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Detroit police.-Contributed by corporation, tax levy for necessary amount; amount of pension, $50 per month; years of service, 25 if permanently incapacitated.
Detroit teachers.-Contributed by corporation, interest on moneys for salaries, certain other sums and any appropriation by board; contributed by employee, 1 per cent to 3 per cent of annual salary; amount of pension, maximum $250 per year; years of service, 25 in Detroit public schools, or 20 in Detroit plus 10 in other public schools.
Pittsburgh municipal.—Contributed by corporation, an act passed in 1913 enables city to establish a pension fund by appropriation, by deduction from salary or by both methods; contributed by employee, optional membership, fee and dues from 50 cents to 3 per cent of salary to $200. After being pensioned pay one-half of former dues; amount of pension, one-half of average salary for last 5 years, maximum $100 per month; years of service, 20; age, 55.
Pittsburgh police and firemen.—Contributed by corporation, $50 a year for each employee.
Chicago & North Western Railroad.—Contributed by corporation, maximum $200,000; contributed by employees, nothing; amount of pension, for each year of service 1 per cent of average salary for last 10 years, minimum $12 per inonth; years of service, 20; age, 70.
Atchison, Topeka e Santa Fe Railroad.—Contributed by corporation, amount necessary; contributed by employee, nothing; amount of pension, minimum $20 per month, maximum $75 per month; years of service, 15; age, 65.
Canadian Pacific Railroad.-Contributed by corporation, amount necessary; contributed by employee, nothing; amount of pension, minimum $20 per month; years of service, 10; age, 65.
Baltimore & Ohio Railroad.-Contributed by corporation, amount necessary; contributed by employee, nothing; amount of pension, minimum $6.25 per month; years of service, 10 to 20 years; age, 65.
Delaware, Lackawanna & Western Railroad.—Contributed by corporation, amount necessary; contributed by employee, nothing; amount of pension, for each year of service 1 per cent of average salary for last 10 years; years of service, 25; age, 70.
Grand Trunk Railroad.—Contributed by corporation, amount necessary; contributed by employee, nothing; amount of pension, for each year of service 1 per cent of highest average pay during any 10 consecutive years; years of service, 15; age, 65.
Illinois Central Railroad.-Contributed by corporation, amount necessary; contributed by employee, nothing; amount of pension, minimum for each year of service 1 per cent of average salary for last 10 years; years of service, 10; age, 70.
Michigan Central Railroad.—Contributed by corporation, amount necessary; contributed by employee, nothing; amount of pension, minimum $5 per month, maximum $250 per month; years of service, 10; age, 70.
Minneapolis, St. Paul & Sault Ste. Marie Railroad.Contributed by corporation, amount necessary; contributed by employee, nothing; amount of pension, minimum $15 per month; years of service, 15 ;age, 65.
New York, Chicago & St. Louis Railroad.—Contributed by corporation, amount necessary; contributed by employee, nothing; amount of pension, for each year of service 1 per cent of average salary for last 10 years, minimum $5 per month, maximum $200 per month; years of service, 10; age, 70.
Chicago, Rock Island & Pacific Railroad.—Contributed by corporation, amount necessary; contributed by employee, nothing; amount of pension, for each year of service 1 per cent of average salary for last 10 years, minimum $20 per month; years of service, 20; age, 70.
Mr. FLA HERTY. I would say in passing that Great Britain-in fact, every nation except Turkey and the United States—has established in some way a retirement system. In Great Britain they have worked it out in great detail and have evolved a fairly satisfactory plan, and for the information of the committee I will insert it in the record. This exhibit of facts will be of interest to you.
The CHAIRMAN. Very well.
