July 1, 1948 1.

STATEMENT OF ALFRED F. BEITER, LEGISLATIVE REPRESENTATIVE OF THE NATIONAL ASSOCIATION OF RETIRED EMPLOYEES

Mr. BEITER. Mr. Chairman, I am Alfred F. Beiter, legislative representative of the National Association of Retired Civil Employees. I am accompanied by our national officers, Frank J. Wilson, president, Nalton Ralph Edmonds, vice president and Clarence L. Williams, secretary. Since you have a number of witnesses yet to be heard today, and in the interest of brevity, I should like to request permission to file a statement for the record which outlines in detail our views on S. 2875 and several amendments which we intend to propose. Then I should like to proceed with a summary of our position on the legislation and explain, very briefly, the amendments which we feel are worthy of your earnest consideration.

We are here, Mr. Chairman, to lend our support to S. 2875. We endorse it wholeheartedly.

We suggest the following amendments:

AMENDMENT NO. 1

To provide annuity increases for annuitants and survivors on the civil service retirement roll at the date of enactment of S. 2875. To accomplish this purpose we suggest the following language: (a) The annuity of any employee who, before the date of enactment of this Act, was retired and is receiving or entitled to receive an annuity from the fund, shall be increased, effective on the first day of the second month following enactment of the Act, by $100 plus $10 for each two full months elapsed between the comemncing date of the annuity and the date of enactment of this Act: Provided, That such increase in annuity shall not in any case exceed $300.

(b) The annuity of any survivor, except children covered in paragraph (c), who, on the date of enactment of this Act is receiving or is entitled to receive an annuity based on the service of a former employee, shall be increased, effective on the first day of the second month following the date of enactment of the Act, by $80.

(c) The annuity of any child who, on the date of enactment of this act, is receiving or is entitled to receive an annuity based on the service of his parent, shall be increased by $50

Mr. Chairman, some of the statements that have been passed around here "by" is substituted for the word "to." It is a great difference, and I would like to have the record show that it shall be increased "by $50" rather than "to $50"

effective on the first day of the second month following the date of enactment of this Act: Provided, That the annuity of each such child shall not at any time exceed $1,200 divided by the number of children then receiving annuity.

This amendment is similar to a provision in S. 1191, introduced last session by Chairman Johnston, except that we suggest a smaller increase in annuities than was proposed in that bill.

This amendment is in accord with the recommandation of the Kaplan committee that it is incumbent upon Congress, when liberalizing the retirement formula for future annuitants, to reexamine the benefits paid to annuitants already on the rolls with a view to adjusting their annuities as warranted.

Since S. 2875 liberalizes the formula for future annuitants but has no provision for the adjustment of annuities of persons already on the retirement rolls, we believe our amendment is appropriate.

Retires already on the rolls retired on pay rates that had not been fully adjusted to the cost of living. Hence, their annuities were out of gear with living costs from their inception. Industry and business generally have voluntarily granted cost-of-living adjustments in the pensions of their retired employees over and above the strict legal requirements of their pension system.

Some corporations pay the entire costs of their employees pension plans and some have provided escalator clauses in their pension rates so that, as the cost of living goes up, the pensions are automatically adjusted to meet it. For instance, General Motors recently granted increases of at least 28 percent in the pensions of employees already retired, and similar increases in the rates for those retiring in the future. The Ford Co. also granted incerases to employees already retired based on the pensioner's service credit at the time of retire

ment.

In our detailed statement we have submitted facts and figures to support our contention that the cost of this amendment would not reduce the retirement fund by any dangerous degree, nor would it weaken it unduly. The Kaplan committee considered the fund so sound that it proposed that the income from salary deductions be permanently decreased from 6 percent to 3% percent on salaries up to $4,200. This would result in an income cut of about 35 percent. The Kaplan committee stated that after this income cut became effective, the fund would still be able to pay the same benefits as under the present act. If the fund could continue to function with a substantial reduction in income, it stands to reason it could afford to pay the increased annuities we propose here, especially if salary deductions remain at 6 percent as contemplated by S. 2875. Furthermore, the cost of the increases in annuities for future retirees as provided in S. 2875 will be very moderate during the first few years and the full impact of the increases will not be reached for from 20 to 25 years.

Through the years actuaries and experts have claimed that potential liabilities of the fund are excessive, that it should be acutarially fully funded, and that it could not afford increases which have been proposed or authorized by Congress from time to time. But through 35 years of successful operation these dire predictions have never been realized, and the fund continues to be sound as demonstrated by successive large annual increases resulting in a balance in the retirement fund of $6,477,166,364 on December 31, 1955.

We stress the fact that the increases we propose will not nearly equalize the annuities of employees heretofore retired with the annuities of employees who will retire after January 1, 1957, but it will, to a degree give them some deserved consideration. I cite the following example to illustrate that while the employee retiring in 1957 under S. 2875 will receive fair and proper consideration, his fellow employee retiring a few months ahead of him, having the same length of service and the same average salary, will collect a much smaller annuity.

