A BILL

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-03721A000600020012-9
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 20
• Document Creation Date: December 12, 2016
• Document Release Date: January 25, 2002
• Sequence Number: 12
• Publication Date: January 1, 1964
• Content Type: REGULATION

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TAB
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A BILL
To amend the Central Intelligence Agency Retirement Act of 1964
for Certain Employees, and for other purposes.
EXPLANATION AND JUSTIFICATION
The purpose of the proposed bill is to update the Central
Intelligence Agency Retirement Act to bring it in line with legislation
approved for Civil Service and Foreign Service employees. Authority
is also provided for exemption for the Agency from the Federal
Employees Pay Act. The specific provisions of the proposed bill
together with related Central Intelligence Agency statutory provisions,
if any, are set forth in the Appendix, "Sectional Analysis and Explana-
tion".
Additional cost of providing the authority set forth in this
bill are estimated not to exceed $46,300 for the first full year.
Sections 1 through 8 amend the Central Intelligence Agency
Retirement Act of 1964 for Certain Employees, (78 Stat. 1043,
50 U.S.C. 403, note.) It should be understood that the Central
Intelligence Agency has two retirement systems: the regular civil
service retirement for the vast majority of its employees and its
own CIA retirement system for a relatively small number of
employees.
The following statements are cited to the appropriate section
of the proposed bill.
Definition "Child"
Section 1
Section 1 does three tnings: First, it eliminates the require-
ment that a child be dependent upon a parent retiree in order to
receive a survivor annuity. The present definition of a child
requires that the child receive more than half his support from the
participant to be eligible. This requirement could defeat a survivor
annuity based on the service of a working mother. This support
rewsimVOIYMISIiiinioVA/4iTe.ikgDPiN2632fabeatf666{Wt Act
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by the 89th Congress.
Second, it raises from 21 to 22 the maximum age for
receiving survivor annuity payments as a student and increases
from four to five months the maximum absence from school
which may be permitted without terminating the survivor annuity.
This will aid survivor children enrolled in trimester programs
to secure employment and earn money without losing their annuity.
This same action was taken by the 89th Congress for
student beneficiaries under the Civil Service Retirement Act.
Lastly, it permits a natural child to share in the distribution
of any money in the CIA retirement and disability fund. The act
today clearly permits a natural child to receive an annuity but it is
not entirely clear with respect to lump-sum benefits. This would
correct this deficiency.
A similar provision amending the Civil Service Retirement
Act was approved by the 89th Congress.
Computation of Annuities
Section 2
This section increases the number of years service that May
be included in computing the annuity of an individual from 35 to 40
years. This will permit the same annuity ceiling (80 percent) for
Agency annuities as applies to Civil Service retirement annuities.
A similar amendment to the Foreign Service Act was approved by
the Senate in June and is now pending before the House.
Widow's Annuity
Section 3
This section permits the annuity of a widow or a dependent
widower to continue in the event of remarriage. This is similar
to the law applicable to survivor annuitants under the Foreign Service
Act and is in keeping with the plan approved by the 89th Congress for
survivor annuitants under the Civil Service Retirement Act.
Child's Annuity
Section 4
This section provides for the commencement and termination
date for a child survivor annuity and assures that the survivor
annuity of a student may be resumed even though it had previously
been terminated, as for example, because of military service.
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30 JUN 1966
MEMORANDUM FOR THE RECORD
SUBJECT: Conversation with Mr. Ruddock - Transfer of ContributIons
1. On 30 June 1966 I called Mr. Andrew E. Ruddock, Director,
Bureau of Retirement and Insurance, Civil Service Commission. I
reminded Mr. Ruddock of our conversation in January 1966 concerning
the transfer of the Government contribution to the CIA Retirement fund
for those CIA employees coming into the CIA Retirement program.
Z. I then read the attached statement under the heading Transfer
of Contributions. Mr. Ruddock's only comment was that the past cases,
I. e. , transfer of the Government contributions for employees already
transferred into the CIA Retirement System, would be a nuisance but he
was sure that this could be worked out. I raised the question specifically,
and he answered affirmatively, that the language as read to him in fact
covered the transfer of the Government contribution on all cases, be
they past, in process, or future.
3. Mr. Ruddock thought that the two paragraphs I read to him
covered the transfer question into the CIA Retirement fund and from our
fund to other retirement funds.
Chief, Benefits and Services Division
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vegor4
STATINTI_
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vole ILLEGI6
Today once an annuity has been terminated because of an absence
between school terms in excess of the maximum absence authorized,
the annuity cannot be resumed.
