THE AGENCY SINGLE RETIREMENT PLAN & THE IMPACT OF INTERNALIZING ITS ADMINISTRATION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP89-00066R000900010001-4
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 74
• Document Creation Date: December 22, 2016
• Document Release Date: January 7, 2011
• Sequence Number: 1
• Publication Date: January 1, 1986
• Content Type: REPORT

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January 1986
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TABLE OF CONTENTS
Page
Part I--INTRODUCTION 1
Purpose of the Study 1
Scope of the Report 1
Assumptions 1
How This Study Was Conducted 3
Organization of the Report 3
Part II--BACKGROUND 5
Why does the Agency want to administer its own
retirement programs? 5
The Agency's Current Retirement Systems 5
"The Agency Single Plan" 6
Administration of CIARDS and CSRS 8
Administration of the Voluntary Investment Plan 9
Part III--OVERVIEW: WHAT WILL NEED TO BE DONE 11
Current OPM Involvement 12
Initial Actions Required 13
Role of the Offices of Finance and Personnel 13
Role of the Office of Information Technology 16
Part IV--RECOMMENDATIONS 18
General Recommendations 18
Specific Recommendations for the Office of Finance 23
Specific Recommendations for the Office of Personnel 28
Part V--PROJECTED IMPACT ON RESOURCE REQUIREMENTS 29
Office of Finance 30
Office of Personnel 33
Part VI--CONCLUSION 36
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Purpose of the Study: To project potential Agency resource
requirements in establishing a single Agency Retirement System,
entirely administered "in-house", assuming the proper
legislation is enacted into law, and to make recommendations
for beginning the implementation.
Scope of the Report: This report encompasses the discussion of
the impact on Agency resources of beginning to adjudicate, pay
and administer all cases of Agency employee separations. In
short, eliminating other government agency involvement,
especially where the release of the names of Agency employees
is required, is the goal.
Assumptions: The following are the assumptions upon which this
report is based:
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1. That the major "three-tier" provisions of Senator
Stevens' Supplemental Retirement Bill, entitled the
"Federal Retirement Reform Act of 1985", are included
in the final version of the legislation passed by
Congress--specifically, the design of the supplemental
retirement plan for new Federal employees; Amendment
No. 978 which brings C.I.A. employees who entered on
duty after 31 December 1983 and are covered under the
Social Security System into the proposed supplemental
plan; and Amendment No. 979 which gives the Agency the
authority to administer its own retirement system.
(Note that the House of Representatives also has its
own version of a Civil Service supplemental retirement
plan, the Ford-Oakar bill.)
2. That the Agency will not attempt to assume
responsibility for the pay and administration of the
current Agency Civil Service annuitants, who are
handled by the office of Personnel Management.
3. That the Agency will not assume responsibility for the
adjudication, payment and administration of Social
Security benefits for its employees at the same time
that it assumes these duties for the rest of the
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Agency's retirement benefit plans. However, the
feasibility and impact of doing this at a later date
should be considered, as a possible system enhancement.
How This Study Was Conducted: The primary Agency personnel who
are currently involved in the retirement process were
interviewed, first to gain an understanding of the nature and
extent of their involvement in the process, and secondly to
introduce the likelihood of the Agency gaining legal authority
to fully self-administer its retirement and disability
programs. Reactions to the proposal, suggestions for
implementation, and other recommendations were noted. The
information gathered during this exercise serves as the basis
of this report.
Organization of the Report: The following summarizes the
additional issues discussed in the report:
? Background: This section discusses the Agency's
justification for wanting to administer its own plan;
the current systems in place, the level of
participation in each; the composition of
the proposed "Agency Single Retirement Plan",
including a description of the supplemental system
for new employees who are under Social Security. In
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addition, the current delineation of responsibility for
the administration of the retirement systems is
discussed. (Part II)
? Overview-- What Will Need To Be Done: This section
summarizes the major changes that will have to take
place, particularly in the Offices of Finance and
Personnel. (Part III)
? Recommendations for Implementation: This section lists
some suggestions for the implementation of the
internally-administered "Agency Single Retirement Plan".
(Part IV)
? Projected Impact on Resource Requirements: Based on
the identified changes that will occur, both the
long term and short term impact on the Agency's resource
requirements, and those of its individual offices, are
considered. The focus is on projecting incremental
needs in the areas of money, personnel, systems, and
space. (Part V)
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Why does the Agency want to administer its own retirement
programs? The main reason that the Agency is seeking
legislation to grant it the authority to internally administer
its own retirement programs, is to avoid the dissemination of
sensitive Agency personnel information to other federal
departments and agencies. Upon separation, the Agency sends
the former employee's retirement records to OPM
Currently there are approximately
separations per year from the Agency; less than 20% are
retirees. Only the records of the CIARDS participants are
currently maintained by the Agency upon separation. With the
implementation of the proposed plan, the Agency will begin to
store and maintain the records on all separating Agency
employees, instead of sending them to OPM.
The Agency's Current Retirement Systems: The current
retirement systems, of which the majority of Agency employees
are members, are the CIARD and Civil Service Retirement
Systems. A small percentage of employees hired since 1 January
1984 are covered by Social Security. (They are also covered
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for the interim under the current Civil Service System, until
the final design of the supplemental plan is decided upon by
Congress.) Currently, less than 20 percent of Agency employees
are CIARDS participants; the remainder are members of the Civil
Service. There are an estimated Agency retirees per year,
about an equal number from each system.
An additional option available to Agency employees is the
Voluntary Investment Plan (VIP), a qualified pension plan to
which employees who choose to join can contribute a limited
proportion of their salaries, during the period of time that
they are active employees. The members have the choice of
having their contributions invested in one of two funds. Since
it is a qualified pension plan, most of the employee
contributions and none of the income portion is eligible for
withdrawal until retirement; the income earned is not taxable
until the time that the funds are disbursed. VIP currently has
approximately members, about of which are retirees
who have elected to defer distribution of their equity. The
costs to operate the plan is fully funded by its members.
"The Agency Single Plan": The concept of an "Agency Single
Plan" is a comprehensive retirement plan which would encompass
both the current CIARDS and Civil Service System, in addition
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to the system which is set up to cover the new employees who
are under Social Security. Under the Stevens' bill for the
latter, this system would be three-tiered, as follows:
1. A base benefit of Social Security coverage, which
would provide the basis of retirement income,
disability protection and survivor benefits;
2. A defined benefit plan, to supplement the Social
Security benefit; and
3. A capital accumulation (thrift or defined
contribution) plan (CAP) which allows each
employee the option of contributing a portion
of his/her salary, with the Government matching
a limited proportion. Employee contributions
would be handled on a tax-deferred (401(k)) basis.
Presumably, there will eventually be both "CIARDS-like" and
"Civil Service-like" members among the new employees. If this
is the case, the "Agency Single Retirement Plan" would be
comprised of the following four different systems (exclusive of
VIP):
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Current Systems:
1. CIARDS
2. Civil Service Retirement System
New Systems (for those under Social Security):
3. CIARDS-like
4. CSRS-like
Each employee will be a member of only one system, and will
have to be identified as such for purposes of the
administration of the new system.
Administration of CIARDS and CSRS--The Agency administers the
CIARD System, while the office of Personnel Management (OPM)
administers the Civil Service Retirement System (CSRS). Within
the Agency, Retirement Division of the Office of Personnel and
Compensation Division of the Office of Finance are the offices
which are most involved in the retirement process.