With a 5-year average salary of $5,000 and 30 years of service, the annuity of an employee who retires in December 1956, would be $2,370. The annuity of an employee having the same 5-year average salary and the same years of service, retiring in January 1957, would be $3,000

or a difference per annum of $630. Similar differences in most of the other salary ranges.

Obviously, this is an injustice. The amendment we propose would correct this inequity.

AMENDMENT NO. 2

To delete the provision in Public Law 369, 84th Congress, which established a ceiling on the increased amount of annuity a retiree may receive, and substitute in lieu a stipulation that the increase authorized by such law shall not exceed $360; and that such increase shall be effective the 1st day of the second month following enactment of this

act.

This amendment would remove the limitation on the amount of increase a retiree may receive under Public Law 369. The limitation is discriminatory

(a) Against employees who diligently served their Government an extra long period of years;

(b) Against employees who for years carried extra heavy responsibilities for the Government; and

(c) Against employees who contributed the largest amounts to the retirement fund.

It will be recalled that the Senate approved the bill which became. Public Law 369 without this limitation. The original bill introduced by the chairman of the House committee did not contain such limitation.

There is ample precedent for this amendment. The armed services do not set any limitation on the increases in annuities of persons already retired. Congress did not place a limitation on increases in annuities granted to firemen and policemen of the District of Columbia. Industry does not place a limitation on pension increases of persons heretofore retired when such increases are granted to their retirees.

The limitation in Public Law 369 was agreed to in conference just prior to adjournment in the closing hours of the last session. It is our understanding that the Senate conferees were opposed to the limitation but felt if they held out against it the whole bill might be jeopardized. We recommend this amendment as equitable and just to correct a discrimination which we believe was never intended by the Congress.

AMENDMENT NO. 3

To provide automatic increases in annuities of Federal retirees whenever the salaries of active employees are increased.

This proposal has the endorsement of the Kaplan Committee. It has solid precedent in our Government as it has been followed for years by the Army, Navy, Air Force, Coast Guard, Marines, Public Health Service, and some other Government agencies.

If the Congress determined that a cost-of-living increase is warranted for active employees in order that they may enjoy a decent standard of living, we believe that in all fairness Congress should, at the same time, recognize the plight of the aged, the sick, and the disabled civil-service retirees and grant them a similar increase. This principle has been recognized and approved by industry.

Mr. Chairman, nearly half of the employee annuitants get less than $100 a month, and more than half of the survivor annuitants get less than $50 a month. Many of them, to use the words of a famous American, lead lives of quiet desperation. The great fear of most of them is the terrific cost of medical attention, hospitalization, medicines, and home care. A considerable part of the salary deductions collected during their Government career was in 100-cent dollars, and they are now being paid in 50-cent dollars. To provide basic economic protection for these older people and for their survivors, we propose automatic increases in annuities whenever the salaries of active employees are increased.

We respectfully urge this subcommittee to act favorably and promptly on S. 2875 and the amendments we have proposed.

We have endeavored to limit this summary to a general statement in support of the bill with emphasis on basic amendments which we feel are most necessary and advisable.

Our detailed statement, submitted for the record, contains much supporting data which we have collected from competent sources and we hope it will have your attention when time permits. Thank you for this opportunity to present our views.

I would like to make a correction of my statement. It has just been called to my attention. I referred to S. 1195, it should be S. 1153. Now, Mr. Chairman, I would like to put on my other hat andMr. BRAWLEY. Do you propose to read the next statement, sir? Mr. BEITER. No, I have had that submitted for the record.

I would like to put on my other hat now and testify as president of the National Customs Service Association.

STATEMENT OF ALFRED F. BEITER, NATIONAL PRESIDENT, NATIONAL CUSTOMS SERVICE ASSOCIATION

Mr. BEITER. Mr. Chairman and members of the committee, I am Alfred F. Beiter, national president of the National Customs Service Association. We represent some 8,000 officers and employees of the United States Customs Service. Our members are career Government employees. The Customs Service is outstanding among Federal employee groups for its low turnover, because the nature of the work is so interesting that those who have once become part of this agency seldom leave it, except to retire.

Our members are enthusiastic about S. 2875, the bill now before you for consideration. It is a fact that this bill will provide the things career civil-service employees have long sought, such as: Early elective retirement, less reduction for age under 60, less or no deduction for electing a survivor, and best of all, an increased factor for the computation of annuity.

Our national committee on retirement has studied S. 2875 and, on the basis of the aforementioned features alone, highly favors its passage and urges that it be reported favorably to the Senate.

Mr. Chairman, our retirement committee has made certain comments relative to some provisions of the bill which we submit now in the form of suggestions rather than proposed amendments for your consideration. I shall touch on them briefly, with a very minimum of explanation since most of them require little elaboration.