OPTIONAL RETIREMENT WHEN AGE AND LENGTH OF SERVICE EQUALS EIGHTY YEARS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP77M00144R001100010001-1
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 48
• Document Creation Date: December 16, 2016
• Document Release Date: March 22, 2005
• Sequence Number: 1
• Publication Date: May 8, 1974
• Content Type: OPEN

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7M0014
OPTIONAL RETIREMENT WHEN AGE AND LENGTH OF
SERVICE EQUALS EIGHTY YEARS
HEARING
BEFORE THE
SUBCOMMITTEE ON
RETIREMENT AND EMPLOYEE BENEFITS
COMMITTEE ON
POST OFFICE AND CIVIL SERVICE
HOUSE OF REPRESENTATIVES
NINETY-THIRD CONGRESS
"
SECOND SESSION
`' e y.a~
ON
H.R. 3024
A BILL TO AMEND THE AGE AND SERVICE REQUIREMENTS
FOR IMMEDIATE RETIREMENT UNDER SUBCHAPTER III OF
CHAPTER 83 OF TITLE 5, UNITED STATES CODE, AND FOR
OTHER PURPOSES
Serial No. 93 - 47
Printed for the use of the
Committee on Post Office and Civil Service
0
U.S. GOVERNMENT PRINTING OFFICE
34-097 WASHINGTON : 1974
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COMMITTEE ON POD r ?FFICE AND CIVIL SERVICE
THADDEUS J. DUI.4SKI, New York, Chairman
DAVID N. HENDERSON North Carolina, Vice Chairman
MORRIS K. UDALL, Arizona
DOMINICK V.,DANIELS, New Jersey
ROBERT N. C. NIX, Pennsylvania
JAMES M. HANLEY, New York
CHARLES H. WILSON, California
JEROME R. WALDIE, California
RICHARD C. WHITE, Texas
WILLIAM D. FORD, Michigan
FRANK J. BRASCO, New York
WILLIAM (BILL) CLAY, Missouri
PATRICIA SCHROEDER, Colorado
JOEMOAKLEY, Massachusetts
WILLIAM LEHMAN, Florida
BOB TRAXLER, Michigan
H. R. GROSS, Iowa
EDWARD J. DERWINSKI, Illinois
ALBERT W. JOIINSON, Pennsylvania
LAWRENCE J. HOGAN, Maryland
JOHN H. ROUSSELOT, California
WALTER E. POWELL, Ohio
RICHARD W. MALLARY, Vermont
ANDREW J. HINSHAW, California
L. A. (SKIP) BAFALIS, Florida
JAMES M. COLLINS, Texas
GENE TAYLOR, Missouri
Joan H. MASTINY, Chief Counsel
VICTOR C. SMIROLDO; Staff Director and Counsel
THEODORE J. KAZY,, Assistant Staff Director
ROBERT E. Locx}{AERRT, Assistant Counsel
Roy C. MES , Staff Assistant
FRANCIS C. FORTUNE, Coordinator
SUBCOMMITTEE ON RETIRtIMENT AND EMPLOYEE BENEFITS
JEROME R. WAL IE, California, Chairman
FRANK J. BRASCO, New York LAWRENCE J. HOGAN, Maryland
DOMINICK V. DANIELS, New Jersey L. A. (SKIP) BAFALIS, Florida
CHARLES H. WILSON, California JAMES M. COLLINS, Texas
JOE MOAKLEY, Massachusetts
Ecc Offlcioj Voting Members
THADDEUS J. DULSKI, New York H. R. GROSS, Iowa
DONALD F. TERRY, Staff Assistants Room 406, Cannon Building-Ext. 56831
(II)
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CONTENTS
Statement of-
Bradley, George E., executive director, Organization of Professional Page
Employees of the Department of Agriculture_____________________ 43
Daniels, Hon. Dominick V., a Representative in Congress from the
the State of New Jersey---------------------------------------- 42
Dorson, C. L., president, Retirement Federation of Civil Service
Employees of the U.S. Government------------------------------ 38
Geller, Irvin I., general counsel, National Federation of Federal
Employees ---------------------------------------------------- 13
Hill, James, president, National Federation of Professional Organi-
zations, accompanied by George Bradley, vice president ---------- 28
Jaspan, Daniel, administrative vice president, National Asociation of
Postal Supervisors--------------------------------------------- 43
Mauro, Rose T., Brooklyn, N.Y------------------------------------- 41
McCart, John, operations director, Government Employes Council-- 3:;
Murphy, John J., president, National Customs Service Association_ 40
Nilan, Patrick J., legislative director. American Postal Workers
Union, accompanied by Edward L. Bowley, legislative aide, and
Dave Silvergleid, general executive vice president--------------- 19
O'Dea, James L., legislative counsel, National Association of Govern-
ment Employees ----------------------------------------------- 17
Rademacher, James H., president, National Association of Letter
Carriers, accompanied by John Swanson, director of health insur-
ance; Gus Johnson, director, city delivery services; and Joseph
Johnson, national business agent :-------------------------------- 23
Sadler, Carl K., legislative representative, accompanied by Stephen
A. Koczak, director of research, and James Lynch, assistant legis-
lative representative, American Federation of Government Em-
ployees ------------------------------------------------------- 10
Additional material.-
Report from Civil Service Commission on H.R. 3024, dated May 8,
1974 __
Copy of H.R. 3024, subject of hearing_____________________________ 5
(III)
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UNITED STATES CIVIL SERVICE COMMISSION
WASHINGTON, D.C. 20415
Honorable Thaddeus J. Dulski
Chairman
Committee on Post Office
and Civil Service
House of Representatives
Washington, D.C. 20515
Dear Mr, Chairman:
We'are voluntarily submitting to the Committee our views 'on H,R, 3024, a
bill "To amend the age and service requirement for immediate'retiremont un-
der subchapter III of chapter 83 of title 5. United States Code, and for
other purposes".
H.R. 3024 proposes, among other things, to amend the Civil Service Retire-
ment law as follows:
Permit immediate retirement when the sum of years of serv-
ice and age total at least 80 years,
Change the reduction in annuity of employees under age 55
from the present 2 to 1 percent reduction for each year
the employee is under age 55 at the time of voluntary or
involuntary retirement.
Include premium and overtime compensation as a part of
pay for deduction and computation purposes.
H,R. 3024 also contains provisions which would permit optional retirement for
an employee of an agency undergoing a major reduction in force at age 50 with
20 years' service or at any age with 25 years' service. However, these pro-
visions are similar to provisions recently enacted into law (Public Law 93-39
approved June 12, 1973).
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As already noted, H.R. 3024 would permit optional retirement of an employee
or Member of Congress with any combination of age and service totalling at
least 80. A related provision would liberalize the reductions applied to
certain "early retirement" annuitieslof employees and Members of Congress
who retire before age 55 and 60, resjectively. Currently, certain employee
annuities are reduced by 1/6 of 1 percent per month for months they are
under age 55; and Member,annuities ate reduced by 1/12 of 1 percent per month
for months they are between ages 55 and 60 and by 1/6 of 1 percent for months
they are under age 55. The result would be that both groups would have their
annuities reduced only by 1/12 of 1 ercent per month and only for months
under age 55.
The idea of using a combination of 80 years of age plus service, instead of
more meaningful age and service r_otitement tests, would go considerably be-
yond the present retirement law whict provides for optional retirement at or
after age 55 with at least 30 years of service, age 60 with 20 years of serv-
ice, and age 62 with 5 years of service. We believe the "combination 80" and
the related liberalization-of-reduction-provisions would induce experienced
employees with valuable talents who an readily obtain employment outside the
Government to leave Federal service t the time of their greatest potential.
Conversely, marginal employees who could not readily find outside employment
of older people, including retirees.! One aspect of this interest is expresseci
in the belief that for the economic good of the country, it is important to
utilize the skills and experience of our older citizens rather than to en-
courage early retirement. Emphasis is also placed on the psychological impor-
tance of keeping people engaged in u$eful work. Persons who subscribe to this
belief would find it difficult to understand why the Government, as an em-
ployer, should encourage its employes to retire at the peak of their produc-
tive capacity.
As indicated previously, H.R. 3024 wquld include premium and overtime compen-
sation as a part of basic pay for deduction and computation purposes: Public
Law 89-737, approved November 2,,196$, provides that premium pay for employees
in positions which require them regu arly to spend a substantial part of their
period of duty in a standby status C O.S.C. 5545(c)(l)) shall be considered
basic pay for Civil Service Retiremeit purposes and as annual pay for life in-
surance purposes. Employees-affectei are primarily Federal civilian fire-
fighters. Other employees qualify i$ they receive premium pay for standby
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The Commission is of the opinion that it would not be in the best interest
of the vast majority of employees to include overtime pay in basic pay for
retirement and related purposes. There are relatively few employees-who
work overtime on such a basis as would constitute it a part of theircareer
pattern. For those few employees who do, including overtime in basic pay
for retirement and other purposes could be justified on the grounds of
making their annuities commensurate with their pay. However, even if a
technical distinction could be made between irregular or intermittent over-
time and overtime of the career pattern type, employees in the former group,
not really understanding all of the implications of the situation, would
persistently urge that their overtime pay be included in basic pay for re-
tirement and other purposes.
The majority of employees who work overtime (even some of those performing
such work on a career pattern basis) would, if the law were otherwise, be
required to make retirement contributions (currently set at 7% of base pay)
on their overtime pay but often would not improve their retirement benefits.
This is true because most overtime is performed during the early and middle
stages of an employee's career, while the highest 3 years of salary used
for annuity computation purposes usually come at the end of his career when
no overtime is worked because of seniority or promotion to a higher level
position.
Conversely, if an employee performs very little or no overtime during his
early career, but performs a substantial amount of overtime during his last
three years before retirement, his salary for retirement purposes could
be distorted to the extent that he would gain a windfall in retirement bene-
fits at the expense of the retirement system. In any event,'the take-home
pay for most' members of the retirement system who work overtime would be
reduced without increasing their ultimate retirement benefits.
In some cases, the benefits will be increased because of inclusion of
overtime pay in the final average salary. In the future, the additional
contributions attributable to overtime Oay should offset this cost. However,
we cannot retroactively collect contiibution,3 on past overtime pay but must
provide benefits based on past. service. This creates an additional liability,
for past service, estimated at $3.7 billion.
If H.R. 3024 is enacted, we estimate that the unfunded liability of the Civil
Service Retirement System would be increased by $13.2 billion and the normal
cost would be increased by 0.96 percent of payroll. Under. 5 U.S.C. 8348(f),
the bill would be deemed to authorize appropriations to finance the increase
in the unfunded liability in 30 equal installments of $815 million each.
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1. Allowing employees to retire after attaining age plus service
aggregating at least 80 would increase the unfunded liability
by $8.8 billion (30 annual payments of $545 million) and in-
crease the normal cost by .881.
2. A1% reduction in annuity in lieu of the present 2% reduction
for each year the employee or Member is under age 55 would in-
crease the unfunded liability by $ .7 billion (30 payments of
$42 million) and increase the normal cost by .08%.
3. Inclusion of premium and overtime pay as a part of basic pay
would increase the unfunded liability by $3.7 billion (30
payments of $228 million) but would not affect the normal
cost percentage.
In view of the more than $13 billion cost of the bill, and the other
reasons mentioned in this report, the Commission is strongly opposed
to H.R. 3024.
The Office of Management and Budget advises that there is no objection
to the submission of this report and that enactment of H.R.. 3024 would
not be in accord with the program of the President.
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93o CONGRESS
XBT SUSION
. R. 3024
IN THE HOUSE OF REPRESENTATIVES
JANUARY 26,1973
Mr. WALOrE introduced the following bill; which was referred to the Com-
mittee on Post Office and Civil Service
A BILL
To amend the age and service requirements for immediate re-
tirement under subchapter III of chapter 83 of title 5, United
States Code, and for other purposes.
Be it enacted by the Senate and House of Representa-
2 Lives of the United States of America in Congress assembled,
3 That paragraph (3) of section 8331 of title 5, United States
4 Code, is amended-
9
10
(1) by inserting the
subparagraph (A) ;
(2) by striking out subparagraphs (B) and (C)
and inserting in lieu thereof the following:
" (B) remuneration for service performed as
an employee to whom this subchapter applies;";
34-047-74-2
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1 (3)) by striking out. "overtime pay,"; and
2 (4) by striking rut "pay given in addition to the
3 base pay of the position as fixed by law or regulation
4 except as provided by subparagraplis (B) and (C) of
5 this paragraph,".
6 St-c. 2. Section 83.26 of i itle 5, United States Code, is
7 amended-
8 (1) by amen ling subsection (a) to read as follows:
9 " (a) An employee who is separated from the service
10 after attaining an age plus service aggregating at least 80
11 years is entitled to an annuity.";
12 (2) by striking out subsection (b) and redesignat-
13 ing subsections (c), (d), (e), (f), (g), and (h) as
14 subsections (b) , (c) , (d) , (e), (f) , and (g) re-
15 spectively;
16 (3) by amending redesignated subsection (c) to
17 read as follows :
18 " (c) An employee who is separated from the service-
19 " (1) involuntarily, except by removal for cause on
20 charges of misconduct or delinquency; or
21 "(2) while his agency, or subdivision thereof, is
22 undergoing a major reduction in force, as determined by
23 the Commission, and who is serving in such geographic
24 areas as may be designated by the Commission;
25 after completing 25 years of service or after becoming 50
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years of age and completing 20 years of service is entitled to
an atntttity." ; and
(4) by amending the second sentence of redesig-
nated subsection (f) to read as follows: "A Member
who is separated from the service after attaining an age
Code, is amended by striking out "8336 (c) " and inserting
"8336 (b) " in lieu thereof.
(b) Section 8339 (h) of title 5, United States Code, is
plus service aggregating at least 80 years is entitled to an
annuity.".
SEC. 3. (a) Section 8339 (d) of title 5, United States
12 amended to read as follows :
13 " (h) The annuity ' computed under subsections (a)
14 (b) (c), and (f) of this section for an employee or Mein-
15 her retiring tinder section 8336 (a) , (c) , or (f) , or section
16 8338 (b) of this title is reduced by '%12 of 1 percent for
17 each full month the employee or Member is under 55 years
18 of age at the date of separation.".
19 SEC. 4. (a) Except as provided in subsection (b) of
20 this section, the amendments made by this Act shall become
21 effective on the date of enactment.
22 (b) The amendments made by the first section of this
23 Act shall become effective at the beginning of the first
24 applicable pity period which begins on or after the ninetieth
25 day following the date of enactrnciit of this Act.
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OPTIONAL RETIREMENT WHEN AGE AND LENGTH OF
SERVICE EQUALS 80 YEARS
WEDNESDAY, MAY 8, 1974
U.S. HOUSE OF REPRESENTATIVES,
COMMITTEE ON POST OFFICE AND CIVIL SERVICE,
Su-Boo mirrEE ON RETIREMENT AND EMPLOYEE; BENEFITS,
Washington, D.C.
The subcommittee met at 9:35 a.m., in room 210, Cannon House
Office Building, Hon. John Joseph Moakley (acting chairman),
presiding.
Mr. MOAKLEY. The Subcommittee on Retirement and )Employee
Benefits of the Committee on Post Office and Civil Service will now
come to order.
The chairman of the subcommittee, Jerome Waldiee will be unable
to be here this morning because of his important assignment on the
Judiciary Committee which I'm sure you gentlemen know are holding
hearings on some very important matters before them. I will read an
opening statement and then we will proceed with the witnesses.
Today the subcommittee will hear testimony on H.R. 3024, which
was introduced by Mr. Waldie and is substantially identical to bills
which were introduced by Mr. Dominick Daniels, Mr. Dent. Mr.
Rooney of Pennsylvania, Mr. St Germain, Mr. Roe, Mr. Hogan, and
Mr. Mo:ikley. In accordance with the precedent set by the enactment
of Public Law 93-39, to facilitate earlier retirement, H.R. 3024 would
increase the opportunities for the voluntary retirement of Federal
and postal employees and would include overtime and premium pay
for retirement purposes.
