These cover a basic 5 Your committee has before it some 17 bills. percent increase or a 3- to 4-percent increase. They cover a field of recomputation where a retiree had to take more than 22 percent deduction to protect his spouse, and importantly they cover many needed improvements to help the surviving widows. We have done much in this Congress to bring to par, salaries of ourselves, the Federal employee and the military. Let's not forget that it is only in the last 8 years that our retirement system has become more liberal, and let's not forget that we have thousands who retired many years ago when their salaries were low and when there was a less liberal retirement formula than now. Let's not forget the inroads inflation has made on fixed incomes in recent years. Let's not forget that these folks once carried the burden of Government as we do today. Would we like to change places with them? No, I think not because in recent years the changes have improved the retirement system. These changes make the present day retirement system more attractive to us--we just couldn't afford to step back. My plea is to do something in this Congress to help bring our retirees to par. The cost of living continues to go up and as time moves on our fellow workers of former years will find their retirement dollars buying less and less and their financial problems growing and growing. Now is the time to do something for them. Mr. MORRISON. We thank you for your contribution and your state ment. Mr. HUDDLESTON. Thank you, Mr. Chairman. Mr. MORRISON. Mr. Beckworth, do you wish to make a statement? Mr. BECKWORTH. Mr. Chairman, I will not be privileged to be here the whole time, but I do want to say I appreciate the gentleman's interest. We all recognize the great need of our retirees for additional help. I do hope, even in the short time left, we shall have an opportunity to discharge our duties appropriately with reference to this very worthy group. I, for one, shall support efforts to do that. Mr. MORRISON. The next witness will be the Honorable John W. Macy, Jr., Chairman of the U.S. Civil Service Commission. 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 this morning by Andrew E. Ruddock, Director of the Commission's Bureau of Retirement and Insurance. Mr. Chairman and members of the subcommittee, I am pleased to appear today in connection with your consideration of H.R. 2155 and related bills, proposing to revise past and present provisions of the Civil Service Retirement Act with respect to annuities for surviving spouses. Effective the first day of the third month following enactment, any of these bills would provide new or expanded spouses' survivor annuity benefits or protection in many types of cases under the retirement law, including All retirees currently on the roll and all who retire in the future; all employees separated at any time with title to deferred annuity; all retirees who have died prior to enactment of the legislation; and all employees who die in service in the future after 5 or more years' service. My letter of October 17, 1963, contains a detailed analysis of the various changes proposed by this legislation and sets forth the Commission's reasons for strongly recommending against enactment. If you agree, Mr. Chairman, I believe it would be well to incorporate that letter in the record at this point. Mr. MORRISON. Without objection, the letter will be incorporated in the record. (The letter follows:) Hon. Toм MURRAY, U.S. CIVIL SERVICE COMMISSION, Chairman, Committee on Post Office and Civil Service, DEAR MR. CHAIRMAN: This refers further to your requests for Commission report on H.R. 2155, H.R. 3296, H.R. 6395, H.R. 6430, and H.R. 8335, identical bills to amend the Civil Service Retirement Act, as amended, to provide annuities for surviving spouses without deduction from original annuities, and for other purposes. All five bills need technical correction in two respects. If any is considered, the annuity beginning and ending date provisions throughout section 1 should be revised to read "shall commence the day after death" and "shall terminate the last day of the month before." This will maintain the effective date concepts installed for all survivor annuities by Public Law 86-713. Also, for completeness provision should be added to amend section 10 (b) of the Retirement Act to change "(h)" to "(g)" in two places in that section. A third correction is necessary in H.R. 6430 and H.R. 8335; the word "member" on page 1, line 6, should read "Member". Effective the first day of the third month following enactment, any of these bills would provide new or revised spouses' survivor annuity protection in cases of (a) all retirees then on the roll and those who come on the roll in the future, (b) employees and Members of Congress thereafter dying in service, (c) former employees and Members of Congress separated at any time with deferred annuity title, and (d) all retirees who died at any time prior to the bill's approval date. Following is an analysis of the changes proposed for these groups. CURRENT AND FUTURE RETIREES Enactment of any of these bills would, from effective date, afford automatic survivor annuity protection, without reduction in retirement annuity, for widows and widowers of all retirees them on the annuity roll and all retirees added to the roll thereafter. Retirees already on the roll with reduced annuity elections in favor of spouse would have their full single life rates restored as of retirement dates, with intervening increases added thereto, and with resulting rates paid from and after the cited effective date. Recomputations in these cases would involve restoration of annuity reductions sustained under each of five survivorship options described below. Retired between Jan. 1, 1940 and Mar. 31, 1948. Reduction in retiree's annuity Full actuarial........ 