In general, Operations Section, Retirement Operations
Branch of Personnel's Retirement Division, has the
responsibility for the calculation of annuity estimates and
making sure all the necessary paperwork is completed on each
retiring employee. The "counselors" prepare a "package" for
each employee or eligible beneficiary. (Once the case is
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adjudicated, this package serves as the basis for making
annuity payments.) The CIARDS members' cases are then
forwarded to the Program Administration Branch of Finance's
Compensation Division for verification of qualifying service
dates, and finally to Retirement Pay Branch for adjudication,
pay and administration. The CSRS members' cases, in turn, are
sent to OPM for adjudication, pay and administration.
Following retirement, the Annuitant Section,
(Retirement Operations Branch of Personnel's Retirement
Division), and OPM have the responsibility for correspondence
with and for handling any benefit questions or problems of
CIARDS and Civil Service annuitants, respectively.
Administration of the Voluntary Investment Plan--The Voluntary
Investment Plan is administered by one full-time representative
in each of the offices of Personnel and Finance. The OP "VIP
Representative" position belongs to Retirement Services Branch
of Retirement Division, and the OF "VIP Accountant" belongs to
Proprietary Systems Branch of Commercial Systems and Audit
Division. VIP's Fiscal Year 1986 operating budget exceeds
most of which is made up of the two full-time
salaries, but it also includes allocations of charges from
other Agency components which provide services to the Plan and
its members. Although the administration of VIP is essentially
done on a manual basis, due to the attractiveness of the
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Government matching contributions included in the proposed
thrift plan, (which is part of the design of the Senate's
supplemental retirement plan), the Plan's future growth can
probably be accomodated by the current system, if no other
changes were made. In any case, the decision to undertake any
system enhancements would be left to the Plan.
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Part III--OVERVIEW: WHAT WILL NEED TO BE DONE
By assuming full responsibility for the administration of
the various retirement systems for all Agency employees, the
Agency will be absorbing essentially all of the functions
currently carried out for us by OPM. Also included would be
any other procedures currently carried out by others outside
the Agency which require submitting the names of Agency
employees outside the Agency, especially those who have served
overseas and/or under cover. As previously mentioned, one
possible exception may be the collection of Social Security
contributions and the administration of benefits. In addition,
some functions, such as the payment of Agency employee and
annuitant insurance premiums on their behalf may continue to be
handled as it is currently. This procedure does not require
that any names be released. The Agency, however, may wish to
obtain concurrence from FEGLI/New York to let trained Agency
representatives certify appropriate life insurance coverage in
retiree death cases. It is important to emphasize that the
main concern is the compromise of sensitive Agency personnel
information.
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Current OPM Involvement--The primary functions that OPM
currently performs on behalf of Agency employees and
annuitants, are as follows:
(1) Adjudication of all CSRS retiree applications.
(2) Arranges for payment of all Civil Service
annuitants.
(3) Approval/Disproval of CSRS disability applications.
(4) Maintenance of the CSRS retirement fund including
employee and employer contributions, and transfers
of funds back to the Agency when an employee
becomes a participant of CIARDS.
(5) Maintenance of CSRS retirement files, and records
of those who transferred into CIARDS.
(6) Certification of FEGLI benefit entitlement for both
CIARDS and CSRS participants.
(7) Receipt of pay cards on Agency CSRS resignees and
handling of requests for refunds of contributions.
(8) Confirmation of prior Federal service.
(9) Processing of requests for deposits and redeposits
for CSRS employees.
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If the Agency indeed internalizes the administration of its
retirement systems, all of the above functions will have to be
absorbed primarily by the Agency's Office of Finance and Office
of Personnel.
Initial Actions Required--As one of the first steps in
preparing to administer its retirement systems internally, the
Agency must request that OPM:
1. Release all "lock-up" and any other files on Agency
employees (these would consist mostly of retirement pay cards,
refund, deposit/redeposit, and insurance records); and
2. Return the employee and employer contributions that it
currently holds; it is questionable that the Agency would
receive interest on these funds as the amount would probably be
difficult to determine.
Role of the Offices of Finance and Personnel--Depending on the
final form of the plan, implementing the proposal at hand may
not be as difficult as it may at first appear. The Agency
already has systems in place to fully administer the CIARD
System, aside from some involvement by OPM. The design and
implementation of the proposed thrift plan will be one of the
major tasks at hand. As with the Voluntary Investment Plan,
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both Finance and Personnel employees will probably be involved
in its administration. In addition, the maintenance of records
on all separated employees will likely be an area of
substantial impact in both offices. Discussed below are some
forseen additional responsibilities of the offices of Finance
and Personnel:
Office of Finance (OF): This office will be impacted
the greatest. Compensation Division will be assuming the
adjudication, pay and administration of all new Civil Service
annuitants. The Retirement Pay Branch of Compensation Division
will be inheriting double the current number of new annuitants
that it now receives, on an annual basis. Monetary Division
will have to begin investing the Civil Service retirement fund
contributions as it does for the CIARDS members' contributions.
Another area of potentially substantial impact within OF
will be the assumption of recordkeeping and related
responsibilities to support the proposed thrift plan. The
required support would be similar to that currently performed
for VIP, except that the Agency will not be required to invest
the contributions collected, since it is proposed within the
legislation that they will be sent to a centralized
Government-wide Thrift Investment Board. However, the
recordkeeping potentially will be much more complex than that
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which is required for VIP because of the tax provisions and IRS
reporting requirements associated with 401(k) type programs.
In addition, since the office of Finance will be required
to retain all information pertaining to retirement
contributions for all employees, including those who eventually
separate, then a data base will eventually need to be
established whereby information can be readily retrieved and
securely retained.
Office of Personnel (OP): In general, the role of the
Office of Personnel will not be altered as dramatically as that
of the office of Finance by the assumption of the prospective
Civil Service retirees; it already performs most of the
functions related to the administration of both of the Agency's
current retirement systems.
One exception is that the Annuitant Section (within OP's
Retirement Division, Retirement Operations Branch) will have to
assume responsibility for all necessary correspondence with the
new Civil Service annuitants, handling of their disability,
death, former spouse, and student-child cases, in addition to
those of the current and prospective CIARDS annuitants.
The Operations Section of Retirement Division will also have
some additional responsibilities relating to prior Federal
service verifications (which under current procedures requires
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correspondence and/or coordination with the OPM facility in
Boyers, Pennsylvania or the National Personnel Records Center),
and deposit/redeposit computations and the related paperwork.
There is no forseen impact on Retirement Division's Social
Security Section, unless, of course, the Agency also gains the
authority to administer Social Security benefits. The
Retirement Board Secretariat, who is also part of Retirement
Division, will have to begin keeping statistics on Civil
Service retirement and disability cases, in addition to those
involving CIARDS participants.
In addition, if the Agency chooses to retain all records on
separated employees, the Office of Personnel will have to begin
storing the information and it will likely be involved in the
handling of requests for verification of prior Federal service
from other government agencies on behalf of these individuals.
The Offices of Personnel and Finance may wish to consider the
establishment of a single data base, to which they would both
have access, that would include all the necessary information
on current and separated Agency employees.
Role of the Office of Information Technology--Inherent in any
changes will be the requirement to review the existing computer
support systems. Regardless of whether or not an internal
retirement system for all employees is developed, new computer
support systems will be required to handle the effects of the
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supplemental program created for employees hired since 1
January 1984. As such, coordination with OIT will be essential
to the future administration of such programs.
Once all aspects of the proposal have been considered in
detail, and the changes to be implemented have been determined,
arrangements will have to be made for the projected additional
resources that will be needed for implementation. In addition,
regulations will have to be rewritten and training for those
who are taking on new responsibilities should be considered.
