Document Type: 
Document Number (FOIA) /ESDN (CREST): 
Release Decision: 
Original Classification: 
Document Page Count: 
Document Creation Date: 
December 21, 2016
Document Release Date: 
August 27, 2008
Sequence Number: 
Case Number: 
Publication Date: 
September 1, 1983
Content Type: 
Approved For Release 2008/08/27: CIA-RDP86B00338R000400610002-1 ~ 1 September 1983 Oll 83-2025 MEMORANDUM FOR: Harry Fitzwater Deputy Director for Administration James McDonald Associate Deputy Director for Administration Legislation Division Office of Legislative Liaison SUBJECT: Request By OMB for Our Views on an Office of Personnel Management Report on S. 888, The Economic Equity Act. 1. OMB has requested our views on a proposed report by the Office of Personnel Management (OPM) on the Economic Equity Act. The Economic Equity Act, S. 888, is a comprehensive bill dealing with equal rights for women. The title which is dealt with in OPM's report is Title I concerning tax and retirement matters, specifically section 109. (Attached) This section seeks various degrees of protection for former spouses of Civil Service employees in terms of retirement and survivor annuities. 2. OPM in this report objects to enactment of section 109 because they feel that the current provisions under the Civil Service Retirement System provide adequate protection for former spouses through the case by case award of benefits by State courts in divorce proceedings. They also object to section 109 on the grounds of cost. They point out in the report that this section resembles provisions of the Foreign Service Act of 1980 and the Intelligence Authorization Act for FY 1983, both of which provide benefits for former spouses of officers and employees serving overseas. They feel that the same equities are not involved in careers of most employees covered by the Civil Service Retirement System. Interestingly, that do not address the fact that section 612 of our FY 83 Authorization Act extends these same benefits to former spouses of Agency employees covered by the Civil Service Retirement System. Approved For Release 2008/08/27: CIA-RDP86B00338R000400610002-1 Approved For Release 2008/08/27: CIA-RDP86B00338R000400610002-1 3. In deciding how we should respond to OPM's report, a policy decision must be made as to whether this Agency should oppose, support, or remain neutral on, the government-wide extension of benefits to former spouses of employees under the Civil Service Retirement System. Procedures governing our response to OPM require us to indicate support, opposition, or no objection, to all or part of a proposed report. Therefore, I would appreciate your close review of OPM's report and your advice as to how you wish this Agency to respond. I need to respond to OMB by COB 7 September. STAT STAT cc: Office of legislative Liaison Distribution: 1 - KAD Chrono 1 - OLL Chrono 1 - LEG File: Economic Equity Act 98th OLL:KAD:maw (7 September 1983) Approved For Release 2008/08/27: CIA-RDP86B00338R000400610002-1 Approved For Release 2008/08/27: CIA-RDP86B00338R000400610002-1 ? ? Vit:LGJ .Ji 41 ) - - ?, vI, IJ.C.2l'-+ Honorable Robert J. Dole Chairman Committee. on Finance United States Senate Washington, D.C. 20510 Dear Mr. Chairman: We understand that your Committee is now considering S. 888, entitled the "Economic Equity Act." Since the Office. of Personnel Management would .have to administer significant, por of this bill, I hope you will include the folio=,ii-,g comments in your consideration of this legisla- tion. Section 1Ci9 of S. 888 would automatically. entitle a former spouse (defined as one who had been married to a Federal employee for at least ten years during the employee's Gover::ent service) to a pro rata share of half of the employee's Civil Service Retirement annuity, unless a court order or spousal agreement- provides o;lierwise. The pro rata share would equal .the ratio of (1) the number of years of Federal service during which the former spouse and the employee were married to (2) the total number of years of the employee's Federal service. The former spouse's right to this annuity would terminate if the .for- mer spouse remarried before age 60. The retired employee's annuity would be reduced by the annuity paid to the former spouse, but this reduction would be disregarded in calculating any survivor annuity. If a disability an_nui _ant .became reemployed by the Government, payment of annuity-to.his or her former spouse would continue, but the employ- ee's pay would be reduced by the amount of the former spouse's annuity, -ancl .the e-dt ioying age:icy would reimburse the Retirement un d for the cost of the payments to the former spouse. Under section 109, the former spouse would also be entitled to the same share of the survivor annuity that is payable based on the employee's Federal service, unless otherwise provided by a court order. or spousal -agreement. Any part of. the survivor annuity not paid to a former spouse would be available for a surviving spouse, but the sum of the survivor annuities could not exceed 55 percent of the retiree's annuity. -The right to a survivor annuity would terminate upon remarriage before age 60 but would be reinstated if the remarriage later ended.