a day but will take a part time job. He is not 100 percent disabled, thus cannot retire, but under this provision he could retire without reduction in his earned annuity. This would be in the public interest; the Government would have fully efficient employees and could expect employee morale to go up.

Thank you, Mr. Chairman. If you have any questions, I would be happy to answer them.

Senator MCGEE. Thank you both for your comments and the ideas that you have shared in this with the members of the committee.

I think that an important point you submitted to us is that liberalization of these measures would increase the caliber of the service and the attractiveness of the service to those interested in a career with the Government, which in my opinion is all to the good because unless and until we can make this business of Government as high and attractive and effective and efficient as any other profession, until that point is reached Isuspect we are going to be falling short of our goals in trying to make a free society as attractive as it ought to be in our own midst and in other parts of the world. I support very strongly anything that will intensify the performance and increase the stature of the Federal service.

Senator Fong, do you have any questions you would like to ask? Senator FONG. Mr. Rademacher, you referred a lot to disability retirement in your prepared statement. You said there were 426,031 on the retirement rolls on June 30, 1962, and of this number 210,294 were receiving benefits under disability retirement.

Now could you tell us what percentage of this disabled employee's salary is paid to him if he retires as a disabled person?

Mr. RADEMACHER. A disabled employee, thanks to the Congress, is entitled to no less than 40 percent of his salary. You will find that most of the employees are in that bracket, about 40 percent of what his salary would be.

Senator FONG. That is of the earned annuity, is that correct?

Mr. RADEMACHER. Salary. His annuity would be 40 percent, no less than 40 percent of what his salary is today upon retirement. Senator FONG. Of these 426,031 employees, probably one-half of them are under disability retirement earning about 40 percent of their salaries?

Mr. RADEMACHER. Yes, sir; and if I may just add that last year when 16,728 retired for disability reasons, their annuities averaged only $161 monthly. That will give you an idea of what the annuity

amounts to.

Senator FONG. Yes. Now you say that if these employees were allowed to retire at any age or at the age of 55 with 30 years' employment, then the ones who will be retired under disability retirement would decrease. Were you making a point there that there will be a savings to the Government?

Mr. RADEMACHER. It is natural to assume that the disability retirements come about at a later age in life, and if you permit the employee to retire at an earlier age he is not going to have to accept disability retirement. So he is naturally, by retiring at the normal optional retirement. going to save the Government money in the long run. The reason of course why you have the retirees under disability is because

they are living longer than the people who retired on an optional basis.

You have only one-third of the people retiring every year, our disability retirees, but one-half of all retirees are under the disability provisions. We feel there will be a substantial savings and actually an increase in productivity and efficiency. When you have an employee who is upward in years, say at age 55, and he is only struggling through his job daily until such time as he reaches an age when he can get out without a reduction, the Government is not benefiting by the employment of that man. Certainly the man is not benefiting his condition, either.

Senator FONG. You are not getting his peak productivity.

Mr. RADEMACHER. No, where a younger person replacing him would produce more efficiently.

Senator FONG. You might have quite a number of employees in that category.

Mr. RADEMACHER. Yes, because it is called to our attention frequently how many people apply for retirement and are rejected because they are not totally disabled. These are people who have gained heart conditions because of their employment, back problems, but they still are considered as physically able to perform their duties. The people who rate them as such do not stop to consider how arduous the duties are, so they allow them to remain on in this condition.

Certainly the passage of this bill would protect a great many people. You would find, even though, as has been stated earlier, there might be suddenly next year many who would take advantage of this, and there may not be, but there would be the person taking advantage that cannot get out today because he is not totally disabled. As I said in my closing remarks, it would be an act of mercy which will promulgate efficiency and increase productivity for the Government. Senator FONG. If a man has 30 years of service, he would naturally take retirement?

Mr. RADEMACHER. Yes.

Senator FONG. More than what he would be paid under this other? Mr. RADEMACHER. You are right, sir.

Senator FONG. I have no further questions.

Senator MCGEE. Thank you very much, Mr. Rademacher, for making your contribution for the record.

Now Mr. Max Jordan, president of the National Rural Letter Carriers Association, accompanied by John Emeigh, secretary.

While they are coming to the table, I want to place in the record here a telegram received today.

