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year in a job covered by social security for the next 5 years he can, at age 65, receive in addition to his annuity, a social-security old-age benefit of $1,302 a year.

None of these situations is desirable. None of them can be corrected by merely liberalizing civil-service retirement benefits. The administration shares fully the firm conviction of the Committee on Retirement Policy for Federal Personnel that only through coordination can existing problems be solved. Under a coordinated program the social needs of employees and their families can best be met through coverage under social security.

Senator LANGER. Mr. Young, if I may interrupt, you ran up a bill providing for this coordination?

Mr. YOUNG. A bill has been been introduced by Senator Carlson and I believe is before this committee.

Senator LANGER. What is the number, Mr. Brawley?

Mr. BRAWLEY. S. 3041.

Mr. YOUNG. The need for a sound retirement plan for career employees can be met only through continued independent operation of a strong civil-service retirement system.

These objectives, and this is in response to your question, Senator, are embodied in a bill, S. 3041, introduced by Senator Carlson on January 25, 1956, which is now pending before the Senate Post Office and Civil Service Committee.

Senator LANGER. Excuse me, I just want to introduce my distinguished friend here, Senator Case from the State of New Jersey. Senator CASE. Thank you, Mr. Chairman.

Senator LANGER. Senator Case is a former head of the Ford Foundation, is used to dealing in building, and used to dealing in hundreds. I want you to know who he is.

Senator CASE. I am sorry to be late, a prior engagement, dates fixed before this meeting with the farmers of my State kept me and I know you understand how important farmers are, too.

Mr. YOUNG. These objectives are embodied in a bill, S. 3041, introduced by Senator Carlson on January 25, 1956, which is now pending before the Senate Post Office and Civil Service Committee. This bill would carry out the recommendations made by the Kaplan Committee to the Congress after 2 years of most intensive study. The recommendations were a response to the specific congressional directive that the committee submit its findings and recommendations on, and I quote:

The relationships of these retirement systems to one another, to the Federal employees' compensation system, and to such general systems as old-age and survivors' insurance.

S. 3041 proposes that social security coverage be extended to employees now subject to the Civil Service Retirement Act. A new appointee would have social security coverage from his first day of employment, and after 3 years of continuous service he would also be covered by the civil-service retirement.

An employee subject to both would pay into civil-service retirement at the rate of 32 percent of his first $4,200 of salary, and at the rate of 6 percent on salary over $4,200. He would also pay the socialsecurity tax, which is now 2 percent of the first $4,200 of salary, and under present law will be increased to 22 percent after 1959, to

3 percent after 1964, to 311⁄2 percent after 1969, and to 4 percent after 1974. This would make a combined civil-service retirement-socialsecurity deduction on the employee's first $4,200 of salary of 51⁄2 percent through 1959, then 6 percent through 1964, then 62 percent through 1969, then 7 percent through 1974, and finally 72 percent after 1974. The Government would pay the social-security employer tax at the same rates.

Since each Federal employee would be covered by social security, he would qualify for all the old age and survivor protection afforded by that system. This protection would be continuous even though he moves between Government and private employment.

The bill S. 3041 would not change any of the age and service requirements of the civil-service retirement system for the retirement of a career employee, nor would it change the annuity payable before he reaches age 65. At age 65, when he could also qualify for a socialsecurity old age benefit, his civil-service retirement annuity would be reduced, but the combined retirement and old age benefits would, on the average, be about 8 percent higher than present civil-service retirement annuity alone.

Senator LANGER. I take it, Mr. Young, if I may interrupt, you note a distinction between men and women?

Mr. YOUNG. That is correct.

Senator LANGER. Under Senator Carlson's bill?

Mr. YOUNG. That is correct. The bill contains a guaranty that the combined civil-service retirement annuity and social-security old-age benefit, for a current employee, cannot be less than civil-service retirement alone would pay under present law.

S. 3041 further provides that a person with at least 10 years of civilian service retiring for disability would receive, as a minimum annuity, the lesser of 40 percent of his average salary or the annuity he would have earned if his service had continued to age 60.

The bill, S. 3041, would retain civil-service retirement survivor benefits for widows where death occurs after at least 10 years of civilian service, and would add similar benefits for disabled dependent widowers. This would be in addition to survivor benefits payable by social security.

