CIVIL SERVICE RETIREMENT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP71B00364R000500160006-0
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 21
• Document Creation Date: December 12, 2016
• Document Release Date: September 6, 2001
• Sequence Number: 6
• Publication Date: August 1, 1969
• Content Type: REPORT

Approved For Release 2001/11/01 : CIA ~ &W&L
Calend[WMM33
91ST CONGRESS
1st Session
REPORT
No. 91-339
Mr. McGEE, from the Committee on Post Office and Civil Service,
submitted the following
REPORT
The Committee on Post Office and Civil Service, to which was re-
ferred the, bill (S. 2754) to amend subchapter III of chapter 83 of
title 5, United States Code, relating to civil service retirement, and
for other purposes, having considered the same, reports favorably
thereon without amendment and recommends that the bill do pass.
Summary of the Bill
Title I :provides a permanent solution to the financial problems of
the Civil Service Retirement and Disability Fund by authorizing annu-
al payments directly from the Treasury to the Fund equal to the "lost
interest" on the unfunded liability of the Fund created by the Govern-
ment's failure to contribute sufficient funds, the gradual increase in
liability caused by past increased retirement benefits, and salary in-
creases; and to transfer from the Treasury annually funds sufficient
to pay the cost 'of annuity payments based on military service.
'Title I also provides that future benefit increases and the effect of
future salary increases will be paid for by amortizing the cost of such
benefits and increases in equal installments over a 30-year period. This
will authorize appropriations by the Congress, not direct transfer of
money.
'Title I also increases both employee and agency contributions from
61/2 percent of payroll to 7 percent of payroll, effective January 1, 1970.
Contributions by employees of the Congress are increased to 71/2 per-
cent, and contributions by Members of Congress are increased to 8
percent.
Approved For Release 2001/11/01 : CIA-RDP71B00364R000500160006-0
 R beA 01 : C~4-RDP71 B00364R000500160006-0
T iYn3 s benefits under the Retirement Act; :
+J 1. Uses 'hig ' instead of "high-5" for computing civil service
annuities.
11 2. Permits adding sick leave accumulated at time of retirement to
the computation of annuity.
3. Adds 1 percent to cost-of-living increases for annuitants.
4. Makes the remarriage provisions of the 1966 Act partly retro-,
active.
5. Improves survivor benefits for employees and retired disabled
employees who die in service or after disability retirement.
6. Exempts ulr to $3,000 of civil service retirement annuities from
`'I`ederal income taxation.
7. Permits an employee of the Congress to receive 21/2 percent credit
for all years of Congressional employment rather than limiting such
credit to 15 years.
Title I of S. 2754 provides a long-term, permanent solution to the
problem of the unfunded liability of thet,Civil Service Retirement and
Disability Fund.
Since its creation in 1920, the Retirement Fund has had an unfunded
deficit. The actuarial theory of the retirement system is that the nor-
mal cost will be fully met if a percentage of pay is withheld from the
employee's salary, a percentage of payroll is contributed by each
agency and the total is invested at interest. This actuarial determina-
tion takes into account the age and longevity of the group, and a nor-
mal progression in salary throughout a career in the Federal service.
It does not take into account extending retirement benefits to new
groups, improving retirement benefits, Increases in salary enacted by
Congress from time to time, the, Government's failure to make pay-
ments in some years, or the Government's failure to pay the interest
on the unfunded liability.
The result is that the Fund has a liability which is not funded
through agency and employee contributions. All service performed
prior to August 1, 1920, for instance,'was credited even though no
payment was made for such service. Increases in salary enacted by
Congress increase the average salary base for annuity computation,
but contributions are not made by either the employee or the agency
to pay for the cost which such increases make in the future annuity
when past service is credited at the new :average salary rate. The Fund
also loses the interest on the unfunded liability which would have been
earned if payment had been made.
Of the total liability of i$78 billion now owed by the Fund (that is,
the present value of all payments promised for service already per-
formed), $57.7 billion was not funded as of June 30, 1969.
Receipts now exceed disbursements, and will continue to do so until
1975. Thereafter, however, annuity payments will exceed income from
employee and agency contributions and earnings, and by 1987 the
liquid assets of the Fund will be depleted.
Ii' action to prevent depletion of the Fund is not taken at this
time, an annual appropriation will be necessary each year after 1987,
and the impact upon the budget will be significant. It will also sub-
Approved For Release 2001/11/01 : CIA-RDP71B00364R000500160006-0
 Approved For Release 2001/11/0t: CIA-RDP71B00364R000500160006-0
ject the payment of annuities to the procedures of budget requests
and appropriations.
In 1963, the Committee on Post Office and Civil Service considered
legislation to provide for a gradual increase in agency contributions
to the Fund to meet the interest on the unfunded liability by the year
1986. That legislation proposed a mandatory increase in agency con-
tribution from 61/2 percent to 171/2 percent over a 22-year period to
meet the $1,574 million annual cost (in 1963) of lost interest on the
unfunded liability. Action on that legislation was postponed.
In 1967, the administration proposed that legislation be enacted to
authorize a permanent indefinite appropriation for a transfer of funds
from the Treasury to the credit of the Civil Service Retirement and
Disability Fund, beginning at 10 percent of the lost interest and
increasing over a period of 10 years to meet the full amount of the
lost interest on the unfunded liability ; and that future liberalizations
of the program be paid by amortizing the cost of the liberalizations in
equal annual payments over a 30-year period. That is the legislation
embodied in title I of S.2754.
This method of funding the cost of future benefit changes will de-
pend upon the willingness of the 'Congress and the administration to
include in annual appropriations and 'budget requests funds necessary
to meet the amortized cost of increased benefits. it will. be of no con-
sequence whatsoever to enact title I of S. 2754 unless both the Con-
gress, through its appropriation process, and the Executive branch, in
its recommendation of funds necessary for each fiscal year, face the
fact that further inaction will result in a bankrupt retirement fund in
18 years.
Neither branch of the Government can ignore the cost implications
of Federal retirement benefits. At the present time, the liability of the
Civil Service Retirement and Disability Fund is increased by $2.55
every time a $1 pay increase is enacted. The $1.3 billion pay increase for
classified and postal employees which became effective July 1, 1969,
increased the future liability of the Fund by $3.4 billion. The annual
interest on the present unfunded liability which was not paid at the
end of fiscal year 1969 added more than $1.9 billion to the total liability
of the Fund. The nine statutory salary increases, four civil service re-
tirement laws, and the nine annual installments of lost interest on the
unfunded liability of the Fund which have occurred since June 30,
1960, have doubled the unfunded liability-from $31.1 billion in 1960
to $61.1 billion in 1969.
The obligation of the Government to insure that payments for re-
tired employees are made, and made when due, requires that action
be taken now to insure that there will be an adequate amount in the
Fund after 1987 to meet all obligations incurred.
