United States General Accounting Office

GAO Report to Congressional Committees

June 1997 FEDERAL PENSIONS

Judicial Survivors’

Annuities System Costs

and Benefit Levels

GAO/GGD-97-87

GAO United States

General Accounting Office

Washington, D.C. 20548

General Government Division

B-270286 

June 27, 1997

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) specifying that we

review certain aspects of the Judicial Survivors’ Annuities System (JSAS).

JSAS is one of several survivor benefit plans applicable to particular groups

of federal employees. It 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 participating judges and other judicial officials were required to

contribute toward the plan’s costs. The act requires us to review the

system’s costs every 3 years and to determine whether the participants’

contributions covered one-half of the costs. If the contributions are less

than half of these costs, we are to determine what adjustments would be

needed to achieve the 50-percent figure. The act also requires us to

compare JSAS to the survivor benefit plans for other federal employees.

To respond to this requirement, we reviewed JSAS’ 1993 to 1995 annual

reports submitted by the Administrative Office of the U.S. Courts (AOUSC)

to Congress and the Comptroller General. Such reports are required by

Public Law 95-595 and contain financial and actuarial information

indicative of JSAS’ cost and financial status. Our analysis of the judges’

share of JSAS costs was done for the first 2 full years of the 1992 Act, fiscal

years 1994 and 1995. We did not use the fiscal year 1993 cost information

for this part of our analysis because it was based on actuarial information

as of September 30, 1992, and did not reflect the changes in participant

benefits and contributions resulting from the 1992 Act, which became

effective on October 29, 1992. The costs we examined were “normal

costs.” Normal cost is a term used to describe the annual cost of funding a

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pension or survivor plan, expressed as a percentage of payroll. Our

comparison of JSAS to other federal survivor benefit plans was based on a

review of applicable federal statutes, regulations, and agency guidance as

well as interviews with agency specialists. For this comparison, we chose

those plans previously compared to JSAS in developing the 1992 Act—the

Civil Service Retirement System (CSRS), including Members of Congress,

the Military Retirement System’s Survivor Benefit Plan (SBP), the U.S. Tax

Court Survivors’ Annuity Plan, and the U.S. Court of Veterans Appeals

Judges Retirement Plan. We also included the Federal Employees

Retirement System (FERS) because it covers a large number of federal

employees. The Tax Court and Veterans Appeals judges plans are not

administered by AOUSC.

Results in Brief The participating judges did not pay one-half of the JSAS normal cost

during fiscal years 1994 and 1995; they paid about 36 percent. Based on

information contained in JSAS’ 1995 actuarial report, to cover one-half of

the future costs, the judges’ contribution would need to increase

0.9 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.

JSAS’ benefits are greater than those available to the majority of federal

employees. JSAS provides greater spousal and children benefits, expressed

as a percentage of salary, than those for employees under CSRS, FERS, and

the military’s SBP. JSAS benefits also are greater than those for Members of

Congress. While a direct comparison of contribution rates for active

participants among the plans could not be made because of differing

program designs, retired judges under JSAS contributed a smaller

percentage of their annuities for survivor benefits than retired general

employees and Members of Congress under CSRS and FERS and retired

members of the military. Two judicial plans in our study provided spousal

and children’s benefits that were similar to JSAS. Also, JSAS included

features that were not available in the other survivor plans we studied.

Background Most federal civilian employees are covered by CSRS or FERS. Both these

retirement plans include survivor benefit provisions. Three separate

retirement plans apply to various groups of judges in the federal judiciary,

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with JSAS being available to participants in all three retirement plans to

provide annuities to their surviving spouses and children. AOUSC

administers all four of these 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 Court of Federal Claims judges. Except for judges

who are automatically covered under the Judicial Retirement System,

judges and judicial officials may opt to participate in CSRS or FERS rather

than one of the other judicial plans if they were in either CSRS or FERS at the

time of their appointment.

Judges who retire1

 under any of the three judicial retirement plans

generally continue to receive the full salary amounts that they were paid

immediately before retirement, assuming they met the age and service

requirements. Retired territorial district court judges receive the same

cost-of-living adjustment (COLA) increase 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 at age 65 with 15 years of service.

Those in the Judicial Officers’ Retirement Fund are eligible to retire at age

65 with 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 Social Security and receive 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 are not married when they

take office. Active and senior judges 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

1

There 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 time of resignation and may engage in private law practice. Judges who retire to senior status

receive the current salary of the office and generally may perform reduced judicial duties. Senior

judges may not engage in private law practice.

Page 3 GAO/GGD-97-87 Federal Pensions
B-270286 

equal to 1.5 percent of the judge’s average annual salary during the 3

highest paid years (known as the “high 3”) times years of creditable

service. The annuity may not exceed 50 percent of 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 equal to 10 percent of the judge’s high 3. COLAs are paid to

surviving spouses and children based on 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, down from 90 percent in 1976),2

Congress made broad reforms effective in 1986 with the Judicial

Improvements Act of 1985 (P. L. 99-336). The act (1) increased the annuity

formula for surviving spouses from 1.25 percent to the current 1.5 percent

of 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 (P. L. 94-554) in 1976. In recognition of the

significant benefit improvements that were made, the 1985 Act increased

the amounts 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, it was

about 40 percent overall and 25 percent for newly appointed judges.

In response to concerns that required contributions of 5 percent may have

been creating a disincentive to participation,3

 Congress enacted the

Federal Courts Administration Act of 1992. Under the act, participants’

contribution requirements were reduced to 2.2 percent of salary for active

and senior judges and 3.5 percent of annuities for retired judges. For those

already enrolled in JSAS, the new rates were further reduced by

2

H. Rep. 99-423, 99th Congress.

3

H. Rep. 102-1006, 102d Congress.

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0.5 percentage point 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 retirement4

 in the calculation of creditable service

and high-3 salary averages. The 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.5

 As of

September 30, 1995, there were 1,263 active and senior judges, 109 retired

judges, and 221 survivor annuitants covered under JSAS. About 67 percent

of all eligible judges participated in the system in 1995, including

73 percent of all new judges who began service in 1995.

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 participants’ 5 percent of salary and

annuity contributions 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 1995 accounted for 50 percent of JSAS’

costs, we first identified the costs for plan years 1993 to 1995. 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 that, with investment earnings, will be

sufficient to cover future benefit payments. It applies to future benefits

being earned during current employment, not payments to current

4

Includes senior judges and judges who resign their offices.

5

A judge who is not entitled to receive an immediate retirement annuity upon leaving office, but is

eligible to receive a deferred retirement annuity at a later date, may remain in JSAS by contributing

3.5 percent of the deferred retirement annuity that the judge would be entitled to receive.

Page 5 GAO/GGD-97-87 Federal Pensions
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annuitants. Therefore, if participating judges were to pay one-half the cost

of JSAS, they would pay one-half 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 are required by Public Law 95-595 for

all federal retirement plans. These reports (595 Reports) are due 210 days

after the end of each plan’s fiscal year. AOUSC provided to us a final version

of the 595 Report for fiscal year 1995 on April 8, 1997.6

 We discussed the

contents of the 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 also obtained the services of an enrolled

actuary, Mr. Jess Feinman, to assist us in analyzing the reports and making

the required determinations about the share of costs covered by

participant contributions, including the adjustment needed to achieve the

50-percent figure for the participating judges.

To compare the features of JSAS with those of other federal survivor

benefit plans, we reviewed applicable federal statutes, regulations, and

agency guidelines and interviewed agency specialists for the various plans.

We also met with actuaries at the Office of Personnel Management (OPM)

and the Department of Defense. We reviewed the annual reports filed

under Public Law 95-595 for all plans in the comparison.

We identified and compared the benefit levels, contribution rates, and

other features of JSAS and five other federal survivor benefit plans. We

compared JSAS benefit levels to the other plans’ survivor benefit levels

without Social Security survivor benefits. Total survivor benefit levels for

those eligible to receive Social Security benefits will be greater than those

levels reported in our comparison. We compared retiree contribution rates

only. The differing designs of the various programs precluded us from

making a comparison of total employee and retiree contribution rates.

Two of the plans in our study do not have separate and identifiable

employee contribution rates for survivor benefits. Appendix I describes

the features of the six federal survivor benefit plans in our study.

6

Although the Federal Courts Administration Act of 1992 mandated us to report to Congress by

November 29, 1995 (60 days after the end of fiscal year 1995), we informed the addressees of our

report in November 1995 that the 595 Report for fiscal year 1995 would not be available until after our

statutory reporting date (the 595 Report was due by Apr. 28, 1996). We were unable to complete our

work until we received the 595 Report for fiscal year 1995. In February 1997, we again informed the

addressees that the 595 Report had not been finalized, and we would fulfill our reporting requirement

using the draft 595 Report provided to us by AOUSC on October 24, 1996, if the final 595 Report was

not provided by the end of February 1997.

Page 6 GAO/GGD-97-87 Federal Pensions
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The five plans in our comparison were CSRS and FERS (including Members

of Congress), the Military Retirement System’s SBP, the U.S. Tax Court

Survivors’ Annuity Plan, and the U.S. Court of Veterans Appeals Judges

Retirement Plan. We selected these five plans because (1) four of them

(not FERS) were compared to JSAS in the legislative history of the Federal

Courts Administration Act of 1992 and (2) CSRS, FERS, and the Military

Retirement System cover about 97 percent of all participants in federal

retirement plans and, like JSAS, the U.S. Tax Court and U.S. Court of

Veterans Appeals plans cover judicial workforces.

We made our review from October 1995 to February 1997, 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. Although we did not obtain

comments from the other agencies on the survivor benefit plans included

in our review, we asked officials responsible for each of these other plans

to verify the accuracy of the information presented on their respective

plans. Their views were considered in preparing this report.

Judges Did Not

Contribute One-Half

of JSAS’ Cost

For JSAS’ first 2 full years (1994 and 1995) under the Federal Courts

Administration Act of 1992, the participating judges contributed about

36 percent of the plan’s costs. Fiscal year 1993 cost did not reflect the

changes in contribution rates and benefits incorporated by the 1992 Act.

To cover one-half of JSAS’ costs, the participating judges’ contribution

would have to increase 0.9 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 adding the increase solely to

those paying 2.2 percent. 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.

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 total cost of a plan. For the 3-year period ending

September 30, 1995, the participating judges paid $12.5 million, and the

government’s actual outlays were $6.9 million. Although judges’ payments

were made in the same year they were accrued, the government’s

payments were based on actuarial valuations that occurred 1 to 2 years

before the appropriation year. The government’s contribution of

$6.9 million in fiscal year 1995 was based on the actuarial calculation for

Page 7 GAO/GGD-97-87 Federal Pensions
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employer normal cost as of September 30, 1993. There were no

government contributions for 1993 and 1994 because the actuarial

valuation for the applicable prior years (before the 1992 changes to

participant benefits and contributions) showed that the participants’

contributions covered the entire normal cost of JSAS.