10 percent, plus 34 of 1 percent for any 5 percent of 1st $1,500 and 10 percent Oct. 1, 1956 and Oct. 10, 1962. 21⁄2 percent of 1st $2,400 and 10 percent Oct. 11, 1962 and to date.... of any added amount used as base 21⁄2 percent of 1st $3,600 and 10 percent Benefit to spouse named at retirement 50 or 100 percent of retiree's 50 percent of retiree's unre- 50 percent of amount used as survivor base. 55 percent of amount used as survivor base. The proposed automatic widow's and widower's annuity in these cases and in all future retiree cases would be 55 percent of the annuity received by the retiree at the time of death. Also, eligibles for the proposed automatic survivor annuity would include not only widows and widowers who were married to employees at time of retirement, but also those married after retirement for at least 3 years preceding death. One phase of this feature has not been thought through. Section 10(a) of the Retirement Act would be amended to require that a widow or widower be paid annuity equal to 55 percent of "the annuity received by such annuitant at the time of death." This requirement clashes with computation-of-annuity provisions in section 9 of the act. Subsections (a), (b), and (c) of this section each contain a provision prohibiting any added annuity afforded a retiree under the minimum disability formula from increasing the annuity of a survivor. The requirement is also at odds with section 12 of the act, which governs additional annuity purchasable by voluntary contributions. Such added annuity may be taken on a single life or survivorship annuity basis, the choice to be made at retirement. The "annuity received" by a retiree at date of death could be construed as including any added annuity purchased by voluntary contributions. This would result in such anomalies as (a) free automatic spouse's annuity based on voluntary contributions, and (b) double survivor benefits where additional annuity is taken under the survivorship plan and the retiree also leaves a spouse eligible for the purposed automatic benefits. We do not know whether proponents of the bill consider the 55-percent-of-finalrate feature indispensable. We are thus unable to suggest technical revisions to eliminate these conflicts. Active employees (including Members of Congress) Present law affords automatic survivor annuity to an eligible widow or dependent widower of a covered employee dying after 5 or more years of civilian service. The survivor receives 55 percent of the annuity computed on the service and salary of the deceased, commencing the day after employee's death and continuing to the end of the month before the survivor's death or remarriage. The bills would eliminate existing marriage-parentage and dependent-widower requirements and sharply expand the class of eligibles as follows: Widow: Surviving wife married to de- Widow: Surviving wife. issue by their marriage. Dependent widower: Surviving hus- Widower: Surviving husband. SEPARATED EMPLOYEES (INCLUDING MEMBERS) WITH DEFERRED ANNUITY TITLE Present law provides differing death benefits for separated employees and for former Members who die before establishing valid claim for deferred annuity. In separated employee cases, the only death benefit provided is a lump-sum payment of the employee's retirement contributions, with interest. In separated Member cases, however, survivor annuity may be payable to a qualified spouse. If the surviving wife or husband was married to the Member at date of separation affording deferred annuity title, such wife or husband is eligible for an annuity of 55 percent of the Member's deferred annuity, commencing on the day after the Members death and continuing to the end of the month before the survivor's death or remarriage. If the wife or husband is the person who would be entitled to the lump-sum death benefit, he or she may elect to receive it instead of survivor annuity provided such election is made before survivor annuity is awarded. Under the proposal, the death benefit provisions now applicable only to eligibles for deferred Member annuity would be extended to all former employees with deferred annuity title, separated in the past or future, who die (on or after the bill's effective date) before establishing a valid claim for deferred annuity. 37-307-64 2 all retirees who have died prior to enactment of the legislation; and all employees who die in service in the future after 5 or more years' service. My letter of October 17, 1963, contains a detailed analysis of the various changes proposed by this legislation and sets forth the Commission's reasons for strongly recommending against enactment. If you agree, Mr. Chairman, I believe it would be well to incorporate that letter in the record at this point. Mr. MORRISON. Without objection, the letter will be incorporated in the record. (The letter follows:) Hon. Toм MURRAY, U.S. CIVIL SERVICE COMMISSION, Chairman, Committee on Post Office and Civil Service, DEAR MR. CHAIRMAN: This refers further to your requests for Commission report on H.R. 2155, H.R. 3296, H.R. 6395, H.R. 6430, and H.R. 8335, identical bills to amend the Civil Service Retirement Act, as amended, to provide annuities for surviving spouses without deduction from original annuities, and for other purposes. All five bills need technical correction in two respects. If any is considered, the annuity beginning and ending date provisions throughout section 1 should be revised to read "shall commence the day after death" and "shall terminate the last day of the month before." This will maintain the effective date concepts installed for all survivor annuities by Public Law 86-713. Also, for completeness provision should be added to amend section 10 (b) of the Retirement Act to