SECTIONAL ANALYSIS AND EXPLANATION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00498A000500160020-7
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 26
• Document Creation Date: December 9, 2016
• Document Release Date: July 21, 2000
• Sequence Number: 20
• Content Type: REGULATION

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SE=ONAL ANALYSIS AND EXPLANATION
TITLE I-?-FINANCING
Section 101 amends section 111 of the Central Intelli
e
a
g
nce
gency Retire-
xnent.Act of 1964 for Certain Employees, as amended, to add three definitions
concernin
th
di
f
g
e
un
ng of the System:
"Fuzed balance" is defined as the par value of se
iti
cur
es.
in which retirement money is invested plus the uninvested cash
remaining in the Retirement Fund.
"Unfunded lability" is defined as the estimated amount
needed to finance all benefits payable from the Fund less the
money now in the Fund and to be placed in the Fund in the
future.
Normal, cost" is defined as the level percentage of
?,p?ayroU required to meet the cost of benefits payable under
"tile system, less the expenses attributable to service
performed under another retirement system.
The preceding definitions are necessary for implementing subsequent
provisions of the bill; definitions comparable to the first two were adopted
by the Civil Service Retirement System under section 101(3) of Public Law
91-
93; the normal cost definition is similar to that proposed-for the Foreign.
Service syste^~
Section 102 amends section 261 of the Act to add three new paragr?a.phs
cone-rin
the fundi
f th
g
.~g o
e System:
New paragraph (b) authorizes appropriations to the Fund
in equal annual installments over a 30--year period to finance
any newly created unfunded liability incurred by the enactment
of future legislady.)n, or the exercise of authority based. on
statute, includic_?;; benefit improvements for active employees,
extension of co-%,-,!rage to new groups of employees, genera.].
salary increases, and any new statutory annuity increases
(other than automatic cost-of-living adjustments). Interest'
would be require, to be included in these amortized payments at
the rate used it the then most recent valuation of the system.
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New paragraph (c) provides authority for annual appropriations,
for that portion of the normal cost of the System which is not being
currently defrayed by contributions.
New paragraph (d) provides authority for annual appropriations.,
for interest on the unfunded liability computed for that year at. the
interest rate used in the then most recent valuation of the System,
and for that portion of disbursement for annuities for that year which
the Director estimates is attributable to credit allowed for military
service. Payments under this paragraph would commence with fiscal
year 1977, at 70 percent of the prescribed amount. An additional
10 percent would be paid in each subsequent year until, in 1980 and
in each subsequent year, 100 percent of the prescribed amount would
be paid.
Provisions identical to new paragraphs (b) and (cl;) except for a
change in the effective date and a change in the appropriation authority in
paragraph (d), were enacted for the Civil Service by sections 103(a) (2)
and 103(b) of Public Law 91-93 and for the Foreign Service by sections
104(a) and 104(b) of Public Law 91-201. A provision similar to new paragraph
(c) has been proposed for the Foreign Service system except for a change- in the
appropriation authority.
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Section 201 retaoves dependency requirements from the definition of
the term "widoweers" and.. thereby conforms the Act to the requirement.of
Public Law 92-187 ccnc: rning equality of benefits for married women Federal
employees.. As a result, widowers of female participants or retirees will be
accorded the same benefits as widows of deceased male participants or
retirees. Section 20:; also changes the definition of child to include an adopted
child who is under a petition for adoption at the time of the participant's
death and hakes suck, child -eligible. for survivorship benefits if the surviving'
spouse proceeds with. the adoption. Section 201 further changes the definition.
of 'widow" and "widower" to reduce from two years to one year the marriage
requirement to be entitled to a survivor annuity and thereby conform the Act
to Public Law 93-260.
Section 202 amends the Act as follows:
First, it amends the current provision for annuity for
surviving spouse to whom the retiree was married at the time
of retirement by authorizing payment of that annuity to a
subsequent spouse. The spouse acquired after retirement
must qualify as a widow or widower as those terms are defined _
in section 204 of the Act as amended by section 201 of the bill.
