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annuity of $637 a year. The number of those entering so late in life is naturally not great and is confined largely to those whose workthat of watchman or messenger-is light enough to permit its continuance late in life.

TABLE XXII.-Showing amount of cash accumulation at the end of various years of service payable to employee on resignation or to his legal heirs in case of death; and life annuity that may be granted on resignation in lieu of cash.

Age on entrance into service and monthly deduction required from a salary of $100 (retirement age, 70).

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1 Section 7 of House bill No. 22013 provides that on leaving the service prior to the age of retirement an annuity will not be granted unless the cash to the employee's credit amounts to at least $1,000.

TABLE XXII.—Showing amount of cash accumulation at the end of various years of service payable to employee on resignation, etc.—Continued.

Age on entrance into service and monthly deduction required from a salary of $100 (retirement age, 70).

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1 Section 7 of House bill No. 22013 provides that on leaving the service prior to the age of retirement an annuity will not be granted unless the cash to the employee's credit amounts to at least $1,000.

AMOUNT OF DEDUCTION FROM SALARY VARIES ONLY WITH CHANGE IN SALARY.

The bill provides that deductions shall be varied to correspond to any change in the salary of the employee. It is apparent, of course, that if this were not done the annuities would not amount to 1 per cent of salary for each year of service in cases where there had been changes in salary during the years of service. The deduction from salary in cases of promotion is computed on the salary increase at the attained age-that is, the age of the employee when the promotion takes place. In other words, the promoted employee is regarded as a new entrant to the extent of his increase in salary. Table XXIII shows how deductions from salaries may be adjusted to correspond to promotions.

TABLE XXIII.-Showing how deductions from salaries may be adjusted to correspond to promotions.

A entered service at age 20 at salary of $900 a year, or $75 a month. Deduction required at age 20 is 4.267 per cent of salary. 4.267 X $75..

At age 22 his salary was increased to $1,000 a year, or $83.33 a month. Increase in salary, $100 a year, or $8.33 a month. Deduction required at age 22 is 4.458 per cent of salary increase. 4.458×$8.33...

Deduction thereafter.

At age 25 his salary was increased to $1,200 a year, or $100 a month. Increase in salary, $200 a year, or $16.66 a month. Deduction required at age 25 is 4.756 per cent of salary increase. 4.756×$16.66..

Deduction thereafter.

At age 32 his salary was increased to $1,400 a year, or $116.66 a month. Increase in salary, $200 a year, or $16.66 a month. Deduction required at age 32 is 5.516 per cent of salary increase. 5.516X$16.66.

Deduction thereafter.

At age 35 his salary was increased to $1,600 a year, or $133.33 a month. Increase in salary, $200 a year, or $16.66 a month. Deduction required at age 35 is 5.869 per cent of salary increase. 5.869×$16.66.

Deduction thereafter.

At age 38 his salary was increased to $1,800 a year, or $150 a month. Increase in salary, $200 a year, or $16.66 a month. Deduction required at age 38 is 6.240 per cent of salary increase. 6.240×$16.66..

Deduction thereafter.

Total..

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annuity required.

$1,197 $7.595 (value of an annuity of $1 at age 70)=$9,091.21. Amount to credit of employee on retirement at age 70=$9,086.76. NOTE. The difference of $4.45 between the value of the annuity ($9,091.21) and the amount to the credit of the employee at retirement ($9,086.76) is due to the omission of decimals from the monthly deductions at the various ages.

Those already in the service at the time the plan goes into effect must be regarded as new entrants and the amount of their deductions from salary computed on the basis of their age at that time.