The financing provisions of title I have been amended to provide
that the cost of military service credited for civil service retirement
shall be paid annually by a transfer of funds from the Treasury to the
Civil Service Retirement and Disability Fund equal to the annual dis-
bursement of annuities attributable to the crediting of military serv-
ice. To avoid an undue impact upon the budget, the transfer is amor-
tized over a, 10-year period.
Approved For Release 2001/11/01 : CIA-RDP71B00364R000500160006-0
 Approved For Release 2001/11/01 : CIA-RDP71B00364R000500160006-0
4
Under existing law, service credited for civil service retirement
annuities includes years of active service in the military service of the
United States. At the present time, this amounts to 4.5 percent of an-
nuities, or an annual cost of $95 million. Neither the employee nor any
agency of the Government contributes any money to the Fund for this
credit. Thus, an employee who retires from the civil service after 15
years of civilian service and 5 years of military service receives
an annuity based on 20 years' service, although he and his agency have
paid for only 15 years' service. The cost of crediting military service
is made up out of the Fund.
'The committee recommendation requires that the Treasury pay to
the Fund the amount of annual annuity payments resulting from mili-
tary service credit. This payment will result in an annual payment to
the Fund beginning at approximately $9.5 million and rising over a
20-year period to a maximum of $300 million a year. Thereafter, be-
cause of the restrictions of the Social Secirity Act relating to military
service performed after December 31, 1956 which results in a social
security benefit, service will not be permanently creditable for civil
service retirement purposes. The annual payment will decline to a level
figure of approximately $100 million in the distant future.
The 'committee believes that the transfer of funds is appropriate and
desirable because the normal cost estimated by the Commission in de-
termining an appropriate rate of contribution for agencies and em-
ployees includes 0.22 percent of payroll for military service credit even
though it 'benefits only some employees and it is not civilian service
to the Federal Government. The argument that such a transfer is
merely bookkeeping loses effect in view of the fact that employees pay
for the credit which only about one-half of all employees 'receive. Car-
ried to its conclusion, the argument would support the position that
all Government financial transactions are merely bookkeeping and all
money should be appropriated in a lump shim.
TITT,E II-RETIREMENT BENEFITS
The committee has reported favorably: the following amendments
to the Civil Service Retirement Act:
IIIGII-3 AVERAGE
The committee approves language to change the basic period for
computing civil service annuities from the highest 5 consecutive years
to the highest 3 consecutive years. Under existing law, 'in effect since
1930, the formula for computing an employee's annuity is to multiply
his number of years of service by a percentage of salary received over
the best 5 consecutive years of earnings. The additional cost incurred
will be 0.07 percent of payroll, equal to $15.4 million increase in normal
cost of the system.
The committee approves language for crediting, for retirement pur-
poses, accumulated sick leave which an employee has at the time of
his retirement.
Under the Annual and Sick Leave Act of 1951, each employee sub-
ject to the Act is entitled to sick leave on an accumulative basis. For
Approved For Release 2001/11/01 : CIA-RDP71B00364R000500160006-0
 Approved For Release 2001/11/01 -CIA-RDP71B00364R000500160006-0
each biweekly pay period, he is credited with 4 hours of sick leave.
There is no restriction on'the total number of hours he may accumulate.
An employee who works 30 years in the civil service has earned 390
days of sick leave, equal to about a year and a half of normal work-
ing days. At the time of his retirement his sick leave-, if any, is forfeited.
The Civil Service Commission estimates that about half of all Fed-
eral employees retire with no accumulated sick leave and about half
of them retire with an average of 44 days of unused sick leave. The,
problem of the use (or abuse) of sick leave is one that should be
handled properly by administrative officers of the Executive branch;
but regardless of the reasons for the use (or abuse) of sick leave, an
employee who retires with 6 months' accumulated sick leave has de-
voted more time serving his Government than an employee who re.
tires with no accumulated sick leave.
The additional cost incurred by crediting unused sick leave will be
0.06 percent of payroll, or $13.2 million increase in normal cost.
The committee would like for the Civil Service Commission to con-
sult with Federal agencies during the calendar year 1970 to survey
the use of sick leave after the enactment of this Act to determine
whether there hasbeen any significant effect upon its use by employees,
and to report to this committee at the beginning of the 92d Congress
on the results of its survey.
'The committee approves provisions increasing all cost-of-living ad-
justments under section 8340 of title 5, United States Code, by 1 per-
cent beyond the Consumer Price Index figure used as a basis for
adjustments.
Under existing law, whenever the Consumer 'Price Index shows a
3-percent increase for each of 3 consecutive months over the base
month, annuities are adjusted by the highest percentage of any of the
3 months and that month becomes the new base, month for the purpose
of future adjustments. Since the cost-of -living provisions of the Civil
Service Retirement Act were revised in 1965, cost-of-living adjust-
ments have beenmade in January 1967, May 1968, and March of 1969-
each 3.9 percent.
In order to take into account the increased productivity of a na-
tional economy, as well as the possible inaccuracy of the Consumer
Price Index as an indicator of purchased goods, particularly for re-
tired employees, the committee approves the addition of a 1-percent
adjustment with each cost-of-living increase.
SURVIVOR ANNUITIES UNDER THE ACT OF JULY 18, 1966
Section 506 of Public Law 89-504 amended the Civii Service Re-
tirement Act to provide that when the surviving spouse of a Federal
employee remarries after attaining age 60, her civil service annuity
would not be terminated, or if she remarried prior to age 60 and the
marriage was terminated, 'her annuity could be reinstated. The benefits
provided by that Act (signed by the President, July 18, 1966) were
not retroactive and had no effect upon the survivor annuity of any
spouse Whose annuity was based on a death or retirement occurring
prior to the date of enactment of the legislation. The effect of this
Approved For Release 2001/11/01 : CIA-RDP71B00364R000500160006-0
 Approved For Release 2001/11/01 : CIA-RDP71B00364R000500160006-0
6
was that two surviving spouses of two Federal employees, one of
whom retired on .July 17, 1966 and the other of whom retired on July
1.9, 1966, would be treated quite differently if they remarried at any
time after their husbands' deaths. Twenty years later, the same two
surviving spouses could remarry after achieving age 60, and one would
continue to receive her annuity while the other would not.
It has been the general policy of the committee to refrain from
recommending legislation which has a retroactive effect upon civil
service retirement, however, in this instance the equities of the situa-
tion are such that language permitting continuance of annuity in the
case of it spouse whose survivor annuity is based on a death or retire-
ment occurring psszor to July 18, 1966, but whose remarriage occurred
on or after the date of enactment of the 1966 Act, should be approved.
In addition, language -authorizing the continuance,of such an 'annuity
whenever the survivor of a Federal employee has been incorrectly ad-
vised by Cxovernment authority between the effective slate of the 1966
Act and the effective date of this Act that such remarriage would not
affect. her annuity is approved. It'is rrnfortunate that in some circum-
stances, officials of Executive agencies have advised an employee of
rights or benefits under prevailing law orsregulations which advice is
erroneous. The surviving spouse of it Federal employee who receives a
letter from it -Government agency indicating that her annuity will not
be jeopardized by her remarriage should be able to rely upon such
information.
