FEDERAL RETIREMENT REFORM ACT

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• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP89-00066R000200060004-3
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 18
• Document Creation Date: December 22, 2016
• Document Release Date: June 14, 2010
• Sequence Number: 4
• Publication Date: November 7, 1985
• Content Type: OPEN SOURCE

1 1 1 ll 1 1 1 1 1 11 1! 1 11111 1111 H
Approved For Release 2010/06/14: CIA-RDP89-00066R000200060004-3
November 7, 1985 CONGRESSIONAL RECORD - SENATE S 25()39
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So I am prepared to indicate at this varied functions of our Federal Gov-
tithe that we will not be to session to. ernmenL It should be fair and rc?ason-
morrow able, as wen, in the eyes of the taxpa:- -
t
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ers. who correctly insist that t
FEDtERAL RETIREMENT REFORM dollars be spent sensibly and to gou.i
ACT result.
As is often the ease, we Love been
The Senate continued with the con obligated to examine a terrain glut.
stlderation of the bill (S. 1527). tered with a number of highly techni-
Mr. GORE addressed the Chair. cal issues. From that clatter of issues.
The PRESIDING OFFICER Who we have sought to extract a sensible
yields time9 retirement polity-a podlr'y that must
Mr. EAGLETON. I yield such time be clear eshough for thane who will
as the Senator may require. depend upon it for their erooomie se-
The PRESIDING OFPICEP.. The curity, and flexible enough to address
Senator from Tennessee. the various situations and needs that
Melchor
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Mitchell
Moynihan
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Pau
Proxm"r
Pryor
Rjes)r
Sarbane:
SLSael
Simon
Weicker
So the nomination was confirmed.
M r THURMOND, Mr. President. I
nit e to reconsider the vote by which
tr.c nomination was confirmed.
Mr. IHEFLIN. I move to lay that
:Iotlon on the table.
Tlie motion to lay on the table was
agr- ed to.
Mr DOLE. Mr. President, I ask
unanimous consent that the President
be immediately notified of the confir-
rration of this nomination.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
Mr. GORE. Mr. President. I am Federal workers may face during their
pleased to be a cosponsor of S. 1527. careers.
the Federal Retirement Reform Act of The manner is which we ultinrately
1965. As a cosponsor of this lilt. I find address these concern,- will recast the
myself in good company because by basic Federal retiement structure anti
now most of ray coueatrues on tit its patt?rn of payments for dfcades.
Senate G .nta_l Affairs Commit- We ate. therefore. in a unique position
tee are also o eosl) cosponsors. to influence the kind of Federal work
To varying degrees, each of ray col- lur ce this country should have.
leagues on the committee has devoted the ranking minor
considerable time and thought to this member oPresidentf , as the subcommittee -
legislation. Virtually all of our poten- ity Mr. which S member o thethe c of
tial differences have been aired with
out the rancor that often character- than. I have been in a position to sec
izes issues in which the stake.-, are so and benefit from the depth of his high. Nome of the cosponsors ha:. tensive knowledge in the pension fie?d.
achieved everything he has sought. That resource, together with the lead-
ership and cooperation of both Chair-
tel
yet we have all trade surd ca., car
rein ROTH and the senior Senator
LEGISLATIVE SESSION butions. from Missouri. Serritor iori-ros. har
r. ask bLin DALE D4r. President, I I have wish to already add my been voice raised to in those praise that of forged a good bill which I commend to
back legislative lativ that session. the Serrate go the chairman of the subcommittee, every member of this body. The care-
The RESIDING OFFICER. With- Senator STSvsris: the chairman of the ful attention to details of substance
full committee. Senator Rama, and the and leadership which these Serators
out r. on, It is so ordered. ranking minority member of the full have devoted to this challenge over Mr. Mr. STEVENS. utsed leader President, the committee. Senator EAc.LETOx. the past several years has been evident
d mment on leader has asked for a As a freshman member of the Gov- in every aspect of the process. I am a
comment f the pending newcomer to this process and I ar,
the airs experien trience of of t 1 won proud to have been able to playa part
For the itzwmation of the Serrate, we dared tai what Affairs
have worked out the disagreements on dered t pis lei nit. We also Dare a debt of thanks to
all of the amendments that are coy- illation would be like, but I must say the tireless efforts of the committee
Bred by the time agreement. that I have found it enjoyable and staff and tireless ort of c the coianal re-
re-
We will be In the process of accept- educational. and 1 have learned a the t analysts who al e
ing them all shortly. We expect one great deal in particular from the three search and
the commservice ittee, and to th wa siis t d
senior Senators whom 1 just men on an and th ewe be this nl final passage. tioned. I thank them for allowing me who testified during lengthy hearings
and that
at u the oary final passage. to be a part of such an enjoyable. de- on this issue.
That should take place in roughly an liberative process. The bin's three-tier design combines
hour. Mr. President, the 1983 decision to Social Security with a defined benefit
extend Social Security coverage to tier that focuses on providing a sure
ORDER OF PROCEDURE Federal employees left Congress with and certain retirement benefit, and a
Mr. DOLE. Mr. President. will the the difficult task of redesigning the defiled contribution tier that provid;-s
S. nator yield? Civil Service Retirement System. That for portability and fkx.ibilit,. Thy bit.
Mr STEVENS. I an happy to yield responsibility must be dis^_h::rged by roes a step further by providing Ft ('I
to t h, leader. the end of this year. B.:cat dint to the t rr-1 workers with an option of chots-
M . DOLE. Mr. President. as 1 indi- 2-year period we allotted uur Ives. i.-.1o between two alternative m.-xvi; of
i:aced to the distinguished minority Our failure to do so will require Feder- retirement plans. aceord:ug to their
lef:dcr. if we can put some of these al workers who have started work netds. Both alternatives offer siguifi-
thifurs together. there will be a likeli- since January 198.1. or who will be cant advantages to the Federal
lfood of no session tomorrow. coming, to the Federal Government in worker.
I think I am about to be safe in indi- the future, to contribute up to 14 per- Mr. President, I am cosponsoring
eating that-we will tiol'be in session to- cent of their hard-earned payv. for pen- this bipartisan sub- itute, because I
morrow. After we finish this, we will sion benefits ahicli will be uncertain believe it addresses all the concern: I
take up the D.C. appropriation bill. at best. It is obvious. therefore, that targeted in my floor statement at the
That will be a very short debate. we have to act. time Senators RoTi and SrEvt is in-
There will be one vote. Depending Throughout our deliberations, our troduced S. 1527 in its original form.
on what happens to the vote, that will focus has been to ensure that Federal Those issues-the COLA. early retirt-
determine the future of the bill. employees, at work and upon retire. ment. the mix between defined benefit
Then we will try to reach some nit,:ir, receive fair and reasonable coin- amid defined contribtrtieda. and the ben.
unanimous consent agreement on rec- pcnsation for their service. That corm- eats For survivors and disabled work-
unciliatiun. Senator Cirri-Es. Senator pensatiou should be fair and rea_.ona- ers-all require important eboict?s. The
at the
heart of a of those
ital tolethe resolution
Doasratc>i, and others are working on lie` in the effortsttareworkers
system.
that rile afternoon.
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 I I ~ ii ' II fl i --- 1 I' I i11l i III
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S 15040 CONGRESSIONAL RECORD - SENATE November 7, 1985
Chief among those issues is the
degree to which we should protect
future pension benefits from dwin-
dling in the face of rising prices. To be
sure, this is a familiar and difficult
issue for all of us. The fixed incomes
of retirees must be accorded a measure
of economic security.
Because Social Security continues to
be fully and automatically adjusted
for changes in the cost of living, it
serves as the basic component of
income protection for all workers. But
a pension must also serve as a depend-
able source of retirement income.
That objective is only possible if its
value Is maintained. While the ex-
pense of COLA's in benefit programs
is of concern to all of us, we must be
careful not to schedule an erosion in
benefit value that grows worse with
each passing year.
With those concerns In mind, S. 1527
reflects an understanding that an ade-
quate retirement benefit should not
rely solely upon the inflation protec-
tion granted by the Social Security
cost-of-living adjustment. That is par-
ticularly true for option B which pro-
vides generous inflation protection to
early retirees and full COLA's to all
retirees at age 62 and above.
