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Senator LANGER. I wonder if the staff would prepare an amendment along that line for both bills.

Mr. BRAWLEY. We will try, sir.

Mr. LAWTON. If you consider retirement as a deferred compensation you approach it from that point of view.

Mr. BRAWLEY. Mr. Lawton, would you be in favor of the Johnston bill if ways and means were found to finance it? That is bill S. 2875. Mr. LAWTON. It depends on what the ways and means are. I do not know?

Mr. BRAWLEY. Would you, Mr. Young?

Mr. YOUNG. Well, I think you have to realize that one of the basic distinctions between S. 2875 and S. 3041 is that S. 2875 is basically a liberalization bill for retirement benefits; S. 3041 is not regarded really as its primary objective is not liberalization of benefits, its objective is to get it on a sound principle of coordination between civilservice retirement and social security.

Now, it would be my feeling that the provisions of S. 3041 should be adopted and this coordination worked out so the foundations are firmly established here and then the question of liberalization of benefits should be taken up in terms of the overall budgetary picture of the Government as to what you can do with it.

Mr. BRAWLEY. Would the administration then submit to Congress a plan to liberalize the new retirement plan?

Mr. YOUNG. I say that is a budgetary consideration which would have to be taken into account by the President and the Bureau of the Budget. Certainly there are all kinds of things which all of us can think of which we would like to see eventually in the retirement system and it is always a question of what you can afford in Government just the same as there is in your own life.

Mr. BRAWLEY. I wish I could run the budget of my household the same way you are going to finance your plan. It would be mighty nice to defer my bills 30 years.

Back sometime before you came in, Senator Case, Senator Langer asked for a list of the advisers and employees of the Kaplan committee. We have that now and we would like to have it inserted in the record at the point of this questioning.

Senator LANGER. I want to have that read. I want you to read out their names. I want to know what their businesses are, how many of them were connected with retirement funds and what their experience has been. I want to know about these gentlemen who were on the committee.

Mr. BRAWLEY. The report submitted to Congress shows that Kaplan was chairman.

Senator LANGER. Who is he? What does he do?

Mr. BRAWLEY. That, I am not sure. I think he was at one time director of the National Civil Service League in New York and is now sort of a free-lance adviser.

Mr. LAWTON. He was also pension commissioner in New York State, and he is a consultant on retirement pension systems.

Senator LANGER. Who is the next gentleman?

Mr. BRAWLEY. The next five are the Secretary of the Treasury, George Humphrey; Charles Wilson, Secretary of Defense: William Martin, Chairman of the Board of Governors of the Federal ReServe System; Rowland Hughes

Senator LANGER. Mr. Brawley, I want to know who the staff was, figure this thing out. Mr. Wilson and Mr. Humphrey did not devote any time to this, they are busy with other things. I want to know the gentlemen and the ladies who figured this thing out.

Mr. YOUNG. Could I just comment on the list of names there to point out again the fact that this committee was set up by President Truman and at that time the list of names was different-the persons who were members of the committee.

Senator LANGER. You know what I want.

Mr. BRAWLEY. Mr. C. Victor Johnson is listed as Executive Director. I know nothing about Mr. Johnson, does anyone else?

Mr. IRONS. Do you know, Fred? I am sure it is Socony Vacuum that he was connected with and director of their benefit plans.

Mr. YOUNG. Why is it not the thing to do, Mr. Chairman, for us to submit a biographical sketch of these people for the record? Senator LANGER. I want to get it, I am not interested in Mr. Humphrey's background.

Mr. YOUNG. I am referring to the staff people.

Senator LANGER. Or Mr. Wilson. I want to get the names of the fellows who did the actual work.

Senator CASE. I wonder if maybe Mr. Kaplan might not tell us that himself; if he could not come some time.

Mr. YOUNG. Are you asking Mr. Kaplan to appear before this committee?

Senator LANGER. I would like to have him here at the next meeting.

Mr. BRAWLEY. We have not requested his presence, sir.

Senator LANGER. I want to know what experience these people had who drew up this bill.

Mr. BRAWLEY. We will try to get that information from Mr. Kaplan for the next meeting.