(The matter referred to above is here printed in full, as follows:) Mr. FLAHERTY. I want to submit for the information of the committee some of the more important features of the British retirement pension system. The British civil-service retirement provision dates from the passing of an act to alter, amend, and consolidate laws for regulating the pensions, compensations, and allowances to be made to persons in respect of their having held civil offices in His Majesty's service. This was on the 25th day of July, 1834, in the fourth and fifth years of the reign of King William the Fourth. Apart from this being the first instance of an established retirement system for the British civil service, there are two other points worthy of attention, first, the method of calculating pensions, which was one-twelfth of salary according to the length of service. Thus for an officer, clerk, or person who has served 10 years and upward, and under 17 years, any annual allowance not exceeding in amount three-twelfths of the salary and emoluments of his office, and so on, until the maximum of 45 years and upward, not exceeding eighth-twelfths of such salary and emoluments. The other point is that the context shows that the first retirement scheme was a contributory one, and all abatement from salaries and emoluments being made from salaries and emoluments not exceeding the annual sum of £100, and abatement after the rate of £2 10s. per cent; and from salaries and emoluments exceeding £100, £5 per cent.
In 1859, in the twenty-second year of the reign of Queen Victoria, an amendin gact was passed which practically repealed the whole of the act of 1834. This latter act abolished the contributory plan, which had been open to grave objections, both from the staff and from an administrative point of view, besides being incompatible with the dignity of the national department. It further laid down the pension scale which remained in force until the year 1909. The act of 1859 laid it down that pensions should be calculated on sixtieths of the annual salary and emoluments multiplied by years of service for every officer, with 10 years' service and upward to a maximum of 40 years, both when the annual allowance of forty-sixtieths may be granted. Further provision was made for officers compelled to leave the service either on account of bodily injury or from infirmity of mind or body before the completion of the period which would entitle him to a retirement allowance.
In the case of severe bodily injury occasioned while in discharge of his public duty, a gratuity—that is, a lump sum—not exceeding three months' pay for every two years of service, or a retirement allowance not exceeding the annual salary and emoluments of his office. In the case of physical or mental breakdown such sum of money by way of gratuity as the commissioners of the treasury may think proper, but so as that no such gratuity shall exceed the amount of one month's pay for each year of service.”
Provision was also made for such cases as abolition of office when allowance up to two-thirds of the salary and emoluments of the office could be granted. Other acts were passed, such as the pensions commutation acts of 1869, 1870, and 1871; also those of 1887 and 1892, which had reference to employment under Government of India, but the 1859 act held the field until the passing of the superannuation act of 1909.
The act of 1859 swept aside the contr:butory scheme of pensions, so far as the British civil service was concerned, and introduced the straight pension.
As to the line the American civil service should pursue in furtherance of its aims, Mr. Charles G. Ammon, from whose article I gathered the statistics and information I am giving you in reference to the British retirement system, suggests first that it was considered beneath the dignity of the national department that its servants should directly conribute toward the remuneration of the offices.
About 1890 certain mutterings arose within the British civil service as to the hardship inflicted upon the dependents of officers dying in harness; that is, while still in the employ of the nation and without having been placed on pension or gratuity—who were left without any means of support other than might have been provided by the deceased officer through insurance or other means of thrift. The contention advanced was that even a nation did not give employment out of philanthropy, but were more or less guided by the higgling of the market and economic conditions; therefore, all gratuities and retirement allowances were part of the emoluments of office and, in the event of the demise of an officer should by right fall to the next of kin. Consequently by the year 1896 the mutterings grew to so strong a volume that a conference of civil servants of all ranks was convened and a committee
inaugurated which was afterwards known as the deferred-pay committee, which had for its object the securing of some system of payment or pension of the next of kin of officers dying in harness and to secure the necessary alteration in the existing acts. After a strenuous and persistent agitation, in which they were assisted by one or two sympathetic members of Parliament, the deferredpay committee won recognition of the principle, and the superannuation act of 1909 was placed on the statute books and is now in force.
The act of 1909 amended, in the first instance, that of 1859 in that future pensions should be collected on eighths instead of sixteenths. As a set-off against the reduction in pension provision was made for the next of kin and by way of compensation to the officer himself, so that any civil servant who retires after having served for more than two years owing to infirmity of mind or body may become entitled to a lump suin equal to one-thirtieth of the annual salary or emoluments of his office multiplied by the number of completed years of service, provided that such allowance shall in no case exceed one and-one half times the amount of such salary and emoluments. Should any civil servant die after he has served five years or upward while still employed in the service, a grant equal to the annual salary and emoluments is granted to his legal representative. In the event of an officer retiring from the service and entitled to retirement benefits, he is granted, in addition to the ordinary pension allowance, a lump sum of not less than the annual salary and emoluments of his office.