The more complete and acceptable calculation of a plan’s cost is the total

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

payroll, for JSAS represents the amount of money that should be set aside

during the judges’ working and retirement years that, with investment

earnings, will be sufficient to cover future survivor benefit payments.

Normal cost calculations, prepared by an actuary, require that many

actuarial assumptions be made about the future, including mortality rates,

quit rates, return on investments, salary increases, and COLA increases over

the lifespans of current and future participants.

There are many acceptable actuarial methods for calculating normal cost.7

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 cost in the later years, whereas the more commonly used

entry-age normal method gives a level annual cost over the years. One of

the principal reasons for this is that the aggregate method includes the

unfunded liability for participants’ past service (for which no contributions

were made at the time service was performed) as part of its normal cost,

while the entry-age normal method treats the unfunded liability separately

from the normal cost.

JSAS Costs for the 3-Year

Period

On the basis of data from the first 2 full years under the Federal Courts

Administration Act of 1992, fiscal years 1994 and 1995, the participating

judges contributed about 36 percent of JSAS’ normal cost; and the

government’s share amounted to about 64 percent. For fiscal year 1993,

the government’s normal cost was based on an actuarial valuation that

preceded changes in participant benefits and contributions. Thus, the

fiscal year 1993 normal cost was not indicative of the government’s share

of JSAS’ cost under the 1992 Act. Table 1 shows the judges’ and

7

Acceptable 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.

Page 8 GAO/GGD-97-87 Federal Pensions
B-270286 

government’s contribution rates and share of JSAS’ normal cost (using the

aggregate cost method), for the period covered in our study.8

Table 1: Share of JSAS’ Normal Cost Borne by Participating Judges and Government, Fiscal Years 1993-1995

Fiscal year 1993 Fiscal year 1994 Fiscal year 1995

Fiscal

years

1994-1995

Contributions to JSAS

Source of contributions Ratea Shareb Ratea Shareb Ratea Shareb Shareb

Judges 2.35% 74.6% 2.24% 37.7% 2.23% 34.2% 35.8%

Government 0.8%c 25.4% 3.7% 62.3% 4.3% 65.8% 64.2%

Totals 3.15% 100.0% 5.94% 100.0% 6.53% 100.0% 100.0%

aNormal cost expressed as a percentage of payroll.

bPercentage of total normal cost.

cThe government’s normal cost for fiscal year 1993 was based on the September 30, 1992,

actuarial valuation that preceded benefit and contribution changes to JSAS on October 29, 1992.

Source: JSAS actuarial reports, 1993-1995.

The judges’ and 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

2.23 percent and the government’s contribution of 4.3 percent in fiscal year

1995 were based on the September 30, 1994, valuation contained in the

fiscal year 1994 actuarial report. The contribution rates for the judges were

the expected contributions for the upcoming year excluding any purchase

of prior creditable service at 3.5 percent or any reduction of 0.5 percentage

point in the contribution rates, up to 18 months, for those judges who were

enrolled in JSAS on October 29, 1992, the effective date of the 1992 Act.

Although JSAS uses the aggregate cost method to determine normal cost,9

officials from AOUSC contended that the entry-age normal cost method was

a more appropriate measure to determine whether the participating judges

were paying one-half of JSAS’ costs. Their reasoning was that when the

judges’ share of the costs was determined in 1992, comparable costs were

calculated for general employees and Members of Congress under the CSRS

survivor benefit programs. It was estimated that these CSRS participants

8

Although outside the scope of our study, the fiscal year 1996 normal cost was 6.26 percent, a drop of

0.27 percentage points from fiscal year 1995. However, the judges’ contributions to JSAS for fiscal year

1996 remained at about 36 percent of normal cost.

9

AOUSC selected the aggregate cost method for JSAS in 1982.

Page 9 GAO/GGD-97-87 Federal Pensions
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were paying about one-half of the costs. CSRS uses the entry-age normal

cost method, which treats separately the unfunded liability for

participants’ past service and provides a relatively constant year-to-year

annual cost.

Based on information provided by JSAS’ enrolled actuary, if the entry-age

normal cost method were used to determine JSAS’ normal cost, the

participating judges would have contributed 38 percent of JSAS’ normal

cost, or 2 percentage points more than under the aggregate cost method,

for the same 2-year period. This calculation was based on an estimated

entry-age normal cost of 5.96 percent for 1994 and 1995.

Adjustment That Would Be

Needed in Judges’

Contribution Rates

How much of an adjustment that would be needed to the judges’

contribution rates depends on which actuarial method for calculating

normal cost is used and the distribution of the adjustment among the

active and retired judges. Based on the information contained in JSAS’ 1995

actuarial report, as of September 30, 1995, the participating judges’ future

contributions would have to increase a total of 0.9 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 3.1 percent; and those contributing

3.5 percent would have to increase to 4.4 percent.

If the entry-age normal cost method were used to determine normal cost,

the participating judges’ contributions would have to increase a total of

0.7 percentage points to achieve the 50-percent figure. To ensure that the

increase is distributed equally among the judges, those contributing

2.2 percent would have to increase to 2.9 percent; and those contributing

3.5 percent would have to increase to 4.2 percent.

Because of the relatively small number of judges contributing 3.5 percent

(109 compared to 1,263 of those contributing 2.2 percent as of

September 30, 1995), the entire increase could be added solely to those

contributing 2.2 percent. Therefore, the 2.2 percent could be increased by

0.9 percentage points under the aggregate method and 0.7 percentage

points under the entry-age normal method.

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. Increasing participation was

a major reason for the changes to JSAS over the years. The participation

Page 10 GAO/GGD-97-87 Federal Pensions
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rate had increased from 38 percent before the 1992 Act was enacted to

67 percent as of September 30, 1995. 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. In a booklet

describing retirement benefits to the judges, AOUSC said that, if the

contribution rates were to change, it would ask Congress for an opt-out

provision for the judges already covered under JSAS. Currently, the only

way that participation for an active or retired judge may be revoked is

upon dissolution of the marriage, and there are no contribution refunds

until the judge’s death, if there are no survivors.

Comparison of JSAS

to Other Federal

Survivor Plans

Based on our comparison of JSAS to the five other federal survivor benefit

plans in our study, we found that JSAS generally provides greater benefits.

JSAS provides greater survivor spousal and children’s benefits than the

nonjudicial survivor plans in our study—CSRS, FERS, and the military’s SBP.

Members of Congress earn greater spousal benefits than general

employees under CSRS and FERS, but these benefits are still less than JSAS

benefit levels. Moreover, while a direct comparison of JSAS participant

contributions to the other survivor plans in our study cannot be made

because of differing program designs, we found that retired judges under

JSAS, Tax Court, and Court of Veterans Appeals survivor plans contributed

a smaller percentage of their retirement annuities than retirees under CSRS

and FERS, including Members of Congress and the military’s SBP.

We also found other JSAS features that were unique to JSAS or not available

in all of the other plans. These included counting retirement years in the

spousal benefit formula, refunding contributions to the participants’

estates if there are no survivors, and lower interest rates on purchasing

prior years creditable service.

JSAS Spousal and

Children’s Benefits Are

Greater Than Those of

Nonjudicial Plans

JSAS spousal survivor benefits are greater than those provided by CSRS,

FERS, or the military’s SBP. Children’s benefits are also higher under JSAS.

The Tax Court and Court of Veterans Appeals plans provide spousal and

children benefit levels that are similar to those of JSAS because the benefits

formulas are basically the same.

Figure 1 shows the spousal benefit replacement rates at various years of

creditable service for JSAS and the nonjudicial survivor plans that we

studied. The replacement rate is the initial survivor annuity computed as a

percentage of annual salary before retirement. For participants with

Page 11 GAO/GGD-97-87 Federal Pensions
B-270286 

comparable years of service, JSAS always provides greater survivor

benefits. While Members of Congress earn greater survivor benefits than

do general employees in CSRS or FERS, Members’ survivor benefits are still

less than JSAS benefits.

Figure 1: Comparison of Spousal Benefit Replacement Rates Among Selected Plans

0

10

20

30

40

50

60

25

30

45

50

22

28

41

44

22 22

31

36

13

17

22

25

8 10

15

18

0

16

30 30

JSAS

Military SBP

Member of Congress

General employee

Member of Congress

General employee

CSRS FERS

JSAS

Military SBP

JSAS

Military SBP

JSAS

Percentage of salary

15 years of service 20 years of service 30 years of service 35 years of service

d

d d d

f

f

c

Military SBP

c

c

c

CSRS FERS b b CSRS FERS b b CSRS FERS b b CSRS FERS b b

Surviving spouse's benefits a

e

aDoes not include Social Security survivor benefits. Thus, total benefit levels to JSAS, CSRS

Members of Congress, and FERS survivors will be greater than the levels reported in this table.

Social Security provides a higher replacement rate for the survivors of lower wage earners than

higher wage earners.

bMaximum amount based on survivors’ benefit formula for active or retired employee.

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cComputations are based on (1) member’s service beginning after July 31, 1986, (2) surviving

spouse under age 62 (at age 62, SBP benefits are reduced to 35 percent of retirement pay to

reflect availability of Social Security benefits), and (3) regular military compensation, which is

considered to be the military equivalent of federal civilian pay. Regular military compensation

includes basic pay, tax-free subsistence and housing allowances, and the federal tax advantages

accruing from the tax-free allowances.

dMinimum guaranteed amount. In CSRS, the guaranteed minimum surviving spouse benefit

applies only to active employees and Members. There is no guaranteed minimum surviving

spouse benefit for CSRS retirees.

eNo SBP benefits are available to survivors of military members with fewer than 20 years of

service unless the member is retired for disability or a specially enacted early retirement program.

f

Maximum allowable amount.

Source: Survivor benefit plans data.

JSAS Survivor Benefits JSAS spousal survivor benefits are equal to 1.5 percent of the judge’s

average annual salary received during the 3 highest paid years (known as

the “high 3”) for each year of creditable service, which includes

employment and retirement. Regardless of years of service credits, the

minimum benefit is 25 percent of high 3, and the maximum benefit is

50 percent of high 3. It takes 33 years and 4 months of creditable service to

earn a survivor benefit equal to 50 percent of high 3. It would take 16 years

and 8 months of creditable service to earn a survivor benefit of 25 percent

of high 3 were it not for the guaranteed minimum. Judges and their

survivors are also eligible for Social Security benefits in addition to JSAS

benefits.

CSRS Survivor Benefits CSRS survivor benefits for general employees are based on actual or

accrued annuity amounts, not high-3 salaries. The maximum retirement

annuity is 80 percent of high 3, which can be reached with 41 years and 11

months of service. The survivor benefit is 55 percent of the annuity.

