SURVIVOR ANNUITIES HEARINGS BEFORE THE SUBCOMMITTEE ON RETIREMENT , INSURANCE, AND HEALTH BENEFITS OF THE COMMITTEE ON POST OFFICE AND CIVIL SERVCE HOUSE OF REPRESENTATIVES NINETY - FIRST CONGRESS SECOND SESSION ON H.R. 3661 AND RELATE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP74B00415R000600020010-9
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 77
• Document Creation Date: December 12, 2016
• Document Release Date: August 7, 2001
• Sequence Number: 10
• Publication Date: June 10, 1970
• Content Type: OPEN

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I
SURVIVOR ANNUITIES
HEARINGS
SUBCOMMITTEE ON RETIREMENT, INSURANCE,
AND HEALTH BENEFITS
COMMITTEE ON
POST OFFICE AND CIVIL SERVICE
HOUSE OF REPRESENTATIVES
NINETY-FIRST CONGRESS
SECOND SESSION
ON
H.R. 3661 and Related Bills
A BILL TO AMEND CHAPTER 83, TITLE 5, UNITED STATES
CODE, TO ELIMINATE THE REDUCTION IN THE ANNUITIES
OF EMPLOYEES OR MEMBERS WHO ELECTED REDUCED
ANNUITIES IN ORDER TO PROVIDE A SURVIVOR ANNUITY
IF PREDECEASED BY THE PERSON NAMED AS SURVIVOR
AND PERMIT A RETIRED EMPLOYEE OR MEMBER TO
DESIGNATE A NEW SPOUSE AS SURVIVOR IF PREDE-
CEASED BY THE PERSON NAMED AS SURVIVOR AT THE
TIME OF RETIREMENT
Serial No. 91-27
Printed for the use of the Committee on Post Office and Civdl Service
U.S. GOVERNMENT PRINTING OFFICE
46-821 WASHINGTON : 1970
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COMMITTEE ON POST OFFICE AND CIVIL SERVICE
THADDEUS J. DULSKI, New York, Chairman
DAVID N. HENDERSON, North Carolina, Vice Chairman
ARNOLD OLSEN, Montana ROBERT J. COR 13 ETT, Pennsylvania
MORRIS K. UDALL, Arizona H. R. GROSS, Iowa
DOMINICK V. DANIELS, New Jersey GLENN CUNNIN GRAM, Nebraska
ROBERT N. C. NIX, Pennsylvania EDWARD J. DERWINSKI, Illinois
JAMES 11. HANLEY, New York ALBERT W. JOHNSON, Pennsylvania
CHARLES H. WILSON, California DANIEL E. BUTTON, New York
JEROME R. WALDIF? California WILLIAM L. SCOTT, Virginia
RICHARD C. WHITE, Texas JAMES A. McCLURE, Idaho
WILLIAM D. FORD, Michigan THOMAS J. MESKILL, Connecticut
LEE 11. HAMILTON, Indiana DONALD E. LUKENS, Ohio
FRANK J. BRASCO, New York LAWRENCE J. HOGAN, Maryland
ROBERT O. TIERNAN, Rhode Island
GRAHAM PURCELL, Texas
CHARLES E. JOHNSON, Chief Counsel and Staff Director
B. BENTON BRAY, Associate Staff Director
JOHN 11. MARTINY, Counsel
WILLIAM A. IRVINE, Assistant Staff Director
THEODORE J. KAZY, Senior Staff Assistant
SUBCOMMITTEE ON RETIREMENT, INSURANCE, AND HEALTH BENEFITS
DOMINICK V. DANIELS, New Jersey, Chairman
DAVID N. HENDERSON, North Carolina WILLIAM L. SCOTT, Virginia
JAMES M. HANLEY, New York DONALD E. LUKENS, Ohio
FRANK J. BRASCO, New York LAWRENCE J. HOGAN, Maryland
ROBERT N. C. NIX, Pennsylvania
Ex Officio Voting Members
THADDEUS J. DULSKI, New York ROBERT J. CORIBETT, Pennsylvania
(Ralph J. Devlin, Staff Assistant, Room 207, Cannon Building-Ext. 0831)
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CONTENTS
Testimony of- Page
Broyhill, Hon. Joel T., a Representative in Congress from the State 4
of Virginia --------------------------------------------------
C. L., president, Retirement Federation of Civil Service
Employees-------------------------------------------------- 52
Dulski, Hon. Thaddeus J., a Representative in Congress from the 2
State of New York ------------------------------------------
Andrew E., Director, Bureau of Retirement, Insurance,
and Occupational Health, U.S. Civil Service Commission-------_ 40
Jaspan, Dan, legislative representative, National Association of
Postal Supervisors--------------------- ------- ---------- 56
Sadler, Carl K., legislative representative, American Federation of
Government Employees, AFL-CIO, accompanied by James H.
Lynch, assistant legislative representative, and Stephen A. Koczak,
director of research------------------------------------------
_________________ _ 21
Walters, Thomas G., president, National Association of Retired Civil
Employees, accompanied by Mrs. Gertrude Holt, first vice president
Virginia Federation of Chapters, NARCE, and Louis J. Mancuso,
president, District of Columbia Federation of Chapters, NARCE_ 8
Wolkomir, Nathan T., president, National Federation of Federal
Employees, accompanied by Benjamin E. Hinden, legislative 61
representative, NFFE----------------------------------------
Statements submitted by-
Alfrey, Herbert F., president, National Rural Letter Carriers' As-
sociation------------- 71
Broyhill, Hon. Joel T., a Representative in Congress from the State 65
of Virginia --_-_____--_
Burke, Hon. J. Herbert, a Representative in Congress from the State 66
of Florida---------------------------------------------- -Griffiths, Hon. Martha W., a Representative n Conress from the 65
State of Michigan -___-__--___
Hill, James D., executive director, National Federation of Professional 71
Organizations -----------------------------------------------
John A., operations director, Government Employes Council, 72
AFL-CIO-------------------------------------------------- 68
Nilan, Patrick, legislative director, United Federation of Postal
Clerks (AFL-CIO) ------------------------------------------ 68
Rademacher, James II., president, National Association of Letter
Carriers, AFL-CIO ____________________
Schwengel, Hon. Fred, a Representative in Congress from the State 66
of Iowa----------------------------------------- ---------
Communications received from-
Ferebee Dr. Dorothy B., Chairman, Commission on the Status of
Women, government of the District of Columbia---------------- 68
Murphy, Lionel V., executive director, Federal Professional Associa-
tion 74
------------ ----------------- 68
Ryan, William Ii., national coordinator, International Association
of Machinists and Aerospace Workers --___-__--__
Watt, Graham W., Assistant to the Commissioner, District of Colum-
letter dated August 10, 1970______________________________
bia, 73
Additional material-
Administration reports received on H.R. 3661, H.R. 5230, H.R.