The civil-service retirement annuity of a survivor would be reduced at age 65, but the combined civil-service retirement and social-security benefits payable thereafter would exceed those now paid by civilservice retirement alone.

Senator LANGER. Mr. Young, as I understand it, you are not in favor of reducing the women to age 62, the age now is 65?

Mr. IRONS. The age is 65 under the Social Security Act. Under the Civil Service Retirement Act today and under the Chairman's proposal today, women could retire at age 55 with 30 years of service, or 60 years of age

Senator LANGER. You are not in favor of women being retired at age 62, then.

Mr. IRONS. We do not make any distinction.

Mr. YOUNG. None at all.

Senator LANGER. Do you not think that women ought to retire at age 62 rather than 65?

Mr. IRONS. She can if she wants to.

Mr. BRAWLEY. She can retire at the lower age under this bill, Senator.

Senator LANGER. And social security we try and reduce the age to 62. I wanted to know if Mr. Young is in favor of that.

Mr. YOUNG. I think that the provisions such as we have in the civil service retirement proposal are sound. They make no distinction; they can retire from 55 on, on some basis with the proper years of service.

Senator LANGER. So, in other words, you would not favor a bill of 62 for women?

Mr. YOUNG. I would not see any reason to make that distinction between men and women.

Senator LANGER. I just wanted to know.

Mr. YOUNG. As long as you have adequate provision for them being able to retire if they wanted to.

Senator LANGFR. I just wanted to get your opinion.

Mr. YOUNG. The children's survivor annuities now payable by civil service retirement would be eliminated because greater children's benefits would be payable by social security.

Enactment of S. 3041, instead of S. 2875, would provide Federal employees with the basic protections offered by social security, while retaining in the independently operated civil service retirement system the rewards for long service inherent in the staff retirement plan.

The Commission has already submitted to you a table of comparative costs of the present law, S. 2875, and S. 3041. This table shows that S. 2875 would increase the total annual cost of retirement by $521 million. Its enactment would saddle the Government with this additional cost but would not begin to solve the problems resulting from lack of coordination.

S. 3041, on the other hand, would resolve the issues in a most fair manner. The annual retirement cost would be immediately reduced by $56 million a year. Even after all scheduled social-security tax increases are in effect after 1974, the ultimate annual cost is $267 million less than the cost of S. 2875.

I urge upon your committee and the Congress the view that the whole problem be considered with the idea of resolving the issues in a manner most fair to the employees and without unwarranted burden upon the taxpayers. I strongly recommend that these objectives can best be attained by enactment of S. 3041.

Attached to this statement, Mr. Chairman, are three tables.

First, a table and a graph showing comparative costs of the present law, of S. 2875, and of S. 3041.

Secondly, four tables comparing employee annuity and survivor benefits under the present law, S. 2875, and S. 3041.

And thirdly, a columnar comparison of the major features of the present law, S. 2875, and S. 3041.

May I again express my appreciation for this opportunity to testify, Mr. Chairman, on retirement legislation pending before this committee. Commissioner Lawton is here with me. Commissioner Moore had intended to be here but he was detained, unfortunately, although I expected him to accompany us.

Commissioner Lawton served as my alternate on the Committee during its 2 years of study.

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I also have with me, Mr. John Macy, the Executive Director of the Civil Service Commission, Mr. Warren B. Irons who is the head of our Bureau of Departmental Operations, and Mr. Andrew Ruddock who is the Chief of the Retirement Division.

Those gentlemen are fully qualified, Mr. Chairman, to, I think, reply on the technical questions which are involved in this very complicated area.

Senator LANGER. Mr. Young, I want to express appreciation of the committee for your cooperation, for coming here today, and for their kindness in testifying so fully and for your willingness to answer questions.

Have you any questions, Senator Case?

Senator CASE. No, I do not, at the moment.

Senator LANGER. Have you, Mr. Brawley?

Mr. BRAWLEY. Yes, sir; I have quite a few questions.

The first question I would like to ask of Commissioner Lawton. Do you concur, sir, in the statements in detail made by the chairman this morning?