Therefore, the maximum survivor benefit is 44 percent of high 3. If an

employee worked 33 years and 4 months—the creditable years of service

required for JSAS survivors to receive 50 percent of high 3—the CSRS

survivor benefit would be 34.6 percent of high 3.

Unlike JSAS, CSRS does not guarantee a minimum survivor benefit for

retirees. However, it does have a minimum for active employees,

22 percent of high 3. Survivor benefits greater than 22 percent of high 3 are

available only after about 21 years and 10 months of service, compared

with 16 years and 8 months a JSAS participant must work and/or be retired

to earn survivor benefits greater than 25 percent of high 3. It would take a

CSRS employee 24 years and 8 months of service to earn a survivor benefit

of 25 percent of high 3. Unlike the other five survivor plans in our study,

Page 13 GAO/GGD-97-87 Federal Pensions
B-270286 

CSRS general employees generally receive no Social Security benefits

(regular or survivor) from their federal service.10

CSRS Member of Congress

Survivor Benefits

The maximum retirement annuity for Members of Congress under CSRS is

80 percent of the higher of high 3 or final salary. The survivor benefit

formula is the same for Members as for general employees; therefore,

44 percent of high 3 or final salary is also the maximum survivor benefit

for Members. However, a Member can reach the 80 percent annuity

maximum after 32 years of service because the percentage of salary used

in the retirement formula is higher. Therefore, even though a Member can

never earn a survivor benefit as large as a judge under JSAS, he or she can

earn the maximum survivor benefit 1 year and 4 months sooner than the

judge. Under CSRS, Members can earn more than the guaranteed 22 percent

minimum survivor benefit by working longer than 16 years. Members

would have to work 18 years and 2 months to earn a survivor benefit equal

to the 25 percent of high 3 guaranteed by JSAS.

FERS Survivor Benefits The FERS defined benefit plan for general employees has no maximum or

minimum survivor benefits. FERS is a three-part retirement package that

includes (1) a defined benefit plan, (2) a Thrift Savings Plan11 (TSP), and

(3) Social Security. For deceased employees, the survivor benefit is a

lump-sum payment, currently $21,335 plus one-half the higher of the

employee’s high 3 or salary at the time of death, and, if the employee had

at least 10 years of service, an annuity equal to 50 percent of the

employee’s accrued annuity. Survivors of retirees receive either 50 or

25 percent of the retiree’s annuity, depending on the amount of annuity

reduction the retiree elects. For the FERS defined benefit plan to provide a

survivor benefit equal to 25 percent of high 3—the minimum guaranteed

by JSAS—an employee would have to work 45 years and 6 months. It would

10Relatively few federal employees are covered by CSRS and Social Security at the same time. These

employees participate in the “CSRS Offset” plan. They are employees who were rehired into federal

service after 1983 with a break in service of more than 1 year but had at least 5 years of creditable

civilian service at the time they separated from service and chose not to participate in FERS.

Employees pay the Social Security tax plus a small contribution to CSRS, which equates to the regular

CSRS employee contribution of 7 percent. At age 62, CSRS Offset retiree annuities are reduced to

reflect the availability of Social Security benefits.

11TSP is a tax-deferred retirement savings and investment plan, similar to what private corporations

offer their employees under 401(k) plans. For each employee covered by FERS, including Members of

Congress, the government contributes 1 percent of salary to the employee’s TSP account. The

government contributes additional amounts to match any contributions the employee makes to TSP.

The government matches, dollar-for-dollar, employee contributions up to 3 percent of salary and 50

cents on the dollar for each of the next 2 percent of salary the employee contributes. Employees may

contribute another 5 percent of salary to TSP with no government matching.

Most judges and Members of Congress and general employees in CSRS may participate in TSP. They

can contribute up to 5 percent of their salaries to TSP, but the government makes no contribution to

their accounts. Tax Court judges and military members cannot participate in the TSP.

Page 14 GAO/GGD-97-87 Federal Pensions
B-270286 

take over 90 years of service to provide a survivor benefit equal to

50 percent of high 3—the maximum available after 33 years and 4 months

in JSAS.

The TSP component of FERS, to which most employees and the government

contribute, has no survivor benefits as such. If a participant dies before

withdrawing all his or her account balance, the survivors receive the

remainder. A spousal waiver is generally required for withdrawals other

than a joint life annuity. If the retiree purchases a 100 percent joint life

annuity with spouse,12 the retiree’s annuity is actuarially reduced to cover

the full cost of the survivor benefit. In any event, TSP pays the same total

amounts to retirees and survivors as would have been paid to the retiree

alone.

FERS employees and their survivors also receive Social Security benefits. If

the surviving spouse is not eligible for Social Security benefits, a special

supplementary annuity is provided that approximates the value of FERS

service in a Social Security benefit. Like JSAS, Social Security spousal

survivor benefits are completely additive to spousal survivor benefits

under the FERS defined benefit plan. However, unlike JSAS, Social Security

benefits for surviving children are deducted, dollar-for-dollar, from FERS

benefits.

FERS Member of Congress

Survivor Benefits

Similarly, the FERS defined benefit plan for Members of Congress has no

maximum or minimum survivor benefits. It would take 36 years of service

for a Member to earn survivor benefits equal to the guaranteed minimum

of 25 percent of high 3 available under JSAS. It would take 86 years of

service for a Member to earn survivor benefits of 50 percent of high 3—the

maximum under JSAS—that a judge can earn in 33 years and 4 months of

work and retirement.

Military SBP Survivor Benefits Under the military’s SBP, if the member dies with 20 years or more of

service, the full spousal annuity is 55 percent of the member’s retirement

pay, with a minimum of 35 percent and maximum of 55 percent of

retirement pay. After the surviving spouse reaches age 62, SBP benefits are

reduced to 35 percent of retirement pay to reflect the availability of Social

Security benefits. For those members who die before completing 20 years,

protection is available through a survivors’ program for service-related

deaths administered by the Department of Veterans Affairs, Social Security

benefits, and/or life insurance.

12A 50 percent joint life annuity is available whereby the monthly payment to the survivor, retiree or

spouse, is one-half of the annuity payment made while both retiree and spouse were alive.

Page 15 GAO/GGD-97-87 Federal Pensions
B-270286 

Children’s Benefits Under the

Various Plans

Children’s benefits under JSAS, expressed as a percentage of salary, are

higher than those under CSRS and FERS except where the high-3 salary of a

CSRS or FERS employee falls below $40,440. Under the military’s SBP,

children’s benefits must be purchased separately. For a surviving spouse

with children under JSAS, each child receives an annuity of the lesser of

10 percent of average salary or 20 percent of high-3 salary divided by the

number of children.13 Under CSRS, each child receives a fixed dollar

amount—the lesser of $4,044, $12,132 divided by the number of children,

or 60 percent of the high-3 salary divided by the number of children. FERS

provides similar dollar amounts. The amounts under CSRS and FERS are

adjusted annually for inflation. If there is no surviving spouse, the amounts

increase under both plans.

Differing Program Designs

Preclude Direct Comparisons

of Contributions Among Plans

The survivor benefit contributions for employees and Members of

Congress in CSRS and FERS are incorporated into their basic retirement

plans, whereas JSAS, the Tax Court, and the U.S. Court of Veterans Appeals

plans have separate and identifiable contribution rates for survivor

benefits. Because OPM does not report the survivor portion of retirement

contributions for CSRS and FERS, direct comparisons of employee

contribution requirements among the plans cannot be made. Participants

in all the programs except CSRS14 are also covered by Social Security to

which they must contribute and from which survivor benefits are

available.

While the differing designs of the various plans preclude definitive

comparisons of employee contributions toward survivor benefit costs, it is

clear that retirees under CSRS, FERS, and the military’s SBP must contribute

larger percentages of their annuities than retired judges must contribute

under JSAS in order for their survivors to receive benefits upon the retirees’

deaths. Retired Tax Court and Court of Veterans Appeals judges

contribute at the same rate as retired judges under JSAS. Table 2 shows the

participants’ contribution rates for the six federal survivor plans in our

study.

13At the end of fiscal year 1995, the average salary/retirement pay for participating active and retired

judges was about $126,500.

14CSRS Members of Congress are covered by Social Security.

Page 16 GAO/GGD-97-87 Federal Pensions
B-270286 

Table 2: Participants’ Contributions to

the Six Federal Survivor Benefit Plans Participants’ contribution rate

(expressed as a percentage of

salary or annuity)

Federal survivor plans Active Retired

JSAS 2.2% 3.5%

Tax Court Survivors’ Annuity Plan 3.5% 3.5%

Court of Veterans Appeals Judges Retirement Plan 3.5% 3.5%

CSRS

a

2.5% of $3,600

plus 10% of

excessc

FERS a 10%d

Military’s SBP b 6.5%c

aNo portion of participants’ contributions to the retirement plan is designated for survivors’ benefit

costs.

bMilitary members do not contribute to their retirement plan, and survivor benefits are not

available until the member is eligible to retire.

cFor reduced survivor benefits, a lesser portion of the retirement annuity may be designated as

the base for the survivor benefit computation.

dMaximum contribution rate for full survivor benefits, 5 percent for reduced survivor benefits.

Source: Survivor benefit plans data.

JSAS requires active and senior status judges to contribute 2.2 percent of

their salaries towards the costs of JSAS. Retired judges must contribute

3.5 percent of their retirement annuities to JSAS. In contrast, survivor

benefit plans for judges under the Tax Court and Court of Veterans

Appeals require all participating judges, active and retired, to contribute

3.5 percent of their salaries and annuities toward plan costs.

Judges in the three retirement plans that are associated with JSAS have

varying participant contribution requirements. Judges in the Judicial

Officers’ Retirement Fund contribute 1 percent of their salaries for no

more than 14 years toward the cost of their retirement benefits, while

judges in the Judicial Retirement System and the Court of Federal Claims

Judges’ Retirement System make no contributions toward retirement

benefits. Additionally, Tax Court judges do not contribute toward their

retirement benefits while Court of Veterans Appeals judges contribute

1 percent of their salaries for no more than 15 years toward their

retirement benefits.

Page 17 GAO/GGD-97-87 Federal Pensions
B-270286 

Most employees in CSRS contribute 7 percent of their salaries to the

retirement plan during their working years. Certain groups with special

benefits not available to general employees contribute amounts greater

than 7 percent. For example, Members of Congress receive more generous

retirement benefits and must contribute 8 percent of their salaries. While

annuities are available to the survivors of employees and Members who

die before retirement, no portion of the required contribution is designated

as being the employee’s or Member’s share of survivor benefit costs.

Rather, the contributions represent the share of all system costs, including

survivor benefit costs, that participants must pay. Similarly, the retirement

plan portion of FERS requires employees to contribute 0.8 percent of their

salaries and Members to contribute 1.3 percent of their salaries toward

total plan costs, with no specified portion of these contributions being

designated as contributions toward survivor benefit costs. Active military

personnel do not contribute toward the cost of the Military Retirement

System; however, the plan provides no survivor benefits to personnel who

die before they are eligible to retire.

