```
Federal Pensions: Judicial Survivors' Annuities System Costs (Letter
Report, 05/25/2000, GAO/GGD-00-125).

Pursuant to a legislative requirement, GAO reviewed certain aspects of
the Judicial Survivors' Annuities Systems (JSAS), which provides
annuities to the surviving spouses and dependent children of deceased
federal judges and other judicial officials who participate in JSAS.

GAO noted that: (1) the participating judges did not pay one-half of the
JSAS normal cost during fiscal years 1996 through 1998; (2) they paid on
average about 40 percent over the 3-year period; (3) however, the
participating judges' contributions represented an increasing share of
normal costs over the period, starting at about 36 percent in fiscal
year 1996 and growing to about 45 percent in fiscal year 1998; (4) on
the basis of information contained in JSAS' 1998 actuarial report, to
cover one-half of the future costs, the judges'contribution would need
to increase 0.3 percentage points above the 2.2 percent of salary
currently paid by retired judges; and (5) increasing required
contributions could affect the judges' rate of participation, which was
one of the major reasons for enhancing JSAS' benefits and reducing the
judges contributions in 1992.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GGD-00-125
     TITLE:  Federal Pensions: Judicial Survivors' Annuities System
	     Costs
      DATE:  05/25/2000
   SUBJECT:  Employee survivors benefits
	     Cost control
	     Financial analysis
	     Fringe benefit costs
	     Judges
IDENTIFIER:  Consumer Price Index
	     Civil Service Retirement System
	     Federal Employees Retirement System

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United States General Accounting Office
GAO

Report to Congressional Committees

May 2000

GAO/GGD-00-125

FEDERAL PENSIONS
Judicial Survivors' Annuities System Costs

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Contents
Page 101GAO/GGD-00-125 Judicial Survivors' Annuities System Costs
Letter                                                                      1
                                                                             
Appendix I                                                                 12
Features of the Judicial
Survivors' Annuities
System
                           Contribution Rates                              12
                           Eligibility Requirements for Survivor           12
                           Benefit Coverage
                           Participation Election                          12
                           Revocation or Withdrawal of                     13
                           Participation
                           Survivor Benefit Formula                        13
                           Reduction of Annuity for Unpaid                 13
                           Contributions for Prior Service
                           Children's Benefits                             14
                           Cost-of-Living Adjustments                      14
                           Social Security Eligibility and                 14
                           Benefits
                                                                             
Appendix II                                                                15
Comments From the
Administrative Office of
the U.S. Courts
                                                                             
Appendix III                                                               16
GAO Contacts and Staff
Acknowledgments
                           GAO Contacts                                    16
                           Acknowledgments                                 16
                                                                             
Tables                     Table 1:  Share of JSAS' Normal Cost             8
                           Borne by Participating Judges and
                           Government, Fiscal Years 1996-98
                                                                             

Abbreviations

AOUSC     Administrative Office of the United
States Courts
COLA      cost-of-living adjustment
CPI       Consumer Price Index
CSRS      Civil Service Retirement System
FERS      Federal Employees' Retirement System
JSAS      Judicial Survivors Annuities System

B-284663

Page 2GAO/GGD-00-125 Judicial Survivors' Annuities
System Costs
     B-284663

     May 25, 2000

The Honorable Orrin G. Hatch
Chairman
The Honorable Patrick J. Leahy
Ranking Minority Member
Committee on the Judiciary
United States Senate

The Honorable Henry J. Hyde
Chairman
The Honorable John Conyers, Jr.
Ranking Minority Member
Committee on the Judiciary
House of Representatives

This report was prepared in response to the
requirements of the Federal Courts Administration
Act of 1992 (P.L. 102-572)1 specifying that we
review certain aspects of the Judicial Survivors'
Annuities System (JSAS), which is one of several
survivor benefit plans applicable to particular
groups of federal employees. JSAS provides
annuities to the surviving spouses and dependent
children of deceased federal judges and other
judicial officials who participate in JSAS.