Under present law, an employee may retire voluntarily at age 60
with 20 years service or at age 55 with 30 years service. Existing law
also permits involuntary retirement or voluntary retirement, while
the employee's agency is undergoing a major reduction-in-force, after
25 years of service regardless of age or after 20 years of service at age
50. An annuity, which begins before the retiree has reached age 55 is
reduced by 2 percent for each year under 55.
H.R. 3025 would permit voluntary retirement at such time as an
employee's or member's age plus length of service aggregates 80. In
addition, the reduction in annuity for those who retire before age 55
would be lowered to 1 percent for each year the retiree is under age
55. The bill also provides for the inclusion ofovertime and premium
pay as "base pay" for deduction and average salary computation
purposes.
This legislation would make it more economically feasible for work-
ers with partial disability, or declining capacity or interests, to with-
(9)
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10
draw from active service, at some additional cost to the civil service
retirement system, but with an overall gain in Government efficiency.
In some instances, the present law discriminates against employees who
came into Federal service at an early age. Furthermore, this legislation
would encourage early retirement to ease the Nation's unemployment
problem by making room for new employees, as has been provided for
in recent private industry labor contracts.
Althonirh we have not received a eost report from the administration
on H.R. 3025, the administration claimed that similar legislation which
was considered in the 92d Congress would be extremely expensive.
However, this cost may be defrayed by the fact that those employees
who choose to retire earlier would receive an annuity based on a lower
salary than if the employee had waited for a few more cost of living
increases in salary.
In today's hearing we will hear from the various organizations rep-
resenting Federal and postal employees.
I think you gentlemen know that this committee voted last year 18
to 3 so that this committee is in favor of the concept of this bill, so
I think that probably most of your work will probably have to be done
before the Rules Committee where they were very difficult to work
with last year. So I would hope in view of this that your statements
wo,ll(l be submitted into the record and probably make a brief pres-
entiition of your existing position.
The first gentleman I'd like to hear from is Mr. Carl Sadler,
legislative representative of the American Federation of Government
Employees.
STATEMENT OF CARL K. SADLER, LEGISLATIVE REPRESENTATIVE,
AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES (AFL-
CIO) ; ACCOMPANIED BY STEPHEN A. KOG='AK, DIRECTOR OF
RESEARCH; AND JAMES LYNCH, ASSIST:..NT LEGISLATIVE
REPRESENTATIVE, AMERICAN FEDERATION OF GOVERNMENT
EMPLOYEES
Mr. SADLER. Thank you, Mr. Chairman.
First, let me apologize for Mr. Webber not being able to be here
this morning. I have with me this morning Mr. Jim Lynch on my
right, the assistant legislative representative, and Mr. Stephen Koczak
on my left, the research director of AFGE, and I will summarize my
statement, Mr. Chairman.
The American Federation of Government Employees, representing
over 650,000 Federal employees in exclusive recognition units who per-
form every kind of service for the Federal Government, has a deep
and continuing interest in legislation to provide equitable retirement
programs to all Federal employees. We feel that dedicated, career
employees are due no less than a just retirement system. In the interest
of justice such a system must meet the pressures and changing needs
of the times.
In our judgment, the very concept of the Federal service involves
in itself elements of equitable retirement. We have been gratified that,
in our American democratic system, our country has had the good
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fortune that national concepts have grown as to what constitutes Fed-
eral service, and what constitutes equity.
We have found it noteworthy that this growth in concepts has been
reflected most of all in the legislative bodies of our country, especially
the Senate and the House of Representatives, which have been espe-
cially responsive to new ideas and to changes in our national life.
We are especially grateful to Mr. Waldie for introducing H.R. 3024,
a bill which will indeed move toward bringing the civil service retire-
ment system up to date and more in line with the demands of the
times.
As you know, the present law provides for voluntary retirement at
age 60 with 20 years' service or at age 55 with 30 years' service.
Annuities are pursuant in the case of involuntary retirement after
25 years' service, regardless of age, or after age 50 with 20 years' serv-
ice. The annuity is reduced by 2 percent for each year the employee
is under age 55.
We feel that it is in the interests of all employees that the retirement
system be made more equitable with regard to age and time limita-
tions by passing II.R. 3024. H.R. 3024 changes section 8336, title 5,
United States Code, to allow employees whose age plus length of
service aggregates the sum of at least 80 years' entitlement to an
annuity.
Many employees would like to be able to retire while their health
allows them to enjoy life more fully. Many need to undertake pursuits
of a less taxing nature than full-time employment. Allowances for
early retirement would also provide positions and help to alleviate the
pressures of the great influx into the labor market of persons out of
our high schools and colleges. For these reasons AFGE believes that
I-I.R. 3024 will provide many productive changes in the retirement
system and we fully support these provisions.
An important question that arises concerning H.R. 3024 is : How
much will the program cost?
Unfortunately, the answers to this question are usually restricted to
how much the retirement program will cost the Government. Accord-
ing to an estimate, this legislation would increase the "normal cost" of
the system by a proximately 1 percent of the payroll, and the unfunded
liability by approximately $8.8 billion.
However, according to data obtained from the CSC, the retirement
fund in 1973 received $7.61 billion in contributions from employees
and agencies. This figure also includes interest and service credits. The
amount of cash payments to employees, including annuities, refunds,
and lump sum payments totaled $4.59 billion. After subtracting the
cash payments to employees from the amount paid into the fund there
is a remainder of $3.02 billion.
Back in June of 1973, we were told that a gap of 0.9 percent-nine/
tenths of 1 percent-between the annual income of the fund and the
future contingent liabilities on behalf of current employees existed.
Consequently, AFGE feels that the 0.9 percent overpayment is more
than sufficient to cover the additional benefits of this bill.
Parenthetically, I believe it would be an "eye opener" to your sub-
-committee to ask the Civil Service Commission what the present prac-
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tices of the Department of Defense are costing in terms of unfunded
liability. You are aware that the Department of Defense has been re-
sorting to retirements worldwide in its RIF programs based on 50
years of age and 20 years of service. In short, the Department of
Defense, with the consent of the Civil Service Commission, has been
operating an accelerated aggregate 70 retirement system. Now the
Department of Defense employs only about half of all Federal em-
ployees; that means the other half of the Federal employees have
been subsidizing this interim aggregate 70 system.
Another consideration which deals with costs more indirectly is the
morale and recruitment factor. Employees with less service often
leave the Federal service for other jobs because higher positions are
kept by employees who cannot retire. This discourages effort and ini-
tiative, and in the long run costs the Government.
The fact is, that when regarded from the standpoint of total costs
and total savings, such an accelerated retirement program would cost
little, if anything at all. In fact, it might even show savings.
We understand that H.R. 3024 amends section 8331 of title 5, United
States Code, by allowing all overtime and shift differentials to be added
to "basic pay" for computation of the employees retirement annuity.
This action would increase the base used in figuring retirement bene-
fits thereby raising the retirement rate for employees who work long
and unusual hours. AFGE endorses this increased benefit to devoted
employees who dedicate many hours over and beyond their normal
working schedules.
Moreover, we feel that the provision for the inclusion of premium
pay in "basic pay" is a long needed element in the retirement system.
Individuals who work unusual and irregular hours are in great need
of a more beneficial retirement system due to the very nature of their
careers.
While we support the change in age and service limitations and the
inclusion of premium pay in "basic pay" contained in H.R. 3024, we
object to the provision for a reduction in annuity for those who retire
while under age 55. We feel that such a penalty for retiring in advance
of age 55 is uncalled for. Retirees under 55 would, in effect, be helping
to vacate very much needed jobs and therefore making a great contri-
bution to the general welfare. Furthermore, under the 80-year formula,.
their length of service would be as long and probably longer than that
of some of their counterparts. A reduction in their annuity simply be-
cause of their lower age is inequitable and unjust. and we feel that
H.R. 3024 would be vastly improved if this provision found in section
3 were eliminated.
In recent years many Federal agencies have undergone reductions
in force in economy efforts. This fact makes the provision, found in
H.R. 3024. for entitlement to an annuity after 25 years' service-re-
gardless of age-or at age 50 after 20 years' service by employees
whose "agency is undergoing a major reduction in force, as determined
by the Commission" most relevant and worthwhile.
However, we would like to reiterate our suggestion that you con-
sider amending this bill to eliminate any reduction in annuities for
those retiring under age 55 in RIF situations. Considering the fact
that such an employee who is retiring in a RIF situation is indeed
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protecting another person's job, it seems to me that he is performing
a service to his fellow employee--and indeed the general economy-
and that being forced to suffer a reduced annuity is totally unwar-
ranted and may lead to his not choosing or even being financially able
to retire.
In summary, I would like to express AFGE's full endorsement of
the provisions in H.R. 3024 that allow employees to retire when their
age and length of service aggregate the sum of 80. We see this change
in the retirement system as a step toward alleviating many of the pres-
siires now involved in our labor force and our economy. Also we believe
that the very nature of our society has changed in such a way that
the present retirement system should be modernized.
AFGE feels that with the exceptions previously mentioned H.R.
3024 is a most productive and timely bill.
Mr. MOA$LEY. Thank you very much, Mr. Sadler.
The next gentleman is the president of the National Federation
of Federal Employees, Mr. Nathan T. Wolkomir.
STATEMENT OF IRVING I. GELLER, GENERAL COUNSEL FOR THE
NATIONAL FEDERATION OF FEDERAL EMPLOYEES
Mr. GELLER. My name is Irving I. Geller. I'm general counsel for
the National Federation of Federal Employees. Dr. Wolkomir could
not attend this hearing, and with the committee's wish to expedite the
hearing we would like to submit our prepared testimony for the record;
however, I would like to make a few remarks and comments concern-
ing this.
Mr. MOAKLEY. Without objection.
Mr. GELLER. We do endorse the bill. However, we are concerned
about the reduction in annuity provided for those people who retire
at an age below 55. We think the cost of the bill, if adopted, is some-
what exaggerated and not properly equated with the reductions in ex-
penditures that will result from these early retirements.
The Office of Management and Budget has a policy which agencies
are following rather diligently which commits them to hire people at
lower grades than those that are vacated, and in the process, assuming
people leave the Government based on the adoption of this bill, the
Government in its overall expenditures will effect economies.
Now we don't approve of the grade deescalation program the Office
of Management and Budget advocates but it is a reality of life and
the Civil Service Commission as well is encouraging agencies to iden-
tify grades at a lower level than those for which people occupy. There
is an important sociological concern and that is for those large num-
ber of employees who are affected by the grade reduction program or
who serve in dead-ended jobs who are just putting in time, so to speak.
The agency would be happy if they would leave. The morale of these
employees is demoralized. This would be a rather pragmatic way of
resolving these bad feelings that exist both between the management
which would like to see the employee retire and the employee who
would like to retire because of the limitations in their career develop-
ment.
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14
Further, many agencies are adopting rather onerous promotional
plans which require an employee to move about the country in order
to advance in their career. This, again, is a burden which many em-
ployees do not want to bear and we think this is a poor program, that
it has resulted in the advancement of mediocre employees. However,
with the adoption of the combination 80 bill, without the reduction of
the' l percent in the annuity calculations, I think Congress and this
committee can make a very important contribution to the improve-
ment of the personnel management as well as to effect really an
economical approach to the Government expenditures.
And - I stand ready to answer any questions you may have on our
testimony or the remarks I have made.
Mr. MOAKLEY. Mr. Geller, do you know of any negotiation in the
private sector that encompasses the change in retirement such as this
bill does?
Mr. GELLED. Well, I know that there are many municipalities and
State agencies, particularly the State of New York and the city of
New York, which has adopted a 55-year retirement program without
the substantial contributions that Federal employees make, and there
are some of the bigger private concerns in which there are no contri-
butions made who permit an early retirement program.
Mr. MOAKLEY. Would you happen to have any of the names of those
firms?
Mr. GELLED. No. I would be happy to submit those to the committee
at a subsequent date.
Mr. MOAKLEY. Would you, please. Thank you very much and thank
you for your testimony.
[Complete statement of Mr. Nathan T. Wolkomir follows:]
STATEMENT OF NATHAN T. WOL$OMIR, PRESIDENT, NATIONAL FEDERATION OF
FEDERAL EMPLOYEES
Mr. Chairman and Members of the Subcommittee, I am Nathan T. Wolkomir,
President of the National Federation of Federal Employees, the pioneer Federal
employee union and the largest independent union in the Federal service.
Mr. Chairman, I am always especially interested and concerned, and apprecia-
tive of the opportunity, of testifying on retirement legislation. The first major
piece of legislation successfully sponsored by the NFFE was the original Federal
Retirement Law of May, 1920. For more than 57 years, official spokesmen for the
NFFE have been appearing before Congressional Committees in support of
progressive Federal retirement legislation.
The bill under consideration here today, namely, H.R. 3024 qualifies without.
quibble or question for the designation of "progressive."
Thesponsors of this bill, as well as the other Members of the Committee, and
other Members who have sponsored related bills. are to be commended for their-
Interest in seeking the enactment of these measures.
The introduction of these bills indicates very clearly and emphatically recogni-
tion of the fact that especially at this time the need for liberalization of the
retirement law has become a very urgent imperative.
H. R. 3024 with its so-called "80 formula", liberalizing retirement for em-
ployees caught in a major reduction in force ... has the strong support of the
NFFE. We urge favorable action both here and in the Congress at this session.
The bill represents major objectives on the NFFE Program of Progress. It is.
designed, however, not only to benefit the employees but I am confident that it
represents the kind of legislation which is very much in the public interest and
in the interest of a sound Government service.
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That has been true over a long period of years. But it is even more graphically
true today than ever before in view of the whole national economic picture-
Moreover, equity to employees requires that in a period of radical, drastic re-
adjustment in the Federal service-in which literally thousands of faithful,
dedicated employees are impacted by reorganizations, transfers of functions,
reductions-in-force and increasing contracting out-that steps be taken to cushion
the impact upon them, upon their families, and upon the communities in which
they live.
These measures, which are very much in line with progressive actions taken.
in the area of retirement in the private sector, would be a long step forward in.
that right direction.
With respect to optional retirement after 30 years of service regardless of age,
as the Committee is aware, numerous bills to accomplish this wholly desirable and
progressive objective have been introduced over a long period of years. The
arguments in support of it are unassailable. Indeed, since one result undoubtedly
would be to open up certain positions to younger employees, the intransigent op-
position of the Administration is difficult to fathom.
I would like to state also, Mr. Chairman, in connection with our support of
these measures, that over the years the NFFE has been zealous (some few have
even occasionally accused us of over-zealousness) in our determination to
strengthen the Federal Retirement System and to accord our support to no pro-
posal which, however sincerely motivated, could in our judgment tend to weaken,
undermine, jeopardize, or otherwise impair the integrity of the system. For that
reason from time to time we have opposed measures which in our considered view
would be contrary to the best interests of the Government and its retirees and
their families .: . even though some such measures may have had rather wide
immediate and surface appeal. What I am saying is that our primary concern
at all times has been not only to see progressive legislation enacted . but:
legislation which is well conceived and which would be in consonance with sound
fiscal policy vis-a-vis the Retirement Fund.
Mr. Chairman, we believe that the bill under consideration here today ratee
approval on all vital counts, and we make this assertion on the basis of our care-
ful, analytical appraisal of the entire Federal retirement issue and currently
related 'natters already discussed herein.
H.R. 1266 was introduced previously by the Honorable Dominick V. Daniels
(D., N.J.). Congressman Daniels, long a champion of equity was then Chairman
of this Committee, and should also be commended for his efforts. His aim to.
modify the age and service requirements to facilitate the opportunities for volun-
tary retirement, has for many years been part and parcel of our "Program of
Progress."