The committee proposes to amend the Civil Service Retirement Act
to improve very substantially the survivor- benefits for employees who
die with little Federal service, for employees who die after retiring
upon it, disability annuity, and for the surviving children of Federal
employees.
cinder existing law, no civil service employee earns any vested an-
nuity rights or benefits until he has cor`npleted 5 years of service
under the Civil Service Retirement Act. Thus, an employee who dies
with 4 years 11 months and 29 days of Federal civilian service wader
the Act is entitled to no benefits and his survivors receive only it refund
of the deductions which have been made from his payroll check in each
pay period during his years of service. llad he lived another day, such
,in employee would have vested annuity benefits for his survivors
which would pay to each of his children approximately $61 it month
and would pay to his surviving spouse it 55-percent remainder of his
earned annuity.
,1u employee who retires on a disability annuity of 40 percent of
salary under the Civil Service Retirement Act and who- thereafter
dies, leaves his family with minimal benefits, because the basis for
the disability arnmity which lie received as a retired employee is sub-
sta:ntial l y reduced ]it determinin;r survivor annuity benefits.
For example, Joe Jones is it 27-year-old civil service employee with
6 years' service and an average salary of $10,000 a year. Ile dies,
leaving a. wife and two small children. Airs. Jones receives a survivor
annuity equal to 55 percent of his earned annuity. After 6 years'
service, Joe has an earned annuity of 91/4 percent of his average salary,
or $925 a year. Airs. Jones' annuity is $5127 a year, or $44 a month. Each
Approved For Release 2001/11/01 : CIA-RDP71B00364R000500160006-0
 Approved For Release 2001/11% 7 : CIA-RDP71B00364R000500160006-0
child is entitled to a survivor annuity of $61 a month. The total sur-
vivor annuity for Jones' widow and the children is $1,991 a year,
subject to cost-of-living adjustments related to the Consumer Price
Index.
If Jones had been employed in private industry subject to, the So-
cial Security Act under similar pay and tenure, his survivors would
have received the "maximum family benefit" of $4,982.40 a year. 'This
would result from applicable current social security law which under
existing limitations would give Mrs. Jones and each child $138.40 a
month. When the older child reaches majority, the other child and the
widow's benefit would increase to $15~3 a month each, almost twice the
benefit payable to all three under the Civil Service Retirement Act's
survivor provisions.
In 'the case of a civil service employee who is disabled and subse-
quently dies, the example is similar. Had Jones retired on a disability
annuity, his annuity would be the, smaller of 40 percent of his aver-
age salary or his 'annuity projected to age .60. In most cases, the 40-
percent clause applies, and Jones would receive $4,000 a year. But if
lie died after disability retirement, the 40-percent provision would
be eliminated and his survivors would be entitled only to a survivor
annuity based on his earned annuity. Mrs. Jones would receive the
same $527 a year for herself and the same $1,464 for the children.
Had Jones been retired on disability under social security, the surviv-
or's annuity would be the same as that described in the first example.
Using social security as a comparison is not entirely relevant when
evaluating benefits under the Civil Service Retirement Act, because
the two systems have different basic purposes. Civil service retire-
ment is a long te.rmn, staff retirement plan based on earnings and length
of service; but that it is a staff' retirement plan should not obscure the
fact, that 3 million employees rely upon its protection for survivor
benefits as well as retirement, and are excluded from participation
under social. security.
Adequate protection, particularly for the younger employee whose
earnings are, low and service is short, has been a major goal of this
committee and the administration for several years. Legislation to
provide ~a transfer of credit from civil service to social security has
been proposed, but no encouraging action has been taken by the Coan-
mittees on Post Office and Civil Service, the Committee on Finance,
or the Committee on Ways. and Means.
In 1967, employee unions initially supported such a plan. in public
hearings before the House Committee on. Post Office, and Civil Service.
but ;subsequently provisions necessary to effect the transfer of credit
were stricken from a bill reported by the Commit-tee on Ways and
Means. This committee is inclined 'to believe that Federal employees
do not desire to establish a close relationship between social security
and civil service retirement.
Until the issue of transfers between retirement systems can be satis-
factorily resolved, the survivors of Federal employees who die with
fewer than 5 years' service-, or those who die with a vested annuity but
little service will continue to suffer drastic curtailment of income. The
committee believes it is, in the best interest of the employee, and the
Government to improve substantially the survivor protection offered
Approved For Release 2Q01/11/01 : CIA-RDP71B00364R000500160006-0
 Approved For Release 2001/11/01 : CIA-RDP71B00364R000500160006-0
8
these employees at this time, solely through amendments to the Civil
Service Retirement Act, and continue the effort to work out a transfer
system at a later date.
Accordingly, the committee recommends that when an employee
serves 18 consecutive months in a position under the Civil Service Re-
tirement Act, his annuity rights (for survivor protection only) shall
vest, and in the event of his death thereafter, his widow shall be en-
titled to an annuity equal to 55 percent of 40 percent of his average
salary. If he dies after retiring on disability, his wife will be en-
titled to at least 55 percent of his disability salary.
Although this is a very substantial improvement in the retirement
program, it is not a great windfall. Mrs. Jones, in the example cited
above, would be entitled to a survivor annuity of $2,200 a year rather'
than $527.
The committee also recommends that the survivor annuity 'for the
unmarried children under 18 years of age of a Federal employee (or
an unmarried child between 18 and 22 Who is a full-time student) be
increased from. the present minimum standards. Existing law pays
a benefit of $600 a year, or 40 percent of 'the employee's average salary
divided by the number of children, or $1,800 a year divided by the
number of children, whichever is le.ss. The cost-of-living adjustments
in effect since 1962 have, raised the actual minimum payment to $732
Per child per year for not to exceed three children.
The committee recommends that the iiiinimum be increased to $900
a year, 60 percent of average salary divided by the number of children,
or $2,700 divided by the number of children, whichever is less. This
is an actual increase of $168 per child per year under existing annuity
payment schedules, or about 25 percent. The cost-of-living adjust-
ment.ss made since 1962 wouldbe eliminated and a new base period for
future adjustments would be established. Proportional increases are
made in the survivor annuity of a child who has lost both parents.
The total cost of the entire survivor annuity amendment proposed
by the committee will be $46 million a year in normal cost. This is
equal to 0.21 percent of payroll. The survivor annuity amendments
relating to extension of coverage to short-term employees and a new
guaranteed minimum for the survivors of an employee who dies after
retirement on a disability annuity, will cost 0.17 percent of payroll;
and the increases in the survivor annuities for children presently on
the rolls and those coming on the rolls in the future is 0.04 percent of
payroll.
