Indexation of deferred annuities

(a)

Amendments to Subchapter III of Chapter 83

Section 8338 of title 5, United States Code, is amended— (1)in subsection (d) by striking (d) An and inserting (d) Subject to subsection (e), an; and (2)by adding at the end the following:

(e)(1)The average pay used in the computation of an annuity authorized by this section shall be equal to the average pay described in section 8331(4), increased by the percentage adjustments (compounded) in rates of pay of the General Schedule taking effect during the period— (A)beginning on the day after the date of the separation on which title to annuity is based, and (B)ending on the day before the commencement date of such annuity. (2)In the case of a former employee or Member who dies after having separated from the service with title to an annuity authorized by this section but before having established a valid claim for such annuity, the average pay used in the computation of any survivor annuity payable based on the service of such former employee or Member shall be increased in the manner described in paragraph (1), except that, in applying subparagraph (B) of paragraph (1) for purposes of this paragraph, the commencement date of such survivor annuity shall be used instead of the commencement date of the annuity referred to in such subparagraph. (3)Average pay shall not be increased by reason of any adjustment under this subsection to an amount which exceeds the rate of basic pay that, as of the day before the commencement date of the annuity or survivor annuity involved, is payable for the position that was held by the employee or Member at the time of earning the highest rate of pay taken into account in computing such employee’s or Member’s average pay, as determined under regulations of the Office.

(b)

Amendment to Chapter 84

Section 8415 of title 5, United States Code, is amended by adding at the end the following:

(m)(1)The average pay used in the computation of a deferred annuity under section 8413 shall be equal to the average pay described in section 8401(3), increased by the percentage adjustments (compounded) in rates of pay of the General Schedule taking effect during the period— (A)beginning on the day after the date of the separation on which title to annuity is based, and (B)ending on the day before the commencement date of such annuity. (2)In the case of a former employee or Member who dies after having separated from the service with title to a deferred annuity referred to in paragraph (1) but before having established a valid claim for such annuity, the average pay used in the computation of any survivor annuity payable based on the service of such former employee or Member shall be increased in the manner described in paragraph (1), except that, in applying subparagraph (B) of paragraph (1) for purposes of this paragraph, the commencement date of such survivor annuity shall be used instead of the commencement date of the annuity referred to in such subparagraph. (3)Average pay shall not be increased by reason of any adjustment under this subsection to an amount which exceeds the rate of basic pay that, as of the day before the commencement date of the annuity or survivor annuity involved, is payable for the position that was held by the employee or Member at the time of earning the highest rate of pay taken into account in computing such employee’s or Member’s average pay, as determined under regulations of the Office.

(c)

Amendments Relating to Individuals Becoming Subject to FERS by Election

(1)

Computation of a deferred annuity

Paragraph (6) of section 302(a) of the Federal Employees’ Retirement System Act of 1986 (5 U.S.C. 8331 note) is amended by adding at the end the following:

(C)In determining average pay under this paragraph for purposes of computing a deferred annuity under section 8413 of such title— (i)the provisions of section 8338(e)(1) and (3) of such title shall apply, to the extent that such annuity is computed under paragraph (4); and (ii)the provisions of section 8415(m)(1) and (3) of such title shall apply, to the extent that such annuity is computed under paragraph (5).

(2)

Computation of a survivor annuity

Paragraph (9) of such section 302(a) is amended by striking (9) and inserting (9)(A), and by adding at the end the following:

(B)In computing an annuity under paragraph (3) for purposes of determining the amount of a survivor annuity under subchapter IV of chapter 84 of title 5, United States Code, to which the survivor is entitled based on the service of a former employee or Member who dies in the circumstances described in section 8415(m)(2) of such title— (i)paragraph (6)(C)(i) shall apply, to the extent that such annuity is computed under paragraph (4); and (ii)paragraph (6)(C)(ii) shall apply, to the extent that such annuity is computed under paragraph (5).

(d)

Conforming Amendments

(1)Section 8331(10) of title 5, United States Code, is amended by inserting former employee or Member, before or annuitant. (2)Section 8341(h)(1) of title 5, United States Code, is amended by striking or former Member who was separated from the service with title to a deferred annuity under section 8338(b) of this title and inserting or former employee or Member who died after having separated from the service with title to a deferred annuity under section 8338 but before having established a valid claim for annuity,. (3)Clause (iii) of section 8341(h)(2)(B) of title 5, United States Code, is amended by striking a Member and inserting an employee or Member.

Amendment to provide that the widow or widower of a deferred annuitant who dies before establishing a valid claim for annuity under csrs shall be eligible for a survivor annuity in the same way as applies currently under FERS

Subsection (f) of section 8341 of title 5, United States Code, is amended to read as follows:

(f)If an employee or Member dies after having separated from the service with title to a deferred annuity under section 8338 but before having established a valid claim for annuity, and is survived by a widow or widower to whom married on the date of separation, the widow or widower— (1)is entitled to an annuity equal to 55 percent of the deferred annuity of the employee or Member commencing on the day after the employee or Member dies and terminating on the last day of the month before the widow or widower dies or remarries before age 55; or (2)may elect to receive the lump-sum credit instead of annuity if the widow or widower is the individual who would be entitled to the lump-sum credit and files application therefor with the Office before the award of the annuity.

Notwithstanding the preceding sentence, an annuity payable under this subsection to the widow or widower of a former employee or Member may not exceed the difference between—

(A)the annuity which would otherwise be payable to such widow or widower under this subsection; and (B)the amount of the survivor annuity payable to any former spouse of such former employee or Member under subsection (h).

Effective dates

(a)

Amendments Made by Section 1

(1)

In general

The amendments made by section 1 shall apply to any annuity or survivor annuity commencing before, on, or after the date of the enactment of this Act, subject to paragraph (2). (2)

Recomputations

In the case of any individual who is entitled to an annuity or survivor annuity based on a separation from service which occurred before the date of the enactment of this Act— (A)such annuity or survivor annuity shall be recomputed to take into account the amendments made by section 1 only if application therefor is made within 12 months after the effective date of regulations prescribed by the Office of Personnel Management to carry out such amendments; and (B)any change in an annuity or survivor annuity resulting from a recomputation under subparagraph (A) shall be effective only with respect to amounts accruing for months beginning on or after the date of the enactment of this Act. (b)

Amendment Made by Section 2

The amendment made by section 2 shall take effect as of the date of the enactment of this Act. Upon timely application to the Office of Personnel Management, such amendment shall also apply to the widow or widower of a former employee or Member who died before such date of enactment, except that no amount shall be payable— (1)for any period beginning before such date of enactment; or (2)in any case in which all annuity rights under subchapter III of chapter 83 of title 5, United States Code, have been voided due to the lump-sum credit having been taken. (c)

Savings Provision

Nothing in section 2 shall affect the right of an individual to a survivor annuity, based on a death occurring on or after the date of the enactment of this Act, if such individual would (upon filing claim therefor) have been entitled to such annuity had section 2 not been enacted. (d)

Definitions

For purposes of this section— (1)the terms widow and widower have the respective meanings given them by section 8341 of title 5, United States Code; and (2)the term lump-sum credit has the meaning given such term by section 8331(8) of such title.