A similar amendment to the Civil Service Retirement Act
was approved by the 89th Congress.
Annuity Commencement Date
Section 5
This section makes a technical change in the law which will
authorize the commencement of an annuity as soon as the individual
enters a nonpay status. Under existing law, an annuitant must
wait until the beginning of the month following his date of separation.
This will conform the CIA retirement system to the civil
service retirement system in this respect.
Transfer of Contributions
Section 6
Tinder existing law, an individual who transfers into the CIA
retirement fund from some other Government retirement system
can transfer his contributions from the other fun(' to the CIA fund,
but there is no provision for transfer of the Government contribution
to such fund.
Also, when an individual transfers from the CIA retirement
fund to some other Government retirement fund, there is no provision
for the transfer of either the Government's contribution or his own
contribution to the non-CIA retirement fund. This section would
correct the inequities of this situation.
The Civil Service Commission is wholly in accord with this
change.
Reemployment of Annuitants
Section 7
The small group of employees who are under the CIA
Retirement Act retire, on the whole, some 10 years earlier, than
employees under the Civil Service Retirement Act. These retirees
therefore, with few exceptions, will need to seek a second career.
They do not acquire status in the competitive service and much of
the experience and competence cannot be readily related to normal
Government positions. It is probable, therefore, that they would have
to accept a Government position, at least initially, several grades
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below their position in the CIA at the time of retirement. This
section would authorize an annuitant who is retired from the
Agency to be reemployed in the Government and to retain the
salary of the new position, plus so much of his annuity, which when
added to the new salary, wOuld not exceed his salary at the time of
retirement.
For example, if a CIA GS-13 (salary of $12, 873) retires
with an annuity of $6,000 and then enters other Federal employment
at the GS-11 level (salary, S9, 22.1), he would actually receive only
$3, 221 for his services. This section would permit the retiree to
receive his earned salary of 7,9, 221 plus $3, 652 of his $6,000
annuity bringing him up to his previous salary level of $12, 873.
It is pointed out that this relates to very few people. It
is pointed out, also, that a retired military reservist can retain
both his civilian salary and his entire annuity and that a retired
Regular officer can retain his salary plus the first $2, 000 of his
annuity and 50 percent of the balance of it.
Cost-of-Living Adjustments
Section 8
This section will bring the cost of living provision of the
Agency's Retirement Act into line with provisions which currently
apply to civil service and military retirees. During the first session
of the 89th Congress, the cost-of-living provision for military
retirees was amended to gear increases to quarterly rather than
average 'calendar year Consumer Price Indexes. Later in that session
similar legislation for the benefit of the entire civil service system
was approved.
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Federal Employees Pay Act
Section 9
The Central Intelligence Agency is now excluded from the
Federal Employees Pay Act of 1945, as amended, by regulation of
the Civil Service Commission, but not by law. This section would
exclude the CIA by law.
The Agency has developed a salary administration program
which adheres closely to the principles and standards of the Classifi-
cation Act regarding the classification of positions, establishment of
entry salary rates, and the grant of merit and quality step increases
and conforms generally to the principles and standards of the Pay
Act regarding premium pay and hours of work. However, it has been
necessary for the Agency to deviate somewhat from the specific
practices required by the act to accommodate peculiar problems
inherent in its mission and functions.
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EXISTING LAW
(c) No increase in annuity provided by
this section shall be computed on any additional
annuity purchased at retirement by voluntary
contributions.
(d) The monthly installment of annuity
after adjustment under this section shall be
fixed at the nearest dollar.
TH7 BILL AS REPORTED
"(c) Any annuity increased under this
section shall be deceased by the amount of
increase in force and effect with respect
to that annuity under section 291 prior to
the date of enactment of this Act.
"(d) The term 'price index' shall mean
the Consumer Price Index (all items--United
States city average) published monthly by
the Bureau of Labor Statistics. The term
'base month' shall mean the month of October
1966 for the first increase under section
291(a)(2) and thereafter the month for which
the price index showed a percentum rise
forming the basis for a cost-of-living
annuity increase.
"(e) No increase in annuity provided
by this section shall be computed on any
additional annuity purchase at retirement by
voluntary contributions.
"(f) The monthly installment of annuity
after adjustment Pnder this section shall be
fixed at the nearest dollar, except that such
installment shall after adjustment reflect an
increase of at least one dollar.".