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Since feasibility of implementation of the proposed
internalization of the administration of the Agency's
retirement system appears likely, (provided that the necessary
additional resources are made available), this section includes
some recommendations for implementation--some of which are
suggestions originated by the writer and some of which are
suggestions of those who were interviewed and consulted on this
issue. The "general" recommendations are introduced first,
followed by some specific recommendations for the office of
Finance and the Office of Personnel, the two offices that are
expected to experience the greatest impact.
General Recommendations:
1. Start at once. Or, at least once it looks very
likely that the Agency will get the authority to fully
administer its own retirement systems. Coordination
will be required among all components which are
involved in, or affected by, the retirement process.
An initial meeting will be necessary to introduce the
proposal.
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2. Following the initial meeting, set up a task force to
organize the effort. Due to the complexity of
designing and implementing the proposed new procedures,
it is recommended that the task force members be
available on a full-time basis. The task force should
be made up of representatives from all the offices
which will be affected by the reorganization. It
should be responsible for determining which offices
will absorb the new responsibilities, and among the
individual offices, how they will be organized or
reorganized. It should prepare progress reports
(showing options and plans and the anticipated short
and long run costs/impacts associated with each), and
report on a regular basis to the concerned office
directors and to the Deputy Director for
Administration. Its goal is to design a single Agency
system; detailed plans or blueprints denoting the
delineation of responsibility and where coordination is
necessary, should be the result. In order to help them
undertake the design and development of the proposed
new plan, the individual task force members will want
to consult with those currently involved in the
retirement process on the working level, (both in the
Agency and at OPM), specifically to gather opinions and
assessments of additional resources which will be
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necessary, the effect of proposed alternative plans,
and other details. As an underlying concern, the task
force should consider/project the impact on the
following resources, from the implementation of the
in-house system:
?Personnel
?Space
?Systems
?Money
The capacity of the currently available resources
should be considered. Additional resources should be
sought to ensure that the plans can be realistically
carried out.
3. Visit OPM and study in detail the functions that it
performs on the Agency's behalf, noting the extent of
its involvement and the procedures and systems in
place; then determine how and where these functions can
be absorbed within the Agency.
4. Although the goal is to eliminate other government
agency involvement, especially where the release of
names of Agency employees is required, the Agency may
wish to maintain cleared liaison contacts with OPM in
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order to obtain required information on an individual's
prior Federal service and contributions to the
retirement fund. This is normally only done upon
retirement, however this procedure may not meet the
objectives of the plan, since Agency employee names and
records would be maintained and handled by OPM
employees.
A more secure alternative would be to place Agency
personnel physically at OPM to verify dates of prior
Federal service and amounts contributed to the Civil
Service retirement fund. Although this would probably
be a feasible alternative, it would not likely be a
sufficient certification to support any transfers of
money to the Agency from OPM on behalf of the unnamed
Agency employee. As a cost of protecting the
identities of Agency employees, a remedy for this
problem is to set up a fund in the Agency's budget to
match the contributions due to the retirement fund
which are not transferred to the Agency by OPM.
5. Based on the recommendations of the task force,
a. Start working on the creation of new systems and
enhancements of current systems. Consider
contracting out for help. Be sure that future
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users and experienced personnel are involved in the
determination of the identified needs and other
decisions. Consult the Office of Information
Technology (OIT) when necessary, especially as
regards to the the immediate impact of this effort
on current Agency systems (especially that of
Compensation Division's Retirement Pay Branch), and
the design and timing of bringing on new or
upgraded systems.
b. After the reorganization plans have been made,
begin to consider staffing requirements, and
arrange for new personnel slots. Training will
need to be arranged for certain individuals. For
example, some Finance personnel may need to take an
OPM retirement benefit adjudicator's course.
Courses which may also be sought are those which
provide instruction on the administration and
recordkeeping requirements of a thrift plan similar
to the one proposed.
6. The task force should consider contracting out for
assistance as it deems necessary.
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Specific Recommendations for the Office of Finance:
Two alternative methods of incorporating the additional
responsibilities into the office of Finance's current system
were identified as a result of this study: establish a
Retirement Division in the Office of Finance, or reorganize
Compensation Division. Both of these options are discussed
below:
1. Establishment of a Retirement Division in OF--
Because of the anticipated growth in responsibility,
it will probably be necessary to establish a
a Retirement Division in the long run. It might be
easier, however, to establish it initially before
the volume of responsibility is so great that
future reorganization would mean a major overhaul.
The Division may be comparatively smaller than
other divisions in OF at first, but it will need to
expand over time to meet the additional demands and
workload. The new Retirement Division would have
three basic functions:
a. Accounting/Recordkeeping--Responsible for
keeping records of each individual's
contributions and equity accumulated in
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the defined benefit and thrift plans;
doing all the necessary recordkeeping for
the various funds; preparing cash flow
projections used to guide Monetary
Division in its investment of certain
funds; and preparing all the necessary
periodic statements for each fund and for
each participant. The various funds will
probably need to be kept separate for
actuarial review purposes.
b. Adjudicating--Responsible for the
verifying individual benefit computations
and certifying to initiate payments.
c. Payroll--Responsible for the correct and
timely payment of all qualified
annuitants, including the accuracy of the
payroll deductions and home/bank addresses
of annuitants and related information.
For control purposes, each function--the recordkeeping,
verification, and payment functions--should be kept separate.
In addition, in the interest of security, there may be a need
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for different personnel to handle the pay and administration of
covert and overt annuitants, especially where significantly
diverse procedures are involved.
The new Retirement Division would have three major areas of
responsibility. Shown below, they are broken down into
branches for illustration purposes:
(1) CIARDS Branch--To handle all of the above
functions for both the current and new CIARDS and
"CIARDS-like" annuitants.
(2) CSRS Branch--To handle all of the above functions
for only new Civil Service and "Civil Service-like"
annuitants.
(3) Thrift Plan Branch--To handle all the
accounting-related functions for the new plan,
including keeping track of individual records and
also the amount required to be periodically sent
to the Thrift Investment Board for investment.
Finance's VIP Accountant could be relocated with
this section, since their functions are related.
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2. Reorganization of Compensation Division of OF--This is
probably a less ambitious option than the establishment of an
entirely new division. There are many combinations possible;
some suggested alternatives for reorganizing Compensation
Division are as follows:
a. Retirement Pay Branch as it is today could be
dissolved and its functions made a part of a system
that is set up to accomodate both CSRS and CIARDS
participants. A separate branch could be set up to
accomodate the CSRS and CIARDS participants who are
also covered by Social Security.
b. Or, Retirement Pay Branch could remain intact and
be expanded to accomodate the CIARDS participants
who are under Social Security. A parallel system
could then be designed to handle the pay and
administration of the CSRS annuitants (including
those under Social Security).
c. Another alternative is to modify the current
procedures and systems of the Retirement Pay Branch
to accomodate its current workload, plus all
prospective retirees under all systems, provided
that the modified system in place could accomodate
the additional numbers.
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d. A final alternative is to design and implement an
entirely new "Retirement Pay Branch", to handle all
Agency annuitants.
Further integration of the three branches suggested for the
proposed Retirement Division, especially combining RPB (the
CIARDS payroll function) with the Civil Service payroll
function, may however cause excessive confusion or overloading
of the system's capabilities. Retirement Pay Branch currently
carries out a separate and distinct operation. It essentially
has two functions: the payment of CIARDS annuitants and
recordkeeping of the related investments. It has a "VM
application" with some automated features, however, it also has
alot of manual requirements. In addition, there are some
unique and time-consuming responsibilities which require
personal attention and a high degree of security
consciousness.
In any case, separate personnel will be needed to
administer the new thrift plan. The staff should probably be
located near, but not integrated with, the other pay and
administration personnel who are also working with the
retirement systems.