Active judges in all of the above-mentioned judicial retirement systems

and participants in FERS and the Military Retirement System must make

Social Security contributions. In 1997, the required Social Security

contribution is 6.2 percent of earnings up to $65,400. Social Security

benefits are available to the survivors of deceased participants in all of

these systems, but like CSRS and FERS, no portion of the Social Security

contribution is designated as being for survivor benefit costs. CSRS

participants, except for Members of Congress, are not covered by Social

Security.

CSRS retirees who wish to provide annuities to surviving spouses upon

their deaths must accept reductions in their annuity amounts. They may

designate any portion of their annuities as the base for spousal survivor

benefits and then accept reductions equal to 2.5 percent of the first $3,600

of the designated annuity amount and 10 percent of any designated

amount greater than $3,600. Retirees under FERS have somewhat different

options for providing benefits to their surviving spouses. They may have

their annuities reduced by either 10 percent or 5 percent, depending on the

level of spousal survivor benefits they desire to provide. Regardless of

whether CSRS and FERS retirees elect to have their annuities reduced to

provide benefits to their surviving spouses, benefits are payable to any

eligible surviving children without an annuity reduction.

Page 18 GAO/GGD-97-87 Federal Pensions
B-270286 

Military retirees may designate their retirement annuity or a lesser elected

base amount as the base for survivor benefits. Military retirees accept

annuity or lesser elected base reductions of 6.5 percent to provide spousal

survivor benefits and further reductions to provide benefits to surviving

children. The amount of annuity reduction for children’s survivor benefits

varies, depending on the age of the youngest child and whether there is a

surviving spouse.

The varying contribution requirements among JSAS, CSRS, FERS, and military

retirees who provide survivor benefits to their survivors are best

illustrated with an actual computation. A U.S. District Court judge who

retired in 1996 would receive an annual annuity of $133,600. To provide

survivor coverage under JSAS, the retired judge would contribute

3.5 percent of annuity or $4,676. If the judge were subject to the annuity

reduction requirements of CSRS or FERS and wished to provide the

maximum survivor benefits, the required reduction would be $13,090

under CSRS and $13,360 under FERS, or at least $8,414 a year more than the

contribution required by JSAS. Similarly, if the judge were subject to the

military SBP reduction requirements, the reduction would be $8,684 for the

basic package, and $4,008 more than required by JSAS.

Other Differences Among

the Survivor’s Benefit

Plans

In addition to the spousal and children’s benefits, other features of the

survivor’s plans in our study are different, but there are similarities. Table

3 shows a summary comparison of these other features of the six federal

survivors plans in our study.

Page 19 GAO/GGD-97-87 Federal Pensions
B-270286 

Figure 3: Summary Features of the Six Federal Survivor Benefit Plans

 

Minimum service requirement

Marriage duration

Minimum age of surviving 

spouse

Participation election

Participation withdrawal

Deferred annuity

Surviving spouse benefit

formula (after retirement)

Surviving spouse benefit

formula (before retirement)

Minimum/maximum benefit 

(percentage of pay)

Children benefits 

(with surviving spouse)

Children benefits 

(with no surviving spouse)

Cost-of-living adjustment

18 months

1 year

None

Within 6 months of 

taking office or marriage

1.5% of pay x years of 

service, including 

retirementd

Same as after 

retirement

25%/50%

Lesser of 10% of pay per

child or 20% of pay 

divided by number of 

children

Lesser of 20% of pay per

child or 40% of pay 

or spousal annuity divided

by number of children

Full CPI

Yes

JSAS

Plan Feature

5 years

2 years

50, any age with children

Anytime in office, before 

successor takes office

1.5% of pay x years of 

serviced

Same as after 

retirement

25%/50%

Lesser of 10% of pay per

child or 20% of pay 

divided by number of 

children

Lesser of 20% of pay per

child or 40% of pay 

divided by number of 

children

3% for each

5% increase in judges' 

pay

Description

of feature,

time, or age

5 years

2 years

50, any age with children

Anytime in office

1.5% of pay x years of 

serviced

Same as after 

retirement

25%/50%

Lesser of 10% of pay per

child or 20% of pay 

divided by number of 

children

Lesser of 20% of pay per

child or 40% of pay 

divided by number of 

children

3% for each

5% increase in judges' 

pay

No

Description

of feature,

time, or age

Yes

No

Description

of feature,

time, or age

Yes

No

Tax Court of Survivors'

Annuity Plan

Court of Veterans Appeals

Judges Retirement Plan

Six federal

Page 20 GAO/GGD-97-87 Federal Pensions
B-270286 

18 months

9 months

None

At retirement; after 

retirement, within 2 years

of marriagec

Only Members of 

Congress

55% of retirement pay

Higher of 55% of

retirement pay or disability

formula

22%/44%f

Lesser of $4,044 per child 

or $12,132 or 60% of

pay divided by number of 

children

Lesser of $4,824 per child 

or $14,472 or 75% of

pay divided by number of 

children

Full CPI

18 months

9 months

None

At retirement; after 

retirement, within 2 years

of marriagec

50% of retirement pay +

special supplement or

Social Security

Lump sum + one-half 

annual pay and 50% of

retirement pay if 10 or 

more years

0/0

Lesser of $4,044 per child 

or $12,132 divided by 

number of children

Lesser of $4,824 per child 

or $14,472 divided by 

number of children

Modified CPI

20 yearsa

1 yearb

None

At retirement; after 

retirement, within 1 year

of marriagec

55% of retirement paye

None (VA provides 

benefits for servicerelated deaths)

35%/55%g

No separate annuity

55% of retirement pay

divided by number of 

children

Modified CPI

Yes

CSRS

Description

of feature,

time, or age

No

Description

of feature,

time, or age

Yes

No

Description

of feature,

time, or age

Yes

No

FERS Military Retirement System's

SBP

survivor plans

aNo mandatory years of service if member retires under disability or early retirement.

Page 21 GAO/GGD-97-87 Federal Pensions
B-270286 

bApplies only to marriage after retirement; there is no minimum marriage duration before

retirement.

cCoverage is automatic for employees/members after meeting the eligibility requirements; retirees

can elect to continue survivor benefit coverage.

dYears of service other than judicial may be included at 0.75 percent of pay.

eBenefits are reduced to 35 percent of retirement pay at survivor’s age 62 to reflect availability of

Social Security benefits.

f

Minimum survivor benefits for deceased employees; there is no guaranteed minimum for retirees’

survivors.

gMinimum survivor benefits are 55 percent of a minimum $300 base amount and the maximum

survivor benefits are 55 percent of full retirement pay.

Source: Survivor benefit plans data.

Under JSAS, the judges’ years of service in the survivor benefit formula

include those years in retirement. The survivor benefit formulas for the

other five plans do not include the retirement years, even though

participants under all six plans make contributions in retirement.

Refunding of the contributions to participants’ estates, if there are no

survivors, varies among the three judicial and three nonjudicial plans.

Those who choose to participate in the survivor plans must contribute a

designated amount to the plan. Under the JSAS, Tax Court, and Court of

Veterans Appeals plans, contributions plus 3 percent interest are paid to

the judges’ estates if there are no survivors. Conversely, there are no

refunds to the estates of CSRS, FERS, and military SBP participants. While

participants in all six plans may stop their contributions upon the

dissolution of the marriage, only the participants in the three judicial plans

can receive refunds upon leaving office. However, JSAS participants cannot

receive refunds on those contributions of 2.2 percent of salary under the

1992 Act.

Creditable service rendered in prior years, for which contributions were

withdrawn or not withheld, may be purchased under all of the plans,

except the Military Retirement System and FERS for service performed

after 1988 or any contribution withdrawal, with differing rates of interest

paid by the participants. The years of creditable service are used in the

formula for determining retirement and/or survivor benefit amounts.

Survivor annuities under the three judicial plans and retirement annuities

under CSRS, for work performed before October 1982, may be reduced by

10 percent of the unpaid contributions for prior service at the time of the

participant’s death. JSAS, Tax Court, and Court of Veterans Appeals

Page 22 GAO/GGD-97-87 Federal Pensions
B-270286 

participants pay 3.5 percent of the salary earned during the earlier service

plus 3 percent interest. CSRS and FERS participants pay 7 percent and

1.3 percent, respectively, of salary earned during the earlier service at

current interest determined by the Secretary of the Treasury. CSRS

participants may be required to make payment to receive credit for prior

military service. For FERS participants to receive credit for prior military

service, 3 percent of the earned military base pay plus current interest

determined by the Secretary of the Treasury must be paid. The other plans

do not require payment to receive credit for prior military service.

All six plans have employee minimum-service requirements before

survivors become eligible for benefits, ranging from 18 months to 5 years

with the military’s requirement set at 20 years. There is a minimum

marriage duration before the employee’s death, ranging from 9 months to 2

years for all of the plans except the military’s SBP; however, a child of the

marriage overrides the marriage tenure. Although two of the plans, Tax

Court and Court of Veterans Appeals, have a minimum-age requirement

before a surviving spouse can begin receiving benefits, there is no age

requirement if there are eligible dependent children of the marriage.

Electing to participate in these optional survivor plans varies from the

time of taking office with JSAS to the time of retirement with CSRS, FERS, and

the military’s SBP; employees in the latter three plans are automatically

covered after meeting the eligibility requirements. Two plans, JSAS and

FERS, and Members of Congress under CSRS provide for a deferred annuity

for a surviving spouse. All six plans have some type of COLA, with four of

them tied to the yearly changes in the CPI.

Details on the various features of the six plans are provided in appendix I.

Agency Comments

and Our Evaluation

The Director of AOUSC provided written comments on a draft of this report.

AOUSC’s comments and our detailed responses to them are contained in

appendix II.

In general, AOUSC believed that we should have (1) stressed more that the

judges’ contributions have exceeded the government’s contributions,

(2) used the entry-age normal cost method with a different weighting for

retired judges’ contributions to determine the judges’ future costs, and

(3) included Social Security and TSP benefits in the comparison of the

survivor plans that we studied.

Page 23 GAO/GGD-97-87 Federal Pensions
B-270286 

AOUSC believed that we should have highlighted that the judges have

actually contributed more than the government to JSAS during the 3-year

period covered by our study and, as a matter of record, more than the

government over the last 10 years. Our report did provide this context,

pointing out that the judges have paid more into JSAS than the government

before and after the 1992 Act. However, as directed by statute, our

objective was to determine whether the judges were paying one-half of

JSAS’ future costs, as opposed to comparing the judges’ and government’s

share of total JSAS contributions in any particular year.

