QUESTION
You asked if the Cost of Living Allowance (COLA) payments made to Maria (Claimant),
a Government of Guam retiree, should be included in the computation of monthly non-covered
government pension amount for Government Pension Offset (GPO) purposes or whether
they should be considered differently due to a Guam court settlement involving COLA
payments for retired employees.
SHORT ANSWER
Yes, COLA payments to Government of Guam retirees are subject to GPO, and should be
pro-rated and included in the computation of monthly non-covered government pension
amounts. Claimant’s COLA payments are not related to the Guam court settlement.
SUMMARY OF EVIDENCE
According to the records provided by the Government of Guam Retirement Fund, Claimant
retired under regular retirement on December 25, 2004. Claimant received her first
COLA payment on December 31, 2005, in the amount of $1,100. Claimant received subsequent
COLA payments annually in the same amount. These COLA payments were provided through
appropriations made by the Guam Legislature and disbursed by the Department of Administration;
they were not paid directly out of the Government of Guam Retirement Fund.
We were also asked to investigate the possible relationship between the annual COLA
payments that Claimant received and payments made pursuant to the settlement in Rios v. Camacho, a class action lawsuit involving Guam retirees. See Rios v. Camacho, Guam Superior Court Case No. SP0206-93, and the COLA Relief Act of 2007, Guam Pub.
L. 29-18 (Sept. 24, 2007). The plaintiff class in Rios was limited to Government of Guam retirees who retired between 1988 and 1995 and sought
payment of COLA as provided by a law in effect from 1988 to October 1995. See id. Because Claimant did not retire until 2004, Claimant is ineligible for any disbursement
pursuant to the terms of the settlement. In information provided to OGC, Paula , Director
of the Government of Guam Retirement Fund, confirmed that the COLA payments made to
Claimant were not related to the Rios case or settlement, but are annual COLA benefits that are subject to an annual appropriation
by the Guam Legislature.
ANALYSIS
GPO
Enacted in 1977 (Pub. L. No. 95-216), the purpose of the GPO is “to reduce the Social
Security spousal benefits of individuals who are not financially dependent on their
spouses because they receive their own retired-worker or pension benefits.” Christine,
Cong. Research Serv., RL32453, Social Security: The Government Pension Offset (GPO)
(2013), available at http://www.fas.org/sgp/crs/misc/RL32453.pdf (last visited June 24, 2013). As such, the GPO applies to spouses who qualify for
both: (1) Social Security spousal benefits based on their spouse’s work histories
in Social Security-covered employment, and (2) their own government pensions based
on their own government work that was not covered by Social Security. See id.; Social Security Act (Act) § 202(k)(5), 42 U.S.C. § 402(k)(5); see also 20 C.F.R. § 404.408a(a).
The present offset calculation structure was established by the Social Security Amendments
of 1983 (Pub. L. No. 98-21), which provides that the GPO reduces Social Security spousal
benefits by two-thirds of the pension from non-covered government employment. For
example, if one receives a monthly civil service pension of $600, two-thirds or $400
must be deducted from any Social Security spouse’s, widow’s or widower’s benefits
that one is eligible to receive. Government Pension Offset, SSA Pub. No. 05-10007,
ICN 451453 (June 2012).
Pension payments paid in a lump-sum, including COLAs, are converted as though they
were paid monthly for the purpose of calculating GPO. Program Operations Manual Support
(POMS) GN 02608.400 (Determining a Pension Amount (GPO)). “COLA increases are considered changes in the
amount of the non-covered government pension for the purpose of imposing GPO” and
can provide a basis for reopening a claim. POMS GN 04030.090 (Reopening When Government
Pension Offset (GPO) is Involved).
Government of Guam Annual COLA Payments
Since at least 2005, Guam has adopted annual legislation authorizing that a COLA in
the amount of $1,100 be paid to each current Government of Guam retiree. See, e.g., Pub. L. No. 28-94 (adopted December 22, 2005) (“I Magn’lahen Guåhan is authorized
to give a [COLA] of [$1,100] per annuitant of the Government of Guam Retirement Fund
who is receiving an annuity as of December 15, 2005, payable from the Guam Telephone
Authority Privatization Proceeds Fund); Pub. L. No. 28-150 (adopted September 30,
2006) (“I Magn’lahen Guåhan is authorized to give a [COLA] of [$1,100] per annuitant
of the Government of Guam Retirement Fund who is receiving an annuity as of September
30, 2006[,]. . . appropriated from the General Fund”); see also Government of Guam Retirement Fund, Current News: Cost of Living Allowance (COLA)
(April 18, 2013), http://www.ggrf.com/index.php?pg=news (last visited June 20, 2013).
Rios v. Camacho (“The COLA case”)
In Rios v. Camacho, Guam Superior Court Case No. SP0206-93 (“The COLA case”), eligible Government of
Guam retirees brought a class action seeking mandamus relief for the non-payment of
annual COLA provided by 4 Guam Code Ann. § 8137.1, a law in effect between 1988 and
1995. See Guam Pub. L. No. 19-19 (enacting § 8137.1), repealed by Guam Pub. L. No. 23-045:IV:7
(Oct. 18, 1995). The parties in the COLA case ultimately entered into a stipulated
judgment setting the case on November 21, 2006.
On September 24, 2007, the Guam Legislature passed The COLA Relief Act, implementing
the COLA case settlement by creating a statutory mandate for the immediate payments
of retroactive COLA. See 5 Guam Code Ann. § 6404(d) (created by the COLA Relief Act); Guam Pub. L. 2918 (adopting,
ratifying, and reaffirming the existing settlement to ensure that it is not appealed
or challenged). The COLA Relief Act recognized that “[t]he government of Guam is obligated
to pay each member of the successful class of COLA Awardees in Rios v. Camacho,” and authorized a means to provide each class member with a document stating the settlement
amount due. See Guam Pub. L. 2918, § 1.
Having retired after October 1995, Claimant is not a COLA case class member and therefore
does not receive COLA payments pursuant to the COLA Relief Act. The Guam Retirement
confirmed that Claimant’s COLA payments are not related to the COLA case or settlement,
but are annual COLA benefits made by appropriation of the Guam Legislature. Therefore,
we need not consider whether retroactive COLA payments made pursuant to the settlement
would be subject to the regular GPO rules. [1]
CONCLUSION
The annual COLA payments issued to Claimant were not awarded pursuant to any court
action or settlement. Because Claimant receives COLA payments pursuant to general
legislation based on her non-covered earnings, they are subject to GPO. As such, Claimant’s
COLA payments should be pro-rated and included in the computation of monthly non-covered
government pension amounts in accordance with POMS GN
02608.400.