AN EARLY RETIREMENT PROGRAM FOR CIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-03721A000500030011-0
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 30
• Document Creation Date: December 14, 2016
• Document Release Date: May 9, 2003
• Sequence Number: 11
• Content Type: OUTLINE

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AN EARLY RETIREMENT PROGRAM FOR CIA
CONTENTS
Topic Page
I. An "Early Retirement Program" Defined
II. Employees Covered 1
III. Justification for Early Retirement
- Category A
IV. Justification for Special Early Retirement
Benefits - Category A 4
V. Justification for Early Retirement
- Category B 8
VI. Justification for Special Early Retirement
Benefits - Category B 9
VII. Pertinent Facts 11
VIU. Pertinent Assumptions 14
IX. Specific Criteria for Eligibility
- Category A 16
X. Discussion and Justification of Eligibility
Criteria - Category A
XI. Specific Criteria for Eligibility
- Category B
XII. Discussion and Justification of Eligibility
Criteria - Category B ?
XIII. Legislation and Financing
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AGENDA FOR TASK FORCE OE EARLY RETIRalENT
PROBLEM: To Develop an Early Retirement Program for CIA
I. An 'Early Retirement Program" Defined
For our purposes, an early retirement program would be one in which the
Director under certain circumstances could retire employees beginning at
age 50 or with 25 years of service with immediate annuities, without an
annuity rate reduction for years under age 60. The benefits under this
program should be sufficient to maintain the reputation of the Agency as a
desirable employer and intelligence work as an attractive career field, not-
withstanding the establishment of a positive program to retire an undeter-
mined proportion of the employee body prior to completion of a normal career
span.
II. Employees Covered
Certain employees within two distinct categories would be eligible for
retirement under an early retirement program:
Category A - Those employees whose careers have involved
specializing in the conduct or direct support of clandestine
operations in foreign countries.
Category B - Those employees who (a) are in positions which
directly influence policy or operations, or CO perform critical
evaluation functions, or (c) perform key technical functions.
III. Justification for Early Retirement - Category A
The maintenance of a relatively young work force among our operational
personnel engaged in clandestine activity overseas is essential to the
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mission of CIA. The following factors are pertinent to this conclusion:
A. Physical and Mental Work Demands
The effectiveness of our clandestine operations overseas depends
in large measure upon personnel having the highest degree of vigor,
resilience, adaptability, energy, aggressiveness, vitality, fearless-
ness, and endurance. These traits are normally found in youthful
individuals and tend to deteri.)rate with age. The work of clandestine
operati.rns pers,Dnnel is characterized by uneven and uncertain hours
of work, duty in unhealthy locations with often less than adequate
medical facilities, and arduous, demanding, and occasionally hazardous
assignments in which employees become a direct target for activities
of the opposition, susceptible to immediate attack or seizure in the
event of war or civil disturbance. These conditions combine frequently
to lead to physical and mental exhaustion at an age much lower than is
normally the case for those engaged in more sedentary activity. The
physical and mental requirements of most of the operational positions
overseas are such that they cannot be filled by older men. A full
career leading to retirement at age 62 or more after 30 years or more
of service is not practical for the majority of those personnel re-
cruited, trained, and employed in clandestine operations.
The average length of a career for personnel engaged in clandestine
activity is also shortened by two other factors related to the work
demands of overseas service: (a) the unusual significance of physical
impairments and (b) the necessity for maintaining cover.
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B. Physical Impairments
Frequently, employees and dependents suffer minor chronic ailments
or defects. These impairments, while non-disabling, often limit the
mobility of the employee and are either disqualifying insofar as an
overseas assignment is concerned or seriously affect the vitality and
adaptability of an employee permitted to serve overseas.
C. Cover
Operations officers overseas normally are required to perform under
the cover 3f another goverment or private organization. In many cases,
when this cover is revealed to unauthorized sources, the iLdividual's
usefulness to the Agency is seriously impaired, and therefore it is
often in the interests of the Agency to shorten his career. Cover is
also a limiting career factor in a second sense. Most cover positions,
whether Governmental or commercial, are normally manned by younger per-
sonnel of the host organization. To use older officers for such assign-
ments is thus often operationally unsound.
D. Flexible Requirements
The constantly changing nature of clandestine intelligence opera-
tions produces changes in the types of personnel required. Shifts in
the kinds of skills, experience, and mental and physical traits neces-
sary to perform current assignments cannot always be met by concentrated
retraining of personnel on duty, nor by normal attrition and hiring
practices. The need frequently exists to release personnel who have
thus become occupationally surplus to permit the input from time to
time of those who qualify for new or changed programs. Early retire-
ment would be one of various programs which encourage attrition at or
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before that point in an individual's career when he may be losing his
drive, zest, health and tolerance for personal sacrifice. It is in the
Government's interest for the Agency to maintain an unusually flexible
work force due to its necessary inability to forecast accurately the
specifics of its long-range personnel requirements.