(The telegram is as follows:)

Senator GALE W. MCGEE,

BREMERTON, WASH., MAY 13, 1963.

Chairman, Retirement Subcommittee, Washington, D.C.

DEAR SENATOR: Local 8 Retirement Federation, representing all Federal employees in Northwest feel that enactment of S. 176 would relieve positions for younger men, allow retirement for travel and enjoyment, and stimulate the economy, please act favorably on S. 176.

Respectfully,

J. R. BOND,

Chairman, Legislative Committee.

Senator MCGEE. You may proceed, Mr. Jordan.

STATEMENT OF MAX JORDAN, PRESIDENT, NATIONAL RURAL LETTER CARRIERS ASSOCIATION, ACCOMPANIED BY JOHN EMEIGH, SECRETARY

Mr. JORDAN. Mr. Chairman, members of the committee, for the record I am Max H. Jordan, president of the National Rural Letter Carriers Association, an organization of 40,000 substitute, retired and regular rural carriers. I am accompanied by Mr. John W. Emeigh, secretary of our organization.

I am pleased to appear here today and testify in support of S. 176, introduced by the distinguished chairman of the Committee on Post Office and Civil Service, Senator Olin D. Johnston, of South Carolina We deeply appreciate the fact that he has sponsored such legislation. We also appreciate the introduction of a similar bill by Senator Hiram L. Fong of Hawaii.

Thirty-year optional retirement has been a goal of this association for many years. It has been mandated as a legislative objective by repeated resolutions passed by our national conventions. We have on various occasions in the past appeared before committees of the House and Senate and urged action to amend the retirement act to provide for such optional retirement.

We are pleased that consideration of this proposal is again on the legislative agenda of this committee and we wish to thank you, Mr. Chairman, for scheduling hearings on these bills.

Statistics relative to employee annuitants added to the retirement rolls during the past years would not indicate that there would be any wholesale flight from Government service if this legislation were enacted. Likewise, they would not indicate that any great financial burden would accrue to the retirement fund if the retirement act were amended to provide this liberalization.

During fiscal year 1962, 50,524 persons were added to the retirement rolls. Only 2,980 of these represented employees who elected optional retirement at age 55 with 30 years of service. It is also important to note that in fiscal year 1961, 3,136 employees elected optional retirement at age 55. Thus, the number availing themselves of this optional retirement has actually decreased from 1961 to 1962.

The small number who presently retire at age 55 fully substantiates our opinion that removal of a penalty in the form of reduced annuity would not result in any tremendous increase in the number who would elect such optional retirement.

And, if the provisions of S. 620 were to be adopted, we also would not believe that the total number retiring under the liberalized provisions would greatly increase.

This opinion would seem to be further substantiated by the fact that out of 50,524 added to the retirement rolls last year, 4,075 were mandatorily retired at age 70. If those retiring on disability (16,737) are removed from the total retirements in fiscal year 1962, it will be noted that less than 9 percent exercised optional retirement at age 55. The position of our association is that there should be no reduction in annuity when an employee desires to voluntarily elect retirement after 30 years of service. In general, certainly within the rural delivery service, there would need to be some extenuating circumstances which would cause the employee to desire to exercise such retirement

privilege, particularly if under age 55-the point at which he can presently retire with a reduction in annuity.

We feel that, except for a possible small minority, such retirements would in most cases be due to health reasons; that is, cases where the individual may be suffering illness or disability which indicates he should discontinue his work but where it may be impossible to establish a degree of disability warranting disability retirement.

This provision for optional retirement would contribute a great deal to the morale of employees. It is a privilege they do seek and desire but one which would not be exercised by a large number of employees.

We wholeheartedly endorse S. 176 and trust the committee may be able to report the bill in the near future.

Senator MCGEE. Would it be your judgment that were this liberalization to be enacted that it would have the effect of attracting higher caliber people, let us say, at a very young age to go into the service? Mr. JORDAN. That is a very good possibility, yes.

Senator FONG. And that the efficiency would be greater in the civil service?

Mr. JORDAN. As a result of that, yes, sir.

Senator MCGEE. I have no further questions, Mr. Jordan.

Mr. JORDAN. Thank you very much, Mr. Chairman and Senator Fong.