As they plan for their retirement
years. Federal employees deserve to
know with certainty at what age bene-
fits begin. The current Civil Service
Retirement System has been criticized
for permitting employees to retire as
early as age 55. This costly feature of
the system has been a major focus of
our deliberations.
It is important to note that many
private-sector employers, particularly
those with a heavy concentration of
physical labor, permit unreduced re-
tirement at age 55 to workers with ca-
reers spanning 30 or more years. Virtu-
ally all private-sector pensions make
some provision for retirement at that
age. Furthermore, despite the range of
jobs in the Federal Government and
the private sector, the average retire-
ment age is around 61-for workers
inside or outside the Government.
That comes as a surprise to some
casual observers of the pension issues.
With 62 as its earliest age of eligibil-
ity, Social Security reduces the bene-
fits Federal employees will receive at
earligr..ages. Although option A of this
bill would go further, by reducing the
Federal pension benefit drawn before
age 62, option B would permit Federal
workers who have devoted a lifetime
to Government service to receive an
unreduced pension benefit prior to age
62.
We cannot guarantee every worker
in every circumstance the same total
benefits he or she would now receive.
The issue thus becomes one of deter-
mining the appropriate mix of bene-
fits to achieve the goal of fairly dis-
tributing those benefits among em-
ployees at every salary level. S. 1527
would establish a contributory, em-
ployee-savings plan with significant
tax benefits accruing to those who
elect to participate. The savings plan
also provides participants under both
options with generous Government
matching funds.
The thrift plan component will give
every worker the opportunity to sup-
plement a defined benefit and predict-
able pension amount. The bill recog-
nizes that some workers will not be in
a financial position to participate in
the savings plan fully and consistently
throughout their careers. For workers
falling into that category, this bill pro-
vides a basic defined pension which,
along with Social Security, is intended
to produce adequate retirement
income on Its own.
Before I move on. I would like to
raise two related issues. First, this bill
and several of the pending amend-
ments provide special benefits for em-
ployees whose job requirements are
unusually demanding. The retirement
legislation before the House commit-
tee currently provides more generous
benefits for some of these groups-in-
cluding the U.S. Park Police and Na-
tional Guard technicians. I hope that
in resolving the differences between
this legislation and that in the other
body, the conferees will be able to
fashion a standard to measure the
needs of each of these groups fairly
and consistently.
Second, I feel it bears noting when
considering the thrift plan provisions
of this bill, that the investment of
those funds in common stocks may not
always yield a greater return than in-
vestment in Government securities. I
have requested an analysis of this
issue from the Congressional Research
Service, and I ask unanimous consent
that a copy of the analysis be printed
in the record at the conclusion of my
remarks.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
(See Exhibit 1).
Mr. GORE. I believe that it is impor-
tant to require, as S. 1527 does, that
each thrift plan participant be fully
apprised for the higher risks associat-
ed with investment of thrift plan
money in common stocks as opposed
to Government securities.
Finally, a pension plan must not
only meet the obvious and expected
needs of its retirees, but must assure
its participants and their families ade-
quate income protection in the event
of death or disability. We can do no
less than provide our employees a
package of specific family protections
should such family disasters strike.
I have taken particular interest in
the design of the survivors benefits
package. Chief among our concerns in
protecting survivors have been the
needs of displaced homemakers. To
that end, this legislation provides an
immediate and unreduced annuity for
survivors of Federal workers who die
prior to retirement. The legislation
also establishes a basic group life in
surance benefit which amounts to a 2-
year salary continuation.
In conclusion, Mr. President, this
bill combines compassion with confi-
dence and good fiscal sense. I urge its
passage.
Again, Mr. President, I commend my
senior colleagues on the committee
who have done so much to craft this
legislation.
EXHIBIT 1
CONGRESSIONAL RESEARCH SERVICE,
THE LIBRARY or CONGRESS.
Washington. DC, November 7. 1985.
To: Hon. Albert Gore. Jr.
Attention: Thurgood Marshall, Jr.
From: Dennis Snook, Civil Service Retire.
ment Team. Education and Public Wel.
fare Division.
Subject: Question on Risks Associated With
Investing Capital Accumulation Savings
in the Private Sector as opposed to Fed-
eral Securities.
You have asked us if we could provide in-
formation relating to the claim that if a
capital accumulation plan (CAP) were
adopted as part of a new Civil Service Re.
tirement System (CSRS), Federal employ-
ees could achieve greater returns on CAP
asssets if they invested in private invest-
ment opportunities rather than in Federal
securities. While a definitive answer to this
question is not possible, we are providing
you with the results of study done by Rich-
ard A. Hobbie of the Civil Service Retire-
ment Team.
Dr. Hobbie finds that while it is clear that
individuals have opportunities for higher re-
turns if money is invested in private sector
market instruments, that high return is nec-
essarily associated with greater risk. Cer-
tainly some individuals would do better by
taking such risks, but a portion of the popu-
lation practicing private sector investment
would do less well than if they had invested
the same amount of money in risk-free fed-
eral securities. Relatively recent develop-
ments in financial management could have
the potential for lowering the risks to indi-
viduals by pooling the assets in a fund so
that they could be invested in a broad spec-
trum of stocks, but the value of any partici-
pant's share of the assets would still depend
on the health of the fund in the year in
which the individual retired. The data in
the attached report suggest that a chance of
lower value in private investment always
exists, no matter how diversified, and that
historical experience indicates years of low-
ered value occasionally occur. Given that re-
tirement funds in individual CAPS are accu-
mulated over the years of employee service.
and are thus influenced by fluctuation in
common stock values, a significant risk of
lower investment re, rn from private sector
investment cannot be denied.
WOULD FEDERAL WORKERS EARN A HIGHER
RATE or RETURN ON THEIR INDIVIDUAL CAP-
ITAL ACCUMULATION PLAN ACCOUNTS IF
THEY INVESTED IN COMMON STOCKS IN-
STEAD or U.S. TREASURY SECURITIES?
A BRIEF ASSESSMENT
During the recent debate on civil service
retirement reform, some have advocated a
type of supplemental pension plan often
called a --capital accumulation plan" (CAP). A
CAP is a deferred compensation arrange-
ment in which an employee can contribute
before-tax or after-tax compensation to an
individual account maintained in his behalf
that might also receive matching emplgyer
contributions at some specified rate up to a
maximum. This type of plan would allow
employees hired after 1983 to contribute ad-
ditional amounts voluntarily toward their
retirement to supplement benefits available
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November 7, 1985 CONGRESSIONAL RECORD - SENATE
to them under social security and a scaled-
down mandatory civil service pension plan.
If the future resembles the past. Federal
workers could ear on average a higher rate
of return on their Individual capital accu-
mulation accounts in common stocks Instead
of Treasury securities. However, because
common stocks are riskier than default-free
U.S. Treasury securities, some workers
would earn less, some workers would earn
about the same, and some workers would
earn more in common stocks than they
would in U.S. Treasury securities. There-
fore, if Congress wants to offer Federal
worker the opportunity to invest their indi-
vidual CAP funds in private securities, It
should do so with the recognition that some
workers would earn less than they would if
they invested in U.S. Treasury securities.
In the debate on how to invest individual
CAP funds, the following argument has
been made in support of investing in a diver-
sified portfolio of common stocks: r
(1) Retirement plans have long-term in-
vestment perspectives.
(2) Contributions are madr to a CAP ac-
count over many years and employees re-
ceive benefits over many years.
(3) Despite short-term volatility, the
Standard and Poori Index of 500 common
stocks still has outperformed less risky secu-
rities, such as long-term corporate or gov-
ernment bonds.
(4) Moreover, even when one selects the
best and worst 20 years for each type of in-
vestment, common stocks still have out per-
formed other securities.
(5) Therefore, despite the short-term vola-
tility of common stocks, all employees can
realize a higher yield from a diversified
portfolio of common stocks than from less
risky investments.
The data presented to support this argu-
ment initially appear overwhelming. For ex-
ample, the value of a dollar invested in
common stocks at the end of 1925 would
have grown in nominal terms to $248.25 by
June 30, 1985 compared to only $14.51 for
long-term corporate bonds, $9.68 for long
term government bonds. and $7.20 for
Treasury bills.2 Granted, annual returns to
common stocks fluctuated widell from - 43
percent to -+ 54 percent, but over the long-
term they grew phenomenally (see table 1).
