or unclassified employee, and shall include periods of service at different times and service in one or more departments, branches, or independent offices of the Government, the Signal Corps prior to July first, eighteen hundred and ninety-one, and the general service in or under the War Department prior to May sixth, eighteen hundred and ninety-six.

SEC. 9. That the Secretary of the Treasury shall prepare and keep all needful tables, records, and accounts required for carrying out the provisions of this act. The records to be kept shall include data showing the mortality experience of the employees in the various branches of the service and in different localities through the country and the rate of withdrawal from the classified service, and any other information that may be of value and may serve as a guide for future valuations and adjustments of the plan for the retirement of employees.

SEC. 10. That within thirty days before the arrival of an employee at the age of retirement, the head of the Department or independent office shall certify to the Secretary of the Treasury regarding the efficiency of such employee, with a statement whether the public interest requires his continuance in the service or his retirement, and such certificate and statement shall be conclusive. If he certifies that by reason of the efficiency of an employee who has reached the retirement age, and is willing to remain in the service, his continuance therein would be advantageous to the public service, such employee may be retained for a term not exceeding two years; and at the end of two years he may by similar certification be continued for an additional term of two years, and so on. Upon the failure of the head of the Department or independent office to make the above-described certificate it shall be the duty of the Secretary of the Treasury to place such employee upon the retired list in accordance with the provisions of this act.

SEC. 11. That if an employee is retained in the service after reaching the retirement age, a deduction of ten per centum of his monthly salary, pay, or compensation shall thereafter be made while he remains in the service, and the same shall be treated as other deductions under this act.

SEC. 12. That the provisions of this act shall apply only to the classified civil service, which is hereby defined to include all officers and employees in the executive civil service of the United States, except persons appointed by the President and confirmed by the Senate, and mere unskilled laborers. No person serving in a position excepted from examination or registration as defined in the civil-service rules shall be included within the provision of this act unless he has served in a competitive position for at least one year. Whenever any person becomes separated from the classified service by reason of appointment in the unclassified service, such separation shall not operate to take him out of the provisions of this act. The President shall have power, in his discretion, to exclude from the operations of this Act any groups of employees whose tenure of office is necessarily intermittent or of uncertain duration. SEC. 13. That none of the moneys mentioned in this act shall be assignable either in law or equity or be subject to execution or levy by attachment, garnishment, or other legal process.

SEC. 14. That for the clerical and other service and all other expenses necessary in carrying out the provisions of this act, during the fiscal year nineteen hundred and nine, including salaries and rent in the city of Washington, there is hereby appropriated the sum of fifty thousand dollars; and also the amounts necessary for the annuities to be paid by the United States, under section seven of this act, from year to year, are hereby appropriated, out of any money in the Treasury not otherwise appropriated, to be available until expended.

SEC. 15. That the Secretary of the Treasury is hereby authorized to perform or cause to be performed any and all acts, and to make such rules and regulations as may be necessary and proper, for the purpose of carrying the provisions of this act into full force and effect.

APPENDIX B.

BILL RECOMMENDED BY THE SUBCOMMITTEE ON PERSONNEL, OF THE KEEP COM

MISSION, AND INTRODUCED BY HON. J. A. GOULDEN, H. R. 17969, SIXTIETH

CONGRESS.

A BILL For the retirement of employees in the classified civil service of the Government. Be it enacted by the Senate and House of Representatives of the United States of Am rica in Congress assembled, That, beginning with the first day of July next following the passage of this act, there shall be deducted and withheld from the monthly salary, pay, or compensation of every officer or employee of the United States to whom this act applies an amount that would be sufficient, with interest thereon at four per centum per annum, compounded annually, to purchase from the United States, under the provisions of this act, an annuity for every such employee, on arrival at the age of retirement as hereinafter provided, equal to one and one-half per centum of his annual

salary, pay, or compensation for every full year of service, or major fraction thereof, between the date of the passage of this act and the arrival of the employee at the age of retirement. The necessary deduction hereby provided for shall be based on such annuity table as the Secretary of the Treasury may direct, and interest at the rate of four per centum per annum, compounded annually. Such deductions shall be varied to correspond with any change in the salary of the employee.

