[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 1710 Introduced in Senate (IS)]







105th CONGRESS
  2d Session
                                S. 1710

   To provide for the correction of retirement coverage errors under 
           chapters 83 and 84 of title 5, United States Code.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 4, 1998

   Mr. Cochran (by request) (for himself, Mr. Levin, Mr. Leahy, Mr. 
    Stevens, Mr. Robb, Mr. Warner, Mr. Sarbanes, and Ms. Mikulski) 
introduced the following bill; which was read twice and referred to the 
                   Committee on Governmental Affairs

_______________________________________________________________________

                                 A BILL


 
   To provide for the correction of retirement coverage errors under 
           chapters 83 and 84 of title 5, United States Code.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, That this Act may be 
cited as the ``Retirement Coverage Error Correction Act of 1998''.

SEC. 2. FINDINGS AND PURPOSE.

    The Congress finds that a number of Government employees have been 
placed under erroneous retirement coverage during the transition from 
the Civil Service Retirement System to the Federal Employees Retirement 
System. When these errors are of significant duration, they adversely 
affect an employee's ability to plan for retirement. It is the purpose 
of this Act to provide a remedy that treats all such individuals fairly 
and reasonably, and demonstrates the Government's concern for its 
employees who have been disadvantaged by a Government error in their 
retirement coverage. Affected employees should have a choice between 
corrected retirement coverage and the benefit the employee would have 
received under the erroneous coverage, without disturbing Social 
Security coverage law.

SEC. 3. DEFINITIONS.

    For the purposes of this Act--
            (1) ``Annuitant'' means an individual described by section 
        8331(9) or 8401(2) of title 5, United States Code;
            (2) ``CSRS'' means the Civil Service Retirement System 
        established under subchapter III of chapter 83 of title 5, 
        United States Code;
            (3) ``CSRS covered'' means subject to the provisions of 
        subchapter III of chapter 83 of title 5, United States Code, 
        including full CSRS employee deductions;
            (4) ``CSRS Offset covered'' means subject to the provisions 
        of subchapter III of chapter 83 of title 5, United States Code, 
        including reduced CSRS employee deductions;
            (5) ``Director'' means the Director of Office of Personnel 
        Management;
            (6) ``FERS'' means the Federal Employees Retirement System 
        established under chapter 84 of title 5, United States Code;
            (7) ``FERS covered'' means subject to the provisions of 
        chapter 84 of title 5, United States Code;
            (8) ``OASDI employee tax'' means the Old Age, Survivors and 
        Disability Insurance tax imposed on wages under section 3101(a) 
        of the Internal Revenue Code of 1986;
            (9) ``OASDI employer tax'' means the Old Age, Survivors and 
        Disability Insurance tax imposed on wages under section 3111(a) 
        of the Internal Revenue Code of 1986;
            (10) ``OASDI taxes'' means the sum of the OASDI employee 
        tax and OASDI employer tax;
            (11) ``former employee'' means an individual who formerly 
        was a Government employee, but who is not an annuitant;
            (12) ``Office'' means the Office of Personnel Management;
            (13) ``Retirement coverage determination'' means the 
        determination by an agency whether employment is CSRS covered, 
        CSRS Offset covered, FERS covered, or Social Security only 
        covered;
            (14) ``Retirement coverage error'' means an erroneous 
        retirement coverage determination that was in effect for a 
        minimum period of 3 years of service after December 31, 1986;
            (15) ``Service'' means a period of civilian service that is 
        creditable under section 8332 or 8411 of title 5, United States 
        Code;
            (16) ``Social Security-only covered'' means employment 
        under section 3121(b) of the Internal Revenue Code of 1986, 
        subject to OASDI taxes, but not CSRS covered, CSRS Offset 
        covered, or FERS covered; and
            (17) ``Survivor'' means an individual described by section 
        8331(10) or 8401(28) of title 5, United States Code.

SEC. 4. ERRORS OF LESS THAN 3 YEARS EXCLUDED.

