COMPARED WITH THE RETIREMENT SYSTEM THAT PREVIOUS FEDERAL WORKERS HAVE ENJOYED

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• Collection: General CIA Records
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• Publication Date: November 7, 1985
• Content Type: OPEN SOURCE

I 11 1 llfitI II I
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CONGRESSIONAL RECORD - SENATE November 7, 1985
Rorkers to make employer-matched contri-
butions to a tax-deferred savings plan.
Compared with the retirement system
that previous federal workers have enjoyed,
the proposed system would provide less gen-
erous early retirement features and less
complete inflation protection. On the other
hand. It would provide superior disability
and survivors' benefits, and much better
benefit "portability" for the many workers
who'now sacrifice all benefits when they
leave federal service for the private sector.
And for the taxpayer the plan would offer
substantial future savings.
A final deft addition to the plan, which al-
leviated union concerns and secured solid bi-
partisan support In the committee, would
give workers an additional option. By agree-
ing to pay a small extra contribution, and
by sacrificing some employer matching of
thrift-plan savings, workers could choose to
have more complete inflation protection at
earlier reitrement ages. The total cost of the
plan would be unaffected.
The administration has remained official-
ly opposed to any plan that does not seri-
ously undermine pension protection for fed-
eral workers. That's not a useful position.
Federal pensions have been over generous
and poorly designed. Congress was right to
cover new federal workers under Social Se-
curity and require that a new, coordinated
pension system be developed for them. But
federal workers, as able Cabinet members
and lesser officials will confirm, do much
important work for this country from polic-
ing air traffic safety and environmental haz-
ards to processing tax returns and Social Se-
curity benefits. A decent though responsible
pension system is needed to attract and hold
quality workers. The committee's plan is an
excellent start in that direction.
Mr. ROTH. Mr. President, it is nor-
mally the policy for the chairman of
toe committee to manage the bill, but
I have asked my good friend and col-
league, the distinguished Senator from
Alaska, to undertake that responsibi)-
ity. I do so because I think we are all
deeply indebted to his leadership, to
his imaginative approach and his per-
sistence in working for an excellent
pension plan for the Government em-
ployees.
Again, in closing. I want to again pay
my special thanks and appreciation
not only to Senator STEvgNs, but to
Senator EAGLrroN and Senator GORE
as well as all members of the Govern-
mental Affairs Committee for their
willingness to work together in a bi-
partisan way to hammer out a new
pension program that I personally be-
lieve will help ensure that we attract
the kind of excellent employees we
want to be part of the public sector.
Mr. EAGLETON addressed the
Chair.
The PRESIDING OFFICER. The
Senator from Missouri.
Mr. EAGLETON. Mr. President, I,
too, wish to thank some people that
have been very, very active partici-
pants in this bill. Before he leaves the
floor I especially want to thank the
chairman of the full committee. Sena-
tor ROTH of Delaware.
This bill has not been an easy one to
craft but with his leadership as the
chairman of that committee we were
able to do a Job in which all 13 mem-
bers of the committee could agree.
That is most unusual around here,
espcially on a subject that can be clas-
sified as controversial. But for his pa-
tient guidance of this measure, we
would not be in this unanimous pos-
ture today. I thank him most kindly.
Mr. ROTH. I thank the Senator.
Mr. EAGLETON. Of course, I thank
Senator STEVENS, who has labored for
years in this vineyard. Senator STS-
vstNs was the first Member of the
Senate a long, long time ago to face up
to the reality that there was going to
be, like It or not, a new civil service re-
tirement system, and that like It or
not, not everybody would agree with
it. Ana it would not be identical to the
system that was then on the books.
During this period of time he was
pretty much alone in terms of trying
to craft and formulate a new bill. be-
cause, I repeat, It was controversial.
But he persevered and he persevered.
And thus we are where we are today
through his efforts.
On my left is one of the new Mem-
bers of the Senate, Senator GORE of
Tennessee. When he came on the Gov-
ernmental Affairs Committee, the one
subcommittee assignment that no one
wanted was the Civil Service Commit-
tee. Why did no one want it? Because
that subcommittee would have within
Its jurisdiction the duty of formulating
this new plan-a hot potato.
Yet, without griping or grousing he
took that assignment, and threw him-
self into the substance of this effort,
and a large portion of this bill before
us today is the handiwork-the sub-
stantive,. prudent handiwork-of Sena-
tor GORE.
Those are some of the lead players.
There are some other players that do
not get much credit because they do
not have a title like Senator or chair-
man or ranking something or other.
They do most of the work. They are
the ones that work weekends and
nights while the Senators make some
basic fundamental decisions. But they
have to work it out in real statutory
ways.
