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DEFINITION OF THE TERM "CHILD" UNDER c)

GOVERNMENT

Storage

RETIREMENT ACT

HEARING

0 BEFORE THE

rd-J COMMITTEE ON

HFICE AND CIVIL SERVICE

°3R SE OF REPRESENTATIVES

< EIGHTY-EIGHTH CONGRESS

FIRST SESSION

ON

H.R. 3612

A BILL TO DEFINE THE TERM "CHILD" FOR LUMP-SUM

PAYMENT PURPOSES UNDER THE CIVIL SERVICE

RETIREMENT ACT

MARCH 26, 1963

Printed for the use of the

Committee on Post Office and Civil Service

U.S. GOVERNMENT PRINTING OFFICE

Cro4 WASHINGTON : 1963
PAP 41

dit?

064. .. :

COMMITTEE ON POST OFFICE AND CIVIL SERVICE

TOM MURRAY, Tennessee, Chairman

JAMES H. MORRISON, Louisiana

THADDEUS J. DULSKI, New York

DAVID N. HENDERSON, North Carolina

ARNOLD OLSEN, Montana

MORRIS K. UDALL, Arizona

DOMINICK V. DANIELS, New Jersey

LINDLEY BECKWORTH, Texas

HARLEY 0. STAGGERS, West Virginia

ROBERT N. C. NIX, Pennsylvania

EVERETT G. BURKHALTER, California

DON EDWARDS, California

JOE R. POOL, Texas

ALBERT W. WATSON, South Carolina

ROBERT J. CORBETT, Pennsylvania

H. R. GROSS, Iowa

JOEL T. BROYHILL, Virginia

AUGUST E. JOHANSEN, Michigan

GLENN CUNNINGHAM, Nebraska

GEORGE M. WALLHAUSER, New Jersey

ROBERT R. BARRY, New York

KATHARINE ST. GEORGE, New York

EDWARD J. DERWINSKI, Illinois

ROBERT F. ELLSWORTH, Kansas

HOMER E. ABELE, Ohio

SUBCOMMITTEE APPOINTED To CONSIDER H.R. 3612

DOMINICK V,; DANIELS, New Jersey, Chairman

ROBERT N. C. NIX, Pennsylvania JOEL T. BROYHILL, Virginia

DON EDWARDS, California GEORGE M. WALLHAUSER, New Jersey
CONTENTS

Statement of—

McCart, John, operations director, Government Employes' Council,

AFL—CIO 

Ruddock, Andrew E. Director, Bureau of Retirement and Insurance,

US. Civil Service Commission, accompanied by Tom Walters, U.S.

Civil Service Commission 

Udall, Hon. Morris K., Member of the House of Representatives,

District 2 of the State of Arizona 

nx

Page

10

3

2
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DEFINITION OF THE TERM "CHILD" UNDER

RETIREMENT ACT

TUESDAY, MARCH 26, 1963

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE OF THE

COMMITTEE ON POST OFFICE AND CIVIL SERVICE,

Washington, D.C.

The subcommittee met, pursuant to notice, at 10 a.m., in room 215,

House Office Building, Hon. Dominick V. Daniels (subcommittee

chairman) presiding.

Mr. DANIELS. The subcommittee will come to order.

I would like the record to show that Mr. Nix is out of town on

business and that Mr. Edwards stated that he would be here, but he

is a member of the Subcommittee on Census which is meeting at the

Census Bureau this morning.

This subcommittee is composed of Mr. Nix, Mr. Edwards, Mr.

Broyhill, Mr. Wallhauser, and I was designated chairman.

Our first witness this morning is Mr. Udall, author of H.R. 3612,

which is the subject matter of this morning's hearing.

(The bill follows:)

[H.R. 3612, 88th Cong., 1st sess.]

A BILL To define the term "child" for lump-sum payment purposes under the Civil Service Retirement Act

Be it enacted by the Senate and House of Representatives of the United States

of America in Congress assembled, That section 1(j) of the Civil Service Retirement

Act (5 U.S.C. 2261(j)) is amended by adding at the end thereof the following

sentence: "The term 'child', for purposes of section 11, shall include an adopted

child and a natural child, but shall not include a stepchild.".