The 1992 Act enhanced the benefits available from
JSAS and reduced the amounts that participating
judges and other judicial officials were required
to contribute toward the plan's costs. The act
requires us to review JSAS' costs every 3 years
and to determine whether the participants'
contributions covered one-half of the costs. If
the contributions are less than one-half of these
costs, we are to determine what adjustments would
be needed to achieve the 50-percent figure. We
issued our first such review in June 1997.2

To respond to this requirement, we reviewed JSAS'
1996 to 1998 annual reports submitted by the
Administrative Office of the U.S. Courts (AOUSC)
to Congress and the Comptroller General.3 Such
reports were required by Public Law 95-595 and
contain financial and actuarial information that
is indicative of JSAS' cost and financial status.
The costs we examined were "normal costs." Normal
cost is a term used to describe the annual cost of
funding a pension or survivor plan, expressed as a
percentage of payroll.

Results in Brief
The participating judges did not pay one-half of
the JSAS normal cost during fiscal years 1996
through 1998; they paid on average about 40
percent over the 3-year period. However, the
participating judges' contributions represented an
increasing share of normal costs over the period,
starting at about 36 percent in fiscal year 1996
and growing to about 45 percent in fiscal year
1998. On the basis of information contained in
JSAS' 1998 actuarial report, to cover one-half of
the future costs, we determined that the judges'
contribution would need to increase 0.3 percentage
points above the 2.2 percent of salary currently
paid by active and senior judges and the 3.5
percent of annuities paid by retired judges.
However, increasing required contributions could
affect the judges' rate of participation, and
increasing participation was one of the major
reasons for enhancing JSAS' benefits and reducing
the judges' contributions in 1992.

AOUSC provided technical comments to this report.

Background
Most federal civilian employees are covered by the
Civil Service Retirement System (CSRS) or the
Federal Employees' Retirement System (FERS). Both
of these retirement plans include survivor benefit
provisions. Three separate retirement plans apply
to various groups of judges in the federal
judiciary, with JSAS being available to
participants in all three retirement plans to
provide annuities to their surviving spouses and
children. AOUSC administers these three plans.

The Judicial Retirement System automatically
covers U.S. Supreme Court Justices, federal
circuit and district court judges, and territorial
district court judges and is available, at their
option, to the Administrative Assistant to the
Chief Justice, the Director of AOUSC, and the
Director of the Federal Judicial Center. The
Judicial Officers' Retirement Fund is available to
bankruptcy and full-time magistrate judges, and
the Court of Federal Claims Judges' Retirement
System is available to the Court of Federal Claims
judges.  Also, except for judges who are
automatically covered under the Judicial
Retirement System, judges and judicial officials
may opt to participate in CSRS or FERS or elect to
participate in the Judicial Retirement System for
Bankruptcy Judges, Magistrate Judges, or Court of
Federal Claims Judges.4

Judges who retire under any of the three judicial
retirement plans generally continue to receive the
full salary amounts that were paid immediately
before retirement, assuming the judges met the age
and service requirements.5 Retired territorial
district court judges generally receive the same
cost-of-living adjustment (COLA) that CSRS
retirees receive, except that their annuities
cannot exceed 95 percent of an active district
court judge's salary. Court of Federal Claims
judge retirees continue to receive the same salary
payable to active Court of Federal Claims judges.

Those in the Judicial Retirement System and the
Court of Federal Claims Judges' Retirement System
are eligible to retire when the number of years of
service and the judge's age total at least 80,
with a minimum retirement age of 65, and service
ranging from 10 to 15 years. Those in the Judicial
Officers' Retirement Fund are eligible to retire
at age 65 with at least 8 years but no more than
14 years of service. The judicial officers under
the Judicial Retirement System can retire with 80
percent of full salary at age 65 with 15 years of
service. Participants in all three judicial
retirement plans are required to contribute to and
receive Social Security benefits.

JSAS was created in 1956 to ensure financial
security for the families of federal judges. It
provides benefits to eligible spouses and
dependent children of judges who elect coverage
within 6 months of taking office or within 6
months after getting married, if they were not
married when they took office. Active and senior
judges currently contribute 2.2 percent of their
salaries, and retired judges contribute 3.5
percent of their annuities to JSAS. Upon a judge's
death, the surviving spouse is to receive an
annual annuity that is equal to 1.5 percent of the
judge's average annual salary during the 3 highest
consecutive paid years (known as the "high 3")
times the judge's years of creditable service. The
annuity may not exceed 50 percent of the high 3
and is guaranteed to be no less than 25 percent.