E. Manpower Distribution
The need for a young work force in the Clandestine Services is thus
established. However, manpower studies reveal that unless certain reme-
dial action is taken, the Clandestine Services will be staffed ny a pre-
dominantly older group of employees in 10 to 15 years from now. Therefore,
steps mus:, be taken to achieve an acceptable distribution of personnel
by age groups and the Agency must be equipped with the legal and admin-
istrative authority needed to maintain such a distribution. An early
retirement program is one method of achieving the desired result.
IV. Justification for Special Early Retirement Benefits - Category A
Recognizing that many of the employees whose "early retirement" is in
the Agency's interest could be separated under the present Surplus Personnel
Program, it is necessary to establish the necessity for granting special
retirement benefits to such individuals.
A. Moral Obligation
That the group of employees serving in the clandestine operations
under conditions as described above deserve special retirement consid-
eration is almost self-evident. It is in the Agency's interest to sepa-
rate certain employees who have lost usefulness by virtue of diminishing
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vitality, loss of cover, physical impairments, or the changing require-
ments of clandestine activity. These factors occur through no fault of
the individual, and in fact are often caused by the nature of the assign-
ments the Agency has imposed upon the individual. The result is that an
employee in the Clandestine Services can look forward to a span of
career employment which is less than that of the average Government
employee. The Government, therefore, has a moral obligation to provide
this individual with compensating retirement benefits.
B. Inc_)nveniences and Sacrifices
In addition to the justificatiors cortaired in paragraph III, above,
there are other factors which do not necessarily limit the span of use-
fulness of an employee serving in clandestine operations, but which
nevertheless involve inconveniences and sacrifices which deserve sympa-
thetic consideration in determining employment benefits. These include
the following: security limitations on freedom of expression and action;
subjection to continuous scrutiny and some degree of invasion of personal
privacy; cover restrictions which impinge on living habits and require
some degree of continuous, conscious attention; a sense of dedication
that will tolerate anonymity and the subordination of normal family and
social life and of overt status expectations; limited opportunity to
exercise choice concerning the location and nature of duty due to the
practice of assignment by direction; and frequent job rotation requiring
repeated adjustments to various job requirements and to changes in the
area of close personal work relationships.
C. Problems in Convertin to Other Employment
An employee who retires "early" generally cannot afford to live on
his annuity alone and therefore is obliged to seek other employment to
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supplement his retirement income. The nature and circumstances of
Agency service, however, places him at a distinct disadvantage in making
occupational transfers. Employment with CIA, particularly in the clandes-
tine operations, frequently: (1) requires the acquisition and applica-
tion of skills for which requirements in other Government or commercial
fields of employment are either rare or nonexistent; (2) effectively
prevents employees from studying, pract:cing, or otherwise developing
or retaining proficiency in an established occupation or profession;
and (3) prevents the individual, for reasons of operational cover or
security, from describing or confirming to a prospective employer the
scope and level of his duties and responsibilities. The "early retiree"
through no fault of his awn, is thus forced to make substantial and
significant occupational readjustments and, at least initially, finan-
cial adjustments involving hardships to himself and his family. This
is especially pertinent to persons who, during the predominant part of
their service, have been trained for and assigned to intelligence,
operations, or communications positions which are part of the overseas
structure of the Agency's organization. In acquiring the skills and
abilities which have made them valuable to the Agency, many employees
now on duty have departed from the career fields for which they initially
prepared or in which they were established when they entered the Agency.
Agency employees also find conversion to other Government employ-
ment more difficult because most lack civil service status. Finally,
there is a general reluctance of both Government and private industry
employers to hire former Agency personnel because they will not be con-
vinced that the employee has severed all official ties with the Agency.
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D. A Recruitment and Retention Device
If it is agreed that the conditions of Agency service are so exacting
and demanding that the Agency must encourage or require the establishment
of a short career for certain individuals, then it follows that these
individuals should receive sufficient benefits under an early retirement
program to indemnify them for the loss of employment in their chosen
career field.
If applicants for Agency employment are to be asked to enter into
an occupational field in which a full career is to be or may very likely
be denied, adequate inducer:lents must be assured in compensation. Thus,
the retirement indemnity should represent to the employee throughout
his career a reasonable compensation for loss of employment after a
relatively short span of career service and also sufficient financial
security to permit orderly re-establishment in a new career field with
a probable permanent reduction in earning power. The benefits of the
early retirement program must be sufficient to maintain the reputation
of the Agency as a desirable employer in a highly competitive employment
market and they must be sufficient to impart a sense of employment secu-
rity to those engaged in clandestine activities if we hope to maintain
the attractiveness of this career field.
Early separation of career employees without adequate retirement
compensation would clearly cause deep resentment in such individuals
which would lead to unfavorable publicity among employment sources.