AOUSC believed that we overstated the adjustment needed for the judges to

cover one-half of JSAS’ future costs. AOUSC said that the adjustment would

have been less had it been computed using the entry-age normal cost

method, rather than the aggregate normal cost method, and a different

weighted contribution rate for the judges. AOUSC provided a revised table

based on the entry-age normal method and its proposed new weights for

the judges’ contributions. We recognize that the entry-age and aggregate

approaches are both acceptable methods for determining normal cost and

have shown in the report that the adjustment would have been smaller

using the entry-age method. However, we used the aggregate cost method

as our primary cost comparison approach for consistency reasons.

Specifically, this was the method that was used in JSAS’ 595 Reports and in

comparing JSAS’ normal costs to other federal survivor benefit plans in the

report of the House Judiciary Committee accompanying the 1992 Act.15

With respect to using a different weighted contribution rate for the judges,

at issue are AOUSC’s past and current assumptions about the rate at which

judges retire. In its comments, AOUSC asserted a higher retirement rate than

the one that was used in preparing the JSAS 595 Reports and that AOUSC

made available during our review. We recognize that actuarial

assumptions vary from year-to-year and can yield different results.

However, we believe it is appropriate to rely on the weighted contribution

rate for the judges that AOUSC presented in its published JSAS 595 Reports,

which are the official public record of JSAS’ fiduciary soundness.

AOUSC also said that our comparison of federal survivor plans should have

included any benefits available to survivors from Social Security and TSP.

While we recognized and have noted in our report that Social Security

survivor benefits and TSP investments can contribute to a surviving

spouse’s income, we disagree that they should have been included in our

comparison of the federal survivor benefit plans. In the House Judiciary

Committee report accompanying the 1992 Act, Social Security benefits

15H. Rep. 102-1006, 102d Congress.

Page 24 GAO/GGD-97-87 Federal Pensions
B-270286 

were not included in the comparison of JSAS to the other federal survivor

benefit plans. Also, the act specifically required us to compare JSAS to the

other federal survivor plans, and—as noted in the report—Social Security

contributions and benefits are separate and apart from such plans. Finally,

had we added Social Security benefits into our comparison, we believe the

most appropriate comparison would have been between the judges in JSAS

and Members of Congress and higher-graded FERS general employees

because of Social Security’s benefit structure. In this regard, Members in

either CSRS and FERS, higher-graded FERS general employees, and JSAS

survivors should receive about the same level of Social Security survivor

benefits because the salary levels of judges, Members of Congress, and

higher-graded FERS general employees are similar.

We also do not agree that TSP investments should have been included in

our comparison because TSP does not provide survivor benefits. As stated

in the report, TSP is a tax-deferred retirement savings and investment plan.

If an employee or retiree dies and has a TSP account, the surviving spouse

can receive the proceeds from the account or an annuity if one had been

purchased with the TSP proceeds at retirement. However, survivors

generally have no statutory entitlement to TSP account balances as they do

to the federal plans’ survivor benefits. Spouses of retired FERS employees

must waive their rights to any TSP withdrawal option other than a

50-percent joint life annuity. Moreover, just as with Social Security

benefits, TSP was not included in the federal survivor benefit plans’

comparison in the House Judiciary Committee report on the 1992 Act.

Based on its view that we should have used the entry-age normal method

and different retirement rate assumptions to determine the adjustment

that would be necessary for the judges to pay one-half of JSAS’ future costs,

AOUSC prepared an alternative table to ours using its preferred cost method

and retirement assumptions. It also prepared alternative tables comparing

survivor benefits and participant contributions that included TSP and

Social Security. Our detailed responses to these tables are provided in

appendix II. Caution should be exercised in drawing conclusions from

these tables because of technical errors in the tables and because the

assumptions underlying them appear to underestimate the shortfall in the

judges’ contributions and survivor benefits.

We are sending copies of this report to the Chairmen and Ranking

Minority Members of the Senate Subcommittee on Administrative

Oversight and the Courts and the House Subcommittee on Courts and

Page 25 GAO/GGD-97-87 Federal Pensions
B-270286 

Intellectual Property of the Committees on the Judiciary, the Director of

AOUSC, and other interested parties. Copies will also be made available to

others upon request.

Major contributors to this report are listed in appendix III. If you have any

questions, please call me at (202) 512-9039.

Michael Brostek

Associate Director, Federal Management

 and Workforce Issues

Page 26 GAO/GGD-97-87 Federal Pensions
Page 27 GAO/GGD-97-87 Federal Pensions
Contents

Letter 1

Appendix I 

Features of Selected

Federal Survivor

Benefit Plans

30

Judicial Survivors’ Annuities System 30

U.S. Tax Court Survivors’ Annuity Plan 33

U.S. Court of Veterans Appeals Judges Retirement Plan 36

Civil Service Retirement System 38

Federal Employees Retirement System 42

Military Retirement System’s Survivor Benefit Plan 45

Appendix II 

Comments From the

Administrative Office

of the U.S. Courts

50

Appendix III 

Major Contributors to

This Report

60

Tables Table 1: Share of JSAS’ Normal Cost Borne by Participating

Judges and Government, Fiscal Years 1993-1995

9

 Table 2: Participants’ Contributions to the Six Federal Survivor

Benefit Plans

17

Figures Figure 1: Comparison of Spousal Benefit Replacement Rates

Among Selected Plans

12

Figure 3: Summary features of the Six Federal Survivor Benefit

Plans

20

Abbreviations

AOUSC Administrative Office of the U.S. 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

OPM Office of Personnel Management

SBP Survivor Benefit Plan

TSP Thrift Savings Plan

Page 28 GAO/GGD-97-87 Federal Pensions
Page 29 GAO/GGD-97-87 Federal Pensions
Appendix I 

Features of Selected Federal Survivor

Benefit Plans

This appendix lists the various features of the six selected federal survivor

benefit plans. Two of the survivor plans, the Judicial Survivors’ Annuities

System (JSAS) and the U.S. Tax Court Survivors’ Annuity Plan, are

stand-alone plans. For those judges who participate in the JSAS, the

companion retirement and disability benefits plans include the Judicial

Retirement System, the Judicial Officers’ Retirement Fund, and the Court

of Federal Claims Judges’ Retirement System. The Tax Court judges’

retirement and disability plan is called the U.S. Tax Court Retirement Plan.

The remaining four survivor plans are part of larger retirement systems

that also provide retirement and disability benefits to participants. The six

plans are as follows:

• Judicial Survivors’ Annuities System

• U.S. Tax Court Survivors’ Annuity Plan

• U.S. Court of Veterans Appeals Judges Retirement Plan

• Civil Service Retirement System

• Federal Employees Retirement System

• Military Retirement System’s Survivor Benefit Plan

Judicial Survivors’

Annuities System

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 retirement annuity to

participate in 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 prior 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.

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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 have been 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.

16 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.

Withdrawal of

Participation

Participation may be revoked upon the dissolution of the marriage. The

contributions plus 3 percent interest, minus those paid at 2.2 percent of

salary and 3.5 percent of salary for prior creditable service, may be paid to

the judge upon leaving office. 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 estate.

Survivor Benefit Formula After retirement. The annual spousal annuity is 1.5 percent of average

salary17 for each year of creditable judicial service (including years in

retirement) and as a Member of Congress and up to 15 years of combined

congressional staff and executive branch service and up to 5 years of

military service, plus 0.75 percent of average salary for congressional staff

16An insurable interest beneficiary is one who can reasonably expect to receive financial benefit from

the continued life of the retiree.

17Average salary is the average annual salary and/or retirement annuity received during the 3 highest

paid years.

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and executive branch service over 15 years. Creditable years include those

where deductions or contributions were made to the plan, except for

military service.

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

Spousal annuity is reduced by 10 percent of any judicial and nonjudicial

service deposits that are still unpaid on the date of the judicial officer’s

death. The survivor may elect not to count years for which contributions

were not paid for prior service and not incur a reduced annuity.

Children’s Benefits Age of children. Surviving unmarried dependent children must be under

age 18 or age 22 if 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 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 number of children,

• 20 percent of average salary, or

• 40 percent of average salary divided by number of children.

Cost-of-Living Adjustments Survivors’ annuities are increased for full annual increase in the Consumer

Price Index (CPI). The adjustment measures yearly change in third quarter

to third quarter CPI for urban wage earners and clerical workers.

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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 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 marriages 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.

U.S. Tax Court

Survivors’ Annuity

Plan

Contribution Rates Employee/retiree contribution rate. Active and retired judges contribute

3.5 percent of salary and retirement annuity to participate in the plan.

Credit is given under the Tax Court plan for any deposits that were made

and not withdrawn during any earlier service under CSRS or FERS. Prior

creditable service for which contributions were not made or withdrawn

may be credited to the Tax Court plan 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 prior 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

11 percent of salary.

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Benefit Plans

Eligibility Requirements

for Survivor Benefit

Coverage

Years of service. A judge must have at least 5 years of creditable service

and contributions before becoming vested in the plan. Creditable service

for vesting purpose includes judicial, congressional, and executive branch.

Marriage duration. A surviving spouse must have been married to the

judge at least 2 years before the judge’s death or be a parent of a child of

the marriage.

Commencement/termination of benefits. Benefits commence on the date

of the judge’s death, for a surviving spouse beginning at age 50 or any age

if there are dependent children. If a surviving spouse remarries before age

55, benefits for the spouse are terminated.

Participation Election The election must be made while the judge is still in office or no later than

the day after the judge’s successor takes office, if the judge is not

reappointed.

Former spouse. Not applicable.

Insurable interest. Not applicable.

Deferred retirement. Not applicable.

Withdrawal of

Participation

Participation may be revoked upon the dissolution of the marriage. The

contributions plus 3 percent interest may be paid to the judge upon leaving

office or dissolution of the marriage. If there is no eligible surviving spouse

or child upon the death of the judge, the contributions plus 3 percent

interest are to be paid to the judge’s estate.

Survivor Benefit Formula After retirement. The annual spousal annuity is 1.5 percent of average

salary18 for each year of judicial, congressional (member and/or staff), and

military service, excluding any service greater than 15 years as a

congressional staff employee and greater than 5 years in the military

service, plus 0.75 percent of average salary for executive branch service.

Before retirement. Same as after retirement.

18Average salary is the average of the highest 3 consecutive years of annual salary and/or retirement

annuity.

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Insurable interest, Not applicable.

Deferred retirement. Not applicable.

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 Spousal

annuity is reduced by 10 percent of any judicial and nonjudicial service

deposits still unpaid on the date of the judicial officer’s death. The survivor

may elect to not count years for which no contributions were paid for

prior service and not incur a reduced annuity.

Children’s Benefits Age of children. Surviving unmarried dependent children must be age 18

or incapable of self-support due to a disability.

Benefit computation. If the judge is survived by a spouse, each child’s

annual annuity is the lesser of

• 10 percent of average annual salary or

• 20 percent of average annual salary divided by number of children.

If the judge is not survived by a spouse, each child’s annual annuity is the

lesser of

• 20 percent of average annual salary or

• 40 percent of average annual salary divided by number of children.