Present retirement law provides for retirement at age 60 with 20 years' service
and age 55 with 30 years' service.
The bill would modify the age and service requirements by allowing an em-
ployee to exercise the right to retire from Federal employment, on an immediate
annuity, at such time as the sum of the years, months, and days of his attained:
age and length of creditable service aggregates at least 80 years.
The bill would also permit the optional retirement of employees, during an
involuntary separation, a major reduction in force in a department or agency,
under the existing involuntary retirement provisions of the civil service retire-
ment law-25 years' service or, after becoming 50 years of age, with at least 20
years' service. (A similar provision was formerly embodied in H.R. 9303 whereas
ILR. 3592 employed both the 30-year amendment and the 62/5, 60/10 year
formulas).
Finally, the proposed bill would lower the reduction in annuity under section
8336 or 8338(b) by reducing 1/12th of 1 percent for each month the employee
is under age 55 at time of either voluntary or involuntary retirement.
Preliminary estimates indicate additional unfunded liabilities of $12 billion-
Normal cost would increase by approximately 1% percent in accordance with.
advance information received from the Civil Service Commission.
The Administration opposes this legislation, but we question its cost analysis
In addition, II.R. 3024 provides equity for the long-service employee who due-
to no fault of his own is subject to a reduction in force and then. Is boxed into
'the situation of losing his only source of livelihood and restricted by age require-
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ment and law to voluntarily retire. Even the Administration is aware of this in-
justice and endorses "early out" recommendations on a crisis by crisis basis.
It is surprising however that cost factors become unknown and unused on those
occasions. That policy is hindsight not foresight !
The NFFE, as I have stated, strongly urges enactment of these measures.
At the same time, I bespeak the indulgence of the Committee to place on the
record, at least in brief, our view that. the time has come for a fuller considera-
tion of and action on a wider range of proposals which we put forward to update,
improve, liberalize, and strengthen the Federal Retirement System. We certainly
do not believe that enactment of the pending measures should wait upon com-
prehensive omnibus retirement legislation, but we do very strongly feel that it
would be in the national Interest for the Committee to take under close and
careful advisement the desirability of a multi-faceted legislative approach to
the many aspects of the Federal retirement law which need either some basic
revisions or, at the very least, some knowledgeable tidying up.
Mr. Chairman, we are, of course, glad to see that equitable provisions are
Incorporated in the subject bill. The NFFE favors the principle of equal treat-
ment for all Government retirees and their survivors based upon equal service
regardless of the date of retirement. The rights and benefits were partially
equalized for our senior citizens, those who retired prior to 1969 both with
respect to their own annuities and their survivors' annuities by Public Law
93-273. Thanks to you Mr. Chairman and the Members of this Subcommittee.
We also urge the enactment of legislation exempting annuities under the Civil
Service retirement laws from Federal and State income and inheritance taxes.
We cite in outline form below the overall improvements in the Civil Service
Retirement System proposed by the NFFE, all of which we feel are urgently
needed.
At the NFFE biennial national convention in September, 1972, our position in
support of these proposals was overwhelmingly approved. In this connection. I
may point out that of the many resolutions presented to that convention, the
subject drawing the largest single group of resolutions was retirement, indicative
of the employees' great interest in this issue. I am sure that you, Mr. Chairman,
and Members of the Subcommittee, already have heard from many of our Locals
and individual members, evidencing their deep interest and concern In Improve-
ments in the Civil Service Retirement System. The National Federation of Fed-
eral Employees regards liberalization in Federal retirement benefit's as absolutely
essential If the Government wishes to recruit and retain qualified personnel now
and in the years ahead. This Is most essential considering present trends to
politicize and contract out many merit system career positions. The NFFE pro-
posals for broad Improvement of the retirement system are outlined in a 11-point
program :
1. Government employees be permitted the option of retirement at full annuity
after 30 years of service regardless of age.
2. The enactment of legislation to obtain a calculation factor In the annuity
formula based on actual high three aggregate salary rather than base pay.
3. Enactment of legislation permitting a married employee retiring from serv-
ice to provide for his widow or widower without a deduction from his annuity.
4. The accumulative total contribution made by each employee to the Civil
Service Retirement Fund be reported to each contributing employee on an annual
basis.
5. Enactment of legislation to grant optional social security coverage with the
retention of the Civil Service Retirement System as a separate entity.
6. Upon the death of a female employee, the dependency clause on a survivor
annuity to the widower be eliminated.
7. The enactment of legislation exempting annuities under the Civil Service
retirement laws from Federal and State income and inheritance taxes.
8. When the survivor annuitant predeceases the retiree, the full annuity be
restored to the retiree.
9. That procedure be developed between the Civil Service Commission and the
Federal agencies whereby an application for retirement may be sufficiently ahead
of the effective date so that payment of annuities will actually begin on the first
day of the month following the specified date.
10. In addition to the foregoing, the rights and benefits should be equalized
for those who retired prior to July 18, 1966 with those who retired on and after
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July 18, 1966 both with respect to their own annuities and their survivor an-
nuities. An equalization should also be made in the annuities of those who retired
prior to October 11, 1962 and who elected a reduced annuity in order to provide
a survivor annuity for a spouse. If legislation to cover the foregoing cases were
enacted it would afford no greater rights and benefits than those who retired on
and after July 18, 1966. It is fair and equitable to accord similar rights and bene-
fits to these earlier retirees.
11. Full service creditation to National Guard Technicians for their service
within the National Guard prior to January of :L969.
Mr. Chairman, the NFFE is grateful to you and to the Members of the Sub-
committee for your constructive interest in the areas covered by this measure.
While we have made certain suggestions which we earnestly believe improve
the proposed legislation, I wish to make it quite clear that the NFFE is appre-
ciative of the great amount of work which has gone into the preparation of
this legislation and, of paramout importance, the motivation of the legislation,
which is considerate of the interests of the Federal employees, the Govern-
ment, and the public interest as a whole.
I should like to emphasize also that there is an urgency about this matter
which we hope will be taken into full account by both Houses of Congress and
by the Administration. There is a no more important aspect of employee-manage-
ment relations than the character of a retirement system to which employees,
and thin families can look forward. We must bring the Civil Service Retire-
ment System up to date-completely up-to-date in all respects-if it is to fully
benefit not only the employees but the Government and the people of this country.
A substantial increase in present annuities depending upon the amounts re-
ceived should be granted to retirees and survivors. I am certain that they appre-
ciate the one percent added to the cost of living increase as provided in recent
legislation. There are retirees and survivors now living on less than subsistence
incomes. The Subcommittee should consider increasing the one percent addi-
tion to the cost of living increase.
It is our hope that the proposed legislation now under consideration will be
passed in this session. Early action would, in our judgment, have far-reaching
beneficial effects, morale-wise as well as in the other practical advantages which
this legislation would provide. Many employees will make important decisions
regarding their retirement plans as a result of the proposed measure, if enacted.
Mr. Chairman, it is respectfully urged that our views be carefully considered.
I appreciate the opportunity to have presented them in behalf of the NFFE.
Mr. MOAKLEY. The next gentleman we will hear from is Mr. James
O'I)ea, legislative counsel, National Association of Government
Employees.
STATEMENT OF JAMES L. O'DEA, LEGISLATIVE COUNSEL,
NATIONAL ASSOCIATION OF GOVERNMENT EMPLOYEES
Mr. O'DEA. Thank you very much, Congressman Moakley.
The National Association of Government Employees is the largest
independent public sector union in the United States, and as such, has
long been in favor of improving the retirement program for Federal
employees.
We have a prepared statement for the record so I will briefly sum-
marize what I have to say.
We are very much in favor of this legislation. We feel that the age/
service retirement provision of this nature will open up employment
for younger employees, allowing many employees who would like to
retire to do so at this time. It would also give greater opportunity for
upward mobility, increasing morale and improving efficiency of the
work force.
At the same time it does not require an older employee to leave his
job. The person who is able to comply with the job requirements may
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'stay in his particular occupation and provide service for the Govern-
anent and give him something to do. If the man is capable or interested
in second employment he can stay with the Government. He doesn't
need to take this retirement, and his retirement will increase as it goes
along.
We are very much in favor of the combined "80" formula. We are
very much in favor of the premium pay being added to the computa-
tion. However, we would request that the committee take a look at
H.R. 2 which is before the House Committee on Education and Labor
which provides for private sector employees, and allows for vesting.
There are several different provisions in H.R. 2 as amended by the
senate and as presented to the House. One would provide for partial
vesting at 5 years, 10 years and full vesting at 15 years. The others
provide for full vesting after 10 years of service, and another pro-
viding for 50 percent vesting after the employee reaches 45 years of
age and 10 percent a year thereafter up to 100 percent. At a time
when the private sector is finally being required to insure pension
benefits the Federal Government can do no less.
At the same time that NAGE proposes this vesting it must oppose
any reduction in annuity based upon the arbitrary age of 55. Although
we are in favor of the greater part of this legislation that both you
and Chairman Waldie and others have introduced, we would request
that they eliminate the one-twelfth of 1 percent per month reduction
in the employees annuity for each month the employee is below age 55
at retirement. I feel that's a discriminatory act and an arbitrary choice
of age and it really discriminates against a person because of age,
which is against the spirit of the Fair Labor Standards Act.
We also request that the multiplier presently adjusted 11/2 percent,
13/4 percent and 2 percent be made a blanket 2 percent to provide more
equity.
In closing, I would like to thank you very much for this opportunity
to testify.
Mr. Monrci.rY. Thank you very much, Mr. O'Dea.
[The complete statement follows:]
STATEMENT OF JAMES L. O'DEA, LEGISLATIVE COUNSEL, NATIONAL ASSOCIATION OF
GOVERNMENT EMPLOYEES
Mr. Chairman and Members of the Subcommittee, the National Association of
Government Employees is the largest Independent public sector union in the
United States. We have long been In favor of legislation that would provide
some more reasonable retirement benefits for those employees of the Federal
Government covered by Title 5, Section 8331, et al than they presently receive.
The benefit to both the employee and the Government are myriad, especially in,
light of recent legislation whereby the FLSA applies to Federal Employees. This
legislation provides for a limited "vesting" and does not specifically discriminate
against employees due to age. There is, of course, a need to establish some age
certain when retirement must be taken but it is a more equitable system to allow
employees to retire over a reasonable period of time based on age and time in
service and also to allow those employees who got a later start to still receive
benefits in their retirement years.
In addition, this opportunity for older employees to retire will often cause the
labor market to open for younger employees as well as giving greater opportunity
for upward mobility, increasing morale and often improving efficiency of the work
force.
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A younger man is more likely to take an active interest in a career that seems
to provide a real future for him. The present policy of allowing so-called early
retirements only in time of RIF does not lead to increased employee morale and
efficiency. The features of Chairman Waldie's bill would make Federal service
more attractive to many employees. Those who feel the interest and have the
ability to continue working past their "S0" tptal could, in most cases ; while
those who clad not have one or the other could retire at a reasonable rate thus
opening up, as earlier stated, the job market.
Although we wholeheartedly support the principle of this bill, we would pro-
pose some additional sections. There are no time vesting aspects of the legisla-
tion before the committee except as the law now reads in regards to RIF's
where there are rights after twenty years. NAGE proposes vesting after five (5)
years of either all or a percentage of the credits earned at that point. This latter
approach is the one used by the Senate Committee on Education and Labor in
S. 4200 Sec. 221 (now H.R. 2 as amended by the Senate) for private sector
employees. It provides for 25% of credits earned vesting at five (5) years of
service up to 100% at fifteen (15) years. The original House version of H.R. 2
in Section 203 (still alive) gave three vesting options: the one above; S. 4200,
Sec. 221; one providing for 100% after ten (10) years; and another providing
for 50%o vesting after the employee reaches 45 years of age and 10% a year
thereafter up to 100% ; i.e., at age 50. At a time when the private sector is finally
being required to ensure pension benefits the Federal Government can do no less.
At the same time that NAGE proposes this vesting it must oppose any reduc-
tion in annuity based upon the arbitrary age, 55. H.R. 3024 proposes a reduction
of 1/12 of 1% per month in the employees annuity for each month the employee
is below age 55.at retirement. This is not as bad as the 2% in effect for involun-
tary retirement but it is still reverse age discrimination because an employee
started Government service at a younger age and stayed on to age 50 to 54 and
is now ready to retire. This proposal then seems both unfair and unnecessary.
If an employee is doing a good job and enjoys his work he will very probably
stay on through age 55 but he should not be required to.
In conclusion, let NAGE say that we wholeheartedly endorse all legislation
that would provide for this combination "80" retirement. We would, of course,
prefer the amendments we have suggested as well as the change of multiplier to
2% for all years as has often been proposed previously just as the decrease in
annuity under age 55 has been denounced.
Mr. MOAKLEY. The next gentleman we will hear from is Mr. Pat
Xilan, legislative director, American Postal Workers Union.
STATEMENT OF PATRICK J. NILAN, LEGISLATIVE DIRECTOR,
AMERICAN POSTAL WORKERS UNION, ACCOMPANIED BY
EDWARD L. BOWLEY, LEGISLATIVE AIDE; AND DAVE SILVER-
,GLEID, GENERAL EXECUTIVE VICE PRESIDENT
Mr. NILAN. Thank you very much, Mr. Chairman, and we would be
del ighted to cooperate with the committee in submitting our statement
for the record and making a few comments.
Mr. MOAKLEY. I know you gentlemen have a lot of work to do and
I think your main attention should be turned on the Rules Committee.
Mr. NILAN. I am delighted to be here with our legislative aide,
Mr. Edward Bowley, and also Mr. Dave Silvergleid, our general exec-
utive vice president, and we do suggest for the record that similar
legislation has really been pending before the Congress since 1970
when our good friend, Congressman Daniels, first introduced such
legislation. So we feel it is long overdue.
We do have one reservation about the legislation, Mr. Chairman,
which gives us great concern. That is the inclusion of premium pay,
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overtime pay, night differential, as I understand it, for retirement
purposes. Our concern is that as far as the postal worker is concerned
it's true that while in his younger years they do work overtime and
receive night differential and other shift differential premium pay.
However, since retirement, benefits are based on the high 3 years of
average salary for computation purposes we believe that the average
postal worker will have 30 or 35 or 40 years of serv ice at time of retire-
ment and frankly they're going to be working minimal overtime and
no night differential because they will be senior enough to generally
have daytime jobs. So we question whether it's in their best interest
to be paying the 7 percent contribution to the retirement fund for 30,
35 or 40 years on any overtime or night differential they might have
earned and then, during their last 3 or 4 years when they would no
longer be working overtime or night shifts and therefore no extra pay
would enter into the computation of their final annuities and they
would receive no increase in their annuities.
So, Mr. Chairman, we suggest the committee review this provision
of H.R. 3024 very carefully and consider whether that provision per-
haps should be deleted insofar as postal workers are concerned.
Also, Mr. Chairman, we join with our other sister organizations in
opposing any reduction in annuities for those retiring under age 55.
We point out on page 4 of our statement a number of cities in which
we refer to the Municipal Finance Officers Association Committee re-
port and which demonstrates that there is a substantial trend toward
earlier retirement in the public sector. So we do urge the committee to
take that into account.
Finally, Mr. Chairman, we would like to point out that H.R. 9257
which this committee reported and the House voted on favorably last
July recognized in effect that approximately 0.9 of 1 percent of payroll
was in excess of the funds needed to provide existing retirement bene-
fits. Our union did not support the legislation at that time because we
felt that that percentage of additional income would be better used
to extend employee benefits rather than reduce the contribution rate.
Quite frankly, we were and are vigorously opposed to the Civil Service
Commission being granted the right to adjust rates at their own dis-
cretion even though there was some provision for congressional over-
sight. We suggest that H.R. 9257 which is presently pending before
the Senate Post Office Committee that no final action be taken on this
legislation.