SEC. 2. That the amounts so deducted and withheld from the salary, pay, or compensation of each employee shall be deposited in the Treasury of the United States and shall be invested from time to time by the Secretary of the Treasury in State, municipal, railroad, or other bonds approved by him. The interest on said bonds shall be paid into the Treasury of the United States and shall be reinvested in the same manner as above described. The earnings shall be annually credited to the individual accounts of the employees from whose salary, pay, or compensation the deductions have been made, and the moneys deducted, together with the interest added thereto, shall be held and invested by the Government while the employee remains in the service, and after retirement as required for an annuity payment if he selects such option as hereinafter provided.

SEC. 3. That upon retiring at the age of retirement the employee shall withdraw his savings, with the increment of interest as herein provided, under one of the following options:

Option I. In one sum.

Option II. In an annuity payable quarterly throughout life.

The annuity herein provided for shall be based on such mortality tables as the Secretary of the Treasury may direct, and interest at the rate of four per centum during the first two years of the operation of this act. After the act shall have been

in operation two years the interest assumed shall be the average rate the retirement fund shall have been earning during the two years prior to the first of January preceding the date of retirement. Upon the death of an annuitant his estate shall be paid the proportional part of the current quarterly payment.

SEC. 4. That upon absolute separation from the civil service prior to the retirement age, and only upon such separation, there shall be paid to the employee or his estate the amount of his savings, with the increment of interest credited thereon, in one sum: Provided, That any employee who shall voluntarily withdraw from the service before the age of forty-five years shall forfeit the accrued interest on his savings, and only the amounts deducted from his salary shall be returned to him. In case of death after reaching the retirement age and before deciding upon an option the savings, with the increment of interest credited thereon, shall be paid to the estate of the employee.

SEC. 5. The retirement age herein referred to shall be sixty years for Group One, which shall consist of employees whose duties require great physical activity; sixtyfive years for Group Two, which shall consist of employees whose duties require a moderate amount of physical activity; and seventy years for Group Three, which shall consist of employees whose duties are mainly intellectual. And the President of the United States shall designate the branches of the service to be included in each group.

SEC. 6. Every employee to whom this act applies shall be entitled on reaching the retirement age, or, having already passed that age, to retire from the service under the provisions herein before contained, and also in addition to the annuity herein provided for by his own contribution from his salary to receive from the United States, during the remainder of his life, an annuity equal to one and one-half per centum of his total compensation during service prior to the taking effect of this act, and the Secretary of the Treasury is hereby authorized and directed to pay such annuity quarterly upon certification of the retirement of such employee by the proper appointing officer under whom he last served: Provided, That after having served the United States twenty years an employee may be retired by the proper appointing officer by reason of disability not due to vicious habits, or by reason of exigencies of service but without fault or delinquency on his part, or on his own application after forty years' service, and upon such retirement shall be entitled to the benefits of this act.

SEC. 7. The provisions of this act shall apply only to the classified civil service, which is hereby defined to include all officers and employees in the executive civil service of the United States, except persons appointed by the President and confirmed by the Senate, and mere unskilled laborers. No person serving in a position excepted from examination or registration as defined in the civil-service rules shall be included within the provisions of this act unless he has served in a competitive position for at least one year. Whenever any person becomes separated from the classified service by reason of appointment in the unclassified service, such separation shall not operate to take him out of the provisions of this act. The President shall have power, in his discretion, to exclude from the operations of this act any groups of employees whose tenure of office is necessarily intermittent or of uncertain duration.

SEC. 8. The period of service upon which the annuity to be paid by the United States is based shall be computed from original employment, whether as a classified or unclassified employee, and shall include periods of service at different times and service in one or more departments, branches, or independent offices of the Government, the Signal Corps prior to July first, eighteen hundred and ninety-one, and the General Service in or under the War Department prior to May sixth, eighteen hundred and ninety-six.

SEC. 9. The Secretary of the Treasury shall prepare and keep all needful tables, records, and accounts required for carrying out the provisions of this act. The records to be kept shall include data showing the mortality of the employees in the various branches of the service and in different localities throughout the country, and the rate of withdrawal from the classified service, and any other information that may be of value and may serve as a guide for future valuations and adjustments of the plan for the retirement of employees.