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The determination of what the new form of the annuitant
payroll and thrift plan systems will be, should be made with
feasibility, efficiency, cost consciousness and any existing
time constraints in mind. Anticipated future needs of the
systems should also be considered.
Specific Recommendations for the Office of Personnel:
As mentioned, there are some additional responsibilities
that the Office of Personnel will need to assume; however, the
organization in place should be adequate to accomodate them.
Therefore, the Office of Personnel should continue to handle
its responsibilities to the Agency retirement systems as it
does currently, with a few exceptions. One exception is the
establishment of a new thrift plan administration staff that
would perform essentially the same functions that the "VIP
representative" performs for the Voluntary Investment Plan.
Due to its anticipated popularity and volume of activity, a
fully automated system should be designed and implemented.
Increased personnel will be needed especially in the Annuitant
Section to handle the increased workload. They will also need
a data base system for maintaining the voluminous records of
separated employees. Also, additional automation in both the
Annuitant and Operations Sections will be essential in
achieving efficiency and accuracy.
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Part V--PROJECTED IMPACT ON RESOURCE REQUIREMENTS
It is a fact that the enactment into law of the proposed
legislation, which would permit the Agency to fully, internally
administer its retirement systems, will require increased
resources in the four general areas of personnel, money,
systems and office space. However, since the Agency is not
planning to administer the current Agency Civil Service
retirees, it should be noted that much of the incremental
resource requirements that will be needed as a result of
bringing the administration of the Agency's retirement system
in-house, can be phased in over a period of years. The pay and
administration function which will only be absorbing new Civil
Service annuitants, for example, will experience its fullest
impact in the long run. This is true also of the Agency's
proposed assumption of responsibility for the continued
maintenance of the retirement records of all prospective
separating employees: the additional office space and personnel
that will be needed will increase as the number of files
increase. However, if the future needs of both the payroll and
file maintenance functions are thoughtfully projected at the
initial stages, automated systems can be set up to accomodate
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CIL I"111\1 V11\~LlL\L .r aa yra a.+ .. v.+ ..
the respective long term requirements. In turn, other aspects
of the proposed system, such as the new recordkeeping
responsibilities, will have to be effected immediately.
The amount of additional resources needed is entirely
dependent upon what specific plans are made for
reorganization. This is particularly true in the office of
Finance, where major changes are likely to occur. The impact
on resource requirements in the office of Personnel is more
readily determinable and estimable, however, because of the
smaller scale changes that will be required. The personnel
dedicated to the Voluntary Investment Plan should not be
affected at all by changes or reorganizations in the other
offices. The following paragraphs address the projected
additional resource requirements in the offices of Finance and
Personnel of implementing the subject proposal.
Office of Finance:
Retirement Pay Branch/Compensation Division--Without
knowing the exact or even general design of the final
organization (that is the result of the creation of a new, or a
modification of a current one), it is difficult to predict the
specific additional needs which relate to the pay and
administration of all Agency annuitants.
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Given the current systems and procedures in place, the pay
and administration of the current CIARDS, and prospective
CIARDS and CSRS annuitants, could probably be handled by some
additional pay technicians at the GS-09 level--if some new
systems and system enhancements are implemented. Specifically,
a computer program similar to that currently in use for
computing benefit entitlements for CIARDS annuitants, needs to
be designed and made available for computing CSRS benefit
entitlements. In addition, the extensive recordkeeping and
financial statement requirements that are currently being
almost entirely done manually need to be automated; an
"off-the-shelf" software package could probably be used with
some slight modifications.
These initiatives will not, however, produce a system that
will accomodate the various recordkeeping requirements and
procedures that are peculiar to the administration of the new
Social Security-covered employees, or the thrift plan.
Separate staffs and systems will need to be set up to perform
these new responsibilities. This will, of course, require
additional office space and funds to implement these plans.
Other Branches/Compensation Division--Although the
Automated Operations and the Special Payroll Branches will have
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additional deductions to make, especially with the proposed
Social Security-covered employees' plan and its thrift plan,
this should not require much, if any, additional resources.
The Pay Administration Branch should not have any significant
change in responsibility or effort, hence there is no forseen
need for any additional resources.
Other Divisions in OF with Perceived Additional
Responsibilities--The following divisions within the office of
Finance are likely to be affected by the implementation of the
proposal to internalize the administration of the Agency's
retirement systems, however, in each case the perceived impact
which is mentioned is unlikely to require any additional
resources.
Accounts Division--This division will conceivably have
to set up some additional general ledger accounts.
Monetary Division--As previously mentioned, this
division will likely be responsible for investing the
equity in the Civil Service retirement fund, as it
currently does for the CIARDS fund. It may also have
additional funds to invest with implementation of the
proposed new system.
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Assistant Director for Liaison (ADL)--This staff may
need to be involved with the transfer back to the
Agency from OPM of Agency employees' equity in the
Civil Service retirement fund.
In conclusion, the final organizational form of the staffs,
their corresponding responsibilities, and plans for additional
systems and system enhancements, will necessarily dictate the
impact and incremental resource requirements in the office of
Finance.
Office of Personnel:
Annuitant Section/Retirement Operations Branch/Retirement
Division--This staff of six people currently handles all the
correspondence and problem-solving related duties for all
CIARDS annuitants, of which there are currently about
It will be inheriting the entire number of approximately
additional annuitants on an annual basis if Civil Service is
administered in-house. Without considering annuitant deaths,
this represents an increase of more than 10% a year, which is
double what it normally experiences. In addition, its
personnel must become familiar with the existing Civil Service
laws. They must also begin to make the necessary notifications
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to Civil Service annuitants of relevant changes in the law when
they occur, as it currently does for CIARDS annuitants and
changes in the C.I.A. laws. With the additional
responsibilities, a gradual increase in personnel will be
necessary; the working level of the "Employee Benefits
Assistant" appears to a GS-09. One suggestion that will hold
down the number of positions needed would be to provide some
automation to cut down the time-consuming effort required in
the mass mailing process that the section must carry out
several times a year.
Operations Section/Retirement Operations Branch/Retirement
Division--This staff initially will be minimally affected by
the proposed internalization of the retirement processing and
payment. It already carries out all the necessary procedures
to prepare each annuitant case for payment. It will, however,
have to begin processing cases for employees under the new
system and must become familiar with the new supplemental
program features. Computerization would appear to be an
essential ingredient to performing functions currently done on
a manual basis. This includes integration with other data
sources in the office of Finance and the Office of Personnel.
Retirement Board Secretariat--As mentioned in the overview
section of this report, the Retirement Board Secretariat will
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have to begin keeping statistics on participants and annuitants
of all retirement systems, instead of just for CIARDS members.
The individual who currently holds this position has the aid of
another for four hours a day. This part-time position may have
to be expanded into a full-time assistant position, depending
on the additional time constraints imposed by the incremental
recordkeeping and reporting requirements. Again, automation
would enhance this operation.
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Part VI--CONCLUSION
Following a brief introduction and background, this report
includes an overview of the proposal at hand, and some
recommendations for implementation of "The Agency Single
Retirement Plan". The final part of the paper suggests the
impact on the resource requirements of the two Agency offices
that are the most involved in the retirement process. Some
additional offices that may be impacted, but have not been
considered in detail, are the office of Information Technology,
Central Cover Staff, and the Office of the Comptroller, among
others which have not been identified or mentioned.
As recommended, additional study and consideration by a
task force made up of experienced and knowledgeable personnel
should yield better estimates and projections of the
anticipated impact on the Agency's resource requirements.
Their decisions regarding the specific design of the staffs of
personnel and the related systems, will allow for meaningful
estimates to be made of the necessary additional office space
and funds.
