B-231205, Feb 3, 1989, 68 Comp.Gen. 220

B-231205, Feb 3, 1989, 68 Comp.Gen. 220

Appropriations/Financial Management - Claims Against Government - Interest - Civilian Personnel - Compensation - Retroactive compensation - Interest: The Department of the Interior is without authority to make payments to employee Thrift Savings Plan accounts for lost earnings on insufficient agency contributions resulting from administrative error because earnings on contributions are a form of interest not expressly provided for by Interior appropriations and such payments are not otherwise authorized under the Back Pay Act, 5 U.S.C. Sec. 5596.

Agency Authority to Pay Lost Earnings on Contributions to Employee Thrift Savings Plan Accounts:

Mr. William L. Carpenter, Acting Director of Financial Management, Department of the Interior, requests our opinion on whether his Department has authority to make payments to employee Thrift Savings Plan accounts for lost earnings on insufficient agency contributions resulting from administrative error. We conclude that the Department does not have such authority.

The Thrift Savings Plan (TSP) was established under the Federal Employees' Retirement System (FERS), 5 U.S.C. Secs. 8401-8479 (Supp. IV, 1986), for the purpose of providing federal employees with a form of capital accumulation plan similar to those found in private industry. See S. Rep. No. 166, 99th Cong., 2d Sess. 13, reprinted in 1986 U.S. Code Cong. & Admin. News 1405, 1417. Employee TSP accounts, consisting of employee contributions and matching agency contributions /1/ for FERS covered employees, are pooled into the Thrift Savings Fund and are augmented by Fund earnings. /2/ 5 U.S.C. Secs. 8432(a), (c), 8437(b). All sums contributed to the Thrift Savings Fund by or on behalf of an employee as well as earnings on those contributions are held in trust for the employee in the Thrift Savings Fund. 5 U.S.C. Sec. 8437(g).

Pursuant to 5 U.S.C. Secs. 8351(c) and 8474, the Federal Retirement Thrift Investment Board (Board), the TSP governing body, has promulgated regulations for the correction of administrative errors made in connection with contributions to employee TSP accounts. 5 C.F.R. Sec. 1605 (1988). In May 1987, when the Board first promulgated those rules for comment, it included procedures for correcting insufficient agency contributions to employee TSP accounts, but provided that "(n)o earnings will be paid into an employee's Thrift Savings Plan account that would have accrued to such account but for the error causing the underdeduction or failure to deduct." Error Correction Regulations, 52 Fed. Reg. 17919, 17921 (1987). Responding to comments, the Board deleted this prohibition, stating that although the Board was with out authority to pay for lost earnings itself or to compel an agency to pay for lost earnings, an agency making retroactive contributions to an employee's TSP account could also pay lost earnings on those contributions if the agency decided that it had such authority. Error Correction Regulations, 52 Fed. Reg. 46314, 46315 (1987). In this regard, the current regulations provide at 5 C.F.R. Sec. 1605.3(b)(7):

"No earnings will be paid by the Board into an employee's Thrift Savings Plan account that would have accrued to such account but for the error causing the insufficient contribution. However, an agency may make this type of deposit if it determines that it has the authority to spend its funds for this purpose."

Therefore, whether an agency has authority to pay into employee TSP accounts lost earnings on insufficient agency contributions resulting from administrative error depends on the availability of agency appropriations for this purpose. From the perspective of the agency, contributions made to an employee's TSP account are analogous to payments made directly to an employee. We have consistently held that a delay by the United States in making payment to one of its employees does not create an entitlement to interest in the absence of a contract or statute creating such entitlement. See Charles Wener, 65 Comp.Gen. 541 (1986) (no interest payable on an allotment check issued by the government to an Army employee even though the check was issued several months late); B-202039, May 7, 1982 (delay in paying Army employees for making cost-saving suggestions does not create an entitlement to interest); Leland M. Wilson , B-205373, Apr. 24, 1984 (employee not entitled to interest on payment of retirement contribution erroneously withheld by the government for 15 months).

A legal memorandum from the Interior Department Solicitor's Office which accompanied the submission to us in this case indicates that there is no language in current or recent Interior Department appropriations that would authorize payments for lost earnings relating to TSP contributions. While Interior appropriations thus are not available for such payments, one other statute, the Back Pay Act, is worth discussing in this context.

The Back Pay Act, 5 U.S.C. Sec. 5596 (1982), authorizes the use of agency appropriations to, among other things, pay an employee who has been affected by an unjustified or unwarranted personnel action for "the pay, allowances or differentials" lost due to the personnel action. 5 U.S.C. Sec. 5596(b)(1)(A)(i). The Office of Personnel Management, charged with prescribing regulations to carry out the Back Pay Act, 5 U.S.C. Sec. 5596(c), has defined "pay, allowances, and differentials" to mean, "monetary and employment benefits to which an employee is entitled by statute or regulation by virtue of the performance of a Federal function." 5 C.F.R. Sec. 550.803 (1988).

In our view, pay, allowances and differentials under the Back Pay Act do not include earnings on contributions to the Thrift Savings Fund. noted above, earnings on contributions are the result of Thrift Savings Fund investments and may vary without regard to an employee's "performance of a Federal function." Lost earnings on agency contributions are a form of consequential damages, and as such are not recoverable under the Back Pay Act. Cf. John H. Kerr, 61 Comp.Gen. 578 (1982). /3/

For the foregoing reasons we conclude that there is no statutory basis for agencies to pay into employee TSP accounts earnings lost due to agency's delay in making contributions to those accounts. At the same time we recognize that from the employee's perspective the TSP represents an obligation by the government that upon retirement or separation the sum of all contributions and whatever earnings should have accrued to those contributions will be paid. Therefore, from an equitable standpoint we would support legislation authorizing agencies to make payments into TSP accounts to cover earnings lost due to an agency's delay in making contributions.

/1/ The TSP was recently amended in part to require agencies to make matching contributions within 12 days after the end of each pay period. Pub. L. No. 100-238, Sec. 121, 101 Stat. 1744, 1752 (1988). This change was intended to make the timing of agency and employee contributions more closely coincide, but did not address the issue of lost earnings due to delayed agency contributions. H.R. Rep. No. 347, 100th Cong., 1st Sess. 30 (1987).

/2/ In this context "earnings" means "the amount of the gain realized or yield received from the investment of sums in such (Thrift Savings) Fund." 5 U.S.C. Sec. 8401(10).

/3/ Congress recently amended the Back Pay Act to provide for interest on amounts recovered under it. See 5 U.S.C. Sec. 5596 (b) (2), added by Pub. L. No. 100-102, Sec 101(m), 101 Stat. 1329-428. Back Pay Act interest is awarded in connection with a recovery under that Act and computed at the rate or rates in effect under section 6621 (a) of the Internal Revenue Code of 1986. We express no view on whether or when an agency's delay in making TSP contributions could constitute an unjustified or unwarranted personnel action leading to a recovery of interest under 5 U.S.C. Sec. 5596 (b) (2). However, any such recovery of interest would take the form of a payment to the affected employee. It would not result in a payment into the employee's TSP account.