Additionally, a sound retirement program resulting in the separation of
"satisfied" employees would serve as a deterrent to security indiscretions.
Another by-product of an early retirement program, which would serve
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as both a recruitment and retention inducement, would be the opening up
of positions in the middle and higher grades. Early retirements thus
would provide an accelerated rate of advancement. The Agency will not
be able to maintain its present level of clandestine operational activity
unless steps are taken to provide for the annual recruitment of a sub-
stantial number of capable young officers and for their advancement at
a reasonable pace. To be able to recruit these young officers, an equal
number must be separated each year. To be able to promote them, a means
must be found to effect such separations among personnel occupying medium
and higher grades. Normal attrition will not accomplish this. Because
the duration of an intelligence operations career is very likely to be
shorter than in other occupations, the opportunity for advancement at
reasonable intervals is vital to the Agency's ability to recruit and
retain high caliber personnel on a career basis. An early retirement
program will assist in attaining this desired goal.
Finally, an attractive retirement program in itself will serve as
an incentive for career employees to remain with the Agency until eligible
for such retirement rather than to seek other employment for reasons of
personal and financial security at the zenith of their productivity and
usefulness.
V. Justification for Early Retirement - Category B
Category A refers to a group of employees, those involved in the conduct
or direct support of clandestine operations, for whom an early retirement
program is particularly desirable. Early retirement is also desirable in
certain individual cases, identified here as Category B, where clandestine
service overseas is not necessarily an element, but where it is in the
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interest of the Government for the Director to have special retirement
authority. These are cases in which the mission of CIA would be aided by
the removal from office of any officer who is in a position to directly
influence policy or operations, who performs a critical evaluative function,
or who performs a key technical function.
It is desirable to separate officers in key Agency positions who, despite
many years of valuable and devoted service, have for various reasons lost
their spark, drive, creativeness, imagination, vitality, or perspective to
such a degree that their retention makes them a liability rather than an
asset. Also included in Category B would be officers who have responded well
to past requirements but are unable to adjust and perform effectively under
new programs or conditions of management. Retirement of such officers would
be directed only in the event that their reassignment within the Agency is
not practicable.
The critical mission which CIA performs dictates that it be staffed on
a continuing basis with the highest caliber personnel in its key positions.
CIA cannot afford the luxury of retaining in these positions faithful career
servants who no longer are able to perform at full effectiveness.
VI. Justification for Special Early Retirement Benefits - Category B
If it is agreed that it is in the Agency's interest to separate key ,
officials under circumstances as described above, we must still establish
that these individuals are entitled to increased annuities under an early
retirement program. The Director has the authority to separate these
individuals without granting special retirement benefits, and the factors
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related to service overseas which serve to justify an early retirement pro-
gram for officers in the Clandestine Services are not normally present in
these Category B cases. Nevertheless, early retirement benefits are justifi-
able for a number of reasons.
In the first place, these individuals have served the Government long
and faithfully in positions of importance. In a sense, they are being asked
to retire becavse they have alvanced to key positions in an organization
having a critical mission to perform in the U. S. Government. Their early
separation would not be necessary had they been able only to reach positions
of lesser importance. Their conduct and performance is such that separation
for cause would not be a proper action. Yet, their performance is below the
level desired in key positions, so that it is in the interests of the Govern-
ment to replace them with more able officers. The Director could declare
them surplus, but retirement seems the more suitable course for individuals
with 20 or more years of Government service in positions of responsibility.
Although these individuals may not have served for any length of time
in clandestine activity overseas, nevertheless they have suffered many of
the disadvantages peculiar to Agency service. These include the following
proglems in converting to other employment because of the nature of their
Agency employment: possession of skills which are not easily transferable,
limitations on describing duties and responsibilities to prospective employers,
and lack of civil service status in most cases. The advantages of avoiding
resentment in retired clandestine operations officers by granting adequate
retirement compensation apply equally to individuals in this Category.
The moral obligation to provide an adequate retirement annuity to
senior officials separated short of a normal career in the interests of the
Government is no less than the obligation to provide similar compensation to
operations officers.
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VII. Pertinent Facts
A. Precedent exists for early retirement systems for civilian Government
employees whose working conditions are comparable in some respects to certain
employees engaged in clandestine operations. This precedent is found in the
Foreign Service Act of 1946 for Foreign Service Officers and in Section 691 (d)
of Title V, USCA for persons engaged in the investigation and apprehension of
criminals.
Career prospects measured in terms of conditions of retirement offered
today by the Foreign Service, the military services and the investigative
services of the Federal Government are generally superior to those offered
by the Civil Service Retirement system to which employees of CIA belong.
Congress has recognized in the retirement programs of these other serv-
ices that the specialized nature of the individual's training and experience
during his career may affect adversely his ability to obtain other employment
upon retirement.
The military services and the Foreign Service in certain cases permit and
in other cases require early retirement as a means of keeping open the chan-
nels of advancement for junior officers.