Cost-of-Living Adjustments Survivor’s annuities increase by 3 percent for each 5 percent increase in

judges’ salaries on the day the salary increase becomes effective.

Social Security Eligibility

and Benefits

Survivors’ eligibility and benefits under the U.S. Tax Court Survivors’

Annuity Plan are the same as those described under JSAS.

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U.S. Court of Veterans

Appeals Judges

Retirement Plan

Contribution Rates Employee/retiree contribution rate. Active and retired judges contribute

3.5 percent of salary or retirement annuity to participate in the survivor

plan. Credit is given under the plan for any deposits that were made and

not withdrawn during any earlier service under CSRS or FERS. Prior

creditable service for which contributions were not made or withdrawn

may be credited to the plan 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 prior military service.

Government contribution rate. The government’s share is the amount

required to reduce the unfunded liability to zero.

Eligibility Requirements

for Survivor Benefit

Coverage

Years of service. A judge must have at least 5 years of creditable service

and contributions before becoming vested in the plan. Creditable service

for vesting purpose includes judicial, congressional, and executive branch.

Marriage duration. A surviving spouse must have been married to the

judge at least 2 years before the judge’s death or must be a parent of a

child of the marriage.

Commencement/termination of benefits. Benefits commence on the date

of the judge’s death for a surviving spouse beginning at age 50 or any age if

there are dependent children. If a surviving spouse remarries before age

55, benefits for the spouse are terminated.

Participation Election The election must be made while in office.

Former spouse. Not applicable.

Insurable interest. Not applicable.

Deferred retirement. Not applicable.

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Withdrawal of

Participation

Participation may be revoked at any time. Revocation of the election to

participate in retirement program automatically revokes participation in

the survivor plan. The contributions plus 3 percent interest may be paid to

the judge upon leaving office. If there is no eligible surviving spouse or

child upon the judge’s death, the contributions plus 3 percent interest shall

be paid to the judge’s estate.

Survivor Benefit Formula After retirement. The annual spousal annuity is 1.5 percent of average

salary19 for each year of judicial, congressional (member and/or staff), and

military service, excluding any service greater than 15 years as a

congressional staff employee and greater than 5 years in the military

service, plus 0.75 percent of average salary for executive branch service.

Before retirement. Same as after retirement.

Insurable interest. Not applicable.

Deferred retirement. Not applicable.

Minimum/maximum amount of benefit. Spousal annuity may not be

greater than 50 percent or less than 25 percent of average salary.

Reduction of Annuity for

Unpaid Contributions for

Prior Service

Spousal annuity is reduced by 10 percent of any judicial and nonjudicial

service deposits still unpaid on the date of the judicial officer’s death. The

survivor may elect not to count years for which no contributions were

paid for prior service and not incur a reduced annuity.

Children’s Benefits Age of children. Surviving unmarried dependent children must be under

age 18 or age 22 if 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 judge is survived by a spouse, each child’s

annual annuity is the lesser of

• 10 percent of average annual pay or

• 20 percent of average annual pay divided by number of children.

19Average salary is the average of the highest 3 consecutive years of annual salary and/or retirement

annuity.

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If the judge is not survived by a spouse, each child’s annual annuity is the

lesser of

• 20 percent of average annual pay or

• 40 percent of average annual pay divided by number of children.

Cost-of-Living Adjustments Survivors’ annuities are increased by 3 percent for each 5 percent increase

in judges’ salaries on the day the salary increase becomes effective

provided some of the last 18 months of federal service was service on the

Court.

Social Security Eligibility

and Benefits

Survivors’ eligibility and benefits under the U.S. Court of Veterans Appeals

Judges Retirement Plan are the same as those described under JSAS.

Civil Service

Retirement System

Contribution Rates Employee/retiree contribution rate. Employees generally contribute

7 percent20 toward the retirement program with no designated amount for

survivor benefits. For retirees, 2.5 percent of the first $3,600 of annuity

plus 10 percent over $3,600 are deducted to cover costs of full survivors’

benefits. For less than full survivor’s benefits, the contribution rate

remains the same, but the base amount is any amount less than the full

retiree’s annuity. Insurable interest premiums are 10 to 40 percent of

retirement annuity, depending on the age difference between the

employee and the person named as beneficiary. Prior creditable service

for which there are no contributions may be credited if deposits equal to

7 percent of prior salary (since January 1970) plus interest as determined

by the Secretary of the Treasury are paid. No deposits are required for

pre-1957 military service or any military service if first employed by the

federal government before October 1982.21

20Although most employees contribute 7 percent, law-enforcement officers, firefighters, and

congressional employees contribute 7.5 percent, and Members of Congress contribute 8 percent

towards the retirement program. Bankruptcy, magistrate, Court of Federal Claims, and Court of

Military Appeals judges also contribute 8 percent.

21Deposits for any post-1956 military service can be made to avoid a reduction in retirement annuity at

age 62 or a reduction in spousal survivor annuity, if the employee becomes eligible for Social Security

benefits.

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Government contribution rate. The government pays all of the remaining

cost; there is no specified maximum.

Eligibility Requirements

for Survivor Benefit

Coverage

Years of service. An employee must have at least 18 months of civil service

and contributions before becoming vested in the plan.

Marriage duration. A surviving spouse must have been married to the

current or former employee or retiree at least 9 months or be a parent of a

child of the marriage; however, accidental death of an employee overrides

the marriage duration. A former spouse must have been married to the

employee or retiree at least 9 months.

Commencement/termination of benefits. Benefits commence on the date

after the employee or retiree’s death. If a surviving or former spouse

remarries before age 55, benefits for that spouse are terminated. The

benefits may be reinstated if the remarriage terminates.

Participation Election Full surviving spouse benefits are effective at the time of retirement,

unless waived or reduced jointly by retiree and spouse or the Office of

Personnel Management (OPM) waives the spouse’s consent when all

reasonable attempts have been made to obtain such consent for the

surviving spouse benefit. If married after retirement, an election to

participate must be within 2 years of the marriage. An employee may

change the survivor annuity no later than 30 days after the date of the first

regular monthly retirement annuity payment. If no survivor benefits or less

than full benefits are selected, the retiree may elect to increase benefits up

to 18 months after retirement but may not elect to decrease the benefits.

Former spouse. The election must be made at time of retirement. If the

marriage terminates after retirement, a change in the participation election

must be made within 2 years after the marriage is dissolved.

Insurable interest. The election must be made at time of retirement and

does not require spousal consent.

Deferred retirement. For a Member of Congress eligible for deferred

retirement annuity, a surviving or former spouse is eligible for an

immediate survivor annuity. There is no spousal annuity for a former

employee who is eligible for a deferred retirement annuity and dies before

the deferred retirement annuity begins or before reaching age 62.

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Withdrawal of

Participation

The surviving spouse or former spouse annuity and insurable interest

elections may not be revoked later than 30 days after the date of the first

regular monthly retirement annuity payment, except, in the case of a

spouse, when OPM waives the spouse’s consent when all reasonable

attempts have been made to obtain such consent for the surviving spouse

benefit or where the employee ceases to be married. The exception to the

30-day rule, in the case of insurable interest, is when the beneficiary dies

or the surviving spouse benefit is elected after retirement. There is no

refund of contributions to the retiree even if there is no eligible surviving

spouse, child, or beneficiary.

Survivor Benefit Formula After retirement. The full survivor spousal annuity is 55 percent of the

retiree’s annuity before the survivor contribution reduction. Less than a

full survivor annuity is 55 percent of the base amount selected, which is

any amount less than the full retiree’s annuity. The retiree’s annuity

formula is 1.5 percent of average salary22 for the first 5 years, plus

1.75 percent for the next 5 years, plus 2 percent for the remaining years.

For a Member of Congress, the retiree’s annuity formula is generally

2.5 percent of average salary or final salary times years of service. The

maximum retiree’s annuity is generally 80 percent of average salary.

Before retirement. The survivor spousal annuity is 55 percent of the

employee’s accrued retirement benefits at time of death, or if higher,

55 percent of the disability formula, the lesser of (1) 40 percent of average

salary or (2) the amount attained if the employee had worked until age 60.

Insurable interest. The beneficiary receives 55 percent of the retiree’s

self-only annuity after insurable interest reduction.

Deferred retirement. For a Member of Congress, the survivor spousal

annuity is 55 percent of a Member’s deferred retirement annuity. For a

former employee who dies before the deferred annuity begins or before

reaching age 62, the surviving spouse receives a refund of the retirement

contributions. For a former employee who dies after the deferred

retirement annuity begins or reaches age 62 and has filed an application

for retirement, the survivor spousal annuity is 55 percent of the deferred

retirement annuity.

Minimum/maximum amount of benefit. For a full survivor spousal annuity,

the minimum amount of benefit is generally 22 percent and the maximum

22Average salary is the highest basic pay over 3 consecutive years of creditable service.

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is 44 percent of employee’s average salary. There is no guaranteed

minimum for employees dying after retirement.

Reduction of Annuity for

Unpaid Contributions for

Prior Service

The retirement annuity is reduced by 10 percent of any prior service

deposits that were never withheld for service performed before October

1982. To not incur the reduced annuity and to receive credit for service

after September 30, 1982, the deposits plus interest must be paid by the

employee prior to retirement. The survivor may elect to not count years

for which no contributions were paid or to pay for prior service and not

incur a reduced survivor annuity.

Children’s Benefits Age of children. Surviving unmarried dependent children must be under

age 18 or age 22 if full-time student or incapable of self-support due to a

disability incurred before age 18.

Benefit computation. If there is a surviving spouse, each child is to receive

annually the lesser of

• 60 percent of average salary divided by the number of children,

• $4,044 (as of 12/01/96) for each child, or

• $12,132 (as of 12/01/96) divided by the number of children.

If there is no surviving spouse, each child is to receive annually the lesser

of

• 75 percent of average salary divided by the number of children,

• $4,824 (as of 12/01/97) for each child, or

• $14,472 (as of 12/01/96) divided by the number of children.

Cost-of-Living Adjustments Survivors’ annuities are increased for full annual increase in CPI as

described under JSAS.

Social Security Eligibility

and Benefits

Under CSRS for a Member of Congress, the survivors’ eligibility and benefits

are the same as described under JSAS. An employee/retiree’s survivor is not

eligible for Social Security benefits under CSRS.

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Benefit Plans

Federal Employees

Retirement System

Contribution Rates Employee/retiree contribution rate. Employees generally contribute

0.8 percent23 (7 percent minus 6.2 percent for Social Security) of salary

toward the defined benefit plan part of the retirement program,24 with no

designated amount for survivor benefits. Retirees contribute 10 percent of

their annuities to receive full survivor benefits and 5 percent for reduced

survivor benefits. Insurable interest premiums are 10 percent of annuity

plus 5 percent for each full 5 years the beneficiary is younger than the

retiree. The total reduction for insurable interest may not exceed

40 percent. Only service performed before 1989 for which there are no

contributions may be credited if deposits equal to 1.3 percent of prior

salary plus interest as determined by the Secretary of the Treasury are

paid. Deposits of 3 percent of military base pay plus interest, as

determined by the Secretary of the Treasury, are required to receive credit

for post-1956 military service.

