TESTIMONY OF MOE BILLER PRESIDENT AMERICAN POSTAL WORKERS UNION AFL-CIO BEFORE THE COMMITTEE ON POST OFFICE AND CIVIL SERVICE UNITED STATES HOUSE OF REPRESENTATIVES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP89-00066R000100080015-0
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 7
• Document Creation Date: December 22, 2016
• Document Release Date: April 23, 2010
• Sequence Number: 15
• Publication Date: March 1, 1984
• Content Type: OPEN SOURCE

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American Postal Workers Union, AFL-CIO
MOE BILLER
President
TESTIMONY OF
MOE BILLER
PRESIDENT
AMERICAN POSTAL WORKERS UNION
AFL-CIO
COMMITTEE ON POST OFFICE AND CIVIL SERVICE
UNITED STATES HOUSE OF REPRESENTATIVES
MARCH 1, 1984
NATIONAL EXECUTIVE BOARD ? MOE BILLER, President
WILLIAM BURRUS
RICHARD I WEVODAU
EHOMAS A NEILL
REGIONAL COORDINATORS
PHILIP C FLEMMING, JR.
Executive Vice President
Director Maintenance Division
Industrial Relations Director
RAY DELL R MOORE
Eastern Region
DOUGLAS HOLBROOK
LEON 5. HAWKINS
KEN LEINER
Western Region
NEAL VACCARO
Secretary-Treasurer
Director, MVS Division
Director, Mail Handler Division
I-\%1FS P WILLIAMS
Northeastern Region
JOHN A MORGEN
SAMUEL ANDERSON
Central Region
ARCHIF SAI ISBURI
Director, Clerk Division
Director, SDM Division
Southern Region
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TESTIMONY OF
DOE BILLER, PRESIDENT
AMERICAN POSTAL WORKERS UNION, AFL-CIO
MR CHAIRMAN, I APPRECIATE THE OPPORTUNITY TO TESTIFY TODAY
CONCERNING THE DEVELOPMENT OF A RETIREMENT PLAN FOR NEW POSTAL
AND FEDERAL EMPLOYEES WHO ARE SUBJECT TO SOCIAL SECURITY. THE
AMERICAN POSTAL WORKERS UNION IS COMMITTED TO PROTECTING THE
FINANCIAL WELL-BEING OF PAST AND FUTURE POSTAL WORKERS AS WELL AS
OUR CURRENT POSTAL WORKFORCE- It WAS TO THAT END THAT WE WORKED
WITH THE COMMITTEE LAST FALL TO REDUCE THE PAYROLL TAX OF NEW
EMPLOYEES FROM 14 PERCENT TO A MORE EQUITABLE 8.3 PERCENT- I
WANT TO COMMEND YOU, MR- CHAIRMAN, FOR YOUR DILIGENCE AND
LEADERSHIP IN THAT EFFORT.
CREATION OF A RETIREMENT SYSTEM FOR NEW EMPLOYEES IS NOT A
SIMPLE TASK- THERE ARE MANY COMPLEX ISSUES WHICH MUST BE
ADDRESSED IN ORDER TO DESIGN AN EQUITABLE PLAN- I KNOW THIS
COMMITTEE HAS COMMISSIONED SEVERAL MAJOR STUDIES TO ASSIST IN
DEVELOPING THE PLAN DESIGN AND SOLVING THE MANY DIFFICULT
TECHNICAL ISSUES- WE IN THE AMERICAN POSTAL WORKERS UNION LOOK
FORWARD TO THE RESULTS OF THESE STUDIES AS WE CARRY OUT OUR OWN
ANALYSIS OF THE ISSUES-
MR- CHAIRMAN, THE STUDY UNDERTAKEN BY THE COMMITTEE AND OUR
OWN STUDIES ARE NOT YET COMPLETE. THEREFORE, MY REMARKS TODAY DO
NOT REPRESENT A FINAL POSITION ON THE NEW RETIREMENT PLAN- WHAT
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I PRESENT TO THE COMMITTEE TODAY IN MY ORAL AND WRITTEN TESTIMONY
IS THE GENERAL FRAMEWORK I BELIEVE THE COMMITTEE SHOULD FOLLOW IN
REGARD TO THE ISSUES AT HAND.