468, and H.R. 11120 from the Civil Service Commission and the 33-40
Bureau of the Budget___________
Report on H.R. 468, received from the Commissioner of the District 73
of Columbia------------------------------------------------
H.R. 3661, subject of hearing----------------------------------- 2
(III)
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SURVIVOR ANNUITIES
WEDNESDAY, JUNE 10, 1970
U.S. HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON RETIREMENT, INSURANCE,
AND HEALTH BENEFITS OF THE
COMMITTEE ON POST OFFICE AND CIVIL SERVICE,
Washington, D.C.
The subcommittee met, pursuant to notice, at 10:10 a.m., in room
210, Cannon House Office Building, Hon. Dominick V. Daniels
(chairman of the subcommittee) presiding.
Mr. DANIELS. The Subcommittee on Retirement, Insurance, and
Health Benefits will come to order.
The Subcommittee on Retirement, Insurance, and Health Benefits
is meeting this morning to consider H.R. 3661, a bill introduced by
the chairman of the full Committee on Post Office and Civil Service,
the Honorable Thaddeus J. Dulski, and related bills dealing with
certain survivorship provisions of the civil service retirement law.
Originally the joint and survivorship option. was included in the
retirement law, effective January 1, 1940, and required a full actuarial
reduction in the retiree's annuity to provide survivor annuity pro-
tection. The option has been amended several times over the past
30 years to progressively decrease the annuity reduction cost to the
retiree. Since 1956 the reduction has amounted to relatively little
more than a token, and the survivor benefit equals 55 percent of the,
retiree's rate of annuity.
The provision was initially premised upon contractual principles
whereby, in consideration of the retiree's unconditional agreement to
accept a reduced annuity for life, the retirement system would under-
take to pay his spouse designated at time of retirement a specified
benefit in the event she survived him.
That philosophy has consistently precluded the restoration of full
annuity to the retiree when the marriage is terminated, and the
extension of the survivor protection to the spouse of a subsequent
marriage.
It will be the purpose of the subcommittee to evaluate the relative
equity of these concepts in the light of changing social attitudes and
our society's resolve to provide economic security for the aged.
H.R. 3661 proposes a limited change in the basic philosophy under-
lying the original joint and survivorship concept in two respects:
(1) It provides for the restoration of the full single life rate of
annuity-the rate which would have been payable had a reduced
benefit not been elected-to the retiree in the event he is predeceased
by the designated spouse.
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(2) It further provides that in the -event such a retiree remarries
lie may eventually designate the subsequent spouse to receive a
survivor annuity by refunding the amount of annuity previously
restored to him.
Without objection, the bill, H.R. 3661, will be inserted in the
record at this point.
('I'he bill follows:)
1.11. It. 3661, 91st Cong., first less.]
A B1LL To aauend chapter 53, title 5, United States Codo, to eliminate the reduction in the annuities of
einployees or Men hers who elected reduced annuities in order to provide a survivor annuity if predeceased
by I he person named ss survivor and permit a retired employee or Member to designate a new spouse
as survivor if predeeeased by the. person named as survivor at the time of retirement
Be it enacted b?/ the Senate and House of Representatives of the United States of
America in Congress assembled, That section 8339(1), title 5, United States Code,
is amended by adding at the end thereof the following new sentence: "If the
designated spouse predeceases the employee or Member making such election the
reduction shall be restored to the employee or Member and the annuity of such
employee or Member shall be computed without regard to any election made
under this subsection: Provided, That any such employee or Member may elect
to designate a new spouse as survivor when such new spouse has attained the age
of sixty and all reductions by reason of prior designations that have been restored
to such employee or Member have been repaid to the retirement fund."
Sac. 2. Annuities of those employees or Members as defined in section 8331 of
title 5, United States Code, predeceased by a designated spouse after the date of
enactment of this Act shall be computed pursuant to the amendment contained
in section 1 of this Act and he effective the first day of the month which begins
after the date of death of the spouse designated at time of retirement or the first
day of the month which begins after a new spouse attains the age of sixty. Annuities
of those employees or Members as defined in section 8331 of title 5, United States
Code, retired prior to the date of enactment of this Act and predeceased by a
designated spouse shall be computed pursuant to the amendment contained in
section 1 of this Act and be effective the first day of the third month following the
date of enactment of this Act.
SLc. 3. The provisions of section 8348(g), title 5, United States Code, shall not
apply with respect to benefits resulting from the enactment of this Act.
Mr. DANIELS. Our first witness this morning is the Honorable
Thaddeus J. Dulski, chairman of the full committee.
i Mr. Chairman, it is a great pleasure and honor to have you here
this morning in support of the bill you have introduced, H.R. 3661.
STATEMENT OF HON. THADDEUS J. DULSKI, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW YORK
Niir. Diirshf. Thank you very much, Mr. Daniels and fey dis-
t.ingiiished colleagues of the subcommittee.
I am happy to have with me one of the champions of legislation
before this committee over the years I have had the pleasure to serve
wvith him. Although he represents another political faith, his sincerity
toward the employees and retirees of civil service is outstanding.
I am happy to have with its the Honorable Joel 'I'. Broyhill.
Nlr. Chairman and members of the subcommittee, I deeply appre-
ciate your scheduling hearings on H.R. 3661, a bill which I introduced
earlier in the 91st Congress.
I am genuinely grateful for the opportunity extended me to appear
before this distinguished subcommittee.
The outstanding record of accomplishments of the subcommittee,
under the able leadership of Chairman Dominick V. Daniels, is one to
which each and every member of our committee may point with pride.
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I strongly recommend your favorable consideration of this very
worthwhile legislation. Its purpose is to eliminate the reduction in the
annuities of retirees whose designated spouses have predeceased
them, and to permit the naming of a spouse under a remarriage for
survivor annuity purposes.
The dramatic increase in the proportion of older persons in the
population-the economic, social, and political problems growing out
of this development-and an emerging public policy of providing for
better and more enriching lives in the later years are already so well
documented that they require little further treatment at this time.
More Americans are spending more years in retirement periods of
uncertain length and needs than ever before. The result is a mounting
strain on resources they had when they began their retirement.
For an ever-rising proportion of women-mostly widows-the prob-
lem is becoming especially severe. The rising population of widows is
attempting to live independently, even at the price of poverty.
Unless action is taken here, the economic difficulties of these unfor-
tunate persons will worsen in the years ahead. The inequities they now
face, and the policies that perpetuate them, are of direct concern not
only to the Federal retiree but also to the younger active employee.
