Page 3, section 1 (e): We think the average salary period could very well be based on a 3-year period rather than a 5-year period, with very satisfactory results and with very little increase in cost. This would afford some slight benefit to those who fulfill the duties of a higher position satisfactorily for a limited period. Three years should be conclusive proof that the employee is qualified in the performance of his work. In the case of involuntary retirement or retirement because of disability, the 3-year period would provide some benefit.

Page 5, section 1 (1): Discontinuance of the interest after December 31, 1956, on the sum now in the fund and on the future payments of over 212 million employees at the rate of 6 percent of their basic salaries is a very substantial gain to the Government and a loss to the employees. It is true that objections may be raised to this bill because of the additional cost involved and the savings resulting from the elimination of the interest would cover a substantial part of the increased cost. If salary deductions are to be increased from 6 to 7 percent, as has been proposed by some legislators, the increased cost may be fully met. We would accept either or both the loss of interest and the increased payment if the benefits as stated in the bill were approved.

Page 15, section 6 (c): Present law permits FBI agents, customs agents, narcotics agents, port patrol officers, and so forth, to retire on full annuity after 20 years of service at the age of 50. S. 2875 would include employees in the field service of the Bureau of Prisons, Federal Prison Industries, Inc., and employees of the Public Health Service assigned to such field service, in this category of employees whose duties are primarily the investigation, apprehension, or detention of persons suspected or convicted of offenses against the criminal laws of the United States. We suggest that the committee consider including customs inspectors in this classification. Inspectors are charged with the duty of preventing smuggling and in the course of their duty frequently apprehend known or suspected criminals, narcotics peddlers and persons under the influence of narcotics. We have collected a great deal of data which we would like to submit to the committee staff for study on this subject when the time permits.

And if I may deviate at this point from my prepared statement, I should like to call the committee's attention to the weapons I have here. These are homemade knives, blackjacks, and yoking chains seized by customs inspectors from persons crossing the Mexican border.

Mr. BRAWLEY. Are you submitting those for the record, sir? Mr. BEITER. I cannot very well submit them for the record, but I do want the committee to see the types of weapons which customs inspectors run into during the course of their inspection duties. It will be noted there are switch-blade knives and various types of sticks, used as clubs. Persons entering the country with this type of weapon are apt to be narcotic peddlers, smugglers, and certainly not up to any good.

This will give you some idea of the hazards which customs inspectors encounter. We plan to present some of the material we have collected on this subject to the staff so that the committee will have all of the details en which we base our request for an amendment to this section of the bill.

Page 16, section 6 (d): It is suggested that the committee give consideration to changing this section to provide an immediate annuity to employees involuntarily separated who have completed 20 years of service. An employee who has served between 20 and 25 years of service and has not reached age 50 would not be entitled to an annuity until age 62. A separated employee of middle age, after having spent 20 to 25 years in Government service would have gained little skill of value to general outside industry. Because industry is hesitant about hiring middle-aged employees, especially if they lack the required skill, the chances of reemployment in a comparable position are small.

At this time of life when an employee has assumed heavy family obligations with the reasonable expectation that his permanent status could be relied upon, he would be fortunate if he could find work even in a poorly paid field, menial in character. Therefore, we entreat you to give special consideration to employees who have lost their positions through no fault of their own and who must start a new career under such difficult conditions.

Therefore, we believe that this part of the bill should read:

Any employee who completes twenty years of service shall, upon involuntary separation from the service, not by removal for cause on charges of misconduct or delinquency, be paid a reduced annuity computed as provided in section 9.

Page 21, section 9 (a): The ceiling on annuities is reduced from a maximum of 80 percent to 75 percent, but we believe the maximum should remain at 80 percent because career employees have long service and can easily be affected by a 75-percent maximum. The reduction seems to have been made only for the convenience of uniformity.

Page 24, section 9 (f): We would suggest the following addition to this section:

If the designated wife or husband should predecease the employee or member making such election, the reduced annuity shall be recomputed as if no election had been made.

It seems unjust to have to continue to pay for the coverage of a spouse who no longer exists, inasmuch as the Government will never have to pay an annuity to a survivor. It is only proper that the full annuity should be restored to the annuitant.