THE CIVIL SERVICE RETIREMENT SYSTEM IS A HEALTHY, ',JELL-
FUNDED SYSTEM. THE TRUST FUND CONTAINS $110 BILLION WHICH WILL
PROVIDE MORE THAN FIVE YEARS OF BENEFITS. THIS LARGE RESERVE IS
MORE THAN ADEQUATE IN A PAY-AS-YOU-GO SYSTEM LIKE CIVIL SERVICE
RETIREMENT. THE RETIREMENT SYSTEM FOR CURRENT WORKERS IS A GOOD
SYSTEM WHICH SHOULD NOT BE CHANGED- MY FIRST RECOMMENDATION TO
THE COMMITTEE IS THAT NO CHANGES BE MADE IN THE RETIREMENT SYSTEM
FOR CURRENT WORKERS- THE LEGISLATION WHICH THE COMMITTEE WILL
CONSIDER NEXT YEAR SHOULD PERTAIN TO NEW WORKERS ONLY, AND NO
AMENDMENTS SHOULD BE MADE TO CHANGE THE BASIC CIVIL SERVICE
RETIREMENT SYSTEM. THIS RECOMMENDATION IS CONSISTENT WITH THE
POSITION WHICH YOU TOOK, MR- CHAIRMAN, ALONG WITH THE HOUSE
LEADERSHIP, AT THE TIME THAT SOCIAL SECURITY WAS EXTENDED TO
FUTURE FEDERAL AND POSTAL WORKERS-
THE CURRENT CIVIL SERVICE RETIREMENT SYSTEM HAS SEVERAL
DIFFERENT PENSION PLANS THAT ARE OPERATED THROUGH THE CSRS TRUST
FUND. THESE INCLUDE SPECIAL PLANS FOR MEMBERS OF CONGRESS AND
STAFF AMONG OTHERS, AS WELL AS THE RETIREMENT PLAN THAT COVERS
THE VAST MAJORITY OF FEDERAL AND POSTAL EMPLOYEES, WHICH MOST OF
US THINK OF WHEN WE REFER TO THE CIVIL SERVICE RETIREMENT
SYSTEM. THE RETIREMENT PLAN TO BE DEVELOPED BY THIS COMMITTEE
FOR NEW FEDERAL AND POSTAL EMPLOYEES SHOULD BE PLACED IN THE CSRS
TRUST FUND LIKE OTHER FEDERAL EMPLOYEE RETIREMENT PLANS. THERE
IS NO RATIONALE THAT JUSTIFIES THE PROBLEMS WHICH WOULD BE
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CREATED IN THE CURRENT PENSION PLANS IF ALL NEW WORKERS WERE
REMOVED FROM'THE SYSTEM. THEREFORE, MY SECOND RECOMMENDATION TO
THE COMMITTEE IS THAT THE PENSION PLAN FOR NEW HIRES SHOULD BE
FUNDED THROUGH THE CIVIL SERVICE RETIREMENT SYSTEM TRUST FJ'!D.
WHILE THE AMERICAN POSTAL WORKERS UNION AWAITS THE RESULTS
OF THE VARIOUS STUDIES UNDERWAY BEFORE ADVOCATING ANY PARTICULAR
RETIREMENT PLAN DESIGN, THERE ARE SEVERAL PRINCIPLES AND DESIGN
OBJECTIVES ON WHICH THE NEW PLAN SHOULD BE BASED.
THE VARIOUS RETIREMENT PLANS WHICH MAKE UP THE CIVIL SERVICE
RETIREMENT SYSTEM ARE DEFINED BENEFIT PLANS. THIS TYPE OF PLAN
IS ALSO FAVORED IN THE PRIVATE SECTOR, WHERE MOST LARGE EMPLOYERS
HAVE ESTABLISHED DEFINED BENEFIT PLANS. THIS TYPE OF PLAN ALLOWS
AN EMPLOYEE TO ESTIMATE HIS OR HER RETIREMENT BENEFITS SO THE
EMPLOYEE CAN PLAN FOR THE RETIREMENT YEARS. A DEFINED CONTRI-
BUTION PLAN, ON THE OTHER HAND, IS DEPENDENT ON THE EARNINGS OF
SPECIFIC INVESTMENTS WHICH MAY OR MAY NOT PERFORM SATISFACTORILY.