- The retiree's annuity would be reduced to provide the survivor annuity. This reduction would be eliminated if the former spouse's right to a survivor annuity terminated because of death or remarriage. However, the retiree could elect to continue the reduction in order. to increase the amount of the survivor annuity available to a subsequent spouse. There is no provision CON 1:4-2..3 ' Januay, eo Approved For Release 2008/08/27: CIA-RDP86B00338R000400610002-1 Approved For Release 2008/08/27: CIA-RDP86B00338R000400610002-1 lono_fola Robert 3 sole ? for increas_^g or commencing pay ie^.t of a survivor annuity to the retiree's survivi 'T spouse if a former Spouse's Survivor annuity is terminated after the retiree's death. 1, renting employee uho is married and/or has a former spouse .ould auto- ~ ly have his or her annuity reduced to provide a survivor annuity for the spouse and/or former spouse. The survivor annuity could be waived or reduced by a joint election of the employee and the spouse or former spouse. The employee could make such an election if he or she could establish to OPIi's satisfaction that the whereabouts of the former spouse could not be determined.. OPM would be required, "to the. maximum extent practicable," to inform spouses and former spouses of their rights to Civil Service Retirement benefits. If a retiree has a former spouse who is entitled to a survivor annuity, the retiree could elect-: to provide an additional survivor annuity for his or her current spouse and/or any other former spouse. The total :;:count of additional an Lities with respect to one retiree could not exceed 55 percent of the' retiree's annuity. The retiree would have to pay for the entire actuarial value of the additional annuity, and could elect to provide such an annuity only if in good health. No cost-of- living adjustments would apply to additional survivor annuities unless authorizes? by OP'i regulations. Section 3345(f) of title 5, United States Code, which establishes. a floor on Civil Service annuities, would not apply to ad' di tional survivor annuities. Section 109 of the bill would.also entitle.a former spouse to a pro rata share of half of an employee's lump-sun retirement credit in case the employee separates from the service and tak- s a refund of his or hex- retirement contributions, or the unexpended balance to the employee's or- annuitant's credit in the Fund in case he or she dies. The credit would be reduced by the amount of any annuity that has been paid to the former spouse. The provisions of section 109 would take effect 120 days after enactment and,'n certain exceptions, would apply in cases. where divorce, annul- rient, or legal separation occurred after the effective date. In cases where the marriage dissolved before the effective date, a survivor annu- ity would be provided to the former spouse only if a court order or spou- sal a treemant so provides. Court orders and spousal agrec cents could be made at any time before : etirement, in the case of current em ployees, and trithi^. ;natever period after the effective date that 0?N prescribes, in the case of current retirees. If the employee or former employee is married on the effective date and has been married for more than one year, his 'or her current spouse would have to concur in an election to provide a survivor annuity for a former spouse. Current employees would have their annuities reduced to provide the former spouse's survivor annuity, beginning on the commencing date of their annuity, while the reduction in the annuities of current retirees would begin on the effective date of section 109. Finally, section 109 would provide a survivor annuity to the former spouse of a retiree who died before the effective date, if the retiree was married to the former spouse at the time of retirement, failed Approved For Release 2008/08/27: CIA-RDP86B00338R000400610002-1 Approved For Release 2008/08/27: CIA-RDP86B00338R000400610002-1 l onora:bie Robert J. Dole to elect not to provide a survivor annuity, subsequently became divorcerj, and did not leave a surviving spouse :?i o .'as -Litled to a Civil Service sun: i,.or annuity-. The Office of Personnel Management-opposes enactment of section 109 of S. 888. Current law (5 U.S.C.-8345(j)) already. enables OP?I to recognize State court orders awarding some or all of an employee's annuity to a former spouse, and we believe this is an adequate protection of the rights of former spouses, since it recognizes the primary responsibility of State courts to determine, or. a case-by-case basis, a former spouse's entitlement to a portion of the employee's retirement benefits. Creating P. statutory assumption of automatic entitlement by the former spouse regardless of the circumstances of a partic- ular case, as section 109 of S. 888 would do, is only likely to foster new inequities. Section 109 resembles provisions of the Foreign Service Act of 1980 and. the Intelligence Authorization Act for Fiscal Year 1983, providing benefits for forcer spouses of Foreign Service officers and CIA employees serving overseas, respectively. The Congressional consideration of the relevant portions of these two statutes focused in large part on the effects on a former spouse that follow from the unique nature of employment