Separately, an unmarried dependent child under age
18, or 22 if a full-time student, receives a
survivor annuity that is equal to 10 percent of
the judge's high 3. COLAs are paid to surviving
spouses and children on the basis of annual
increases in the Consumer Price Index (CPI).
Spouses and children are also eligible for Social
Security survivor benefits. Appendix I provides
more details on these and other features of JSAS.

Since its inception in 1956, JSAS has changed
several times. Because of concern that too few
judges were participating in the plan (74 percent
of federal judges participated in 1985, which was
down from 90 percent in 1976), Congress made broad
reforms effective in 1986 with the Judicial
Improvements Act of 1985 (P.L. 99-336).6 The 1985
Act (1) increased the annuity formula for
surviving spouses from 1.25 percent to the current
1.5 percent of the high 3 for each year of
creditable service and (2) changed the provisions
for surviving children's benefits to relate
benefit amounts to judges' high 3 rather than the
specific dollar amounts provided by the Judicial
Survivors' Annuities Reform Act of 1976 (P.L. 94-
554). In recognition of the significant benefit
improvements that were made, the 1985 Act
increased the amounts that judges were required to
contribute from 4.5 percent to 5 percent of their
salaries and retirement annuities.

The 1985 Act also changed the requirements for
government contributions to the plan by specifying
that the government would contribute whatever
amounts were necessary (up to a maximum of 9
percent of participating judges' salaries and
annuities) to keep the plan fully funded. Under
the 1976 Act, the government matched the judges'
contributions of 4.5 percent of salaries and
annuities. Despite the benefit improvements in the
1985 Act, the rate of participation in JSAS
continued to decline. In 1991, the rate of
participation was about 40 percent overall and 25
percent for newly appointed judges.

In response to concerns that required
contributions of 5 percent may have created a
disincentive to participate, Congress enacted the
1992 Act. Under the act, participants'
contribution requirements were reduced to 2.2
percent of salary for active and senior judges and
to 3.5 percent of annuities for retired judges.
For those already enrolled in JSAS, the new rates
were further reduced by 0.5 percentage points for
every month, not to exceed 18 months, during which
they had contributed 5 percent. In other words,
the rate for an active judge could be reduced to
1.7 percent and 3 percent for a retired judge for
up to 18 months. Another significant change was an
increase in benefits for survivors of retired
judges. This increase was accomplished by
including years spent in retirement in the
calculation of creditable service and the high 3
salary averages.7

The 1992 Act also allowed the judges to stop
contributing to the plan upon divorce or the
spouse's death and granted benefits to survivors
of any judge who died in the interim between
leaving federal service and the commencement of a
deferred annuity.8 As of September 30, 1998, there
were 1,284 active and senior judges, 136 retired
judges, and 241 survivor annuitants covered under
JSAS. About 68 percent of all eligible judges
participated in the system in 1998, including 45
percent of all new judges who began their service
in 1998.9

One objective of the change in contribution
requirements contained in the 1992 Act was to
preclude the circumstances that had frequently
occurred under the 1985 Act, whereby the
participating judges paid all of the plan's cost.
In 3 of the 4 years before the 1992 Act, the
government made no contributions to JSAS because
the active participants' and retired judges' 5
percent of salary and annuity contributions,
respectively, were sufficient to cover the costs
for those years. In 1991, the cost of JSAS was
estimated to be 3.2 percent of salary and annuity.
Proponents of lowering the contribution rates
contended that participants in CSRS, including
Members of Congress, were paying about one-half of
the costs of their survivor benefits, and Congress
intended to make JSAS comparable to the cost of
participation by a Member of Congress.