I am well aware that no single proposal will have a major impact
unless tied to broad policy decisions. Nevertheless, I -urge the sub-
committee to give sympathetic consideration to the merits of H.R.
3661, and to the equities of the retirees and survivors it will help.
In order to not unduly delay this morning's proceedings, I have
purposely limited the length of my remarks.
I recognize the expertise of this distinguished subcommittee and the
ability of the scheduled witnesses to deal effectively with the detailed
provisions of this proposal.
Mr. Daniels and Mr. Hanley, I am very happy to endorse H.R.
3661. Knowing the work you have done on your subcommittee, which
has been of great service, I want to assure you that every man and
woman involved will ever be grateful for your consideration when. it
acts upon the bill.
Thank you.
Mr. DANIELS. Thank you, Chairman Dulski. I want to compliment
you for the brief but very pointed statement on the legislation in
question. I know of your great interest over the years in legislation
which affects the welfare and health of our retirees and compliment
you on your continued interest.
I have no questions.
Mr. Hanley, do you have questions?
Mr. HANLEY. I, too, want to commend you on your fine statement
and upon your persistent efforts in behalf of the retiree. I commend
you heartily.
Mr. DANIELS. We are pleased to have this morning with us our
next witness, a gentleman who formerly served on this committee, who
has done a yeoman job in connection with legislation that comes before
this committee, and is doing a splendid job in representing the great
State of Virginia.
I am pleased to welcome the Honorable Joel T. Broyhill.
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STATEMENT OF HON. JOEL T. BROYHILL, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF VIRGINIA
Mr. BROYHILL. Thank you, Mr. Chairman.
I certainly appreciate the kind remarks you have made and I am
particularly thankful for the very fine statement that was made by my
dear friend, the chairman of the full committee, Mr. Dulski.
X 1r. Dulski said we were not of the same political faith, but we are
certainly of the same philosophy and belief insofar as the welfare of the
Federal employees and retired civil service personnel.
M r. DANIELS. I can attest to that because of the way you vote on
legislation. You usually vote with us.
Mr. BROYHILL. I can say I have an open mind, with some prejudice,
because I represent a large segment of Federal employees.
I appreciate the courtesy the chairman has extended to permit me
to testify briefly this morning. I know you have a full schedule of
witnesses and I don't want to impose upon the committee or usurp
the time that is allotted to other witnesses.
I understand one of your first witnesses will be Mr. Tom Walters,
the presidents of the National Association of Retired Civil Employees,
and I. don't know of anyone who has had more experience and is more
qualified to testify on this subject,. I read his statement, and I am
going to associate myself with his remarks as well as the remarks by
the distinguished chairman of the full committee.
Mr. DANIELS. 1 am sure that Mr. Walters and the other -V\-itnesses
who are scheduled to testify here thin morning are happy that both
the distinguished chairman and yourself are here giving your support
and the weight of your office to the legislation we are considering.
M r. BROYHTLL. Thank you, Mr. Chairman.
I have introduced a companion bill to the bill introduced by Mr.
Dulski, and there is no question but what this is an inequity that
must be corrected.
I might add, Mr. Chairman, that I know it is easy for any of us or
all of us to support liberalized legislation that will improve benefits
for our employees and our retirees and not particularly worry what
we should do regarding the responsibility for payment.
I realize whatever this committee does on this legislation or any
other retirement legislation you have to consider the problem of the
actuarial soundness of the fund. You have the problem of Federal
payment to the fund and the deduction from the payroll.
Mr. Chairman, we have that same problem on the Ways and Means
Committee regarding social. security, and I know that every member
of this committee receives constant letters asking for increases in
payments and liberalization so far as the survivors are concerned and
maybe the amount of money that they can earn outside of social
security.
Every time we consider those benefits we have to consider the
payroll tax, the moneys to keep the fund sound. Whatever I am sug-
gesting here this morning, Mr. Chairman, is not unmindful of the
problem the committee has in paying for whatever increase the
committee approves.
1 feel, Mr. Chairman, that in the long run Congress is going to have
to do something, let us say, to relieve the annuitant from what I call
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a game of Russian roulette, of having to make a choice of taking a
reduction in his annuity in order to provide these benefits for his
spouse.
At retirement, the annuitant is at the low ebb of his income and it
is very difficult for him to make a decision of a substantial reduction
in his annuity when his income is being reduced, and he has a tendency
to gamble on whether he will outlive his spouse or not.
If he fails in that gamble, we have the problem of it being suffered
by those who can least afford the loss of the annuity. The high income
annuitant or those with other benefits does not have the problem
of gambling on a reduced annuity like those on a limited annuity.
If he guesses wrong and dies before his spouse, the spouse could very
easily become a responsibility of the community or the Federal
Government in its welfare program and other assistance.
I am hoping eventually this committee can find some way of elimi-
nating the problem of having to make that choice-the same as we
have on social security. They have an option under social security
in which his spouse is automatically entitled to annuity, and his
spouse can obtain the annuity if he remarries.
Incidentally, under the social security bill that just passed the
House, the annuity of the spouse at 65 years of age is now 100 percent
of that which would have been received by the social security annui-
tant himself, upon his death.
If I may take 1 more minute here, I don't want the committee
to delay its action on H.R. 3661 because I know of your other retire-
ment matters before the committee which I hope you will be able
to get to. If these proposals are not considered too controversial, you
might give consideration to them in consideration of this bill, possibly
through an amendment on the floor.
I am referring now to my bill, H.R. 11120 which is pending before
this committee, which has passed the Senate twice before but failed
action in the House maybe because of a legislative logjam. This bill
would provide for the reemployed annuitant that retires and is called
back to service, those who are over 70 years of age whose retirement
was compulsory and who was called back to service at the interest
of the Government.
As far as H. R. 11120 is concerned, it was introduced having one
case in mind, but, of course, it would be applicable to similar cases.
In this case an individual, an inventor, retired under compulsory
retirement at age of 70 and was subsequently called back at the
interest of the Federal Government. He is now 78 years of age and
has worked almost 5 years, but his survivor is not permitted to
receive the annuity or increased annuity based on that increased work
he has performed.
Mr. DANIELS. If the gentleman will yield at that point, I recall
you bringing that matter to the attention of this committee a couple
of years ago. We did bring the matter to the floor of the House but
because of technicalities the legislation was not approved.
I am wholeheartedly in sympathy with the bill you have.
Mr. BROYHILL. I understand the Civil Service Commission opposed
certain parts of the bill, as introduced, and I see no objection to the
perfecting amendments in order to have it meet with their approval.
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Mr. D.ANIELS. I can assure you so far as I am concerned, I support
the bill, as amended, and I am going to urge my colleagues to do like-
wise.
