but without fault or delinquency on his part, has become totally and permanently disabled, may retire from active service prior to the age of retirement, and, on certificate from the head of the department or independent office in which he is employed to the Secretary of the Treasury setting forth such disability and the approval of such certificate by the Secretary of the Treasury, may receive, out of the fund created by section eight of this act, an annual disability allowance, payable quarterly, equal to one and one-half per centum of his total compensation during service prior to such retirement. Allowances under this section shall be discontinued on arrival of the employee at the age of retirement unless sooner terminated by the Secretary of the Treasury.

If, upon the retirement of an employee on a disability allowance, the money then to his credit under section two of this act, together with interest thereon at three and one-half per centum per annum, compounded annually, will not be sufficient to purchase an annuity, payable quarterly throughout life, for such employee on arrival at the age of retirement equal to his annual disability allowance, the Secretary of the Treasury shall deduct and withhold from his quarterly disability allowance an amount, computed to the nearest tenth of a dollar, that together with the money then to his credit, with interest, will be sufficient to purchase such annuity. Amounts deducted and withheld from disability allowances shall be treated as deductions under section two of this act. If the money to his credit as aforesaid is in excess of the amount that will be required to purchase such annuity he may withdraw such excess in one cash sum, or in an annuity certain limited to the age of retirement.

The Secretary of the Treasury shall reduce or terminate the disability allowance granted to any employee whenever in his judgment it is proper to do so, and such action on his part shall be final and conclusive.

In case of the death of an employee while in the receipt of a disability allowance, the amount to his credit under section two of this act shall be paid to his legal heirs, and the disability allowance shall cease and determine.

The disability allowances hereby provided for shall at all times be limited to the fund created by section eight of this act, and if the total allowances shall at any time be in excess of such fund, the allowances shall be reduced pro rata to a sum within such fund.

It is thought that this provision safeguards the interests of the Government in every way, and yet it is so worded that when the disability experience of the employees warrants so doing, more liberal benefits may be allowed by change of a few words in the bill. The ultimate ideal, of course, is the allowance, as soon as it is proved practicable, of disability benefits for total and permanent disability resulting from accident incurred in line of duty after any period of service. Provision is made for the reduction or termination of the allowance within the discretion of the Secretary of the Treasury, since it is always possible that a person thought to be permanently disabled may recover in part or entirely. As a precautionary measure in the interests of the Government it is specifically provided also that the allowances shall be reduced pro rata, if they at any time exceed the amount of the disability fund. While the disability benefit provided is so limited as to make that probability very remote it was thought wise to put a phrase in the disability clause that would

make impossible a deficit and a call on the Government for appropriations.

In pursuance of the principle laid down in the foregoing pages that there should be a sharp distinction drawn between disability and superannuation, this section provides that disability allowances shall be discontinued on arrival of the employee at the age of retirement, and that from that time on, while he shall continue to draw the customary amount as an annuity, it shall be paid out of the retirement fund created by himself instead of the disability fund. (This is necessary for the reason that at the older ages it is impossible to differentiate between disability and superannuation.)

In case the sum to his credit at the time of retirement from active service on a disability allowance is not sufficient to purchase an annuity for him when he shall reach the age of retirement equal to the amount of his disability allowance (which will then be discontinued), it will be necessary to deduct from his quarterly disability allowance such an amount as will be sufficient, together with the money then to his credit, to purchase such an annuity. As the bill stands at present, disability allowances being granted only after 20 years' service, there is no probability of the amount to an employee's credit at the time of retirement on account of disability being insufficient to purchase an annuity at the age of retirement equal to his disability allowance. If the bill should be amended so as to allow of accident benefits after any period of service, it might happen that the amount to an employee's credit at the time of disablement, say, one or two years after entering the service, would be insufficient for the purchase of an annuity at the age of retirement equal to the disability allowance, and deductions would therefore have to be made as provided for. At present, however, with disability benefits granted only after 20 years' service, the sum to the credit of the employee is likely to be in excess of the amount required for the purchase of an annuity at the age of retirement equal to the disability allowance granted in the interval. As an injured employee is likely to be in need of money at the time of his disablement, the bill provides that this excess may be drawn at once in a cash sum, if so desired.

PROVISION FOR REINSTATEMENT IN SERVICE.

As persons who leave the service frequently return to it, section 10 was introduced into the bill to provide for the reinstatement of such persons. It reads as follows:

SEC. 10. That in case of reinstatement in the classified civil service of any person who at the time of his separation therefrom received a refund under section seven of this act, his period of service for the purpose of retirement and of making the monthly deduction from his salary shall be computed from the date of such reinstatement unless he shall, within ninety days after rein

statement, pay to the Secretary of the Treasury the amount refunded to him, with interest at three and one-half per centum per annum, in which case the same shall be replaced to the credit of his account, and the former period of service shall be counted.