Scope and Methodology
To determine whether the contributions by the
participating judges for the 3-year period ending
in fiscal year 1998 accounted for 50 percent of
the JSAS' costs, we first identified the costs for
plan years 1996 to 1998. We used the normal cost
amounts determined by actuarial valuations of the
system for each of the 3 fiscal years. Normal cost
is the term used to describe the annual cost of a
pension or survivor plan. It is expressed as a
percentage of payroll and represents the amount of
money that should be set aside during employees'
working years and that, with investment earnings,
will be sufficient to cover future benefit
payments. Normal cost applies to future benefits
being earned during current employment, not
payments to current annuitants. Therefore, if
participating judges were to pay one-half of the
JSAS cost, they would pay one-half of the plan's
normal cost.

Information on JSAS' normal cost and other
actuarial and financial matters is contained in
annual reports submitted by AOUSC to Congress and
the Comptroller General. Such reports, which were
required by Public Law 95-595 for all federal
retirement plans, were due 210 days after the end
of each plan's fiscal year. We discussed the
contents of these reports with officials from
AOUSC but otherwise relied on the data presented
in the annual reports for the 3 fiscal years
without independent verification.

We performed our review in Washington, D.C.,
between December 1999 and May 2000, in accordance
with generally accepted government auditing
standards. We made a draft of this report
available to the Director of AOUSC for review and
comment. AOUSC's comments are reprinted in
appendix II.

Judges Did Not Contribute One-half of JSAS' Cost
For JSAS' plan years 1996 through 1998 under the
Federal Courts Administration Act of 1992, the
participating judges contributed, on average,
about 40 percent of the plan's costs. Over the 3-
year period, the participating judges'
contributions represented a growing share of the
plan's cost, increasing from about 36 percent in
fiscal year 1996 to about 45 percent in fiscal
year 1998. To cover one-half of JSAS' costs, the
participating judges' contribution would have to
increase 0.3 percentage points above the current
rates. This could be achieved by distributing the
increase equally among those contributing 2.2
percent and 3.5 percent or by adding the increase
solely to those paying 2.2 percent, because
virtually all of the participants are active
judges.  However, increasing the judges'
contribution rates could adversely affect
participation in the plan, which would be contrary
to one of the major reasons for the changes to
JSAS in 1992 (i.e., increase participation in
JSAS).

Defining Cost for JSAS
The cost of a retirement or survivor benefit plan
is generally not measured by annual expenditures.
Such expenditures are not an indicator of the
overall long-term cost of a plan.  JSAS is
financed by judges' contributions and direct
appropriations sufficient to fund all future
benefits to current participants.  For the 3-year
period ending September 30, 1998, the
participating judges paid $10.5 million into the
fund, while the government's contributions totaled
$21.7 million.

The more complete and acceptable calculation of a
plan's cost is the projected outlays to retirees
or survivors, considering the current participants
and allocating such cost on an annual basis. This
annual cost allocation is the normal cost. Normal
cost, expressed as a percentage of covered
payroll, for JSAS represents the amount of money
that should be set aside during the judges'
working and retirement years and that, with
investment earnings, will be sufficient to cover
future survivor benefit payments.10 Normal cost
calculations, prepared by an enrolled actuary,
require that many actuarial assumptions be made
about the future, including mortality rates,
turnover rates, return on investments, salary
increases, and COLA increases over the life spans
of current and future participants.

There are many acceptable actuarial methods for
calculating normal cost.11 JSAS uses the aggregate
cost method. Regardless of which cost method is
chosen, the total long-term cost of the plan will
be the same; however, year-to-year costs may
differ, depending on the cost method used. The
aggregate method ordinarily incurs higher annual
cost in the early years and lower costs in the
later years, whereas the more commonly used entry-
age normal cost method (used in CSRS and FERS)
results in a level annual cost over the ensuing
years.

JSAS Costs for Fiscal Years 1996-98
On the basis of data from plan years 1996, 1997,
and 1998 under the 1992 Act, the participating
judges contributed, on average, about 40 percent
of JSAS' normal cost; the government's share
amounted, on average, to about 60 percent. Table 1
shows the judges' and government's contribution
rates and share of JSAS' normal cost (using the
aggregate cost method), for the period covered in
our study.