    Except as otherwise provided in this Act, an erroneous retirement 
coverage determination that was in effect for a period of less than 3 
years of service after December 31, 1986, is not covered by this Act.

SEC. 5. SOCIAL SECURITY-ONLY COVERED EMPLOYEES WHO WERE ERRONEOUSLY 
              CSRS COVERED OR CSRS OFFSET COVERED.

    (a) This section applies in the case of a retirement coverage error 
in which a Social Security-only covered employee was erroneously CSRS 
covered or CSRS Offset covered.
    (b)(1) This subsection applies if the retirement coverage error has 
not been corrected prior to the effective date of the regulations 
described in paragraph (3).
    (2) In the case of an individual who is erroneously CSRS covered, 
as soon as practicable after discovery of the error, and subject to the 
right of an election under paragraph (3), such a individual shall be 
CSRS Offset covered, retroactive to the date of the retirement coverage 
error.
    (3) Upon written notice of a retirement coverage error, an 
individual shall have 6 months to make an election, under regulations 
promulgated by the Office, to be CSRS Offset covered or Social 
Security-only covered, retroactive to the date of the retirement 
coverage error. If the individual does not make an election prior to 
the deadline, the individual shall remain CSRS Offset covered.
    (c)(1) This subsection applies if the retirement coverage error was 
corrected prior to the effective date of the regulations described in 
subsection (b)(3).
    (2) Within 6 months after the date of enactment of this Act, the 
Office shall promulgate regulations authorizing individuals to elect, 
during the 18-month period immediately following the effective date of 
the regulations, to be CSRS Offset covered or Social Security-only 
covered, retroactive to the date of the retirement coverage error.
    (3) If an eligible individual does not make an election under 
paragraph (2) prior to the deadline, the corrective action previously 
taken shall remain in effect.

SEC. 6. SOCIAL SECURITY-ONLY COVERED EMPLOYEES NOT ELIGIBLE TO ELECT 
              FERS WHO WERE ERRONEOUSLY FERS COVERED.

    (a) This section applies in the case of a retirement coverage error 
in which a Social Security-only covered employee not eligible to elect 
FERS coverage under authority of section 8402(c) of title 5, United 
States Code, was erroneously FERS covered.
    (b)(1) This subsection applies if the retirement coverage error has 
not been corrected prior to the effective date of the regulations 
described in paragraph (2).
    (2) Upon written notice of a retirement coverage error, an 
individual shall have 6 months to make an election, under regulations 
promulgated by the Office, to be FERS covered or Social Security-only 
covered, retroactive to the date of the retirement coverage error. If 
the individual does not make an election prior to the deadline, the 
individual shall remain FERS covered, retroactive to the date of the 
retirement coverage error.
    (c)(1) This subsection applies if the retirement coverage error was 
corrected prior to the effective date of the regulations described in 
subsection (b)(2).
    (2) Within 6 months after the date of enactment of this Act, the 
Office shall promulgate regulations authorizing individuals to elect, 
during the 18-month period immediately following the effective date of 
the regulations to be FERS covered or Social Security-only covered, 
retroactive to the date of the retirement coverage error.
    (3) If an eligible individual does not make an election under 
paragraph (2) prior to the deadline, the corrective action previously 
taken shall remain in effect.

SEC. 7. CSRS COVERED, CSRS OFFSET COVERED, AND FERS-ELIGIBLE SOCIAL 
              SECURITY-ONLY COVERED EMPLOYEES WHO WERE ERRONEOUSLY FERS 
              COVERED WITHOUT AN ELECTION.

