REQUEST BY OMB FOR OUR VIEWS ON AN OFFICE OF PERSONNEL MANAGEMENT REPORT ON S. 888 THE ECONOMIC EQUITY ACT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86B00338R000400610002-1
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 37
• Document Creation Date: December 21, 2016
• Document Release Date: August 27, 2008
• Sequence Number: 2
• Publication Date: September 1, 1983
• Content Type: MEMO

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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.
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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)
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? ? 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
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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, w.it'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
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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
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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 spouse.to 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. _
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'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
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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
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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-