Mr. BROYHILL. Thank you.
The other one 1 have in mind, I realize, of course, whenever we make
any improvement or change in our civil service structure and set a
certain particular date of enactment there is always a marginal case
where the fellow just didn't quite get over that line, and we have
inequities that are created not intentionally, but they are there and we
can't correct all of the inequities.
I have one particular type of problem I would like to suggest to the
cornrnittee for consideration. That is a person who was retired manda-
torily between the time of the passage of the pay bill last year, which is
July 16, and the liberalization of the retirement bill which was October
20.
In this case the law would have to be amended co provide, if he had
enough sick leave accumulated to carry him over to October 20, to
permit him to use such leave to add to his service to bring him under
the benefits of the new retirement bill.
I don't want to belabor this point this morning. I am going to submit
a statement for the record and am going to discuss it further with the
staff.
Hopefully you will get a report on the legislation and see what the
committee can do to take it under consideration.
Mr. DANIELS. With reference to the first part of your testimony
about the retiree entering into a gamble as to whether or not his
spouse will survive, if you had a choice between restoration of the
full rr,unuity or giving the retiree an option of designating a second
spouse, what would your preference be in the event we could not
adopt both?
Mr. BROYHILL. The provision of having the annuity increased
versus the second spouse?
Mr DANIELS. I will give you a specific example.
"A" is married to "B." "A" is the retiree. He designates upon
rotirernetut his wife, "B," for survivor benefits. However, wife "B"
predeceases him.
This legislation proposes that the full annuity be restored. Sub-
sequently "A" marries "X," and this legislation proposes that, he
again be authorized to take a reduced annuity. So you have two
propositions there.
As to priority, which one would you prefer in the event we cannot
do both?
Mr. BROYxiLL. That is like being between the rock and a hard
place.. I certainly appreciate the fact you are going to have a financial
problem here.
In a choice between the two, I think the more humane aspect
would be to provide for that second survivor.
[ know the committee has many cases, but I have a more recent
one of a person who retired and divorced his wife, "B" in this case,
and marries wife "X," and he has a reduced annuity and can't provide
it survivor benefit for wife "B" who is divorced or for wife "X" who
he remarries.
Mr. DANIELS. I know one of the witnesses is going to get involved
in that because I read his testimony at 2 o'clock this morning.
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Do you think the divorced wife should also be entitled to an an-
nuity as well as the second wife?
Mr. BROYHILL. No. I am. not saying the divorced wife should be
entitled to it, but one or the other should be entitled to the annuity.
In the particular case I was giving you the husband wanted to
provide the annuity for the divorced wife and. it was not permitted
under existing law and he knew the second wife was not entitled to
the annuity.
I don't know whether the annuitant can make the choice or not,
but one or the other ought to have it.
Mr. DANIELS. What do you recorrnnend? You have to help this
committee.
Mr. Bnoyr-JILL. As I said before, the committee has this financial
problem. We can't be indifferent about it. I don't know how much
the program is going to cost. It may require additional payroll de-
duction, but I think the employees would. be willing to make whatever
additional payroll deduction is necessary in order to improve the
survivor program and make it better than what it is at the moment.
I am suggesting it be somewhat similar to social security. That
means he doesn't have the reduction to start with, but I know you
can't do it at the moment, and the second wife would be provided
with the annuity.
Mr. DANIELS. Getting back to my original question, you would give
preference to providing the annuity for a second spouse?
Mr. BnoYIImLL. For the second spouse; yes.
Mr. DANIELS. Rather than restoring the annuity to the recipient?
Mr. BnoyruILL. If there is a choice between the two, Mr. Chairman;
yes.
Mr. DANIELS. Taking the example you propose where his spouse
divorces or he divorces his spouse-I don't think it makes any dif-
ference who gets the divorce--he then remarries. Do you think in that
case that provision ought to be made for his second wife to receive the
annuity?
Mr. BROYHILL. I do on the same basis as if the spouse dies. I. cer-
tainly do, Mr. Chairman. I don't think that is the sort of choice
which one wants to make, which one would have the annuity.
Mr. DANIELS. I have, no further questions.
The gentleman from New York, Mr. Hanley.
Mr. HANLEY. Thank you, Mr. Chairman.
Mr. Broyhill, after having wrestled with the $64 question tossed at
you by the chairman, I don't propose any further questions, but I
want to commend you for your presence here this morning which
further evidences your continuing interest in the plight of the retiree.
I have observed your record through. the years, and it certainly is
one that reflects your compassion and consideration for their plight,
for which I commend you and again thank you for your appearance
this morning.
Mr. DANIELS. I recognize the gentleman from Now York, Mr.
Brasco.
Mr. BRASCO. Like my colleague Mr. Hanley, I certainly want to
commend the gentleman for his participation here this morning. I am
inclined to agree with all of the statements that were made in terms
of attempting to clear up the problem.
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The one thing, though, that I didn't get in the last colloquy was if
the employee is married and then divorces his wife or is involved in
legal action which leads to a divorce, at this stage of the game the
divorced partner still remains the beneficiary?
Mr. BROYHILL. No.
Mr. BRASCO. What happens?
Mr. BRoyHiLL. He figures to have his annuity reduced. The
divorced wife sloes not receive the survivor's benefit or would not in
case of death, nor would the new wife.
Mr. DANIELS. If I may interject on that particular point, under
existing law, if the wife dies or if there is a divorce, the annuity can't
be accrued to anyone else.
Mr. BRASCO. Now I understand that. Did I understand that you
didn't make a recommendation in connection. with that except to say
that someone should get it? You didn't want to choose how it should
be done.
Mr. BROYHILL. I would think in this particular case--it was not a
hypothetical case, it was an actual case-the husband wanted to have
the anmiity assigned to his divorced wife in the event of his death,
and, of course, under the law the Civil Service Commission could not
OK that. That, is the particular case I am referring to.
I would imagine if this were taken care of by statute it would have
to go to the surviving spouse at the time of his death. The purpose of
the legislation is to hope we can take care of that problem by providing
for the second spouse.
Mr. BRASCO. Thank you.
Mr. DANIELS. Are there further questions?
Again, gentlemen, I want to thank both of you.
Mr. BROYHILL. Thank you.
Mr. DANIELS. Our next witness is Mr. Thomas G. Walters, presi-
dent of the National Association of Retired Civil Employees.