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6 jjjI,
,Jj
CIA's Requirements in its Retirement Program
Forward
The CIA has monitored closely the Administration and
Congressional efforts to develop new supplemental retirement
programs for employees covered by Social Security and possible
changes to the current Federal retirement systems.
Concurrently, the CIA undertook an in-depth evaluation of the
provisions of CIA's current retirement system coverage and
procedures (i.e., CIARDS and CSRS) to assess their effectiveness
in serving CIA's security and work force management requirements
in the intelligence world of the 1980's and beyond. This
review reaffirmed that in the CIA the provisions of our
retirement programs must serve as the single most important
management tool in maintaining the type, characteristics, and
quality of employee cadre required for the successful
accomplishment of CIA's national foreign intelligence mission.
It is vitally important that the provisions of future
retirement program coverage of all CIA employees are fully
compatible and supportive of the need to recruit and maintain a
young and vigorous employee cadre for relatively short, but
full careers of 20 to 30 years and then be retired before
continued employment becomes detrimental to the best national
security interests of our country.
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Equally important in today's intelligence environment is the
need to assure maximum security protection of the foreign
intelligence interests of the United States in the administration
of CIA personnel-related affairs. Today, as legislative
proposals relative to the structure and provisions of retirement
are taking shape, the Agency foresees certain of these proposals
as seriously incompatibile with CIA's needs and would seriously
damage CIA's intelligence capabilities should the special needs
of the Agency not be recognized and accommodated. This concern
pertains to both proposed changes in the provisions of existing
retirement systems and to possible supplemental retirement
legislation. It is clear that over the years, this vital
understanding and forthcoming support by the Congress at-large
has been realized through the diligent efforts of the Members of
the Congressional Intelligence Oversight Committees privy to the
special circumstances and needs of the CIA.
Such support by the Oversight Committees is needed again to
preserve the Director of Central Intelligence's ability to carry
out his statutory responsibilities in maintaining the quality
intelligence service that now exists and is required to meet the
critical national security requirements of our Nation and its
citizens.
In the Attachment we have provided an overview of the CIA
today with summaries of the Agency's situation, concerns and
needs. We hope this information is useful to Members of the
Oversight Committees in providing understanding within the
Congress as they address current and future legislative proposals
affecting CIA.
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Overview
of
CIA's Requirements in its Retirement Program
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CIA's Requirements in its Retirement Program
I. Background
The mission and special requirements of the CIA, established
by the Congress in the National Security Act of 1947 and the CIA
Act of 1949, involve all Agency employees in ways unique to the
Federal government. This legislatively mandated special status
for CIA and its impact on all our people is the basis for a
personnel system which is different from any other Federal agency
ranging in all personnel management aspects from recruitment and
appointment practices through to retirement.
In establishing CIA, Congress recognized the Agency's special
personnel needs, the unique nature of the careers it would offer,
and the demands it would make of its employees. As a result, the
CIA Act of 1949 and subsequent legislation established and
refined an independent CIA personnel system to allow, among other
things:
-- the hiring of all CIA employees under the statutory
authority of the Director of Central Intelligence;
-- the classification of CIA positions for pay purposes and
the setting of certain pay rates by CIA standards;
-- the establishment of minimum and maximum age
requirements for Agency employment;
-- the determination of job and employee qualification
standards under the Director's authority;
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-- the termination of employees under the Director's
authorities without further recourse by the employees.
-- exemption from Civil Service Reform Act of 1978 which
allowed creation of Federal employee unions, established
certain prohibited personnel practices and created
Senior Executive Service system.
-- exemption from the Drug Abuse Office and Treatment Act
of 1972, which forbade denial of employment to former
drug users.
-- exemption from Federal Advisory Committee Act of 1972.
-- exemption from Federal Employees Part-Time Career
Employment of 1978.
Among other important legislation for the Agency were PL
88-643 (in 1964) which established the CIA Retirement and
Disability System (CIARDS) and in 1982 new security legislation
(PL 97-200) which imposed severe penalties for the unauthorized
disclosure of the identities of intelligence personnel whose
affiliation with U.S. Intelligence is classified.
All of these special authorities entrusted by Congress to
successive Directors of Central Intelligence have served our
national security interests extremely well. The Directors of
Central Intelligence have been scrupulous in their use of these
broad authorities and have sought special provisions, or
necessary accommodations to general Federal legislation, only
when they impinged on the Agency's capability to effectively
perform its mission or were required to provide security
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protection of national security interests. Wherever possible the
Agency has accepted program coverage in accord with general
Federal statutes and procedures when compatible with CIA
organizational and security requirements.
Included in this category has been acceptance by CIA of
retirement coverage by all Agency employees under the regular
provisions of the Civil Service Retirement System (CSRS). The
CIARDS Act of 1964 provided special statutory authority for the
Director of Central Intelligence to transfer retirement coverage
of certain employees from CSRS to the internally administered
CIARDS system when the special nature and duration of their
duties meet the qualification requisites for CIARDS
participation.
The effectiveness of this policy, while serving the CIA's
managerial needs quite well over the past years, is eroding in
the face of the rapidly changing intelligence environment of
today and the future.
The need for strengthening the secure administration and
structure of the current retirement program is clearly evident
if the Director of Central Intelligence is to fulfill his
statutory responsibility to protect the security interests of
the foreign intelligence activities of the United States.
Two elements continue to fortify these needs - the continuing
and increasing attempts to expose Agency operatives for the
purpose of hostile terrorist attacks, and the tremendous strides
made in computer automation making it increasingly simpler to
evaluate and piece together information on Agency employees.
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Technology in the latter continues to grow at geometric
proportions making it more difficult, if not impossible to
adequately protect the identities of Agency employees where
information on these individuals required by external reporting
requirement goes beyond Agency control. Our review of such
requirements has surfaced many areas where the 1960's and 70's
solutions to these concerns are not sufficient to cope with the
technological advances in information processing, particularly
given the penetration efforts and hostile actions continually
directed at the Agency. In some instances, administrative fixes
are possible and perhaps appropriate. For retirement, however,
the situation is pervasive and the magnitude such that we feel
the only solution, benefits aside, is to totally administer
internally the retirement program for all employees.
In addition to the security aspect, the retirement program
must continue to provide managerial flexibility to the Director
to maintain, control and effectively use the CIA work force in
meeting current intelligence requirements. Many of the
retirement proposals, both as regards the current systems and
new programs for post-1983 employees, that are being actively
considered within the Congress would be incompatible and
damaging to CIA's capabilities and would further exacerbate the
erosion of effectiveness already noted. CIA's special needs
must be understood and accommodated to preclude inadvertent
damage to our nation's intelligence capability.
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CIA is a single, unified Agency
The CIA is a single, indivisible Agency with a single culture
and ethic. This concept is consciously fostered in the
perceptions of all CIA employees and is vital to maintaining the
needed cohesiveness of effort in accomplishment of the Agency's
mission.
Frequently the CIA is viewed as similar to the Department of
State regarding its organizations, use of the work force, and the
"foreign affairs" nature of our mission.
Some similarities do exist, particularly in the increasingly
hostile environment in which both State and the CIA operate
abroad. However, State utilizes a two-tiered work force--a
Secretary of State managed Foreign Service cadre dedicated to
State's foreign diplomatic mission, and a separate domestic Civil
Service status employee cadre carrying out the Department's
domestic responsibilities.
Unlike State, all CIA employees are appointed under the
statutory authority of the DCI and form the Agency's single,
unified work force.
CIA employees do not gain status as "Civil Service" employees
and do not come under the purview of OPM. All CIA employees are
subject for service in any locale--whether domestic or foreign,
either open or under cover--where Agency requirements demand
their services.