ANNUITIES FOR CONCPLESSIONAL EMPLOYEES
Tinder the provisions of the Civil Service Retirement. Act relating
to employees of the Congress, the first `15 years of military service
and Congressional service are computed itit 21/2 percent of the employ-
ee's high-b average rather than the normal percentage computation
used for civil service employees generally (11/2 percent for the first
5 years, 13/4 percent for the next 5 years, and 2 percent for the re-
in,~inder). This has been a part of the Civil. Service Retirement Act
for some years and compensates employees of the Congress because
their jobs generally depend upon the good health and political fortunes
of a Senator or Representative.
Approved For Release 2001/11/01 : CIA-RDP71B00364R000500160006-0
 Approved For Release 2 01/11/01g: CIA-RDP71B00364R000500160006-0
The committee appro, es language to remove the limitation on the
number of years of 'Co grossional employee service computed at 21/2
percent (not to exceed total maximum annuity of 80 percent of the
high-3 average), to limit military service creditable at 21/2 percent
to 5 years, and to increase the Congressional employee's contribution
from 61/2 percent to 71/ percent of gross pay.
The committee propo' es several new amendments to the Civil Serv-
ice Retirement Act to provide basic and significant changes in the
Civil Service Retireme t System :
Finally, the committ e recommends that the Civil Service Retire-
ment Act be amended o exclude ,in amount not to exceed $3,000 in
annuity payments from Federal income, taxes.
Under existing -law, 'ivil service retirement annuities are not sub-
ject to Federal income t x until the employee's total contribution to the
Retirement Fund has been paid by annuity payments. Ordinarily, it
takes about 3 years forr~ this to happen. 'T'hereafter, civil service re-
tirement annuity payments are ordinary income.
Neither social securit- nor railroad retirement benefits, both paid by
the Federal Governmer t, are subject to Federal income tax. The com-
mittee has received rep ated suggestions by retired employees that at
least a portion of civi service annuities be exempted from income
taxes.
The anticipated loss f revenue resulting from the committee amend-
ment cannot be aecurat ly estimated. Considering that annuitants and
their spouses past the age of 65 each receive a double exemption and
a retirement -credit undr the provisions of the Internal Revenue Code,
the taxable income afte -,all deductions is small and the amount of -in-
come tax paid to the Federal Government is not substantial. But it is
also clear that retired Federal employees are discriminated against
when compared to social security or railroad retirement annuitants. In
any case, the committee believes that it is clearly equitable and socially
desirable to exempt a reasonable portion 'of the civil service retirement
annuity from Federal t'ff txation.
The provisions of ti. is amendment are similar to the provisions of
S. 2087, which was introduced an May 8, 1969, and referred to the
Committee on Post Office and Civil Service.
The bill as reported by the committee will increase the normal cost
of the civil service retirement system from the present figure of 13.86
percent of payroll to 3.98 percent of payroll. This cost figure takes
into account the reduc ion in the cost caused by charging the general
fund of the Treasury i.th the futrdi.ng of retirement credit for mili-
tary service.
The unfunded liability will be increased by the benefits enacted in
this legislation by $1.4 billion and will be reduced by the transfer of
funds relating to military service credit by $4.7 billion, resulting in a
net decrease of the unfunded liability of $3.3 billion.
,III
S. Rept. 91-339-2
Approved For Release 2001/11/01 : CIA-RDP71B00364R000500160006-0
 Approved For Release 2001/11/01 : CI0A-RDP71B00364R000500160006-0
SLOTTONAL ANALYSIS
Section 101 adds several new definitions to the provisions of title 5,
United States Code, relating to civil, service retirement in order
to implement the new provisions of the bill relating to retirement
financing.
Section 101 (3) defines "normal cost." Vormal cost is the contribution
necessary, invested at interest, to pay for the benefits authorized by
law. The present normal cost of the system is 13.86 percent of payroll,
but the contribution is 13 percent.
The: benefits and added contribution included in this bill will in-
crease normal cost to 13.98 percent and contribution to 14 percent.
Section 101 (3) defines "fund balanced' to mean cash on hand plus
investments at par. i
Section 101(3) defines "unfunded liabi]lity."
The total liability of the Fund now is about $78 billion, of which
about $58 billion is not funded in any manner other than the full faith
and credit of the Government of the I7nit6d States.
Section 102 increases agency and employee contribution from 6.5
percent to 7 percent of payroll.
Section 102 increases the contribution of an employee of the Con-
gress from 6.5 percent to 7.5 percent, to gay for the added benefits in
section 203 of the bill, and increases a. Member's contribution to 8
percent.
Section 102(b) makes the new contribution rate effective on the first
pay period beginning in 1970.
Section 103 authorizes the Civil Service Commission to pay the
expenses of administering the retirement program (and other retire-
inent. programs) out of the Civil Service Retirement and Disability
Fund.
This language is presently contained in annual appropriation bills.
Section 103 enacts two new subsections relating to retirement
financing.
Section 8348(g) Of existing law, commonly known as the Thomas
Rider (named for Congressman Albert Thomas, chairman of the In-
dependent Offices Appropriations Subcoinmittee), prohibits the pay-
ment of liberalizations in the retirement program until appropriations
are made to pay the cost. The benefit changes in retirement annui-
ties enacted in 1962, for instance, were not paid until June 1963, be.-
cause appropriations were. not made until' that time. Annual appropri-
ations have been made since 1963 to pay the annual cost of the 5-percent
i ncrease.
The new language repeals the Thomas eider and provides that here-
after liberalized benefits or increases in salary will automatically
authorize appropriations over a 30-year period, in equal annual install-
ments, to pay the cost of the added unfunded liability caused by such
benefits or salary increases.
The effect will be to stop the increase in the growth of the unfunded
liability by paying the cost on an annual; basis. The Commission esti-
mates that the unfunded liability will cease to grow in fiscal year 1979
and will remain constant thereafter at about $76.8 (billion.
The new subsection 8,348 (g) authorizes i'he,Secretary of the Treasury
to transfer money from the Treasury to the Fund at the end of each
fiscal year to pay the interest on the unfunded liability as well as the
Approved For Release 2001/11/01 : CIA-RDP71B00364R000500160006-0
 Approved For Release 2p01/11/g11 : CIA-RDP71B00364R000500160006-0
cost of military service credit. To avoid it severe impact on the budget,
the payment would be gr ducted over a 10-year period, becoming fully
effective in fiscal year MO, at a level cost of :$2,990 million.
Section 104 is a techn cal amendment revising language in title 5
relating to annual reports. The substance of the report requirement is
not changed.
Section 105 repeals a report requirement on the annual cost of the
annuity increases enacted by Congress in 1958. Such costs will here-
after be paid out of the Fand and annual reports or annual appropria-
tions will not be necessary. This is a technical amendment.
Section 201 revises the computation factor so that the "average
salary" used to compute1 annuities for retired employees will be the
highest 3 consecutive years rather than the highest 5 consecutive years
and so that average salary for short term will conform to the new
survivor annuity amendments.