STATEMENT OF THOMAS G. WALTERS, PRESIDENT, NATIONAL AS-
SOCIATION OF RETIRED CIVIL EMPLOYEES; ACCOMPANIED BY
MRS. GERTRUDE HOLT, FIRST VICE PRESIDENT, VIRGINIA FED-
ERATION OF CHAPTERS, NARCE; AND LOUIS J. MANCUSO, PRESI-
DENT, DISTRICT OF COLUMBIA FEDERATION OF CHAPTERS,
NARCE
MIr. WALTERS. Mr. Chairman, with your permission, I have with
me ? irs._ Gertrude Holt, first vice president of the Virginia federation
and Louis J. 1'[a.neuso, who is the president of the federation of the
District of Columbia.
Mr. DANIELS. I do wish to take this opportunity to announce to
the people gathered in this room this morning that you are one of
the strongest advocates, if not, the foremost, in support of the legisla-
tion before its.
In fact, you have been persistently lobbying me, if f may use that
word, for the past year or so for this committee to schedule hearings
on the legislation, and your lobbying activities have succeeded in
bringing about this hearing.
Personally, I am happy over the fact that you have because I feel
that there are certain inequities that exist under the law and that these
inequities should be corrected, and I am hopeful that these hearings
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might be concluded early enough in this session of Congress so that
action may be taken on the legislation in both bodies and sent to the
President for his signature.
Mr. WALTERS. Thank you very, very much, Mr. Chairman, for
those remarks.
I repeat what I have said in many meetings around the country-I
hope this bill can become law because it gives the survivors the
opportunity to have more money to where they can buy perfume
instead of liniment, and I would rather smell that anytime.
With your support and the support of the members of this commit-
tee, I think we can make some headway on this.
I would certainly be remiss if I didn't express not only my personal
thanks but the thanks of the organization that I represent, to Chairman
Dulski and Congressman Broyhill for coming before this committee
this morning. We appreciate that greatly.
I might add that these people, especially in this section, are mostly
from Virginia, a few from the District. I noticed one from Mississippi.
We are delighted to have them here showing their interest.
With that, I will read my short statement with your permission.
Mr. DANIELS. You may proceed.
Mr. WALTERS. Mr. Chairman and members of the subcommittee,
by way of introduction, I am Thomas G. Walters, president of the
National Association of Retired Civil Employees. Our organization
was founded February 19, 1921, and has been in continuous operation
since that date. We are located at 1909 Q Street NW., Washington,
D.C. As of June 1, 1970, we had 139,870 members, a net gain of over
6,000 members in 1 year. We have more than 1,100 chapters through-
out the United States, Puerto Rico, the Canal Zone, and the Philip-
pines. Our membership is composed exclusively of persons retired
from the Federal Government and their survivors. We are the only
national retirement organization that restricts its membership to
former Federal employees and their survivors.
On behalf of the membership of the National Association of Retired
Civil Employees, I am happy to express our thanks and appreciation
to the Honorable Thaddeus J. Dulski, chairman, House Committee
on Post Office and Civil Service, for the introduction of H.R. 3661
and to you, Mr. Chairman, for giving me the opportunity to appear
before this subcommittee on behalf of this legislation. We appreciate
this committee's deep interest in the men and women who devoted
their working years to the Federal Government and we are grateful
for all the good things which have come our way in the past.
We acknowledge and thank all Members of the House of Represent-
atives who have introduced legislation similar to H.R. 3661. Their
introduction, we feel, gives direct endorsement for the elimination
of the antiquated laws which the retirees are required to live tinder
and comply with.
H.R. 3661 is a very short bill-33 lines-but it has for its purpose
the elimination of some very unjust provisions of the law, which was
enacted many years ago and which simply do not fit into our present-
day society. I am delighted that this subcommittee has decided to
review this law and see if some of these inequities cannot be eliminated.
At present an employee of the Federal Government is given an
opportunity when he retires to elect a survivor, but he must take a
reduction in his annuity in order to make this election. Today the
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reduction is 2 percent of the first $3,600 annuity, and 10 percent
for all annuity above that amount. This reduction formula has been
liberalized several times over the years, but there are retirees living
today, who at the time of their retirement were compelled to take as
much as it 25-percent reduction in their annuity, which was based
on a small salary, in order to provide for a survivor. We have thousands
of annuitants, who since their retirement, have lost their designated
survivors, but who under present law must continue to pay this
penalty of a reduced annuity and can never designate a new survivor.
These people are paying a price for something from which they or
their family will never benefit.
At, the many meetings and conventions I attend as president of
NARCE there is invariably discussion of the provisions of H.R. 3661
and similar bills. Many second spouses come to me, almost with tears
in their eyes, saying they understood they would be entitled to a
survivor's annuity as the first spouse was, especially since the deduc-
tions were still being made from the annuitant's check. Many of these
annuitants who remarry, marry someone in their own community, and
the new spouse, knowing there is a survivor benefit, naturally assumes
that it will carry over to her as the new survivor. A good case of
illustration of the inequity of this provision is two married men in
'fires n, Ariz., both of them retired postal supervisors. Several years
after the men's retirement, Mr. A and Mrs. B passed away, and several
years later the remaining spouses, Mrs. A and Mr. B were married.
Die to their marriage, Mrs. A lost her survivor's annuity as the
remarriage occurred before July 18, 1966; and she is not eligible to be
designated as Mr. B's survivor annuitant. In other words, in two
cases survivor benefits were deducted from retirees' annuities and no
survivor benefits are being derived.
I am certain, Mr. Chairman and members of this subcommittee,
that you would be greatly surprised at the number of people who
do not believe such an antiquated law exists. In fact there are retirees
who state we must be wrong as this type of provision cannot be the
law of the land. I have had Members, of Congress tell me and my
administrative staff that we must be wrong in our interpretation, as
such a provision would be illegal. I believe that this legislation if
presented to the House of Representatives and the Senate will be
approved by it large majority.
X1 r. Chairman, the National Association of Retired Civil Employees
strongly endorses the provisions of H.R. 3661 to provide for the
restoration of full annuity or allow for the naming of the second
spouse as survivor annuitant when the retiree has been predeceased
by the originally designated survivor. Our correspondence urging the
enactment of such legislation is voluminous.
We would like to recommend, however, that H.R. 3661 be amended
to provide the following: Allow for the naming of a dependent
relative such as parent, child, brother or sister, when the originally
named survivor predeceases the annuitant; allow annuitants not
married at the time of retirement, but married since that time, to
pay past premiums into the fund and designate the present spouse;
allow second spouses, now widowed, of annuitants who paid the
reduction until their death to collect the survivor annuity from this
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reduction, as of date of enactment; and allow annuitants divorced
from designated survivor since retirement, to name a second spouse
or have full annuity restored.
There is a small group of annuitants who retired many years ago
when salaries were small and the retirement computation much less
liberal than it is today, who felt they could simply not live on a re-
duced annuity and therefore did not elect a survivor benefit, but
whom we feel should now be given the opportunity to make this selec-
tion if they so desire. They would, of.course, be responsible for making
a contribution for this benefit.