Moreover, even in the worst 20 years for
common stocks (1929-1948), the real rate of
return was 0.8 percent, which was not as
bad as the worst 20 years for long-term gov-
ernnwnt bonds at -3.1 percent (1962-
1981).3
The main problem with this argument is
that the data do not reflect a realistic pat-
tern of individual contributions to a CAP.
Assuming that the growth of one dollar con-
tributed at the beginning of a long holding
period reflects what would happen to the
growth of an Individual CAP fund is tanta-
mount to assuming that all contributions
for the worker's career are made in the first
year. This is unrealistic, and it leads to an
erroneous conclusion that short-term
market fluctuations in the value of common
stocks do not matter.
Short-term fluctuations are much more
important than portrayed in this argument
because they can dramatically affect the
value of a fund in the last few years before
retirement. This would occur because not
only do workers tend to contribute more in
later years, but even for a constant dollar
contribution the annual returns in the last
few years are critical. Consider a simple ex-
ample In which a worker contributes a
dollar per year for 20 years and earns 6.1
percent per year. At the end of 20 years he
would have accumulated $20 in contribu-
tions and $17.18 In earnings for a total
future value of $37.18. Half of the interest
would have been earned, however, in the
last five years. Therefore, the annual re-
turns in the last few years are critical to the
final value of an individual CAP.
Recognizing that short-term market fluc-
tuations make a significant difference in the
final value of the account allows one to see
why some workers might be worse off if
they invested In common stocks. Suppose a
dollar is invested at the beginning of 1971 in
a portfolio of common stocks reflecting the
returns to the Standard and Poor's Index of
500 stocks, long-term government bonds, or
a fund that would have replicated the inter-
est earned in the Civil Service Retirement
System (CSRS) trust fund.4 At the end of
1980. common stocks would have yielded
$2.25 (see table 2). This compares to only
$1.47 for long-term government bonds and
$1.90 for the CSRS-type fund. Thus, after
10 years It would appear that the common
stocks would outperform long-term govern-
ment bonds and the CSRS trust fund.
A different picture emerges when one ex.
amines shorter time periods. Granted, the
funds would not have the same value in
1971 if they had been Invested differently in
earlier years, but it is the last few years that
make the big differences. Therefore, assume
for Illustration that the three funds start at
$1.00 in 1971 and the worker has, say, four
years left until retirement. Also, assume
that he makes no more contributions. This
is as unrealistic as the data used in the argu-
ment for investment in common stocks. but
including additional contributions would
only exaggerate fluctuations in these data.
It would not alter the conclusion.
If a worker had invested in the CSRS-t3'pe
fund, his account would have grown to $1.25
at the end of 1974. The comparable figure in
long-term government bonds would have
been $1.23, but for common stocks it woul:i
hate been only $0.85. In other words, his in
vestment In common stocks would have' de-
preciated by 15 percent from Its initial value
and by 32 percent from what it could have
earned in the CSRS-type fund. Moreover. it
would have taken the common stocks two
years to recover to the same value as an In-
vestment in the CSRS-type fund and a total
of six years to exceed it substantially.
Therefore, if the worker could have afford-
ed to wait to withdraw his funds six years
after retirement, he would have been better
off investing in common stocks.
S 15011
TABLE I.-TOTAL ANNUAL RETURNS IN PERCENTS FOR
SELECTED INVESTMENTS, 1926-81 1
tong
term
2548)
IS,
bmk
tit
kart
Gorem
meat
bn&,
US
d5
CSr:
I',
1! 6`
137
111
32
34y
1u
89:
31
lid
4$51
284
010
324
13 '9
842
327
342
475
7493
198
466
24!
19'.
4334
-1115
531
10,
19.:
8;v
1087
)614
9,
19'.
5339
1038
-08
31.1
13'f
-:44
1384
10 02
16
4761
961
4 3t
11
15.5
33 32
6 74
15'.
18
35 .'3
2 75
73
31
19 9
3!I?
613
553
- 02
Al
391
594
0:
19'
978
339
6 09
0^
I, 53
2 73
93
OE
:,.c
200
3:
21
19
)'?-
283
2 00
n!
f 13
2?'
3r 14
408
16 1:
3r
E
1
It
911
7:
-234
20.
Sl1
1-<
56
414
3:i.
91
L? 75
3'I
64,
I,c
06
23
1!.
l4
269
294
1037
35'
I in
I `f
yc
341
363
It.
!9-4
5 39
no
8zub
u:.&r the bill as now reported, the time having been yielded back, the section and ieetion $472 of this title.".
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November 7, 1985 CONGRESSIONAL RECORD - SENATE
Mr. STEVENS. Mr. President, the
purpose of this amendment is to facili-
tate transfers among Government re-
tirement systems. I call attention to
the Senate that now we have had the
interplay of the Foriegn Relations
Committee, the Intelligence Commit-
tee and other committees in terms of
bringing before us now a total retire-
ment, package for all Government em-
ployees other than military. This
would provide a consistency in the
transfer provisions for all of these re-
tirement systems covered under this
bill. The amendment would enable an
employee who becomes a participant
in the Federal retirement system to be
given credit for prior serivice under an-
other Government retirement system.
The service credit would continue
toward retirement eligibility vesting
requirements and applying the appli-
cable formula in computing an annu-
ity.
Mr. President, I hope that this is
just the forerunner of future work to
provide the kind of portability and
transferability between Government
systems and private systems which
will tackle at a later date.
Mr. EAGLETON. Mr. President, I
believe this to be an excellent amend-
ment. I yield back the remainder of
my time.
Mr. STEVENS. I yield back the re-
mainder of our time.
The PRESIDING OFFICER. All
time having been yielded back, the
question is on agreeing to the amend-
ment of the Senator from Alaska.
The amendment (No. 983) was
agreed to.
Mr. EAGLETON. Mr. President. I
move to reconsider the vote by which
the amendment was agreed to.
Mr. STEVENS. I move to lay that
motion on the table.
The motion to lay on the table was
agreed to.
AKENDKLNT 140. 964
(Purpose: To make technical and clarifying
amendments)
Mr. STEVENS. Mr. President, I send
an amendment to the desk.
The PRESIDING OFFICER. The
amendment will be stated.
The assistant legislative clerk read
as follows:
The Senator from Alaska [Mr. SrrvsNs)
proposes an amendment numbered 984.
Mr. STEVENS. Mr. President, I ask
unanimous consent that reading of the
amendment be dispensed with.
The PRESIDING OFFICER (Mr.
STAFFORD). Without objection, it is so
ordered.
The amendment is as follows:
On page 133, strike out line 6 and all that
follows through page 134. line 4, and insert
in lieu thereof the following:
"(12) the term 'employee'-
"(A) except as provided in subparagraph
(B) of this paragraph, means-
" (I) each individual referred to in subpara-
graphs (A). (E), (F), (H). (1), and )J) of sec-
tion 833111) of this title, including an em-
ployee of the United States Park Police and
an employee of the United States Secret
Service, and Including an employee referred
to In section 2105(c) of this title who was
first employed by the Government after De-
cember 31. 1983. and
"Ili) a Congressional employee as defined
In section 2107 of this title, Including a tem-
porary Congressional employee,
any of whose employment by the Govern-
ment after December 31, 1983, is employ.
ment for the purposes of title 11 of the
Social Security Act and chapter 21 of the
Internal Revenue Code of 1954: and
"(B) does not include any Individual who-
is referred to In clause (l). (v). (vi), or
(ix) of paragraph (1) of section 8331 of this
title or in the undesignated material after
clause (Ix) or such paragraph;
..(It) is subject to another retirement
system for Government employees, except
In the case of an individual--
-41) who is an employee of the United
States Park Police or the United States
Secret Service, or is an employee referred to
in section 2105(c) of this title who was first
employed by the Government after Decem-
ber 31, 1983; or
"(II) who, without regard to this chapter,
would be subject to subchapter III of chap-
ter 83 of this title or would be eligible to be
subject to such subchapter;
"(iii) is excluded under section 8402tb)(2)
of this title; or
"(Iv) was subject to subchapter III of
chapter 83 of this title on December 31.