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
Federal Employees Pay Act of 1945,
as amended, (5 U.S.C. 5541(2))
-12-
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EXISTING LAW
-13-
THE Bin. AS REPOR1ED
Sec. 9. Section 5541(2) of Title 5,
United States Code, is amended by (1) striking
out "or" at the end of paragraph (xii);
(2) deleting the period at the end of
paragraph (xiii) and inserting "; or";
and (3) adding the following new paragraph:
"(xiv) an officer or employee of the
Central Intelligence Agency.".
,
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COST ESTIMATES
? The total additional cost for the first full year is
estimated not to exceed $ 46,300 . Many of the provisions
of the bill engender either no additional, or no measurable costs.
The costs of authorities set forth in the bill are indicated
below.
a. Definition "Child"
No additional first-year costs are involved since we
currently have no "child" survivors who would be affected.
b. Computation of Annuities
No measurable additional first-year costs are ascertainable
in the increase of this maximum number of years of service.'
c. Widow's Annuity
No additional first-year costs are anticipated in continuing
a widow's annuity in the event of remarriage.
d. Child's Annuity
No additional first-year costs are involved since we currently
have no "child" survivors affected.
e. Annuity Commencement Date
No additional costs are involved -- in fact, to the extent
that this change permits retirements during the month rather than
at the end of the month, minor salary savings will be realized.
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f. Transfer of Contributions
No costs are involved. It is estimated, however, that the
initial transfer will augment the Central Intelligence Agency
Retirement and Disability Fund by $21.5 million.
g. Reemployment of Annuitants
No costs are involved, but there will be decreased payouts
from the CIA retirement fund.
h. Cost-of-Living Adjustment
Based on our current and projected annuity rolls, the first-
year cost of this provision is estimated to be $46,100. .
i. Federal Employees Pay Act
No costs are involved.
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COST ESTIMATES
The total additional cost for the first full year is
estimated not to exceed $ '/A 3Q Many of the provisions
of the bill engender either no additional, or no measurable costs.
The costs of authorities set forth in the bill are indicated
below.
a. Definition "Child"
No additional first-year costs are involved since we
currently have no "child" survivors who would be affected.
b. Computation of Annuities
? No measurable additional first-year costs are ascertainable
in the increase of this maximum number of years of service.'
c. Widow's Annuity
No additional first-year costs are anticipated in continuing
a widow's annuity in the event of remarriage.
d. Child's Annuity
No additional first-year costs are involved since we currently
have no "child" survivors affected.
e. Annuity Commencement Date
No additional costs are involved -- in fact, to the extent
that this change permits retirements during the month rather than
at the end of the month, minor salary savings will be realized.
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f. Transfer of Contributions
No costs are involved. It is estimated, however, that the .
initial transfer will augment the Central Intelligence Agency
Retirement and Disability Fund by $21.5 million.
g. Reemployment 'of Annuitants
No costs are involved, but there will be decreased payouts
from the CIA retirement fund.
h. Cost-of-Living Adjustment
Based on our current and projected annuity rolls, the first-
year cost of this provision is estimated to be $46,100. .
i. Federal Employees Pay Act
No costs are involved.
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MEMOURDUMFOR: Legislative Counsel
25X1A ATTENZIoN
SUBJECT Cost Estimates for Our Proposed Legislation
25X1A
25X1A
has told me that you and Mr. Warner are meeting
with A4iira3. Taylor this afternoon concerning our proposed legis-
lation and that you needed, for this purpose, revised cost estimates.
The only two items that I believe require change are the
estimates on the increase in consultant pay and the savi to be
realized if the proposed transfer of Government conti[tnxti one
from the Civil Service Fund to the CIA Retirement Fund are
approved.
a. Concerning consultant pay, the estimate ve provided
last year MOO based on our actual experience in FY 1965,
our planned use of consultants in FY 1966, with the latter
figure projected into FY 1967. We have np doted these figures
based, on more recent experience and we now estimate (subject
to correction) that the cost of paid consultations during
FY 1967 would be $23,775 and that there were some 200 unpaid
consultations 'torn 1968. It appears that there will be
a substantial increase in consultations whith, at the $50
rate, would toot some $36,250. /f we assume an average rate
of $75 per consultation, the cost of these consultations
would be some $54,373. Thus, the net estimated cost for the
first year, beginning 1 July 1967, would be something a
little less than $18,125.
b. Concerning the "savings" to be realized on transfer
of vernment contributions from the Civil Service Retirement
Fund to the CIA Retirement Fund, the best guestinate that I
now have from the Office of Finance is $21.5 million. This
is a first-year saving only. For the most part, we have
completed action for the transfer of emactreee 'with sub-
stantial service under the Civil Service Retirement System
to the CIA Retirement System. In later years, when we are
dealing with current transfers only, the accumulated Govern-
ment c-ntributions will not be so substantial.