From CIA's inception in 1947 to the current time, all new
appointees, regardless of the nature or locations of their
assignment, are covered initially by the Federal Civil Service
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Retirement System. This coverage provides the same survivor,
disability, and longevity benefits as are provided Federal
employees in domestic-oriented Federal agencies like the
Departments of Agriculture and Labor. This basic coverage
continues for CIA employees until they serve a minimum of five
years of "qualifying service" for CIARDS. The typical career
operations officer serves a minimum of six to eight years of
service with at least two overseas tours in high casualty-risk
and stressful environments under regular CSRS coverage before
accruing sufficient qualifying service for the slightly
preferential CIARDS coverage.
While it is possible to estimate the percentage within each
new entry groups of new CIA employees who can be expected to
perform sufficient qualifying service for designation eventually
as CIARDS participants, it is not possible to identify which
specific individuals will perform this type of duty until later
in their careers.
Differentiation between classes of CIA employees based upon
their retirement coverage or restriction of availability of
certain employee categories to specific types or locales of
assignment would create serious problems for the Agency in
utilizing the CIA work force when and where needed to meet
requirements.
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II. The Intelligence World of Today
The accomplishment of the CIA intelligence mission in the
1980's is significantly more complex and demanding on both
Agency management and the CIA work force than in earlier decades.
These differences impact upon the Agency as follows:
Increased Scope and Complexities of Intelligence Requirements
Developments anywhere in the world, and indeed now in outer
space, have ramifications on the national security of the
United States. In earlier days CIA dealt primarily with the
threat to the United States from our major antagonists in
the world. While this threat remains our principal concern,
its scope constantly enlarges and demands intelligence
attention. All of these and other developing issues
requiring daily intelligence vigilance substantially impact
on all facts of Agency activity. Examples of these
developments are:
the explosion of the scientific and technological
development in recent years and transfer of these
developments to a wide range of applications.
the impact of economic and financial stability of
foreign governments on the United States.
volatility of international political affairs
world petroleum production.
international terrorism
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-- international narcotics trafficking
-- weaponry and space technology
The increase in the scope and criticality of intelligence
requirements of today have produced increased impacts on the CIA
work force, the demands of the working environment and managerial
requisites for effective tools to sustain the quality of employee
force required to meet mission requirements.
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III. Impact on the CIA Work Force
? Employees serving in support of CIA operational activities
Overseas Duty
Employment with the CIA means availability for service where
and when Agency requirements dictate.
This means potential for assignment overseas without any
restriction relative to whether an employee is covered by the
Civil Service Retirement System (CSRS) or the CIA Retirement and
Disability System (CIARDS). For example:
Only 36 percent of CIA employees currently serving
overseas have qualified for CIARDS; the remaining
64 percent are covered under the CSRS. Unlike members
of the Foreign Service, all of whom are eligible for the
foreign service retirement program from the moment they
begin their careers, CIA employees must earn their way
into CIARDS by serving a minimum of five years overseas.
Given CIA policy of rotating people in and out of the
Washington area
it takes time for employees to earn the five year
credit. Obviously, some never do. This explains why,
in an overseas oriented organization, only 18.6 percent
of the staff is in CIARDS.
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-- Nearly two-thirds of the officers in our clandestine
service presently have not qualified for CIARDS and are
under the Civil Service Retirement System (CSRS).
-- CIA has over employees who have served abroad but
have not yet qualified for CIARDS.
-- Intelligence analysts responsible for interpreting
foreign developments are going overseas in increasing
numbers in direct response to Congressional and
Administrative mandates. In 1985, more than
s
e than
analysts will travel and work overseas. Mor
Onon-CIARDS qualified analysts are serving abroad in
such dangerous posts a~
-- Agency scientists and engineers are also going overseas
in increasing numbers on important temporary duty.
-- We have had more than= high tech specialists serve in
a highly sensitive project under the most primitive
conditions
They
are separated from their families for prolonged periods.
None have earned CIARDS membership.
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Increased Stress and Danger
Overseas service is becoming more dangerous for all
Americans, but especially for employees of CIA. The mortality
figures for our people are grim.
-- Since 1968 there have been over 8,500 terrorists
incidents world-wide. Over 3,500 were targetted against
Americans. Risk of death, injury, and capture, and of
CIA personnel makes it painfully obvious that overseas
service with the CIA--even in "friendly" locales--is
extremely dangerous to assignees and their families.
-- Since the 1950's, El Agency employees have died serving
abroad. Only^ (28%) were CIARDS-qualified.
-- We have=gold stars in our entry foyer honoring our
colleagues who died from hostile action or while
participating in highly dangerous Agency activities.
Only _(20%) were CIARDS qualified.
-- One of the two most senior CIA officers slain in hostile
action overseas was the Director of a Headquarters
analytical office.
-- In addition to hostile action and the clinical health
hazards of world-wide service, Agency personnel
travelling and working overseas serve under
circumstances of civil disorder, terrorist threat, and
high local crime rates. This is further magnified by
requirements that our people--case officers, support
personnel, technicians and analysts--frequent remote
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areas under primitive conditions and travel via poorly
maintained local air transport and use of crude landing
fields which do not meet U.S. safety standards. As
evidenced by the examples cited above, a large segment
of Agency personnel serving in high risk assignments
abroad, or who are not openly identified with the CIA
(or the U.S. government in some instances), are covered
under the regular provisions of CSRS because they have
not met the stringent requisites for CIARDS
participation.
Assignment under Cover (domestic and overseas)
Among all other considerations which impact on CIA employees
and Agency management, the single heaviest burden of all is the
need to establish and maintain cover (i.e., concealment of
identification with the CIA or even the United States government)
to protect sensitive activities, organizations and identities of
employees engaged in supporting these activities.
-- Employment at CIA means that a high number of Agency
employees will be called upon to serve under cover
without regard to whether they are protected by CIARDS
or CSRS.
-- Today CIA employees are serving
under cover because of the sensitivity of the activities
involved and/or to provide personal protection for the
employee and family against hostile action.
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-- The nature and conditions of operations work in itself
leads to relatively early employee "burnout" and
diminishing effectiveness.
-- Operational and physical environments abroad demand
sustained high motivation, courage, good health,
adaptability, and vigor in these employees.
-- After age 50 nearly 50 percent of Agency employees are
not eligible for full service medical clearance.
Management Requisites
As a management mechanism for employees who qualify for
CIARDS, the retirement provisions of the system have been
intimately woven into the personnel management system of the
operational cadre and its supporting elements.
It has contributed most effectively in fulfilling such
essential managerial needs as:
? Providing the Agency with a secure mechanism for the
Administration of retirement affairs for members of the
CIARDS.
? Enabling the Agency to recruit and retain the type and
quality of work force essential to fulfilling critical
work requirements and the capability for timely
retirement of those individuals who have passed their
peak performance. Mandatory retirement at age 60 and
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voluntary early retirement (50 with 20 years) without
penalty reduction of benefits are essential contributors
to meeting managerial objectives of keeping the
operational cadre fully effective; permits the
flow-through of new employees; providing opportunities
for employee developmental assignments; timely
promotions; and in meeting reduced personnel ceilings
when required. If the mandatory and voluntary
retirement eligibility ages were to be extended and
current annuity levels reduced for CIARDS, severe
problems would be created in terms of an unacceptable
aging of the overall operational cadre; the diminution
of vigor and adapatability among its ranks, and
increased difficulty in arranging cover. Effective
management of the cadre would be severely weakened in
terms of attracting recruits in the first place; the
creation of severe blockages in essential flow-through
assignment opportunities within the ranks; promotion;
and timely retirement.
? Employees serving CIA's scientific, technical and
substantive intelligence requirements
CIA has responded to the expanding developments of
scientific, technical, economic and political
developments by establishing new or expanding existing
organizations (both domestic and abroad) staffed by
experts in a wide-range of exotic disciplines.