SEC. 2. The provisions under the heading "Civil Service Retirement and

Disability Fund' in title I of the Independent Offices Appropriation Act, 1959

(72 Stat. 1064; Public Law 85-844), shall not apply with respect to benefits resulting from the enactment of this Act.

Mr. DANIELS. This subcommittee was appointed to hold hearings

on H.R. 3612, sponsored by Mr. Udall on the basis of an official

recommendation of the Civil Service Commission. A similar proposal

was made by the Commission in the 87th Congress (H.R. 12040),

and the provisions recommended were added by the full committee

as an amendment to H.R. 10706, which was reported favorably by

the committee but not acted on by the House.

The purpose of this legislation is to include a natural child of a

deceased employee or annuitant within the class of children who are

eligible to receive the lump-sum benefits in accordance with the provisions of section 11 of the Civil Service Retirement Act.

Mr. Udall, it is indeed a pleasure to welcome you here this morning.

We are all aware of your fine contribution to the work of this committee and we are happy to have you here to testify. You may

proceed.

1
2 DEFINITION OF THE TERM "CHILD" UNDER RETIREMENT ACT

STATEMENT OF HON. MORRIS K. UDALL, MEMBER OF THE HOUSE

OF REPRESENTATIVES, DISTRICT 2 OF THE STATE OF ARIZONA

Mr. UDALL. Thank you, Mr. Chairman. I appreciate the opportunity to appear and the promptness with which the committee has

scheduled a hearing on this bill.

As the chairman stated, my bill is based upon an official recommendation by the Civil Service Commission to change a provision in the

present law which causes a great deal of administrative confusion and

expense.

As you have indicated, Mr. Chairman, this bill was incorporated

into the retirement bill approved by the full committee last year,

but no action was taken by the House so that we are back here again

this year with this proposal.

Specifically this bill would relieve a little problem the Commission

has had in administering the provisions of section 11 of the Civil

Service Retirement Act. When an employee dies or an annuitant

dies and there is no survivor annuity payable, or if they pay the survivor an annuity for a time and then the survivor dies, and there is

still some credit to the employee's benefit, then the law provides for

a lump-sum payment to the heirs or estate of the decedent.

The Commission has followed the practice of including all natural

children, including illegitimate children, in this lump-sum distribution.

This has caused a great deal of confusion in some jurisdictions because

some State laws provide that illegitimate children cannot inherit under

any circumstances. In other States they are entitled to inherit and

so lawsuits result, claims are filed, and a good deal of time and effort

is lost in trying to take care of this particular problem.

The Civil Service Commission is faced with the necessity in each

case of examining the State law to see whether illegitimate children

can or cannot inherit, and sometimes this depends on court decisions

that are obscure.

This proposal is directed to that problem and would solve it in this

fashion. It would simply redefine "child" in this particular lump-sum

section of the Retirement Act to include an adopted child and a

natural child but not including a stepchild. The stepchild is excluded

as in the past because stepchildren do not inherit under State laws in

any event.

I did not know of any opposition to this legislation last year and

none has been called to my attention this year. I think this would

simplify the problem and it will remove administrative burdens from

the Civil Service Commission. The disposition of these lump-sum

payments in those instances where they occur would be placed on a

standard nationwide basis rather than having the Commission forced

to look to State law in each case to determine the proper rule.

- I would urge the subcommittee to favorably consider the proposal.

Mr. DANIELS. Mr. Udall, as I understand your testimony, there is

no additional appropriation involved here, no extra expense so far as

the Government is concerned?

Mr. UDALL. No, this simply provides a definite method in lieu of

the present rather vague method of distributing the funds that are

there to the credit of the deceased annuitant.

Mr. DANIELS. It merely clarifies the status of the persons who are

entitled to receive the lump-sum benefit.
DEFINITION OF THE TERM "CHILD" UNDER RETIREMENT ACT 3

Mr. UDALL. Precisely.

