE AUTHORIZED TO MAKE PAYMENT ON A VOUCHER, TRANSMITTED THEREWITH, IN FAVOR OF MRS. ELEANOR C. DEMOREST IN THE NET AMOUNT OF $113.91, REPRESENTING AN ANNUITY PAYMENT FOR THE MONTH OF APRIL 1957, UNDER THE UNIFORMED SERVICES CONTINGENCY OPTION ACT OF 1953, NOW CODIFIED IN 10 U.S.C. 1431-1444, IN THE CASE OF THE LATE CAPTAIN WALTER A. DEMOREST, 01 558 382.

YOU STATED, AMONG OTHER THINGS, THAT PURSUANT TO THE PROVISIONS OF TITLE 10, SECTIONS 1201 AND 1372, U.S. CODE, CAPTAIN DEMOREST WAS RETIRED FROM ACTIVE SERVICE ON APRIL 9, 1957, PURSUANT TO ORDERS OF THE SAME DATE, WITH A PERMANENT DISABILITY RATING OF 100 PERCENTUM, AND THAT PRIOR TO THAT TIME--- ON FEBRUARY 12, 1957--- HE HAD ELECTED OPTIONS III AND IV AT ONE- HALF OF HIS REDUCED RETIRED PAY UNDER THE CONTINGENCY OPTION ACT. THE DATE OF HIS DEATH IS REPORTED AS APRIL 10, 1957. SPECIFICALLY, YOU REQUEST TO BE ADVISED REGARDING THE EFFECTIVE DATE OF REDUCTION FOR COST OF THE ANNUITY AND THE EFFECTIVE DATE OF THE WIDOW'S ENTITLEMENT TO ANNUITY BENEFITS. IT APPEARS THAT PAYMENT OF THE ANNUITY HAS BEEN MADE FOR THE PERIOD ON AND AFTER MAY 1, 1957, AND THAT FROM THE PAYMENT OF ARREARS OF RETIRED PAY MADE FOR APRIL 10, 1957, THERE WAS DEDUCTED THE COST OF THE ANNUITY FOR ONE DAY.

THE RETIREMENT OF THE MEMBER DURING THE MONTH OF APRIL, 1957, APPEARS TO HAVE BEEN AUTHORIZED BY THE ACT OF AUGUST 2, 1956, 70 STAT. 933, WHICH AMENDED THE ACT OF APRIL 23, 1930, 46 STAT. 253, RELATING TO A UNIFORM RETIREMENT DATE FOR AUTHORIZED RETIREMENTS OF FEDERAL PERSONNEL, SO AS TO AUTHORIZE THE SECRETARIES OF THE UNIFORMED SERVICES TO SPECIFY AN EFFECTIVE DATE FOR RETIREMENT FOR PERMANENT PHYSICAL DISABILITY OR PLACEMENT ON A TEMPORARY DISABILITY RETIRED LIST OF MEMBERS OF THEIR RESPECTIVE UNIFORMED SERVICES WHICH IS EARLIER THAN THE DATE FOR RETIREMENT PROVIDED IN THE LATTER ACT.

UNDER THE CONTINGENCY OPTION ACT MEMBERS OF THE UNIFORMED SERVICES ARE PERMITTED TO ELECT CERTAIN CONTINGENCY OPTIONS, THAT IS TO SAY, TO RECEIVE A REDUCED AMOUNT OF RETIRED PAY IN ORDER TO PROVIDE ONE OR MORE OF THE ANNUITIES SPECIFIED IN THE ACT. SECTION 1437 OF 10 U.S.C. PROVIDES AS FOLLOWS:

"EACH ANNUITY PAYABLE UNDER THIS CHAPTER ACCRUES AS OF THE FIRST DAY OF THE MONTH IN WHICH THE PERSON UPON WHOSE REDUCED PAY THE ANNUITY IS BASED DIES * * *.'

SUCH PROVISIONS OF LAW REQUIRE THAT THE ANNUITY IN THIS CASE BE PAID FROM APRIL 1, 1957, SINCE CAPTAIN DEMOREST DIED ON APRIL 10, 1957.

WITH RESPECT TO YOUR INQUIRY AS TO WHETHER A DEDUCTION SHOULD BE MADE TO COVER THE COST OF THE ANNUITY FROM APRIL 1 TO 9, 1957, 10 U.S.C. 1436 PROVIDES THAT THE REDUCTION IN RETIRED PAY SHALL BE COMPUTED AS OF THE DATE WHEN THE PERSON CONCERNED BECOMES ELIGIBLE FOR THAT PAY. PARAGRAPH 9, ARMY REGULATIONS 35-1365 PROVIDES THAT THE EFFECTIVE DATE OF REDUCTION IN RETIRED PAY WILL BE THE EFFECTIVE DATE OF RETIREMENT OR THE FIRST DAY OF THE MONTH IN WHICH ELECTION IS EFFECTIVE, WHICHEVER IS LATER. PARAGRAPH 402A OF THE REGULATIONS FOR THE UNIFORMED SERVICES CONTINGENCY OPTION ACT OF 1953, STATES THAT IN THE CASE OF AN ACTIVE MEMBER, THE EFFECTIVE DATE OF DEDUCTION IN RETIRED PAY WILL BE THE EFFECTIVE DATE OF RETIREMENT.

THE CONTINGENCY OPTION ACT AS ORIGINALLY ENACTED AND AS NOW CODIFIED, CONTEMPLATES THE PURCHASE OF THE ANNUITIES SPECIFIED IN THAT ACT BY DEDUCTIONS FROM RETIRED PAY. THE CITED REGULATIONS CORRECTLY FIX THE EARLIEST DATE OF REDUCTION IN RETIRED PAY, AS THE EFFECTIVE DATE OF RETIREMENT, SINCE THERE IS NO RETIRED PAY SUBJECT TO BE REDUCED BEFORE THAT DATE. SINCE THE OFFICER'S ACTIVE DUTY STATUS IN THIS CASE WAS TERMINATED BY ORDERS OF APRIL 9, HE BECAME ENTITLED TO RETIRED PAY ON THE FOLLOWING DAY. ACCORDINGLY, THERE WOULD APPEAR TO BE NO LEGAL BASIS FOR DEDUCTING THE COST OF THE ANNUITY FOR ANY PERIOD PRIOR TO APRIL 10, 1957.

IT APPEARS FROM THE VOUCHER TRANSMITTED BY YOU THAT IT IS PROPOSED TO REDUCE THE ANNUITY OTHERWISE PAYABLE BY THE SUM OF $20.90, REPRESENTING 9/30THS OF $69.69, THE MONTHLY COST OF THE ANNUITY. IT IS OUR VIEW THAT SUCH DEDUCTION WOULD BE IMPROPER AND THAT THE WIDOW IN THIS CASE IS ENTITLED TO BE PAID THE FULL ANNUITY FOR THE MONTH OF APRIL 1957.

IF THE VOUCHER, RETURNED HEREWITH, IS AMENDED TO OMIT THE REDUCTION OF $20.90, PAYMENT THEREON IS AUTHORIZED, IF OTHERWISE CORRECT.