Senator MCGEE. Next is Mr. C. L. Dorson, president of the Retirement Federation of Civil Service Employees of the U.S. Government. STATEMENT OF C. L. DORSON, PRESIDENT, RETIREMENT FEDERATION OF CIVIL SERVICE EMPLOYEES OF THE U.S. GOVERNMENT

Mr. DORSON. Mr. Chairman and members of the committee, my name is C. L. Dorson. I am president of the Retirement Federation of Civil Service Employees of the U.S. Government, an organization of approximately 95,000 members, most of whom are presently employed in the Department of Defense.

At the outset, we should like to express our thanks to the author of S. 176, Senator Johnston, and to this committee for their great interest in the Federal employee which makes consideration of this most desired legislation possible.

Retirement after 30 years' service, without reduction for age, is not new on the Federal employee's "most wanted list" of benefits. It has been the subject of countless bills since 1920 and is probably the most desired benefit of them all. I know it tops the list of my organization's legislative aims and has for many years.

The proposal in S. 176 is not without precedent in other retirement systems and even, to some extent, in the civil service retirement system which permits the retirement, under section 6(c) of certain employees at age 50 with only 20 years' service. Foreign Service officers enjoy the same privileges.

Probably the largest group of Federal personnel now entitled to optional retirement benefits without regard to age are those in the uniformed services. Both officers and enlisted personnel of the Army, Air Force, Navy, Marine Corps, Coast Guard, and the Military Nurse Corps may retire optionally, at any age, with as little as 20 years' service. Personnel of the Coast and Geodetic Survey and officers of

the Public Health Service have such option after 30 years' service. It is worthy of note that all of these systems are noncontributory, but the employees subject to the civil service retirement system contribute 612 percent of their pay toward the cost thereof.

Among private systems providing benefits similar to those proposed in S. 176 are those of the American Telephone & Telegraph Co. and its subsidiary companies. These also are noncontributory systems.

It seems reasonable to assume that the provision of these benefits, without cost to the recipients, must have some real and practical value to the employer as well as the employee, else they would not be continued. We believe the same values would obtain in the case of those to whom S. 176 would apply.

This legislation is neither new nor strange to this committee. Similar bills were reported favorably in the 78th Congress, S. 1371, in the 84th Congress when S. 2875 and H.R. 7619 passed the Senate, and in the 87th Congress when S. 188 was reported. We ask that you repeat by reporting S. 176 favorably at an early date.

Mr. Chairman, we are most grateful to the committee for this opportunity to express our views.

Thank you very much.

Senator MCGEE. Are you saying to this committee that in terms of the liberality of the proposed legislation that there are already substantial numbers of Federal personnel eligible under more liberal systems as well as those among some private systems likewise eligible in programs that are noncontributory?

Mr. DORSON. Yes, Mr. Chairman, this is true; the military being perhaps the largest and even at least one private system of which we are aware, A.T. & T. and at least some of its major subsidiaries.

Senator MCGEE. Inasmuch then that this is a contributory system, in your view this would not be a particular abuse of the direction of liberality if this legislation were to be enacted?

Mr. DORSON. We do not believe it would, Mr. Chairman. We think that the cost would be small. I do not deny that there would probably be some cost, I am unable to say how much. I do think, however, that Senator Johnston came pretty close to estimating it the year before last when he estimated the cost to be something less than $250,000, I believe. I think he came closer than the billion-dollar figure but I can neither substantiate that figure nor deny that the figures of the Commission and the Bureau of the Budget are true. I expect that there will be some cost involved, I have no question with regard to that. I do believe, however, that a Federal employee has benefits demonstrably less liberal in at least these respects while paying 612 percent of his entire salary, his basic salary, toward the cost of these benefits than do people in similar circumstances in noncontributory systems who are paying nothing; that is, in the way of salary.

Senator MCGEE. So the issue really is equity across the boardconceivably those are the ones that argue rationally that he ought to be relieved of contributing this 62 percent and still get the liberal allowance that others get.

Mr. DORSON. I think that is a fair statement, Mr. Chairman. We do not propose it, of course, but when you get down to equity as the committee knows in a great many instances the employees, of the Department of Defense particularly, work right alongside those in