Government contribution rate. The government pays all remaining cost;

there is no specified maximum.

Eligibility Requirements

for Survivor Benefit

Coverage

Years of service. An employee must have at least 18 months of civil service

and contributions before becoming vested in the plan.

Marriage duration. A surviving spouse must have been married to the

current or former employee or retiree at least 9 months or be a parent of a

child of the marriage; however, accidental death of an employee overrides

the marriage duration. A former spouse must have been married to the

employee/retiree at least 9 months.

Commencement/termination of benefits. Benefits commence on the date

after the employee/retiree’s death. For the surviving or former spouse of a

former employee who is eligible for a deferred annuity, benefits

commence on the date after death or the earliest eligible retirement date.

If a surviving or former spouse remarries before age 55, benefits for that

23Although most employees contribute 0.8 percent, law-enforcement officers, firefighters, air traffic

controllers, congressional employees, and Members of Congress contribute 1.3 percent. Bankruptcy,

magistrate, Court of Federal Claims, and Court of Military Appeals judges also contribute 1.3 percent.

24FERS is a three-part retirement program that includes (1) a defined benefit plan, (2) a Thrift Savings

Plan, and (3) Social Security.

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Benefit Plans

spouse are terminated. The benefits may be reinstated if the remarriage

terminates.

Participation Election Full surviving spouse benefits are effective at the time of retirement,

unless waived or reduced jointly by retiree and spouse. If married after

retirement, an election to participate must be made within 2 years of the

marriage. An employee may change the survivor annuity no later than 30

days after the date of the first regular monthly retirement annuity

payment. If no survivor benefits or less than full benefits are selected, the

retiree may elect to increase benefits up to 18 months after retirement but

may not elect to decrease the benefits.

Former spouse. The election must be made at time of retirement. If the

marriage terminates after retirement, the change in the participation

election must be made within 2 years after the marriage is dissolved.

Insurable interest. The election must be made at time of retirement and

does not require spousal consent.

Deferred retirement. If the former employee was eligible for a deferred

annuity, the surviving or former spouse, as of date of separation from

service, may receive a spousal survivor annuity.

Withdrawal of

Participation

The surviving spouse or former spouse annuity and insurable interest

elections may not be revoked later than 30 days after the date of the first

regular monthly retirement annuity payment, except, in the case of a

spouse, when OPM waives the spouse’s consent when all reasonable

attempts have been made to obtain such consent for the surviving spouse

benefit or where the employee ceases to be married. The exception to the

30-day rule, in the case of insurable interest, is when the beneficiary dies

or the surviving spouse benefit is elected after retirement. There is no

refund of contributions even if there is no eligible surviving spouse, child,

or beneficiary.

Survivor Benefit Formula After retirement. A full survivor spousal annuity is 50 percent of the

retiree’s unreduced benefits plus a special supplementary annuity, which

approximates the value of FERS service in a Social Security benefit, payable

until age 60 if the spouse will not be eligible for Social Security survivor

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benefits until then. A reduced survivor spousal annuity is 25 percent of the

retiree’s unreduced benefits.

The retiree’s unreduced benefit formula is 1 percent of average salary25

times years of creditable service. If employee retires at age 62 with at least

20 years of service, the factor is 1.1 percent. For a Member of Congress,

the retiree’s formula is generally 1.7 percent of average salary for each of

the first 20 years of congressional service and 1 percent for each

subsequent year of creditable service.

Before retirement. If the employee has less than 10 years of service, the

survivor spousal benefit is the lump-sum payment of $21,335.30 (as of

12/01/96) plus the greater of one-half of annual pay rate at death or

one-half of high-3 average pay. If the employee had 10 years or more

service, there is an additional survivor spousal annuity of 50 percent of the

employee’s accrued benefits.

Insurable interest. The beneficiary receives 55 percent of the retiree’s

self-only annuity after insurable interest reduction.

Deferred retirement. The survivor spousal annuity is 50 percent of the

retirement annuity that would have been paid if the former employee had

been eligible for an unreduced deferred annuity on the date of his/her

death. A surviving or former spouse may elect to receive a reduced

survivor annuity on the day after the former employee dies if the former

employee did not meet the age and service requirements for the deferred

retirement annuity. The formula for the reduced survivor annuity includes

a factor to account for the number of years after the death of an employee

before being eligible for the unreduced deferred retirement annuity.

Minimum/maximum amount of benefit. There is no guaranteed minimum

or maximum survivor annuity.

Reduction of Annuity for

Unpaid Contributions for

Prior Service

To receive credit for unpaid service, the deposits must be paid by the

employee prior to retirement. The survivor may elect not to count years

for which no contributions were paid or to pay for prior service and not

incur a reduced survivor annuity; however, credit is not allowed for prior

years of service after 1988 if no contributions were withheld or any

contributions withdrawn.

25Average salary is the highest basic pay over 3 consecutive years of creditable service.

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Children’s Benefits Age of children. Surviving unmarried dependent children must be under

age 18 or age 22 if full-time student or incapable of self-support due to a

disability incurred before age 18.

Benefit Computation. If there is a surviving spouse, each child is to receive

annually the lesser of

• $4,044 (as of 12/01/96) for each child or

• $12,132 (as of 12/01/96) divided by the number of children.

If there is no surviving spouse, each child is to receive annually the lesser

of

• $4,824 (as of 12/01/96) for each child or

• $14,472 (as of 12/01/96) divided by the number of children.

Children’s annuities are reduced dollar-for-dollar by any Social Security

children’s benefits that may be payable.

Cost-of-Living Adjustments Survivors’ annuities are increased annually for increase in CPI. Spousal

survivors, unlike retirees who must be age 62, receive either full or partial

COLAs regardless of age. If the CPI increase is equal to or greater than

3 percent, the COLA is 1 percentage point less than CPI increase. If CPI is at

least 2 percent but less than 3 percent, the COLA is 2 percent. If the CPI is

less than 2 percent, the COLA is equal to the CPI increase. Children’s benefits

are increased for the full annual increase in the CPI.

Social Security Eligibility

and Benefits

Survivors’ eligibility and benefits under FERS are the same as those

described under JSAS.

Military Retirement

System’s Survivor

Benefit Plan

Contribution Rates Employee/retiree contribution rate. Active members do not contribute

toward the retirement program or the Survivor Benefit Plan (SBP). Retired

members contribute 6.5 percent of retirement annuity or a lesser elected

Page 45 GAO/GGD-97-87 Federal Pensions
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Benefit Plans

base amount (cannot be less than $300 monthly) to provide for a surviving

spousal annuity in SBP. If monthly retirement pay or base amount is less

than $930 (as of 01/01/97), the contribution is 2.5 percent of the first $434

plus 10 percent of remaining amount. Supplemental SBP premiums for

former spouse, children coverage with spousal coverage, or children only

coverage are based on age of the retired member, spouse, and youngest

child. Insurable interest premiums are 10 percent of retirement annuity,

plus 5 percent for each 5 years the retired member is older than the

beneficiary, with a maximum premium of 40 percent.

Government contribution rate. The government pays all the remaining cost

of SBP; there is no specified maximum. The government does not

contribute to the Supplemental SBP or insurable interest coverage.

Eligibility Requirements

for Survivor Benefit

Coverage

Years of service. A member must have 20 years of military service unless

retired for disability or specially enacted early retirement.

Marriage duration. A surviving spouse must be married to member at

retirement or, after retirement, at least 1 year before death or be a parent

of a child of the marriage. A former spouse must have been married to the

member at least 1 year.

Commencement /termination of benefits. Benefits commence on the first

day after the member’s death. If a surviving or former spouse remarries

before age 55, benefits for that spouse are terminated. The benefits may be

reinstated if the remarriage terminates.

Participation Election SBP and Supplemental SBP elections must be made at the time of

retirement. Full SBP benefits are in effect at time of retirement unless

waived or reduced jointly by the retiree and spouse. If member marries or

acquires a dependent child after retirement, the election must be made

within 1 year of the occurrence.

Former spouse. The election must be made at time of retirement. If the

marriage terminates after retirement, the change in the participation

election must be made within 1 year after the marriage is dissolved. If

married after retirement and the marriage dissolves, the marriage must

have lasted at least 1 year or the former spouse must be a parent of a child

of the marriage.

Page 46 GAO/GGD-97-87 Federal Pensions
Appendix I 

Features of Selected Federal Survivor

Benefit Plans

Insurable interest. The election must be made at time of retirement. Only

unmarried members with no dependent children may elect insurable

interest coverage.

Deferred retirement. Not applicable.

Withdrawal of

Participation

SBP and Supplemental SBP may be suspended upon dissolution of the

marriage or if children become ineligible for benefits. Insurable interest

may be revoked at any time, except for a former spouse. There are no

refunds of contributions even if there is no eligible surviving spouse, child,

or beneficiary.

Survivor Benefit Formula After retirement. The monthly survivor spousal annuity is 55 percent of

member’s retirement annuity or the lesser elected base amount. The

monthly base amount, elected by member, cannot be less than $300 or

greater than full retirement annuity. The survivor annuity is reduced to

35 percent of base amount at survivor’s age 62 when Social Security

benefits are available. Supplemental SBP annuity is available in increments

of 5 percent up to 20 percent of retirement annuity for a survivor who is

age 62 and older with full SBP. There is a Department of Veterans Affairs’

Dependency and Indemnity Compensation survivors’ program for

service-related deaths. The Veterans Affairs’ program reduces the SBP

benefit dollar-for-dollar, but not Supplemental SBP.

There are three different retirement annuity formulas depending upon

when military service began:

• Before September 8, 1980, retirement annuity is basic pay times

(2.5 percent times years of service).

• After September 7, 1980, but before August 1, 1986, retirement annuity is

the average of the highest 36 months of basic pay times (2.5 percent times

years of service).

• After July 31, 1986, retirement annuity is the average of the highest 36

months of basic pay times (2.5 percent times years of service minus one

percentage point for each year of service under 30). At age 62, the penalty

is removed and the retirement annuity is recomputed.

The multiplier (2.5 percent times years of service) cannot be greater than

75 percent. Basic pay does not include quarters, subsistence, or housing

allowances.

Page 47 GAO/GGD-97-87 Federal Pensions
Appendix I 

Features of Selected Federal Survivor

Benefit Plans

Before retirement. No SBP benefits are available to survivors of a member

with less than 20 years of service unless retired for disability or special

Temporary Early Retirement Authority. The Department of Veterans

Affairs’ Dependency and Indemnity Compensation survivors’ program

protects against the service-related death of a member; and Social Security

benefits and life insurance, if purchased by the member, are available to

survivors. Monthly payments (as of 12/01/96) under the Veterans Affairs’

program begin at $833 to a surviving spouse and $211 for each child under

age 18. If there is no surviving spouse, the monthly payment for one child

is $354, $510 for two, $662 for three, and an additional $130 for each child

in excess of three.