Civil servants in the employ of the state prior to the passing of the act of 1909 were allowed the option to remain under that of 1859 or to elect to come under the new provisions. That over 90 per cent immediately chose the latter is the best evidence of its popularity, particularly when it is remembered that from the remaining 10 per cent should be deducted those who were medically disqualified from coming under the new act.
In addition to those in the service prior to 1909, an additional allowance, payable on retirement, of one-half per cent of every completed year of service prior to the passing of the act is granted.
An assured retirement scheme, based upon general lines and graduated according to years of service, offers security of tenure to the employees, and by removing from the minds of the employees all anxiety as to the features so long as duties are discharged with faithfulness and efficiency, secures the wholehearted application to duty.
Further, men enter the civil service with the intention to make it a life career and so devote all the application and intelligence both to carve out a career for themselves and to give to the nation the best of their energy and intelligence.
It can safely be claimed that since the establishment of the system of superannuation the British civil service has never looked back but has gone steadily forward until it now occupies a position that may challenge comparison with any in the world.
Experience shows that men are prepared to give their best in service to the community, and such can only be rendered when they are free from the anxieties that obtain in the competitive world. By its very nature the work of the nation and of the state demands continuity and application, and this can not be if the best and most energetic and most enterprising are looking out for a jumping-off place in their own interests.
Mr. FLAHERTY. Mr. Charles G. Ammon, president of the London Sorting Clerk's Association, after recently touring this country and examining closely the workings of our Postal Service, declared we were many years behind the British service in our treatment of the employees, noticeably in the absence of any retirement measure. Mr. Ammon briefly describes the British system as follows (reading]:
“A tuberculosis sanatorium is provided by the department, where an employee can receive treatment free of charge and his salary paid to his family. When an employee dies one year's salary is paid to his family, or if he becomes incapacitated either by sickness or accident he is retired on a certain percentage of his salary. At 60 years of age, or after 40 years' service, an employee is entitled to retire upon two-thirds of his annual salary.
“ Whether he retires from sickness or is superannuated, one year's salary is paid him in a lump sum, in addition to the regular monthly payments.”
Mr. FLAHERTY. The House Post Office Committee in the Sixtyfourth Congress recommended the passage of what is known as the Griffin-Penrose indefinite leave of absence bill. It was reported to the House, but died on the calendar when the Sixty-fourth Congress went out automatically on the 4th of March last. In its report to the House the committee made, I think, an excellent argument for retirement. Let me read what the committee quoted from President Taft (reading):
The present practice of retaining such superannuated employees on the roll and, as they grow older, expecting from them a small quantity and lower grade of work, can not continue indefinitely without seriously impairing the efficiency of the entire service and imposing upon the Government a cost that will be in excess of the expense to be incurred by the adoption of a reasonable plan for remedying these conditions.
That is what President Taft said. Reading further from this report (reading): Massachusetts has taken the most advanced steps in caring for superannuated employees. In almost every branch of the State service noncontributory annuities are paid superannuated employees, and the same is true of municipal employees in that State. In Boston, for instance, laborers in the highway department are pensioned after 30 years of service.
Again (continuing reading):
In Detroit, for instance, over 100 postal employees are stated to have re signed within three months because employment with better opportunities was offered them.
In that connection I think that is one of the most cogent arguments for enacting some system of retirement. It will prevent this enormous turnover that takes place in the Postal Service every year. Young men entering it find the possibilities for promotion are not bright, that eventually they will have to face either demotion or dismissal. And as they find nothing in the service to make it a life work they leave. The Post Office News, published in Philadelphia—and I may say that every large office in the country gets out a similar bulletin, weekly--but in this, under date of May 31, you will find 13 resignations of clerks, subclerks, and subcarriers, and in the June number you will find the names of 18 subclerks and subcarriers, as well as regular clerks and carriers, who have quit the service.