Section 202 permits an employee retiring with accumulated sick
leave to have such leave credited towards his length of service for an-
nuity purposes.
Section 203 allows an employee of the Congress to compute his total
congressional service on the 2.5 percent formula, rather than limiting
such computation to not more than 15 years' Congressional service.
The Congressional employees would pay an additional 1 percent for
this additional benefit.
,Section 204 adds 1 percent to each cost-of-living increase for retired
employees.
Under existing law, whenever the 'Consumer Price Index rises 3
percent for each of 3 consecutive months, all civil service annuities
are increased by the highest ercentage figure -within those 3 months.
This provision would add another 1 percent to the increase.
Section 204'(b) increases the minimum survivor annuity for the
children of a deceased Federal employee.
Section 205 changes the remarriage provisions of the 1966 retirement
bill.. Under the law, which applies only to persons eligible after the,
date, of enactment, the surviving spouse of an employee or annuitant
who remarries after age 60 does not lose her ann.uity, or if she remar-
ried prior to age -60, she can have her annuity reinstated if the second
marriage is terminated. The liberalization applies to no spouse whose
annuity is based on a death or retirement occurring prior to July 18,
1966 (date of enactment).
This change permits the widow to continue receiving her annuity
or to have such annuity reinstated if her spouse died or retired prior
to July 18, 1966, but her remarriage (lid or does not occur until after
such date.
Section 205 also permits the widow of an employee whose survivor
annuity has been terminated by remarriage to have her annuity rein-
stated if she was advised by iovernment authority that her remar-
riage would not affect her annuity.
Section 206 provides the new survivor annuity language for Federal
employees who have at least 18 months' service or who retire on dis-
ability.
Section 207 exempts up to $3,000 of civil service retirement annui-
ties from Federal incometaxes.
Section 208 provides effective dates.
Approved For Release 2001/11/01 : CIA-RDP71B00364R000500160006-0
 Approved For Release 2001/11/01 : CIA-RDP71B00364R000500160006-0
12
CHANGES IN EXISTING LAW
In compliance with subsection 4 of rule XXIX of the Standing
Rules of the Senate, changes in existing; law made by the bill as re-
ported are shown as follows (existing law in which no change is pro-
posed is shown in roman; existing law proposed to be omitted is en-
closed in black brackets; new matter is shown in italic) :
I. TITLE 5, UNITED STATES CODE
CHAPTER 13-SPECIAL AUTHORITY
? 1308. Annual reports
(c) The Commission shall publish an annual report on the opera-
tion of subchapter III of chapter 83 of this title, including a statement
concerning the status of the Civil Service Retirement and Disability
Fund [on a normal cost plus interest basis].
CHAPTER 83-RETIREMENT
SUBCHAPTER III-CIVIL SERVICE RETIREMENT
? 8331. Definitions
(4) "average pay" means the largest annual rate resulting
from averaging an employee's or Member's rates of basic pay in
effect-
(A) over any [5] 3 consecutive years of creditable service
or, in the case o_ of an annuity under subsection (d) or (e) (1) of
section 83-/[1 o f this title based on service of less than 3 years,
over the period of service; or
(B) at a Member's option over all periods of Member
service after August 2, 1946, used in the computation of an
annuity tinder this subchapter;
with each rate weighted by the time it was in effect;
(15) "price index" means the Consumer Price Index (all
items-United States city average) published monthly by the
Bureau of Labor Statistics; [and]
Approved For Release 2001/11/01 : CIA-RDP71B00364R000500160006-0
 Approved For Release 2001/11/01c CIA-RDP71B00364R000500160006-0
(16) "base month" means the month for which the price index
showed a percent rise forming the basis for a cost-of-living
annuity increase[.];
(17) "normal cost" means the entry-age normal cost computed by
the Civil Service Commission in accordance with generally accepted
actuarial practice and expressed as a level percentage of aggregate
basic pay;
(18) "Fund balance" means the sum of-
(A) the investments of the Fund calculated at par value; and
(B) the cash balance of the Fund on the books of the Treasury;
and
(19) "unfunded liability" means the esitmated excess of the
present value of all benefits payable from the Fund to employees and
Members, and former employees and Members, subject to this sub-
chapter, and to their survivors, over the sum of
(A) the present value of deductions to be withheld from the
future basic pay of employees and Members currently subject to
this subchapter and of future agency contributions to be made in
their behalf; plus
(B) the present value of Government payments to the IF'und
under section 8318 (f) of this title; plus
(C) the Fund balance as of the date the unfunded liability is
determined.
? 8334. Deductions, contributions, and deposits
(a) (1) The employing agency shall deduct and withhold [634] 7
percent of the basic pay of an employee, [and] 734 percent of the
basic pay of a Congressional employee, and 8 percent of the basic pay
of a Member [, and an]. An equal amount shall be contributed from
the appropriation or fund used to pay the employee or, in the case of
an elected official, from an appropriation or fund available for pay-
ment of other salaries of the same office or establishment. When an
employee in the legislative branch is paid by the Clerk of the House
of Representatives; the Clerk may pay from the contingency fund of
the House the contribution that otherwise would be contributed
from the appropriation or fund used to pay the employee.
(2) The amounts so deducted and withheld, together with the
amounts so contributed, shall be deposited in the Treasury of the
United States to the credit of the Fund under such procedures as the
Comptroller General of the United States may prescribe. Deposits
made by an employee or Member [under this section] also shall be
credited to the Fund.
(b) Each employee or Member is deemed to consent and agree to
these deductions from basic pay. Notwithstanding any law or regu-
lation affecting the pay of an employee or Member, payment less these
deductions is a full and complete discharge and acquittance of all
claims and demands for regular services during the period covered
by the payment, except the right to the benefits to which the employee
or Member is entitled under this subchapter.
Approved For Release 2001/11/01 : CIA-RDP71B00364R000500160006-0
 Approved For Release 2001/11/01 :1CIA-RDP71B00364R000500160006-0
(c) Each employee or Member credited with civilian service after
July 31, 1920, for which retirement deductions or deposits have not
been made, may deposit with interest an amount equal to the following
percentages of his basic pay received for that service:
Percentage
of basic pay
Employee ______________________ 23 ---------- August 1, 1920, to June30, 1926.
3%____--__-_ July 1, 1926, to June 30, 1942.
.5------------ July 1, 1942, to June 30, 1948.
6____________ July 1, 1948, to October 31, 1956.
6V2 ---------- [After October $1, 1956.] November 1, 1956, to December 31,
1969.
7 After December 31, 1969.
Member or employee for Coro-
gressioeeal employee service--_-- 23 ---------- August 1, 1920, to June 30, 1020.
3%__________ July 1, 1926, to June 30, 1942.
July 1, 1942, to June 30, 1948.
h------------ July 1, 194S, to Qctober 31, 1956.
6!/2 ---------- November 1, 1956' to December 31, 1969.
7%---------- After December 3l, 1969.