    (a) If an individual was prevented from electing FERS because the 
individual was erroneously FERS covered during the period when the 
individual was eligible to elect FERS under title III of the Federal 
Employees Retirement System Act of 1986, the individual is deemed to 
have elected FERS coverage and will remain covered by FERS, unless the 
individual declines, under regulations promulgated by the Office, to be 
FERS covered, in which case the individual will be CSRS covered, CSRS 
Offset covered, or Social Security-only covered; as would apply in the 
absence of a FERS election, retroactive to the date of the erroneous 
retirement coverage determination.
    (b) In the case of an individual to whom subsection (a) applies, 
who dies prior to discovery of the coverage error, or who dies during 
the election period prescribed in subsection (a) prior to making an 
election to correct the error, without having the right to decline FERS 
coverage, the individual's survivors shall have the right to make the 
election under regulations promulgated by the Office that provide for 
such election in a manner consistent with the election rights of the 
individual.
    (c) This section shall be effective retroactive to January 1, 1987, 
except that this section shall not affect individuals who made or were 
deemed to have made elections similar to those provided in this section 
under regulations promulgated by the Office prior to the effective date 
of this Act.

SEC. 8. FERS COVERED CURRENT AND FORMER EMPLOYEES WHO WERE ERRONEOUSLY 
              CSRS COVERED OR CSRS OFFSET COVERED.

    (a) This section applies to a FERS covered employee or former 
employee who was erroneously CSRS covered or CSRS Offset covered as a 
result of a retirement coverage error.
    (b)(1) This subsection applies if the retirement coverage error has 
not been corrected prior to the effective date of the regulations 
described in paragraph (2). As soon as practicable after discovery of 
the error, and subject to the right of an election under paragraph (2), 
if CSRS covered or CSRS Offset covered, such individual shall be 
treated as CSRS Offset covered, retroactive to the date of the 
retirement coverage error.
    (2) Upon written notice of a retirement coverage error, an 
individual shall have 6 months to make an election, under regulations 
promulgated by the Office, to be CSRS Offset covered or FERS covered, 
retroactive to the date of the retirement coverage error. If the 
individual does not make an election by the deadline, a CSRS Offset 
covered individual shall remain CSRS Offset covered and a CSRS covered 
individual shall be treated as CSRS Offset covered.
    (c)(1) This subsection applies if the retirement coverage error was 
corrected prior to the effective date of the regulations described in 
subsection (b)(2).
    (2)(A) Within 6 months after the date of enactment of this Act, the 
Office shall promulgate regulations authorizing individuals to elect, 
during the 18-month period immediately following the effective date of 
the regulations, to be CSRS Offset covered, retroactive to the date of 
the retirement coverage error.
    (B) An individual who previously received a payment ordered by a 
Court or provided as a settlement of claim for losses resulting from a 
retirement coverage error shall not be entitled to make an election 
under this subsection unless that amount is waived in whole or in part 
under section 12, and any amount not waived is repaid.
    (C) An individual who, subsequent to correction of the retirement 
coverage error, received a refund of retirement deductions under 
section 8424, or a distribution under section 8433, of title 5, United 
States Code, shall not be entitled to make an election under this 
subsection.
    (3) If an individual is ineligible to make an election or does not 
make an election under paragraph (2) prior to the deadline, the 
corrective action previously taken shall remain in effect.

SEC. 9. ANNUITANTS AND SURVIVORS IN CASES WHERE FERS COVERED EMPLOYEES 
              WERE ERRONEOUSLY CSRS COVERED OR CSRS OFFSET COVERED.