I think that inasmuch as we maintain our Civil Service Commission to recruit efficient men for the service, inasmuch as our civil service imposes an educational qualification, as well as a character qualification, and that the machinery is expensive, it is certainly an economic waste to invite these young men into the service, have them stay a few days or months or possibly a year, and then get out because they secure some more lucrative employment elsewhere.
I would invite your attention, Mr. Chairman, to the tables which you will find in the Pomerene hearing, showing principal provisions of private pension systems of 50 representative industrial concerns in the United States. I do not think it is wise to burden this record with that, because it is in the Pomerene hearing. This sindicating] is also in the Pomerene hearing. Its principal feature is the civilservice retirement of representative countries, and it shows the system that is in existence in Germany, France, Belgium, Argentina, Australia, New Zealand, Canada, Austria, Great Britain, and other countries. It contains a wealth of information to anyone who wants to give this subject some consideration.
I sincerely hope and trust, aside from any humanitarian standpoint, that you and your colleagues will have the preservation of the civil service as an institution in mind and give'this subject some thought, some consideration, and see if you can not, if not at this special session, at least when the regular session of Congress convenes in December, report out some system whereby these aged, superannuated workers can be retired on a service annuity.
I think now, Mr. Chairman, in view of the fact that there are quite a number of other witnesses, and I have covered the principal points I had in mind, that I will cease. But there may be an insert here and there that I would like to put in the record.
The CHAIRMAN. That will be all right. We are obliged to you, sir. Mr. FLAHERTY. I thank you. (The inserts referred to above are here printed in full, as follows:)
[House Post Office Committee, Apr. 7, 1916.)
Service annuity or retirement legislation is the only equable solution that is fair to the employee and the employer. Let us see if it is fair to the employer, the Government, to single out one class for this legislation that properly and rightfully, in my opinion, to every wage earner who had contributed to the development, progress, and wealth of the Nation, and who in his declining years, through no fault of his own, was in need of monetary aid.
Take the post-office clerk, a distributer in a large office, and examine this question from his viewpoint. This distributor must of necessity devote most of his time to memorizing the ever-changing post-office schemes. To be expert in his Government work this employee must study after office hours to the exclusion of everything else. And the knowledge he is acquiring year after year is valueless to any other employer. This distributor can't sell his knowledge to some competing post office; neither can he establish an office of his
No; his years of experience and study can not be capitalized. He must sell his knowledge to the Government. The years spent in memorizing postoffice schemes, he finds out when too late, have unfitted him for other vocations. Though possessing a bewildering number of facts, he finds these facts are not an asset in the business or commercial world. He is a post-office distributor ; he can be nothing else because of that.
Meanwhile he finds his maximum salary of $1,200 is dwindling under the rapidly soaring cost of necessities. He must live a great distance from his work because post offices in large cities are in the business or commercial dis. tricts where rentals are beyond a clerk's income. His time is spent in scheme study, his lengthy trip to and from work make his day, even with an eight-hour limit, much longer than that of the average wage earner. If he is a man of family, and if there is sickness in his family, then the lot of this clerk is not an enviable one. And, remember, he is what the clerks term a high-salaried man. If he is a substitute clerk, or if he is but newly appointed, getting $66 a month, then his predicament is much worse.
A case like this is by no means exceptional. Rather it is typical. Such cases rarely ever attract public attention, however, because there is one thing that must be said of a Government job, it is a good medium for borrowing money.
The Government clerk can get unlimited credit; the various tradesmen are overobliging. This creates the erroneous impression that the clerk, on his princely salary, is able to live in a manner beyond the means of the artisan, whereas, in most instances, he is heavily involved in debt in trying to keep up appearances in his rôle of a representative of the greatest Government on earth.
If the salaries paid to postal employees permit of no saving for old age, if the work exacted of them unfits them for occupation elsewhere, then it is necessary for some system to be evolved to take care of those who have given the best years of their lives to the service, reaching an improvident old age despite the strictest vigilance to economize. This system, in my opinion, should take the form of contributions by the employees, provided a revision of salaries is first effected. The present salaries, in justice to the employees, should not be curtailed in the least.