Senator CASE. I think it would be best if he could come and talk to us not only about that but his theory and development of the plan and other questions.

Senator LANGER. Could we have him here today? What do you have on tomorrow?

Mr. BRAWLEY. The employee associations are scheduled to testify on the bill tomorrow.

Senator LANGER. Could you invite Mr. Kaplan to be here tomorrow?

Mr. BRAWLEY. Could we do it on Friday because the appearances are not as heavy on Friday as they are tomorrow.

Senator LANGER. Yes, I would like to have you have him here. We would like to meet the gentlemen.

Mr. BRAWLEY. We will arrange it for Friday. We have a full schedule for tomorrow and we have a light schedule Friday. Senator LANGER. Where does he live?

Mr. BRAWLEY. In Albany, N. Y.

Senator LANGER. Let us have him here Friday morning i it is agreeable. Does that suit you?

can we not meet at 9 o'clock?

This 11 o'clock is too late, why

Mr. BRAWLEY. Will you be here, sir?

Senator LANGER. Yes, sir; I will be here at 9 o'clock in the morning. Here we meet at 11 o'clock

Mr. BRAWLEY. It was 10 o'clock, sir.

Senator LANGER. It does not give us time enough to go into these matters. I do not see Mr. Philip Young very often and I like to keep him around for a few hours when I see him, I like to keep him around because he is a delightful gentleman.

Senator CASE. I normally would be glad to accomodate myself but in view of the 10 o'clock date, I had made other engagements before this so I could not get here before 10.

Senator LANGER. So, make it 10 o'clock Friday, but we meet tomorrow morning at 10 o'clock?

Thank you very much for coming, Mr. Young, and we appreciated your presentation.

Mr. YOUNG. Thank you, sir, it was a pleasure.

Mr. BRAWLEY Mr. Charles I. Schottland, Commissioner of the Social Security Administration.

Senator LANGER. You may proceed, Mr. Schottland.

Mr. BRAWLEY. Mr. Schottland is the Commissioner of the Social Security Administration.

Senator LANGER. You may proceed.

STATEMENT OF CHARLES I. SCHOTTLAND, COMMISSIONER OF SOCIAL SECURITY, UNITED STATES DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE

Mr. SCHOTTLAND. Mr. Chairman and members of the committee, I am Charles I. Schottland, Commissioner of Social Security of the Department of Health, Education, and Welfare.

The Department appreciates this opportunity to present its views on proposed legislation affecting the retirement and survivor protection of civilian employees of the Federal Government. Secretary Folsom has asked me to express his regrets at not being able to be here to present his views personally.

The Department of Health, Education, and Welfare believes that the importance of the civil-service retirement system to Federal employees and to good government cannot be overemphasized. This committee is to be congratulated for its part in the development of a strong staff retirement system for Federal employees-a system that was established in 1920, well in advance of the recognition of the necessity for pension plans by many private employers.

The civil-service retirement system is a significant factor in attracting able persons to Federal employment, in encouraging competent, experienced employees to continue in the Federal civil service, in making orderly retirement possible for them and in giving dignity to their years of retirement.

As the employer of more than 32,000 Federal employees covered by the civil-service retirement system, this Department is constantly aware of the benefits provided by the civil-service retirement system.

We consider the maintenance and continued improvement of a strong, independent civil-service retirement system essential to the welfare of Federal employees and to the efficient conduct of the business of Government.

Under the Social Security Act, the Department of Health, Education, and Welfare is charged with the responsibility and—

duty of studying and making recommendations as to the most effective methods of providing economic security through social insurance *** and as to legislation and administrative policy concerning old age pensions * * * and related subjects.

As a result of this continuing study and the congressional consideration of old-age and survivors insurance over the years, practically all areas of gainful employment except employment by the United States Government are covered by old-age and survivors insurance.

It seems to me that it is not desirable to have one policy for workers and employers in private industry and another for the Government and its employees. As the official of one large private employer stated:

It was one of the anomalies of the act that Congress did not treat its own employees on a basis comparable with what it expected of other employees. *** Had the Congress given this treatment to its civilian employees, problems of transferring between private and Federal employment would have been greatly diminished.