There are five in particular that I
want to mention that have devoted, I
think in the aggregate, thousands of
hours to this endeavor. They are all
here on the floor. I think they all need
to be recognized. Jamie Cowen of Sen-
ator STEvgNS' staff: John Duncan, Sen-
ator ROTH's staff; Margaret Cranshaw
of my staff; Peter Lynn, on loan to us
from the General Accounting Office;
and I thank Mr. Bowsher for that be-
cause I do not think we would have a
bill today but for his excellent work;
and last but by no means least, Thur-
good Marshall, Jr., of Senator GORE'S
staff.
All of these individuals, as I say, de-
voted thousands of hours to putting
this bill in the fine shape that it is in
today. Let me now proceed to my pre-
pared remarks.
Mr. President, the bill before us
today, the Federal Retirement Reform
Act of 1985, S. 1527, represents the
culmination of nearly 3 years of work
by the Governmental Affairs Commit.
tee and. the individuals heretofore
mentioned. The task of structuring a
totally new retirement system for Fed-
eral employees hired after January 1,
1984, has been formidable. Indeed,
never in my 17 years In the Senate
have I seen an Issue as complicated.
Our committee was directed by the
Social Security Amendments Act of
1983, Public Law 98-21, to establish a
new Federal retirement system for
civil service employees-the first since
the original system was founded in
1920. Prior to 1984 civil servants had
never been in Social Security. Now
every Federal employee hired after
January 1. 1984. is subject to the 7-
percent Social Security withholding.
They are also temporarily covered
by the current civil service retirement
system-a system designed for employ-
ees not covered by Social Security.
The Congress was given until Decem-
ber 31, 1985, to formulate a new plan
which would provide retirement
income for Federal employees with
Social Security as the basic benefit.
Mr. President, I believe that we will
make the deadline-a deadline which
often seemed impossible and one
which most betting men would have
given, at best, a 50-50 chance in 1983. I
take a great deal of pride in the fact
that this bill has actually reached the
floor today and seems assured of pas-
sage.
I want to emphasize that while this
matter has been guided by the Repub-
lican leadership, it has never been a
partisan issue. Throughout those
nearly 3 years the committee has
worked as a bipartisan and cooperative
unit. The committee's unanimous vote
at its October 2, 1985, markup reflects
the success of our bipartisan approach
to what is essentially a good govern-
ment issue-a fair, equitable, and well-
designed retirement plan for all Feder-
al employees-Members of Congress,
doctors, astronauts, secretaries, fire-
men, policemen, file clerks, custodians,
and all of the myriad of Federal per-
sonnel. Obviously there were political
differences on some of the key issues,
but in the Interest of the whole, and
based on the crucial need for the Fed-
eral Government-the largest employ-
er in the world-to have a working re-
tirement system, both sides gave a
little here and a little there. Mr. Presi-
dent, this compromise process worked.
What we have before us today is a
bill sponsored not only by Senators
ROTH andSTEVENS, but a bill sponsored
by Senators ROTH, STEvENs, EAGLETON,
GORE, CHILES, NUNN, GLENN, LEVIN,
DURENBERGER, MATHIAS, COHEN, and
COCHRAN. An unfortunate mistake left
most of our names off the printed doc-
ument.
I emphasize this strong bipartisan
sponsorship, Mr. President, because on
a major issue such as this, such bipar-
tisan support is unique In this Con-
gress-a Congress that when facing
major issues agrees on nothing and
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1Vnt'ember 7; 1985 CONGRESSIONAL RECORD - SENATE
gr?ees to nothing. Therefore, as rank-
ing minority member on the Govern-
mental Affairs Committee, I am in-
tensely proud of the committee's work
on this measure. We were given a
problem to solve, we solved it, and we
me t our deadline.
Now, let me turn a bit to what that
ha,, entailed. The committee effort
spanned research covering subjects as
drhtrs as macroeconomics, surveys of
pe?iision practices in the private. non-
profit, and State and local government
6vc?tors, the philosophy behind what a
pc:iron plan should be-both for an
employer's cost and management con-
ct rn . as well as the employee's bene-
fit package-and the statistical and ac-
tuarial bases which ultimately govern
a:: as`umptions or goals upon which a
pension plan is designed.
Mr. President, I know that when I
1' ;,re the Senate. my memory of this
particular legislation will be one of
numbers and charts, more numbers
and more charts, and still more num-
b'rs and still more charts. Frustrating-
ly, it is almost impossible to under-
st;:nd this legislation unless you get
into the numbers and charts, so I have
concluded. as I believe have Senators
STm?rirs, RoTH, and Goar that In fair-
ness to our colleagues, we will not sub-
the Senate to lengthy explana-
tions of what lies behind much of the
bill.