in the Foreign Service and overseas employment with the CIA--residence in foreign countries, frequent relocations, they spouse's involvement with the employee's duties, and the co:secuert likelihood that a spouse is unable to pursue his or her own career 'and establish separate retire-sect benefits. T.:ese conditions do not characterize the careers of most employe s covered under the Civil Service Retirement System. Although section 109 of this bill is designed to benefit former spouses who were completely financially dependent on their Federally-employed spouses throughout long-term marriages, it would also impose an unreason- able and inequitable burden on many employees in lower-income Government jobs :-hose former spouses' intones are substantially higher than their oir._. The. authors of S. 888 implicitly recognize this potential inequity by providing that the automatic provision of benefits to a divorced spouse -may ve superseded by a court order or spousal agreement. Ile agree that vari--bles must be considered in individual cases, such as . he financial status of both parties, property settlements, children involved, and the reasons for the divorce. . Thus, we do not see a reason to abandon the present law, v'iich simply provides for disposition of Civil Service Retire- ment benefits by State courts on a case-by-case basis. We also note that significant new costs would be incurred by the Retirement System as a result of this bill. The reduction in the employee's annuity to provide for a survivor annuity (2 1/2 percent of the first $3600, plus 10 percent of the remainder) falls far short of the true cost of the sur- vivor annuity. We estimate that the annuity reduction pays only 29 percent of the cost of a widow's survivor benefit and 76 percent of a widower's benefit. Because S. 888 would require survivor annuities to be paid in many cases where none would be paid under current law (either because the employee never- remarried after being divorced or elected not to provide a Approved For Release 2008/08/27: CIA-RDP86B00338R000400610002-1 Approved For Release 2008/08/27: CIA-RDP86B00338R000400610002-1 no; or able ober_ JWole survivor annuity for his or her spouse at the _ine of .retire::ent), it Would increase the cost to =he Retirement System of providing survivor benefits. The problem of cos-- is also exacerbate` by the bill's retroactive prov lions. "nee:ion 109(e) would provide survivor annuities to former spouses of employ- e-3 :ho have been retired or dead', for several Years. In cases where the r`~iree died before the effective date of section: 109, the reduction in the retiree's annuity presumably would have been eliminated at the time of divorce, further increasing the cost to the Government of providing the annuity. Finally, the 3driinistrative costs of apportioning annuities and survivor amenities, as well as of informing potential former spouses of their annuity rights, would also be significant. Section 109(b)(2) of S. 888 concerns service credit under 5 U.S.C. 8332(k) and 8334(d). The former requires that employees on leave-without-pay chile serving full-time with an employee organization must make retirement con- tributions for such periods after July 17, 1966, in order to receive credit for those periods. For such periods before July 18, 1966, only up to 6 months in a calendar year may be credited if the employee fails to make a. deposit. Section 8334(d) requires an employee who has received a refund of Civil Service Retirement contributions to redeposit the refund, with interest, in order to receive credit for the period of service covered by the refund. Under section 109(b)(2) of S. $28, these periods could be used in computing annuities for former spouses, even if they were not covered by retirement contributions of the employee. This provisio- is unreason- able and inequitable, since it would allow a former spouse to receive . credit for periods for which neither the employee nor the employee's survi vi g spouse could receive credit. Accordingly, this provision could enable the former receive more than a pro rata share of the employee's annuity and the survivor annuity. Finally, it should be noted that the provision concerning additional survivor annuities is impractical and unrealistic. The employee would have to pay the full actuarial value of such an annuity, which would be prohibitively expensive in most cases. The employee's annuity would already have been. reduced by 2 1/2 percent of the first $3600 and 10 percent of the remainder in order to provide the basic survivor annuity. Moreover, it is likely that the employee's anrlity will have been apportioned between the employee and the former spouse. From this already reduced annuity, yet a.further reduction would be ran ui_ed to Provide the second spouse with an addi.tionai, survivor annuity, and even where the employee and second spouse are the sak=e age, this reduction could have to be approximately 20 percent of the e::ploy- ee's unreduced annuity. Thus, few employees would be willing or financially able to provide an additional benefit for the second spouse. In addition to these substantive objections to section 109, we would like to point out the following technical deficiencies in these