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2875 proposes to alleviate this situation at least with respect to employees who have reached the age in life when it is difficult, if indeed not impossible, to start another career by providing an immediate annuity on a reduced basis to employees involuntarily separated who have attained the age of 50 years and have rendered 20 years of service.

Section 6 (f)

Under present law Members may retire at age 60 with 10 years of service on an annuity which is reduced for each full month the Member is under age 62. Since reduced annuities in the case of all other persons under the act are related to age 60, the reduction in the case of Members who have attained the age of 60 has been eliminated.

Section 7 (a)

SECTION 7. DISABIITY RETIREMENT

Under present law an employee who completes 5 years of civilian service or a Member with 5 years' Member service may be retired due to disability. However, under existing law an employee cannot be retired due to disability if he is eligible for immediate retirement by reason of age and length of service. Thus, a situation exists under which departments may separate employees who become disabled before reaching retirement age but cannot separate disabled employees who have attained retirement age. S. 2875 would correct this incongruity.

Section 7 (b)

In the interest of administrative simplicity, the Senate bill makes some technical changes in regard to the filing of applications for retirement due to disability.

Section 7 (d)

Under present law the annuity of a disability annuitant who recovers before reaching age 60 is discontinued. The Senate bill provides that if the earning capacity of such an annuitant is restored to a level fairly comparable to that which he had prior to retirement, his annuity shall be discontinued even though he has not attained complete recovery from a medical viewpoint.

Section 7 (e)

Under existing law if a disability annuitant recovers and is unable to obtain remployment or for any other reason does not return to service under the act, he is considered as having been separated from service as of the date of his retirement for disability and entitled only to a deferred annuity at age 62. The bill modifies this provision so that a disability annuitant who recovers or is restored to earning capacity before he attains age 60 will be considered (except for service credit) as having been involuntarily separated from the service upon termination of the disability annuity. This change would permit the granting of immediate annuity if the employee is otherwise entitled.

SECTION 8. DEFERRED RETIREMENT

Section 8 makes no changes in existing law.

Section 9 (a)

SECTION 9. COMPUTATION OF ANNUITY

Under present law the rate of annuity for employees generally is computed on the basis of 11⁄2 percent of average basic salary times the number of years of service, or on the basis of 1 percent plus $25, multiplied by the number of years of service, whichever is to the disadvantage of the employee. The 1 percent plus $25 formula is favorable to employees whose average basic salary is not in excess of $5,000, while the 11⁄2 percent formula is used where the average salary is in excess of $5,000. In either case, the total annuity of an employee, irrespective of his length of service, may not exceed 80 percent of his average basic salary.

S. 2875 raises the computation base for employees generally from 11⁄2 percent to 2 percent and retains the 1 percent plus $25 formula in favor of the few very low-paid employees who might be helped thereby. The ceiling on annuities is reduced from a maximum of 80 percent to 75 percent, in order to establish a uniform ceiling throughout the bill. The bill makes no change in the computation formula for investigatory employees whose annuities are presently computed on the basis of 2 percent. It does, however, remove the current restriction limiting their creditable service to 30 years and brings them under the 75 percent maximum applicable to other employees.

The present law contains no minimum for a total disability annuity. S. 2875 provides that the annuity of any employee retired due to total disability after meeting the 5-year eligibility requirement be at least (1) 40 percent of his average salary, or (2) the amount obtained after increasing his total service by the period elapsing between the date of his separation due to the disability and the date he attains the age of 70 years, whichever is the lesser. However, it is not intended that the provision shall serve to increase the benefits of the annuitant's survivors. Section 9 (b) extends these minimum disability benefits to congressional employees and section 9 (c) extends them to Members.

Section 9 (b)

The bill makes no changes in the annuity computation formula for congressional employees, except that the 11⁄2 percent figure applicable to noncongressional service would be changed to percent in line with the change discussed under subsection (a) applicable to employees generally, and the present maximum of 80 percent of average salary is changed to 75 percent as in the case of annuities generally.

Section 9 (d)

Under existing law an employee retiring prior to attainment of age 60 is required to take a reduction of one-fourth of 1 percent in his earned annuity for each full month he is under age 60 at the date of his separation.