Mr. DANIELS. Would this not in the long run be more economical

to the Government in the administration of this law?

Mr. UDALL. I think so. I think there would undoubtedly be less

administrative expense.

Mr. DANIELS. I have no questions. Mr. Broyhill?

Mr. BROYHILL. No questions.

Mr. DANIELS. Mr. Wallhauser?

Mr. WALLHAUSER. I have no questions. Thank you, Mr. Chairman.

Mr. DANIELS. Our next witness is Mr. Andrew E. Ruddock,

Director, Bureau of Retirement and Insurance, U.S. Civil Service

Commission. Mr. Ruddock, will you step forward. You are privileged to proceed in any manner that you deem feasible.

STATEMENT OF ANDREW E. RUDDOCK, DIRECTOR, BUREAU OF

RETIREMENT AND INSURANCE, U.S. CIVIL SERVICE COMMISSION, ACCOMPANIED BY TOM WALTERS, U.S. CIVIL SERVICE

COMMISSION

Mr. RUDDOCK. Thank you, Mr. Chairman, and members of the

subcommittee. I appreciate this opportunity to appear before you

in support of the bill H.R. 3612, which Congressman Udall introduced

at the request of the Civil Service Commission. Chairman Macy

asked me to convey his regret that, because of a prior out-of-town

commitment, he is unable to be here today to express his interest in

favorable consideration of this legislation.

In its letter of January 24, 1963, to the Speaker of the House of

Representatives, the Commission explained in some detail the need

for legislation to define the term "child," for lump-sum benefit purposes of the Civil Service Retirement Act, to include an illegitimate

child. I ask, Mr. Chairman, that the Commission's January 24

letter be made a part of the record.

Mr. DANIELS. Is there any objection? Without objection then,

the letter of the Commission will be made a part of the record following the testimony of Mr. Ruddock.

Mr. RUDDOCK. Prior to 1955, the provisions of the Civil Service

Retirement Act which authorized benefits to a child were interpreted

by the Commission to include only a legitimate child as that term

is used generally in the laws of domestic relations and statutes of

descent and distribution. Survivor annuity benefits, and also lumpsum benefits, were denied a child if evidence showed him to be illegitimate. This construction of the law was in line with court

decisions on similar statutory provisions affecting social security

benefits and pay and allowances of officers in the uniformed services.

In 1955, in a case arising in Missouri, the U.S. District Court for

the Eastern District of Missouri decided that since the Retirement

Act did not specifically exclude illegitimate children

'

they should

be viewed as included. Shortly thereafter, the 1956 Retirement

Act definition of "child" for survivor annuity purposes adopted

the principle of the court's decision, but provided survivor annuity

benefits to a recognized natural child only if he received more than

half his support from, and lived in a regular parent-child relationship
4 DEFINITION OF THE TERM "CHILD" UNDER RETIREMENT ACT

with, the parent who was the Federal employee. Although the act

does not presently define "child" for lump-sum death benefit purposes,

the Commission has since 1955 consistently followed the holding of

the district court and does not withhold lump-sum death benefits

from illegitimate children.

Because the Retirement Act is silent as to its intention, we are

urged by claimants and attorneys to disregard the court decision and

not view it as a precedent in States where illegitimates are not entitled

to inherit or are recognized as having rights inferior to those of legitimate children. The Commission's desire to have a uniform practice

and a consistent rule for all Federal employees, and to avoid misunderstandings, appeals from decisions, and litigation in the limited number

of affected cases has prompted our initiation of this legislative proposal. I urge favorable consideration of H.R. 3612 by this committee.

We have been asked informally why the Commission proposal did

not include stepchildren for lump-sum benefit purposes. This is

because, in all jurisdictions, a stepchild is not an heir or next of kin

and does not inherit from a stepparent except under the specific

terms of a will. Where a Federal employee wants a stepchild to

receive a lump-sum benefit he may, of course, designate him as a

beneficiary. If a minor stepchild lives in a parent-child relationship

with a Federal employee who provides more than half support, the

stepchild may receive survivor annuity. If a lump-sum is payable,

the stepchild would usually be an adult not living in the home, and in

some instances may not even know the employee. We believe the

present law provides adequately for a stepchild.