Second, it authorizes a survivor annuity for a widow or
widower of a retiree who was unmarried at the time of retire-
ment, subject to the election of a reduced annuity for this purpose
b
th
ti
y
e
e rree pursuant to section 203 of the bill.
Third, it requires the surviving spouse, widow, or
widower to elect between the benefits afforded under section 202
of the bill and any other entitlements to survivor benefits from a.
retirement system for Government employees.
Fourth, it provides for the commencement and termination
date for the survivor annuities provided under section. 202 of the
Fifth, it provides that a participant must at the, time of retire-
ment elect in writing not to provide any surviving spouse benefits
as provided in section 221(b). This adopts a provision in Section
8339(j), Title 5, of the Civil Service retirement system.
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Finally, it provides that annuities reduced to provide for a
surviving spouse shall for each full month during which an annui-
tant is not married, be recomputed and paid as if the annuity had
not been reduced. Upon remarriage, the annuity would be reduced
by the same percentage as in effect at the time of retirement. All
annuities are covered except no increase in annuity may be made
for any period prior to November 1, 1974. This conforms the Act
to Public Law 93-474, which became effective October 26, 1974.
Section 203 provides a retiree who is unmarried at the time of retire-
ment with an irrevocable election to select a reduced. annuity and provide,
under section 202 of the bill, survivorship protection for a. spouse acquired
after retirement. The election must be received within. one year after the
marriage and voids any election made at the time of retirement for a.
survivor annuity for an individual with an insurable interest as authorized
under current law (section 221 of the Act). The retiree's annuity is paid
at the reduced rate starting with the first day of the month following receipt
Section 204 imposes a minimum retirement annuity based upon the
Social Security minimum primary insurance amount and conforms the Act to
the requirements of Public Law 93-273, which increased certain annuities
and was signed into law April 26, 1974. The annuitant's monthl
benefit
y
would not be increased to such minimum if the individual receives any other
periodic payment from the United States Government of a. similar mature,
including, but not limited to, social security, annuity, other civilian or
military retired pay, pension, or veterans compensation, and the monthly
rate of such periodic payment equals or exceeds the smallest primary
Sections 205, 206, and 207 amend section 231 of the Act to. allow
persons who are separated or retired on a nondisabil:ity retirement to
later apply under specified requirements for a disability retirement if a
,disabling condition existed at the time of separation or retirement. The
changes also grant termination authority to the Director in those instances
where there has been restoration of earning capacity; allow voluntary or
involuntary retirement for such restored retirees, and. assure that
periods of voluntary or involuntary retirement do not count for service
credit. These amendments adopt existing authorities in Section. 8337,
Title 5, of the Civil Service retirement system.
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Section 208 changes the "Death in Service" provisions of the Act
(section 232) to remove the dependency requirements currently attached to
the payment of a survivor annuity to a widower of a female participant who
dies in service. The changes are compatible with the changes made in the
definition of the germ '!widower" under section 201 of the bill.,
Section 209 amends Section 241 of the Act with regard to filing desig-
nation of beneti.c;,,:,y ;fvr the payment of contributions and interest in excess
of benefits received to survivors of participants under the Act, The amend-
ment states clearly that the order of preference set out in that section shall
prevail over any extraneous document designating a beneficiary unless the
designation has been received by the Director. This conforms the Act to a
similar provision in the Civil Service Retirement system under Public Law
89-373 approved March 23, 1966. The provision was sought by the Civil:
Service Commission to make clear that the statutory order of precedence
prevails and avoid the problems of conflicting case law and resultant
serious delays in paying insurance claims to survivors. Adoption of the
provision by the Central Intelligence Agency Retirement Act will avoid
these same r-7-1
e
ms.
Section 210 updates the citation in Section 251 of the Act. Section 210
also provides retirement service credit for periods of s
i
eparat
on from
Federal Government employment covered by employeesF compensation for
work injuries under 5 U . S . C . 8101 et seq.
Section 211 amends Section 252 of the Act to credit service in. the
Regular or Reserve Corps of the Public Health Service after June 30, 1960,
or as a commissioned officer in the Coast and Geodetic Survey after June 30,
1961. This conforms the Act to Public Law 86-415, approved April 8, 1960,
which credits, as military service under the Civil Service Retirement Act,
certain prior service in the Regular or. Reserve Corps of the Public Health.
