Minimum Benefit Provision of the Civil Service Disability Retirement Program Should Be Changed

GAO has issued several reports pointing out the seriousness of increasing civil service disability costs and the need for reform. Disability benefits are payable to employees with 5 or more years of service and are calculated under the same formula as other benefits under the civil service retirement system. In 1956 minimums were established to provide disabled employees with limited service a reasonable income.

It was found that minimum benefits were being paid to many retirees who were not, in fact, short-term Federal employees, and many who were also receiving benefits from prior careers in the military. At the time of the report, there were over 140,000 retired military personnel employed in the Federal civilian work force who were subject to the civil service retirement system. These employees were eligible for the guaranteed minimum disability annuities even though they were receiving benefits from their prior military service. A review of a sample of the 1,102 retirees who were receiving both Air Force and civil service benefits during 1976 to 1978 indicated they worked an average of 10.8 years in civilian jobs after retiring from their military careers. Because of the guaranteed minimum annuity provisions, these retirees will receive an estimated $54 million more in lifetime civil service benefits than they would have received if their disability annuities had been based on their actual civilian service. Since this estimate applied only to Air Force retirees who retired from the civil service during 1976 to 1978, the total additional cost of the minimum benefit provisions for such retirees would be significantly greater when all military service retirees in the civil service are also considered. GAO believed that the payment of minimum disability benefits to employees who are retiring from their second Federal career is inconsistent with the purposes of the minimum disability provisions.

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