To be quite honest with you, the nine-tenths of 1 percent or what-
ever the exact amount might be better used to finance improved re-
tirement benefits and certainly this legislation, I-I.R. 3024, with the
amendments we have suggested or with even a temporary solution
being optional retirement with 30 years of service regardless of age,
assuming the combination 80 bill may not be the final measure to
come out of the committee.
We do appreciate the interest by yourself, Mr. Moakley, and the
members of the committee, in this regard andhopefully we will look
forward to early action by the committee.
Mr. MOAKLEY. Thank you. I think you realize that Congressman
Daniels on his bill does delete that overtime provision.
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Mr. NILAN. We had talked to Congressman Daniels about it and we
appreciate his bill.
Mr. MOAKKLEY. But it would be true in the post office.
Mr. NILAN. As far as the postal workers we represent, we would
support Congressman Daniel's bill.
Mr. MOAKLEY. Thank you very much for your presentation.
[Complete statement follows:]
STATEMENT OF PATRICK J. NILAN, LEGISLATIVE DIRECTOR, AMERICAN POSTAL
WORKERS UNION (AFL-CIO)
Mr. Chairman and Members of the Subcommittee, for the record, I am Patrick
J. Nilan, National Legislative Director of the American Postal Workers Union
(AFL-CIO) with offices at 817--14th Street, N.W., Washington, D.C. I am very
pleased to appear before the Subcommittee this morning with our Legislative
Aide, Edward L. Bowley, and General Executive Vice-President, Dave Silver-
gleid, as we present our testimony concerning H.R. 3024, which proposes to
amend the Civil Service Retirement Act.
We speak in behalf of more than 400,000 postal employees, for whom Nye are
the Exclusive National Representative for labor-management relations and col-
lective bargaining with the U.S. Postal Service. Our membership is employed
in post offices in all 50 states, the District of Columbia, Puerto Rico, Virgin
Islands and Guam.
The American Postal Workers Union (AFL-CIO) wishes to take this oppor-
tunity to commend you, Mr. Chairman, and members of your Subcommittee for
scheduling hearings on a matter which is of considerable importance to all
Federal employees.
We believe H.R. 3024, a bill that will amend the age and service requirements
for immediate retirement under the present retirement act, should receive top
priority by the full Committee with every effort to enact the bill in the 03rd
Congress.
Mr. Chairman, we also want to express our appreciation to the gentlemen from
New Jersey, Mr. Dominick Daniels, and Maryland, Mr. Lawrence Hogan, dis-
tinguished members of the House Post Office and Civil Service Committee for
introducing H.R. 437 and H.R. 9886 respectively. Other of your colleagues who
have introduced identical bills are also commended for their actions by the
American Postal Workers Union. They are Mr. Dent (Pa.), H.R. 5494; Mr.
Rooney (Pa.), H.R. 6011; Mr. St Germain (R.I.), H.R. 8504; and Mr. Roe (N.J.),
H.R. 8937.
II.R. 3024 provides :
An employee who is separated from the service after attaining an age
plus length of service aggregating at least 80 years is entitled to an annuity.
An employee who is separated from the service-(1) involuntarily, except
by removal for cause on charges of misconduct or delinquency; or (2) while
his agency is undergoing a major reduction in force, as determined by the
Commission; after completing twenty-five years of service or after becoming
fifty years of age and completing 20 years of service, is entitled to an annuity.
Reduction by 1/12 of 1 percent for each full month the employee is under
55 years of age at the date of separation.
The American Postal Workers Union endorses these principles of H.R. 3024,
but opposes any reduction because of age at the date of separation.
We are grateful for any improved benefits such as those proposed in II.R.3024.
However, we believe a combination of 80 years' service and age justifies a full
annuity. We also seek such provisions as:
Elimination of all deductions for widows' and dependents' annuities as
presently proposed in S. 628.
Extension of all benefits to former employees now on the retirement rolls.
All salary increases to be immediately reflected in the retirement benefits
to all annuitants.
Tax exemptions for all annuitants.
In addition to the above, Congressman Frank Brasco, also a distinguished
member of this Committee, introduced II.R. 3930, a bill that would permit op-
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22
tional retirement after 20 years of Federal service with 50% of an annuity. The
American Postal Workers Union strongly supports this bill.
The membership of the American Postal Workers Union has designated earlier
retirement legislation and particularly, a 20 year optional retirement opportunity
as a "Paramount Legislative Goal" of our union. This Is significant in view of re-
assignment and relocation of postal workers in recent years (and it may con-
tinue indefinitely) as the result of operational and mechanized changes within
the U.S. Postal Service.
We should like to point out that the U.S. Postal Service continues to face
major difficulties in attracting and retaining desirable personnel in many areas
of the country. 11.1t. 3930 would also, in our opinion, go a long way in helping to
reduce the staggering numbers of unemployed in this nation.
Retirement benefits which were formerly an important factor in mitigating
the recruiting problem of the postal service, now loom as much less meaningful
in view of increasing comparable and better retirement systems in the private
sector-in many instances with no cost to employees. New York City for example,
provides its employees with the same provisions outlined in II.R. 3930.
In addition, based on a sample prepared by the Municipal Finance Officers'
Association Committee on Public Employees Retirement Administration
(AFCSIIE), the following municipal and county employees have similar retire-
ment programs:
Baton Rouge, La.-Normal retirement for after 30 years of service: age 55
with 2.5 years of service, or age 00 with 20 years of service.
San Diego County, Calif.--Early retirement, 30 years of service or age 50 with
ten years of service.
Detroit, Mich.-Early retirement, 25 years of service.
Los _Angeles, Calif.-Early retirement, 30 years of service or age 55 with ten -
vears of service.
Miami, Fla.-For early retirement, 20 years of service.
ltawaii.-Early retirement for after 25 years of service.
Where the Committee refers to "NORMAL" retirement, an employee draws his
full annuity and where the reference is made to "EARLY" retirement, there
is an annuity reduction based on a flat percentage or by actuarial determination.
In any event, the American Postal Workers Union opposes any reduction to an
employee annuity as long as he has 20 or more years of satisfactory service.
As a postal union representing employees who have a considerable stake in
the Civil Service Retirement System, we are deeply concerned with the need for
ninny improvements in the system and know that the members of this Committee
share those concerns.
We submit that when a Federal employee has concluded 20 or more years
of dedicated and loyal service, lie or she should be given the opportunity to
retire optionally, without any reduction in the annuities which they have so
richly earned.
We make a special plea on behalf of retirees. The fact is that the nominal
value of annuities has consistently dwindled in practice, due to the steady in-
crease in the cost of living, increases which have never been properly offset over
the past years. We believe that the Government should assure equal annuities
for all retirees and survivors, based on equal service regardless of the date of
retirement of the employee. While past legislation attempted to accomplish
nominal comparability in salary for active employees, no such comparability
is assured retirees.
A large number of retired workers now receive monthly benefits below $200.
More than 50% of all eligible survivors receive less than $1.00 a month. The pres-
ent cost-of-living formula for adjustment of dollar benefits operates so that an-
nuitants must necessarily be deprived of many necessities while costs are in-
creasing. When they receive a cost-of-living increase, it is not sufficient to pick
up the slack for expenditures they have incurred while living costs were going up.
Mr. Chairman and Members of the Subcommittee, may we express our sincere
appreciation for your interest in seeking a proper solution to the inequities pres-
ently in existing law, and for this opportunity you have given us to express our
views on behalf of the more than 400,000 postal employees represented by the
American Postal Workers Union (AFL--CIO) employed in Post. Offices through-
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out the United States and possessions thereof. We will be happy to respond to any
question you may have concerning our testimony. Thank you.
Mr. MOAKLEY. The next gentleman we will hear from this morning
is Mr. James Rademacher, National Association of Letter Carriers.
STATEMENT OF JAMES t. RADEMACHER, PRESIDENT, NATIONAL
ASSOCIATION OF LETTER CARRIERS, ACCOMPANIED BY JOHN
SWANSON, DIRECTOR OF HEALTH INSURANCE; GUS JOHNSON,
DIRECTOR, CITY DELIVERY SERVICE; AND JOSEPH JOHNSON,
NATIONAL BUSINESS AGENT
Mr. RADn 1ACIiER. Thank you, sir. In keeping with your desire for
brevity and still making the, point, I'd like to briefly state that I'ni
the president of the National Association of Letter Carriers and that
on my left is the director of our health insurance who knows about
the number of people who are retiring these (lays for reasons of ill
health, Mr. John Swanson. On my right, Mr. Gus Johnson, the direc-
tor of our city delivery service; and on my far right, Mr. Joseph John-
son, national business agent for this area.
We would respectfully request that our entire statement be included
in the record.
Mr. MoAKLEY. Without objection.
Mr. RADEMACIIER. I think that the significant point in this statement
relates to the tremendous number of people who leave the Government
service after once entering before the time of retirement. I believe
that this unusual figure has not been brought to the attention of the
Congress before and I truly believe that it is costing the Federal Gov-
ernment and the civil service fund considerable moneys.
So if we begin on page 8, if you will, the process of aging is a very
personal thing and should he observed on an individual basis. Obvi-
ously a man or woman who is washed up at 45 years old is not doing
the Federal service any good by working another 20 years before
retiring. The quicker such a person can retire with dignity and reason-
able security, the better for a11. concerned.
There is another point I would like to stress here. According to Civil
Service Commission figures, it very well may be true that 25-year
retirement at any age will be only half as expensive to the Govern-
ment than the "magic 80" retirement formula.
The Civil Service'Commission authorities estimate there are 186,000
Federal employees eligible for immediate retirement under the present
system.
Under the 25-year retirement regardless of age, the number of Fed-
eral employees eligible would rise to 223,000.
But under the "magic 80" formula, 373,000 Federal employees would
be eligible to retire, and it is estimated that 13 percent would exercise
their option immediately.
The average entrance age under the retirement system today is 31
years-a fact which lends considerable weight to the statistics I have
just mentioned.
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Mr. Chairman and members of the committee, I know some people
look with horror at the idea of a noncontributory retriement program.
They feel its cost would be out of sight. But, such people are quite
mistaken.
The Civil Service Commission, in April of last year, analyzed the
major employee benefit programs-including retirement--of six major
private employers and five major public employers.
All the major employers, and one of the public employers, conduct
retirement programs without asking the employee to contribute any-
thing. They were the Pacific Gas &- Electric Co., IBM, General Motors.
Du Pont, Aetna, 11.S. Steel and New York State.
The public employers analyzed who do insist upon employee con-
tributions were Georgia, Michigan, Wisconsin, and the city of Balti-
more-none of these public employers were deducting as much from
their employees' pay as is the U.S. Government from its employees.
Mr. Chairman and members of the committee, you will remember
that in June of 1972 Postmaster General Klassen announced a policy
which would (1) permit optional retirement of all postal employees
who are 50 years of age and had 20 years of service or (2) have 25
years of service at any age.
This program was undertaken in the interest of economy and in-
eolved no coercion on the part of management. Naturally, we did not
oppose the. program, though we, did make numerous constructive sug-
gestions which would make it more palatable to the workers. Some of
the. suggestions were adopted.
There was no great scramble for the exits. As I remember, less than
2 percent of the work force chose to take advantage during the first
8 months. It was an orderly egression.
If the U.S. Postal Service could do this in 1972 in the interest of
economy, why do they feel they cannot let employees opt for early
retirement now?
In short, Mr. Chairman, we support the "magic S0" formula if there
is no more generous alternative available. We seek 25-year retirement
without contributions from the employees. Our members are even ask-
ing 20-year retirement. We know the realities of the situation; all we
ask is that our members get the very best the traffic will bear-and I
am convinced the traffic will bear a grrea.t deal more than it is bearing
right now.
Once again, Mr. Chairman and members of the committee, thank
you for your courtesy and your helpfulness in asking us to testify be-
fore you and state our hopes and our preferences. We are very grate-
ful for what you have done in the past and for what you are trying to
do now.
And now I would be happy to try to answer any (Iuestions you might
have.
I might just conclude by stating that there is a great demand today
among our membership for early retirement. In fact, where wages
previously had the priority, today the talk in the entire field, whether
it be the young rookie letter carrier or the senior letter carrier, is
"When can I get out," because the pressures have become unbearable
and as we testified yesterday before another subcommittee, a number
of our senior carriers who could retire under the legislation now pend-
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ing before this committee are having their assignments eliminated and
we think that now is the most appropriate time for the Congress to-
take action in regard to this early retirement.
Mr. MoAKLEY. Thank you very much for your presentation.
[Complete statement follows:]
STATEMENT OF JAMES H. RADEMACHER, PRESIDENT, NATIONAL ASSOCIATION OF
LETTER CARRIERS, AFL-CIO
Mr. Chairman and Members of the Committee, for the record, my name is
James H. Rademacher and I am President of the National Association of Letter
Carriers (AFL-CIO), with headquarters at 100 Indiana Avenue, right here in
Washington, D.C.
I am joined here today by all of our national officers as an expression of our
total support for liberalizing amendments to the U.S. Civil Service Retirement
Act.
We welcome this opportunity to discuss retirement with you. The NALC is
unique among postal unions in that we permit retirees to maintain full member-
ship rights. They pay reduced dues and have all the privileges of an active
member except that of holding national office. We have approximately 220,000,
members and about 30,000 of our members are retired. We also have 2,500 who.
have been members more than 50 years and are considered life Gold Card mem-
bers.
Our interest in retirement, therefore, is far from academic. Our retired mem-
bers keep us well informed about their views and 'they are not hesitant about
needling us if they feel we are not doing enough for them.
However, the trend today is to seek earlier retirement. A great many of our
members-if they have any seniority at all-want out as soon as possible. Liberal-
ization of the retirement laws stands very high on the agenda. To many it is
even more important than pay. They seek a greater flexibility than they have,
now.
I think it goes without saying that the National Association of Letter Carriers
supports the Daniels 13111, HR 3024. We support the "Magic 80" formula and
hope this legislation will gain your approval and the approval of the entire
Congress.
Nonetheless, I would be less than candid if I did not add that we think the
"Magic 80" formula is just a first step toward the ideal retirement program
we are seeking. Our membership, in convention assembled, has mandated us to
seek a non-contributory program which will permit retirement after 25 years,
regardless of age.
Actually, Mr. Chairman and Members of the Committee, there is nothing sacred
about the age of 65 for retirement. The figure 65 was more or less pulled out of a
hat in Bismarck's Germany, approximately 100 years ago. The German govern-
ment of the time set up the world's first retirement program and, lacking statistics
and precedents, adopted the age of 65 or more or less as an experiment. The
experimental age limit lasted almost a full century and acquired a kind of spuri-
ous aura of sanctity which, I sumbmit, should be objectively examined and then
discarded. Now, with a 60-year retirement age, we have not really advanced
much beyond Bismarck's day.
There is a growing body of evidence indicating that 25 years of service is long
enough for a career. The Civil Service Commission, for instance, tells us that
one out of every three Federal employees who retired last year did so for
disability.
In a study covering 7.8 million workers, the Bankers Trust Co., of New York
recently reported that 90 percent of all the major labor-management contracts
negotiated in this country during the 1965-70 period called for retirement before'
65 years of age. The report also says : "Although ages 55 to 60 continue as the
standard early retirement ages in requiring employees to meet an age require-
ment, there has been a dramatic shift of emphasis from age 60 to 55 in the,
1965-1970 period."
The study also points out that the proportion of older workers in the labor-
force is decreasing rapidly. Only twenty years ago, a majority of all men over.
65 were still in the work force. Now only one-quarter are and the Bureau of the,
Census estimates this figure will be reduced to one-fifth by 1980.
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According to the Bureau of Labor Statistics, by 1977--just three years from
now-there will be fewer people over 45 in the work force than out.
Once again-as in so many areas of employee relations-the Government is
falling behind the private sector when. it should be at the head of the parade,
the ideal employer, setting an example for the entire nation.
