Brady, John G., legislative chairman, National Association of Internal Dorson, C. L., president, Retirement Federation of Civil Service Employees Gibson, Everett G., president, National Federation of Post Office Motor Griner, John F., president, American Federation of Government Em- Hughes, Hon. Philip S., Assistant Director for Legislative Reference, Bureau of the Budget; accompanied by David McAfee, Personnel Man- Jordan, Max, president, National Rural Letter Carriers Association; accom- 36 Lasseter, Dillard B., executive officer, Organization of Professional Em- Macy, Hon. John W., Jr., Chairman, Civil Service Commission; accom- panied by Andrew E. Ruddock, Director, Bureau of Retirement and Manbeck, Jesse B., president, Columbia Typographical Union No. 101.. Murphy, John J., national president, National Customs Service Associa- North, Roy M., legislative representative, National Association of Post- O'Connor, John, legislative director, United Federation of Postal Clerks, Owen, Vaux, president, National Federation of Federal Employees- Rademacher, James, vice president, National Association of Letter Carriers, AFL-CIO; accompanied by J. Don Kerlin, legislative liaison director....... Silvergleid, David, secretary, National Postal Union.. Simcox, Glenn R., president, National Association of Retired Civil Em- Smith, Ashby G., president, National Alliance of Postal Employees-- Warfel, George L., president, National Association of Special Delivery Bond, J. R., chairman, legislative committee, local 8, Retirement Federa- EXHIBITS Chronology-early retirement provisions-Civil Service Retirement Act "Rising Expense of Retirements May Lengthen Military Terms," article from the Washington Post, May 21, 1963, by John G. Norris, staff RETIREMENT AT AGE 55 WITH 30 YEARS' SERVICE TUESDAY, MAY 14, 1963 U.S. SENATE, SUBCOMMITTEE ON RETIREMENT OF THE COMMITTEE ON POST OFFICE AND CIVIL SERVICE, Washington, D.C. The Committee met at 2:30 p.m. in room 6202, pursuant to call, Senator Gale McGee (chairman of the subcommittee) presiding. Present: Senators McGee, Brewster, and Fong. Also present: Senator Johnston. Staff members present: William P. Gulledge, staff director and counsel; Dr. Robert L. Sumwalt, assistant staff director, and Frank A. Paschal, minority clerk. Senator MCGEE. The subcommittee will come to order. These hearings are convened today so that the retirement subcommittee may hear testimony on S. 176, a bill introduced by the distinguished chairman of this committee, Senator Olin Johnston, in order to amend the Civil Service Retirement Act to provide for retirement on full annuity at the age of 55 after 30 years of service. I am glad to welcome here today all of those who have been asked to testify and, before we get into the testimony itself, I will ask the chairman if he would have a statement. Senator JOHNSTON. Mr. Chairman, I appreciate very much your permitting me to make this brief statement prior to the beginning of these hearings on S. 176, which I introduced. This bill would provide for the retirement from the Federal service after 30 years at age 55. Thirty-year retirement has been a goal of the rank and file of all members of the Federal service for many years. I ask that S. 176 be placed in the record. Senator MCGEE. The bill will appear at this place. (S. 176 is as follows:) [S. 176, 88th Cong., 1st sess.] A BILL To amend the Civil Service Retirement Act so as to provide for retirement on full annuity at age fifty-five after thirty years of service Be it enacted by the Senate and the House of Representatives of the United States of America in Congress assembled, That (a) section 6(a) of the Civil Service Retirement Act (5 U.S.C. 2256(a)) is amended by striking out "sixty" and inserting in lieu thereof "fifty-five". (b) Section 6(b) of such Act (5 U.S.C. 2256 (b)) is repealed. (c) Section 9(d) of such Act (5 U.S.C. 2259 (d)) is amended by striking out the words "an employee retiring under section 6(b) or 6(d) or" and the words "employee or", and by inserting at the end thereof the following new sentence: "The annuity as hereinbefore provided, for an employee retiring under section 6(d), shall be reduced by one-sixth of 1 per centum for each full month in excess of sixty such employee is under the age of sixty years at date of separation." 1 SEC. 2. The amendments made by the first section of this Act shall be effective only with respect to persons separated from the service on or after the date of enactment of this Act. SEC. 3. Notwithstanding any other provision of law, benefits under the Civil Service Retirement Act resulting from the enactment of this Act shall be paid from the civil service retirement and disability fund. Senator JOHNSTON. When I introduced the 30-year retirement bill during the 87th Congress it was my hope that the retirement act would be amended so that retirement after 30 years of service without regard to age would be provided for. In the face of strong opposition, however, the bill was amended by the provision that the employee must have reached age 55. With this amendment, it was favorably reported out of the committee, but failed to be acted upon by the Senate. I regard S. 176 as a first important step to a full annuity 30-year retirement which I believe will inevitably be enacted in due course. The