provisions: (1) The use of a capital letter in denoting a section ("8341A") is inconsis- tent with the style used throughout title 5, U.S. Code. "8341a" should be used instead. _ Approved For Release 2008/08/27: CIA-RDP86B00338R000400610002-1 Approved For Release 2008/08/27: CIA-RDP86B00338R000400610002-1 'io,oraole Robert J. Tole (=?) The definition of court" should stipe ~?he~, ec or. .rot -erritorial courts are included. (3) Proposed section 83 1A'c)(3)(A)(i) provides that an employee or ;1enber could provide an additional survivor annu _y through 3 Salary al' otrie :_. This is inconsistent with section 83 4 1A(c)(1), =rich enables only an "employee or t?lernber providing a survivor a nui benefit under subsection (b) for a former spouse to provide an additional survivor annuity. This means that only a retired employee whose annuity is being reduced to pro- vide a survivor an: ui.ty for a former spouse could rake payments or have his or her annuity further reduced to provide an. additional survivor anz=ity. Accordingly this would preclude an individual from providing an additional survivor annuity through salary allotments. (4) Proposed section 8341A(c)(3)(C), should be amended by inserting "or spouse" after "If a"former spouse". This change is needed in order to. reflect that an additional survivor annuity may be provided either for a former spouse or a current spouse. Similarly, in section 8341A(c)(4), "spouse's or" should be inserted before "fo m-:er spouse's death". (5) Proposed section 8341A(c)(3)(C) provides that if a former spouse pre- deceases the employee or remarries before age o0, the annuity reduction or salary allotment by which the employee is providing for an additional survivor annuity will be terminated and whatever contributions the employee has made for this purpose will be refunded, but only to the extent that the employee's contributions have exceeded the actuarial cost of providing additional survivor benefits for the period such benefits were provided. The latter clause is confusing. There is no actuarial cost of providing an addition na survivor annuity unless such an annuity is actually paid. If such an annuity has been paid, the retiree must be deceased, so it is unclear to who- his or her contribu- tions would be refunded. In any event this hind of payment 'should -ever be refunded, since it, in essence, amounts to a purchase of life insurance. (6) Section ' 0>'(b) (3) (L) would amend 5 U.S.C. 8341(d) , r elating to annuities for surviving spouses of employees who die in service, to provide that a surviving former spouse shall be entitled to an annuity under 5 U.S.C. 8341A(b) , as if the employee died after becoming entitled to an annuity . Although this provision appears intended to provide survivor annuities to former spouses of employees and ?:embers who die in service, it. does not actually so stipulate. 11oreover, the placement of this provision in 5 U.S.C. 8341(d) is inappropriate, since it is providing entitlement to a benefit under 5 U.S.C. 8341A(+). (7) In the proposed new 5 U.S.C. 8339(j)(4)(B), as added by section 109(c)(1) of the bill, "or" should be changed to "and". (8) In section 109(e)(3)(A) of the bill, "or at" should be inserted after "prior to". This provision concerns a joint election between an employee and the employee's current spouse to waive or reduce a survivor annuity Approved For Release 2008/08/27: CIA-RDP86B00338R000400610002-1 Approved For Release 2008/08/27: CIA-RDP86B00338R000400610002-1 49 - 4P Honorable Robert J. Dole 6 for the current spouse in order to provide a survivor annuity for a former spouse, and stipulates that such an election. may he made prior to the time of retirement. However, this provision refers specifically to an election under 5 U.S.C. 3339(j)(1)(B), which in turn. provides only for an election to be made at the time of retirement. It is inconsist- ent to require under section 109(e) (3) (A) of the bill that such an election must be made before the time of retirement. (9) Section 109(e) (4) of the bill refers erroneously This should be changed to 5 U.S.C. 8339(j)(2). to '5 U.S.C. 8339(b)(2). (10) Paragraphs (2) and (3) of section 109(f) of the bill, concerning the effective date, are largely redundant and could be merged into one paragraph. Finally, we wish also to comment briefly on section 511 of S. 888, which would amend chapter 55 of title 5, United States Code, to authorize garnish- ment of Federal eaployees' pay for child and spousal support. This provision seems to be a restatement of authorities currently found in 42 U.S.C. 659, 661, and 662. We question the need to repeat the same provisions in title 5. The Office of Aanagema_nt and Budget advises that there is no objection to the submission of this report from the standpoint of the Administration's program. Sincerely, Donald J. Devine Director Approved For Release 2008/08/27: CIA-RDP86B00338R000400610002- Approved For Release 2008/08/27: CIA-RDP86B00338R000400610002-1 98TH CONGRESS 1ST SESSION Entitled the "Economic Equity Act". IN THE SENATE OF THE UNITED STATES MARCH 23 (legislative day, MARCH 21), 1983 11r. DLTREN.BERGER (for himself, Mr. PACKWOOD, Mr. HATFIELD, Mr. HART, Mrs. KASSEBAUM, Mr. BAUCUS, Mr. BURDICK, Mr. INOUYE, Mr. BOSCH-