In the letter carrier craft, as I have pointed out before on numerous occasions,
we are getting more than our share of heart attacks. We are also getting an in-
crease in such occupational ailments are varicose veins and fiat feet. I am con-
vinced that most of these ailments-and most of these disability retirements-
have come about because the letter carrier was simply too elderly to be perform-
ing such a hazardous and strenuous job.
And we are going to find this situation more aggravated in the future. The
Postal Service management is installing a monstrous innovation called Central-
ized Mark-up. The idea is to take office work away from the letter carrier and
to give it to some clerks and a computer. What the carrier loses in office time
must be added to his route, so he will be carrying 6 to 8 percent more mail on his
back and he will have to carry it 6 to 8 percent farther. It is logical, I think, to
expect a 6 to 8 percent increase in disabilities.
I cannot resist commenting on what the United States public-the patrons of
the Postal Service-are losing because of this mechanical so-called "improve-
ment." The retentive memory of the letter carrier has been replaced by an in-
adequate and poorly-understood computer and the havoc this has caused in the
service is tremendous.
I might add that in many cases letter carriers are being held back to correct
the mistakes of the computer which never would have been committed if the
letter carrier had done the job in the first place, and then they still must perform
the additional 6 to 8 percent work on the street.
As matter of fact, with the increased emphasis on productivity in the United
States Postal Service, there is an increase also in mental and physical effort
.and a tendency for the individual to deteriorate at a more accelerated rate than
under more relaxed conditions.
Because of this, it is really to the benefit of the Government if these elderly
workers are permitted to retire at an earlier age, with full benefits, so younger
men and women can enter the service.
We have a serious unemployment problem in this country. Permission to retire
earlier would help considerably to alleviate this disturbing condition.
I also feel that early retirement will create greater efficiency in the Postal
Service. It would be an inducement for talented young men and women to join
the post office, . eager young people who would grow with the Service and
adapt themselves to the new techniques which will eventually revolutionize the
mails.
Then there is another valid reason to support early retirement. We all know
it is impossible to run an agency competently if there is too high a turnover of
personnel. The Post Office has always been a conspicuous leader in the turnover
field and that may well be one of the reasons why it has never been a model
of efficiency. During World War II, for example, the turnover one year reached
30 percent.
Throughout Government we have far too high a turnover of personnel. People
get discouraged and decide not to wait to reap the benefits of the retirement
program. The goal is too distant ; the rewards too meager.
In 1970, the Civil Service Commission found that 89.2% of all males entering
Government service at the age of 20 would withdraw before reaching retirement
age, and 94.8% of the females would do likewise.
Of those entering the Service at age 30, 70.2% of the males would quit before
retirement and 84.2% of the females.
And, of those coming in at age 40, 62.7% of the males and 60.6% of the females
would leave prematurely.
Mr. Chairman, these figures, taken from the Fiftieth Annual Report of the
Board of Actuaries of the Civil Service Retirement System, dated January 3, 1973,
will be attached as an Appendix to this statement, if that is satisfactory with you.
We don't have a retirement program in the Civil Service today so much as a
quitting program.
I submit, Mr. Chairman and Members of the Committee, that the turnover
figures would be much lower if the retirement age were lowered. To many people
today, the age of 60 seems far too remote. But, if we could make the target con-
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siderably more accessible, I am sure thousands of Federal employees would stay
on working in order to realize the full benefits of retirement. This would make for,
a more stable work force and it would benefit considerably the morale of the
,employees.
Of course, the concept of early optional retirement is not a new one in Govern-
mental circles, During the Great Depression, Congress approved legislation along.
these lines in order to provide more jobs for young unemployed people. The nation
is not yet in such bad straits as it was in the 1930's, but unemployment is still far
too high and approval of early retirement legislation could not help but alleviate
the conditions of today.
I am quite aware that there are some who argue that passage of an early
retirement Bill would open the flood gates and let thousands of capable and expe-
rienced employees out of government service.
I simply do not believe this is true, I can't visualize thousands of essential
employees quitting their jobs at age 50. 1 do visualize many others-not so skillful,
not so energetic-seizing this opportunity to leave Federal employment with
dignity and with pride intact.
It is true that on June 30, 1973--when the 6.1%%o increase in annuities was avail-
able, 80,000 Federal workers voluntarily retired. But, on December 31, 1973, when
the 5.5% Increase was announced, only 10,000 retired.
The effect of inflation on set incomes and the increased difficulty of middle-
aged persons finding part-time employiiient had taken its toll.
I think the major trouble with the 60-year age limit is its rigidity. It ignores
the idiosyncracies of geriatrics. Some people are vigorous and useful at 70, 75 or
even 80 years of age. Others are washed up at 45 or 50.
The process of aging is a very personal thing and should be observed on an
individual basis. Obviously a man or woman who is washed up at 45 is not doing
the Federal service any good by working another 20 years before retiring. The
quicker such a person can retire with dignity and reasonable security, the better
for all concerned.
There is another point I would like to stress here. According to Civil Service
Commission figures, it very well may be true that 25-year retirement at any age
will be only half as expensive to the Government than the "Magic 80" retirement
formula.
The Civil Service Commission authorities estimate there are 186,000 Federal
employees eligible for immediate retirement under the present system.
Under the 25-year retirement regardless of age, the number of Federal em-
ployees eligible would rise to 223,000.
But under the "Magic 80" .formula, 373,000 Federal employees would be eligible
to retire, and it is estimated that 13% would exercise their option immediately.
The average entrance age under the retirement system today is 31 years-a
fact which lends considerable weight to the statistics I have just mentioned.
Mr. Chairman and Members of the Committee, I know some people look with
horror at the idea of a non-contributory retirement program. They feel its cost
would be out of sight. But, such people are quite mistaken.
The Civil Service Commission, in April of last year, analyzed the Major Em-
ployee Benefit Programs--including retirement-of six major private employers
.and five major public employers.
All the major employers, and one of the public employers, conduct retirement
programs without asking the employee to contribute anything. They were the
Pacific Gas & Electric Company, IBM, General Motors, Du Pont, Aetna, U.S.
Steel and New York State.
The public employers analyzed who do insist upon employee contributions
were Georgia, Michigan, Wisconsin and the City of Baltimore-and none of these
public employers were deducting as much from their employees' pay as is the
United States Government from its employees.
The non-contributory retirement program is the wave of the future. Soon it
will be compulsory if the Federal. Service is to remain competitive not only with
private industry but also with State and municipal employers.
And, incidentally, of all the employers analyzed, only General Motors in the
private sector, and Georgia and Wisconsin in the public sector were found to
have retirement programs less generous than that of the United States_
Government.
Mr. Chairman and Members of the Committee, you will remember that in,
June of 1972, Postmaster General Klassen announced a policy which would (1)
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Permit optional retirement of all postal employees who are 50 years of age and
had 20 years of service or (2) Have 25 years of service at any age.
This program was undertaken in the interest of economy and involved no co-
ercion on the part of management. Naturally, we did not oppose the program,
though we did make numerous constructive suggestions which would make it
more palatable to the workers. Some of the suggestions were adopted.
There was no great scramble for the exits. As I remember, less than 2 percent
of the work force chose to take advantage during the first three months. It was
an orderly egression.
If the U.S. Postal Service could do this in 1972 in the interest of economy,
why do they feel they cannot let employees opt for early retirement now?
In short, Mr. Chairman-we support the "Magic 80" formula if there is no
more generous alternative available. We seek 25-year retirement without contri-
butions from the employees. Our members are even asking 20-year retirement.
We know the realities of the situation ; all we ask is that our members get the
very best the traffic will bear-and I am convinced the traffic will bear a great
deal more than it is bearing right now.
Once again, Mr. Chairman and Members of the Committee, thank you for your
courtesy and your helpfulness in asking us to testify before you. and state our
hopes and our preferences. We are very grateful for what you have done in the
past and for what you are trying to do now.
Mr. MOAKLEY. The next gentleman on the list is Mr. James Hill,
National Federation of Professional Organizations.
STATEMENT OF JAMES HILL, NATIONAL FEDERATION OF PROFES-
SIONAL ORGANIZATIONS; ACCOMPANIED BY GEORGE BRADLEY,
VICE PRESIDENT
Mr. HILL. Mr. Chairman, I have with me Mr. George Bradley, the
vice president of our association.
We greatly appreciate your willingness to hear us on this matter.
We are very much in support of this legislation. We also have a state-
ment on file and so I would like to make a few extemporaneous remarks
if I may. Most of them are not in my statement.
First, we'd like to point out that the present law which permits
retirement at age 55 at 30 years of service has been on the books since
1942.
Mr. MOAKLEY. Pardon me. At this time I'd like the record to show
that Mr. Collins is joining the committee.
Mr. COLLTNS. Thank: you very much, Mr. Chairman.
Mr. HILL. That's a long time. We think that the views of our society
with respect to retirement have changed considerably since that time.
As a practical matter, we think that the earliest that this bill would
permit retirement would be about age 50 with 30 years of service and
we think today it's well accepted that a man who's labored all of his
adult life for 30 years has contributed just about all that society
should ask him to contribute, and that he ought to be permitted to
enjoy a few years of leisure.
Next, we'd like to point out that even the Civil. Service Commis-
sion, in testimony they gave recently before the Senate committee,
seems to approve this, although they may not tell his committee that.
Last week or the week before Mr. Tinley of the Civil Service Com-
mission was testifying before a Senate committee in opposition to a
bill which would include Immigration and Customs Service Inspec-
tors in the 50-20 provision as hazardous duty, and he said these early
retirement provisions aren't intended to compensate for hazardous
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duties. He said it's to enable Federal agencies to improve their quality
and productivity and to provide opportunities for younger people.
Well, what agency doesn't want to do that? If that's good for some
agencies, why isn't it good for the whole Federal service?
I don't think the Civil Service Commission ought to oppose in-
clusion of people in the hazardous duty provision on the ground that
early retirement is a good thing for everybody and then when such a
bill as this is introduced to oppose it by saying, no, it's just for people
with hazardous duties.
Some agencies can now retire people at a magic figure of 70, 50 plus
20. For everybody else it's 85. This bill, as a practical matter, will re-
duce it to 80. Really, this bill is a very modest proposal.
Finally, we'd like to say that we don't think every employee would
take advantage of this law if it were passed. Many employees still
have their enthusiasm and their ability and are still wanted by their
agencies and will continue to work. But the employee with declining
interest or capacity or obsolescent skills, would take advanta e of it
and that's for the good of his agency and for the good of the govern-
ment and for the good of the man, and it ought to be permitted.
Now with respect to some proposals to reduce or eliminate the deduc-
tion of one-sixth of 1 percent per month, this bill would reduce it to
one-twelth of 1 percent per month for every year of age under 55.
That's all to the good. We must say that we understand the figures to
be that if a man retires at 50 lie will get more total annuity during
his expected life time even with the one-sixth of 1 percent deduction
than a man who stays on until age 55, of the same sex and grade.
This committee's proposal to reduce that to one-twelfth of 1 percent
per month would increase that disparity, but still we're happy to
receive it. If it were eliminated entirely however, it would further
increase the disparity and it might engender some opposition by
Members of the Congress.
With respect to the inclusion of overtime, that's well deserved. In
many types of work overtime is a way of life. In the air traffic control
profession, for example, the Congress passed a law several years ago
that went through this committee to provide that they shall get true
time and a half for overtime no matter what their grade. At that time
some air traffic control facilities were on a straight 6-hour day. The
men regard overtime as a part of their basic pay. Overtime pay ought
to be included in basic pay, for retirement purposes.
Our only objection is that all premium pay ought to be included.
I understood one of the previous speakers to say be so understood the
bill. I don't so understand it. I hope he's right and I'm wrong, but
there's no reason why night-time differential and Sunday pay and
holiday pay should not also be included as a part of basic pay, espe-
cially for people on shift duty. They have to take their turn on the
night shifts and working on holidays and Sundays. They regard it as
part of basic pay and we would recommend that the inclusion of over-
time be broadened to include all forms of premium pay as a part of
basic pay.
That's all we have to say unless there are some questions, Mr.
Chairman.
Mr. MOAKLEY. Congressman Collins, any questions?
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30
Mr. COLLINS. I'd like to, if I could. How long are we going to take,,
Mr. Chairman, on discussion with witnesses? Can I have 5 minutes?
Mr. MoAKLrY. Surely.
Mr. COLLINS. Mr. Hill, you said this bill is a very modest one. How
old are you, Mr. Hill?
Mr. HILL. I'm 60.
Mr. COLLINS. Why do you think that we should be encouraging
lower retirement ages?
Mr. HILL. Well, as I said, I don't think everybody will take advan-
tage of it, but many people have given everything they have to give by
the time they have a combination of 80-say by the time they're 50
with 30 years of service.
Mr. COLLINS. Have you worked all your life?
Mr. HILL. Yes; I have.
Mr. COLLINS. Do you enjoy working?
Mr. HILL. I don't want to quit, no.
Mr. COLLINS. Why should we encourage others to quit?
Mr. HILL. Well, if you've ever been an administrator in a Federal
agency, you know the problem of the fellow who just isn't doing the
job anymore but he doesn't want to quit. He isn't eligible for retire-
ment. He can't quit. So he keeps on working when really you'd rather
have a younger fellow who can do better work at a lower grade.
Mr. COLLINS. In here we mention law enforcement officers and they
have this system set up where they retire at 20 years at the age of 50.
Assuming a man will live 20 years after 50 he will work 20 years and
draw retirement 20 years and now we're draining this retirement re-
serve so the wife will also receive a full annuity out, of pension reserves.
How can the country afford pension plans of that type?
Mr. HILL. Well, I think that the Civil Service Commission's esti-
mates of cost are greatly overstated. You must realize that although a
man who retires early is going to start drawing his annuity earlier he
isn't going to get nearly as much annuity as the man who now retires at
age 55. Actuarially, it's supposed to work out so everybody comes out
even at the end.
Mr. COLLINS. Are you familiar with the railroad pension plan?
Mr. HILL. No, sir.
Mr. COLLINS. At one time that was considered the model plan of all
pension plans and I'm just talking in broad terms. I can't recall the ex-
act figures. But there are around 600,000 people drawing pensions now
and 500,000 people paying into the plan, and they have increased bene-
fits and they have not increased contributions, and last year when we
reviewed that plan it was estimated it would be bankrupt in 9 years.
It's very easy to put in an early age for retirement, but. when you do
that means that the young people in the Federal service will have no,
funds left for them when they are ready to retire. Is that equitable?
Mr. HILL. Oh, no, they are not keeping that ph:,n actuarially sound.
They are just being foolish.
Mr. COLLINS. That's right, and we're doing it because they have re-
quested the Government to do it and not make it actuarially sound. Do
you think what you're suggesting is actuarially sound?
Mr. HILL. Yes. Under this bill a man who could retire at age 50,
would get a total life-time gross amount of annuity equal to a man who
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later retired at the age of 55 with a higher annuity. If he lives longer
than three score years and ten the man who retires at the early age is
going to be the loser. The Government is going to pay out more to the
man who retired at age 55 than the man who retired at age 50.
Mr. COLLINS. Now I saw a statement in these papers-maybe this is
in your statement. Were you the one that made the statement in your
paper related to President Johnson, who's one of the greatest Presi-
dents this country ever had. President Johnson had a committee review
civil service pensions and they recommended that we not reduce the
annuity amount that we pay people just because they had retired at
an earlier age. Have you ever recommended that?
Mr. FELL. I think that was in my statement. I know I did refer to it
in my statement.
Mr. COLLINS. That was a Government committee that came up and
recommended that?
Mr. HILL. They did not recommend earlier retirement. They kept
the provision the same as it has been since 1942. All that they did was
eliminate the deduction of one-twelfth 1 percent per month that had
been taken out for retirement under age 60.
Mr. CoLLINs. It says here "until."
Mr. HILL. Until age 60.
Mr. COLLINS. And yet you were just saying that you think you can
keep the reserves actuarially sound.Which way do you stand on this?