Service after June 30, 1960, and conforms the Act to Publi
L
8
c
aw
t--2.33,
approved September 14, 1961, which similarly "credits under, the Civil
Servi
t
ce sys
em service as a commissioned officer in the Coast and
Geodetic Survey (now functionally within the National Oceanic- and
Atmo
" A -I`----
sp
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bec?.on Z eI ; adds a new section to "PART G--MONEYS" to grant the
Director the authority to waive recovery of payments from a recipient made
under the Act if in the judgment of the Director the individual is without:
fault and recovery would be against equity and good conscience. This
section also allows the Director to withhold or recover moneys mentioned
under the Act from a former employee of the Agency where there is a
finding and certification by the Director that the former employee exercised
fraud. This section conforms the Act to a similar provision in the Civil.
Service retirement system (section 8346 of Title 5, U.S..C Public: Lam, 89-:
554), which became effective September 6, 1966. The necessity for this
provision was highlighted as the result of the recent overpayment in
cost-of-living increases for all.Government retirement systems based on a
miscalculation of the data utilized. This section would be made effective'
sufficiently retroactive to allow the Director to waive the overpayment: to
annuit
t
d
th
A
'
an
s un
er
e
gency
s retirement system as was done by the .
C
ivil Service Commission in.. December 1974 for Civil Service r_ etir.. ees .
oUUUUn 4La adds a new "PART K--CONFORMITY WITH CIVIL SERVICE,
RETIREMENT SYSTEM" to the Act to authorize- administrative changes in -
Central Intelligence Agency retirement provisions to maintain existing coxi-`
formity between the Civil Service and Central Intelligence Agency retirement
systems. Under this amendment, whenever a law enacted after January 1,
1975 amends a provision of the Civil Service retirement system or otherwise
changes retirement benefits for employees or annuitants under that. system
which prior thereto had been substantially identical to a corresponding . _ -
provision of law governing benefits payable under the Central Intelligence
Agency retirement system, the President, if he determines it appropriate
to maintain the previous conformity between the two systems could issue. an
order to apply the new Civil Service provision or benefit to the Central'...
-
Intelligence Agency. This could be done retroactively in the interest of
equity where necessary.
In addition to the applicability of this proposal to amendments of
Civil Service retirement provisions that were substantially identical to
corresponding Central Intelligence Agency retirement provisions. immediately
.prior to enactment of the Civil Service amendment, it is i.ntended that the,
January 1, 1975 but before enactment of this bill which. were substanti.all.y
identical either to correspcndirtg Central Intelligence Agency retirement
provisions when this bill is introduced or to Central Intelligence Agency
retirement provisions as proposed in this bill.
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Authority would not be available under the proposal to change a
Central Intelligence Agency retirement provision that had not been sub-
stantially identical to the Civil Service provision prior to the tatter's
amendment. For example, if the present regular Civil Service multipli--
cation factor, which is less than 2% for the first ten years of service, were
increased, a corresponding increase could not be extended. to the Central
Intelligence Agency retirement system under this authority because the
Central Intelligence Agency retirement system multiplicati.on, factor is 2%
for all years of service. Neither could a change affecting only a special
group, such as the change in the law-enforcement employee multiplication
factor made by P.L. 93-350, be extended to the Central Intelligence Agency
retirement system under this authority because this proposal would be.
applicable only to amendments of Civil Service retirement provisions.
applicable generally.
Section 213 is based upon a similar proposal in S. 1943, which
amends the Foreign Service Retirement Act and was submitted to the 94th
Congress. This establishes authority to adopt by administrative action
applicable changes in the Civil Service system and shortens the existing,
time lag resulting from normal Executive and Legislative processing to
adopt separately for the Agency retirement system each applicable change
in the Civil Service system. The proposal does not in any way abridge.
the right of Congress to enact future laws changing the Central. Intelligence
Agency retirernept.system provisions or benefits.