SEC. 10. Within thirty days before the arrival of an employee at the age of retirement the proper appointing officer shall certify to the Secretary of the Treasury regarding the efficiency of such employee, with a statement, whether the public interest requires his continuance in the service or his retirement, and such certificate and statement shall be conclusive. If he certifies that by reason of the efficiency of any employee who has reached the retirement age, and is willing to remain in the service, his continuance therein would be advantageous to the public service, such employee may be retained for a term not exceeding two years; and at the end of the two years he may by similar certification be continued for an additional term of two years, and so on. Upon the failure of the proper appointing officer to make the above-described certificate, it shall be the duty of the Secretary of the Treasury to place such employee upon the retired list in accordance with the provisions of this act, SEC. 11. None of the moneys mentioned in this act shall be assignable either in law or equity or be subject to execution or levy by attachment, garnishment, or other legal process.

SEC. 12. For the clerical and other service and all other expenses necessary in carrying out the provisions of this act, during the fiscal year nineteen hundred and nine, including salaries and rent in the city of Washington, there is hereby appropriated the sum of fifty thousand dollars; and also the amounts necessary for the annuities to be paid by the United States, under section six of this act, from year to year are hereby appropriated, out of any moneys in the Treasury not otherwise appropriated, to be available until expended.

SEC. 13. The Secretary of the Treasury is hereby authorized to perform or cause to be performed any and all acts, and to make such rules and regulations as may be necessary and proper, for the purpose of carrying the provisions of this act into full force and effect.

APPENDIX C.

TABLES PREPARED BY HERBERT D. BROWN, SHOWING SALARY DEDUCTIONS UNDER GILLETT OR GOULDEN BILLS.

TABLE I.-Showing per cent required to be deducted monthly from any salary to provide an annuity for a male at age of 70 equal to 14 per cent of annual salary for each year of service. Illustration: $1,200 (salary)×11′′ (per cent)=$18×50 (years of service) =$900 (amount of annuity).

[(a) Age of retirement. (b) Age of entrance to service. (c) Years of service. (d) Amount of annuity to be provided for on retirement at age shown in column (a). (e) Cost of $100 annuity, for a male, at age shown in column (a), first payment in one year after retirement. Interest at 3 per cent per annum, compounded annually. (f) Cost of annuity shown in column (d). (g) Amount to which a deposit of $1 per month, first payment immediate, will accumulate at 4 per cent per annum, compound interest, at end of years shown in column (c). (h) Amount of monthly deduction required from monthly salary of $100 (per cent of other salaries), during years shown in column (c), to accumulate sum shown in column (f). Interest at 4 per cent per annum, compounded annually.]

TABLE II.-Showing per cent required to be deducted monthly from any salary to provide an annuity for a male at age of 65 equal to 14 per cent of annual salary for each year of service. Illustration: $1,200 (salary)×11 (per cent)=$18×50 (years of service) -$810 (amount of annuity).

[(a) Age of retirement. (b) Age of entrance to service. (c) Years of service. (d) Amount of annuity to be provided for on retirement at age shown in column (a). (e) Cost of $100 annuity, for a male, at age shown in column (a), first payment in one year after retirement. Interest at 3 per cent per annum, compounded annually. (f) Cost of annuity shown in column (d). (g) Amount to which a deposit of $1 per month, first payment immediate, will accumulate at 4 per cent per annum, compound interest, at end of years shown in column (c). (h) Amount of monthly deduction required from monthly salary of $100 (per cent of other salaries), during years shown in column (c), to accumulate sum shown in column (f). Interest at 4 per cent per annum, compounded annually.]

TABLE III.-Showing per cent required to be deducted monthly from any salary to provide an annuity for a male at age of 60 equal to 14 per cent of annual salary for each year of service. Illustration: $1,200 (salary)× 11⁄2 (per cent)=$18 × 40 (years of service)=$720 (amount of annuity).

[(a) Age of retirement. (b) Age of entrance to service. (c) Years of service. (d) Amount of annuity to be provided for on retirement at age shown in column (a). (e) Cost of $100 annuity, for a male, at age shown in column (a), first payment in one year after retirement. Interest at 3 per cent per annum, compounded annually. (f) Cost of annuity shown in column (d). (g) Amount to which a deposit of $1 per month, first payment immediate, will accumulate at 4 per cent per annum, compound interest, at end of years shown in column (c). (h) Amount of monthly deduction required from monthly salary of $100 (per cent of other salaries), during years shown in column (c), to accumulate sum shown in column (f). Interest at 4 per cent per annum, compounded annually.]