These are the important general features of the various retirement pro-
grams of the Federal Government (the exceptions and refinements are omitted):
1. Foreign Service
a. Voluntary retirement at age 50 with 20 years of service
and with the consent of the Secretary.
b. Mandatory retirement at age 60.
c. Annuities computed at 2% of the average "high-5" salary
multiplied by the number of years of service not exceeding 35 years.
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d. Employee contribution of 6L1 base pay.
2. Military Services
a. Voluntary retirement with 20 years of service regardless
of age.
b. Mandatory retirement at age 60.
c. Annuities computed at 232-% of base pay at time of retirement
multiplied by the number of years of service; maximum annuity not
to exceed 75% of base pay.
d. No employ,e contribution.
3 Investigative Employees
a. Voluntary retirement at age 50 with 20 years of investi-
gative service and with approval of agency head and the CSC.
b. Mandatory retirement at age 70 for those with 15 or more
years service.
c. Annuities computed at 2% of the everage "high-5" salary
multiplied by the number of years of service; maximum annuity
not to exceed 80% of the "high-5" average salary.
d. Employee contribution of q% base pay.
4. Civil Service Retirement System
a. Voluntary retirement at
(1) age 62 with 5 years service.
(2) age 60 with 30 years service.
(3) age 50 with 30 years service, but with actuarial reduction.
b. Mandatory retirement at age 70 for those with 15 or more
years service.
c. Annuities computed by taking li% of the average "high-5"
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salary multiplied by 5 years of service; adding 1 3/4% of the
same "high-5" multiplied by the years of service between 5
and 10; and adding 2% of the same "high-5" multiplied by all
service over 10 years; maximum annuity not to exceed 80% of the
"high-5" average salary.
d. Employee contribution of 6% base ray.
B. The Director does not have the legal authority to remove CIA employ-
ees from the Civil Serv*ce Retirement System. Such action would require
prior legislative approval.
C. The Agency presented an early retirement proposal for consideration
by the White House, the Bureau of the Budget and the Civil Service Commission
in 1957. This proposal provided for the granting of extra service credits
for years served abroad, a provision rejected as undesirable by the then
Chairman of the Civil Service Commission, Harris Ellsworth, who indicated,
however, that the Commission would not object to a proposal along these
lines: voluntary retirement at age 50 with 20 years Federal service, of
which not less than 10 years covers civilian service in foreign areas,
including 5 years overseas service for CIA, and authorizing retirement at
full annuity computed at the 2% rate, subject to approval by the Director.
This has become known as the "Ellsworth Formula."
D. In 1958, the Actuaries, drafted an actuarial study on an
Agency early retirement plan providing for voluntary retirement at age 50
with 20 years Federal service, 10 years Agency service, 10 years overseas
service, and 5 years Agency overseas service at full annuity computed at the
2% rate. No affirmative action based upon the results of this draft has been
taken.
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E. In 1960 the Agency obtained approval of the Executive Branch and the
concurrence of appropriate congressional committees for specific administra-
tive procedures by which the Director may separate personnel who become sur-
plus to Agency needs through no fault of their own and to pay separation
compensation to these individuals under certain circumstances.
F. Congress has been unreceptive to relatively recent attempts by
civilian agencies to obtain legislation for retirement annuity computatioi.
at a rate greater than 2o Or for special retirement consideration as a
reward for overseas service of a particular type.
G. There are about 300 different retirement proposals pending before
Congress, among which are several bills to amend the Civil Service Retire-
ment Act so as to provide for retirement on full annuity at age 55 after 30
years of service.
VIII. Pertinent Assumptions
A. An early retirement program cannot be justified for CIA personnel on
the basis of CIA employment alone. The conditions of employment of most
individuals serving in DD/I and DD/S components are not so unusual within
Government as to warrant special retirement benefit considerations.
B. The mission of the Clandestine Services is unique within the Govern-
ment. Their organizational and personnel problems are unlike those of other
Government agencies. Although similar to the Foreign Service, military
services, and investigative services in certain respects, the differences
are of such significance to merit a special retirement program tailored to
their own requirements and problems.
C. The present climate of thinking within Congress and the White House
regarding the subject of retirement and its varied implications (attitudes
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and policies toward older employees, soundness of retirement fund, relation
to pending personnel legislation, etc.) is not known to preclude presenting
an early retirement plan for CIA at this time.
D. The provisions of the Civil Service Retirement system and of the
Agency program for the separation of surplus personnel provide equitable
benefits to employees who must be separated through no fault of their own
but who do not qualify for inclusion in early retirement Categories A or D,
as defined in paragraph II, above.
E. The presentation of any proposal for early retirement legislation
for CIA must take account of the previous proposal which the Agency has pre-
sented and of established procedures for the separation of surplus personnel.
It must also be geared to the current political climate.