PROVISION FOR PAYMENT OF ANNUITIES FOR PAST SERVICES.

The proposed bill thus far down to section 11, has had to do only with Part I of the plan, the payment of annuities for services rendered after its adoption. Sections 11 and 12, which have to do with Part II of the plan, the payment of annuities for services rendered prior to the adoption of the plan proper, are discussed by themselves in the chapter entitled "Cost of plan," since it is the payment of annuities for past services which constitutes, aside from the cost of administration, the sole expense connected with the plan.

MISCELLANEOUS PROVISIONS OF THE PROPOSED BILL.

The remaining sections of the bill make provision mainly for the condition and legality of its enactment. Section 13 is self-explanatory, and reads as follows:

SEC. 13. That every person to whom this act applies who shall continue in the classified civil service after the passage of this act, as well as every person to whom this act applies who may hereafter be appointed to a position or place, shall be deemed to consent and agree to the deductions made and provided for herein, and shall receipt in full for the salary, pay, or compensation which may be paid monthly or at any other time, and such payment shall be full and complete discharge and acquittance of all claims or demands whatsoever for services rendered by such person during the period covered by such payment, notwithstanding the provisions of sections one hundred and sixty-seven, one hundred and sixty-eight, and one hundred and sixty-nine of the Revised Statutes of the United States, or of any other law, rule, or regulation affecting the salary, pay, or compensation of any person or persons employed in the classified civil service to whom this act applies.

PROVISION FOR KEEPING STATISTICAL RECORDS.

Section 14 of the bill should have special emphasis. It reads as follows:

SEC. 14. 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 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. The Secretary of the Treasury shall make a detailed comparative report annually to Congress showing all receipts and disbursements under the provisions of this act, together with the total number of persons receiving annuities and disability allowances, and the amounts paid them.

As pointed out in the first report made by the subcommittee on personnel of the Keep Commission, one of the valuable features of the plan is the array of reliable statistics concerning a large body of representative people that will gradually be collected if this retirement plan is adopted. In handling the accounts of the employees under this plan records will necessarily be kept showing the mortality experience of the employees in the various branches of the service and in different localities throughout the country, the rate of withdrawal from the classified civil service, and much similar information that may be of value and service as a guide in future valuations and adjustments of any plan, and in reducing the cost, not only to the employees, but to the Government as well.

The records should eventually prove of great interest to the insurance companies in this country as well as to the public, for on them mortality tables of exceptional reliability might be constructed.

PROVISION LIMITING OPERATION OF PLAN TO DISTRICT OF COLUMBIA.

The operation of the plan is limited in the proposed bill, for reasons explained in the chapter entitled "Cost of plan," to the classified civil service in the District of Columbia. Section 15 will be found on page 214.

PROVISION MAKING MONEYS OF BILL NONASSIGNABLE AND NONATTACHABLE.

A necessary provision in the bill is section 16, which reads as follows:

SEC. 16. 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.

PROVISION FOR ADMINISTRATION OF PLAN.

Section 17 of the proposed bill, which makes provision for the cost of administering the plan, is discussed in the chapter entitled "Cost of plan," on page 185.

ENACTING CLAUSE.

The final provision of the proposed bill is the enacting clause, which reads as follows:

SEC. 18. 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.

CHAPTER IV.

COST OF PLAN.

COST OF PUTTING PLAN INTO OPERATION UNDER PERKINS BILL.

Assuming that the proposed retirement plan is acceptable to Congress, the most important thing to be considered is the cost of putting it into operation.

The plan itself is self-sustaining and asks nothing of the Government except the care and investment of the employees' savings. If the present civil service could be wiped out entirely and a fresh list of appointments made to-morrow, this savings and annuity plan might go into full operation without any appropriation from the Treasury except that necessary to cover the cost of keeping the accounts. Part I of the plan might indeed be put into immediate operation without Part II and the Government's help not be asked, but that would mean postponing the solution of the superannuation problem for a full generation. In that case benefits resulting to the service from the plan would only begin to be apparent in about 30 years, when the old and middle-aged persons now in the service would have passed away. The ideal solution of the problem, however, is to require employees to begin at once to save for their own annuities, and at the same time to retire, under the provisions of the bill, all those who are now at the retirement age.

The one difficulty in the way of doing this is the necessity of providing money for the retirement of those already grown old in the service. If the plan were put into effect immediately there is a considerable body of old people, of 70 years of age and over, who should be retired at once, there are others 69 years of age who would have only one year of monthly deductions from salary to contribute toward the purchase of an annuity, there are others 68 years of age who would have only two years' time for accumulating the necessary sum, and so on down to those employees whose term of service begins with the enactment of the plan, each lacking something, according to the length of time he had served before the passage of the bill, toward the sum required to buy the desired annuity. The only way in which these persons could be retired would be through the appropriation