1983, has not had a break in service with the
Government described In section
210(a)(5)(A) of the Social Security Act for a
period of more than 1 year beginning after
such date, and has not commenced partici-
pation in the System pursuant to section
8471 of this title;".
On page 150. line 24, strike out "A" and
insert in lieu thereof "Except as provided in
section 8436(c)(1) of this title, a".
On page 164, strike out lines 4 through 7
and Insert in lieu thereof the following:
?(5) Under regulations prescribed by the
Executive Director, at least once each year a
participant may modify the amount contrib-
uted pursuant to paragraph t 1) or (2) of this
subsection, as the case may be. or may ter-
minate an election to make contributions
under such paragraph.".
On page 183, line 24, strike out "notwith-
standing" and insert In lieu thereof "subject
to".
On page 191, line 13, strike out "the re-
duced" and all that follows through "com-
puted," on page 191. line 16, and insert in
lieu thereof the following: "an annuity com-
puted with respect to such participant as of
the day before the date of death".
On page 191, line 19. strike out "reduced".
On page 192, line 8, strike out "the annu-
ity" and all that follows through "comput-
ed" on line 11, and insert in lieu therof "an
annuity computed with respect to the par-
ticipant as of the day before the date of
death".
On page 236, line 6, Insert a comma after
"annuitant".
On page 238, line 8, insert a comma after
"subsection".
On page 238. strike out lines 7 through 15,
and insert in lieu thereof the following.
"(B)D the number of mouths, not to
exceed 12 months, for which the annuity
was payable before the effective date of the
increase, counting any portion of a month
as a month, or
"(ii) In the c$..se of a survivor annuity pay-
able to a surviving spouse or surviving
former spouse of a deceased annuitant
whose annuity has never been so increased,
the number of months, not to exceed 12
months, since the annuity was first payable
to the deceased annuitant. counting any
portion of a month as a month.
S 15051
On page 246. line 21, strike out "before"
and all that follow', through "1984," on line
22.
On page 248. lino, 2, insert "and" after
"title,".
On page 248, lint' 4, strike out "and" and
all that follows thio.)gh line 6.
On page 248, lime 8. Insert "before Janu-
ary 1. 1984," after "performed".
On page 248, line 14, insert "and" after
"tit le,"
On page 248. Ito' 18, strike out "and" and
all that follows through line 18.
On page 248, line 20, strike out "1987,"
and insert in lieu thereof "1984,".
On page 262, lint 9, insert "subject to sec-
tion 8495 of this tick'," after "(1)".
On page 262, line 16, insert "subject to
section 8495 of this title," after "(2)".
On page 266. line 2. insert "and" after the
semicolon.
On page 266, line 3. strike out "; and" and
all that follows through line 6. and insert In
lieu thereof a period.
Mr. STEVENS. Mr. President, these
are technical amendments that are re-
quired, as I will explain. As can be ex-
pected in a bill as complex as this one,
there are a number of technical
amendments.
First. The definition of an "employ-
ee" is reworded to make clear that the
new plan covers employees hired
during 1984-85, and to accommodate
the amenedment just approved regard-
ing coverage of employees of nonap-
propriated fund instrumentalities,
Second. The wording regarding elec-
tion of an option at retirement is
amended to make clear that a new
option can be elected by a married an-
nuitant upon the termination of enti-
tlement of a former spouse.
Third. The thrift plan contribution
language is amended to make clear
that an employee's right to change the
amount contributed at least once a
year includes the right to stop contrib-
uting. I think that must be empha-
sized-that the right to change in-
eludes the right to stop contribution
to a thrift plan.
Fourth. The wording regarding pos-
sible employee input into the defini-
tion of the stock index fund is amend-
ed to assure that this will not conflict
with the fiduciary standards and in-
vestment policies which apply.
Fifth. The wording regarding surviv-
ing spouse benefits payable at death of
an employee before retirement is
amended to clarify that benefits are
payable in cases where the employee
was not yet eligible to retire.
Sixth. The wording regarding cost-
of-living adjustments is amended to
make clear that all classes of survivor
annuitant.s are eligible for COLA's,
and to correct the formula for pro-
rating the initial COLA payable.
Seventh. The wording regarding
transition from the existing program
is clarified regarding its application to
employees hired both before and after
1984, including participants in the in-
terim plan that became effective Janu-
ary 1984.
Eighth. The wording regarding in-
vestment policies is amended to elimi-
nate the reference to criteria other
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S 15052 CONGRESSIONAL RECORD - SENATE
than prodent investments and low ad-
ministrative costs.
Mr. EAGLETON. Mr. President. I
support the amendments as submitted
by Senator STEVENS. and I yield back
the remainder of my time.
Mr. STEVENS. I yield back the re-
mainder of my time.
The PRESIDING OFFICER. The
question is on agreeing to the amend-
ment of the Senator from Alaska.
The amendment (No. 984) was
agreed to.
Mr. EAGLETON. Mr. President, I
move to reconsider the vote by which
the amendment was agreed to.
Mr. STEVENS. I move to lay that
motion on the table.
The motion to lay on the table was
agreed to.
Mr. STEVENS. Mr. President, we
are awaiting the arrival of the Senator
from Virginia. I suggest the absence of
a quorum until his arrival.
The PRESIDING OFFICER. The
clerk will call the roll.
The legislative clerk proceeded to
call the roll.
Mr. TRIBLE. Mr. President, I ask
unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
Mr. STEVENS. Mr. President, I yield
to the Senator from Virginia such
time as he and his colleague may need.
Mr. TRIBLE. I thank my distin-
guished friend from Alaska.
A ZII MENT NO. 985
(Purpose: To amend title 5, United States
Code. to increase the opportunity to pro-
vide a survivor annuity under subchapter
III of chapter 83 of such title. and to im-
prove retirement Counseling for Federal
Government employees)
Mr. TRIBLE. Mr. President, at this
time I send an amendment to the desk
and ask for its Immediate consider-
ation.
The PRESIDING OFFICER. The
amendment will be stated.
The legislative clerk read as follows:
The Senator from Virginia [Mr. Tax"]
for himself and Mr. WAar.zj purposes an
amendment numbered 985.
Mr. TRIBLE. Mr. President. I ask
unanimous consent that the reading of
the amendment be dispensed with.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
The amendment is as follows:
On page 151, between lines 9 and 10.
insert the following:
-(c)(1) A participant or former partici-
pant-
-(A) who, at the time of retirement, is
married. and
"(B) who elects at such time (in accord.
ance with subsection (b) of this section) a
method of payment other than the method
described in subsection (a)(2)(B) of this sec-
tion.
may. during the 18-mouth period beginning
on the date or which the participant or
former participant may first make an elec-
tion under subsection (b) of this section.
elect the method of payment described in
.subsection (b)(2) of this si?i Lion.
2kA) An election unoe r paragraph (1) of
subsection shall net be co-.sidercd
0- ,"t uitluss-
"(i) the spouse of the participant or
former participant Is provided advance
notice of the election in accordance with
such regulations as the Office shall pre-
scribe: and
-00 the amount specified in subpara-
graph (B) of this paragraph is deposited
into the Fund before the expiration of the
applicable 18-month period under such
paragraph (1).
"(Bi The amount to be deposited with re-
spect to an election under this subsection is
an amount equal to the sum of-
"(1) the additional cost to the System
which is associated with providing a survi-
vor annuity under subsection (b)(2) of this
section and results from such election
taking into account (I) the difference (for
the period between the date on which the
annuity of the participant or former partici-
pant commences and the date of the elec-
tion) between the amount paid to such par-
ticipant or former participant under this
subchapter and the amount which would
have been paid if such election had been
made at the time the participant or former
participant applied for the annuity, and (I1)
the costs associated with providing for the
later election: and
"(if) Interest on the additional cost deter-
mined under clause (i) of this subparagraph
computed using the average annual interest
rate earned during such period by securities
held by the Fund.
"(3) An election by a participant or former
participant under this subsection voids pro-
spectively any election previously made in
the case of such employee or Member under
subsection (b) of this section.
"(4) The annuity of a participant or
former participant which is reduced in con-
nection with an election under this subsec-
tion shall be reduced by the same percent-
age reductions as were in effect on the date
on which the annuity of the participant or
former participant commenced.