Table 1:  Share of JSAS' Normal Cost Borne by
Participating Judges and Government, Fiscal Years
1996-98
Source of contributions   JSAS normal cost rates and shares, by fiscal year
                                 1996            1997          1998 1996-98
                           Ratea Shareb   Ratea Shareb  Ratea Shareb  Shareb
Judges                     2.26% 36.1%   2.27%  39.3%  2.27%  44.8%   39.8%
Government                   4.0  63.9     3.5   60.7    2.8   55.2    60.2
Total                      6.26% 100.0%   5.77% 100.0%  5.07% 100.0%  100.0%
aNormal cost expressed as a percentage of payroll.
bPercentage of total normal cost.
Source: JSAS actuarial reports, 1996-98.

The judges' and the government's contribution
rates for each of the 3 years, shown in table 1,
were based on the actuarial valuation that
occurred at the end of the prior year. For
example, the judges' contribution of 2.27 percent
and the government's contribution of 2.8 percent
in fiscal year 1998 were based on the September
30, 1997, valuation contained in the fiscal year
1998 actuarial report.

     Although outside the scope of our study, the
fiscal year 1999 normal cost is estimated at 3.86
percent, a drop of 1.21 percentage points from
fiscal year 1998. If this downward trend in
aggregate normal costs continues, the judges'
contributions will continue to approach 50 percent
of normal costs without additional contributions.
However, aggregate normal costs could also rise in
the future, depending on what economic and
demographic assumptions are used.

Adjustment That Would Be Needed in Judges'
Contribution Rates
On the basis of the information contained in JSAS'
1998 actuarial report as of September 30, 1998, we
determined that the participating judges' future
contributions would have to increase a total of
0.3 percentage points above the current 2.2
percent of salary for active and senior judges and
3.5 percent of annuity for retired judges to cover
one-half of JSAS' costs. If the increase were
distributed equally among the judges, those
contributing 2.2 percent would have to increase to
2.5 percent; and those contributing 3.5 percent
would have to increase to 3.8 percent.

Because of the relatively small number of judges
contributing 3.5 percent (136 compared to 1,284 of
those contributing 2.2 percent as of Sept. 30,
1998), the entire increase could be added solely
to those contributing 2.2 percent.

Potential Drawback to Increasing Judges'
Contribution Rates
A potential impact associated with increasing the
contribution rates could be a decline in the
participation rate for JSAS. The desire to
increase participation was a major reason for the
changes made to JSAS over the years. This
potential impact appears to be less likely as
compared with our findings from 3 years ago, when
we reported that an increase of 0.9 percentage
points would have been needed to achieve the 50-
percent contribution goal. The participation rate
has increased from 38 percent before the 1992 Act
was enacted to 68 percent as of September 30,
1998. Increasing the contribution rates now, along
with the potential for changing them every 3
years, could have an impact on the judges'
decision to participate in JSAS.12 Currently, the
only way that participation for an active or
retired judge may be revoked is upon the
dissolution of the marriage, and there are no
contribution refunds until the judges' death, if
there are no survivors.

Agency Comments
We requested comments on a draft of this report
from the Director of AOUSC or his designee. In a
letter dated May 5, 2000, the Associate Director
of AOUSC stated that the agency was making no
comments on the report other than some technical
comments provided separately. We clarified the
report where necessary to reflect those comments.
The agency's letter is reproduced in appendix II.

We are sending copies of this report to AOUSC.
Copies will also be made available to others upon
request.

     Key contributors to this report are listed in
appendix III. If you or your staff have any
questions about this report, please call me or
Jennifer Cruise on (202) 512-8676.

Mike Brostek
Associate Director, Federal Management
    and Workforce Issues
_______________________________
1H. Rep. 102-1006, 102d Congress.
2Federal Pensions: Judicial Survivors' Annuities
System Costs and Benefit Levels (GAO/GGD-97-87,
June 27, 1997).
3This annual reporting requirement was repealed by
the Federal Reports Elimination Act of 1998
(P.L. 105-362) for reports requiring submission to
Congress after December 21, 1999. However,
officials from AOUSC indicated that they plan to
continue to produce this report.
4FERS is open and available to new federal
employees. CSRS has been closed to new employees
since December 31, 1983.
