JUSTIFICATION AND EXPLANATION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP67B00446R000600030013-9
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 5
• Document Creation Date: December 16, 2016
• Document Release Date: June 20, 2005
• Sequence Number: 13
• Content Type: REPORT

Approved For Release 2005/06/29 : CIA-RDP67B00446R000600030013-9
JUSTIFICATION AND EXPLANATION
1. Purpose. The purpose of the proposed legislation is to maintain
consistency between the Central Intelligence Agency Retirement System and
the Civil Service Retirement System for the automatic adjustment of annui-
ties on the cost-of-living principle.
2. Background Statement. The Central Intelligence Agency Retire-
ment Act of 1964 authorizes automatic cost-of-living adjustments on the basis
of Consumer Price Index rises by an annual average of 3 per centum or more
for a calendar year and establishes 1 April 1966 as the earliest effective
date for the first such annuity increase. The automatic adjustment principle
was incorporated into the Civil Service Retirement Act in 1962. The Civil
Service Retirement Act automatic adjustment provision was incorporated
into the Central Intelligence Agency Retirement Act when it was passed in
1964. The Senate Report supporting the bill to provide for the Central Intel-
ligence Agency Retirement System states that the Senate Committee ".. .
adopted new language authorizing increases in the retired pay of annuitants
based upon the identical system now in effect for retired civil service em-
ployees providing for periodic increases in retired pay based on mimimum
3 per centum advances in the Consumer Price Index." (88th Congress,
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Second Session, Senate Report 1589.) Similar reference to this cost-of-
living feature was made by Senator Russell during Senate consideration of
the Senate amended bill which became law. At the time a similar basis for
adjustment existed for the benefit of military members of the armed forces.
3. Recent Congressional Consideration. Recently, the 89th Congress,
at the request of the Secretary of Defense, amended the cost-of-living pro-
vision affecting military retirees. This amendment gears increases to
monthly rather than average calendar year Consumer Price Indexes and
accelerates the cost-of-living adjustment due on 1 April 1966 to a more
current date. This amendment has become law (P. L. 89- ). Similar
legislation for the benefit of civil service retirees has passed the House of
Representatives and it is expected that it will be reported out shortly by the
Senate Post Office and Civil Service Committee. The Chairman of the Civil
Service Commission has stated that he does not object to this proposed change
in law.
4. Central Intelligence Agency Retirement System. The Central
Intelligence Agency Retirement System provides an early retirement pro-
gram for a limited number of career Central Intelligence Agency employees
who are at least 50 years old and have at least 20 years of service. As con-
trasted with normal civil service annuities, no reduction is made for age and
the multiplicant factor against high five average salary is set at a flat 2 per
cent rather than 1. 5 per cent for the first five years of service, 1. 75 per
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cent for the next five years, and 2 per cent for succeeding years. These
features are not unique in the Federal Government and exist under the Civil
Service Retirement Act for law- enforcement officers and under the Foreign
Service system for foreign service personnel. Only those career employees
of the Central Intelligence Agency who meet the statutory conditions of eli-
gibility are eligible for annuities under the Central Intelligence Agency
Retirement Act. The remaining career Central Intelligence Agency employ-
ees are covered by the Civil Service Retirement Act. The statutory conditions
for eligibility under the Central Intelligence Agency Retirement Act covers
those employees "whose duties are determined by the Director to be (i) in
support of Agency activities abroad, hazardous to life or health and (ii) so
specialized because of security requirements as to be clearly distinguishable
from no al Government employment. re
5. Impact of Congressional Action on the Central Intelligence Agency
Retirement System. If the pending amendment to cost-of-living adjustments
under the Civil Service Retirement Act is enacted without equivalent amend-
ment to the Central Intelligence Agency Retirement Act, the following dis-
crepencies will exist:
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Cutoff date
for eligibility
Civil Service Retirement
Act Retirees*
First day of third
month following
enactment (possibly
1 November 1965)
Central Intelligence Agency
Retirement Act Retirees
1 January 1965
Effective date
of increase
Applicable esti-
mated point rise
in Consumer
Price Index
Estimated per-
centage increase
for annuity adjust-
ment
Effective date
of subsequent
increase
First day of third
month after 3 per
cent rise in Consumer
Price Index has been
sustained for three
consecutive months
over month used for
last adjustment
1 April 1966
1 April of year
following year
when Consumer
Price Index has
risen 3 per cent
over 1964
'Includes Central Intelligence Agency employees and law enforcement officers
of other Federal agencies.
**Rise computed from 196Z to possibly June, 1965, for Civil Service annuitants
and from 1964 to 1965 for Central Intelligence Agency retirement annuitants.
",**Minimum 3 per cent rise over base year 1964 required.
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Should the pending legislation affecting Civil Service Retirement Act cost-of-
living adjustments be enacted without equivalent amendment to the Central
Intelligence Agency Retirement Act, the Central Intelligence Agency Retirement
Act will be completely out of phase with the Civil Service Retirement Act and
no longer paralleled as originally intended.
It is felt that the case made for the change to monthly Consumer Price
Index indicators and for the acceleration of cost-of-living increase for Civil
Service retirees and military personnel applies with equal force to Central
Intelligence Agency Retirement System retirees. Unless the Central Intel-
ligence Agency Retirement System is kept in phase, its retirees will not
participate in the cost-of-living benefits granted their contemporaries under
the Civil Service Retirement System. While the Central Intelligence Agency
Retirement Act contains the identical principles enunciated in the Civil
Service Retirement Act and Military retirement system, this principle will
be rendered ineffective in practice unless changes in the mechanics of com-
puting cost-of-living increases adopted by the 89th Congress for the benefit
of Civil Service and military retirees are also enacted for Central Intelligence
Agency Retirement System retirees.
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