There are also a few annuitants who were forced to retire on dis-
ability or involuntarily retired by a reduction in force who were not
married at the time of retirement, but did marry later on. We should
like to see these people granted the opportunity to elect a survivor
benefit.
Mr. Chairman and members of this subcommittee, only a small
percentage of annuitants and survivors would be affected by these pro-
posed amendments, and I do not feel the cost involved would be great
enough to prove a major factor.
Mr. Chairman, at this time we should like to ask this subcommittee
to consider amending section 205 of Public Law 91-93, the section
which provides for the continuance of a survivor's annuity upon re-
marriage if the survivor's remarriage occurred on or after July 18, 1966,
and after attaining age 60. We feel very strongly that the 60 year age
limit and the July 18, 1966, date should be eliminated from section
205. Survivor annuitants remarried before July 18, 1966, and before
attaining age 60 cannot understand why they are being discriminated
against in this provision, and there seems to be no feasible explanation
for the discrimination. We, therefore, request this subcommittee to
consider the elimination of these two discriminating factors in section
205 of Public Law 91-93.
In closing, Mr. Chairman, I reemphasize NARCE's strong desire
and support for this long-overdue legislation, and again express my
thanks and appreciation for these hearings being scheduled, as I
know that the members and staff of this subcommittee have been ex-
tremely busy with the health benefits bill and other legislation. I am
certain that whatever you recommend on H.R. 3661 will be approved
by the full Committee on Post Office and Civil Service and by the
House of Representatives.
I shall be happy to answer any questions you might have, but I
would like to leave with this thought-that from a humane and social
point of view this bill, H.R. 3661, is a most important piece of legisla-
tion, and I trust it will be given full consideration as soon as possible.
Thank you, Mr. Chairman.
Mr. DANIELS. Mr. Walters, I want to commend you for a very
brief, succinct statement analyzing the legislation in question and also
for your recommendations in other areas.
I have prepared a number of questions upon which I would like
to have your views.
Mr. WALTERS. Yes, sir.
Mr. DANIELS. Mr. Walters, while your statement describes situa-
tions where you feel some inequities exist, you do agree, don't you,
with my earlier observation that the survivor option was enacted and
has always operated on contractual principles?
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Mr. WALTEIIS. Yes; I agree with that, just like I would agree that
up until a few years ago there was a strong feeling in Congress that
annuities shouldn't be increased because they have had a contractual
settlement.
But we broke that down as we moved into a now day of society. I
certainly agree with you on your statement.
Mr. DANIELS. Do you feel this policy is a reasonable one?
Mr. WALTERS. Yes-well at the date it was enacted I would have
to suppose it was a reasonable one at that time, but I don't think it
is reasonable now under present day's conditions and present day's
society and the way we are accustomed to living.
Mr. DANIELS. In attempting to establish an order of precedent of
treatment to the various circumstances of these retirees, is it your
opinion that the priority position should be accorded the retiree who
did, in fact, elect a reduction in annuity, whose spouse has predeceased
him, who continues to receive a reduced benefit-even though he
has remarried-and who is precluded from providing survivor protec-
tion to his subsequent spouse?
Would you agree this is the classic example having the greatest
degree of merit?
Mr. WALTEUS. This is the classic example. Do you mean. from that
question do I feel that restoring reduced annuity is more important
to society than naming the second spouse?
Mr. DANIELS. Just the reverse.
Mr. WALTERS. I would have to agree with Congressman Broyhill if
I had to make a decision; I would have to, in my opinion, think that
the spouse should. be given first consideration.
Mr. DANIELS. In providing for both the restoration of the full rate
of annuity to the retiree and the extension of survivor protection to
one or more subsequent spouses, would that not be tantamount to
adding a unilateral escape clause, whereby the retiree would be per-
mitted to withdraw from the agreement when it ran adversely, but
with the retirement system being bound to full compliance?
Mr. WALTERS. Maybe I am missing the point, but, I don't see where
that would be a scapegoat.
Mr. DANIELS. I said escape clause, not scapegoat.
Mr. WALTERS. You mean to where he wouldn't pay the second
spouse.
Mr. DANIELS. Let me put the question a different way.
Should we let the retiree out of his part of the agreement, restore
the retiree's annuity, and then subsequently take care of all spouses?
Mr. WALTERS. If you can find the money, that would be the liberal
thing to do and be the better thing to do, but I still feel if you have to
give some priority somewhere that we ought to lean it in the way of the
second spouse because I think a great number of second spouses very
sincerely believe that the privilege of naming a survivor would just
be carried over in case of her husband's death.
I would like to see the whole provision of this bill if we can get it,
but if we have to pick out some of the better portions, I would have
to say that if we have to leave off somebody, leave off the fellow
that is paying reduced annuity and who is a widower rather than leave
off the naming of the second spouse.
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Mr. DANIELS. Wouldn't that gentleman be getting the best of the
bargain in view of his contractual obligation? You restore his full
annuity, and subsequently he remarries and provides for his second
spouse.
Mr. WALTERS. Of course, if that was restored it would be my think-
ing, trying to look at it from the broad side, if he remarried he would
then have to take a reduction in order to name that second spouse.
Mr. DANIELS. Let us assume the further situation that this retiree
was both hale and hearty, physically fit, he not only remarried the
second time but perhaps the third and fourth time.
Mr. WALTERS. We have had letters on that.
Mr. DANIELS. Assuming these spouses died from a natural death
would you continue this benefit from the second to the third and the
fourth?
IVVIr. WALTERS. I would like to see it go to the spouse that put him
in the ground, whether it is the third or fourth or fifth one, provided,
of course, as you said earlier, it was a normal death.
Mr. DANIELS. We have to have a little levity in the proceedings.
Mr. Walters, would you agree that an argument for both benefits
might be more compelling if the reduction factors were based upon
full actuarial considerations?
Mr. WALTERS. I hate to say yes to that because it is costly, but to
try to be honest, I would have to say yes. That would open another
can of worms we would just as soon not have opened up.
Mr. DANIELS. Without questioning your sincerity, Mr. Walters, I
would like the benefit of your organization's position on a very hard
issue. If you were in the position to arrive at a compromise of mutual
interest to both the Government and retiree, where would your
preference lie?
Would you require the continued reduction in annuity but extending
the survival protection to a subsequent spouse; or would you restore
the annuity to the single life rate and denying survivor benefits to a
later spouse?
Mr. WALTERS. I learned a long time ago you never win an argument
with the fair sex. But honestly and from the standpoint of our society,
I would have to go with naming the second spouse.