S. 2875 would lower the reduction formula to one-twelfth of 1 percent per month for each month up to 30, one-eighth of 1 percent for each month in excess of 30 and up to 60, one-sixth of 1 percent per month for each month in excess of 60 the employee is under the age of 60 at the time of his retirement.

Section 9 (c)

Under present law if an individual has failed to make deposit (with interest covering service when no deductions were withheld, the annuity otherwise due is reduced by one-tenth the amount of the required deposit unless he elects to eliminate the service from credit. The bill removes the option to eliminate nondeductible service.

Section 9 (f)

Under existing law an employee retiring on an immediate annuity with at least 15 years of service may elect a joint and survivorship annuity in favor of the surviving wife or husband. The bill changes the service prerequisite to a joint and survivorship election by an employee from 15 years to 5.

At the present time only an employee retiring on immediate annuity can elect a joint and survivorship annuity. The bill extends this right to employees receiving deferred annuities. It was felt that since employees entitled to deferred annuities contributed to the retirement fund at the same rate as other annuitants, and since they receive annuities computed in precisely the same manner as other annuitants, they should be entitled to provide the same protection to their survivors as other annuitants.

Under present law when an annuitant makes a joint and survivorship election he is required to take a reduction of 5 percent on the first $1,500 of his annuity and 10 percent on all in excess thereof. S. 2875 removes the reduction on the first $4,000 of the annuity but leaves the 10 percent penalty on any amount in excess thereof.

Section 9 (g)

Under existing law the election of a joint and survivorship annuity by an unmarried annuitant carries with it a reduction of 10 percent plus 5 percent for each full 5 years the survivor is younger than the retiring employee except that the reduction for the 5-year span between 25 and 30 years is 10 percent. The bill removes this inequity by making the reduction for a joint and survivorship annuity 10 percent plus 5 percent for each full 5 years the survivor is younger than the retiring employee with a maximum reduction of 40 percent.

Section 10 (a) (1)

SECTION 10. SURVIVOR ANNUITIES

Under existing law, upon the death of any annuitant who elected the joint and survivorship annuity the widow or widower designated at the time of the annuitant's retirement is entitled to an annuity equal to one-half of the annuitant's earned annuity beginnging on the 1st day of the month following the survivor's attainment of age 50, or on the 1st day of the month in which the annuitant's death occurs if the survivor is then 50 years of age or over, and is payable until the survivor remarries or dies.

Section 10 (a) (1) provides that when an annuitant dies, the surviving widow or widower shall be paid an automatic immediate annuity equal to 50 percent of so much of the annuitant's earned annuity as does not exceed $4,000.

Also, under existing law, upon the death of any male annuitant who is survived by a widow and children, an automatic immedaite annuity is paid to the widowregardless of whether or not the annuitant made such an election. This automatic annuity-to widows with dependent children-terminates when the widow reaches age 50, remarries or dies, whichever occurs first. If the annuity is terminated by virtue of the widow having reached age 50, she receives no further benefits unless the annuitant elected a joint and survivorship annuity at the time of his retirement.

Extension of a limited automatic annuity to all surviving widows and widowers on an equal basis is not only an economic necessity in most instances, but it is justified by the fact that all annuitants contributed a like amount to the retirement fund. Elimination of the age restriction in regard to surviving widows is based on the grounds that the number of surviving widows who are under the age of 50 and have no dependent children and who are, therefore, not entitled to an immediate annuity under existing law is relatively small and in most such cases the deferment of an annuity until the widow reaches age 50 works an individual hardship all out of proportion to the small additional cost to the retirement fund of providing an immediate annuity. Extension of the same benefit to surviving widowers is on the ground that to do otherwise would create an inequity.