Page 26, section 19 (a) (3): The new retirement bills, including Senator Carlson's bill, would allow a surviving widow or widower to remarry after age 55.

Forfeiture of the annuity presents an obstacle to contemplated remarriage for lonesome people seeking companionship, because of the gamble that the marriage may or may not last, but the annuity is lost. Page 26, section 10 (c): We would suggest that a surviving widow or widower should be allowed to remarry after age 55.

Page 36, section 15 (a): This section provides that annuities shall not be assignable, either in law or equity, or be subject to execution, levy, attachment, garnishment, or other legal process. We suggest the committee consider adding the word "taxation." Federal employees pay income taxes on all their yearly earnings including the amount deducted from their salaries for the retirement fund. The annuitants must maintain a lower standard of living aggravated by the fact that Federal income-tax payments are deducted from their pensions bought with their previously taxed earnings. Those under the Railroad Retirement Act or receiving social security are not taxed in this respect.

Page 40, section 4: Continuation of prior rights should include the statement that the annuity shall be not less than would have been received if this act had not been enacted.

Gentlemen, we believe, without detracting one iota from any of the laws that have come out of this committee in the past, if the purpose of this bill can be substantially achieved, this legislation will deserve to be ranked as one of the outstanding legislative accomplishments of the past two decades insofar as Federal employees and their dependents are concerned.

I thank you.

Mr. BRAWLEY. Thank you.

I think we have one out-of-towner, Mr. Edward McCabe. Mr. McCabe was asked to come before the committee today and made a trip from Nashville, Tenn.

Mr. MCCABE. Mr. Chairman, I have filed my brief with your committee and I do not think there is much I can add that has not already been said here except to say that we are unequivocally in favor of S. 2875 and want to go on record as favoring it. There is one addition that we would like to have you give your consideration to and that is where an employee has accrued more than 1,000 hours of sick leave, we feel that some reward should be given to these employees who have accrued this sick leave and to this end we propose that you include in your bill some provision which would allow the cash value of the sick leave to be added as an additional contribution to the fund.

For example, if an employee had 1,000 hours of sick leave valued at $2 an hour, his annuity would be increased by the amount that the $2,000 would buy.

We put that in for consideration in your deliberations. I want to thank you for the opportunity for presenting this brief and urge the passage of same.

STATEMENT OF EDWARD MCCABE, CHAIRMAN OF COMMITTEE ON LEGISLATION, NATIONAL ASSOCIATION OF INTERNAL REVENUE EMPLOYEES

Mr. MCCABE. Mr. Chairman, I am Edward W. McCabe, chairman of the committee on legislation and past president of the National Association of Internal Revenue Employees. I am here on annual leave from my position in the Office of the District Director of Internal Revenue, Nashville, Tenn.

First, I want to commend Senator Olin Johnston, of South Carolina, for his untiring efforts in behalf of Federal employees and for the introduction of S. 2875, which will revise the Civil Service Retirement Act. I also want to commend the members of his committee for the help they are now giving and have been giving to Federal employees throughout the years.

We of the National Association of Internal Revenue Employees wholeheartedly support Mr. Johnston's bill to revise the Civil Service Retirement Act and implore the members of this subcommittee to favorably report the bill to the entire committee.

We generally favor all of the bill; however, we would like to recommend certain additions thereto:

1. We favor the provision that would allow optional retirement after 30 years of service without reduction in his annuity. Many

75735-56-8

municipalities and several State governments now permit this provision. The Johnston bill allows retirement after 30 years of service regardless of age; however, the annuity is discounted if the employee is under age 60. It has been argued that this feature would cost the fund considerable moneys; however, I doubt that the additional costs would be as high as anticipated because of the fact that many of the employees would not want to retire after 30 years of service.

Second, most of the employees would be around 55 years of age or older, when they attain 30 years of service.

2. The bill being considered provides that any employee who attains age 62 and completes 5 years of service shall, upon separation, be paid an annuity as provided in the act. An exception is provided where any Member of Congress has 10 years of service and reaches age 60.

We feel that this exception should be extended to the Federal employees as well; that is, when an employee reaches age 60 with 10 years of service he should be allowed to retire if he so desires.