Mr. DANIELS. The idea of allowing the retiree to name a later spouse
as substitute survivor has always raised the question of the scope of
the Government's responsibility as an employer.
What justification can be offered, beyond that presented in your
statement, which you feel might warrant an employer policy of pro-
viding costly survivor benefits to a spouse acquired after the termina-
tion of the employer-employee relationship?
Mr. WALTERS. I think, Mr. Chairman, we would have to all agree
in the last quarter of a century our society and our thinking has all
changed. There are many things that we support today that our
parents or grandparents would have supported under no circumstances.
We had a Chairman of the U.S. Civil Service Commission at one
time who was also chairman of the Civil Service Committee in this
Congress and others in those days that felt that whatever you retired
on at that time should never be increased because the Government
was keeping their contract.
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That has been broken down and the people who thought that way
don't think that way now. I would have to say under our present
day society I can't see a thing in the world out of line to provide for
the second spouses even though the Government is fulfilling every-
thing they promised when they retired.
I am persuaded to believe that the public will support that approach
and from the Members of Congress that I have talked to, I ant sure
most of them will. In fact, we have had some freshmen Members of
Congress to tell us that the way this is proceeding now was just simply
unconstitutional.
They said it just couldn't be that way. But that is the law of the
land. I think the public will support you in liberalizing it; yes.
Mr. DANIELS. Mr. Walters, if it were agreed that an inequity pres-
ently exists with respect to the retiree who is predeceased by his spouse,
what relative degree of inequity, if any, exists with respect to a
marriage that is terminated by divorce?
Mr. WALTERS. I am getting in a lot of hot spots here.
Mr. DANIELS. I have some more.
Mr. WALTERS. I don't mind them. I think when you go into court
and settle a divorce then perhaps it should mean just what the law
says-that you are no longer attached to one another. That may be a
cold way of putting it, but that particular party, man or woman, who
would be named the beneficiary, would have lost their right to this in
the courts and that if the other party remarried then I think his obliga-
tion or her obligation is to the new spouse.
Mr. DANIELS. You get into a very involved situation under those
circumstances.
Mr. WALTERS. I agree with that. But we have recommended that
this bill be amended to make it possible for those annuitants who have
a legal constituted divorce to be eligible to name their second spouse as
their beneficiary.
That, of course, would say in substance that we were not recom-
mending that the divorced spouse receive an annuity.
If we can be like Congressman Broyhill and we could have both, I
would go for the divorced spouse getting it and the second spouse, too,
but I know that is out of the question. At least I feel it is.
Mr. DANIELS. In your opinion should the retiree be at liberty to
designate a substitute spouse when it suits his own fancy, or do you
think it advisable that he be required to do so within a prescribed
time limit?
Mr. WALTERS. I think there would have to be some ground rules
laid down by this committee to put this into operation. I do riot
think that we ought to say unless he remarries within the next 3
years, he would never be eligible to name that second spouse. I think
just to get rid of one spouse and marry another for the sake of making
changes, there ought to be some restrictions put on it, I guess. Just
like I don't feel we ought to have the 1966 provision in the law, that
if you remarried since July 1966, the survivor can have the money
and keep the old man, too. In this case the ones that remarried just
before that date just simply cannot understand why.
So f do not think we should have too rigid regulations on it, but
there will have to be some ground rules set up.
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Mr. DANIELS. I believe you are familiar with existing law with
respect to an active worker who dies and leaves his annuity in favor
of his wife. I believe existing la}v provides that he must be married
for a period of at least 2 years prior to his death.
Mr. WALTERS. I would be perfectly willing to see some restriction
of 2 years or a year and a half or some such figure put in there. Just as
if we remove the 60-year clause and the remarriage since 1966, I think
we ought to have some type of restriction in there. Maybe 2 years
would be the right figure. In other words, that they be married 2 years.
Somebody said be married 2 years unless there were children born in
the family. I said there was not much danger of that in our group of
people. But the 2-year clause, I think, Mr. Chairman, or something
like that, would have to be put in there.
Mr. DANIELS. There is no such restriction when he retires as to the
length of time that the retiree should be married to his wife.
Mr. WALTERS. You mean when he first retires?
Mr. DANIELS. Yes.
Mr. WALTERS. That is right.
Mr. DANIELS. You are not advocating that we impose a restriction
whereby he must have been married at least 2 years prior to
retirement?
Mr. WALTERS. Not on that portion of it, because it is presumed in
most cases he is living with the spouse that he has been with for some
time. I would not suggest we bother that.
Mr. DANIELS. You might so recommend as to a second spouse or
any subsequent spouse.
Mr. WALTERS. I would recommend it. I feel we should have some
restriction. We don't want these young girls running after us old men
and grabbing us just before our grave and be on the road for the
next 75 years like they did in some of the wars. I know some of these
things I am saying are not going to be popular but they are my hon-
est opinion.
Mr. DANIELS. I want to compliment you for your honesty and
frankness in giving these responses, because this gives greater credence
to your testimony, Mr. Walters.
Mr. WALTERS. I am perfectly willing to lay it on the line.
Mr. DANIELS. If this legislation were adopted substantially as in-
troduced, whereby the retiree would be eligible to designate a subse-
quent spouse on the condition that he refund the amount of annuity
restored to him from his previous spouse's death, or divorce, as the
case may be, couldn't you conceive of a situation where the retiree's
financial resources would be such that he could not come up with the
amount due?
Mr. WALTERS. That is possible. But the Commission has always
been very lenient. They would let him pay $10 a month for the rest
of his life, I guess, or some such amount to pay that back. If we
have to do some of those things to get this bill, I would say do it.
I think this bill is so important that we can take a little of the things
that may not be too complimentary or whatever you want to deter-
mine it. It is just like Joel Broyhill said:
We have to look at the whole picture of this thing, and we have to look at how
much it is going to cost and so on. In order to get these good things, I would take
a few bad things.
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Mr. DANIELS. Mr. Walters, your recommendation that the survivor-
ship protection be extended beyond that proposed in H.R. 3661, that
is, to persons other than subsequent spouses, while raising serious
reservations in my mind, give rise to this question : How do you deal
equitably with the unmarried retiring employee who elected a survivor
benefit for a person having an insurable interest, where the potential
survivor predeceases the retiree?
Mr. WALTERS. What group of people are you having reference to
th ere?
Mr. DANIELS. The unmarried.
Mr. WALTERS. Unmarried when they retire?
Mr. DANIELS. Yes. He names a person with an insurable interest.
He might name his fiancee.