F. The Agency will continue the policy of retaining an individual who
is within 2 years of eligibility for optional or discontinued service retire-
ment until he attains such eligibility as long as he can be usefully assigned.
This same policy would be extended to those employees within two years of
eligibility under an early retirement program.
G. The provisions of any early retirement program should be so drafted
that such a program is not regarded as a benefit in itself which employees
would normally seek; instead, the benefits should be regarded as providing
no more than equitable compensation for those whose separation is effected
primarily in the Government's interest.
H. An early retirement program which provides special benefits for
employees serving in the clandestine operations and for certain key offi-
cials is not to be regarded as a cure-all for such problems as separating
surplus personnel, opening advancement opportunities for junior personnel,
or providing adequate benefits to those exposed to the hardships, incon-
veniences and restrictions of a career in clandestine activity. An early
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retirement program would serve, however, as a personnel management device
supplementing such programs and policies as:
1. The statutory power of the Director under the authority of
section 102 (c) of the National Security Act of 1947 to terminate
the employment of any Agency employee for cause
2. The separation of surplus personnel
priate separation compensation
with appro-
3. Career Redirection within CIA in order to make more effec-
tive use of manpower on hand. In the case of older employees,
reassignment to less active positions which will utilize the depth
and breadth of past experience.
4. An active out-placement service to assist in external
career direction for employees who are resigning.
5. Adequate compensation and allowances during employment for
hazardous duty, assignment to unhealthful or otherwise undesirable
posts, and for the expenses and inconvenience of frequent rotation
between headquarters and overseas.
IX. Specific Criteria For Eligibility - Category A
An early retirement program for certain personnel whose careers have
involved the conduct or direct support of clandestine operations is proposed
as follows:
A. Voluntary retirement at age 50 with 20 years of Federal service,
certain CIA service requirements as described below, and with the approval
of the Director:
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Year of Years of
Retirement Federal Service
Years of
CIA Service*
Years of CIA
Service Overseas
1962
20
10
5
1963
20
11
5
1964
20
12
6
1965
20
13
6
1966
20
14
7
1967
20
15
7
1968
20
16
8
1969
20
17
6
1973
20
18
9
1971
20
19
9
1972 and forward
20
20
10
For the purpose of this program, CIA servlce cannot
be considered to have begun prior to 18 September 1947.
B. Mandatory retirement at age 60, with special provisions for excep-
tions by the Director for certain key officials.
C. Annuities computed at 2% of the average "high-5" salary multiplied
by the number of years of Federal service; maximum annuity not to exceed
80% of the "high-5" average salary.
D. Continued employee contribution at rate of 0% of base pay.
X. Discussion and Justification of Eligibility Criteria - Category A
A. Voluntary Nature. A choice exists between establishing a program in
which individual requests for early retirement require approval by the Direc-
tor case by case from one in which early retirement is generally automatic
on the attainment of eligibility. In the latter case, the Director might
approve individual requests for extensions of employment as exceptions to
the general rule. If it is desirable that most employees 'retire on attaining
eligibility, the latter program has merit. On the other hand, if it is desir-
able that only those who are considered to have lost their usefulness be
separated, the program should require the Director's approval of individual
applications for retirement.
The question then arises regarding the means of separating an employee
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who should be separated in the interest of the Government, has met the mini-
mum eligibility requirements for early retirement, yet refuses to volunteer
for separation. The answer is that if the number of persons not desiring to
retire becomes a problem of manpower imbalance, Separation of Sur- 25X1A
plus Personnel, would be invoked.
A system which combines voluntary early retirement with the Director's
approval and a means to encourage certain individuals to volunteer provides
a better tool for manpower control than a system which expects or requires
most employees to retire wher they become eligible.
The proposed early retirement program gives the Director the flexibility
to (1) encourage one officer to retire voluntarily or (2) decline to approve
the request for early retirement by another officer whose continued services
are required. (As shall be discussed later, this latter officer does not
thereby lose entitlement to the more favorable annuity computation of an
early retirement program.)
B. Age 50. There is general agreement within the Agency that 50 years
of age is an appropriate minimum requirement for early retirement of the
group of employees who are engaged in the conduct or direct support of cland-
estine operations. This age limit has precedent in the retirement plans of
Foreign Service officers and of investigative employees. There is no evidence
that a lower age minimum is either needed or desired, and a much higher age
minimum would tend to make an early retirement program relatively insignifi-
cant in comparison with the present Civil Service Retirement system.
C. Years of Service. There is general agreement that a retirement pro-
gram based upon less than 20 years of service at age 50 cannot be supported,
either on an actuarial basis or from the viewpoint of those annuitants who
must rely on their retirement annuity as their major source of income. On
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the other hand, by raising the minimum service requirement above 20 years
an early retirement program would less effectively achieve a basic purpose:
the maintenance of a young work force in the Clandestine Services. Prededent
is established for a 20 year minimum service requirement in the retirement
plans of the
employees.