present bill takes a long step forward in achieving much needed liberalization of the retirement system. I am sure that the hearings beginning today under Chairman McGee's able leadership will provide the committee with a clear cross-section of opinion on this measure. Senator MCGEE. Thank you, Mr. Chairman. We have been advised that we have here in the audience, Junji Shikano, the assistant director of the Pension Bureau of the Office of the Prime Minister of Japan. I wonder if he would stand up. We want to welcome you to this session. I understand that you have been over here at the Civil Service Commission for the past 3 or 4 months making a study of the Civil Service retirement system and interrelationship to surety, and we hope and know, given the personnel down there in that job, that you have had a very profitable session. I might say that I am among those many people in this country that had very profitable sessions in your country. We learn a great deal from each other. I was there as recently as December and ever since then I have been trying to get them to open a Japanese bath here on the Hill. Senator Fong reminds me that Mr. S. K. Law of the Sarawak Government is also here and we welcome him. Senator MCGEE. I was rather close to Sarawak physically but not actually there in person. I met with a delegation from your country when they met in the Kuala Lampur last fall. I was a little closer on the other end of the line when we were over in part of the Philippines later on, but we didn't have the privilege of getting into Sarawak itself. The first witness this afternoon will be the distinguished chairman of the U.S. Civil Service, Hon. John W. Macy, Jr. Mr. MACY. Thank you, Mr. Chairman. STATEMENT OF HON. JOHN W. MACY, JR., CHAIRMAN, U.S. CIVIL SERVICE COMMISSION, ACCOMPANIED BY ANDREW E. RUDDOCK, DIRECTOR, BUREAU OF RETIREMENT AND INSURANCE Mr. MACY. Thank you. Mr. Chairman, I am accompanied by Mr. Andrew E. Ruddock, the Director of the Commission's Bureau of Retirement and Insurance. Mr. Chairman and members of the subcommittee, I appreciate the opportunity to appear before you today to present the views of the Civil Service Commission on these proposals to liberalize the optional retirement provisions of the Civil Service Retirement Act. The act now permits an employee with 30 years of service to retire voluntarily on full annuity at any time after age 60. A further provision permits the 30-year employee to retire at any time after age 55, but the annuity in this case is reduced by 1 percent for each full year he is under the age of 60. S. 176, introduced by the distinguished chairman of the committee, Senator Johnston, would retain the minimum age 55 requirement, but eliminate the age reduction, permitting optional retirement on full annuity after age 55 with 30 years of service. S. 620, introduced by your distinguished colleague, Senator Fong, proposes to eliminate all minimum age requirements for early optional retirement, permitting voluntary retirement on full annuity at any age after 30 years' service. The Commission's May 13 report to the chairman of the full committee states the administration's official position and best judgment on these proposals. To complete the record, I suggest that this report be incorporated in the subcommittee's proceedings. Senator McGee. Without objection it will be made part of the record. (The report referred to follows:) Hon. OLIN D. JOHNSTON, CIVIL SERVICE COMMISSION, Chairman, Committee on Post Office and Civil Service, U.S. Senate, DEAR MR. CHAIRMAN: This refers further to your request of February 9 for Commission comment and recommendation on S. 176 and S. 620, bills to amend the 30-year optional provision of the Civil Service Retirement Act. The latter bill would accord each employee subject to the Retirement Act a right to retire voluntarily at any time after completing 30 years' service, regardless of his age and with no reduction in rate because of earlier retirement. S. 176 proposes 30-year optional retirement on full annuity only at or after age 55. The present law gives an employee who has served at least 30 years the option of retiring on full annuity at any time after attaining age 60. Further provision is made for an employee with 30 years' service to retire after attaining age 55, but the annuity in such case is reduced because of such earlier retirement. These options have been in the Retirement Act since the amendment of January 24, 1942. Under this amendment, the reduction for under-60 retirement was based in each individual case on the present actuarial worth of an annuity allowable were the employee 60 years of age; the actuarial reduction under this law amounted to slightly more than 6 percent for each year the employee was under age 60 at retirement date. The computation plan was liberalized by act of February 28, 1948, and the annuity of a person retiring under this provision after that law's effective date (April 1, 1948) was reduced by only one-fourth of 1 percent for each full month (3 percent a year) the retiring employee was under age 60 at the time of separation. The act of July 31, 1956, effective October 1, 1956, further lowered this reduction factor so that the annuity of the 30-year employee now retiring between 55 and 60 is reduced by only one-twelfth |