Mr. HILL. I think President Johnson did not go far enough. I think
he should have recommended a retirement at a total of 80 back in 1965.
Mr. COLLINS. Well, now if he had done this under this recommenda-
tion of the committee, they said that they wanted them to stop reduc--
tion of annuity just because you began retiring at an earlier age. Do
you think that the person should be entitled to the same annuity if
he retires at an earlier age ?
Mr. HILL. Under present law, he has to take a 2 percent reduction
for every year under 55. This is not available to anybody now except
people who are let out in a major reduction-in-force. They now have
to take a reduction of 2 percent a year for every year they are under
age 55.
Mr. COLLINS. Social Security is the basic retirement system of the
Government and if you retire at 62 years you take a reduced amount,,
and 62 is the earliest age that you're entitled to retire. Sixty-two is rec-
ognized nationally so that we can keep an actuarially sound plan.
How can Ave take civil service at 55 and keep it actuarially sound by
allowing full retirement at that age?
Mr. HILL. Because the man gets a lesser annuity.
Mr. COLLINS. That isn't what you recommended in this committee.
Mr. HILL. Yes. The federal system gives you, in effect
Mr. COLLINS. I thought you said age 55 that they started reducing.
Mr. HILL. At the present time every year that you retire under age
55 you take this 2 percent a year reduction.
Mr. COLLINS. I'm talking about every year you retire under ago 62,
which is the social security year.
Mr. HILL. In effect, you do get a reduced annuity because you
haven't served as many years and the federal system bases your
annuity on the number of years you have served. So you do get a
reduced annuity.
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Now if this bill were to pass and in effect permit people to retire
at age 50 with 30 years of service, they would get a lower annuity.
If the same man stayed on until age 55, ate would get a higher annuity
Mr. COLLINS. But that's based on what he's worked. I'm talking
about life expectancy, which is the big factor in annuity-.
Mr. HILL. Well, I say again, I think these things are actuarially
planned so in the end if you live three score and ten you're supposed
to come out at the same place, whether you have retired at age 55
or age 50.
Mr. COLLINS. Mr. Chairman, I wonder if I could have some of these
expert witnesses furnish the committee with actuarial tables which
would show the effect their suggestions would have, and how their
retirement recommendations will be completely funded.
Mr. BRADLEY. I'll answer that. I am submitting written testimony
to this committee on that very point. I took a case, a GS-11 and
worked a potential retirement plan starting 5 years ago when the
employee would have 30 years of service at age 50, and worked out
the annual annuity and used his life expectancy of 26 years. His total
charge against the retirement fund with no reduction in annuity
would be about $170,000. With reduced annuity it would, be down to
about $135,000. Carrying that same individual to age 55, who would
then have 35 years of service using his life expectancy of 21 years, his
total take from the retirement fund would be about $225,000.
Every time we figure it I can't see where the early retirement is
more costly, really. I don't think the actuarial tables are as bad as
they are said to be. If you work it out you will find that people who
retire early get less money, you take their life expectancy and you find
you're drawing less against the retirement fund.
Mr. COLLINS. I would appreciate that. When you draw up those
tables I wonder if you'd supplement them with this new plan that
we are also recommending. We're going to pay $6 billion in supple-
mentary benefits because we're going to guarantee the survivorship
widows the full plan without any additional payment. You know
the new recommendation?
Mr. BRADLEY. Yes; I do.
Mr. CoLLixs. What worries me, anybody under age 40 is not going
to have any money left in this reserve. We're going to pay to every-
body over age 40 and the others are going to be left with nothing.
We don't want to hurt the young employees.
Are you an actuary?
Mr. BRADLEY. No ; I'm not.
Mr. COLLINS. You certainly sound pretty good. You sound like you
know.
Mr. BRADLEY. I'm just the executive director of a professional as-
sociation, but I put in 40 years with the Federal Government. I
worked my retirement out very carefully before retiring. I did not
retire until I had adequate annuity.
Mr. MOAKLEY. Thank you, Congressman Collins.
You will submit that testimony that Congressman Collins asked
.for?
Mr. BRADLEY. Right, I will.
Mr. MOABLIY. Thank you very much.
[Complete statement follows:]
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STATEMENT OF JAMES D. HILL, EXECUTIVE DIRECTOR, THE NATIONAL FEDERATION
OF PROFESSIONAL ORGANIZATIONS
Mr. Chairman, this testimony is presented in behalf of the National Federation
of Professional Organizations, composed of the following organizations, repre-
senting 35,000 Federal professionals :
Air Traffic Control Association, Inc.
Airways Engineering Society.
Association of Senior Engineers of the Naval Ship Systems Command.
Federal Plant Quarantine Inspectors' National Association.
National Association of Federal-State Employees.
National Association of Federal Veterinarians.
National Association of Government Engineers.
National Labor Relations Board Professional Association.
National Society of Professional Engineers.
Naval Civilian Administrators Association.
Navy Field Safety Association.
Organization of Professional Employees of the U.S. Department of Agri-
culture.
Patent Office Professional Association.
We commend the Subcommittee for its attention to this measure, which is of
great importance to Federal employees. We urge its approval.
Under present law, the "sum of 80" concept exists only at age 60, at which an
employee may retire with 20 years of service. But he may not retire at age 59
with 21 years of service, or at age 55 with 25 years of service, or at any other
combination of age and service that totals 80. As a practical matter, the present
bill would reduce the existing minimum by five years. Today an employee must
be age 55 and have 30 years of service, a total of 85 years. I3.R. 3024 would per-
mit retirement at age 50 with 30 years of service or at age 55 with 25 years of
service, or any other combination of these which total 80 years.
The present law, which permits an employee to retire on an immediate annuity
at age 55, with 30 years of service, has been virtually unchanged since 1942. In
the last 30 years the views of our society with respect to retirement have changed
considerably, but the minimum age for retirement for the Federal Service has
remained unchanged. Until. 1966 an employee retiring before the age of 60 was
required to take a reduction in his annuity of 1/Z of one percent per month. This
reduction was eliminated by P.L. 89-504, of July 18, 1966.
At the beginning of the 87th Congress in 1965, a large number of bills were
presented to liberalize the Federal retirement system. As we understand it, Pres-
ident Johnson requested the Congress to delay consideration of these measures
until he could have them examined by a special Cabinet Committee on Federal
Retirement Systems.
He created this Committee by memorandum of February 1, 1965, and the
Committee issued its report to him on February 15, 1966. The Committee held
extensive hearings, at which various Federal employee groups recommended
retirement after 30 years of service at any age, retirement at age 50 with 30 years
of service, extension of the special provision for retirement of law enforcement
personnel at age 50 with 20 years of service to other groups of Federal employees
engaged in hazardous work, etc. The President's Cabinet Committee did not see
fit to recommend any of these. It recommended only that in the future optional
retirement at age 55 with 30 years of service be with unreduced annuity. The
Committee said that its recommendation "will accommodate the purpose under-
lying those various suggestions." To us, this is quite an overstatement. In fact,
the Committee proposal did not alter the minimum retirement. age at all.
President Johnson adopted the Cabinet Committee's recommendations and
embodied them in proposed legislation providing for a salary increase, which he
forwarded to the Congress on March 7, 1966. See 112 Cony. Record 5014, March
7, 1966; House Document 402, 89th Congress, 2nd Session ; Senate Document 14,
90th Congress, 1st Session. The proposed legislation was enacted as the "Federal
Employees' Salary Act of 1969," P.L. 80-504. We point out that, as to retirement,
this law did not alter the minimum retirement age of 55, with 30 years of service,
which has now remained unchanged since 1942. The only subsequent liberal.iza-
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tion has been with respect to air traffic controllers, firefighters and those involved
in a major reduction-in-force, who may now retire at age 50 with 211 years of
service. So, at present, there are some groups, mostly those engaged in supposedly
hazardous duties, who may retire when age and service totals 70; for other
Federal employees, the minimum is 85.
We respectfully suggest to the Committee that the proposed reduction in
Federal retirement age is fully justified. If H.R. 3024 were enacted into law,
we would doubt that every Federal employee would retire as soon as he became
eligible. We would expect that an employee of 50 years of age and with 30 years
of service who still retained his health and his enthusiasm for his work would
prefer to continue, rather than to retire on reduced income. We understand that
the privilege of retiring at age 50 with 20 years of service, now held by law
enforcement officers, is not universally taken. At hearings held in 1972 before
the Committee on Post Office and Civil Service with respect to legislation which
would permit air traffic controllers to retire at age 50 with 20 years of service,
or at any age with 25 years of service (P.L. 92-297), the Administration esti-
mated that of those controllers becoming eligible for such optional retirement,
only 15% would actually do so. However, retirement at.age 50 with 30 years of
service would make it economically feasible for employees with growing dis-
ability, declining capacity or interest, or obsolescent skills, to withdraw from
active service, if they wished. Such a provision is meritorious and justified.
The only objections that we have heard to this proposal are (1) the Civil
Service Commission's usual dire estimate of cost: and (2) that it would benefit
only one-fourth of all Federal employees. We do not feel competent to make an
estimate of cost, but we have heard that the present 7% contribution by em-
ployees and agencies is excessive, and that a surplus is growing in the Retirement
Fund. A news item in the "Federal Employees News Digest" of April 15, 1974
contend that the effect of the present bill would be to reduce the obligation of the
Retirement Fund.
As to the second objection, it is generally true that different employees receive
different benefits from a retirement program, depending on a variety of personal
factors, such as their length of life, whether their spouse predeceases or survives,
their age at retirement, their length of service, whether they became eligible
for a discontinued service annuity, whether they retired at an early age on dis-
ability, and so forth. Under present law there are undoubtedly many employees
who cannot receive the benefit of retirement at age 55 with 30 years of service,
or even at age 60 with 20 years of service. But this is not evidence of an unfair
law. It is not unfair to short term employees to permit a man who has served
for a longer period to retire. On the contrary, we think that a retirement law
that distinguishes between persons in differing circumstances is preferable to
one that treats persons in differing circumstances alike.
Perhaps if only one liberalizing retirement law were to be enacted, and em-
ployees were forced to select one, many would prefer a measure that benefits all,
such as a reduction in the contribution from 7% to 6i!?%, or a straight 2%
computation formula. But we do not think that Federal employees should be
forced to make such a choice ; all meritorious improvements in the system
should receive this Committee's support.
If, for any reason, II.R. 3024 as presently drafted does not meet with the
committee's approval, we suggest a modified proposal that would be of benefit
to many employees. That is, that employees be permitted to retire between the
are of 55 and 59 whenever the sum of their age and years of Federal service
totals R5. The practical effect of this would be to permit employees to retire
at 55-30, 56-29, 57-28, 58-27 and 59-26. This would provide justice to many em-
ployees who are now caught in a "no mans land" between the present provisions
of 55-30 and 60-20.
We greatly appreciate the committee's interest in this subject.
Mr. MOAT{LTY. The next gentleman the committee will hear from is
Mr. John McCart, operations director, Government Employes Colin-
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STATEMENT OF JOHN McCART, -OPERATIONS DIRECTOR,
GOVERNMENT EMPLOYES COUNCIL
Mr. MCCART. Mr. Chairman, we have supplied the subcommittee
with copies of our formal statement. I'd appreciate it if that could be
inserted. in the record and I be permitted to summarize our statement.
Mr. MOAKI,E.Y. No objection.
Mr. MCCART. The council, of course, appreciates very much the ar-
rangement for these hearings and the interest that the various mem-
bers of the subcommittee and the committee and the house itself has
taken in the civil service retirement program.
We support II.R. 3024 and we support some of the other measures
that are pending before the subcommittee on this subject as well.
Let me just give you a few excerpts from our statement which I
think will summarize our position on the proposal.
As the pace of production accelerates in the various Federal agen-
cies, increasing mental and physical effort is experienced by employ-
ees. Particularly where individuals are assigned to jobs involving a
large degree of physical activity, their condition is likely to deterio-
rate more quickly. This is true of many positions in the postal, clas-
sified and wage board categories. Even though an individual in these
occupations may not experience physical impairments sufficient to war-
rant disability retirement, he may still. desire to cease work before
normal retirement age in order to preserve his health.
Under these conditions, it will benefit both the employee and the
Government as the employer to permit him to retire with full bene-
fits at an earlier age so that younger individuals may enter Govern-
ment service.
As we are all well aware, inflation is rampant. At the same time,
our rate of unemployment is a continuing source of worry. Some
communities are facing an economic crisis because of these two fac-
tors. Enactment of this kind of legislation will ease this national
burden by making employment opportunities available to replace
those Federal workers who retire. By supplying an additional incen-
tive to retire upon attaining eligibility, it will alleviate the impact
of reductions in force for those workers who have not acquired the
length of service or age needed to retire.
In addition, approval of legislation of this kind will assist agen-
cies to perform their missions more effectively by insuring a nucleus
of skilled, younger workers, who can be trained to accept the respon-
sibilities performed by their mature fellow-employees.
Retirement is one of the most important aspects of the Federal
personnel program. Turnover among employees is a continuing prob-
lem. A large number of Federal workers quit their jobs each year.
Acceptance of the principle embodied in these bills would provide an
incentive for individuals to continue their careers in the Federal Gov-
ernment in order to retain retirement eligibility.
The number of senior citizens in our population increases each year.
Boys and girls are spending more years in school. To satisfy the ever-
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increasing demand for jobs for those who complete their education,
it is essential that job opportunities be made available at a much faster
pace than heretofore. The number of working years will have to be
reduced as one means of providing additional jobs.
Enactment of legislation similar to the bills discussed here will help
alleviate the problems so far as the federal service is concerned, and
will stand as an example of enlightened personnel management for
others to follow.
The concept of retirement with full benefits for federal employees
with 30 years of service below age 55 is not new. During the disastrous
economic depression our country experienced in the 1930s, Congress
approved legislation allowing this type of retirement for Federal
workers. Admittedly, the economic situation today is not identical to
that prevailing 40 years ago. But the rationale of the earlier action
applies with equal force in 1974. The object then was to provide an
incentive for Federal workers with long years of service to retire so
that their jobs would be available to younger men and women with
families who were in dire financial straits.
The idea. of permitting retirement of Federal employees whose com-
bined service and age equals 80 is relatively new. It is an attractive
approach. to providing greater flexibility to the existing retirement
act.
Adoption of this recommendation will allow workers to complete
their Federal Government careers at an earlier age than is now the
case and will enable many to contribute more to our social and econ-
omic progress by utilizing their Federal experience in second careers.
However, we do not believe that an individual below age. 55 should
have to accept a reduced annuity.
In summary, then, the GEC advocates as a minimum that the sub-
committee approve H.R. 3024.
Another bill, proposing full retirement benefits after 20 years of
service merits the sympathetic consideration of the subcommittee.
The same rationale described earlier in this statement supporting H.R.
3024 applies to Representative Brasco's measure, H.R. 3930.
At its biennial convention in October 1973 the AFL-CIO adopted a
general resolution covering conditions and benefits for Government
employees. Included was an item advocating "voluntary retirement
after 20 years of service, regardless of age, with full benefits, or with
age and years of service totalling 80." Consequently, enactment of
either II.R. 3024 or H.R. 3930 would fulfill this objective. Logically,
any legislative proposal falling between these two approaches would
be supported by our organization.
The council is grateful for this occasion to present its views on the
important measures under, consideration today.
Mr. MOAKLEY. Congressman Collins, any questions?
Mr. Corr INS. No ; thank you. I appreciate his statement.
Mr. MOAKLEY. Thank you very much.
[Complete statement follows:]
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,STATEMENT OF JOIIN A. AICUART, OPERATIONS DIRECTOR, GOVERNMENT EMPLOYES
COUNCIL, AFL-CIO
Mr. Chairman and members of the subcommittee, the 30 AFT-CIO unions
affiliated with the Government Employes Council desire to commend you as the
sponsor of II.R. 3024 for providing an opportunity for discussion of this and
other bills advocating improvement in the existing law governing voluntary
retirement on full annuity. Taken together, these unions represent in excess of
one million postal and other Federal employees who participate in the collective
bargaining process in a variety of Federal agencies.