"(5) Rights and obligations resulting from
the election under this subsection shall be
the same as the rights and obligations
which would have resulted had the partici-
pant or former participant made such elec-
tion at the time of applying for an annuity.
"(6) The Office shall, on an annual basis,
inform each participant and each former
participant who has accrued entitlement
under this subchapter of the right of elec-
tion under this subsection, including the
procedures and deadlines applicable in
making any such election.".
At the end of title III, insert the follow-
mng:
1a-MONTA PERIOD TO ELECr A SURVIVOR
ANNUITY
SEC. 310. (a) Section 8339 of title 5, United
States Code, is amended by adding at the
end thereof the following:
"(oX1XA) An empployee or Member-
"(U who, at the time of retirement, is mar-
ried. and
"(ii) who notifies the Office at such time
(In accordance with subsection (j)) that a
survivor annuity under section 8341(b) of
this title is not desired,
may, during the 18-month period beginning
on the date of the retirement of such em-
ployee or Member, elect to have a reduction
under subsection (j) made in the annuity of
the employee or Member (or in such portion
thereof as the employee or Member may
designate) in order to provide a survivor an-
nuity for the spouse of such employee or
Member.
November 7, 1985
portion of the annuity of such employee or
Member is to be used as the base for a survi-
vor annuity under section 8341(b) of this
title.
may. during the 18-month period beginning
on the date of the retirement of such em-
ployee or Member, elect to have a greater
portion of the annuity of such employee or
Member so used.
"(2)(A) An election udner subparagraph
(A) or (B) of paragraph (1) shall not be con
sidered effective unless-
"O the spouse of the employee or
Member is provided advance notice of the
election in accordance with such regulations
as the Office shall prescribe; arid
"(ti) the amount specified in subpara-
graph (B) of this paragraph is deposited
into the Fund before the expiration of the
applicable 18-month period under para-
graph (1).
"(B) The amount ti. be deposited with re-
spect to an election under this, subsection is
an amount equal to the sum of-
"(i) the additional cost to the System
which is associated with providing a survi-
vor annuity under subsection (b)(2) of this
section and results from such election
taking into account (I) the difference (for
the period between the date on which the
annuity of the participant or former partici-
pant commences and the date of the elec-
tion) between the amount paid to such par
ticipant or former participant under this
subchapter and the amount which would
have been paid if such election had been
made at the time the participant or former
participant applied for the annuity, and (11(
the costs associated with providing for the
later election. and
"(ii) interest on the additional cost deter-
mined under clause (i) of this subparagraph
computed using the average annual interest
rate earned during such period by securities
held by the Fund
"(3) An election by an employee or
Member under this subsection voids pro
spectively any election previously made in
the case of such employee or Member under
subsection (j).
'.(4) An annuity which is reduced in con-
nection with an election under this subsec-
tion shall be reduced by the same percent
age reductions as were in effect at the time
of the retirement of the employee or
Member whose annuity is so reduced.
"(5) Rights and obligations resulting from
the election of a reduced annuity under this
subsection shall be the same as the rights
and obligations which would have resulted
had the employee or Member involved elect-
ed such annuity at the time of retiring.
"(6) The Office shall, on an annual basis,
inform each employee and Member of the
right of election under this subsection, in.
cluding the procedure and deadlines appl;
cable in making any such election.".
(bXl) Notwithstanding section 404 of thi:
Act. the amendment made by subsection (a(
shall take effect 3 months after the date of
the enactment of this Act.
(2)(A) Subject to subparagraph (B). the
amendment made by subsection ta) shall
apply with respect to employees and Mem
bees retiring before, on, or after such
amendment first takes effect.
(B) For purposes of applying the provi-
sions of paragraph (1) of section 8339(c) of
title 5. United States Code bas added by this
Act) to employees and Members retiring
before the date on which the amendment
made by subsection (a 1 first takes effect-
An An employee or Member- ti) the period relerred to in subparagraph
who, at the time of retirrrnvnt. is rear- (A) or (B) of such paragraph (as the cr_a?
ried, and may- bc) shall be considered to being on th'
'(ii) who at such time designate, (in ac date as of which suck: amendment first br-
cord iet- with su(~'ction OU that a limited comes effective, and
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November 7, 1985 CONGRESSIONAL RECORD - SENATE S 15053
i(11) the amount referred to in paragraph ment law. Federal employees must month period for determining the pro-
(_) of such section 8339(o) shall be comput mike a decision regarding survivor vision of the benefit is certainly justi-
ed without regard to the provisions of sub, benefits prior to retirement. If a retir- fiable.
paragraph (B)(ii) of such paragraph, relat- ee does not elect survivor benefits for I believe In many cases, Federal em-
11ii; to interest.
(3) For purposes of this subsection, the his or her spouse at that time, that de- ployees upon reaching retirement
terms *'employee*' and "Member" each has cislon is irrevocable. would greatly appreciate an extended
the meaning given that term in sections Unfortunately, far too many Federal timeframe for making the survitor
8331(l) and 8331(2) of title 5, United States employees make a decision regarding benefit designation,
Code. respectively. survivor benefits based upon incorrect With the
aLTIaaueNT COUNSELING or incomplete information and advice greatly reduced level compensation available througe o
through a re-
Six 311. (aul) Subchapter III of chapter provided by the employee's personnel tirement annuity. It is already difficult
83 of title 5. United States Code, is amended retirement counselor. The result is for Federal retirees to revise their life-
b} adaing at the end thereof the following that, despite the retiree's wishes, some styles and household budgets.
new section: survivors are left unprotected and
'isi19. Retirement cu n.eling without any source of income upon housekeeping" might saamthis gi a g new
'?(a.) For the purposes of this section. the the death of their spouse. Federal retire amendment , aten new
teem-'retirement counselor'. when used with My amendment will ensure that this time Federal which an appropriate period
respect to an agency, means an employee of unfortunate situation does not arise me and d whi lonech long-term examine ncore-
the agency who is designated by the head of under the new retirement program. reach spousal income
the agency to furnish information on bone - needs be and to reach what would der-
hope-
fits under this subchapter and chapter 84 of The amendment would provide Feder- fully be a Joint decision, fully under-
this title and counseling services relating to al retirees who have not already elect- stood and thought out by the retiree
such benefits to other employers of the ed survivor benefits, with a second and his or her spouse.
apencs. chance. The preretirement counseling serv-
--, b ~ The Director of the Office- of Person. Federal retirees who have not
net Management shall- chosen a survivor annuity will be given ices provided in the bill would further
' i 1 i e.$ablish a training program for all 18 months after retirement to change enhance overall sur stn ices and assist a-current in
rcUn ment counselors of agencies of the their decision. If a Federal retiree opts the overall survivor benefit designs
Federal Government: and lion.
?(2) designate and publicize a telephone for survivor benefits during this time, I express my strong appreciation to
e'imber at the Office which annuitants he or she will be required to make all Senators STEVENS and ROTH for their
(Bider this subchapter or chapter 84 of this necessary deposits to the retirement support of the amendment.
cute may call to obtain answers to questions fund in order to cover this selection. I am hopeful that all of our coi-
relating to retirement benefits under this In addition, this amendment will leagues will
subehaieter or such chapter and which is to ensure that agency retirement coun g give us their unanimous
be used exclusively for such propose. selors provide Federal employees with consent.
(r), 1) The training program established accurate information and advice re- Mr. TRIBLE. Mr. President, I simply
under subsection (b)(1) of this section shall garding survivor benefit decisions. add that this amendment has been
provide for comprehensive training In the Counselors will be required to com- drafted with the help of the majority
prnr. a ions and administration of this sub- piece a training minority leaders of this legislation
chapter and chapter 84 of this title, shall be g program on the and their staffs, and I appreciate e their
designed to promote fully informed retire- changes in civil sen?ice retirement law. help.
ment decisions by employees and Members This training program will be annual
under this subchapter and participants and will enable retirement counselors It is my understanding that it will be
under chapter 84 of this title, and shall be to gain the understanding of retire- agreed upon
by both NG si FF
Ise iced as necessary to assure that the infor- ment law essential to counsel future The PRESIDING OF'F'ICER. Who
matiun furnished to retirement counselors retirees. yields time?