If there
must be made
Foreign Service, the military services, and for investigative
is agreement on a 20 year service minimum, a determination then
regarding how much of this service should be CIA service. It
should be noted that the Foreign Service (1) requires only 5 years of credit-
able service for which full contributions have been made to the Foreign
Service Reserve and Disability fund and (2) credits Federal civilian service
prior to appointment as a Foreign Service officer; that the military services
credit only that service which, is military; and that the investigative serv-
ices require at least 20 years of the total, Federal service to be spent in
law-enforcement duties.
The justification presented in paragraphs III and IV, above, for an
early retirement program for employees in the Clandestine Services is in
itself an argument
years CIA service.
inconveniences and
in favor of establishing a minimum requirement of 20
The factors of physical, and mental work demands, the
sacrifices attendant upon clandestine activities, and
the problems in converting to othwr employment are valid reasons supporting
a special retirement program only for those employees whose major career
has been with CIA. It would be difficult to defend special retirement bene-
fits for those employees who, for example, have spent only a few of their
most recent working years with the Agency.
Establishing a 20 year CIA service requirement at this time, however,
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would make an early retirement program non-operative for the next five years,
and only slightly effective for the following five years. It is believed
necessary to define CIA service as beginning on 18 September 1947 in order
to avoid the vagaries in attempting to assess creditable service in predeces-
sor civilian and military intelligence organizations. Therefore, so that an
early retirement program will serve as an immediate tool for manpower control,
a gradual increase in the minimum CIA service requirement from 10 years in
1962 to 20 years in 1972 is proposed. This formula would provide immediate
early retirement eligibility for a number of employees who entered on duty
from the date of the Agency's birth through the period of heavy recruitment
in the early 1950's.
D. Years of Overseas Service. The requirement of overseas service for
retirement eligibility has two aspects which are not entirely compatible
with one another. There is on the one hand evidence of a lack of receptive-
ness by Congress and elements in the Executive Brandh to special retirement
consideration for overseas service with a particular Agency. On the other
hand, within this Agency, the employees for whom early retirement coverage
is considered desirable are those most easily identified by their overseas
service.
The Comdittee on Retirement Policy for Federal Personnel during the
Eisenhower administration cautioned against granting discriminatory rewards
for overseas service of a particular type. The Chairman of the Civil Serv-
ice Commission in 1957, commenting on a CIA proposal for extra retirement
credit for overseas service, stated that he saw no reason why the earlier
retirement right should be allowed persons working overseas for a particu-
lar Government agency when other Federal employees serving overseas under
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similar handicaps do not enjoy this special privilege. In recent years,
bills calling for an "Overseas Career Employee" retirement formula for 10
or more years of foreign service and one for a 2.4% annuity credit for over-
seas service died in Congressional committees. There is also a growing
belief and acceptance among many learned observers of the American overseas
that overseas service in general today is a benefit in itself rather than a
sacrifice. This conclusion leads to difficulty in supporting any additional
fringe benefits related to uverseas service.
Two corollary conclusions follow from the above. First, the basis for
justification of an early retirement program cannot stem from overseas serv-
ice per se. Instead CIA's case must be presented on the basis of the nature
and implications of certain kinds of activity peculiar to CIA, which coinci-
dentally are predominantly carried on overseas.. Second, it would be diffi-
cult to justify a formula which would credit for retirement purposes overseas
service other than with CIA.
Completion of 10 years CIA service overseas out of a minimum of 20 years
CIA service is proposed as a means of identifying an individual as a member
of the basic group entitled to the increased benefits of an early retirement
program. Because most of the reasons supporting an early retirement program
are related to overseas service, it is felt that special benefits cannot be
supported for those who spend less than approximately one half of their CIA
service overseas. The rotation practice of the Clandestine Services further
supports the conclusion that a 10 year minimum is a practical one. Ag4in,
for essentially the same reasons which favor a graduated scale for years of
CIA service from 1962 until 1972, an overseas service scale at approximately
the same rate is proposed.
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Identification of this group by a minimum overseas service requirement
is considered the only method which is both objective and practical in an
organization which does not have a pre-defined corps of foreign service
officer personnel.
An alternative method to using the fixed criteria of overseas service in
order to identify personnel eligible for early retirement would be to evaluate
all of the factors which justify an early retirement program for the Clandes-
tine Services (overseas service, hardship posts, loss of vitality and adapt-
ability, physical impairments, acute cover problems, loss of skills for other
employment, etc.) and determine on an individual basis who qualifies. This
system would have the advantage of extending the benefits of early retirement
to only those particular employees who are considered truly to merit these
benefits and would exclude those employees who may have served overseas for
10 years but who have not actually suffered significant hardships or incon-
veniences. In other words, the employees would not only have to meet the
age and length of service requirements but also be found in fact to have met
the conditions which justify the special provisions of the program.