THE RETIREMENT PLAN FOR NEW FEDERAL AND POSTAL EMPLOYEES
SHOULD BE A DEFINED BENEFIT PLAN. POSTAL AND FEDERAL WORKERS
SHOULD BE ACCORDED THE SECURITY AND KNOWLEDGE THAT THEIR
RETIREMENT BENEFITS WILL BE AVAILABLE REGARDLESS OF FLUCTUATIONS
IN THE STOCK OR BOND MARKETS OR THE PERFORMANCE OF ANY PARTICULAR
STOCKS OR BONDS.
THE INTEGRATION OF THE PENSION PLAN FOR NEW HIRES WITH
SOCIAL SECURITY IS A COMPLEX ISSUE. SOCIAL SECURITY IS A
PROGRESSIVE SYSTEM WHICH PAYS A HIGHER PERCENT OF PAYROLL TO LOW-
WAGE WORKERS THAN TO HIGH-WAGE WORKERS- THE AMERICAN POSTAL
WORKERS UNION, AND INDEED THE LABOR MOVEMENT IN GENERAL, HAS
TRADITIONALLY SUPPORTED THIS PROGRESSIVE SYSTEM. WE ALSO SUPPORT
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THE PROVISIONS IN THE TAX CODE WHICH PROHIBIT PRIVATE SECTOR
PENSION PLANS FROM FULLY OFFSETTING ALL SOCIAL SECURITY
BENEFITS, THEREBY WIPING OUT THE PROGRESSIVITY OF SOCIAL
SECURITY-
THE AMERICAN POSTAL WORKERS UNION BELIEVES THAT LOWER TO
MIDDLE WAGE WORKERS SHOULD RECEIVE A HIGHER PERCENTAGE REPLACE-
MENT RATE THAN THE HIGHEST WAGE WORKERS. THEREFORE, WE RECOMMEND
THAT AT A MINIMUM, THE PENSION PLAN FOR NEW HIRES MUST MEET THE
IRS REGULATIONS IN FORMULATING ANY OFFSET APPROACH IN BENEFIT
CALCULATIONS. MR. CHAIRMAN, WE AWAIT THE RESULTS OF THE VARIOUS
STUDIES BEFORE WE MAKE A SPECIFIC RECOMMENDATION ON THE DEGREE OF
PROGRESSIVITY TO BE RETAINED IN THE INTEGRATION OF THE NEW
PENSION SYSTEM WITH SOCIAL SECURITY.
MANY PRIVATE SECTOR PENSION PLANS, IN FACT MORE THAN HALF OF
THE PLANS OFFERED BY LARGE COMPANIES, OFFER A THRIFT PLAN IN
ADDITION TO A DEFINED BENEFIT PLAN TO ENCOURAGE ADDITIONAL
EMPLOYEE SAVINGS FOR RETIREMENT. THESE PLANS GENERALLY HAVE
PROVISIONS WHICH REQUIRE THE EMPLOYER TO MATCH EMPLOYEE CONTRI-
BUTIONS. THE APWU IS NOT PREPARED AT THIS TIME TO ADVOCATE THAT
A THRIFT PLAN BE AVAILABLE IN ADDITION TO THE BASIC DEFINED
BENEFIT PLAN ESTABLISHED FOR NEW EMPLOYEES. HOWEVER, WE DO
RECOMMEND THAT ESTABLISHING A THRIFT PLAN BE THOROUGHLY EXPLORED
BY THE COMMITTEE.
IN OTHER AREAS OF PLAN DESIGN, THE PENSION PLAN FOR NEW
EMPLOYEES SHOULD BE AS SIMILAR AS POSSIBLE TO THE CURRENT CIVIL
SERVICE RETIREMENT SYSTEM. RETIREMENT AT AGE 55 SHOULD BE AN
OPTION IN THE NEW PLAN, AND BENEFITS IN THE NEW SYSTEM SHOULD BE
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PROTECTED FROM THE RAVAGES OF INFLATION THROUGH ANNUAL COST-OF-
LIVING INCREASES TIED TO THE CONSUMER PRICE INDEX - YEARS OF
SERVICE AND OTHER SERVICE REQUIREMENTS, AND FIVE-YEAR VESTING
SHOULD ALSO BE CONTINUED IN THE NEW SYSTEM.