Section 10 (a) (2)

Under present law any employee eligible for an immediate annuity may at the time of his or her retirement elect a joint and survivorship annuity under which the surviving spouse is entitled to an annuity equal to one-half of the annuitant's earned annuity. In view of the fact that section 10 (a) (1) allows an automatic joint and survivorship annuity equal to 50 percent of so much of the annuitant's earned annuity as does not exceed $4,000, the election provided in section 10 (a) (2) applies only to that portion of an annuitant's annuity in excess of $4,000. When such an election is made, the annuitant is required to take an reduction of 10 percent on the amount of his or her annuity as may be in excess of $4,000. As in the case of the automatic survivorship annuity provided under section 10 (a) (1), any elected annuity under section 10 (a) (2) becomes payable immediately upon the death of the annuitant without regard to the age of the surviving spouse.

Section 10 (a) (3)

The bill continues in effect the provision that both the automatic annuity and any elected annuity shall terminate upon the survivor's death or remarriage. Section 10 (c)

Under existing law, an automatic annuity, equal to 50 percent of the employee's or Member's earned annuity, is paid to the widow of an employee, or to the widow or widower of a Member, who dies after 5 years of civilian service.

The bill continues without change the automatic annuity to widows of both employees and Members and extends similar benefits to widowers of employees but requires that in either the case of an employee or Member the surviving widower must be a "dependent widower" to be eligible for such annuity. Annuities to spouses under this provision terminate upon death or remarriage of the widow or widower, or upon the widower's becoming capable of self-support.

Section 10 (d)

Automatic annuities are also paid under existing law to surviving dependent children upon death of (1) an employee or Member with 5 or more years of service, (2) an employee annuitant retired under any provision except a deferred annuity, or (3) a Member retired for any reason. Except in the case of a female Member, no automatic annuity is paid to children of a female employee if a widower survives. If both an entitled spouse and child or children survive, each child is entitled to an annuity which is (1) 25 percent of the annuitant's regular earned annuity, (2) $900 divided by the number of surviving children,. or (3) $360, whichever is least. If no entitled spouse survives, the annuity for each child is equal to (1) 50 percent of the annuitant's earned annuity, (2) $1,200 divided by the number of surviving children, or (3) $480, whichever is least. A child's annuity begins on the 1st day of the month after the employee or Member (or annuitant) dies and terminates upon the child's death, marriage, or attainment of age 18 (unless the child is incapable of self-support, in which event his becoming capable of self-support terminates the benefit). Upon the death of the widow or entitled widower, or the termination of annuity to a child, the annuities of the remaining child (or children) are recomputed.

The bill provides, in addition to benefits under existing law, for the payment of children's annuities where there is a surviving widower, provided such widower was dependent upon the employee or annuitant for his support.

S. 2875 raises the ceiling on annuities to surviving children in cases where there is a surviving widow or dependent widower from $900 divided by the number of such children or $360, whichever is the lesser, to $1,200 divided by the number of such children or $480, whichever is the lesser. Where there is not a surviving widow or dependent widower, the ceiling on annuities to surviving children is raised from $1,200 divided by the number of such children or $480, whichever is the lesser, to $1,600 divided by the number of such children or $640, whichever is the lesser.

Section 11 (a)

SECTION 11. LUMP-SUM BENEFITS

Under present law, an employee who at the time of separation or transfer to a position not subject to the act has less than 5 years of service is entitled only to a lump-sum refund of his retirement deductions plus interest if the period covered by the refund exceeds 1 year. If such employee has 5 but less than 20 years of service and is not eligible for immediate retirement by reason of being at least age 62 and with at least 15 years' service, he may elect to withdraw his deductions with interest or retain entitlement to a deferred annuity payable upon reaching age 62.

As previously pointed out, section 1 (e) redefines the term "lump-sum" to eliminate the payment of interest on deposits after December 31, 1956. Also, section 6 (d) provides for the payment of an immediate annuity to employees involuntarily separated not by removal, for cause who have attained the age of 50 and who have 20 years' service. Accordingly, section 11 (a) merely provides for a refund of deposits (without interest) to employees with less than 5 years' service and the right of election as between a refund of deposits (without interest) or entitlement to a deferred annuity at age 62 to employees with 5 but less than 20 years of service.

The remaining subsections of section 11 make no change in existing law.

Section 12

SECTION 12. ADDITIONAL ANNUITIES

Section 12 makes no change in existing law.