The basic provisions of the bill have
been thoroughly detailed in the state-
ment of my esteemed colleague from
Alaska, and pages 126 to 127 of the
committee report provide a clear sum-
mary of the bill in chart form. Also of
interest to my colleagues will be pages
118 to 125 of the committee report,
which again in chart form, provide a
comparison of the present Civil Serv-
ice Retirement System and the new
plan. It is the committee's expectation
that many Federal employees. includ-
ing Members of Congress, will find the
new plan so attractive that they will
want to transfer in. While this legisla-
tion changes nothing in the current
plan, and I emphasise the word noth-
ing, it does allow that transfer option.
It may, surprise many of my col-
leagues that the committee finds the
new plan so appealing that it expects
numerous employees to transfer. This
is particularly surprising since the cost
of the new system is 21.9 percent of
payroll, while current civil service re-
tirement costs about 25 percent of
payroll. If the plan will cost the Gov-
ernment less, how could Individuals
find the plan more attractive?
The answer, Mr. President. lies In
how the money is distributed. The
Federal Government now spends $16.5
billion a year on civil service retire-
ment cob-ts. The new system will cost
about $14 billion a year, a substantial
savings, and In long-run budgetary
terms, a massive savings.
Under the current plan the bulk of
the money is going to long career,
higb.incuae wage earners. The cur-
rent defined benefit plan, which Is
based on a formula of years of service,
times high 3 years of salary, times 2
percent. guarantees generous annu-
ities to those who work a substantial
portion of their careers in Govern-
ment and earn at the top of the Feder-
al pay scale. Senators and House Mem-
bers are treated with great favoritism
under the current system. This favor-
ttism for Members of Congress, Mr.
President, has been eliminated In the
new plan. That saves the Government
money, and the system is more equita-
b)e for everyone.
But eliminating favoritism for Mem-
bers of Congress is only one place the
new plan saves money. The far more
important savings come from the new
plan's basic structure--a structure
known as a three-tiered plan.
With Social Security as the base tier,
the new plan provides as a second tier
a defined pension benefit, which is
much like the current system's only
less generous, and a third tier, which
is known as a capital accumulation,
thrift, or defined contribution provi-
sion. In essence, this "capital accumu-
lation plan or, "CAP" as we've come to
call it, allows each Individual employee
the option of saving a portion of his or
her salary, with the Government
matching that savings up to a certain
level. Basically the "CAP' Is similar, to
an Individual Retirement Account
[IRA). Keogh, or 401(k) plan in the
private sector.
If the employee leaves Government,
he takes his savings, plus his Govern-
ment match, with him. The money
must be rolled-over Into a qualified re-
tirement plan, a retirement annuity or
an IRA. but the money is the employ-
ee's. Under the current civil service re-
tirement system only about 25 percent
of those ever covered by the plan re-
ceive any annuity. The other 75 per-
cent leave Government, take out the
cash they, have contributed, but re-
ceive nothing else from their years of
Federal service.
The buss word for the advantage the
"CAP` plan gives employees is "porta-
b lity." Today's workforce Is Increas-
ingly mobile, It contains thousands of
working women, many of whom move
in and out of jobs as they take time
out for family responsibilities, and It is
highly competitive In the managerial,
technical. and professional areas.
"Portability" is attractive to all these
groups. The Private sector has long
had portability features in its best re-
tirement plans; this feature will help
the Government compete for the
people w# need and want to attract.
I must emphasize, however, that the
"CAP" portion of the bill actually rep-
resents only 3 percent of the total
cost. The remaining 18.9 percent is di-
vided between Social Security (5.8 per-
cent) and the defined benefit (12.9
percent). This is extremely knportant
to the Democratic side of the aisle.
While the Democrats on the commit-
tee agreed with the "portability" fea-
ture and felt strongly that It will be at-
tractive to today's worker, we felt
S 15033
equally strongly that the Federal Gov-
ernment must, like any responsible
employer, guarantee all its employees
a retirement annuity that is substan-
tially above Social Security's basic
benefits.
There are retirement plans that
depend totally on capital accumula-
tion provisions, and in those instances
where the employee cannot or does
not contribute, the retirement income
is only Social Security. That should
never happen to a Federal worker who
has worked enough years with the
Government to be eligible to retire. As
a nation we must protect those at the
lower end of the income ladder, those
who simply cannot afford to contrib-
ute to a "CAP' plan. and we must also
provide some guaranteed economic in-
centive (deferred salary if you will) to
our best, most loyal, and longest-term
employees.