Recruitment and retention of these specialized
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professionals is extremely difficult in a highly
competitive labor market which offers substantially
higher pay and better benefits.
These are the people:
-- whose research in the U-2 program provided the medical
basis on which NASA later built its space survival
knowledge;
-- whose imagination and energy created the program which
brought the first photographic satellite back from space;
-- whose creativity in high performance aircraft design was
used by Boeing when planning the SST;
-- whose determination built and launched the largest
antenna in space;
-- who have built advanced computer systems with
capabilities and applications unique in the world;
-- who have built the world's most sophisticated
space-based reconnaissance vehicles;
-- and who have done all these tasks at or below budget and
on schedule.
Work Environment Factors
Scientific, technical and substantive intelligence analysts
and support personnel who perform periods of service abroad
endure the same stressful and hazardous
conditions for the duration of such service as the career
operational cadre.
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A substantial number of employees in these categories,
comprising approximately~ercent of the work force, spend the
major portion of their Agency careers in domestic assignments
and are not exposed to the extreme employment conditions
encountered by career CIARDS and pre-CIARDS personnel.
As compared to regular Civil Service employees elsewhere in
government however, they are liable for service where needed,
subject to intrusive security standards, limitations on social
interchange and external professional recognition and status
that have common application to all CIA employees but are
atypical of their counterparts elsewhere in government.
The nature of intelligence work and the critical importance
of its product generates its pressures of continuous stress,
extreme consequence of error, lessening of skills and "burnout"
at ages somewhat older than those in the operational milieu but
nonetheless at relatively young ages.
Management Requisites
Just as the special management requirements of the Agency's
clandestine service have been effectively acccommodated through
the CIARDS mechanism, the provisions of Civil Service retirement,
particularly the early optional retirement feature with non-
reduced annuities at 55 with 30 years of service, have proven to
be most effective tools for Agency managers in accommodating the
different but equally important requirements served by CIA's
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analytical, scientific, and support cadres by providing:
? Recruitment inducement in the face of intense
competition with the private sector (where higher
salaries are frequently available) of the best expertise
in a broad spectrum of professional disciplines and
fields of specialization.
? Predictability of the projected patterns of the timing
and numbers of future retirements that enable Agency
managers to establish employee career development,
progression, and replacement on a definitive basis.
? Retention of substantive analysts, scientific and
technical experts, and administrative specialists
through their most productive years with sustained
currency in their areas of expertise and state of the
art.
? Capability of managers of these non-operational cadres
to encourage voluntary retirement at appropriate
combinations of age and service compatible with
organizational needs.
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IV. CIA's Specific Concerns
Relative To Its Retirement Systems Needs
Role of the Agency's retirement system
The several retirement related proposals now under
consideration by the Congress, both as regards changes to the
current Federal Retirement System and supplemental plans for new
employees, are heavily focused on perceptions of the "benefit"
role of retirement systems rather than improvements in their use
as work force management mechanisms.
The Agency's retirement system must continue to be designed
to serve as the key management tool in maintaining the required
characteristics of the work force required to accomplish the CIA
mission.
While the importance of the economic and social aspects of
benefit entitlements is fully recognized, the payment of
relatively attractive retirement benefits in itself is an
important element in attaining managerial objectives.
Among the various combinations of proposals, those which
would increase retirement ages for non-reduced annuities from
age 50 with 20 years for CIARDS, and from 55 to age 65 for
non-CIARDS (i. e. now under CSRS) participants would severely
weaken the managerial utility of CIA's system and would be
destructive to the Agency and capabilities now developed within
the Agency to protect the vital national security interests of
our country.
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Maintaining the Principle of the Single CIA Work Force
As previously stated, the CIA is a single, unified Agency
with a single, unified employee body.
The Agency does not categorize its employees into separate
"Civil Service" and "CIARDS" classes in terms of personnel
status or availability for assignment where their services are
required. All CIA employees are subject to the same intrusive
security investigation and standards, periodic polygraphing and
personal restrictions that are identified with Agency employment.
The only "Civil Service" connotation within the CIA is
relative to the fact that all Agency employees are covered by
the provisions of the CSRS until they qualify for participation
in the internally administered CIARDS program.
Agency employees understand and accept a two-tiered
retirement policy which provides some employees the eligibility
for retiring five years earlier because they know the grueling
hardships of a prolonged overseas career under stressful
circumstances.
None could, or indeed should, understand a rationale that
would call for a ten to fifteen year spread between those in
CIARDS and the majority performing similar work outside CIARDS.
Such a situation would shatter the Agency culture and risk
polarizing a work force which to be effective, must work as a
team.
Substantial differences in retirement provisions applicable
to employees on board prior to 1 January 1984 and those hired
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after 31 December 1983 who are serving under the same conditions
and circumstances would present similar risks.
Need for Retention of Specific Retirement Provisions Applicable
to Employees Serving Different Patterns of Career Employment
There are specific differences within the CIA applicable to
members of the work force who primarily serve in support of the
Agency's overseas intelligence activities and those who are
primarily engaged in domestic intelligence functions.
The Agency's current retirement program, though based on two
separate statutory systems--the internally administered CIARDS,
and OPM managed CSRS--has provided "sets" of retirement
eligibility and benefit provisions that have been effective in
providing Agency management with the flexibility to meet the
quite different work environment and management implications of
these different career employment patterns.
Weaknesses in the current systems are not related so much to
specific retirement provisions in themselves, but to the fact
that Agency employees serving in high risk assignments abroad
are provided only regular CSRS
coverage until they meet the statutory and regulatory requisites
for participation in CIARDS with the administrative security
that it provides.
This accounts for the fact that approximately percent of
CIA's overseas assignees are covered by CSRS. This reality
creates a major concern for the CIA as outlined in the next
category.
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Administration of Retirement Affairs with Full Security
Protection
The high number of CSRS employees serving abroad
because of the sensitivity of the
activity, poses the problem that casualty cases (death and
disability) among them must be processed through OPM and
bureaucratic processes that are designed to handle routine overt
employees of the regular Federal establishment. Employees who
came on duty with CIA after 31 December 1983 and are covered by
Social Security, present an additional bureaucratic security
dilemma in terms of providing needed security protection of
foreign intelligence interests from unauthorized disclosure.
These security risks are not limited to retirement matters
only, but extend to processing FEGLI, Health Insurance, and
Bureau of Employee Compensation claims through external channels
that simply are not attuned to handling highly sensitive
security conditions.
The processing of benefit entitlements for any employee who
is currently or in past years has been under cover,
poses the same risks of sensitive security disclosures
as casualty cases incurred through hostile action abroad.
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V. Features of a Model Retirement System
that Would Most Effectively Serve CIA Needs
Establishment of a single CIA Retirement System administered
under the Authority of the Director of Central Intelligence
Such a single system administered under the authority of the
Director of Central Intelligence would cover all CIA employees
and consist of sets of specific provisions applicable to CIARDS
and CSRS--type participants.
These provisions would be essentially the same as currently
provided in the existing CIARDS and CSRS system and would not
alter the present numbers of individuals ultimately qualifying
for CIARDS retirement.
The purpose of establishing a single CIA system would be to:
? Provide the Director of Central Intelligence with the
capability to fulfill his statutory responsibility under
Title 50 USC 403 for the protection of sensitive
identities, organizations and activities relative to the
intelligence interests of the United States.
? Recognize and provide the needed security protection of
intelligence interests that are increasingly vulnerable
today because of the increased risks flowing from the
long duration and large numbers of CSRS covered
employees serving abroad or under cover in support of
the Agency's intelligence mission. Inclusion of all CIA
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employees (old and new) under a fully secure system
would reverse current procedures and provide maximum
security protection of employee identities and
affiliation from inadvertent disclosure when required.