As you, Mr. Chairman, and Mr. Udall have indicated, a similar

proposal was considered last year and was reported by the House

Committee on Post Office and Civil Service in H.R. 10706.

I respectfully urge that you once again support this proposal.

I would like to add just one point. In the normal situation in

which the need for this legislation arises, we find what appears to be

a normal family situation. We find the Federal employee who is the

father of the child, the mother of the child, and the child, living in the

same household. In the course of adjudication of the claim, we find

that because of some impediment, usually a prior valid marriage on

the part of one of the parents, the present marital relationship does

not exist, so that I think it is a technicality on which we decide that

the child is illegitimate. It is because of a lack of marriage between

the parents. Very seldom do we run across this question in a situation in which the illegitimate child is living other than in the household of the Federal employee.

(The letter previously referred to follows:)

U.S. CIVIL SERVICE COMMISSION,

Washington, D.C., January 24, 1963.

Hon. JOHN W. MCCORMACK,

Speaker of the House of Representatives,

Washington, D.C.

DEAR MR. SPEAKER: In line with the apparent weight of judicial precedent, a

child for Civil Service Retirement Act benefit purposes was for years generally

considered as involving legitimate offspring. This general exclusion of illegitimate

considered as involving legitimate offspring. This excluison of illegitimate

(natural) children was continued after the February 28, 1948, amendment introduced a plan for automatic widow's and children's survivor annuity for employees dying in service; for this purpose, the amendment defined children as

follows:
DEFINITION OF THE TERM "CHILD" UNDER RETIREMENT ACT 5

"The term 'child' means an unmarried child, including a dependent stepchild

or an adopted child, under the age of eighteen years, or such unmarried child who

because of physical or mental disability is incapable of self-support."

In the unreported case of Visor v. United States, the U.S. District Court for the

Eastern District of Missouri, eastern division, held the illegitimate children of a

deceased civil servant entitled to survivor annuity under the 1948 amendment.

The court's memorandum opinion, filed February 16, 1955, prior to actual judgment, recited in pertinent part:

"Defendant contends that the term 'child' as used in the statute refers to legitimate children only and that if Congress had intended to include illegitimate

children, it would have so stated. We feel, however, that if Congress had intended to exclude illegitimate children it would have so stated. In various other

statutes in which illegitimate children were excluded, Congress has so provided

by using the term 'legitimate children'."

The Commission accepted and applied this principle for survivor annuity and

for lump-sum retirement payments. When reenacting the Civil Service Retirement Act in its entirety in 1956, Congress with Commission concurrence limited

survivor annuity in this area to a "recognized natural child who received more

than one-half his support from and lived with the member or employee in a regular

parent-child relationship" (5 U.S.C. 2251(j)). This had the effect of restricting

the Visor holding to illegitimates as described and denying survivor annuity to

those beyond that scope.

The 1956 definition does not extend to lump-sum death payments under the

Retirement Act, which payments are due only if no survivor annuity is payable

or if all survivor annuities terminate before the amount to the deceased employee's credit in the retirement fund is exhausted. The Commission's position

in still following the cited Visor principle as regards lump-sum payments is frequently and persuasively challenged in States where illegitimate children are not

entitled to inherit or are otherwise not recognized on the same footing as legitimates. In other words, we are faced with a possible necessity of checking the

appropriate State law and current judicial precedent each time a case of this

nature arises.

This time-consuming administrative problem can be avoided by statutorily

specifying the status of illegitimate children for purposes of lump-sum settlements

as has already been done with respect to survivor annuities. The Commission

believes that illegitimate children should be here recognized on a par with other

children. Since adult children will generally be involved in lump-sum cases, the

half-support and living-with requirements applicable to survivor annuity situations are inappropriate.