It is along these lines that the com-
mittee compromised. Democrats
pushed for a larger defined benefit
provision; Republicans sought a larger
capital accumulation provision. As
Senator Srsvaxs will point out, our
final compromise was a two-option
plan. Those who want a system
weighted for a "CAP" plan can choose
option A; those who want more from
their defined benefit can choose
option B. There are some problems
with the option approach; Should an
employee be forced to make such an
important decision when he or she is
young and Just entering government?
Will so many choices prove an admin-
istrative nightmare? Will it be clear to
employees that ekher option offers a
fair retirement plan, but that one may
be more suitable to their own individ-
ual needs? If they understand that,
will they make the right choice?
Personally. Mr. President, I do not
have the answer to those obvious
proWems, but I am convinced that
either option A or B will provide a
solid. fair. and generous retirement
plan. Also. it is very important to note
that both option A and option B cost
the same to the Federal Government,
21.9 percent of payroll.
Like health plane, pension plans
today come is so many varieties,
shapes and sizes that It proved impos-
sible for the committee to agree to one
single plan that was right for all Fed-
eral workers. The multitude of health
plans wort; I expect the two-option
pension plan will work also. I do know
that the two options represent the ul-
timate in fairness.
Finally, Mr. President, I wish to
make some .comments about pensions
and pension planning in general.
When the Governmental Affairs
Committee first commenced work on
this legislation, I had three goals: (1)
meet the December 21, 1985 deadline:
(2) provide equitable benefits across
the work force, and (3) cover military
Personnel. Unfortunately we failed on
goal number 3. The Governmental Af.
fairs Committee does not have juris-
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CONGRESSIONAL RECORD - SENATE November 7, 1985
diction over the military, and early on
it was crystal clear that if Governmen-
tal Affairs attempted to convince the
military that it should become part of
the Federal Government's retirement
system, the bill would be dead before
we started. Interesting]., the Govern-
mental Affairs Committee does not
have jurisdiction over the Foreign
Service or the Central Intelligence
Agency, either, but as the amend-
ments to S. 1527 show, those groups
are going to cover their employees'
with the new plan. The two groups
will be granted the same special bene-
fits S. 1527 provides for such groups as
law enforcement officers and firefight-
ers.
It Is my hope that the military will
ultimately be covered by the new plan.
There is simply no Justification for the
special pension treatment that this
Nation accords the Department of De-
fense.
You remember, Mr. President, I
noted earlier that the cost of the cur-
rent civil service retirement system-
that is the one that is on the books
now-is about 25 percent of payroll.
The cost of the current military
system-listen to this, Mr. President-
is 52 percent of payroll. It is incredi-
ble. It is so huge, it is hard to imagine.
I repeat: the civil service retirement
system costs 25 percent of the payroll;
the military retirement system: 52 per-
cent of payroll. I predict, Mr. Presi-
dent, that some day-it may not
happen in this century, but maybe
toward the end of this century, the
Department of Defense is going to
have to make a hard decision between
guns and pensions. I predict that the
pension system of the military will so
overwhelm the budget of the-Depart-
ment of Defense, that it is going to
have to make some very difficult deci-
sions. Quite frankly, those difficult de-
cisions should have been made right
now, and the military should have
been In this bill, which is 21.9 percent
of payroll. But as I said, Governmen-
tal Affairs does not have jurisdiction
over that subject matter, and had we
attempted to capture it by some clever
ploy or other, the whole bill would
have gone down the tube.
But we're willing to help on the mili-
tary problem. Our committee has com-
puter programs, cost analyses, data
comparisons, and any other imagina-
ble kind of pension information, which
we would gladly loan to our armed
services colleagues so they can focus
on this crucial issue.
Since our committee has spent
nearly 3 years studying every aspect of
pensions, there is no need for armed
services to re-invent the wheel.
In fact, Mr. President, I would be per-
sonally happy to consult with them.
Either fortunately or unfortunately, I
have, through my original committee
assignment 18 years ago to the Com-
mittee on the District of Columbia,
and now as ranking on Governmental
Affairs, learned more than I ever
wanted to know about pensions. In
1979 our committee handled the DC
Retirement Reform Act, which I re-
member as numbers and charts and
more numbers and charts. All those
numbers and charts established a
mental basis for all the numbers and
charts behind today's legislation. I
think they'll be with me for life.
In light of that background, I can
authoritatively say that the Federal
Retirement Reform Act of 1985 estab-
lishes a system, which in combination
with Social Security, is rationale, equi-
table, and affordable, and a system
which will very likely be a model for
retirement plans far Into the future.
Mr. President, once again, I thank
my colleagues, Senator Rocs, Senator
8ru.vz,s, and Senator Goes, for their
exemplary work on this very difficult
and complex bill.
Mr. STEVENS adressed the Chair.