Section 214 increases annuities that occurred prior to October 20, 1969,
and further conform, s.the..Act to the requirements of Public Law 93-273,
which authorized payment effective August 1, 1974. Retirees under the Act
(and Civil Service retirees) prior to October 20, 1969, did not receive the
liberalization in retirement computation made under Public Law 91-185,
effective December 30, 1969. Under Public Law 91-185 the computation of
annuities was changed from a high -5 years average salary to a high --3 .
years average salary and unused sick leave was counted, as.ser-vicee for
annuity computation purposes, .:..
Section 215 prvovides-effectiYrr dates in phase with those established
for the Civil Service..Retirenxeh.t system in connection with i.dent:ical. changes
These dates assure that the treatment afforded retirees and their- survivors
under the CIA Retirement Act will not be different than that afforded retirees
and their survivors under the Civil Service Retirement System. ,Section.
215 provides that all of the provisions in the bill become operative effective
October 1, 1976.
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=-AMENDMENTS TO H. R. 13615 -
On page-3; line- 25 immediately after the word "year," add the
following:.
"beginning with'-fiscal year l977
" -
On page 4, line l immediately after the word "for" strike the
word "that" and. in.sert the word peach"
On page 4, line 3 immediately after the word "There" strike
the word "are" and insert the word "is"
On page 4, line 3 immediately after the word "appropriated" add
the following:
"to the fund each fiscal year"
On page 4, line 11 strike the following:
"60 per centum for 1976;"
On page 11, line 2 immediately before the word "was" insert
the word "annuity"
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94TH CONGRESS
2D SESSION
R. 13615
IN TIIE HOUSE OF REPRESENTATIVES
MAY G, 1976
Mr. IIt BER,'r introduced the following bill; which was referred to the Com-
inittee on Armed Services
To amend the Central Intelligence Agency Retirement Act of
1964 for Certain Employees, as amended, and for otli.e
purposes.
1 Be it enacted by the Senate and House of Representa-
2 fives of the United States of America in Congress assembled,
3 TITLE I-RETIREMENT FINANCING.
4 Six. 101. Section 11.1 of the Central. Intelligence
5 Agency Retirement Act of 1964 for Certain Employees, as
6 amended (78 Stat. 1043; 50 U.S.C. 403 note), is amended-
7 (a) by striking out "and" at the end of paragraph.
8 (2) ;
9 (b) by striking out the period at the end of para-
10 graph (3) and inserting a semicolon in lieu thereof; and
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2
1 (c) by adding the following new paragraphs (4),
2 (5), and (6)
3 " (4) `Fund balance' means the sum of-
4 " (a) the- investments of the fund calculated at
5 par value; and
6 " (b) the cash balance of the fund on the books
7 of the Treasury;
8 " (5) `Unfunded liability' means the estimated ex-
9 cess of the present value of all benefits payable from the
10 fund to participants and former participants, subject to
11 this Act, and to their survivors, over the sum of-
12 " (a) the present value of deductions to be
13 withheld from the future basic salary of participants
14 currently subject to this Act and of future Agency
15 contributions to be made in their behalf; plus
16 " (b) the present value of Government, pay-
17 ments to the fund under section 261 (b) and (c) of
18 this Act; plus
19 " (c) the fund balance as of the date the tin-
20 funded liability is determined; and
21 " (6) `Normal cost' means the level percentage of
22 payroll required to be deposited in the fund to meet the
23 cost of benefits payable undf r the system (computed in
24 accordance with generally ac,,Iepted,actuarial practice on
25 an entry-age basis) less the value of retirement benefits
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4
10
11
12
3
earned under another retirement system for Government
employees and less the cost of credit allowed for military
service.".
-SEC. 102. Section 261 of the Central Intelligerco
Agency Retirement Act of 1.964 for Certain Employees, as
amended (78 Stat. 1043; 50 U.S.C. 403 note) is amended
by inserting " (a) " after "261." and by adding the follow-
ing new paragraphs (b) , (c) , and (d)
" (b) Any statute which authorizes-
(1) new or liberalized benefits payable from the
fund, including annuity increases other than' under
section 291 of this Act;
" (2) extension of the coverage of this Act to new
groups of employees; or
" (3) increases in salary on which benefits are
computed is deemed to authorize appropriations to the
fund to finance the unfunded liability created by that
statute in thirty equal annual installments ~vith interest
computed at the rate used in the then most recent valua-
tion of the System -and with the first payment thereof
due as of the end of the fiscal year in which each new
or liberalized beU_efit, extension of coverage, or increase
23 in salary is effecti- re.