change "(h)" to "(g)" in two places in that section. A third correction is necessary in H.R. 6430 and H.R. 8335; the word "member" on page 1, line 6, should read "Member". Effective the first day of the third month following enactment, any of these bills would provide new or revised spouses' survivor annuity protection in cases of (a) all retirees then on the roll and those who come on the roll in the future, (b) employees and Members of Congress thereafter dying in service, (c) former employees and Members of Congress separated at any time with deferred annuity title, and (d) all retirees who died at any time prior to the bill's approval date. Following is an analysis of the changes proposed for these groups. CURRENT AND FUTURE RETIREES Enactment of any of these bills would, from effective date, afford automatic survivor annuity protection, without reduction in retirement annuity, for widows and widowers of all retirees them on the annuity roll and all retirees added to the roll thereafter. Retirees already on the roll with reduced annuity elections in favor of spouse would have their full single life rates restored as of retirement dates, with intervening increases added thereto, and with resulting rates paid from and after the cited effective date. Recomputations in these cases would involve restoration of annuity reductions sustained under each of five survivorship options described below. Retired between Jan. 1, 1940 and Mar. 31, 1948... Reduction in retiree's annuity Full actuarial... 10 percent, plus 34 of 1 percent for any 5 percent of 1st $1,500 and 10 percent Oct. 1, 1956 and Oct. 10, 1962. 2% percent of 1st $2,400 and 10 percent Oct. 11, 1962 and to date.. of any added amount used as base 21⁄2 percent of 1st $3,600 and 10 percent Benefit to spouse named at retirement 50 or 100 percent of retiree's 50 percent of retiree's unre- 50 percent of amount used as survivor base. 55 percent of amount used as survivor base. The proposed automatic widow's and widower's annuity in these cases and in all future retiree cases would be 55 percent of the annuity received by the retiree at the time of death. Also, eligibles for the proposed automatic survivor annuity would include not only widows and widowers who were married to employees at time of retirement, but also those married after retirement for at least 3 years preceding death. One phase of this feature has not been thought through. Section 10(a) of the Retirement Act would be amended to require that a widow or widower be paid annuity equal to 55 percent of "the annuity received by such annuitant at the time of death." This requirement clashes with computation-of-annuity provisions in section 9 of the act. Subsections (a), (b), and (c) of this section each contain a provision prohibiting any added annuity afforded a retiree under the minimum disability formula from increasing the annuity of a survivor. The requirement is also at odds with section 12 of the act, which governs additional annuity purchasable by voluntary contributions. Such added annuity may be taken on a single life or survivorship annuity basis, the choice to be made at retirement. The "annuity received" by a retiree at date of death could be construed as including any added annuity purchased by voluntary contributions. This would result in such anomalies as (a) free automatic spouse's annuity based on voluntary contributions, and (b) double survivor benefits where additional annuity is taken under the survivorship plan and the retiree also leaves a spouse eligible for the purposed automatic benefits. We do not know whether proponents of the bill consider the 55-percent-of-finalrate feature indispensable. We are thus unable to suggest technical revisions to eliminate these conflicts. Active employees (including Members of Congress) Present law affords automatic survivor annuity to an eligible widow or dependent widower of a covered employee dying after 5 or more years of civilian service. The survivor receives 55 percent of the annuity computed on the service and salary of the deceased, commencing the day after employee's death and continuing to the end of the month before the survivor's death or remarriage. The bills would eliminate existing marriage-parentage and dependent-widower requirements and sharply expand the class of eligibles as follows: Widow Surviving wife married to de- Widow: Surviving wife. issue by their marriage. Dependent widower: Surviving hus- Widower: Surviving husband. SEPARATED EMPLOYEES (INCLUDING MEMBERS) WITH DEFERRED ANNUITY TITLE Present law provides differing death benefits for separated employees and for former Members who die before establishing valid claim for deferred annuity. In separated employee cases, the only death benefit provided is a lump-sum payment of the employee's retirement contributions, with interest. In separated Member cases, however, survivor annuity may be payable to a qualified spouse. If the surviving wife or husband was married to the Member at date of separation affording deferred annuity title, such wife or husband is eligible for an annuity of 55 percent of the Member's deferred annuity, commencing on the day after the Members death and continuing to the end of the month before the survivor's death or remarriage. If the wife or husband is the person who would be entitled to the lump-sum death benefit, he or she may elect to receive it instead of survivor annuity provided such election is made before survivor annuity is awarded. Under the proposal, the death benefit provisions now applicable only to eligibles for deferred Member annuity would be extended to all former employees with deferred annuity title, separated in the past or future, who die (on or after the bill's effective date) before establishing a valid claim for deferred annuity. 37-307-64 2 |