There is accordingly attached a draft bill to effect the desired result. It will

involve no Government cost whatsoever, but will produce an administrative

saving in connection with adjudicating claims and should eliminate litigation in

the area. The Commission recommends its introduction and early enactment

into law.

The Bureau of the Budget advises that from the standpoint of the administration's program there is no objection to the submission of this proposal.

By direction of the Commission:

Sincerely yours,

JOHN W. MACY, Jr., Chairman.

A BILL To define the term child for lump-sum payment purposes under the Civil Service Retirement Act.

Be it enacted by the Senate and House of Representatives of the United States of

America in Congress assembled, That section 1(j) of the Civil Service Retirement

Act (5 U.S.C. 2251(j)) is hereby amended by adding at the end thereof the following sentence: "The term 'child', for purposes of section 11, shall include (1) an

adopted child and (2) a natural child, but shall not include a stepchild."

SEC. 2. Notwithstanding any other provision of law, benefits resulting from

enactment of this Act shall be paid from the civil service retirement and disability

fund.

Mr. DANIELS. Mr. Ruddock, would the enactment of this legislation

involve any additional appropriation on the part of the Government?

Mr. RUDDOCK. No, on the contrary, although the number of

cases is relatively small, there will be some savings administratively.

By virtue of having one rule consistently followed and, of course,

recognized in the law rather than one that is ironed out by recourse
6 DEFINITION OF THE TERM "CHILD" UNDER RETIREMENT ACT

to the State law, to the decisions of the State courts, and by protracted

correspondence with claimants and with attorneys, there should be

some savings resulting from this.

Mr. DANIELS. In other words, what you are saying is that the

enactment of this bill into law would cause a uniform law throughout

the 50 States and will avoid any investigation or legal work or any

trouble so far as the Government is concerned with reference to

the distribution of funds to the persons legally entitled thereto?

Mr. RUDDOCK. Precisely.

Mr. DANIELS. Mr. Broyhill, any questions?

Mr. BROYHILL. I would like Mr. R' uddock to explain a little more

how the existing law works in regard to this lump-sum payment. Are

those funds actually held to the credit of the deceased employee and

the absence of, let's say this legislation, the funds would go someplace

else, would be disbursed someplace else?

Mr. RUDDOCK. That is exactly right. While he is working for the

Federal Government and is subject to the Retirement Act, 6% percent

of basic salary is deducted, and is deposited in the retirement fund.

This amount goes to the individual credit of the employee, just like

a savings account in a bank. The employee is guaranteed, by the law

that either he or his survivors will get back every penny he has paid

into the fund. If he dies in service, as Mr. Udall has already indicated,

and there are no survivors entitled to monthly payments or such payments have been made for a time but have not exhausted the account

of the individual, then the lump sum becomes payable. It is the

balance of this individual account which has not been paid to him or

to anyone else.

Mr. BROYHILL. That is what I wanted to clear up.

Mr. DANIELS. Under existing law.

Mr. RUDDOCK. Under existing law.

Mr. DANIELS. Who would be entitled to those funds upon the

death of the annuitant or employee?

Mr. RUDDOCK. The law provides that in the event a lump-sum

benefit becomes payable, it is payable first of all to a designated beneficiary. This gives every Federal employee the right to name the person or persons who will receive the lump sum. If there is no designated beneficiary, the amount then goes to a surviving spouse. Then

if there is no surviving spouse, it goes to surviving children. If we

have come that far and have not found a person legally entitled, it

goes to the parents. The next order is the executor or administrator

appointed under the laws of the State of domicile of the decedent.

If there is no administration of the estate, then we pay under the laws

of descent and distribution of the State of domicile. It is very seldom

we can't find someone who is in the line and who is entitled to the

money.

Basically what we are talking about in a case of this kind would

be a potential dispute, for example, between the representative of the

• minor child of the employee and perhaps the mother of the employee.

If I may illustrate, we had a case arising in the District of Columbia

where the Federal employee had a son living in his household, but

there was an existing prior marriage. I don't remember whether it

was on the part of the father or mother of the child, but technically,

at law, this child was illegitimate.