TABLE IV. Showing amount of annuity that may be provided for a male at age of 70 by a monthly deduction of 5 per cent from a salary of $100 per month, deductions beginning at various ages from 20 to 60. Deductions accumulated at 4 per cent per annum, compound interest.

[(a) Age of retirement. (b) Age of entrance to service. (c) Years of service. (d) Amount of annuity to be provided for on retirement at age shown in column (a). (e) Cost of $100 annuity, for a male, at age shown in column (a), first payment in one year after retirement. Interest at 3 per cent per annum, compounded annually. (f) Cost of annuity shown in column (d). (g) Amount to which a deposit of $1 per month, first payment immediate, will accumulate at 4 per cent per annum, compound interest, at end of years shown in column (c). (h) Amount of monthly deduction required from monthly salary of $100 (per cent of other salaries), during years shown in column (c), to accumulate sum shown in column (f). Interest at 4 per cent per annum, compounded annually.]

TABLE V.-Showing per cent required to be deducted from a monthly salary of $100 to provide an annuity of $900 per annum for a male at age of 70, deductions beginning at various ages from 20 to 60.

[(a) Age of retirement. (b) Age of entrance to service. (c) Years of service. (d) Amount of annuity to be provided for on retirement at age shown in column (a). (e) Cost of $100 annuity, for a male, at age shown in column (a), first payment in one year after retirement. Interest at 3 per cent per annum, compounded annually. (f) Cost of annuity shown in column (d). (g) Amount to which a deposit of $1 per month, first payment immediate, will accumulate at 4 per cent per annum, compound interest, at end of years shown in column (c). (h) Amount of monthly deduction required from monthly salary of $100 (per cent of other salaries), during years shown in column (e), to accumulate sum shown in column (f). Interest at 4 per cent per annum, compounded annually.]

STAFF PENSION FUNDS WITH SPECIAL REFERENCE TO A RETIREMENT PLAN FOR UNITED STATES CIVIL-SERVICE EMPLOYEES.

[By Benedict D. Flynn, from transactions of the Actuarial Society of America, October, 1907.] American actuaries have given but little attention to the subject of old-age pension plans, chiefly for the reason that the idea of providing for the aged poor of the state, and for the old and faithful employee, has not yet seriously taken hold of the American people. It is true that many of the great railway systems of the United States and Canada, and a few of the large banks and commercial houses, have established funds for the relief of their old employees, but when one considers the large number of institutions throughout the country in which this idea could be put into effect, the number of such funds existing is seen to be comparatively small. There are signs, however, that the subject is beginning to occupy public attention. The appointment recently by the governor of Massachusetts of a commission to investigate and consider the various plans of old-age pensions, with a view to establishing an old-age insurance system in the Commonwealth, and the interest which has been taken in a retirement scheme recently proposed for the United States civil-service employees, indicate that the time is not far distant when the question of national old-age pensions will be fully discussed, and the justice and advantages of staff pensions will be more clearly understood.

The part which the actuary must take as this idea of old-age provision develops is shown by a study of the history of old-age pensions in foreign countries to be both important and difficult. Actuarial advice will undoubtedly be sought in attempts to obtain a satisfactory solution to the problem of national old-age pensions, but it is in the valuation and readjusting of existing staff pension funds and in the establishing of new retirement plans that the services of the actuaries of this country will be more often required. It is advisable, therefore, that more attention be given to this branch of the subject in preparation for the responsibilities which may later fall upon the members of this society. Recognizing the necessity for this, the society at its last meeting added to its requirements for admission as a fellow a knowledge of the methods of construction and of valuation of pension funds. The subject is important and most interesting and it is with the purpose of bringing it before the society for consideration and discussion that this paper is submitted.

But few articles have been written on the technical side of the subject of staff pension funds from an actuarial standpoint, for the reason, probably, that one can become an authority upon the subject only after years of thought and practical experience, and also that the few papers written have covered the subject ably and thoroughly. Mr. Henry W. Manly. in his masterly work "On the valuation of staff pension funds" (J. I. A., vol. 36, p. 209; vol. 37, p. 193), first placed the study of staff pension funds upon a sound and scientific basis. Prior to the appearance of this paper, although some of the methods described by him had been used by other actuaries, nothing had