MR. 3024 liberalizes the Civil Service Retirement Act by permitting employees
whose age and length of service total 80 or more to retire voluntarily without
reduction in annuity. Reintroduction of the bill, which you sponsored initially in
1971, is further indication of your intense Interest in maintaining the Civil Serv-
ice Retirement System as a model for other employee retirement programs in
industry and government in our country. We recognize other members of the
House who have introduced similar bills, including Representatives Daniels and
Hogan.
One purpose of H.R. 3024 permitting employees to acquire the benefits of invol-
untary separation for retirement during major reductions in force has been
achieved through enactment of Public Law 93-139. The Council applauds the
efforts of the Subcommittee in obtaining Congressional approval of this law.
As the pace of production accelerates in the various Federal agencies, increas-
ing mental and physical effort Is experienced by employees. Particularly where
individuals are assigned to jobs involving a large degree of physical activity,
their condition is likely to deteriorate more quickly. This is true of many posi-
tions in the postal, classified and wage board categories. Even though an indi-
vidual in these occupations may not experience physical impairments sufficient
to warrant disability retirement, he may still desire to cease work before normal
retirement age in order to preserve his health.
Under these conditions, it will benefit both the employee and the Government
as the employer to permit him to retire with full benefits at an earlier age so that
younger individuals may enter Government service.
As we are all well aware, inflation is rampant. At the same time, our rate
of unemployment is a continuing source of worry. Some communities are facing
an economic crisis because of these two factors. Enactment of this kind of legis-
lation will ease this national burden by making employment opportunities avail-
able to replace those Federal workers who retire. By supplying an additional
incentive to retire upon attaining eligibility, it will alleviate the impact of reduc-
tions in force for those workers who have not acquired the length of service
or age needed to retire.
In addition, approval of legislation of this kind will assist agencies to perform
their missions more effectively by Insuring a nucleus of skilled, younger workers,
who can be trained to accept the responsibilities performed by their mature
fellow-employees.
. Retirement is one of the most important aspects of the Federal personnel
program. Turnover among employees Is a continuing problem. A large number
of Federal workers quit their jobs each year. Acceptance of the principle em-
bodied in these bills would provide an Incentive for individuals to continue their
careers in the Federal Government in order to retain retirement eligibility.
The -number of senior citizens in our population increases each year. Boys
and girls are spending more years in school. To satisfy the ever-Increasing demand
for jobs for -those who complete their education, it is essential that job oppor-
tunities be made available at a much faster pace than heretofore. The number
of working years will have to be reduced as one means of providing additional
jobs.
Enactment of legislation similar to the bills discussed here will help alleviate
the problems so far as the Federal Service is concerned, and will stand as an
example of enlightened personnel management for others to follow.
The concept of retirement with full- benefits for Federal employees with 30
years of service below age 55 is not new. During the disastrous economic dgpres-
sion our country experienced in the 1930s, Congress approved legislation allow-
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38
ing this type of retirement for Federal workers. Admittedly, the economic situa-
tion today is not identical to that prevailing 40 years ago. But the rationale of
the earlier action applies with equal force in 1974. The object then was to provide
an incentive for Federal workers with long years of service to retire so that
their jobs would be available to younger men and women with families, who
were in dire financial straits.
The idea of permitting retirement of Federal employees whose combined serv-
ice and age equals 80 is relatively new. It is an attractive approach to providing
greater flexibility to the existing Retirement Act.
Adoption of this recommendation will allow workers to complete their Federal
Government careers at an earlier age than is now the case. and will enable amity
to contribute more to our social and economic progress by utilizing their Federal
experience in second careers. However, we do not believe that an individual
below age 55 should have to accept a reduced annuity.
In summary, then, the GEC advocates as a minimum that the Subcommittee
approve H.R. 3024.
Another bill, proposing full retirement benefits after 20 years of service (H.R.
3930-Representative Brasco), merits the sympathetic consideration of the Sub-
committee. The same rationale described earlier in this statement supporting
H.R. 3024 applies to Representative Brasco's measure.
At its biennial convention in October, 1973, the AFL-CIO adopted a general
resolution covering conditions and benefits for government employees. Included
was an item advocating "voluntary retirement after 20 years of service, regard-
less of age, with full benefits, or with age and years of service totalling 80."
Consequently, enactment of either II.R. 3024 or H.R. 3930 would fulfill this
objective. Logically, any legislative proposal falling between these two approaches
would be supported by our organization.
The Council is grateful for this occasion to present its views on the important
measures under consideration today.
Mr. MOAKLEY. The next gentleman we will hear from is Mr. C. L..
Dorson, president, Retirement Federation of Civil Service Employees
of the U.S. Government.
STATEMENT OF C. L. DORSON, PRESIDENT, RETIREMENT FEDERA-
TION OF CIVIL SERVICE EMPLOYEES OF THE UNITED STATES
GOVERNMENT
Mr. DoRsON. Mr. Chairman, with your permission, we will submit
our statement for the record and I would like to make a couple points.
Mr. MOAKLEY. No objection.
Mr. DoilsoN. We'd like to join Mr. Nilan who expressed concern
with the proposal contained in the first section of H.R. 3024 to strike
out the words "overtime pay" in paragraph three of this section. This
provision, if enacted, would make overtime pay subject to salary de-
ductions, as well as-
Mr. MOAKLEY. Mr. Dorson, may I interrupt at this point. I know
what you're saying, but it bothers me that some employees, their over-
time is almost a part of their salary, and to do this would be a complete
disadvantage to that group. Some start at a very low rate and they
just allow them to work so many hours of overtime a week, and this
becomes really a part of their salary, and if we were to delete that sec-
tion of the bill it would seriously affect them. But I can understand
how it would affect your people also. So there is a very thin line there
that we have to walk.
Mr. DORSON. Yes, Mr. Chairman. I understand that while the
amendment may be beneficial in some cases we think in the overall it
would be best to leave the provision as it now is in the law. We think
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the vast number of Federal employees do not work overtime in the last
few years of employment to the extent that their annuity is not com-
puted on that overtime.
Mr. MOAliL EY. And you would, in that case, accept Congressman
Daniels' bill which deletes that provision?
Mr. DonsoN. Yes ; Mr. Chairman. We think in the overall that would
be better.
The amendment proposed by section 2 of H.R. 3024 to provide the
option to retire when age and service aggregate 80 years for employees.
and members is most desirable, but we think it provides a very liberal
option which few employees could afford unless they intended to seek
other employment after retirement.
However liberal this proposal may seem, from a practical standpoint
few employees could afford to exercise the option unless the annuity
computation formula is also improved. The employee who wishes to
retire at age 50 with 30 years' service would be entitled to only 561/4
percent of his average salary, under the present formula, less the re-
quired reduction for age. An employee with 25 years' service at age 55
would receive only 461/4 percent of his average salary. Neither prospect
is feasible for most employees.
To make early retirement, both possible and economically feasible
for all employees with long service, we urge that you also recommend
to the full committee and the House of Representatives an increase
in the computation rate to 21/2 percent of average salary for each year
of service as proposed in H.R. 2706 by Congressman Leggett. This
bill would improve the 30 year annuity to 75 percent and the 25 year,
annuity to 621/2 percent of average salary, thus bringing the dream
of early retirement closer to reality.
The other amendment proposed in section 2, to liberalize the invol-
untary separation provisions of the law, is, as you probably know, now
unnecessary because it was enacted into law by Public Law 93-39.
The proposal contained a section 3 of H.R. 3024 to reduce the penalty
for retirement before age 55, from one-sixth of 1 percent to one-twelfth
of 1 percent for each full month is most desirable and heartily
endorsed.
With the amendments suggested we endorse H.R. 3024 and urge its
early enactment.
Mr. Chairman, we are grateful for the interest of the committee in
this legislation and especially to the sponsor, Congressman Waldie.
We appreciate the opportunity you have afforded for the expression
of our views.
Mr. MOAT EY. Thank you, Mr. Dorson.
Congressman Collins, any questions?
Mr. COLLINS. No questions.
[Complete statement follows:]
STATEMENT ov C. L. DORsoN, PRESIDENT, RETIREMENT FEDERATION OF CIVIL SERVICE
EMPLOYEES OF THE UNITED STATES GOVERNMENT
Mr. Chairman and members of the subcommittee, my name is C. L. Dorson and
I am president of the Retirement Federation of Civil Service Employees of the.
United States Government, a national organization of Federal employees, with
headquarters in this city.
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40
We are concerned with the proposal, contained in the first section of H.R. 3024,
to strike out the words "overtime pay" in paragraph 3 of section 8331 of title 5,
United States Code. This provision, if enacted, would make overtime pay subject
to salary deductions as well as use in the computation of average salary for
annuity purposes.
We think this proposal is well intentioned, but we fear that its effect would be
to add to the employee's cost without necessarily increasing the annuity com-
mensurately. While any overtime pay received throughout the entire service of
the employee would be subject to salary deductions, the average pay on which
the annuity is based usually occurs during the last 3 years of employment prior
to retirement and this is a time during which the employee is less likely to be
working overtime. Therefore, while the amendment may be beneficial in some
cases, we think that, in the over-all, it would be best to leave this provision as it
now is in the law.
The amendment, proposed by section 2 of H.R. 3024, to provide the option to
retire when age and service aggregate 80 years for employees and members is
most desirable, but we think it provides a very liberal option which few em-
ployees could afford unless they intended to seek other employment after re-
tirement.
However liberal this proposal may seem, from a practical standpoint few
employees could afford to exercise the option unless the annuity computation
formula is also Improved. The employee who wishes to retire at age 50 with 30
years' service would be entitled to only 561/4 % of his average salary, under the
present formula, less the required reduction for age. An employee with 25 years'
service at age 55 would receive only 461/4% of his average salary. Neither pro-
spect is feasible for most employees.
To make early retirement both possible and economically feasible for all
employees with long service, we urge that you also recommend to the full com-
mittee and the House of Representatives an increase in the computation rate to
21/2 % of average salary for each year of service, as proposed in H.R. 2706 by
Congressman Leggett. This bill would improve the 30 year annuity to 75% and
the 25 year annuity to 6214% of average salary, thus bringing the dream of early
retirement closer to reality.
The other amendment proposed in section 2, to liberalize the involuntary sep-
aration provisions of the law is, as you probably know, now unnecessary because
it was enacted into law by Public Law 93-39.
The proposal, contained In section 3 of H.R. 3024, to reduce the penalty for
retirement before age 55, from ?/s of 1% to 1/12 of 1% for each full month, is most
desirable and heartily endorsed. -
With the amendments suggested we endorse H.R. 3024 and urge its early en-
actment.
Mr. Chairman, we are grateful for the interest of the committee in this legisla-
tion and especially to you as the sponsor. We appreciate the opportunity you
have afforded for the expression of our views.
Mr. MOAKLEY. The subcommittee is now adjourned.
[Whereupon, at 10:35 a.m., the hearing was adjourned.]
[The letters and statements which follow were received by the sub-
committee for inclusion in the record.]
STATEMENT OF JOHN J. MURPHY, PRESIDENT, NATIONAL CUSTOMS SEEVIOE
ASSOCIATION
Mr. Chairman and Members of the Subcommittee, I am John J. Murphy, Presi-
dent of the National Customs Service Association. NCSA is an independent fifty-
year old organization representing employees of the U.S. Customs Service. We
have exclusive recognition in eight of the nine Customs Regions and represent
some 8,000 employees under exclusive recognition.
Our organization strongly supports H.R. 3024 and we want to thank you,
Mr. Chairman, for sponsoring this legislation and holding hearings on It.
Customs employees are career employees in every sense of the term. Our people
come into the Serivice at relatively early ages and pursue Customs as a lifetime
career. We have a very low rate of turnover.
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We feel that the legislation being considered today would reward the faithful
service of these dedicated employees by making it economically feasible for
them to retire at an age when they could enjoy the well-deserved fruits of retire-
ment. Additionally, it would enable the Customs Service to maintain its high
rate of efficiency and productivity by making retirement possible for employees
in poor or failing health.
We wish to particularly endorse that section of the bill that would amend
section 8331 of Title 5, U.S. Code, to include overtime pay as part of base pay
for annuity computation purposes. In our view, total pay received for work
performed should be considered base pay. Total pay, which includes overtime,
is the level of income on which the employee is required to pay taxes. It is
logical, therefore, that total pay should be the basis for computing retirement
annunities.
Air. Chairman, we greatly appreciate the opportunity to present our views on
this important matter that so vitally affects employees of the Customs Service
and other Federal employees.
Hon. JOIIN J. ROONEY,
House of Representatives,
Washington, D.C.
U.S. HOUSE OF REPRESENTATIVES,
COMMITTEE ON POST OFFICE AND CIVIL SERVICE,
Washington, D.C., May 14,1974.
DEAR JoHN : In response to your request of May 8, 1974, I would be pleased to
have the statement sent to you by Miss Rose T. Mauro of Brooklyn. New York,
included in the record of the hearings on II.R. 3024, relating to retirement of
Federal employees who have a combination of years of service and age totaling
eighty.
With kindest regards,
Sincerely,
TIIADDEUS J. DULSKI,
Chairman.
CONGRESS OF THE UNITED STATES,
HOUSE OF REPRESENTATIVES,
Hon. THADDEUS J. DULSKI Washington, D. C., May 8, 1974.
,
Chairman, Post Office and Civil Service Committee, U.S. House of Representa-
tives, Washington, D.C.
DEAR THAD : I am enclosing herewith copy of a statement from my constitu-
ent, Miss Rose T. Mauro of 210 Humboldt Street, Brooklyn, New York, with
regard to the "combination 80" retirement bill. Hearings are being held today
before the Subcommittee on Retirement and Employees Benefits.
Miss Mauro is a member of the American Federation of Government-Em-
ployees, Local 1760, and would like to have her statement included in the record.
With kindest regards,
Sincerely,
JOHN J. ROONEY,
Member of Congress.
STATEMENT OF ROSE T. MAURO, BROOKLYN, N.Y.
I appreciate the opportunity to have my personal statement forwarded by my
Congressman, The Honorable John J. Rooney, to the Subcommittee on Retirement
and Employee Benefits of the House Committee on Post Office and Civil Service,
to be included in that committee's record in connection with the hearing scheduled
for May 8th, 1974 at 9:20 AM.
This proposed legislation is, in my opinion, long, long overdue. So many of my
Federal Employee Colleagues who, like myself, are in the "LIMBO" category-
(i.e. do not qualify for optional retirement at 55-30 or 60-20) were so distressed
when last year's efforts to pass the "COMBINATION 80" bills failed, after having
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progressed practically to passage, before the clock ran out. I had been assured by
so many members of the N.Y. Congressional Delegation that it was a "sure thing"
passage-wise-"in the bag"-at that time ! Now that efforts have been activated
again, at long last, let us hope that this time it will pass both Houses and be
enacted into law.
The people most concerned are those who are far advanced in increments and
most are near or at the top of their grade salary ceiling. If they choose optional
retirement, their jobs would either be abolished by attrition or their replacements
would be trainees or promotees at much lower salaries, performing work responsi-
bilities. This would constitute considerable saving to the Government.
In addition, since some are not able to continue inservice for physical and other
personal reasons, such as family considerations, desire to relocate, stress and pres-
sures of urban living, etc. until they qualify under existing regulations, there is
no alternative other than disability. Here again, government revenue loss is great
because of tax exemption privileges for many years afforded disability annuitants
versus limited ones for regulars.
Optional early retirement would greatly help the unemployed, particularly the
Veterans and members of minority groups, by making jobs available.
Another factor (and a most important one) is the realization that the longer
an employee remains in the service, the greater the annuity will be on retirement
because of periodic pay raises, step increases, high quality award increases, etc.