The opposing claim was made by the mother of the Federal employee saying since he was not survived by a child, then she, as a
•

DEFINITION OF THE TERM "CHILD" UNDER RETIREMENT ACT 7

surviving parent, was next in the order of precedence. The amount

payable would be exactly the same in either case.

In this case, and the others are similar, it is a question of whether

we pay to the illegitimate child, as the surviving child of the employee, or move on down the order of precedence to parent, to the

executor-administrator of the estate or all the way down to brother,

sister, cousin, or whoever else might be entitled to inherit under the

laws of the State of domicile.

Mr. DANIELS. If Mr. Broyhill will yield. On the example you

have just given, that dispute would not have arisen if the parents

were married and the child involved was the legitimate offspring of

that marriage?

Mr. RUDDOCK. NO, it would not.

Mr. DANIELS. The situation arises because of the fact that the

parents had not been married to each other and in some States of the

Union, a child born out of wedlock is an illegitimate child and has no

right to inherit.

Mr. RUDDOCK. That is right and that is true in the District of

Columbia.

Mr. DANIELS. By this legislation we are trying to clear up that

situation and make the retirement law uniform throughout the 50

States so as to permit a child born of parents who are not married to

each other to inherit.

Mr. RUDDOCK. That is right, sir. I might point out that this

should not be viewed as infringement of the laws of the State because

what we are proposing is a specific rule for the purpose of a specific

Federal statute. This would not interfere with the normal laws of

descent and distribution of the State because we would be paying

under the third order of precedence; in other words, to a surviving

child as surviving child is defined in this law and we would not be

moving then through the surviving parents, through executoradministrator of the estate or getting down to the point of determining

under the laws of the State of domicile.

Mr. BROYHILL. Off the record.

(Discussion off the record.)

Mr. BROYHILL. I do not want to belabor this because I think that

I understand what the legislation seeks to do, but I want a little

further clarification on the existing act insofar as when is the survivor eligible for lump-sum payment? Maybe you will give us a

few more hypothetical examples? If an employee dies while in

service, of course, he would have a designated survivor that would be

eligible for annuity?

Mr. RUDDOCK. No, survivor annuity is not payable by virtue of

designation where death occurs in service.

Mr. BROYHILL. If he dies before retirement, would the survivor be

eligible if the employee would have been eligible for retirement prior

to his death?

Mr. RUDDOCK. If the employee dies in service, if he has at least 5

years of civilian service, if his last year has been performed subject to

the Retirement Act and if he leaves a widow to whom he has been

married for at least 2 years or who is the mother of issue of a marriage,

she is entitled to survivor annuity. If he leaves children under the

age of 18 who received more than half of their support from him, those

children are automatically entitled to receive survivor annuity.
8 DEFINITION OF THE TERM "CHILD" UNDER RETIREMENT ACT

Mr. BROYHILL. All right. And anything less than that, then the

lump-sum payment comes into being.

Mr. RUDDOCK. If he had less than 5 years' service, or if he had not

been married for 2 years and there were no children of the marriage,

then there would be no survivor annuity payable and the lump sum

would become payable immediately.

Mr. BROYHILL. That is clear. How about in the event of retirement, if the employee had retired and he died prior to the time that he

used up all of his paid-in benefits?

Mr. RUDDOCK. Then, whether his widow receives survivor annuity

depends on the election he made at the time of his retirement. He

could either have taken a life annuity, which would provide no survivor

annuity for a widow or he could take a slightly reduced annuity and

set up a potential survivor annuity for the widow. Let's assume he

did that.

Mr. BROYHILL. Then no lump-sum payment.

Mr. RUDDOCK. Let's say he retires for 6 months, he dies and he

named his wife to receive survivor annuity. Then let's say she receives

annuity for 3 months and then she remarries, so that the payments

made to him for 6 months and to her for 3 months have not exhausted

his individual account, and all survivor rights have been terminated

by her remarriage. So the lump sum becomes payable at that point.