24
" (c) There is he_?eby authorized to be appropriated: to
pr6l'ed1Fbd RWehs6s2O0 11iy1 stO1A-ARRL7RtQOr $?RYOl @OtIPAc i~ r
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1 to meet the amount of normal cost for that year. which is not,
2 riiet by contributions tinder section 2.i.1 (a) .
3 " (d) Th-ere are hereby authorized to- be approprratcd ~-- -- `~
4 such sums as may be necessary to provide the amount
equivalent to- (1) interest on the unfunded liability conr-
5
6 puted for that year at the interest rate used in the then most
recent valuation of the System, and (2) that portion of
disbursement for annuities for that year which the Director
estimates is -attributable to credit allowed for military serv-
ice, riot to exceed the following percentages of -such amounts:
60'per centum for 1976; 70 per centum for 1977.; 80 per
centum for 1978; 90 per centum for 1979; and 100 per
centum for 1980 and for each fiscal year thereafter.".
TITLE II-11EUTIlEMENT ACT AMENDMENTS
Sao. 201. Section 204 of the Central Intelligence
Agency 1 etirement Act of 196 ; for Certain Employees,
as amended (78 Stat. :1043; 50 U.S.C. 403 note), is
amended-
(a) by striking "dependent" in subsection (a) ;
(b) by striking "Dependent widower" and insert-
ing "Widower" in lieu thereof in subsection (b) (2) ;
(c) by inserting a period before the first comma
and striking the remainder of the ~qentence in subsection
(b) (2) ;
(d) by inserting before the comma in subsection
8
9
10
11
13
14
15
17
18
21
22
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(b) (3) (i) the words : "or a child who lived with and
for whom a petition for adoption was filed by a partici-
pant and who is adopted by the surviving spouse after
the participant's death."; and
(e) by striking out "two years" wherever it ap7
6 pears and inserting in lieu thereof "one year".
7 'SIC. 202. Section 221 (b) Hof the Central Intelligence
8 Agency Retirement Act of 1964 for Certain Employees, as
9 amended (i 8 Stat. 1043; 50 IT.S.C. 403 note), is amended
10 to read as follows:
11 " (b) (7.) If a participant dies after having retired and
12 is survived by a spouse to whom lie or she was married at
13 the time of retirement, or by a widow or widower whom
14 lie or she married after retirement, the spouse, widow, or.
15 widower is entitled to an annuity equal to 55 per centum
16 of the amount of the participant's annuity computed-as pre
17 scribed in paragraph (a) of this section, up to the full
1.8 amount of such annuity specified by the participant as the
19 base for such survivor benefits at the time, of retirement.
20 The annuity of the participant shall be reduced by 24.
per
21 centitrn of any amount up to $3,600 specified by the par-_
22 ticipr; nt as the base for such survivor benefit phis 10 per
23 centu.a of any amount over $3,600 so specified. If at the
24 th" 'cf retirement the participant does not desire any sur
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1 viving spouse to receive an annuity under this paragraph he
2 shall ~,so estate in writing to the Director.
3 '' .." (2) If an annuitant dies after having elected a re-
4 cluced annuity provided in paragraph (2) of. section 221
-5. (f) the surviving widow or widower is entitled to an annu-
6 a_ty eoniputed as prescribed in pi) ragraph (1) of this sub-
7 section.
8 ." (3) A spouse acquired after retirement is entitled to a
survivor annuity under this subsection only upon electing
10 this annuity instead of any other survivor benefit to which he
11, or she may be entitled under this or another retirement sys-
12 tem for Government employees. The annuity of the spouse,
13 widow, or' widower under this subsection commences on the
14 day after the annuitant dies. This annuity and the right there-
15 to terminate on the last day of the month before the spouse,
16 widow, or widower-
17 "(A) dies; or
18 " (B) remarries before becoming sixty yeasts of age.