? Reinforce the DCI's managerial flexibility to administer
the personnel affairs of the CIA, enhance the unity and
improve control over utility of the work force.
? Through protection of employee identities and
affiliation with the CIA, extend the career utility of
employees for assignment to sensitive activities and
expand the pool of eligibles for such assignments.
Key Provisions Required in the System
-- Retention of current non-penalized early retirement
eligibility criteria now specified for career CIARDS and
CSRS covered personnel.
-- Involuntary/discontinued service retirement on an
immediate annuity for CIARDS and non-CIARDS members.
-- Mandatory retirement at current statutory age for CIARDS
members.
-- Annuity accrual rates at levels sufficient to attract
and retain the needed type and quality of work force,
and make retirement feasible at designated combinations
of age and service when the needs of the Agency
determine it necessary.
-- Establishing equitable cost and benefits for pre-1984
and post-1983 employees.
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-- Reasonable cost-of-living adjustments for annuitants as
a further inducement for retirement when CIA management
prefers employees leave the service.
-- Sufficient Government funding/financing levels to
sustain the types of retirement systems necessary to
maintain the characteristics of the work force essential
to meeting mission requirements.
Defined Benefit Plan as Primary Basis for Basic Annuity
-- Primary emphasis on a defined benefit plan which
establishes a specified level of benefit when employee
meets age and service criteria is essential to permit
managerial predictability of future retirements and
permit planned employee development, flow through and
retirement of employees when Agency requirements so
dictate.
-- A modest Voluntary Accumulation Plan would provide
additional strength to the total system.
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-- Reasonable cost-of-living adjustments for annuitants as
a further inducement for retirement when CIA management
prefers employees leave the service.
-- Sufficient Government funding/financing levels to
sustain the types of retirement systems necessary to
maintain the characteristics of the work force essential
to meeting mission requirements.
Defined Benefit Plan as Primary Basis for Basic Annuity
-- Primary emphasis on a defined benefit plan which
establishes a specified level of benefit when employee
meets age and service criteria is essential to permit
managerial predictability of future retirements and
permit planned employee development, flow through and
retirement of employees when Agency requirements so
dictate.
-- A modest Voluntary Accumulation Plan would provide
additional strength to the total system.
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CURRENT RETIREMENT PROGRAMS
Optional
Retirement
Eligibility
CIARDS (CIA Administered)
Age 50 w/20 service
(Non-Reduced Benefit)
2% (Maximum 70%)
CIVIL SERVICE (OPM Administered)
? Aqe 55 w/30 years service
? Age 60 w/20 years service
? Age 62 w/5 years service
(Non-Reduced Benefit)
1.5% 1st five years
1.75% 2nd five years
2.0% all years over 10
(Maximum 80%)
Mandatory
Retirement
Involuntary
Retirement
Annuity
Computation Base
Employee
Contributions
Basic
Social Security
Thrift
Full Indexing
? Age 60
? Age 65-SIS 4 and above
? Any age w/25 years service
? Age 50 w/20 years service
(Non-Reduced benefits)
High-3 Average Salary
Full Indexing
? Any age w/25 years service
? Age 50 w/20 years service
(Benefits reduced 2% for each
year under aqe 55)
High-3 Average Salary
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AGENCY PROPOSAL (SINGLE SYSTEM UNDER DCI AU'-'HORITY)
CIARDS
Age 50 w/20 Service
(Non-Reduced Benefit)
? Aqe 55 w/30 years service
? Aqe 60 w/20 years service
? Age 62 w/5 years service
(Non-Reduced Benefit)
? 2% for qualifying years of service
? Current CIARDS formula (2%) For
All other years of service
(Non-Reduced Benefit)
2/3 Indexing**
? Age 60
? Age 65-SIS 4 and above
? Any age w/25 years service
? Age 50 w/20 years service
(Non-Reduced benefits)
High-5 Average salary**
Pre 1984
CIARDS & CIVIL SERVICE**
9%
Voluntary?
? 2 1/2% for qualifying years of service
? Current CSRS formula (1.c%, 1.75%
etc.) for all other years of service
(Non-Reduced Benefit)
2/3 Indexinq**
? Any aqe w/25 years service
? Age 50 w/20 years service
(Benefits Reduced 2% for Each
Year Under Aqe 55)
High-5 Averaqe Salary**
Post 1983
CIARDS & CIVIL SFPVTrF**
3.3%
5.7%*
Voluntary (Up to 15% of basic pay
qovernment matches $.50 for 1. up to F%
of basic pay
* Once S.S. maximum contribution reached in a year (in 1985 5.7% of first
$39,600 basic pay) 5.7% of amounts over SIS maximum base qo to basic plan.
** Assumes similar reductions in benefits are implemented for all of government.
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STTEVENS FKUYUSAL (A UP111V1J'1'C.Kr:11 tsx UF-rl)
SPECIAL BASIC
? Age 50 w/25 Service ? Age 55 w/30 years service
? Age 62 w/10 years service ? Age 62 w/lf1 years service
(Non-Reduced Benefit) (Benefits reduced 2% for each
year under age 62)
.85% .85%
+ Unknown supplement
3/4 Indexing 3/4 Indexing
None None
?
Any age
w/25
years
service
?
Age 50
w/20
years
service
(Benefit reduced 2% for
each year under age 62)
Same
High-5 Average Salary High-5 Average Salary
None None
5.7% 5.7%
Voluntary (Up to 16% of basic Same
ray. Government matches $2 for
1 up to 4% of basic pay)
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1~1471`ly / _Z1 L414'~
Possible Questions That May Be Raised Regarding CIA's Retirement
Proposal For A Single CIA Administered Retirement System For All
CIA Employees
1. QUESTION:
What purpose will be served by putting all CIA employees
under a single retirement plan administered by the Agency?
RESPONSE:
(Use Reasons cited in the "Overview Summary")
2. QUESTION:
What is "qualifying service" for CIARDS?
RESPONSE:
Performance of duty as an Agency employee:
(a) When assigned either PCS or TDY to any place outside the
(b)
50 states, the District of Columbia, Puerto Rico, the
Virgin Islands, and Guam;
Which, in support of Agency activities abroad, requires
a substantial risk to the life or health of the employee;
(c) Which requires the continued practice of tradecraft under
conditions of most stringent security in support of Agency
activities; or
(d) Which, when retirement is imminent, is adjudged to have
been so sensitive or so specialized that security require-
ments forbid disclosure of this duty and that, as a result,
it is unlikely the employee will be able to obtain employ-
ment for which otherwise qualified.
3. QUESTION:
Why doesn't the Agency simply place CSRS employees slated for or
serving in CIARDS qualifying type duty under CIARDS when they first
come into the CIA?
RESPONSE:
The criteria established by statute CIARDS participation limits
membership to employees who serve a minimum of 5 years of qualifying
service. Until meeting this requirement all CIA employees must be
covered under regular CSRS.
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4. QUESTION:
Why do you believe that CIA's domestic civil service employees
are so different that they should not be handled like other Federal
civil service employees?
RESPONSE:
Its not that CIA considers our civil service employees to be
different but that the conditions of employment, working environment,
and mangerial requirements flowing from the CIA's intelligence mission
are significantly different from what is found in other civil service
agencies.
These circumstances require that the provisions of CIA's retirement
systems must serve as work-force management tools. The need to maintain
relatively young CIARDS and non-CIARDS cadre to effectively do the work
of the Agency are made possible by the early retirement provisions of
current law and a policy to encourage voluntary early retirement when CIA
needs dictate.
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