The PRESIDING OFFICER. The
Senator from Alaska.
Mr. STEVENS. Mr. President, I am
pleased that my good friend, the Sena-
tor from Missouri [Mr. EAct.i':rosl has
spoken on the bill, because, in truth,
despite the things that have been said
today so far, we would not have this
bill before us today had it not been for
the attitude that Senator EAGLZroN
has demonstrated, an attitude of dedi-
cation to good government. I am one
who hopes that Professor EAGLETON
will use this whole bill as a study for
his students as he goes to a new
career.
This bill establishes a supplemental
retirement plan for Federal workers
hired beginning January 1. 1984. who
are covered under Social Security. The
need for this bill, of course, came
about as a result of the 1983 Social Se-
curity Amendments which first
brought Federal employees into Social
Security. However, the development of
the retirement plan actually began
long before 1983. In fact, it was the
early part of this decade when we
began to see the need for alternative
Federal retirement plans because of
spiraling costs and also began to an-
ticipate the inevitable inclusion of
Federal employees under Social Secu-
rity. Today I feel that we have
reached an important milestone In a
very long Journey.
During my years of service in Gov-
ernment. I have witnessed few. if any,
issues which have commanded the
degree of analysis, level of study and
amount of time of this piece of legisla-
tion. It's practically unprecedented in
my experience here in the Congress.
In the late 1970's and early 1980's I
began studying the changing demo-
graphics of our society, in particular
the proportion of workers versus retir-
ees Into the next century. I became
troubled about the tremendous finan-
cial burden this could Impose upon the
Government and future generations. I
was equally concerned about the need
to provide adequate retirement income
and financial security for retirees.
Then there was the issue of covering
Federal workers under Social Security.
Since Social Security began In 1935,
the issue of covering Federal employ-
ees had come up from time to time. In
1980, the Universal Coverage Study
recommended inclusion of Federal em-
ployees under Social Security. Then in
1981. the President established the
National Commission on Social Securi-
ty Reform to study the problems of
Social Security financing. One alterna-
tive was to cover Federal workers. By
1981, I knew it was only a matter of
time before we needed a new Federal
retirement system.
In 1981, we requested the Congres-
sional Research Service [CRS) to do a
study of alternative designs for Feder-
al retirement programs. In December
of that year, CRS issued a report, out-
lining four options to coordinate a new
Federal retirement plan with Social
Security. Based on that report, in the
fall of 1982. 1 introduced S. 2905, a
three-tiered Federal retirement plan
based upon Social Security. Although
the bill was not acted upon, 6 months
later new Federal employees were cov-
ered by Social Security. This forced us
to tackle the problem of establishing a
new Federal plan.
We have commissioned study upon
study about Federal retirement issues,
Including those by the Congressional
Research Service and the General Ac-
counting Office.
Mr. President, I want to thank both
of those agencies for the great coop-
eration they have given to us through-
out this whole continuum. We have
consulted extensively on retirement
plan design issues with experts from
the private sector. This was highlight-
ed by the series of five Federal pen-
sion forums held in 1984 to discuss the
types of retirement plans successfully
used in private industry and State and
local governments.
We had several objectives in mind in
designing this system. First of all, we
needed a plan which would supple-
ment and be compatible with Social
Security-the cornerstone of the re-
tirement plan. We wanted a plan
which would provide a package of re-
tirement benefits for our Federal work
force comparable to their private
sector counterparts. This includes the
employee's financial security during
retirement, survivor benefits, and pro-
tection from disability.
It was important that Federal retire-
ment benefits be attractive enough to
enhance recruitment of top notch can-
didates for Federal Jobs, including key
managerial positions. We sought a
plan which would allow for greater
movement in and out of the Federal
work force at all levels and during all
career phases through portable bene-
fits. Providing various options for our
Federal employees in retirement plan-
ning was also a key design consider-
ation. Finally, we desired a retirement
plan that could do all of this but be fi-
nancially stable and fully funded at a
reasonable cost to the Government.
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November 7, 1985 CONGRESSIONAL RECORD - SENATE
With S. 1527, I honestly believe we
have achieved all of that. We have
borrowed from the best of private in-
dustry. adopted features of very suc-
cessful systems, and created some
parts on our own to come up with
K hat I believe is a "state-of-the-art"
retirement plan which will most cer-
tainly serve as a mode for others.
The plan is three-tiered. a very
common and successful design used in
private industry. The first tier is
Social Security, which provides the
basis of retirement income, disability
protection. and survivor benefits. The
second tier is the basic annuity plan.
which is noncontributory on the part
of the employee. The final tier is the
thrift savings plan, which provides for
tax deferred investments through vol-
untary employee contributions
matched in part by the Government.