The Congress has said to private employers and their workers: You can have any kind of retirement system you desire. But every employee must have the basic protection of old-age and survivors insurance.

Not so in Federal employment. The benefits of our present civilservice retirement system, as well as the benefits provided by S. 2875, accrue only to that minority of Federal employees who stay in Federal service for an extended period.

Most of us are in agreement, I believe, that benefits under civilservice retirement should be liberalized. At the same time, attention should be given to providing all Federal employees protection that will follow them after they leave the Federal service. This is particularly important for the one-half million persons who enter and leave Federal service annually.

In 1947 the Senate Committee on Finance appointed an advisory council on social security consisting of persons from management, labor, and other interested groups. One of the major recommendations of the council was that

the Congress should direct the Social Security Administration and the agencies administering the various Federal retirement programs to develop a permanent plan for extending old-age and survivors' insurance to all Federal civilian ployees

This recommendation was unanimous.

Mr. Chairman, in our study of the social-security program and in our day-to-day administration of this program, we are continually impressed with the vital role that independent staff pension and retirement plans play in providing social security in the broad sense. Many employers in private industry of course have, like the Federal Government, developed staff retirement plans for their employees. These employers strive to set up good private pension plans for exactly the same reasons that the Federal Government is interested in maintaining a strong civil-service retirement system-that is, to attract and retain competent employees. Since virtually all jobs in private industry are covered by OASI, private employers can assure a high level of retirement protection for their career employees by building their retirement plans on top of a foundation provided by old-age and survivors insurance.

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This effective relationship that has been developed between old-age and survivors' insurance and the private staff retirement plans in industry has completely dispelled fears that were expressed when the old-age and survivors' insurance program was established. At that time some people claimed that old-age and survivors insurance would undermine private pension plans. But experience has proved that social security is a great stimulus to the development of staff retirement plans.

Old-age and survivors insurance is now recognized as a strong base upon which various forms of additional protection can be built. The benefits it provides are not high enough to preclude the need for supplementation. The moderate level of basic protection under oldage and survivors insurance lends itself to the development of supplementary protection designed to provide a sufficient total of retirement or survivor income.

The experience of over 20 years shows a remarkable growth and improvement in private pension plans. In 1935 there were about 1,000 private pension plans covering about 2 million workers. By 1955 the number of private plans was approaching 20,000 and they covered about 13 million workers.

These 13 million employees, of course, are covered by old-age and survivors insurance as well as by private pension plans. They thus have continuous retirement and survivor protection from old-age and survivors insurance when they, like millions of other American workers, shift from job to job and from one kind of employment to another. In addition, those who make a career or work for a long period with one employer get supplementary benefits under the employer's private pension plan. The private pension plus old-age and survivors insurance makes possible a high level of benefits for employees with one employer in private industry. For example, an employee of Johnson & Johnson who has completed 30 years of service and who has average earnings of $4,200 a year, or $350 a month, would get combined benefits of $216 a month made up of $108 from the private pension plan and $108 from the old-age and survivors insurance.

In similar situations Armstrong Cork provides a total benefit amounting to $239 per month-including $108 old-age survivors insurance and Eastman Kodak $243, again including an old-age and survivors insurance benefit of $108.

Like these staff retirement plans in industry, the civil-service retirement system is intended to provide mainly for career workers. This concern for the long-service employee is in keeping with the objectives of a staff-retirement plan, but, unlike the arrangement in private industry, in Federal employment there is no base of old-age and survivors insurance coverage to give continuity of protection to the workers who move into and out of Federal employment. This poses a major problem when the overall retirement and survivor protection of Federal workers is considered.

A great many Federal employees are people who work in Federal service for only a part of their working lifetime. Of all young people who enter Federal employment at age 20, almost one-half, 48 percent, leave in less than 1 year; over two-thirds, 67 percent, leave before 5 years have elapsed.

Of those who enter Federal employment at age 25, 43 percent leave in the first year and 61 percent leave before 5 years. At age 30, over

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