Of agencies under the program is current Mr. President. the legislation now Mr. EAGLETON. Mr. President, I
"(2) The Director shall conduct a training before us creates a new retirement and think the Trible amendment is an ex-
sessior: under the training program once cellent amendment.
each quarter-year. disability plan for Federal employees.
0 Once each year. each retirement Federal employees covered by this new Mr. STEVENS. )~[r. President, the
counselor of an agency shah successfully system must have accurate informa- Trible amendment, giving a second
complete a training session conducted under tion in order to make critical decisions election to choose survivor benefits
the training program, affecting the financial security of within 18 months after retirement, is a
??(c) The Director shall assign the respon- their spouses. And, I believe that retir. good idea. The retiree must redeposit
ability of receiving and responding to calls ees under this new system should have funds to pay for the benefit.
made to the telephone number designated a second opportunity are prepared to acct
under subsection (b)(2) of this section to a after retirement pt that
sufficient number of employees who are to elect survivor benefits If they did amendment.
knowledgeable about the provisions and ad? not make this designation prior to re- Mr. EAGLETON. Mr. President, I
ministration of this subchapter and chapter tirement. yield back the remainder of my time.
84 of this title to assure that prompt and ef- I commend my colleagues, Senator Mr. STEVENS. Mr. President, I yield
fectne assistance is furnished to annu- ROTH and Senator STxvEfvs, for their back the remainder of my time.
itant.s . leadership on this important retire- The PRESIDING OFFICER. Is all
(2) The chapter analysis at the beginning ment legislation. And, I also want to time yielded back?
of such chapter is amended by Inserting acknowledge the contributions made Mr. STEVENS. All time is yielded
after the item relating to section 8348 the
following new item: "8349. Retirement coun? by Senators EAGLETON and GORE in de- back.
sl WIC.'. veloping legislation which has broad The PRESIDING OFFICER. All
(b) Notwithstanding section 404 of this bipartisan support. time having been yielded back, the
A'-l the amendments made by subsection Mr. President, I believe that my question is on agreeing to the amend-
in- shall take effect on the date of enact amendment adds an important ele- ment of the Senator from Virginia.
ment of this Art. ment to the legislation developed by The amendment (No. 985) was
Mr. TRIBLE. Mr. President, the these distinguished colleagues and I agreed to.
amendment that I am offering today urge all of my colleagues to support Mr. EAGLETON. Mr. President, I
along with my colleague from Virginia, this amendment. move to reconsider the vote by which
Senator WARNER, ensures that Federal Mr. WARNER. Mr. President, I com- the amendment was agreed to.
retirees are provided with an adequate mend my distinguished Virginia col- Mr. STEVENS. Mr. President, I
opportunity to elect a survivor annuity league, Mr. TRIBLE, for having initiat- move to lay that motion on the table.
under this new civil service retirement ed this important amendment. The motion to lay on the table was
plan. Civil service survivor benefits are an agreed to.
As many of my colleagues know, essential means of support for thou- Mr. CHILES. Mr. President, I rise to
under the existing civil service retire- sands of surviving spouses, and an 18- indicate my support for this bill which
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S 15054 CONGRESSIONAL RECORD - SENATE November 7, 1985
:,At" a new supplemental pension ership in this endeavor. Their perse- hope of creating a viable, cost-effective
Man for those Federal workers cov? verence and dedication are the reason pension system for the future. And it
Bred under Social Security. This plan we can stand here today to discuss S. was a further hope that the yearly at-
e as promised to new Federal workers 1527. tacks on the
re-
al thctime w1e brought such employ- As my colleagues are already well tirement system-a to ks civilmade in the
t ?'s under the Social Security system aware, the committee opted for a name of erasing benefit differences be-
and I am glad that we are finally on three-tier approach to the new retire- tween Federal and private pensions
the road toward delivering on that ment system. Social Security provides and saving the taxpayers' money-
commitment. the basic benefit, which will be supple- would abate if the new
I want to congratulate Senators STE- mented by a defined benefit portion- pension plan
vu s, EACLCrON, ROTH, and Gopp and paid for by moved closer to good ate sector cingttce.
all the other Senators on the Govern- thrift plan which is Government-and n d of S. 1527 does a good job containment
ght
mental Affairs Committee on the sue- employee and employer contributions. and objectives of cost ceseful conpletion of this very compli- Under this three-tier scheme, employ- plan. The new plan offers employees providing a workable pension
Gated bill. The amount of work that ees will be able to choose between two more r flexibility and,
went into its creation was monumental options. One option A is geared to em- in some saes, greater nefits. end,
ent
and they deserve an enormous amount ployees who want to take advantage of in se ticases, better the Government
of credit for their efforts. the flexible, more portable thrift plan. same time it saves the Goeermnt
I think that this plan accomplishes The other option B is weighted more money, which will help reduce the
perer-
t he objective of providing adequate toward the defined benefit plan, which fec. Clearly, the first t offer
not p-
arid fair retirement, disability, and sur- will be attractive to employees seeking there I scoldbe the i first to out that
itors bent fits for Federal workers. security and stronger inflation protec- ani confident room that a conference oenB ut I
Such benefits should be helpful in at- tion with respect to cost-of-living ad_ the House will the k;nk wad
t racting and maintaining workers in justments [COLA's]. In addition, the resolve se of iron out tn ;nks and
thc? Federal work force. At the same disability, survivor.and life Insurance Mr. President, nt, the ere basic ik ct. tenets the bill keeps the cost of this benefits offered under S. 1527 are My. Presi work on 1527
new system within reasonable bounds. more generous than those provided in are sound, and as long work they tin-
The bill provides for the worker to the present retirement system. are sound, and as as teonln
choose between two options for his re- As the committee worked on devel- ue to guide our deliberations on this
tirement, survivor, and disability bene- oping the new retirement system, it matter, there is every reason to believe
fit::. I am very pleased that one of had to keep several competing goals in that we will create a retirement
these options provides for full cost-of- mind. One of the most important con- system that is good, viable, and less
living increases for all retirement ben- siderations was to make sure that re- costly than the present one. I urge the
efits after the age of 62 and for all dis- tirees under the present system and Senate to join the Governmental Af-
ability and survivor benefits at any future retirees under the proposed fairs Committee in giving this bill its
age. Once a worker has reached a system receive comparable retirement resounding approval and in moving
normal age for retirement, it makes benefits. Indeed, it would be difficult the Federal pension system into the
little sense to provide for a benefit to justify disparate treatment in this future.
which will erode over time as a result area when one considers the value of Mr. GLENN. Mr. President, I am
of inflation. There is little Justifica- retirement in recruiting and retaining pleased to be a cosponsor of S. 1527,
tion for providing that a person has a qualified employees in Government the Federal Retirement Reform Act of
lower standard of living at age 80 than service. The present retirement system 1985. and to urge its adoption by the
at an earlier age. Similarly, the bene- is a generous one and it serves as an Senate.
fits received by disabled workers or by enticement to prospective employees This legislation establishes a civil
survivors of workers should not be al- who recognize the limitations of Fed- service pension program for new Fed-
lowed to erode over time either. eral pay. It keeps the Federal Govern- eral employees hired after December
Under the reported bill, the worker ment in the running when it competes 31. 1983. who were brought under
must choose the plan he wants within with the private sector for the talent- Social Security as part of the Social
a short period of time after he begins ed and experienced people our Gov- Security Amendments of 1983. The
employment; this choice is then irrev-- ernment needs to properly serve the pension legislation designed by the
ocable. There are compromises which American people. It is important, Governmental Affairs Committee sup-
will be made in conference with the then, that the new retirement system plements this Social Security coverage
House. I hope that the conference will retain this same quality. and provides Federal retirees with a
consider the possibility of having one Another very important consider- retirement plan which is comparable
option in the final plan which includes ation in creating a new system was en- to good private sector retirement
the full cost-of-living protection de- suring that we keep our promise to plans.