The basic annuity plan, or the
second tier. is added on rather than in-
tegrated with Social Security. This is a
departure from usual private industry
practice, which is to integrate pension
plans to counterbalance the necessary
Social Security tilt toward lower
income workers. We selected this ap-
proach for a couple of reasons. Be-
cause of the complexity of integrated
plans, they are sometimes difficult to
explain to employees. With a retire-
ment plan as large as this one, and
given the size to the Federal work
force, the simplicity of an add-on plan
was appealing. Another important
consideration was that we expect
higher income employees to partici-
pate to a greater degree in the thrift
plan than the lower income group.
which serves to flatten the tilt. Al-
though we believe lower income em-
ployees will contribute to the thrift
plan, this add-on approach lessens the
need of these employees having to par-
ticipate to achieve adequate retire-
ment benefits.
The annuity computation formula
under the basic plan is backloaded as
in the current retirement system. This
gives greater weight to later years of
employment, thereby encouraging
career service. The annuity formula is
less generous than the current system.
However, this annuity is meant to sup-
plement Social Security.
The provisions of the basic annuity
plan were designed to parallel Social
Security where possible. For example.
the age for full retirement under S.
1527 is 62, which is the age at which
Social Security is first payable. This is
also the most common age for full re-
tirement in private industry. However,
in keeping with our goal of providing
greater career flexibility and employee
choice in retirement planning. S. 1527
allows employees to retire at age 55
with 10 years service on a reduced an-
nuity. Under another option in the
bill, which I will discuss later on, em-
ployees may make an additional con-
tribution to enable them to purchacc
the right to retire at 55 with 30 year:,
:.erti ice with no reduction.
Cost-of-living adjustments (COLA's)
under the basic annuity plan are also
keyed to Social Security. Under the
basic provisions of S. 1527, cost-of-
living adjustments to annuities would
begin at age 62, when Social Security
is payable, and would be equal to the
Consumer Price Index minus 2 per-
centage points. At 67, the eventual age
for full Social Security retirement, the
COLA would equal the CPI. Again.
under the second option of the plan to
be discussed later, employees could
choose earlier and more extensive pro-
tection against Inflation through
making an additional contribution. In
the private sector, COLA's are typical-
ly made on an ad hoc rather than reg-
ular basis and generally amount to
something less than the full CPI.
Under the basic annuity plan, we
have made special provisions, as under
the current system, for law enforce-
ment officers, firefighters and air traf-
fic controllers to enable them to retire
at age 50 with 20 years service or with
25 years at any age. We provide for an
annuity supplement, approximately
equal to the Social Security benefits,
from retirement to age 62, when the
Social Security benefit begins.
The third tier of the retirement
system, the thrift savings plan. Is one
of the most innovative portions of the
bill. This offers to the general Federal
work force, for the first time, an at-
tractive option available to many pri-
vate sector employees. Until now only
a few Federal organizations, such as
the Tennessee Valley Authority, the
Federal Deposit Insurance Corpora-
tion, the Federal Reserve Board, and
the Comptroller of the Currency, in-
cluded thrift savings plans in their re-
tirement systems. These plans are very
popular among employees at all
income levels because of the matching
employer contribution and the tax de-
ferral on contributions and earnings.
Thrift plans are likewise popular with
employers because the costs are
known from year to year and they do
not add to some future compounded li-
ability for pension costs. I believe it is
imperative that we offer the privileges
of thrift savings plans accorded to pri-
vate sector employees to our Federal
work force and that the Government
as an employer benefit from the tre-
mendous long-run savings of thrift
plans.
The thrift savings plan will be man-
aged by the Thrift Investment Board,
which consists of Government officials
and two employee representatives ap-
pointed by the President. This Board
will have broad oversight and policy
making responsibility with the more
direct day-by-day management being
handled by the Executive Director,
who is appointed by the Board. Em-
ployee input and representation would
come through the Employee Advisory
Committee, with members elected by
participants in the thrift plan.
Employees can contribute up to 10 surance plan self insured by the Fcd-
percent of their pay with the Govern- oral Government but with benefit,
ment matching the first 5 percent and services provided by a third-party
S 15035
dollar-for-dollar. They can choose
from among three Investment funds-
Government securities, fixed income,
and common stock Index fund. Having
a limited number of funds in the thrift
plan has been a successful practice in
private industry and popular among
employees. Employees would have the
option of changing funds and contri-
bution amounts yearly.