Member for Member service----_ 2A ---------- August 1, 1920, t0 June 30, 1926.
3y_ July 1, 1926, to Juune 30, 1942.
5 July 1, 1942, to August 1, 1946.
6 ------------ August 2, 1946, fro October 31,1'956.
7%_________ [After October 31, 1956.3 November 1, 1966, to December 31,
1969.
8------------ After December 31, 1969.
Notwithstanding the foregoing provisions of this subsection, the de-
posit with respect to a period of service referred to in section 8332(b)
(6) [which was performed prior to the effective date of the National
Guard Technicians Act of 1968] Q f this title performed before January 1,
1.969, shall be an amount equal to 55 [per centum] percent of a deposit
computed in accordance with such provisions.
(d) Each employee or Member who has received a refund of retire-
ment deductions rudder this or any other retirement system established
for employees of the Government covering service for which he may
be allowed credit tinder this subchapter Bray deposit the amount re-
ceived, with interest. Credit may not be allowed for the service covered
by the refund until the deposit is made.
(e) Interest under subsection (c) or (d) of this section is computed
from the mid-point of each service period ihicluded in the computation,
or from the date refund was paid, to the date of deposit or commencing
date of annuity, nwhichever is earlier. The. interest is computed at the
rate of 4 percent a year to December 31, 1947, and 3 percent a year
thereafter compounded annually. The deposit may be made in one or
more installments. Interest may not be charged for a period of sepa-
ration from the service which began before October 1, 1956.
(f) Under such regulations as the Civil Service Commission may
prescribe, amounts deducted under subsection (a) of this section and
deposited under subsections (c) and (d) of this section shall be entered
an individual retirement records.
O Deposit may not be required for-
(1) service before August 1, 1920;
(2) military service;
(3) service for the Panama Railroad Company before Jan-
uary 1, 1924; [or]
Approved For Release 2001/11/01 : CIA-RDP71B00364R000500160006-0
 Approved For Release 2001/11/015: CIA-RDP71B00364R000500160006-0
(4) service performed before January 1, 1950, by natives of
the Pribilof Islands in the taking and curing of fur seal skins and
other activities in connection with the administration of the
Pribilof Islands[.]; or
(5) days of unused sick leave credited under section 8359(in) of
this title.
(h) For the purpose of survivor annuity, deposits authorized by
subsections (c) and (d) of this section may also be made by the sur-
vivor of an employee or Member.
? 8339. Computation of annuity
(a) Except as otherwise provided by this section the annuity of an
employee retiring under this subchapter is-
(1) 1j, percent of his average pay multiplied by so much of his
total service as does not exceed 5 years; plus
(2) 1% percent of his average pay multiplied by so much of his
total service as exceeds 5 years but does not exceed 10 years; plus
(3) 2 percent of his average pay multiplied by so much of his
total service as exceeds 10 years.
However, when it results in a larger annuity, 1 percent of his average
pay plus $25 is substituted for the percentage specified by paragraph
(1), (2), or (3) of this subsection, or any combination thereof.
(b) The annuity of a Congressional employee, or former Con-
gressional employee, retiring under this subchapter is computed under
subsection (a) of this section, except, if he has had-
(1) at least 5 years' service as a Congressional employee or
Member or any combination thereof; and
(2) deductions withheld from his pay or has made deposit cov-
ering his last 5 years of civilian service;
his annuity is computed, with respect to [so much of] his service as a
Congressional employee, [and] his military service [as does] not
[exceed a total of 15] exceeding 5 years, and any Member service, by
multiplying 2% percent of his average pay by the years of that service.
(c) The annuity of a Member, or former Member with title to
Member annuity, retiring under this subchapter is computed under
subsection (a) of this section, except, if he has had at least 5 years'
service as a Member or Congressional employee or any combination
thereof, his annuity is computed with respect to-
(1) his service as a Member and so much of his military service
as is creditable for the purpose of this paragraph;
(2) [so much of] his Congressional employee service [as does
not exceed 15 years];
by multiplying 2% percent of his average pay by the years of that
service.
(d) The annuity of an employee retiring under section 8336(c) of
this title is 2 percent of his average pay multiplied by his total service.
(e) The annuity computed under subsections (a)-(d) of this sec-
tion. may not exceed 80 percent of-
(1) the average pay of the employee; or
(2) the greater of-
(A) the final basic pay of the Member; or
Approved For Release 2001/11/01 : CIA-RDP71B00364R000500160006-0
 Approved For Release 2001/11/01 : ClIA RDP71B00364R000500160006-0
(B) the final basic pay of the appointive position of a for-
iner Member who elects to have his annuity computed or re-
computed under section 8344(b) (1) of this title.
(f) The annuity of an employee or Member retiring under section
8337 of this title is at least the smaller of-
(1) 40 percent of his average pay; or
(2) the sum obtained under subsections (a)-(c) of this section
aft
or increasing his service of the type last performed by the
period elapsing between the date of separation and the date he
becomes 60 years of age.
[however, this subsection does not increase the annuity of a survivor.]
(g) The annuity computed under subsections (a), (b), and (e) of
this section for an employee retiring tinder section 8336(d) of this
title is reduced by 316 of 1 percent for each full month the employee is
under 55 years of age at the date of separation. The annuity computed
under subsections (c) and (e) of this section for a Member retiring
under the second or third sentence of section 8336(f) of this title or
the third sentence of section 8338(h) of this title is reduced by hh2 of
1 percent for each full month not in excess of 60 months, and 3s of 1
percent for each full month in excess of 60 months, the Member is
under 60 years of age at the date of seprration.
(h) The annuity computed under subsections (a)-(g) of this
section is reduced by 10 percent of a deposit described by section
8334(c) of this title remaining unpaid, Unless the employee or Mem-
ber elects to eliminate the service involved for the purpose of an-
nuity computation.
(i) The annuity computed under subsections (a)-(h) of this sec-
tion [(excluding any increase because of retirement under section 8337
of this title)] for a married employee or Member retiring under this
subchapter, or any portion of that annfuty designated in writing for
the purpose of section 8341(b) of this title by the employee or Mem-
ber at the time of retirement, is reduced by 2h percent of so much
thereof as does not exceed $3,600 and by 10 percent of so much thereof
as exceeds $3,600, unless the employee 'or Member notifies the Civil
Service Commission in writing at the time of retirement that he does
not desire his spouse to receive an annuity under section 8341(b) of
this title.
(j) At the time of retiring under section 8336 or 8338 of this title,
an unmarried em ployee or Member who; is found to be in good health
by the Commission may elect a reduced annuity instead of an annuity
computed under subsections (a)-(h) of this section and name in writ-
ing an individual having an insurable' interest in the employee or
Member to receive an annuity under section 8341(c) of this title after
the death of the retired employee or Member. The annuity of the em-
ployee or Member making the election ik reduced by 10 percent, and
by 5 percent for each full 5 years the individual named is younger
than the retiring employee or Member. However, the total reduction
may not exceed 40 percent.