scribed above. current employees and retirees that I have always been supportive of leg-
Both options in the new plan con- there will be no tampering with their islation to strengthen the retirement
tain three tiers: Social Security, a "de- retirement benefits. It is my intent system of civil service employees. I be-
fined-benefit" pension plan, and a that present benefits not be affected lieve the Federal Government has a
thrift plan to which employees can by S. 1527, and I am certain that this responsibility to provide an adequate
make voluntary contributions. I think is the intent of the entire Governmen. and fair pension program for its em-
this three-tiered approach is a solid tal Affairs Committee. ployees, and one that helps recruit
one and provides an appropriate Naturally, in any undertaking of this and maintain an excellent and skilled
degree of balance. I look forward to magnitude, cost is a significant factor. work force. The plan proposed today
ttic successful completion of the entire With budget deficits and taxpayer provides retirement benefit protection
supplemental pension plan this year. burdens much in everyone's mind, that meets the needs of both long-
Mr. MATHIAS. Mr. President, I sup- there was great pressure on the com- term career service employees and
port S. 1527, legislation to establish a mittee to devise a system that will be short-term Government employees.
retirement system for postal and Fed- less costly to the Government than For some workers, including women
eral employees hired beginning Janu- the existing system. Thus, arguments and short-term employees, this plan
ary 1, 1984. This bill represents the to have Federal pensions achieve offers more comprehensive protection
best efforts of the Governmental Af- greater parity with less costly private than the current civil service retire-
fairs Committee and I am proud to be sector pensions gathered more cre- meat system.
a cosponsor. I would also ? like to dence; and we spent a great deal of This legislation is necessary because
extend special recognition to my dis- time applying private pension ideas to new Federal employees do not know
tinguished colleagues-Senators ROTH. the new pension system for Federal what retirement protection they will
EAGLETON, and STgVENS-for their lead- employees. Our work was done In the receive when they are hired by the
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November 7, 1985
CONGRESSIONAL RECORD - SENATE 'S 15055
Government. During debate on the
Social Security Amendments in 1983, I
cosponsored an amendment by Sena-
tor LONG to delay Social Security cov-
erage of new Federal employees until
a supplemental pension plan was en-
acted. I felt it was unfair to include
new Federal employees under Social
Security without spelling out in ad-
%ance how their pension benefits
would be provided. Unfortunately,
that amendment was defeated, and
Social Security coverage took effect on
January 1, 1984. Interim legislation
was enacted to provide some disability
and survivor coverage for new Federal
employees until a supplemental pen-
sion program was enacted. This inter-
im legislation expires December 31 of
this year, and I am pleased that we
will meet that deadline.
Thc retirement program proposed
today includes three tiers. The first
tier is Social Security coverage. Advan-
tageL of Social Security include full in-
dexing of benefits to inflation and
portability of coverage from job to job.
The second tier is a Government-paid
defined benefit pension plan designed
as an "add-on" to Social Security. The
third tier is a thrift plan that provides
employees with a tax-deferred savings
plan similar to that provided by sec-
tion 401(k) of the Tax Code. As part of
a compromise necessary in order to
reach agreement on this legislation.
new employees will have the choice be-
tween two options that provide differ-
ent features for the defined benefit
and thrift savings plan. Under option
B. the employee may choose to supple-
ment the Government contribution to
the defined benefit portion in order to
be eligible for early retirement, and
improved inflation protection. Under
the thrift savings plan, employees
under option A could contribute up to
10 percent of their pay, and the Gov-
ernment would match this contribu-
tion dollar for dollar up to 5 percent.
Employees under option B could also
contribute up to 10 percent of pay, but
the Government match would be
lower in order to pay for the bigger de-
fined benefit.
Mr. President, this is not a perfect
bill. and I will work for improvements
in it before final passage. I am con-
cerned about the level of inflation pro-
tection provided to retirees under this
legislation. We should ensure that re-
tirees are able to maintain their stand-
ard of living through their retirement
years. especially as they get older and
may have greater medical and other
living expenses. I also have serious res-
ervations about the "option" provi-
sion, and consider it unworkable ad-
ministratively. The option plan would
force new employees to make a one-
time irrevocable choice on their retire-
ment plan. It would be difficult if not
impossible for employees to make an
informed decision on such a complicat-
ed matter. However. I understand that
this option proposal was necessary in
order to reach agreement on the bill,
and I look -forward to improving the
option plan and other provisions
during the conference committee with
the House.
I would like to emphasize that this
legislation in no way affects the bene-
fits for employees under the old civil
service retirement system. The good
faith and credit of the U.S. Govern-
ment stands behind the civil service
retirement program. We must contin-
ue to protect the earned retirement
benefits for those who have in good
faith placed their trust in the Federal
Government.
The legislation we consider today
will provide new Federal employees
with a fair and adequate retirement
benefits plan. It will assist in building
and keeping a quality career work
force in the Federal Government. It
will enhance portability of retirement
credits for employees moving between
Government service and private sector
employment. The legislation will also
encourage Federal employees to in-
crease their personal savings for re-
tirement. I am pleased to be a cospon-
sor of S. 1527, and I urge its passage
by the Senate.
Mr. CRANSTON. Mr. President. I
wish to speak in support of the bill. S.
1527, the Federal Retirement Reform
Act of 1985, which establishes a sup-
plemental retirement plan for Federal
and postal new hires.
I first want to commend my col-
leagues on the Governmental Affairs
Committee for doing an outstanding
job with an extremely complex and
sensitive issue. Theirs has not been an
easy task. Many competing interests
are involved. And it is to the commit-
tee's credit that the job has been ac-
complished as well as it has been.
In particular, we owe a special debt
of recognition to our colleague from
Alaska. Tam STEVENS. He has been at
work on this matter since 1951 and
during the years has had to accommo-
date a range of concerns of groups rep-
resenting employees, retirees, and
others. Also, during those years, the 28
member organizations of the fund for
assuring an independent retirement
have been actively involved in the de-
velopment of a supplemental retire-
ment program, including active consul-
tation of legislative details and full
participation in all discussion, forums,
and public hearings.
The final product approved by the
committee does not meet the test of
perfect comparability with the present
civil service system. But given the con-
straints, few expected the committee's
work to attain that goal. It does, how-
ever, represent a sincerely sought
after compromise on very difficult
issues that was achieved through the
hard work and tireless commitment of
Senators STEVENS. ROTH, EAclrroN,
and GORE.
That this bill is on the floor of the
Senate moving without controversy
toward enactment is, indeed, itself the
best tribute to the fine work of the
Committee on Governmental Affairs.
I would like to detail my caveats.
however.
We cannot compromise on fairness'
and equity between employees hired
before 1984 and those after.
We cannot compromise on the prom-
ise of equal inflation protection for all
of our Nation's elderly.
We cannot compromise on a digni-
fied and liveable retirement income
for career employees who perform thr
Nation's services.
We cannot compromise the security
of those currently or soon to be rt
tired.
The bill before us does not completr--
ly meet those criteria.
It fails to provide full infl Lion pro-
tection for the defined benefit supple-
ment that is equal to that given to
Social Security Recipients. By not re-
quiring a mandatory emp'.oyce contri-
bution to the defined benefit supple-
ment- the bill breaks the traditional
bond between workers who irate a fi-
nancial stake in their retirement and
retirees who rely on the system for
their financial security. It does not
recognize career progression through
an accrual formula based on the high-
est level of achievement.
However. Mr. President. It does rep-
resent genuine progress. I urge all my
colleagues, especially those who will
serve as conferees, to keep the above
principles in mind to seek to correct
the shortcomings in the legislation
before us.
RECOGNITION OF MICHAEL MC DERMOTT. MACE
Mr. BRADLEY. Mr. President. I am
pleased today to note that with thce
passage of H.R. 2672, a portion of the
road leading to the redesignated New
Jersey International and Bulk Mail
Center will be dedicated as "Michas l
McDermott Place," In 1981. 1 intro-
duced legislation to commemorate this.
young postal worker who died in a
conveyor belt accident at the postal
center during the 1979 holiday season.
Safety devices that should have avert-
ed this tragedy were not in place dtie
to the rush of holiday mail. The dedi-
cation of Michael McDermott Place
will serve a dual purpose: It will.
remind us of ttle_ public service and
sacrifice of this one inditidu,,,'.. It will
also remind us of the need to constant -
ly monitor workplace safety. Naming
this street in honor of Michael McDer-
mott cannot erase the tragedy of sev-
eral years ago. It may help to increase
our vigilance so that other postal em-
ployees are spared such accidents as
they strive to serve the public.
Mr. STEVENS. Mr. President, it is
my understanding we have now com-
pleted the list of amendments that
were in order under the time agree-
ment.
