CHAPTER III.

MINOR PROVISIONS OF THE PROPOSED BILL.

Having considered the mathematical basis of the proposed plan of retiring civil employees of the Government, it is next in order to take up some of the minor provisions of the bill. While these do not vitally affect the essential features of the plan, they are important as adding to its equitableness and attractiveness.

PROVISIONS FOR SEPARATION FROM SERVICE.

It is right that a measure intended primarily for the improvement of the public service should contain some provision for the removal, not only of those who are superannuated, but also of those who have become disabled through illness or accident. It is also right, from the standpoint of humanity, that some cognizance should be taken of the condition in which death or dismissal from the service may find the employee. Not the least merit of a savings plan of retirement, as opposed to any form of civil pension, is the fact that it permits of an extension of its benefits automatically and with justice, to both the individual and the Government, to all cases in which separation from the service occurs.

There are five ways in which an individual may be separated from the civil service. These may be listed as follows:

(1) By retirement because of old age.

(2) By resignation.

(3) By dismissal.

(4) By death.

(5) By retirement because of disability.

RETIREMENT BECAUSE OF OLD AGE.

How the retirement of the superannuated is to be effected has been explained in the first part of this discussion under the head of "Mathematical basis of the proposed plan." Besides section 1 of the bill, which contains the statement of the foundation of the proposed measure, sections 3, 4, 5, and 6 contain provisions regarding the retirement of the superannuated which will now be considered.

AGES OF RETIREMENT ACCORDING TO SEVERITY OF OCCUPATION.

Section 3 reads as follows:

"SEC. 3. That the retirement age herein referred to shall be sixty-five years for group one, sixty-five years for group two, and seventy years for group three. And the President of the United States shall designate the branches of the service to be included in each group."

While it is felt that the age of retirement for clerks generally should be 70 years, it was not thought just to consider all of them in one class together, since those engaged in the more arduous kinds of employment might naturally be expected to become superannuated earlier than others employed at lighter tasks. The powers of the mind ordinarily outlast those of the body, and an aged person engaged in mental work, whether as a judge of the Supreme Court, a Senator in Congress, or a petty clerk in the executive departments remains a useful member of society much longer than do those whose labors depend upon their physical activities.

The employees coming within the scope of the bill whose duties make most severe demands upon their physical endurance are the railway postal clerks. A large part of their work is performed during the night in light railway cars on swiftly moving trains under considerable physical and mental strain. The employees whose physical powers are taxed most heavily after the railway postal clerks are the letter carriers. Abroad in all kinds of weather and burdened with a heavy pack, their work is certainly more exhausting physically than that of the majority of Government clerks. With these facts in mind, the civil-service employees have been divided into three groups. In Group I are the railway postal clerks, for whom retirement is proposed at the age of 65. A clause in section 11 of the bill also provides that employees of Group I may receive the annuity at the age of 60 if they so desire. In Group II are letter carriers, for whom retirement is proposed at the age of 65. In Group III are all the other departmental clerks, and retirement is proposed for them at the age of 70.

In view of the difference in the value of annuities for employees retiring at different ages, it was necessary to compute the cost of annuities for these three groups of employees separately. Their records should also be kept in three separate groups, so that the mortality and disability statistics based on them in years to come will tell a more accurate story than if the history of the three groups is consolidated.

MODES OF PROCEDURE FOR RETIREMENT.

The action to be taken on the arrival of each employee at the age of retirement, whatever that age may be, in order to put into effect

the provisions of the plan, is stated in section 4 of the bill, which reads as follows:

SEC. 4. That if within thirty days before the arrival of an employee at the age of retirement, the head of the department or independent office in which he is employed certifies to the Secretary of the Treasury that by reason of his efficiency and his willingness to remain in the service the continuance of such employee 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 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.

This provision shows that the plan does not contemplate the arbitrary retirement of all who reach the age of 70. It would, in many cases, be a real loss to the nation to force into retirement men engaged in work which they are still able to perform efficiently and which is of benefit to the public. This would be particularly true of scientists and economists engaged in research work. This provision allows them to continue their work beyond the age of 70 if they desire to do so and their services are recognized as valuable. The provision is also of benefit to the efficient clerk entering the service late in life who would prefer to remain at work a few years beyond the age of 70, because he would then be able to retire on a much larger annuity than if he retired at the age of 70, since the annuity not only costs less at the older age, but each year that he remains gives him a larger retirement fund from his savings, plus interest. With the exception of persons who come into the departments by preferment on account of military service, it is generally true, of course, that clerks who enter late in life are admitted by reason of their special qualifications in some particular work, and their continuance in the service past the ordinary age of retirement is not open to the usual objections on the score of advanced age.