5There is a distinction between retired judges who
resign their offices and those who retire to a
status designated as "senior." Judges who retire
by resignation are entitled for life to the salary
of the office at the time of resignation and may
engage in private law practice. Judges who retire
to senior status receive the current salary of the
office-that is, they receive salary increases that
are approved for active judges-and generally may
perform reduced judicial duties. Senior judges may
not engage in private law practice.
6H. Rep. 99-423, 99th Congress.
7Includes senior judges and judges who resign
their offices.
8A judge who is not entitled to receive an
immediate retirement annuity upon leaving office,
but is eligible to receive a deferred annuity at a
later date, may remain in JSAS by contributing 3.5
percent of the deferred retirement annuity that he
or she would be entitled to receive.
9Participation has not changed significantly since
our last review of JSAS-we reported that 67
percent of eligible judges participated in the
system in 1995.
10The Public Law 95-595 report for plan year ending
September 30, 1998, recognizes that the financial
condition of JSAS may be affected by the final
outcome of Williams v. United States (48 F.Supp.2d
52), which is a class action related to the denial
of past annual cost-of-living salary adjustments
that has been appealed. AOUSC has not requested
that its actuary estimate the potential impact;
however, they have determined that additional
amounts due the Fund, resulting from a final
decision on the case, would be paid out of the
judgment fund created by 31 U.S.C. 1304.
11Acceptable actuarial cost methods for preparing
the annual reports required under Public Law 95-
595 include the accrued benefit  (unit credit),
entry-age normal, individual level premium,
aggregate, attained-age normal, and frozen initial
liability. AOUSC selected the aggregate cost
method for JSAS in 1982.
12Because 28 U.S.C section 376 (b) governs
participant contribution rates, AOUSC has no
authority to modify the contribution rate of
participants-new legislation would be required. No
such legislation has been enacted since our last
review of JSAS costs issued in 1997.

Appendix I
Features of the Judicial Survivors' Annuities
System
Page 14GAO/GGD-00-125 Judicial Survivors' Annuitie
s System Costs
Contribution Rates
Employee/Retiree contribution rate. Active and
"senior status" judges and other judicial
officials contribute 2.2 percent of salary and
retired judges and judicial officials contribute
3.5 percent of their retirement annuities to
participate in the Judicial Survivors' Annuities
System (JSAS). Prior creditable service may be
credited to JSAS if deposits equal to 3.5 percent
of salary earned during the earlier service plus 3-
percent interest are paid. No deposits are
required for previous military service.

Government contribution rate. The government's
share of contribution is the amount required to
reduce the unfunded liability to zero, not to
exceed 9 percent of salary or retirement annuity.

Eligibility Requirements for Survivor Benefit
Coverage
Years of service. A judicial official must have at
least 18 months of judicial service and
contributions to JSAS before becoming vested in
the plan.

Marriage duration. A surviving spouse must have
been married to the judicial official at least 1
year before the official's death or be a parent of
a child of the marriage. A former spouse must have
been married to the judicial official at least 9
months.

Commencement/Termination of benefits. Benefits
commence on the date of the judicial official's
death. If a surviving or former spouse remarries
before age 55, benefits for that spouse are
terminated.

Participation Election
The election must be made within 6 months of
taking office or getting married.

Former spouse. The judicial official's election
must be in effect at the time of divorce. An
election to provide a survivor annuity must be
made at the time of retirement or, if later,
within 2 years after the marriage was dissolved.

Insurable interest.1 Not applicable.

Deferred retirement. The judicial official must
file a written notification, within 90 days before
leaving office, of the intent to remain under JSAS
and contribute 3.5 percent of the deferred
retirement annuity amount.

Revocation or Withdrawal of Participation
Participation may be revoked upon the dissolution
of the marriage either through divorce or death of
spouse. Payroll contributions cease, but previous
contributions remain in the JSAS Fund. If there is
no eligible surviving spouse or child upon the
death of the judicial official, the contributions
plus 3-percent interest are paid to the judicial
official's designated beneficiaries, or if there
is not a designated beneficiary, by the statutory
order of precedence.