Although a system which attempts to determine whether certain conditions
of a subjective nature have been met prior to granting retirement eligibility
has metit its disadvantages appear to outweigh its advantages. Specific
eligibility criteria simplifies administration of the program and permits
employees to plan ahead for retirement. Inevitably, the establishment of
any such criteria will make it appear that some "deserving" individuals are
made eligible for special benefits. Nonetheless, any deviation from the
application of such criteria in an attempt to judge selected cases on their
individual merit would invite administrative chaos.
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E. Crediting Non-Staff Employment. If it is agreed that an early retire-
ment plan formula will include length of CIA service and CIA service overseas
criteria, then determinations must be made whether to include or exclude employ-
ment with CIA in such categories as military detail, contract employee, con-
tract agent, and career agent.
F. Mandatory Retirement. If an early retirement program lowers the
voluntary retirement age from age $0 (under the present Civil Service Retire-
ment system) to age 50, then it follows that a lowering of the mandatory
retirement age is justified and reasonable. If a primary purpose of an early
retirement program is to maintain a younger work force, this will be further
accomplished by reducing the mandatory age requirement from 70 to 60.
It should be noted that the mandatory retirement age for the Foreign
Service and the military services is 60 and that for investigative employees
it is the same as under the Civil Service Retirement system, age 70. In each
of these syttems there are refinements and exceptions permitted in certain
types of cases. It is suggested that the Director seek the authority to
except from the mandatory retirement provision any employee when in his Judge-
ment such action is in the best interests of the U. S.
G. Annuity. Once an individual attains eligibility for the more liberal
annuity of an early retirement program by meeting the age, length of service,
and length of overseas service requirements, this eligibility should not be
lost, even though the individual is not retired as soon as he reaches eligi-
bility. Retirement policy should not penalize an individual who has earned
special early retirement benefits but who remains on extended duty in the
Agency's interest.
An annuity computation formula more generous than is trovided under the
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Civil Service Retirement Act is justified in order to make the earlier retire-
ment (with resultant short service) more econamically possible. The benefits
under an early retirement program should be equitable for service rendered,
yet should not be so attractive that employees who should be retained will
want to retire. The benefits must be properly balanced with the objectives
of the program. Problems are invited if the benefits are either too small
or too great.
It is believed that an early retirement program as outlined in this study
for employees in Clandestine operations will not result in more individuals
wanting to retire as soon as they meet the eligibility criteria. In every
case the reduction of total years of creditable service through early retire-
ment will reduce an individual's annuity by a substantial amount which can
be only slightly offset by an increased annuity rate. The most an early
retirement program offers to the employee is a slightly greater annuity at
a particular age than he would receive at the same age under the Civil Serv-
ice Retirement system.
An annuity rate of 2% without reduction for years under age 60 is pro-
posed as the highest rate which the Executive Branch and Congress could be
expected to approve for a civilian agency. There is evidence that attempts
by other organizations and groups to increase this rate have failed. The
general 2% annuity rate maximum is related to the costs of a retirement pro-
gram, and it is unlikely that a more favorable annuity formula could be
approved without an increase in contributions. Annuities for the Foreign
Service and investigative employees are camputed on a straight 2% basis.
The military services rate is 2i%, but of a base pay which does not include
the housing and subsistence allowances.
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XI. Specific Criteria for Eligibility - Category B
An early retirement program for certain personnel who either are in posi-
tions which directly influence policy or operations, perform critical evalua-
tion functions, or perform key technical functions is proposed as follows:
1. Involuntary retirement at the discretion of the Director at
age 50 with 20 years of Federal service or at any age with 25 years of
Federal service.
2. Annuities computed at 2% of the average 'high-5" salary
multiplied by the number of years of Federal service; maximum annuity
not to exceed 80% of the "high-5" average salary.
3. Continued employee contribution of 6e0 of base pay.
XII. Discussion and Justification of Eligibility Criteria - Category B
A. Involuntary Nature. Early retirement under Category B is not earned
in the sense that it is earned by Category A personnel. Neither is it the
type that can be pre-determined or planned for in advance by the individuals
concerned. It would be used in the very limited number of cases in which
the Director determines that a key official should be separated in the
Government's interest and deserves special retirement benefits as a result
of past contributions. Category B retirement cannot be applied for and
there are no fixed internal criteria to be met.
B. Age and Length of Service. The reasons for early retirement under
Category B are not necessarily related to CIA service overseas, career tenure
with CIA, the maintenance of a young work force, or other factors of primary
significance in Category A. Separating a particular person from a particular
position and giving him equitable retirement benefits is the fundamental pur-
pose for including a Category B under an early retirement program. Although
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the Director will exercise his option under Category B in a very limited
number of instances, this authority should extend over as large a group of
personnel as possible in order that it serve its purpose effectively. There-
fore, the only limiting specific criteria proposed are the minimum age and
service requirements which would provide for a reasonable retirement annuity:
50 years of age with 20 years of Federal service or 25 years of Federal serv-
ice regardless of age. This formula combines various features of other Federal
retirement programs to give the Director the widest possible latitude in
separating in the Government's interest key employees with equity.