'19 " (4) An annuity which is reduced under this subsection
20 shall, for each full month during which an annuitant is not
21 married, be recomputed and paid as if the annuity had not
22 been so reduced. Upon remarriage of the annuitant, the an-
23 nuity shall be reduced by the same percentage. reductions
24 which were in effect at the time of retirement.".
25 Snc. 203. Section 221 (f) of the Central Intelligence
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1 Agency Retirement Act of 1.9t;4 for Certain Employees, as
2 as amended (78 Stilt. 1043; 50 U.S.C. 403 note) , is
3 amended-
4
(a) by inserting " (1
and
" immediately after " (f) ";
(b) by adding at the end thereof the. following
7 new paragraph (2) :
8 " (2) A participant, who is unmarried at the time of re-
9 tiring and who later marries, may irrevocably elect, in a
10 signed writing received in the Agency within one year
11 after the marriage, 'a reduced annuity as provided in section
12 221. (b). The reduced annuity is effective the first day of
13 the month after the election is received. The election voids
14 prospectively any election previously made tinder the pro-
15 visions of paragraph (1) of this subsection.".
Sne. 204. Section 221 of the Central Intelligence
Agency Retirement Act of 1964 for Certain Employees,
as amended (78 Stat. 1043; 50 U.S.C.. 403 note), is
amended by adding at the end thereof the following
20 new subsection:
21 " (1) (J.) Notwithstanding any other provision of this
22 section, the monthly rate of annuity payable under . sub-
23 section (a) of this section, shaa.ll not be less than the smallest
-24 primary insurance amount, including any cost-of-living in-
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13
17
1 crease added to that amount, authorized to be paid from
2' time to time under title II of the Social Security Act.
3 " (2) Notwithstanding any other provision of this sec-
4 tion, other than this subsection, the monthly rate of annuity
payable under subsection (a) of this section to a surviving
child shall not be less than the, smallest primary insurance
amount, including any cost-of-living increase added to that
amount, authorized to be paid from time to time under title II
of the Social Security Act, or three times such primary iu=
surance amount divided by the number of surviving children
entitled to an annuity, whichever is the lesser.
(3) The provisions of this subsection shall not apply
to an annuitant or to asurvivor who is or becomes entitled
to receive from the United States an annuity or refired pay
under any other civilian or military rotirernettt .system, beLte-
fits under title II of the Social Secarity Act, a pension, vet-
e'r'aiis' compensation, or ally other periodic payment. iof a
similar nature, when the monthly rate thereof Is equip to or
greater 'than flu, ismallest pmnmuy aunt"ante 'all)'oulnt, tttclud-
20 'ing any cost-of-living increase added to that aluounlt, auth.or-
izcd to be paid from time to time under title II,of the Social'
Security Act.".
23 Six. 205. Section. 231 (a) of the Central Intelligence
24 Agency Retirenlentt Act of 1964 for Certain Employees as
25 amended (78 ;Stat. 1043 ; U.S.C. 403 note) , i; amended by
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1 adding at the end thereof the following: "lletirement for dis-
2 ability or incapacity may be approved only if the application
3 is submitted before the applicant is separated froze. the
4 Agency or within one year thereafter. This time limitation
may be waived by the Director for -a, participant or amullitaut
who at the date of separation from the Agency or within
,one year thereafter is mentally incompetent, if the ~applicatikon
is filed with the Agency within one year from the date of
9 restoration of the participant or annuitant to competency or
10 the appointment of a fiduciary, whichever is earlier.".
11 SEC. 206. Section 23:1 (b) of the Central Intelligence
1.2 Agency Retirement Act of 1964 for Certain Employees, as
13 amended (78 Stat. 1043; U.S.C. 403, note), is amended--
14
16
(a) by inserting the figure " (1) " immediately after
the letter " (b) ";
(b) by striking the words "six nion'ths" in the,six,th
sentence and substitute ",one year"; and
(c) by adding at the end of the section a new para-
graph (2)