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I hope this provides enough information for your meeting
this afternoon. I uill be glad to try to refine the estimates
and elaborate on the bases for them at your request.
25X1A
EXoeutive Officer
Office of Personnel
Distribution:
0 & 1 - Addressee
1 - DiFere Subject
1 - D/Pers Chrono
OD/Pers41111111sac (18 Sept 67)
25X1A
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Cost-of-Living Adjustment
The first year cost of this provision is estimated to be $49,848.00.
This estimate is based on the assumption that the provision would be
enacted during the month of October 1966. This in turn would extend
the first adjustment annuities with a commencement date no later than
1 January 1967.
It is estimated that by 1 January 1967 there will be 107 annuitants
under the CIA Retirement System (89 retirees and 18 survivors).. Further,
it is estimated that the average retiree annuity will be $6, 000 per annum
and the average survivor annuity will be $3,700 per annum. These annuities
would be increased by an estimated 8.3 per centum ($498 per annum
increase in the average retiree annuity and a $307 per annum increase
in the average survivor annuity.)
The index used in computing the percentage rise in cost-of-living
is the Consumer Price Index (all items -- U. S. city average) published
monthly by the Bureau of Labor Statistics. The estimated 8.3 per centum
increase is derived from the change in the Consumer Price Index from
1962 to May 1966 plus the 1.5 percentage additional increase authorized
by P. L. 89-205 for civil service annuities which commenced after .
1 October 1956 and no later than 1 January 1966.
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The Price Index for calendar year 1962 was 105.4 and for May 1966
112.6. May 1966 was arbitrarily selected for this comparison...Under sub-
section 291 (a)(1) of the proposed amendmen. he first adjustment would
actually be based on the Price Index for the month latest published on the
date of enactment. The Price Index for thikkmonth could be either higher
-1\
or lower ;4 the Price Index for May 1966.
There appears to be no feasible basis for estimating the additional
costs which might result from further annuity adjustments based on the
revised formula for getting future cost-of-living increases.
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25X1A
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,CIVIL SERVICE RETIREMENT ACT
ANALYSIS OF INCREASES GRANTED UNDER P. L. 87-793 and P.L. 89-205
(Participants in the CIA retirement system were first designated in
April 1965. Thus this analysis deals with increases accruing to
contemporary retirees and survivors under CSRA.)
. Existing and Survivor Annuities
Section 1101 of P. L. 87-793 provides as follows:
"(b) The annuity of each person who receives or is entitled to receive
an annuity from the civil service retirement and disability fund com-
mencing during the period which begins on the day following the
effective date of this section and ends five years after such date,
shall be increased in accordance with the following table:
"If the annuity commences between-- The annuity shall be
increased by--
? ? ?
Ja.nuary 1, 1965, and December 31, 1965 --
January 1, 1966, and December 31, 1966 --
? ? ?
2 per centum
1 per centum
"(c) In lieu of any other increase provided by this section, the annuity
of a survivor of a retired employee or Member of Congress who received
an increase under this section shall be increased by a percentage equal
to the percentage by which the annuity of such employee or Member was
so increased."
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II. Summary
(a) Annuities Commencing on or between 1 January 1965 and 31 Dec-
ember 1965. Annuities commencing on or between 1 January 1965
and 31 December 1965 were increased by 2 percent under P.L. 87-793.
However, such annuities have also been subjected to two further
increases under P.L. 89-205 of 6.1 percent and 3.9 percent. Con-
sequently, the effective increase in force for such annuities is
12.4 percent. / (2x 6.1) + (8.1 x 3.9) + 2 + 6.1 + 3.971
(b) Annuities Commencing Between 1 January 1966 and 31 December
1966. Annuities commencing between 1 January 1966 and 31 Dec-
ember 1966 were increased by 1 percent under P.L. 87-793.
However, such annuities have also been increased by 3. 9 percent
under P.L. 89-205. Consequently, the effective increase in force
for such annuities is 4.9 percent. / (1 x 3.9) + 1 + 3.9.1
(c) Under P.L. 87-793 and P.L. 89-205 survivors annuities are
Increased by the percentage increase afforded the retiree annuity
from which it was derived.
2
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