    (a) This section applies to an individual who is an annuitant or a 
survivor of a FERS covered employee who was erroneously CSRS covered or 
CSRS Offset covered as a result of a retirement coverage error.
    (b)(1) Within 6 months after the date of enactment of this Act, the 
Office shall promulgate regulations authorizing an individual described 
in subsection (a) to elect CSRS Offset coverage or FERS coverage, 
retroactive to the date of the retirement coverage error.
    (2) An election under this subsection shall be made within 18 
months after the effective date of the regulations.
    (3) If the individual elects CSRS Offset coverage, the amount in 
the employee's Thrift Savings Plan account under subchapter III of 
chapter 84 of title 5, United States Code, at the time of retirement 
that represents the Government's contributions and earnings on those 
contributions (whether or not this amount was subsequently distributed 
from the Thrift Savings Plan) will form the basis for a reduction in 
the individual's annuity, under regulations promulgated by the Office. 
The reduced annuity to which the individual is entitled shall be equal 
to an amount which, when taken together with the amount referred to in 
the preceding sentence, would result in the present value of the total 
being actuarially equivalent to the present value of an unreduced CSRS 
Offset annuity that would have been provided the individual.
    (4) If--
            (A) a surviving spouse elects CSRS Offset benefits; and
            (B) a FERS basic employee death benefit under section 
        8442(b) of title 5, United States Code, was previously paid;
then the survivor's CSRS Offset benefit shall be subject to a 
reduction, under regulations promulgated by the Office. The reduced 
annuity to which the individual is entitled shall be equal to an amount 
which, when taken together with the amount of the payment referred to 
subparagraph (B) would result in the present value of the total being 
actuarially equivalent to the present value of an unreduced CSRS Offset 
annuity that would have been provided the individual.
    (5) An individual who previously received a payment ordered by a 
Court or provided as a settlement of claim for losses resulting from a 
retirement coverage error shall not be entitled to make an election 
under this subsection unless repayment of that amount is waived in 
whole or in part under section 12, and any amount not waived is repaid.
    (c) If the individual does not make an election under subsection 
(b) prior to the deadline, the retirement coverage shall be subject to 
the following rules--
            (1) If corrective action was previously taken, that 
        corrective action shall remain in effect; and
            (2) If corrective action was not previously taken, the 
        employee shall be CSRS Offset covered, retroactive to the date 
        of the retirement coverage error.

SEC. 10. PROVISIONS RELATED TO SOCIAL SECURITY COVERAGE OF 
              MISCLASSIFIED EMPLOYEES.

    (a) Reports to Commissioner of Social Security.--In order to carry 
out the Commissioner of Social Security's responsibilities under title 
II of the Social Security Act, the Commissioner may request the head of 
each agency that employs or employed an individual erroneously subject 
to CSRS coverage as a result of a retirement coverage error and 
retroactively converted to CSRS Offset coverage, FERS coverage, or 
Social Security-only coverage to report in coordination with the Office 
of Personnel Management, and in such form and within such time frame as 
the Commissioner may specify, any or all of the following--
            (1) the total wages (as defined in section 3121(a) of the 
        Internal Revenue Code of 1986) paid to such individual during 
        each year of the entire period of the erroneous CSRS coverage;
            (2) the excess CSRS deduction amount for the individual; 
        and
            (3) such additional information as the Commissioner may 
        require for the purpose of carrying out the Commissioner's 
        responsibilities under title II of the Social Security Act.
The head of an agency or the Office shall comply with such a request 
from the Commissioner. For purposes of section 201 of the Social 
Security Act, wages reported pursuant to this subsection shall be 
deemed to be wages reported to the Secretary of the Treasury or the 
Secretary's delegates pursuant to subtitle F of the Internal Revenue 
Code of 1954. For purposes of this section, the ``excess CSRS deduction 
amount'' for an individual shall be an amount equal to the difference 
between the CSRS deductions withheld and the CSRS Offset or FERS 
deductions, if any, due with respect to the individual during the 
entire period the individual was erroneously subject to CSRS coverage 
as a result of a retirement coverage error.
    (b) Adjustment to Transfers Under Section 201 of the Social 
Security Act.--Any amount transferred from the General Fund to the 
Federal Old-Age and Survivors Insurance Trust Fund and the Federal 
Disability Insurance Trust Fund under section 201 of the Social 
Security Act on the basis of reports under this section shall be 
adjusted by amounts previously transferred as a result of corrections 
made (including corrections made before the date of enactment of this 
Act), and shall be reduced by any excess CSRS deduction amounts 
determined by the Director of the Office of Personnel Management to be 
remaining to the credit of individuals in the Civil Service Retirement 
and Disability Fund or in accounts maintained by the employing 
agencies. Such amounts determined by the Director in the preceding 
sentence shall be transferred to the Federal Old Age and Survivors 
Insurance Trust Fund and the Federal Disability Insurance Trust Fund in 
the proportions indicated in sections 201 (a) and (b) of the Social 
Security Act.
    (c) Application of OASDI Tax Provisions of the Internal Revenue 
Code of 1986 to Affected Individuals and Employing Agencies.--An 
individual described in subsection (a) and the individual's employing 
agency shall be deemed to have fully satisfied in a timely manner their 
responsibilities with respect to the taxes imposed by sections 3101(a), 
3102(a), and 3111(a) of the Internal Revenue Code of 1986 on the wages 
paid by the employing agency to such individual during the entire 
period he or she was erroneously subject to CSRS coverage as a result 
of a retirement coverage error. No credit or refund of taxes on such 
wages shall be allowed as result of the operation of this subsection.