It is highly desirable, however, that there be a fixed age of retirement at which the routine clerk can, without injustice, be forced out of the service. The history of superannuation measures in England shows how important the officials of the civil service in that country have considered a compulsory age of retirement. The Ridley Commission, in England, in 1888, recommended 65 as the proper age, and then said:

There should be no exception to this rule, except in the case of certain scheduled offices, in which the officer, if asked by the Government to do so, might be allowed to extend his services for a further period, never exceeding five years.1

1 See Second Report of Commission on Civil Establishments. 1888. p. XXIII.

A Treasury official who was most vigorous in urging the necessity for compulsory retirement at a given age was Mr. Frank Mowatt. It was about the only reform that he had advocated before the Ridley Commission, being adverse in general to making changes in the existing system. So convinced, however, was he of the wisdom of a compulsory retirement age that he would not even admit that the retention in office of exceptional men after they had reached that age was advisable. An interesting sequel to this statement is the fact that when the Boer War broke out and he, as Sir Francis Mowatt, was serving as Secretary to the Treasury, it was not considered wise at that critical time to make a change in Treasury officials, and he was accordingly retained for a year beyond the compulsory retirement age by special order in council.

It was not until November 29, 1898, that the recommendation of the Ridley Commission and other commissions as to the compulsory retirement age was put into effect by an order in council. The power of retention, in special circumstances, for a period not exceeding five years, is lodged with the treasury, but when the superannuation act of 1909 was passed as a measure intended to modify and reform the civil pension system a clause was included in the act providing for reduction of the pension in case of such retention, which was evidently intended as a discouragement to the exercise of such power. The case of Sir Francis Mowatt shows, however, that the law should make the retention of exceptional employees at least possible, though difficult and unusual.

It has been the policy of the Government to show preference for war veterans in the matter of appointment to office. A similar preference in the matter of their retirement from office would undoubtedly be urged were a retirement plan to be adopted. In the last annual report (1910) of the Hon. M. O. Chance, former Auditor for the Post Office Department, occurs the following paragraph, which is well worthy of consideration in connection with this bill:

For these reasons chiefly I most heartily indorse the plan embodied in Senate bill 1944. It should be modified, however, in my judgment, so as to show war veterans a similar preference in the matter of retirement to that shown in appointment. Of the 711 employees of this office, 48-6.75 per cent—are veterans of the Civil War. Some have been in the civil service many years, while others have been appointed quite recently. It would seem desirable in cases where they have been in the civil service too short a period of time to be entitled under the terms of the bill to receive an adequate annuity from the Government, that the bill should be amended so as to give them a retiring allowance of not less than half pay. I recommend, therefore, that the Treasury Department urge the passage of the bill referred to, with the following amendment:

On page 11, line 21, after the word "act," insert the following: Provided, however, That such annuity to any employee who served ninety days or more in the military or naval service of the United States during the

late Civil War, or sixty days in the war with Mexico, and who has been honorably discharged therefrom, shall, including the annuity herein provided for by his own contributions from his salary, be not less than fifty per centum of his average annual compensation during his entire period of employment in the civil service.

CONTINUANCE IN SERVICE AFTER RETIREMENT AGE.

For the benefit of those employees retained in the service after the age of retirement section 5 was introduced into the bill. It reads as follows:

SEC. 5. 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 section two of this act.

The purpose of deducting 10 per cent from the salaries of persons who remain in the service after reaching the age of retirement is to increase as rapidly as possible the amount to their credit. Those who desire to remain after the age of retirement will, in most cases, be persons who entered the service late in life, and who, therefore, have not had time to accumulate a sum sufficient to buy them a desirable annuity. Five years longer in the service, with a 10 per cent deduction from salary during that period, would almost double the annuity the employee's money would buy (see p. 127).

VARIOUS OPTIONS ON RETIREMENT.

Section 6 details the various options which the employee has of withdrawing his savings on retirement and reads as follows:

SEC. 6. That upon retiring at the age of retirement or thereafter the employee may withdraw his savings, with the increment of interest as herein provided, under one of the following options; and, if Option I or Option II is selected, receive in addition thereto such annuity, if any, as may be apportioned by the Secretary of the Treasury out of accumulations in excess of three and one-half per centum guaranteed by the provisions of this act, and such apportionment by the Secretary of the Treasury shall be conclusive:

Option I. In an annuity payable quarterly throughout life.

Option II. In an annuity payable quarterly throughout life, with the provision that in case of the death of the annuitant before he has received in annuities the amount of his savings, plus the interest credited thereon, the balance shall be paid to his legal heirs. In determining at his death the amount due to his heirs no account shall be taken of the annuities paid to him by the United States under section eleven of this act.

Option III. In one sum.

If after retirement the employee does not avail himself of one of the foregoing options, but leaves the amount due him on deposit, interest at the rate of two per centum per annum on the original sum so left on deposit on retirement shall be credited thereto for a period not exceeding twenty years, and if not then withdrawn the money so left on deposit, without interest, shall be covered into the Treasury as a miscellaneous receipt.