Each surviving child receives annuity, whether death occurs in

service or after retirement. No election on the part of the employee is

required.

Mr. BROYHILL. Does the entire amount he or the survivor receives

in the annuity payments, is that entire amount charged to his fund

at the beginning, or is that half to his fund and half to the Government

share?

Mr. RUDDOCK. No, the entire annuity is charged to his individual

account.

Mr. BROYHILL. Which means it doesn't work quite the way he is

taxed on this annuity because income tax is paid on a portion or he

deducts from his income tax a portion which constitutes repayment

of what he paid into the system.

Mr. RUDDOCK. That is right. While he was working he was taxed

on his gross salary, including the 6 percent which is deducted for

retirement purposes. After he retires, assuming he will not receive

back his own contributions in 3 years, and that is the case with most of

us, then he does not report his annuity as income. He reports it as

income only when it exceeds the amount he paid into the retirement

fund.

Mr. BROYHILL. Now he reports his annuity as income. He

reports all of his annuity as income less a certain portion, which is

considered as recovery of what he paid in. There is a certain amount

each year, I don't recall, but I think there is an inconsistency. He is

being charged or the estate is being charged the entire amount,

according to what you said, the entire amount of what he or his

survivors received until the entire amount is paid. As far as tax

deduction, he gets it over a period of years.

Mr. RUDDOCK. If it is going to take more than 3 years of annuity

payments for him to receive back as much as he paid in, then instead

of just not reporting the annuity until he has received that amount,

he goes on the life expectancy basis. There is a calculation made of
DEFINITION OF THE TERM "CHILD" UNDER RETIREMENT ACT 9

the value of this annuity and then he pays tax on a certain portion

of his annuity each year. Most of us receive back in annuity payments the sum total of our contributions in between 1 and 2 years, so

that there actually are very few people who ever get to this 3-year

rule.

Mr. BROYHILL. Mr. Chairman, I apologize because I was talking

about existing law when the legislation we have before us is a lot

simpler than that. I apologize for taking the committee's time.

Mr. DANIELS. I'm glad you did because you have clarified for the

record just exactly how this fund operates and I think all of us have

bonefited by your questioning.

Mr. Wallhauser.

Mr. WALLHAUSER. You have referred to the limited number of

affected cases. How many cases do you have on record, Mr. Ruddock?

Mr. RUDDOCK. I do not have a precise record. I talked yesterday

with the Chief of our Claims Division. His best estimate was that

somewhere between 100 and 200 cases of this type arise each year.

Actually, there are only five or six in the course of a year which get

down to a bitter dispute among the claimants. Most of the claimants

are willing to accept the ruling of the Commission that the term

"child" does include the illegitimate child. But, as I'm sure you

know, when you get into the field of domestic relations or any question

of family relationship, you can take two good lawyers and put one

on either side and you can have a wingding of an argument and a case

can be made for either side. That is the sort of thing we are trying

to avoid and also trying to make the rule clear and definite so that

merely by a reference to the Civil Service Retirement Act, all the

world will know that there is one consistent ruling on this point.

Mr. WALLHAUSER. How many States are in conflict with your

ruling, would you say?

Mr. RUDDOCK. I can't answer that precisely, sir. It is my recollection that in more than half of the States, there are still restrictions

or limitations against the rights of illegitimate children. The District

of Columbia is one.

Mr. DANIELS. And the State of New Jersey.

Mr. WALLHAUSER. During the course of your remarks, you have

made the statement which I wish you would repeat, please, that there

is no conflict with State law by the passage of this legislation?

Mr. RUDDOCK. In my opinion, there is no conflict with State law

because it is perfectly within the jurisdiction of the Federal Government to decide to whom a benefit under a Federal statute will be made.

This is not a matter of inheritance. There is no requirement except

the one which has been written into the law that there be any lump

sum payable in any retirement claim. This is a benefit. Many

retirement systems operate without any provision for guaranteed

return of the contributions. One of the benefits that is written into

our system is a return of the contributions and it seems to me perfectly

within Federal prerogative to decide to whom this benefit will be payable.