With a thrift fund of this size and
scope for the Federal work force, con-
cern about the role of the Federal
Government in operating this fund
and its effect on the market is under-
standable. We have designed funds
which are essentially self-managed
and do not require extensive day-to-
day investment decisions. Board mem-
bers are prohibited by law from
making specific investment decisions
and from directing the Executive Di-
rector to make specific investment de-
cisions. In addition, S. 1527 includes fi-
duciary obligations. enforcement pro-
visions, and penalties which apply to
private plans under the provisions of
the Employee Retirement Income Se-
curity Act.
As mentioned earlier. S. 1527 offers
two major retirement plan options to
employees. Because of the diverse,
large Federal work force, we thought
it was important to provide alterna-
tives to meet the needs of a wider
range of employees. The basic plan
provisions as described above apply to
option A. Under option B, employees
can elect to make a higher contribu-
tion of 7 percent, which would go to
the old age, survivor, and disability
portion of the Social Security tax up
to the taxable wage base and the re-
mainder to the retirement fund. Under
option B. the employee match for the
thrift plan would be different. Em-
ployees could contribute up to 10 per-
cent of pay with the Government
matching up to 6 percent as follows:
for the first 1 percent, the match
would be dollar-for-dollar; for the
second and third percentage points,
the match would be $0.50 per dollar:
and for the fourth to sixth percentage
points, the match would be $0.25 per
dollar. In other words, the match
would be 2.75 percent for the Govern-
ment per 6 percent for the employee.
Under option B. the additional em-
ployee contribution, combined with
employer savings from the reduced
match in the thrift plan, enables the
employee to purchase retirement at 55
and 20 with unreduced benefits. It also
provides the employee with enhanced
COLA's. Under option B, retirees at
age 55 would have their annuities ad-
justed by the CPI minus 2 percentage
points. At age 62, the COLA would
equal the full CPI.
This plan provides disability benefits
which are better than those under the
current system. The bill establishes a
separate long term disability [LTD] in-
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CONGRESSIONAL RECORD - SENATE
administration. The plan will use two
categories of disability-the Social Se-
curity definition and the civil service
definition of occupational disability.
For employees who become disabled,
payment during disability is equal to
60 percent of his or her average salary
offset by 100 percent of any Social Se-
curity benefit. After 1 year, if the em-
ployee does not meet the Social Secu-
rity definition, but is considered occu-
pationally disabled, the benefits are
reduced from 60 percent to 40 percent
of average pay. For Social Security dis-
abled employees, the 60 percent bene-
fit continues. When disabled employ-
ee:% reach retirement age, they roll
over to the regular retirement rolls-
for occupationally disabled, at 55 and
for So' ial Security disabled at 62.
Tl:r survivor benefits under this
nic' ly supplement those offered
un-:, r Social Security. Benefits for
surviving children up to age 18 are
paid by Social Security, not under this
bill The bill offers supplemental
death benefits-both for preretire-
ment death and post-retirement death.
In the case of the death of a worker,
tfv, survivor annuity would be payable
upon deat h
The benefice of S. 1527, when com-
hined with Social Security, offer com-
prt pensive retirement, survivor and
disability coverage comparable and, in
many cases, superior to the current re-
tirernent system. Yet, the cost of S.
1527 is 21.9 percent of payroll com-
pared to the 25.2-percent cost of the
current system. I believe package in
this bill is a very good deal for both
mployyees and the Government.
During the past 4 or 5 years in work-
mg on this bill. we spent a tremendous
amour of time. We've talked a lot. lis-
tened a lot. drafted a lot, and redraft-
t-d even more. However. I have not
been alone in this undertaking. In
fact, I could not have done it alone. I
-could like to thank my colleagues,
Senators ROTH, EAGLFTON, and GOO,F.,
for their tireless efforts, invaluable as-
sistance, and deep commitment to get-
tine this retirement bill to where we
are today. I would also like to express
my appreciation to the other members
of the Committee on Governmental
Affairs for their cooperation, interact,
and help on this retirement plan. This
'ail I'- the result of a truly cooperati.e
and bipartisan effort.
Mr. President, I would say that it is
utiqulestlonahly a monument to one
per.sor. on the floor today, and that is
fly assistant, Jamie Cowen. who has
worked with me through this whole
per ud and is probably now the great-
est expert we have in the field of gov-
ernment.sl pensions and retirement
systems He has agreed to stay on the
.!afl. as a matter of fact, until the bill
IS cuinplt fed. He actually retired from
our staff 2 years ago, but he decided
that he would stay and work with us
until the bill was finished.
I think it is an amazing thing that
we are here on the floor of the Senate
today with a bill as monumental as
this one is, with this tremendous bi-
partisan support and with no contro-
versial amendments. It is a tribute to
the staffs on both sides and to those
who hate worked with us in a tireless
manner that we have no controversy
to present to the Senate in the area of
this new retirement system for Feder-
al employees.