Please give the "LIMBO" people (i.e. 58/22, 57/23 56/24 55/25, etc.) an oppor-
tunity to have the option to retire, whether or not a personal decision is made to
exercise it. Those under 55 who would qualify (i.e. 54/26 53/27, etc.), would also
benefit since -there would be no reduction factor for "under 55", as is the present
situation, under the involuntary separation regulations where reduction in force
is involved. In this regard, optional retirement would save jobs for younger, newer
employees in the event of reduction in force, in agencies where the choice is not,
presently, authorized.
I understand, too, that the postal employees are advocating an "aggregate of 75"
and have indicated that they intend to pursue this effort in contract negotiations,
as one of their primary goals. By comparison, the "combination 80" apparently, is
the more feasible and practical of the two, in my judgment.
I should appreciate testifying at any future hearings and shall be glad to express
myself, at any time, in more detailed form, if given the opportunity. For the
"LIMBO" people, who have devoted the major part of their lives to government
service and have given dedicated performance as public servants for a great
many years, this is the "NUMERO UNO"-the TOP, TOP PRIORITY LEGISLA-
TIVE GOAL. Please urge action by the full committee and the House. The Senate,
I feel confident, will cooperate, as it did last year.
Thank you.
STATEMENT OF HON. DOMINICK_ V. DANILI.s, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF. NEW JERSEY -
Mr. Chairman and members of the subcommittee, I appreciate the courtesy ex-
tended me to present this statement in support of legislation to facilitate the
opportunities for the voluntary retirement of Long-term federal employees.
Early in the 91st Congress, I introduced If.R. 768, the "Rule of 80" retirement
bill. I reintroduced an identical bill, H.R. 1266, in the 92d Congress. The latter
measure was approved by the retirement subcommittee, with amendments, co-
sponsored in the form of II.R. 11255 by member.; of the subcommittee, and re-
ported to the House by the full Cornmitteeon Post Office and Civil Service. No
further action was taken thereon in the 92d Congress.
At the beginning of the 93d Congress. I again reintroduced the legislation,
H.R. 437. which is substantially identical to H.R. 3024, the bill now under con-
sideration. That part of both bills dealing with voluntary retirement during
major reduction-in-force actions, as we all are aware, was enacted separately as
Public Law 93--39, on dune 12, 1973.
The primary purpose of this legislation is to permit .a Federal employee to
retire voluntarily when his attained age plus length of service aggregates at
least 80 years, with the annuity reduced by the equivalent of 1 percent for each
year the retiree is under age 55 at time of retirement. -
Mr. Chairman, over the years Federal employee organizations have advocated
the adoption of a provision to allow employees to retire optionally after 30 years
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-of service, regardless of age and with unreduced annuity benefits. Their repre-
sentatives have contended that such a provision would make it more economically
practicable for employees with partial disabilities, or with declining capacities
or interests, to withdraw from the active Federal work force at some additional
cost to the retirement program, but with an overall saving in agency personnel
costs and gain in Government's efficiency.
On the other hand, many civil service employees argue that 30 years is a full
career, justifying retirement at any age, without penalty. Others claim that the
existing provisions of the retirement law discriminate against those who en-
tered Federal employment at early ages. A further contention is that opportuni-
ties for earlier retirement will ease, to an extent, our country's unemployment
problem by making room for new hires.
I feel that there is merit in the various proposals pending before the sub-
committee to ease retirement opportunities for partially disabled workers and
employees with substantial periods of service. I believe that there would probably
be mutual advantage, also, in facilitating the retirement of long-term employees
whose skills are supplanted by new technologies, or who have simply lost inter-
est in their work.
While II.R. 437 and II.R. 3024 would apply to some employees having less
than 30 years of service, the bills have the flexibility of accommodating to the
cases of those between ages 55 and 60 who presently need 30 years of service in
order to retire on immediate annuity.
Mr. Chairman, I will be grateful for the subcommittee's consideration of illy
views on the "Rule of 80" concept during its deliberations on the matter of
early optional retirement legislation.
Thank you.
STATEMENT OF DANIEL JASPAN, ADMINISTRATIVE VICE: PRESIDENT, NATIONAL
ASSOCIATION OF ]POSTAL SUPERVISORS
Mr. Chairman and members of the house Subcommittee on Retirement and
Employee Benefits, my name is Daniel Jaspan. I anm the administrative vice
president of the National Association of Postal Supervisors, composed of more
than 33,000 supervisors in the postal field service. This includes supervisors in
the motor vehicle and custodial services.
Our members are grateful to Chairman Waldie for his interests in improving
the retirement system for federal employees as evidenced by his introduction of
1f.]1. 3024 and other beneficial legislation. We have had many resolutions passed
at our conventions over the years in support of such legislation.
We support II.R. 3024 and any bills to reduce the time required for retirement
for many reasons, some of which are included in this statement.
One of the inipartaut reasons for the necessity of such legislation is the general
health deterioration over the years. Retirement due to disability is limited to
those cases in which an employee is found by competent medical authority to be
totally disabled for useful and efficient service in his position. Employees -inclhr
partial loss of sight, hearing, speech, or ability to perform their jobs fully
because of poor health, yet do not qualify for disability retirement because the
infliction results in something less than disability. It is quite apparent that in
many such situations it would be in the best interest of both the government
and the employee to permit the individual to retire.
There are certain types of positions in the postal service that require ability
and reflexes frequently not found in persons beyond a certain age. It is likely
that many persons who have devoted many years to their postal careers would
fail into this category and in such situations the right to retire would be highly
desirable.
There are some employees who, after long years of service, reach the point
when it becomes untenable to continue. This unhappy end may be reached
through one or a combination of reasons, including job stress and strain, condi-
tions of employment, climatic conditions, allergies of one kind or another, or
just a general "end-of-the-road" feeling.
Asthma and allergies are probably more prevalent in the postal service than
in most industries due to working conditions and particularly the dust generated
by ]nail sacks and pouches which often become filthy before being "retired."
The possibility of early retirement on a full annuity would improve employee
morale and productivity. Although we do not believe there would be a rush to
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take advantage of the earlier retirement, we do know that reaching the "age of
independence" could help to relieve the strain of these employees who work
beyond the minimum retirement age.
It is also our firm belief that it would make it much easier to recruit new
employees if they knew that they had the option of retiring when reaching the
"combination 80." Many people do not enjoy the prospect, of a long period of
service in one job before they are eligible for retirement.
In our opinion, the cost of early retirement is overemphasized. It is our belief
that most, if not all, of the cost would be made up in taxes. This is doubly true
because the employee appointed to fill the vacancy would, of course, be paying
taxes on his whole salary. Those retiring under the "combination 80" bill would
after a year or two, also pay taxes on their annuities. These taxes would con-
tribute greatly to the cost of earlier retirement.
It is also our view that long service in any organization should entitle the
employee to the option of retirement. Postal work requires physical and mental
strain that cannot be compared with most employment. There is also constant
eye strain. In addition, there are few hours of duty that are comparable to our,
in industry. The bulk of employment in the postal service is during the night
hours. This not only leads to a disruption of family life and complicates the
social life of the postal employee, but it is not conducive to good health.
It is our firm belief that the government should take the lead and not be tile
follower in employee benefits. More and more industries are permitting earlier
optional retirement and the government should lead the paracte rather than
follow it.
It is our firm belief, however, that there would not be it mass exodus of em-
ployees from the postal service, particularly supervisors, if this excellent bill were
to become law. Postal salaries are not high enough for employees to have great
savings and many could not afford to live on such a greatly reduced income.
It is also probable that an earlier retirement system would help in recruiting-
new employees for government service. Young people who know that they must
begin by working night hours in the post office, and who notice that there are
very few good tours of duty and do not enter the service on account of this, may
be induced to become postal employees if they know that they may leave the sere--
ice with an annuity at a younger age than is now possible.
We appreciate the opportunity of presenting our testimony on this important
bill and hope that the Congress will approve time proposed legislation as quickly
as possible.
ORGANIZATION OF PROFESSIONAL Eli PLOYEES
OF TILE L.S. DEPARTMENT OF AGRICULTURE,
Waslsington, U.C., May 14, 1974.
Hon. JERO,IE R. WALDIE,
Chairman, Subcommittee on Retirement and Employee Benefits, Cannon House
Office Building, Washington, D.C.
DEAR MR. WALDIE : We appreciate the opportunity to include, as part of the
record, the position of our organization on H.R. 3024. H.R. 3024 is another piece
of legislation designed to update the Federal employees' retirement to more fairly
meet the demands of a rapidly changing social structure and a changing Federal
work force.
The two basic changes provided in this legislation, as we interpret the intent,
are to: (1) provide a more gradual period of retirement eligibility, and (2) to
change the annuity reduction from ',5l of 1% per month for each month the
member is under age 55 to 1/12 of 1% per month.
Our organization endorses both features. We are particularly concerned that
steps be taken to provide more logical consistency to establish eligibility. Under
present regulations, a person with 37 years of service and 54 years old may not
retire while a person with 30 years service may retire at age 55. Similarly, a
person 59 years old with 29 years of service is not eligible for retirement, while
a person 60 years old with 20 years of service may retire. Likewise, a person
61 years old with 19 years of service is not eligible for retirement, while a per-
son 62 years of age with 5 years of service can retire. Any employee who must
resign before eligibility for retirement has been established must wait until age
62 before application for Federal retirement can be filed.
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A flexible plan with optional retirement privileges as provided for in the
Magic "80" proposal would provide Federal employees a more satisfactory op-
portunity and will promote more fairness and equity to those persons who are
forced to retire for personal reasons when they do not quite meet present mini-
mum age and/or service requirements. It is very hard for employees to under-
stand why a person with many years of faithful service cannot receive some
reasonable consideration particularly when conditions beyond their control force
their leaving the Federal Service. If it is not possible to obtain the Magic "80"
retirement policy, we would, as alternatives, favor optional full retirement at any
age after 30 years of service or a graduated scale which could start with 35
years of service, age 50, with the age and years of service graduated as follows :
Years of service:
Age Years of service :
Age
35
--------------------------
50
28
--------------------------
56
34
--------------------------
51
26
---------------------------
57
33
--------------------------
52
24
--------------------------
58
32
--------------------------
53
22
--------------------------
59
31
--------------------------
54
20
---------------------------
60
30
--------------------------
55
10
--------------------------
61
This would maintain the present concept but would provide some flexibility
and permit a logical sequence to establish eligibility for retirement.
The Administration's opposition to the proposed Magic "80" concept is ap-
parently based on the assumption that the cost would be prohibitive. Information
available to us does not support this assumption. Our analysis indicates just the
opposite. Early retirement takes less from the retirement fund both annually
and through the employees life expectancy. The attached table gives the salary
scale of a sample GS-T1 employee, 50 years old in January of 1970 with 30 years
service. In order to provide a direct simple analysis, the attached sample con-
siders only the basic average retirement annuity with no deduction for survivors'
annuity, no merit promotions other than longevity increases which are automati-
cally approved for most Federal employees, and no computed credit for unused
sick leave.
The attached example is illustrative, Each employee's retirement annuity will
vary depending upon the individual personal data such as date of birth, period
and date of employment, average salaries considering specific within grade and
merit promotions, credit for unused sick leave, deductions for early retirement,
survivors' annuity, etc.
Most employees who are healthy, satisfied with their work and are able to
make effective contributions, have a feeling of being needed, and are free from
those personal problems which dictate a change in employment status, will con-
tinue working in order to build up an annuity adequate to provide a satisfactory
income for the employee after retirement. The attached analysis supports this
assumption.
The employees who needed this type of retirement can be grouped into three or
four general categories. The most prominent is the female employee who started at
age 16, 17 or 18, and has completed over 30 years of service before reaching age 50.
She is married, her husband has retired and she would like to join him in retire-
ment. Another is the employee who must change residence due to health prob-
lems in the family or for other compelling reasons must move to an area where
Federal employment is not available. The third. group involves those employees
who feel that their talents can be more productive in another endeavor, many
times part-time employment, outside Federal Service.or their specific skills are
not now needed as program operations are changed or specific functions are being
phased out.
Persons who have not reached the current eligible retirement age and are
forced to accept voluntary separation must either withdraw their contribution
to the retirement fund or must wait and request retirement at age 02. Persons
who elect deferred annuity cannot receive credit for any unused sick leave and
are not eligible for any cost of living increases. In other words, at retirement,
they will receive only that annuity computed for them at the time of voluntary
separation front the Federal Service. This seems very unfair for the employee
with 35 years service at age 54has been a dedicated loyal servant, paid into
the retirement fund but for reasons beyond his or her control must wait 8 years
and then retire generally with less annual annuity than a person who could
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retire at age 55 with 30 years of service. The same applies, but with reduced
annuity losses, to the person under age 60 with 29 years of service, or the
person over age 60 but under age 62 with 19 years service.
The illustration likewise does not substantiate the need for a reduced annuity
for those retiring below age 55. We would recommend legislation that would per-
mit retirement with full annuity at any age when age and service total 80 or
more.
OPEDA, as a professional organization, has supported and worked for a sound
retirement fund and when improved retirement benefits made excessive demands
on the fund we have supported increased salary deductions to cover such cost
in order to keep the retirement fund as solvent as is possible. We worked for
and supported proper financing of the retirement fund as reflected in Public Law
91-93 which requires that the unfunded liability be restored in 30 equal annual
installments. We are convinced that had the retirement fund been handled on a
sound investment basis from the start, the fund would have been more than
adequate today to handle annual retirement claims.
Since in our analysis, enactment of II.R. 3024 will not place excessive addi-
tional claims on the retirement fund and since we support common decency and
equitable treatment for all loyal employees we would urge the enactment of H.R..
3024 without further delay.
While the early retirement provided in the proposed bill will not be used by a
large group of Federal employees, it is important to those who must retire for
personal reasons and to those whose skills are not now needed in present program
functions.
We thank the Committee for the opportunity to submit this testimony and
hope that we have been able to provide essential information that will enhance
the enactment of legislation which will provide more equitable consideration for
all employees, including those who were not born or did not start their Federal
employment at the most opportune time to fit the rigid formula in the present
statutory requirements.
Sincerely yours,
GEORGE E. BRADLEY,
Executive Director.
[Attachment is retained in the files of the subcommittee.]
ORGANIZATION OF PROFESSIONAL EMPLOYEES
OF THE U.S. DEPARTMENT OF AGRICULTURE,
Washington, D.C., May 15, 1974.
Chairman, Subcommittee on Retirement and Employee Benefits, Cannon House
Office Building, Washington, D.C.
DEAR MR. WALDIE : We. believe the table attached to our prepared statement
provides the information requested by Congressman Collins at the hearing on
the morning of May 8 on H.R. 3024. Our statement does not contain specially
prepared actuarial tables but it does list the life expectancy used by the Civil
Service Commission.
Because of the cost of living adjustments to Federal retirement income, it is
very hard to project a supplemental estimate of the additional cost to the retire-
ment fund that would result should the 1-louse approved amendment to S-628,
which would eliminate annuity reduction for survivor's annuity, becomes law.
If we take the example of the GS-11 with an annuity of $5,269 for 30 years serv-
ice at age 50, and $10,656 annuity for 35 years service at age 55, we can show
some comparative data. The current annual. annuity reduction to provide for a
survivor's annuity would be $292.90 for $5,629 annuity and $795.60 for the
$10,656 annuity.
On` an average the male 50 years old would be liable for survivor's annuity
deduction for 26 years, or 21 years for the 55 year old male. If both the retiree
and the spouse are the same age and both retired at age 55, the female spouse
would be expected to live 5 more years and under current law be eligible to re-
ceive 55% of the final adjusted annuity during the period of eligible survivorship.
We sincerely hope this is adequate to meet Congressman Collins' needs.
Sincerely yours,
GEORGE E. BRADLEY,
Hxeeutive Director.
Approved For Release 2005/04/21 : CIA-RDP77MOOl 44RO01 100010001 -1