As an illustration of how the plan will work in the case of an employee who has been in the service some time when the law goes into effect, take the case of an employee 40 years of age, who has been in the service 15 years at the time of the enactment of this plan into law. He would on retirement 30 years hence be entitled to receive an annuity from the Government of 13 per cent of his total compensation for service up to the passage of such a law, or 22.5 per cent of his average annual salary during that time, plus the amount of his own savings from the time the law went into effect until his retire

ment, after 30 years, at the age of 70. Suppose that this employee receives a salary of $1,200 per annum throughout the whole term of his service. On retiring at the age of 70 he would be entitled to an annuity of $810 for the remainder of his life, $270 from the Government, as 1 per cent of his total compensation during the 15 years he served prior to the passage of the retirement law, and $540 as an annuity from his own savings-that is, 1 per cent of his salary for every year of service after the passage of the law. The annuity from the Government (the $270) would have no cash-surrender value. It could be taken only as an annuity, never in a lump sum, and could only be obtained in case the employee remained in the service until he reached the retirement age. The $540, on the other hand, which represents his own savings, plus interest, could be converted into the cash sum necessary to buy that annuity, $4,101.30. The employee could always, on leaving the service, withdraw his own money, but the contribution by the Government for services rendered prior to the passage of this act must always be taken in the form of an annuity.

AVERAGE RATE OF DEDUCTION FROM SALARY ONLY 5 PER CENT.

Some criticism has been brought against this plan by employees now old in the service, who will have to be regarded as new entrants, on the ground that the rates of deduction for them are excessive. This criticism seems to be based on incomplete understanding of the situation.

The percentage of salary deducted, to provide for retirement at age 70, it will be seen by reference to Table XIX, ranges from 4.3. in the case of those 20 years old at the time of entrance into the service or at the time of the passage of the bill to 11.2 in the case of those 69 years old at such time. While a deduction of 11.2 per cent from salary seems, at first glance, to be high, the return made by the Government for such contribution is so generous that the employee has no just cause for complaint. The deduction would only be made for one year. On a salary of $1,200 that would be $11.20 a month, or $134.40 for the year. At the end of that time the employee would be retired, under Senate bill 1944, on an annuity of $540 a year if he had been in the service 30 years, an annuity of $720 if he had been in the service 40 years, of $900 if he had been in the service 50 years, and so on. In other words, in consideration of his saving $134.40 for one year, the Government would pay him 401.8 per cent a year on that saving for the rest of his life, provided he had been 30 years in the service; 535.7 per cent a year if he had been employed 40 years; or 669.6 per cent if 50 years. It would be hard to find, at age 69, a better investment for twelve monthly installments of $11.20 each. If the employee should happen to die during the year before reaching

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the age of retirement, the full amount he had contributed, plus interest, would be returned to his family. If he lived to the age of retirement he could, if he preferred, draw his contribution for the one year ($134.40) in cash, but the Government's payment to him for the other 29, 39, or 49 years would be paid, under Part II of the proposed plan, only in the form of an annuity. In any possible event, he would be well repaid for being compelled to save $11.20 a month for 12 months.

Comparatively few of the employees are 69 years of age. The great majority are under 40 years of age. Between the ages of 20 and 40 the rate of deduction from salary ranges from 4.3 to 6.5 per cent, or on a salary of $1,200 from $4.30 to $6.50 a month. As the average age of entrance into the service is about 27 years and the rate of deduction at that age is an even 5 per cent, the average amount deducted from salaries, once the plan were in full operation, would be 5 per cent.

ADVANTAGE TO THE SERVICE OF INCREASING DEDUCTION WITH INCREASE OF ENTRANCE AGE.

The fact that the percentage of deductions from salary increases with the age of entrance into the service works out greatly to the good of the service, since it offers more encouragement to the young than it does to the old to enter the service. Two individuals entering the employ of the Government, one at the age of 20 and the other at the age of 60, on salaries of $100 a month, would be required to set aside, respectively, 4.3 per cent of salary and 9.5 per cent. It amounts, therefore, to this: That the younger employee would receive $95.70 a month, while the older one would receive $90.50, a fact that would have a tendency to discourage the elderly from entering the service. The advantage of this is seen when contrasted with the effect on the service of any form of civil pension which would retire all employees after 10 years or some other period of service. Good places in the business world are likely to become increasingly difficult to secure at advanced ages. The promise of a pension would, therefore, make the Government service look very attractive to those superannuated unfortunates who had not been able to place themselves well in life, and the average age of applicants for civil-service positions would without doubt be much higher than it is now.

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