Mr. LAWTON. The statements as to the advantages of various bills I can concur with. The question of what is the administration's policy as to the amount of money that could or could not be made available, I obviously cannot comment on.

I have not the responsibility for fiscal policy.

The question of whether, if you can afford it or not is something that I cannot judge myself.

The benefits that were cited in this statement, the various points that were raised, I thoroughly concur in.

Mr. KERLIN. However, it should be noted for the record that all of the comparisons by Mr. Young are with the present Retirement Act. A different light would be thrown on the matter had the comparisons been made with S. 2875.

Mr. LAWTON. I think that the problem that is before you is the question of whether you will attempt, through a staff retirement plan, to accomplish a pension for the worker who has spent a career in the service and at the same time provide a social need for the survivor benefits for the short-range, short-term employee. I think that, as the Kaplan Committee pointed out, that the two are dissimilar, that there is a basic system, and that it takes care of social need that is weighted heavily in favor of the low-paid, short-term employee's need for protection, and that the combination of the two systems provides better benefits than are currently available.

Mr. BRAWLEY. Mr. Young, in your opinion, why was the Federal retirement system enacted? What was the basic principle? What was it supposed to do?

Mr. YOUNG. Well, I think I covered that in my statement where I cited the three objectives on page 3 in which I pointed out that it served as an inducement on recruiting, that it provided a method for separating elderly employees by retiring them on an annuity.

Mr. BRAWLEY. In other words, it was to provide retirement for career employees; is that right?

Mr. YOUNG. It is a staff retirement type of plan for career employees.

Mr. BRAWLEY. What does your plan, embodied in S. 3041, do for the career employee?

Mr. YOUNG. Well, it provides for this coordination with social security so that a Federal employee can get both benefits and it gives them a flexibility so that if he does move from industry to Government or back again as, of course, a great many people do, that he does not lose anything by it.

Mr. BRAWLEY. I am mainly directing my remarks now to the employee who makes the Government a career. A man who retires at the age 60 with 35 years service, what does your bill do for that employee?

Mr. YOUNG. What he gets, of course, as shown on these tables back here

Mr. BRAWLEY. Let us turn to table 1, I think that is the one you are probably referring to. Take the first category, a man age 60 with 35 years service with an average salary of $3,500 a year which we might call "Mr. Average Career Employee."

Mr. YOUNG. The average salary today is around something well over $4,000-$4,700.

Mr. BRAWLEY. All right, let us take the man at $1,500, then.

Mr. YOUNG. Well, under the present program, as you can see from column 1, he would get $2 450 under S. 2875.

Mr. BRAWLEY. Let us discuss the married employee who gets $2,280 under the present law?

Mr. YOUNG. Yes, at this same price bracket.

Mr. BRAWLEY. What will he get at age 60 under your bill after 35 years service?

Mr. YOUNG. He will get $2 280 before age 65.

Mr. BRAWLEY. Before age 65. In other words, at age 60 with 35 years service his retirement is not increased a nickel, he gets the same retirement under your plan as he now gets under present law for the first 5 years of his retirement.

Then, at age 65, what does he get?

Mr. YOUNG. He will get, after age 65, $3,298.

Mr. BRAWLEY. That is a total combined annuity from both civil service and social security?

Mr. YOUNG. That is correct.

Mr. BRAWLEY. What happens to his social-security retirement at age 65? It is decreased

Mr. YOUNG. Well, civil-service retirement is reduced and it picks up social security.

Mr. BRAWLEY. Reduced to $1,490. He then gets an additional $1,806 from social security?

Mr. YOUNG. That is correct.

Mr. BRAWLEY. Its pretty hard for a married couple to exist on $2,280 per year and most of them are engaged in outside employment. Suppose at age 65 this same man is earning $1,300 in outside employment, what happens to his annuity at that point.

Mr. YOUNG. May I ask Mr. Irons to reply to that?

Mr. IRONS. I will ask Mr. Ruddock to answer that question.

Mr. RUDDOCK. At age 65 his civil-service retirement annuity would be reduced to $1,492 because his quarters of coverage under social security as a Federal employee would have basically qualified him for the social-security old-age benefit.

Mr. BRAWLEY. Right.

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