Insurable interest. The beneficiary receives 55 percent of the member’s

retirement annuity after premiums for SBP are subtracted.

Deferred retirement. Not applicable.

Minimum/maximum amount of benefit. The survivor spousal annuity may

not be greater than 55 percent of the retirement annuity before survivor’s

age 62 or 35 percent of the retirement annuity beginning at age 62. The

minimum spousal annuity may not be less than 55 percent of the minimum

elected $300 base amount before survivor’s age 62 or 35 percent of the

minimum elected $300 base amount beginning at age 62.

Reduction of Annuity for

Unpaid Prior Service

Not applicable.

Children Benefits Age of children. Surviving unmarried dependent children must be under

age 18 or 22 if full-time student or incapable of self-support due to a

disability incurred before age 18 or 22 if a student.

Benefit computation. If spouse and child coverage is selected and the

member is survived by a spouse, there is no separate children’s annuity. If

a surviving spouse dies and spouse and children coverage was selected,

children equally divide the survivor annuity equal to 55 percent of the base

amount. If children only coverage was selected, children equally divide the

annuity equal to 55 percent of the base amount.

Cost-Of-Living

Adjustments

Survivors annuities are increased each year for the full increase in the CPI

for those members entering service before August 1, 1986. For members

Page 48 GAO/GGD-97-87 Federal Pensions
Appendix I 

Features of Selected Federal Survivor

Benefit Plans

entering service after July 31, 1986, survivors receive the CPI minus

1 percentage point. On the member’s 62nd birthday, survivors receive a

one-time restoral of the less than full COLAs; then the annual partial COLAs

continue.

Social Security Eligibility

and Benefits

At age 62, SBP benefits are reduced from 55 percent of base amount to

35 percent when Social Security benefits become available and are

expected to be at least 20 percent of base amount.

If member dies before 20 years of service, Social Security survivors’

eligibility and benefits are the same as described under the JSAS.

Page 49 GAO/GGD-97-87 Federal Pensions
Appendix II 

Comments From the Administrative Office

of the U.S. Courts

Note: GAO comments

supplementing those in the

report text appear at the

end of this appendix.

Page 50 GAO/GGD-97-87 Federal Pensions
Appendix II 

Comments From the Administrative Office

of the U.S. Courts

Now figure 1.

Page 51 GAO/GGD-97-87 Federal Pensions
Appendix II 

Comments From the Administrative Office

of the U.S. Courts

Page 52 GAO/GGD-97-87 Federal Pensions
Appendix II 

Comments From the Administrative Office

of the U.S. Courts

Now figure 1.

Page 53 GAO/GGD-97-87 Federal Pensions
Appendix II 

Comments From the Administrative Office

of the U.S. Courts

See comment 1.

Now table 2.

See comment 2.

Page 54 GAO/GGD-97-87 Federal Pensions
Appendix II 

Comments From the Administrative Office

of the U.S. Courts

See comment 3.

Page 55 GAO/GGD-97-87 Federal Pensions
Appendix II 

Comments From the Administrative Office

of the U.S. Courts

The following are GAO’s comments on AOUSC’s April 25, 1997, letter.

GAO Comments 1. AOUSC prepared a revised table 2 (our original table 2 is now figure 1 in

the report) that included Social Security survivor benefits and TSP

investments in the replacement rates for surviving spouses. As described

below, the table minimized the difference in Social Security survivor

benefits between JSAS and FERS general employees, double-counted Social

Security benefits for military members’ surviving spouses, included

Department of Veterans Affairs’ survivor benefits that are not part of the

military’s SBP plan, and implied that a large number of JSAS participants

were receiving matching TSP government contributions.

Social Security retirement and survivor benefits computations are

complicated and vary widely, depending on many factors. These factors

include the employee’s date of birth, earnings averaged over an employee’s

working years, the ages of the deceased employee and surviving spouse,

and the presence of dependent children. Social Security is designed to

provide benefits that replace a greater percentage of earnings for

lower-paid employees than for higher-paid employees. Therefore, unlike

the specific spousal benefit replacement rates for the various federal

survivor benefit plans that we provided in figure 1 in the report,

replacement rates for Social Security survivor benefits for each of the

years of service in figure 1 would vary widely because of the many factors

noted above.

The information presented in AOUSC’s revised table 2 required that certain

assumptions be made in order to estimate Social Security survivor

benefits. AOUSC’s assumptions maximized benefits to the surviving spouse

of FERS general employees and therefore minimized the difference between

JSAS and FERS general employees’ surviving spouses. AOUSC’s assumptions

included that (1) JSAS and Members of Congress under FERS and CSRS would

be receiving benefits based on the maximum taxable earnings under Social

Security, and FERS general employees would be receiving benefits based on

one-half of Social Security taxable earnings and (2) participants for all

these plans are age 62 or older—because JSAS participants’ average age is

63.

Based on these AOUSC assumptions, JSAS and Members of Congress

surviving spouses would have received the maximum Social Security

benefits, and their replacement rates of salary from Social Security alone

would be lower than for FERS general employees because of the Social

Page 56 GAO/GGD-97-87 Federal Pensions
Appendix II 

Comments From the Administrative Office

of the U.S. Courts

Security formula. The Social Security formula provides a higher

replacement rate for lower-salaried workers. The magnitude of the effect

that earnings can have on replacement rates is best illustrated with an

example. The Social Security replacement rate of final salary for a FERS

general employee at age 62 with 30 years of service is 26 percent with final

year earnings of $30,000 and 14 percent with final year earnings of

$100,000.26 The range of Social Security replacement rates, for this

example, is 14 to 26 percent, depending on the earnings levels of the

employee. Therefore, the replacement rate should decrease by

12 percentage points in AOUSC’s revised table 2 for a higher-salaried FERS

general employee with 30 years of service.

AOUSC also assumed that the participants for its Social Security

computations were age 62 or older. This assumption provided a higher

benefit level to FERS general employees than would be expected. In reality,

JSAS surviving spouses are more likely than FERS surviving spouses to

receive the full survivor benefits because the JSAS participants on average

are older than FERS participants. While the average age of JSAS participants

is 63, the average age of FERS general employees is 40, and the average age

of death for employed FERS participants is 51. Under Social Security

guidelines, a surviving spouse age 65 or older receives 100 percent of the

employee’s Social Security benefits, and those ages 60 to 64 receive about

71 to 94 percent. A surviving spouse under age 60 with a dependent child

receives 75 percent of the employee’s Social Security benefits. A surviving

spouse under age 60 with no dependent child generally receives no

benefits until age 60.

AOUSC’s revised table 2 also double-counted Social Security survivor

benefits for the surviving spouses of military members. AOUSC added the

Social Security benefits on top of the military’s SBP benefits to arrive at

their revised replacement rates. Throughout the report, we noted that the

military’s SBP benefits are reduced to 35 percent of the military member’s

retirement pay when the surviving spouse reaches age 62 to reflect the

availability of Social Security benefits. Therefore, the Social Security

benefits should not have been added to the military’s SBP benefits; they

should have replaced a portion of them when the surviving spouse reached

age 62. Including Social Security benefits overstated the military’s

replacement rates, increasing them, for instance, from 16 to 43 percent for

a member with 20 years of creditable service.

26Federal Pensions: Thrift Savings Plan Has Key Role in Retirement Benefits (GAO/HEHS-96-1, Oct. 19,

1995).

Page 57 GAO/GGD-97-87 Federal Pensions
Appendix II 

Comments From the Administrative Office

of the U.S. Courts

Additionally, AOUSC added an amount for the Department of Veterans

Affairs’ Dependency and Indemnity Compensation survivors’ program

benefits for service-related deaths if a military member has less than 20

years of service. We acknowledged the availability of these survivor

benefits in the report, but we did not include them in the replacement rate

computations because they are not part of the military’s SBP survivor

benefit plan.

AOUSC’s revised table 2 also included JSAS judges participating in TSP with

matching 5 percent government contributions. Although AOUSC noted that

most JSAS judges may participate in TSP by contributing up to 5 percent of

their salary with no matching government contributions, a lesser number

of JSAS judges—those who are also covered by FERS—may participate in

TSP up to 10 percent of salary or a maximum of $9,500 with matching

government contributions up to 5 percent. According to an AOUSC official,

there are 143 Bankruptcy, Magistrate, and Court of Federal Claims judges

who currently participate in both JSAS and FERS. AOUSC’s presentation in the

revised table 2 did not note that only about 10 percent of JSAS participants

receive the 5 percent government matching, and thus implied that a large

number of JSAS participants receive the matching government

contributions, when in fact, the numbers are relatively small.

2. AOUSC prepared a revised table 3 (our original table 3 is now table 2 in

the report) to show participants’ combined contributions to Social

Security, TSP, and the federal survivor benefit plans. There are flaws in

AOUSC’s revised table 3. Its revised table (1) did not include, as it should

have, participant contributions to the survivorship portion of Social

Security for active participants—except for CSRS general employees’ who

do not contribute to Social Security—and (2) did include, when it should

not have, the Tax Court judges’ contributions to TSP because—as stated in

the report—Tax Court judges cannot participate in TSP. Additionally, JSAS’

enrolled actuary provided AOUSC with estimates of the percentages of

employee contributions attributable to FERS and CSRS survivor benefits.

However, OPM, the plan administrator of CSRS and FERS, does not identify

the portion of CSRS and FERS contributions that are attributable to survivor

benefits, as we had also stated in the report.

3. AOUSC prepared a new table 2a to replace its own revised table 2 to show

a comparison of surviving spouse benefits derived solely from the

contributions of the federal government for the federal survivor benefit

plans, including Social Security benefits and TSP investments. We believe

that the same reasons for caution, as stated in our comment 1 and 2,

Page 58 GAO/GGD-97-87 Federal Pensions
Appendix II 

Comments From the Administrative Office

of the U.S. Courts

should be used in drawing conclusions from this table because AOUSC’s

underlying methodology was the same.

Page 59 GAO/GGD-97-87 Federal Pensions
Appendix III 

Major Contributors to This Report

General Government

Division, Washington,

D.C.

Margaret T. Wrightson, Assistant Director, Federal Management and

 Workforce Issues

Robert E. Shelton, Assistant Director, Federal Management and Workforce

 Issues

Ronald J. Cormier, Assignment Manager

Jeffery A. Bass, Evaluator-in-Charge

Office of General

Counsel, Washington,

D.C.

Robert J. Heitzman, Senior Attorney

(410001) Page 60 GAO/GGD-97-87 Federal Pensions
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