(k) The annuity computed under subsections (a)-(j) of this sec-
tion for an employee who is a citizen of the United States is increased
by $36 for each year of service in the employ of-
(1) the Alaska Engineering Commission, or The Alaska Rail-
road, in Alaska between March 12 1914, and July 1, 1923; or
Approved For Release 2001/11/01 : CIA-RDP71B00364R000500160006-0
 Approved For Release 2001/11/01 CIA-RDP71B00364R000500160006-0
(2) the Isthmian Canal Commission, or the Panama Railroad
Company on the Isthmus of Panama between May 4, 1904, and
April 1, 1914.
(1) In determining service for the purpose of computing an annuity
under each paragraph of this section, 45 per centum of each year, or
fraction thereof, of service referred to in section 8332(b)(6) which
was performed prior to the effective date of the National Guard Tech-
nicians Act of 1968 shall be disregarded. d this
(m) In computing any annuity under subsections (a)-(d) of
section, the total service of an employee who retires on an immediate
annuity or dies leaving a survivor or survivors entitled to annuity includes,
without regard to the limitations imposed by subsection (e) of this section,
the days of unused sick leave to his credit under a formal leave system,
except that these days will not be counted in determining average pay or
annuity eligibility under this subchapter.
? 8340. Cost-of-living adjustment of annuities
(a) Effective December 1, 1965, each annuity payable from the Fund
having a commencing date before December 2, 1965, is increased by-
(1) the percent rise in the price index, adjusted to the nearest
31o of 1 percent, determined by the Civil Service Commission on
the basis of the annual average price index for calendar year 1962
and the price index for the base month of July 1965; plus
(2) 6% percent if the commencing date (or in the case of the
survivor of a deceased annuitant the commencing date of the
annuity of the retired employee) occurred before October 2, 1956,
or 1'/2 percent if the commencing date (or in the case of the sur-
vivor of a deceased annuitant the commencing date of the annuity
of the retired employee) occurred after October 1, 1956.
Each annuity payable from the Fund (other than the immediate
annuity of an annuitant's survivor or of a child entitled under section
8341(e) of this title) having a commencing date after December 1,
1965, but before January 1, 1966, is increased from its commencing
date as if the annuity commencing date were December 1, 1965. Each
survivor annuity authorized by-
(A) section 8 of the Act of May 29, 1930, as amended to July 6,
1950; or
(B) section 2 of the Act of June 25, 1958 (72 Stat. 219) ;
is increased by any additional amount required to make the total
increase under this subsection equal to the smaller of 15 percent or $10
a month.
(b) Each month the Commission shall determine the percent change
in the price index. Effective the first day of the third month that
begins after the price index change equals a rise of at least 3 percent
for 3 consecutive months over the price index for the base month, each
annuity payable from the Fund having a commencing date not later
than that effective date shall be increased by 1 percent plus the percent
rise in the price index (calculated on the highest level of the price
index during the 3 consecutive months) adjusted to the nearest
%0 of 1 percent.
(c) Eligibility for an annuity increase under this section is gov-
erned by the commencing date of each annuity payable from the Fund
as of the effective date of an increase, except as follows:
(1) Effective from its commencing date, an annuity payable
from the Fund to an annuitant's survivor (except a child entitled
Approved For Release 2001/11/01 : CIA-RDP71B00364R000500160006-0
 Approved For Release 2001/11/01 : CIA-RDP71B00364R000500160006-0
18
under section 8341(e) of this title), which annuity commences the
day after the death of the annuitant and after the effective date of
the first increase under this section, shall be increased by the total
percent increase the annuitant was receiving under this section at
death. However, the increase in a survivor annuity authorized by
section 8 of the Act of May 29, 1930 as amended to July 6, 1950,
shall be computed as if the annuity commencing (late had been the
effective date of the first increase under this section.
(2) For the purpose of computing [an] the annuity of [that
commmences after the effective date of the first increase under this
section to] a child under section 8341 (e) of this title that com-
mences on as after the first day of the first month that begins on or
after the date of enactment of the Civil Service Retirement Amendments
of 1.96.9, the items [$600] $900, [$720], $1,080, [$1,800] $2,700,
and [$2 160] ?$3 240 appearing in section 8341(e) of this title shall
be increased by the total percent increases allowed and in force
under this section [or employee annuities that commenced after
October 1, 1956] on or after such day and, in case of a deceased
annuitant, the items [40] 60 per cent and 50] 75 percent ap-
pearing in section 8341(e) of this title shall be increased by the
total percent increase allowed and in force [under this section]
to the annuitant [at death] under this section on or after such day.
(d) This section does not authorize an increase in an additional
annuity purchased at retirement by voluntary contributions.
(e) The monthly installment of annuity after adjustment under
this section shall he fixed at the nearest dollar. However, the monthly
installment shall after adjustment reflect an increase of at least $1.
(f) Effective September 1, 1966, or on the commencing date of an-
nuity, whichever is later, the annuity of each surviving spouse whose
entitlement to annuity payable from the Pund resulted from the death
of-
(1) an. employee or Member before' October 11, 1962; or
(2) a retired employee or Member whose retirement was based
on a separation from service before October 11, 1962;
is increased by 10 percent.
? 8341. Survivor annuities
(d) If an employee or Member dies after completing at.least [5
years] 18 consecutive months of civilian service, the widow or de-
pendent, widower of the employee or Member is entitled to an annuity
equal to 55 percent of an annuity computed under section 8339 (a)-
(e) and (h) of this title as may apply with respect to the employee
or [Member.] Member, except that in the computation. of the annuity
under such section, the annuity of the employee or Member shall be at
least the smaller of (i) 40 percent of his a'erage pay, or (ii) the sum
obtained under such section after increasing his service of the type last
performed by the period elapsing between the date of death and the date
he would have become 60 years of age. The annuity of the widow or
dependent widower commences on the day after the employee or
Member dies. This annuity and the right thereto terminate on the
last day of the month before-
(1) the widow or dependent widower dies;
(2) the dependent widower becomes capable of self-support;
Approved For Release 2001/11/01 : CIA-RDP71B00364R000500160006-0
 Approved For Release 2001/11/01 : CIA-RDP71B00364R000500160006-0
(3) the widow or dependent widower of an employee remarries
before becoming 60 years of age; or
(4) the widow or dependent widower of a Member remarries.
(e) (1) If an employee or Member dies after completing at least
[5 years] 18 consecutive months of civilian service, or an employee or
Member dies after retiring under this subchapter, and is survived by
a spouse, each surviving child is entitled to an annuity equal to the
smallest of-
(A) (40] 60 percent of the average pay of the employee or
Member divided by the number of children;
(B) (6600] $900; or
(C) [$1,800]$2,700 divided by the number of children;
subject to section 8340 of this title. If the employee or Member
is not survived by it spouse, each surviving child is entitled to
an annuit equal to the smallest of-
(i) (50i 75 percent of the average pay of the employee or
Member divided by the number of children;
(ii) [6720]$1,080; or
(iii) [$2,160] $3,240 divided by the number of children;
subject to section 8340 of this title.