Section 13 (a)

SECTION 13. REEMPLOYMENT OF ANNUITIES

Present law provides that no annuitant may be reappointed to any Government position after attaining age 60 unless the appointing authority determines that he has special qualifications.

Section 13 (a) provides that annuitants may be reemployed in any position for which they may be qualified and serve at the will of the appointing officer. Section 13 (b)

The bill provides that if an annuitant is reemployed in an appointive or elective position subject to the Retirement Act, annuity payments shall be discontinued during such employment and deductions for the retirement fund withheld from his salary. It provides further that if the former annuitant performs actual full-time service for a period of at least 1 year, his right to future annuities shall be redetermined. If the annuitant does not perform actual full-time service for at least a year his annuity payments are resumed without change and the deductions made from his salary for the retirement fund during such period are refunded to him.

Section 13 (c)

Under present law if a retired Member is reemployed other than as a Member, his annuity is continued in addition to his salary. However, if he resumes service as a Member, his annuity is suspended. Upon subsequent retirement, his annuity is resumed in the same amount or, if he contributed to the retirement fund during the additional service, the additional service is considered in recomputing his annuity rights.

The bill suspends a former Member's annuity during and period of reemployment in a position subject to the act.

SECTION 14. PAYMENT OF BENEFITS

The bill makes no change in this section which relates to the mechanics of paying benefits under the act.

Section 15 (b)

SECTION 15. EXEMPTION FROM LEGAL PROCESSES

Under present law the Commission in its discretion may waive recovery of any overpayment of annuity when the recipient acted in good faith.

The bill retains the provision and extends the right of the Commission to waive recovery from a recipient to lump-sum payments. Recovery of lump sums can be just as inequitable as recovery of annuity payments.

SECTION 16. ADMINISTRATION

The bill makes no change in the general administrative provisions.

SECTION 17. SHORT TITLE

This section provides that the act may be cited as the "Civil Service Retirement Act."

Section 2 of S. 2875 abolishes the special retirement system for civilian teachers at the Naval Academy and covers them under the Civil Service Retirement Act. The teachers involved have long sought this change and there is no apparent good reason why it should not be made.

Section 3 of S. 2875 carries out the purpose of S. 59, passed by the Senate July 19, 1955, and now pending before the House Post Office and Civil Service Committee.

The effect of section 3 is to make effective as of April 1, 1948, certain benefits effective September 30, 1949. The Civil Service Retirement Act, as amended effective April 1, 1948, authorizes a husband, at the time of his retirement. to elect a survivorship annuity payable to his widow equal to 50 percent of the annuity otherwise payable to him. To obtain the benefit of this provision, the husband was required to take a reduction of 10 percent in the annuity payable to him. The act of September 30, 1949, reduced the reduction on the first $1,500 of the husband's annuity from 10 to 5 percent for those who retired after such date. Accordingly, husbands who retired between April 1, 1948, and September 30, 1949, and who elected a survivorship annuity for their widows, suffered a reduction of $150 on the first $1,500 of their annuities, whereas, husbands who retired subsequent to September 30, 1949, had to take a reduction of only $75 on the first $1,500 of their annuities to obtain the same benefit. Section 3 would correct this inequity in the future but not retroactively by requiring the same reduction in the annuity of male employees who retired during the period from April 1, 1948, to September 30, 1949, and who elected survivship benefits as are made in the case of male employees who retired subsequent to September 30, 1949, and who similarly elected survivorship benefits.

Section 4 of S. 2875 provides that the rights of persons separated, prior to the effective date of this act shall continue in the same manner and to the same extent as if the act had not been enacted.

Section 5 of S. 2875 establishes January 1, 1957, as the effective date of the act. Mr. BRAWLEY. Mr. Chairman, for the record I would like to read a telegram sent to people who wished to be heard at the hearing this morning.

First, one to Hon. Phillip Young, Chairman of the Civil Service Commission:

You are cordially invited to testify on S. 2875, a bill to revise the Civil Service Retirement Act at public hearings starting at 10 a. m., February 1, 2, and 3 in room 135, Senate Office Building. Please advise committee staff, code 190, exten

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