Mr. President. I think the Senate as
a whole can take great pride in the
fact that we can still wort, on a matter
in the public interest in a nonpartisan
manner and for the best interests of
all concerned.
EXECUTIVE SESSION
The PRESIDING OFFICER. Under
the previous order. the hour of 1:50
p.m. having arrived, the Senate will
now go into executive session to con-
sider the nomination of Alex Kozinski
to be U.S. circuit judge for the ninth
circuit, on which there shall be 10
minutes of debate to be equally divid-
ed and controlled. with the vote on the
nomination to occur at 2 p.m.
NOMINATION OF ALEX )U,ZINSKI OF CALIFOF-
NIA, TO BE U.S. CIRCUIT JUDGE FOR THE NINTH
CIRCUIT
Mr. STEVENS. I suggest the absence
of a quorum,
Tile PRESIDING OFFICER. The
clerk will call the roll.
The bill clerk proceeded to call the
roll.
Mr. THURMOND. Mr. President, I
ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. With
out objection, it is so ordered.
Mr. THUPilOND. Mr Pre^;ident, I
rise in favor of the nomination of
Judge Alex Kozinski for the Ninth
Circuit Court of Appeals. Judge Ko-
zinski graduated cum laude from
UCLA in 1972. He graduated first in
his class in law in 1975 at UCLA. He
was law clerk to Judge Anthony M.
Kennedy of the Ninth Circuit Court of
Appeals in 1976. He was law clerk of
Chief Justice Warren Burger in 1977.
He served as assistant counsel in the
Office of the Counsel to the President
in 1981. He served as spectai counsel to
the Mint Systems Protection Board
from 1e31 to 1982. He served as chief
judge of the U.S. Claims Court from
1982 to the present. He is the chief
judge now on the Ciaiins Court.
Mr. President, there has been some
charge here that he was overbearing
with his employees. Three former em-
ployees of Alex Kozinski, the former
attorn' y in charge of the Office of
Special Counsel, the former attorney
in charku- of Hatch Act enforcement,
and the Deputy Special Counsel, Merit
Systems Protection Board, were unani-
mously of the opinion that while
Judge Kozinski was special counsel
they enjoyed an excellent working re-
lationship with him. He was a man of
good judgment, they said, a man of in-
November 7, 1985
tegrity and decisiveness. Judge Ko-
zinski was demanding and set high
standards for his staff but he was a
very caring man for individuals.
Mr. President, I wish we had more
Judge Kozinskis in this Government.
He set high standards. Some of the
employees maybe did not like that and
they are the ones who are complain-
ing. The people who admired him the
most were those who were faithful em-
ployees and did a good job. We are
proud of the service he rendered.
Mr. President, I reserve the remain-
der of my time.
The PRESIDING OFFICER. Who
yields time?
Mr. LEVIN addressed the Chair.
The PRESIDING OFFICER. The
Senator from Michigan.
Mr. LEVIN. Mr. President, the Con
stitution tells us to advise and consent
the President on his nominations to
the Federal court. It tells us to be
active in that process, not to go along
with the nominee but to give our best
judgment, our best advice, and the:,
decide whether or not to consent. This
appointee has been nominated to the
second highest court . in the country.
Not one person on the ABA board said
that he was extremely well qualified
or even well qualified, a majority said
he was qualified, and a minority said
he was unqualified, and that occurred
prior to the hearings in this matter
and the correspondence which has
been exchanged between Judge Ko-
zinski and Senators THURMOND, BIDEN.
and myself.
We have a man here who is obvious-
ly academically qualified, who is hard
wori.ing, smart, and so forth, but who
woefully lacks, on a consistent basis,
the judicial temperament, the fair-
ness. the sensitivity and the compas-
sion which we should all insist of our
Federal judges.
Former employees describe him as
cruel and harsh and sadistic. One of
those employees say, "After 20 years
of Federal personnel management ex-
perience I cannot recall a more callous
disregard for people than Mr. Kozirs.i
exhibited,"
What did a Federal judge say in
hearing a case following Judge Korin-
ski's termination of a 25-year veteran
of Federal service who developed life-
threatening heart disease? What did
that Federal judge say about that
action of Judge Kozinski? There is,
"No discernible valid, legitimate. ac-
ceptable governmental interest in
doing anybody this way."
Judge Kozinski circulated an edi+ori-
at in an effort to gain support for this
confirmation which unfairly smeared
a group which opposed his nomina-
t ion.
It is clearly a smear and It is clearly
unfair, connecting them with an orga-
nization with which they are not con-
nected, and have not been for 114
years. Judge Kozinski said of Mary
Eastwood, when she refused to accept
an appointmert to San Francisco to
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