8345. Payment of benefits; commencement, termination, and
waiver of annuity
(a) Each annuity is stated as an annual amount, one-twelfth of
which, fixed at the nearest dollar, constitutes the monthly rate
payable on the first business day of the month after the month or other
period for which it has accrued.
(b) Except as otherwise provided, the annuity of an employee or
Member commences on the day after lie is separated from the service,
or on the day after his pay ceases and he meets the service and the
age or disability requirements for title to annuity. An annuity payable
from the Fund allowed after September 5, 1960, commences on the
day after the occurrence of the event on which payment thereof is
based.
(c) The annuity of a retired employee or Member terminates on the
day death or other terminating event provided by this subchapter
occurs. The annuity of a survivor terminates on the last day of the
month before death or other terminating event occurs.
(d) An individual entitled to annuity from the Fund may decline
to accept all or any part of the annuity by a waiver signed and filed
with the Civil Service Commission. The waiver may be revoked in
writing at any time. Payment of the annuity waived may not be made
for the period during which the waiver was in effect.
(e) Payment due a minor, or an individual mentally incompetent
or under other legal disability, may be made to the person who is
constituted guardian or other fiduciary by the law of the State of
residence of the claimant or is otherwise legally vested with the care
of the claimant or his estate. If a guardian or other fiduciary of the
individual under legal disability has not been appointed under the
law of the State of residence of the claimant, payment may be made
to any person who, in the judgment of the Commission, is responsible
for the care of the claimant, and the payment bars recovery by any
other person.
Approved For Release 2001/11/01 : CIA-RDP71B00364R000500160006-0
 Approved For Release 2001/11/01 : CIA-RDP71B00364R000500160006-0
(f) An amount, not to exceed $3,000 each year, which is received by
an annuitant or a survivor annuitant 'finder this subchapter and, except
for this subsection, which would be included as gross income for purposes
of the Federal income tax laws, shall not be included as gross income
under such laws.
? 8348. Civil Service Retirement and Disability Fund
(a) There is a Civil Service Retirement and Disability Fund. The
Fund-
(1) is appropriated for the payment of-
[(1)] (A) benefits as provided by this subchapter; and
[(2)] (B) administrative expenses incurred by the Civil
Service Commission in placing in effect each annuity adjust-
ment granted under section 8340 of this title[.]; and
(2) is made available, subject to '.such annual limitation as the
Congress may prescribe, for any expenses incurred by the Commis-
sion in connection with the administration of this chapter and other
retirement and annuity statutes.
(b) The Secretary of the Treasury may accept and credit to the
Fund money received in the form of a donation, gift, legacy, or be-
quest, or otherwise contributed for the benefit or civil service em-
ployees generally.
(c) The Secretary shall immediately invest, in interest-bearing
securities of the United States such currently available portions of the
Fund as are not immediately required for payments from the Fund.
The income derived from these investments constitutes a part of the
Fund.
(d) The purposes for which obligations of the United States may
be issued under the Second Liberty Bond Act, as amended, are ex-
tended to authorize the issuance at par of public-debt obligations for
purchase by the Fund. The obligations issued for purchase by the Fund
shall have maturities fixed with due regard for the needs of the Fund
and bear interest at a rate equal to the average market yield computed
as of the end of the calendar month next preceding the date of the is-
sue, borne by all marketable interest-bearing obligations of the United
States Bien forming a part of the public debt which are not due or
callable until after the expiration of 4 years from the end of that cal-
endar month. If the average market yield is not a multiple of 3i of 1
percent, the rate of interest on the obligations shall be the multiple of
38' of 1 percent nearest the average market yield.
(e) The Secretary may purchase other interest-bearing obligations
of the United States, or obligations guaranteed as to both principal
and interest by the United States, on original issue or at the market
price only if he determines that the purchases are in the public interest.
[(f) The Commission shall submit estimates of the appropriations
necessary to finance the Fund on a normal cost-plus-interest basis and
to carry out this subchapter.]
[(g) Money now or hereafter contained in the Fund may not be
used to pay an increase in annuity benefits or a new annuity benefit
under this subchapter or an earlier statute which is authorized by
amendment thereof until and unless an appropriation i4 made to the
Fund in an amount which the Commission estimates to be sufficient to
prevent an immediate increase in the unfunded accrued liability of
the Fund.]
Approved For Release 2001/11/01 : CIA-RDP71B00364R000500160006-0
 Approved For Release 2001/11/Ql : CIA-RDP71B00364R000500160006-0
(f) Any statute which authorizes-
(1) new or liberalized benefits payable from the Fund, including
annuity increases other than under section 8340 of this title;
(2) extension of the coverage of this subchapter to new groups of
employees; or
(8) increases in pay in which benefits are computed;
is deemed to authorize appropriations to the Fund to finance the unfunded
liability created by that statute, in 30 equal annual installments with
interest computed at the rate used in the then most recent valuation of the
Civil Service Retirement System and with the first payment thereof due
as of the end of the fiscal year in which each new or liberalized benefit,
extension of coverage, or increase in pay is effective
(g) At the end of each fiscal year, the Commission shall notify the
Secretary of the Treasury of the amount equivalent (1) to interest on the un-
funded liability computed for that year at the interest rate used in the then
most recent valuation of the System, and (2) that portion of disbursement
for annuities for that year, which the Commission estimates is attributable
credit allowed for military service. Before closing the accounts for each
fiscal year, the Secretary shall credit to the Fund, as a Government con-
tribution, out of any money in the Treasury of the United States not
otherwise appropriated, the following percentages of such amounts: 10
percent for 1971; 20 percent for 1972; 30 percent for 1973; 40 percent for
1974; 50 percent for 1975; 60 percent for 1976; 70 percent for 1977; 80
percent for 1978; 90 percent for 1979; and 100 percent for 1980 and for
each fiscal year thereafter. The Commission shall report to the President
and to the Congress the sums credited to the Fund under this subsection.
IT. TITLE I, INDEPENDENT OFFICES APPROPRIATION
ACT, 1962
CIVIL SERVICE COMMISSION
* * * * * * *
PAYMENT TO CIVIL SERVICE RETIREMENT AND DISABILITY FUND
For financing the annuity benefits and increases provided by the
Act of June 25, 1958 (72 Stat. 218), $44,637,000, to be credited to the
civil service retirement and disability fund [: Provided, That the Civil
Service Commission shall include annually, in its estimates to the
Bureau of the Budget, estimates of the appropriations necessary to
reimburse the civil service retirement and disability fund for the
amounts paid out of the fund by reason of the enactment of Public
Law 85-465, and the Bureau of the Budget shall submit such estimates
annually to the Congress].
Approved For Release 2001/11/01 : CIA-RDP71B00364R000500160006-0