Pursuant to that agreement I ask for
a third reading.
The PRESIDING OFFICER. The
question is on the engrossment and
third reading of the bill.
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S 15056
CONGRESSIONAL RECORD - SENATE November 9', 1985
The bill was ordered to be engrossed
for a third reading and was read the
third time.
The PRESIDING OFFICER. Do
Senators managing the bill yield back
their time?
Mr. STEVENS. Mr. President, I yield
back my time.
Mr. EAGLETON. Mr. President, I
yield back my time.
The PRESIDING OFFICER. All
t irne is yielded back.
Mr. STEVENS. Mr. President, I ask
unanimous consent that the Senate
t':rn to the consideration of House bill
2672 to redesignate the New Jersey
International and Bulk Mail Center.
The- PRESIDING OFFICER. With-
out object ion, it is so ordered.
The bill will be stated by title.
Thc legislative clerk read as follows:
A b:ll (11.R. 2672) to redesignate the New
lurk lntcrna!ional and Bulk Mail Center in
J rsv} City. New Jersey. as the New Jersey
1:,'erra'ional and Bulk Mail Center", and to
honor the ms'rnory of a former postal em-
f.ioyee b~ dt?airating a portion of a street at
tae Na i?York international and Bulk Mail
C.-;-.ter in J(-rsey City, Nev, Jersey. as ''Mi-
cra' I Atd)t-rmott Plact".
The PRESIDING OFFICER. Is
there objection to the request of the
SenhtOr from Alaska.
There being no objection, the Senate
proceeded to consider the bill, which
had been reported from the Commit-
tee on Governmental Affairs, with
amendments, as follows:
(The parts of the bill intended to be
stricken are shown in boldface brack-
ets, and the parts of the bill intended
to be inserted are shown in italics.)
Be it enacted by-the Senate and Noose of
krprr a!cf.tes of the United States of
An, -c in Congress assembled.
,1,cl1u% I. RIAWSICNATJO% OF BUILDING.
(a) REDFSI.NATION.-The New York
[International and Bulk] Bulk and Foreign
Mail Center in Jersey City. New Jersey,
shall hereafter be known and designated as
the "New Jersey International and Bulk
Mail Center". Any reference to such build-
ing in any law, map, regulation, document,
rccor'i, or other paper of the United States
shall be considered to be a reference to the
Ne?x Jersey International and Bulk Mail
Cent er.
(b) )? vi,Emjvs DATr.-This section shall
tale elfec't 6 months after the date of the
enar tment of this Act.
SEA. 2 111:nl( ATION 01' MN'H.t,F.l. Mrl)F:RMOrr
N.A('F..
(a) Err'-TioN or Siog.-The United States
Po..tal Service shall erect a suitable sign
bearer the inscription "Michael McDer-
mott Place". anywhere on its property adja-
cent to the street and parking area located
immediately to the east of the New York
[International and Bulk] Bulk and Foreign
Mall Center building in Jersey City. New
Jersey, so a9 to dedicate such portion of
.,:ueh street in memory of former postal em-
plo'?ee Michael McDermott.
(b) EFFECTrvz DATE.-This section shall
take effect on the date of the enactment of
this Act.
The PRESIDING OFFICER. The
quest ion is on agreeing to the commit-
tee amendments en bloc.
The committee amendments were
agreed to on bloc.
Mr. STEVENS. Mr. President. I
move to reconsider the vote by which
the committee amendments were
agreed to.
Mr. EAGLETON. Mr. President, I
move to lay that motion on the table.
The motion to fay on the table was
agreed to.
Mr. STEVENS. Mr. President. I ask
unanimous consent that this bill now
be amended to insert the complete
text of S. 1527. as amended, and that
It be advanced to third reading.
The PRESIDING OFFICER. With-
out objection. it is so ordered.
Mr. STEVENS. Mr. President, pursu-
ant to the unanimous-consent agree-
ment following adoption of those two
amendments, the Senate should now
proceed to third reading and final pas-
sage of H.R. 2672 without any inter-
vening action.
The PRESIDING OFFICER. The
question is on the engrossment of the
amendment and third reading of the
bill.
The amendment was ordered to be
engrossed and the bill to be read a
third time.
The bill was read the third time.
Mr. STEVENS. Mr. President, I ask
for the yeas and nays.
The PRESIDING OFFICER. Is
there a sufficient second? There Is a
sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The
bill having been read the third time,
the question is, Shall it pass?
On this question the yeas and nays
have been ordered, and the clerk will
call the roll.
The legislative clerk called the roll.
Mr. SIMPSON. I announce that the
Senator from Pennsylvania. [Mr.
HEINZ) is necessarily absent.
Mr. CRANSTON. I announce that
the Senator from West Virginia [Mr.
ROCKEFELLER] is necessarily absent. I
also announce that the Senator from
Nebraska (Mr. ZORINSKV] is absent be-
cause of illness.
I further announce that, if present
and voting, the Senator from West
Virginia [Mr. ROCKEFEr r ern] would
vote "yea."
The PRESIDING OFFICER. Are
there any other Senators in the Chaim.-
ber who wish to vote?
So the result was announced-yeas
96, nays 1, as follows:
(Rolicall Vote No. 289 Leg.)
YEAS-96
Abdnor D'Amato Gorton
Andrews Danforth Gramm
Armstrong DeConcini Grassley
Baucus Denton Harkin
Bentsen Dixon Hart
Biden Dodd Hatch
Bingaman Dole Hatfield
Boren Domenici Hawkins
Boschwitc Durenberger Hecht
Bradley Eagleton Heflin
Bumpers East Helms
Burdick Evans Hollings
BNrd Exon Inouye
Chafee Ford Johnston
Chiles Garn Karebaum
Cochran Glenn Kasten
Cohen Goid.dater Kennedy
Cranston Gore Kerry
Lautenbcrg Moynihan Aasser
Laxalt Murkowaki Simon
Leahy Nickles Simpson
Levin Nunn )Specter
Long Packwood Stafford
Lugar Pell Stennis
Mathias Pressler Stevens
Matsunaga Proxmire Symms
Mattingly Pryor Thurmond
McClure Quayle Tribie
McConnell Riegie Wallop
Melcher Roth Warner
Metx'nbaum Rudman Weicker
Mitchell Sarbanes Wilson
NAYS-1
Humphrey
NOT VOTING-3
Heinz Rockefeller Sorinsky
So the bill (H.R. 2672), as amended,
was passed.
Mr. STEVENS. Mr. President, I
move to reconsider the vote by which
the bill was passed.
Mr. GORE. I move to lay that
motion on the table.
The motion to lay on the table was
agreed to.
Mr. STEVENS. Mr. President, I ask
for immediate consideration of the
amendment to the title which is at the
desk.
The PRESIDING OFFICER. The
amendment will be stated.
The legislative clerk read as follows:
Amend the title so as to read: "An Act to
redesignate the New York Bulk and Foreign
Mail Center in Jersey City, New Jersey. as
the 'New Jersey International and Bulk
Mail Center', and to honor the memory of a
former postal employee by dedicating a por-
tion of a street at the New York Bulk and
Foreign Mail Center in Jersey City, New
Jersey. as'Michael McDermott Place'.".
The amendment was agreed to.
Mr. STEVENS. I move to reconsider
the vote.
Mr. GORE. I move to lay that
motion on the table.
The motion to lay on the table was
agreed to.
Mr. STEVENS. Mr. President, I ask
unanimous consent that S. 1527 be in-
definitely postponed.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
Mr. DOLE. Mr. President, I thank
the distinguished managers of the bill,
Senator STEVENS and Senator GORE,
for their expeditious handling of this
matter. We are grateful to them and
to all Senators who agreed to the over-
all time agreement on bills and on spe-
cific amendments. It has made it possi-
ble to dispose of two major pieces of
legislation so far today, the military
construction bill and the Federal Re-
tirement Act of 1985.
ORDER OF PROCEDURE
Mr. DOLE. Mr. President, we are
now hoping we can move to Calendar
No. 284, H.R. 2867, the D.C. appropria-
tions bill. I shall make that request in
just a moment.
There is some discussion about cer-
tain amendments that may be offered.
I am advised by the chairman of that
subcommittee that this bill would not
consume a lot of time. There will be
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