Mr. WALLHAUSER. So that as of now, you know of no State

administration that objects to this interpretation?

Mr. RUDDOCK. Absolutely none.

Mr. WALLHAUSER. All right, Mr. Chairman.
10 DEFINITION OF THE TERM "CHILD" UNDER RETIREMENT ACT

Mr. DANIELS. Mr. Ruddock, just one other question. Do these

lump-sum payments ever escheat to a State?

Mr. RUDDOCK. No, they do not because the money is in the civil

service retirement fund. It remains in the civil service retirement

fund unless or until a payment is made under one of the provisions

of the Retirement Act. So there is no escheat.

Mr. DANIELS. If a Federal employee dies and there is a lump-sum

payment due and there is no wife, husband, beneficiary, child, father,

mother, or next of kin, to whom would, the funds go?

Mr. RUDDOCK. The funds would not go to anyone. They would

remain in the civil service retirement fund. They would be available

for payment of benefits under the act to all Federal employees.

Mr. DANIELS. Thank you very much, Mr. Ruddock.

We had scheduled one other witness this morning, Mr. John McCart,

operations director, Government Employes' Council, AFL—CIO. Mr.

McCart has not been able to appear, but has sent to the committee

his statement and has requested that the statement be filed with the

record of this hearing.

Is there any objection to the filing of Mr. McCart's statement?

Hearing none, this statement will be filed at this point in the record.

(The statement follows:)

STATEMENT OF GOVERNMENT EMPLOYES' COUNCIL, AFL—CIO

Mr. Chairman and members of the subcommittee. The Government Employes' Council, with 24 national and international AFL—CIO unions representing Federal employees, desires to endorse the bills under consideration by the subcommittee.

While these measures are not "major" in nature, they will enable the Civil

Service Commission to deal more equitably with illegitimate children who are

survivors in cases of lump-sum payments under the Retirement Act. Under

existing law, the Commission is confronted with thx difficult task of determining

these survivors' eligibility under the appropriate State law. Moreover, that

agency's determination can be challenged in the various States. The legislation

under consideration today is designed to eliminate this time-consuming task, and

to recognize the right to these survivors to the same consideration as other survivors now receive.

The extensive revision of the retirement law enacted in 1948 restricted the

definition of "child" to unmarried children under 18 years of age or incapable of

self-support because of disability. Stepchildren and adopted children were included. This portion of the statute embraced the social concept that surviving

widows and children should be entitled to retirement rights upon the death of the

head of the family while in Federal Service.

Subsequently, a Federal district court decided that illegitimate children should

be entitled to survivorship annuities upon meeting the conditions applicable to

survivors generally.

The next major revision of the Retirement Act occurred in 1956. Among other

broad changes, it established the principle that survivor annuities would be available to recognized natural children who receive more than half of their support

through the regular parent-child relationship. Hence, illegitimate children were

covered.

However, the definition including illegitimate children established in 1956 does

not apply where lump-sum payments are due because of the death of the Federal

employee. The lump-sum feature applies only in instances where no survivor

annuity is payable or that kind of annuity ends before the funds in the employee's

account are completely used.

The nub of the bill before the subcommittee is to permit illegitimate children to

acquire this small portion of an employee's estate under the limited circumstances

described above. .Aside from the origin of the child, we can see no valid reason

for barring him from this small benefit because of the actions of his parent. In

effect, H.R. 3612 extends to this small group of survivors the same treatment

accorded other survivors.
DEFINITION OF THE TERM "CHILD" UNDER RETIREMENT ACT 11

The council urges favorable action on the legislation.

We appreciate, Mr. Chairman, the opportunity of offering our position on this proposal.

Mr. BROYHILL. Mr. Chairman, could we go into executive session

at this time and act on this legislation?

Mr. DANIELS. Yes, I believe that would be appropriate.

There are no other witnesses scheduled to appear. The subcommittee is adjourned.

(Whereupon, at 10:35 a.m., the subcommittee adjourned.)

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