3. The bill provides that at the time of retirement the retiree may elect to take a reduced annuity and designated in writing his wife-or her husband-to receive a reduced annuity after the retired individual's death. We would like to advocate that this be made mandatory without a reduction of 10 percent of the amount in excess over $4,000. We feel that just as under the Social Security and Railroad Retirement Acts, survivors' benefits should be provided automatically without election. So many individuals fail to make the election and innocent ones suffer as a result of this omission.

4. Your bill provides that if an employee dies after completing at least 5 years of civil service, the widow or dependent widower of such employee shall be paid an annuity. We believe that where the decedent has dependent children under age 18 that an immediate annuity should be allowed the survivors if he has at least 18 months of creditable civil service. This feature is contained in the Social Security Act.

Further, the computation for the survivors should be set at a minimum amount of not less than $50 per month.

5. We have many Federal employees who have accrued more than 1,000 hours of sick leave. We feel that some reward should be given to these employees who have accrued this sick leave. To this end we propose that you include in your bill some provision which would allow the cash value of the sick leave to be added as an additional contribution to the act. For example, if an employee had 1,000 hours of sick leave at $2 an hour his annuity would be increased by the amount that $2,000 would purchase an additional annuity. However, the value of the insurance would not be considered cash in case of his death.

I wish to thank you for the opportunity of testifying on behalf of S. 2875.

Mr. BRAWLEY. Thank you very much, Mr. McCabe.

Are there any questions from either Mr. Kerlin or Mr. Johnson? Mr. KERLIN. I have none.

Mr. BRAWLEY. Thank you very much.

Are there any other witnesses who desire at this time to either present their statements or read their statements for the record.

Mr. WALTERS. Mr. Brawley, Russ Stephens represents the American Federation of Technical Engineers in Miami but his assistant is here. I am sure he would like to present Russ' statement, with your permission.

Mr. COUGHLIN. I will not take long, it is relatively short.

STATEMENT OF RUSSELL M. STEPHENS, PRESIDENT, AMERICAN FEDERATION OF TECHNICAL ENGINEERS, AFFILIATED WITH THE AMERICAN FEDERATION OF LABOR AND CONGRESS OF INDUSTRIAL ORGANIZATIONS, PRESENTED BY EDWARD COUGHLIN

Mr. COUGHLIN. Mr. Chairman, I am Edward Coughlin, assistant to President Russell M. Stephens, of the American Federation of Technical Engineers, affiliated with the American Federation of Labor and Congress of Industrial Organizations. I am grateful for the

opportunity to appear before this committee to state our views in

In behalf of the employees of the Federal Government that we have the privilege to represent, I wish first to express our deep appreciation to Senator Olin D. Johnston for his recognition of the necessity of improving and strengthening the Civil Service Retirement Act and for the very excellent recommendations which are presented to the Congress in S. 2875. We very heartily endorse the intent of the bill as presented.

While a civil-service retirement law has been on the statute books for a great number of years now, it has been necessary to periodically reexamine that law and make necessary changes to prevent its obsoletion by changing conditions, unseen economic pressures and radical upheaval in our national age pattern. It is time now to take another stride forward.

Many thousands of words of testimony have been spread on the record during previous hearings on retirement legislation, but it seems to me that the most eloquent testimony never got on the record. This testimony was written on the anxious faces of the old folks who filled the hearing chamber and jammed the corridor outside. Their hands were cupped attentively behind their ears so they did not miss any word of testimony deciding their financial fates.

These old folks who came to listen were a cross section of the retired Federal employees, their widows and dependents who were paying inflationary prices with retirement checks computed on a noninflationary basis.

Is it asking too much to assure our retirees that the percentage of income deducted from their salary earnings will buy the necessities of life in their later years commensurate with their contributions?

As conditions governing retirement payment to workers in private industry change as a result of collective bargaining efforts, so in fairness should conditions governing retirement for Federal workers keep pace with the times.

Mr. Chairman, although we endorse the intent of S. 2875 we do, however, have several recommendations for amendments to the bill that I would like to submit for the consideration of the committee.

It is our recommendation that the definition of the term "basic salary" as described in section 1 (d) of the bill be redefined in order to include in the computation of annuity the total gross salary earned as an employee of the Federal Government. This would include for