If a judge resigns from office without entitlement
to an annuity, the contributions, plus 3-percent
interest, minus those paid at 2.2 percent of
salary may be paid to the judge.

Survivor Benefit Formula
After retirement. The annual spousal annuity is
1.5 percent of average salary for (1) each year of
creditable judicial service (including years in
retirement) plus military service as long as it is
not being used for retired pay, years of service
as a Member of Congress, and (2) up to 15 years of
combined congressional staff and executive branch
service plus 0.75 percent of average salary for
congressional staff and executive branch service
over 15 years.2

Before retirement. Same as after retirement.

Insurable interest. Not applicable.

Deferred retirement. Same as after retirement.
Benefit formula includes time between leaving
office and starting spousal annuity.

Minimum/Maximum amount of benefit. Spousal annuity
may not be greater than 50 percent or less than 25
percent of average annual salary.

Reduction of Annuity for Unpaid Contributions for
Prior Service
If no deposit is made for prior creditable
service, the annuity of the surviving spouse will
either (1) include credit for such service, with
the annuity reduced by 10 percent of the
outstanding deposit computed as of the date of the
judge's death, or (2) not include credit for such
service, but be spared the 10-percent reduction,
whichever results in a greater annuity. In all
cases, however, a surviving spouse is still
entitled to the minimum annuity of 25 percent of
the judge's average annual salary.

Children's Benefits
Age of children. Surviving unmarried dependent
children must be under age 18 or age 22, if a full-
time student, or incapable of self-support due to
a disability incurred before age 18 or age 22, if
a student.

Benefit computation. If the judicial official is
survived by a spouse, each child's annual annuity
is the lesser of

�    10 percent of average salary or
�    20 percent of average salary divided by the
number of children.

 If the judicial official is not survived by a
spouse, each child's annual annuity is the lesser
of

�    spousal annuity divided by the number of
children,
�    20 percent of average salary, or
�    40 percent of average salary divided by the
number of children.

Cost-of-Living Adjustments
     Survivors' annuities are adjusted annually
through cost-of-living adjustments that are based
on the rate of inflation, as measured by the
Consumer Price Index (CPI). The adjustment
measures the yearly change in the third-quarter to
third-quarter CPI for urban wage earners and
clerical workers.

Social Security Eligibility and Benefits
     A surviving spouse with children or children
only are generally eligible for Social Security
benefits if the employee paid Social Security
taxes and worked at least 18 months in the 3 years
preceding his or her death. Benefits are paid to
the surviving spouse at age 60 (age 50 if
disabled) or at any age if there are surviving
children under age 16 or children who were
disabled before age 22. Benefits are also paid to
unmarried children under age 18 and up to age 19
if they are full-time students.

     Former spouses, with the marriage lasting 10
years or more, are eligible for benefits similar
to those of surviving spouses as well as those
former spouses with children who are under age 16
or at any age if disabled before age 22.

     A surviving spouse or minor children may
receive a one-time payment of $255 and monthly
benefits. The monthly benefit is a percentage of
the deceased employee's or retiree's basic Social
Security benefit ranging from 75 to 100 percent
for each beneficiary. The maximum amount that a
family may receive is generally equal to about 150
to 180 percent of the employee's or retiree's
benefit rate.

_______________________________
1An insurable interest beneficiary is one who can
reasonably expect to receive financial benefit
from the continued life of the retiree.
2Average salary is the average annual salary
and/or retirement annuity received during the 3
highest consecutive paid years.

Appendix II
Comments From the Administrative Office of the
U.S. Courts
Page 15GAO/GGD-00-125 Judicial Survivors' Annuitie
s System Costs

Appendix III
GAO Contacts and Staff Acknowledgments
Page 16GAO/GGD-00-125 Judicial Survivors' Annuitie
s System Costs
GAO Contacts
Michael Brostek or Jennifer S. Cruise, (202) 512-
8676

Acknowledgments
     In addition to the individuals named above,
Michael G. Valle, Alan N. Belkin, Robert J.
Heitzman, and Gregory H. Wilmoth made key
contributions to this report.

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