SEC. 11. FUTURE CSRS COVERAGE DETERMINATIONS.

    No agency shall place an individual under CSRS coverage unless--
            (1) the individual has been employed with CSRS coverage 
        within the preceding 365 days; or
            (2) the Office has agreed in writing that the agency's 
        coverage determination is correct.

SEC. 12. DISCRETIONARY ACTIONS BY DIRECTOR.

    (a) The Director is authorized to take any of the following 
actions--
            (1) extend the deadlines for making elections under this 
        Act in circumstances involving an individual's inability to 
        make a timely election due to cause beyond the individual's 
        control;
            (2) provide for the reimbursement of necessary and 
        reasonable expenses incurred by an individual with respect to 
        settlement of a claim for losses resulting from a retirement 
        coverage error, including attorney's fees, court costs, and 
        other actual expenses;
            (3) compensate an individual for monetary losses that are a 
        direct and proximate result of a retirement coverage error, 
        excluding claimed losses relating to forgone contributions and 
        earnings under the Thrift Savings Plan under subchapter III of 
        chapter 84 of title 5, United States Code, and all other 
        investment opportunities; and
            (4) waive repayments otherwise required under this Act.
    (b) In exercising the authority under this section, the Director 
shall, to the extent practicable, provide for similar actions in 
situations involving similar circumstances.
    (c) Actions taken under this section are final and conclusive, and 
are not subject to administrative or judicial review on any basis.
    (d) The Office of Personnel Management shall prescribe regulations 
regarding the process and criteria used in exercising the authority 
under this section.
    (e) The Office of Personnel Management shall, within six months 
after the date of enactment of this Act, and annually thereafter for 
each year in which the authority provided in this section is used, 
submit a report to each House of Congress on the operation of this 
section.

SEC. 13. THRIFT PLAN TREATMENT FOR CERTAIN INDIVIDUALS.

    (a) This section applies to an individual who--
            (1) is eligible to make an election of coverage under 
        section 8 or section 9, and only if FERS coverage is elected 
        (or remains in effect) for the employee involved; or
            (2) is an employee (or former employee, annuitant, or 
        survivor, subject to conditions similar to those in section 8 
        and 9) in the case of a retirement coverage error in which a 
        FERS covered employee was erroneously Social Security-only 
        covered and is corrected to FERS coverage.
    (b)(1) With respect to an individual to whom this section applies, 
the Director shall pay to the Thrift Savings Fund under subchapter III 
of chapter 84 of title 5, United States Code, for credit to the account 
of the employee involved, an amount equal to the earnings which are 
disallowed under section 8432a of such title 5 on the employee's 
retroactive contributions to such Fund. Such amount shall represent 
earnings, on such retroactive contributions, during the period of the 
retirement coverage error and continuing up to the date on which the 
amount is paid by the Director (and based on distributions from the 
employee's Thrift Savings Plan account). Such earnings shall be 
computed in accordance with the procedures for computing lost earnings 
under such section 8432a. The amount paid by the Director shall be 
treated for all purposes as if that amount had actually been earned on 
the basis of the employee's contributions.
    (2) In cases in which the retirement coverage error was corrected 
prior to the effective date of the regulations under section 8(c) or 
section 9(b), the employee involved (including an employee described in 
subsection (a)(2)) shall have an additional opportunity to make 
retroactive contributions for the period of the retirement coverage 
error (subject to applicable limits), and such contributions shall be 
treated in accordance with the provisions of paragraph (1).
    (c) The Office, in consultation with the Federal Retirement Thrift 
Investment Board, shall prescribe regulations appropriate to carry out 
this section.