THE MANDATED EMPLOYEE CONTRIBUTION RATE SHOULD BE THE SAME
OR SIMILAR FOR OLD AND NEW EMPLOYEES- CURRENTLY, BOTH ARE PAYING
8-3 PERCENT OF PAYROLL TOWARD RETIREMENT. THAT IS A FAIR AND
ADEQUATE PAYMENT AND SHOULD BE CONTINUED-
IN ADDITION TO THE NEED FOR COMPARABILITY BETWEEN THE
RETIREMENT PLAN FOR CURRENT WORKERS AND THE PLAN DESIGNED FOR NEW
HIRES, MANY IN THE CONGRESS HAVE SUGGESTED THAT THE CIVIL SERVICE
RETIREMENT SYSTEM SHOULD BE COMPARABLE TO PENSION PLANS OFFERED
BY LARGE PRIVATE SECTOR EMPLOYERS-
MR- CHAIRMAN, AS PART OF OUR ANALYSIS OF THE ISSUES, THE
AMERICAN POSTAL WORKERS UNION SUPPORTED A STUDY WHICH COMPARED
CIVIL SERVICE RETIREMENT TO THREE LARGE PRIVATE SECTOR PENSION
PLANS- IN OUR ANALYSIS, WHICH I HAVE PREVIOUSLY PROVIDED TO THE
COMMITTEE AND WHICH I NOW SUBMIT FOR THE RECORD, THE CIVIL
SERVICE SYSTEM WAS COMPARABLE IN TOTAL RETIREMENT BENEFITS TO THE
THREE PLANS STUDIED, WHICH INCLUDED GENERAL MOTORS, AT&T, AND
IBM. THE RETIREMENT BENEFITS OF FEDERAL AND POSTAL WORKERS
SHOULD BE COMPARABLE TO THE RETIREMENT BENEFITS PROVIDED BY THE
NATION'S LARGE EMPLOYERS, WITH WHOM THE FEDERAL GOVERNMENT
COMPETES FOR EMPLOYEES- OUR ANALYSIS INDICATES THAT WHEN ALL
RETIREMENT BENEFITS INCLUDING THRIFT PLANS ARE CALCULATED, THE
RETIREMENT PLANS OFFERED BY THE LARGEST EMPLOYERS ARE (QUITE
SIMILAR TO THE BENEFITS PROVIDED BY CSRS.
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IN CLOSING, I WOULD LIKE TO REITERATE THE RECOMMENDATIONS
WHICH WE FEEL ARE CRITICAL TO THE DESIGN OF ACCEPTABLE
LEGISLATION:
I- THE LEGISLATION SHOULD PERTAIN TO THE
PENSIONS OF NEW HIRES ONLY, AND NO CHANGES
SHOULD BE MADE IN THE BASIC CIVIL SERVICE
RETIREMENT SYSTEM.
2. THE PENSION PLAN FOR NEW HIRES SHOULD BE
FUNDED THROUGH THE EXISTING CIVIL SERVICE
RETIREMENT SYSTEM-
3. THE PENSION PLAN FOR NEW HIRES SHOULD BE
MODELED AFTER THE CURRENT SYSTEM IN REGARD
TO THE TYPE OF PLAN, WHICH SHOULD BE A
DEFINED BENEFIT PLAN, AND IN REGARD TO OTHER
FACTORS SUCH AS AGE OF RETIREMENT, COST-OF-
LIVING ADJUSTMENTS FOR INFLATION, SERVICE
REQUIREMENTS, AND VESTING-
4. INTEGRATION WITH SOCIAL SECURITY SHOULD
RETAIN THE PROGRESSIVITY OF THE SOCIAL
SECURITY SYSTEM TO SOME DEGREE-
MR- CHAIRMAN, I LOOK FORWARD TO WORKING WITH YOU OVER THE
COURSE OF THE NEXT TWO YEARS AS LEGISLATION IS DEVELOPED TO
CREATE A PENSION PLAN FOR FEDERAL AND POSTAL WORKERS HIRED AFTER
JANUARY 1, 1984.
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