C. Annuity. An annuity rate of 2% without reduction for years under
age 60 is proposed for essentially the same reasons as already cited in para-
graph X-G, above. However, under Category B, an individual would only become
entitled to this formula when his retirement is so ordered by the Director,
The question of whether eligibility for a special annuity once attained should
ever be lost would never arise under the Category B concept. A special
annuity benefit never becomes a matter of right. It accrues to the individual
only after the fact of a separation determination made by the Director.
D. Notice. Although early retirement under Category B lacks fixed
internal criteria and. thus cannot generaLly be pre-determined or planned
for by the individual, it is recommended that reasonable notice be given to
an employee so that he may plan addquately for the future. Formal notifica-
tion not less than one year nor more than two years in advance of separation
is suggested.
E. Relation to Civil Service Retirement System. It is proposed that
the early retirement benefits under Category B not be extended to 4ndividuais
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who qualify for optional retirement (age 60 with 30 years of service; or
between ages 55 and 60 with 30 years of service, but on a reduced annuity)
under the present Civil Service Retirement system. For employees having the
length of service to meet these criteria the Civil Service system is believed
tat:provide an equitable annuity.
F. Number Limitation. In view of the wide latitude of retirement
authority with which the Director would be invested under Category B, a limita-
tion on the number of employees the Director may separate annually under this
Category may be necessary in order to gain approval of the program from the
Executive Branch and Congress.
XIII. Legislation and Financing
A. CIA Retirement Act vs. Amendment to Civil Service Retirement Act.
A determination must be made whether a special retirement program for CIA
should be part of the present Civil Service Retirement system, controlled
and administered by the Civil Service Commission in the way the Commission
handles retirement for employees of investigative agencies, or whether it
should be separate and administered by the Agency in the way the Department
of State handles the Foreign Service Retirement system. A CIA retirement
act would allow for the internal administration of the system without refer-
ence to the authority or review of the Civil Service Commission. An amend-
ment to the Civil Service Retirement Act, on the other hand, would take
advantage of the existing framework which could be modified only to the
extent the Agency desired. The individual mechanics of such items as
"annuities to survivors", "return of deposits", "reduced annuities" would
not have to be spelled out as they would if an entire retimement system were
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adopted. The advantages of an amendment to the Civil Service Retirement
Act appear to outweigh those of a CIA retirement act principally on the basis
of simplicity of application.
B. Director's Power. Basic to any proposal for new legislation which
would affect CIA must be the consideration of whether or not the new legis-
lation might in any way restrict the existing authority of the DCI. Caution
must be exercised to assure that what appears to be a gain in benefits to
CIA employees does not result in an encumbrance on the Director's powers.
C. Absorbing Program Costs. Two approaches could be followed regarding
the absorption of the extra costs to the Government of an early retirement
program for CIA. One approach would be to soft-pedal the costs of such a
program and presume in drafted legislation that the costs will continue to
come out of the regular Civil Service retirement fund, as is the case with
respect to the special retirement provisions for investigative employees.
A second approach would be to volunteer to pay out of current Agency appro-
priations a certain aggregate sum each year which would actuarially represent
the additional cost to the retirement fund of the early retirements planned
for that Fiscal Year. The sum for each annuitant would be actuarially com-
puted to reflect his life expectancy and the number of years of service by
which the individual was preceding his normal optional retirement time. This
approach probably would be saleable but would subject the retirement program
to an annual review by the Bureau of the Budget and by Congress as a part of
the annual appropriations review. This element of fiscal control, however,
is a reasonable and justifiable price tp pay, if necessary, for a CIA early
retirement program with attractiveness as a recruitment and retention device.
D. Specific Legislation. It is proposed that we attempt to obtain as
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broad legislation as possible in order that the Director have the greatest
degree of flexibility in administering the program in accordance with the
needs of the Agency. We must ;justify our need for early retirement in detail,
but should attempt to avoid committing ourselves to fixed criteria.
It is recommended, therefore, that we ask for legislation which would
permit the Director to retire selected employees either at age 50 with 20
years of Federal service or with 25 years of Federal service regardless of
age and give them a 2% annuity rate without reduction for years of age under
60. In consideration of this broad authority, the Director would agree to
submit on a periodic basis the details of internal administration of the
early retirement program to the appropriate Congressional committees.
Before any early retirement program proposal is presented to the Director
for his consideration and approval, it is expected that our Legislative
Counsel will have made at least a tentative determination that such a pro-
posal stands a chance of gaining Congressional acceptance. The desirability
of any plan must, of course, be related to its practicability in terms of
winning the necessary concurrences. We must attempt to assess what is possible,
and then decide if it is worth going after.
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