SEC. 14. AUTHORIZATION AND APPROPRIATION.

    All payments permitted or required by this Act to be paid from the 
Civil Service Retirement and Disability Fund, together with 
administrative expenses incurred by the Office in administering this 
Act, shall be deemed to have been authorized to be paid from that Fund, 
which is appropriated for the payment thereof.

SEC. 15. SERVICE CREDIT DEPOSITS.

    (a) In the case of a retirement coverage error in which--
            (1) a FERS covered employee was erroneously CSRS covered or 
        CSRS Offset covered;
            (2) the employee made a service credit deposit under the 
        CSRS rules; and
            (3) there is a subsequent retroactive change to FERS 
        coverage;
the excess of the amount of the CSRS civilian or military service 
credit deposit over the FERS civilian or military service credit 
deposit, together with interest computed in accordance with paragraphs 
(2) and (3) of section 8334(e) of title 5, United States Code and 
regulations prescribed by the Office, shall be a paid to the annuitant 
or, in the case of a deceased employee, to the individual entitled to 
lump-sum benefits under section 8342(c) or 8424(d) of title 5, United 
States Code, as applicable.
    (b)(1) This subsection applies in the case of an erroneous 
retirement coverage determination in which--
            (A) the employee made a service credit deposit under the 
        FERS rules; and
            (B) there is a subsequent retroactive change to CSRS or 
        CSRS Offset coverage.
    (2) If at the time of commencement of an annuity there is remaining 
unpaid any excess of the CSRS civilian or military service credit 
deposit over the FERS civilian or military service credit deposit, the 
annuity shall be reduced based upon the amount unpaid together with 
interest computed in accordance with paragraphs (2) and (3) of section 
8334(e) of title 5, United States Code and regulations prescribed by 
the Office. The reduced annuity to which the individual is entitled 
shall be equal to an amount that, when taken together with the amount 
referred to in the preceding sentence, would result in the present 
value of the total being actuarially equivalent to the present value of 
an unreduced CSRS Offset annuity that would have been provided the 
individual.
    (3) If at the time of commencement of a survivor annuity, there is 
remaining unpaid any excess of the CSRS service credit deposit over the 
FERS service credit deposit, and there has been no actuarial reduction 
in an annuity under the preceding paragraph, the survivor annuity shall 
be reduced based upon the amount unpaid together with interest computed 
in accordance with paragraphs (2) and (3) of section 8334(e) of title 
5, United States Code and regulations prescribed by the Office. The 
reduced survivor annuity to which the individual is entitled shall be 
equal to an amount that, when taken together with the amount referred 
to in the preceding sentence, would result in the present value of the 
total being actuarially equivalent to the present value of an unreduced 
CSRS Offset survivor annuity that would have been provided the 
individual.

SEC. 16. REGULATIONS.

    (a) In addition to the regulations specifically authorized in this 
Act, the Office may prescribe such other regulations as are necessary 
for the administration of this Act.
    (b) The regulations issued under this Act shall provide for 
protection of the rights of a former spouse with entitlement to an 
apportionment of benefits or to survivor benefits based on the service 
of the employee.

SEC. 17. EFFECTIVE DATE.

    Except as otherwise provided herein, this Act shall be effective on 
the date of enactment.
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