Mr. WALTERS. I think if that person dies or passes on, that he or
she ought to have a right to name someone else. That is the reason I
put in there about the sister or mother. We get a lot of mail where
maybe the lady was the annuitant and her husband passed on and she
is now having to take care of her sister or mother or somebody finan-
cially. I think she ought to have the privilege of naming that person
as beneficiary, whether it is man or woman.
Mr. DANIELS. Suppose that unmarried individual, after having
named that person with an insurable interest, subsequently marries.
What: do we do in that event?
Mr. WALTERS. I would think it ought to be so `voided
Mr. DANIELS. Let us take a specific example so we can all visualize
it.
A is unmarried. He has a sister who is handicapped and is dependent
upon him for support. He designates her as his survivor-annuitant.
Subsequently, and while his sister is still alive, he marries. What do
you propose in such a situation? Should he have the right to change?
Mr. WALTERS. I think we as a nation look upon the first obligation
to any man or woman as to their spouse, because somewhere in the
Scriptures it says you leave your home and take onto yourself a
bride, or something. I would be constrained to say that there ought to
be some provision to either split this survivor annuity, or reduce what
be is paying to his sister, or what would be paid to her in case of his
(loath and provide something for his wife. He would just have to do
that, I think.
Mr. DANIELS. When he takes the reduced annuity because he is
naming his sister, the reduced annuity depends upon how young or
old his sister may be.
Mr. WALTERS. That is right.
Mr. DANIELS. The younger she is, the more of a reduction he
takes.
Mr. WALTERS. That is right.
Mr. DANIELS. Suppose his wife is older. She may be many years
older---10 or 15-or she may be younger than the person with an
insurable interest.
Mr. WALTERS. I think the reduction after he marries, if his wife is
going to be named the beneficiary, his reduction ought to be re-
computed up or down to fit the category of naming this wife as his
beneficiary. If she is younger, he might have to increase his deduction.
If she is older, he would not.
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Mr. DANIELS. You would then give that single retiree the option
of changing the beneficiary upon marriage after retirement?
Mr. WALTERS. If I had to make that choice, I would. If they had
a choice, they could keep on leaving the beneficiary as the dependent
sister. I would be constrained to go with the wife.
I realize you fellows are going to have to make those hard, hair-
splitting decisions, but whatever you do, we will support you.
Mr. DANIELS. By you also proposing that the legislation be ex-
panded to permit a single retiree to designate a subsequent spouse,
you do advocate him paying to the retirement fund the amount that
would have been deducted from the date of retirement had he other-
wise been married?
Mr. WALTERS. The Civil Service Commission might think that
the cost of recomputing these things was greater than the amount of
money they would receive. I would see nothing wrong in having to
recompute it if they got enough buttons on these machines to do it
without too much expense. You are going to have to take some of the
bitter if you get a lot of ice cream and sweets.
Mr. DANIELS. As introduced, the bill confers only upon the retiree
the opportunity to designate a subsequent spouse. Do I understand
correctly that one of your recommendations is that a retiree who is
already deceased be deemed to have designated his subsequent spouse
to receive a survivor annuity?
Mr. WALTERS. Yes. That would keep many of them off the welfare
programs and things of that nature.
Mr. DANIELS. In suggesting that some retirees should now be given
the opportunity to elect a survivor, where they may have declined to
do so at retirement, how would you determine which ones declined to
do so because of economic reasons as opposed to those who for other
possible reasons failed to furnish survivor protection?
Mr. WALTERS. I realize that would be difficult, but the Commission
could send out a questionnaire, and that might be contrary to invasion
of privacy, and ask why they did not elect to name a beneficiary. I
have a sister who is in this category. Her husband just swears up and
down, and I have no reason to doubt him, that he thought he was
checking to provide a survivorship for my sister, but he checked the
other one. If he should go first, she would not get a nickel. There are
honest errors, whether this one is honest or not, I am telling you what
my brother-in-law said, and I do not doubt him because he has been
a fairly good provider. He swears up and down that he meant to check
the one that named her. We have had letters and affidavits from other
people saying the same thing.
Of course, the law is there and there is no way to change it.
Mr. DANIELS. Would you think that a retiree who felt he could not
afford a reduced annuity upon retirement many years ago is in any
better financial position today to do so, particularly if, as you suggest,
he would be required to make a retroactive contribution?
Mr. WALTERS. He may not be any better off financially to do it,
but he is nearer the end of the road, and it is preying on his or her
mind a lot more than it was back there. I may drop off at my age
tomorrow and she would not have anything to live on. I think they
would make a greater sacrifice today than they would have made 15
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is
or 20 years ago when they retired and were both hale and hearty.
The. Hearer you reach the end of the road, you begin to have some
different thoughts and different ideas than we had when we were
yourne and full of vim, vigor, and everything else.
Mr. DANIELS. Do you believe he would have the money to pay into
the fund, particularly after many years of living on reduced income?
Arr. WALTERS. They would. find a way to get it, I think, most of
then,. Some of them, 1 realize, have difficulty. I met a couple down in
Texas who are living on $108 a month and both are in their nineties.
They would have to squeeze that turnip awfully hard to get a little
blood out of it. If he should die, his wife would not get a nickel.
What is worrying him now mostly is that she would have to go on
county welfare or something if he dies.
Mr. DANIELS. As introduced, H.R. 3661 purports to allow the
retiree to designate a subsequent spouse upon her attainment of age
60. To your mind what is the significance of that particular age?
\1r. WALTEns. I would like to have. that 60 eliminated. Actually, I
do not know why it was put in there. I would like to see the 60 elimi-
nated and put in some kind of protective clause of 2-year marriage
something. I would certainly support elimination of the 60 because
none of them are going to admit they are 60 anyway.
Mr. DANIELS. Would you recommend any age limitation?
` fr. WALTE RS. No, sir.
Mr. DANIELS. How about the graveyard marriages that you made
reference to earlier in your testimony?
Mr. WALTERS. What I meant to say there is this
Mr. DANIELS. If you have one of these cute chicks looking around
and saying, "he is ready to kick the bucket and I may have to marry
him because he won't last long"
RBI r. WALTERS. She will have to put up with him for 2 years.
\Ir. DANIELS. And that would be adequate consideration.
N11'. WALTERS. I would hope it would be.
I i [link we would get more support from our members, and I think
from most of the public, if we eliminated age limit and put a 2- or
3-year marriage or whatever was the wisdom of the committee.
i\Ir. DANIELS.
Mr. Walters, you are going to get lots of support
after having testified this morning.
Mr. WALTERS. I am going to get lots of the other, too.
Nfr. DANIELS. Mr. Walters, in your statement you expressed the
feeling that the cost of all the proposed amendments would not take
on major proportions. Has your organization made any attempts to
estimate those costs and the number of persons who might be involved?
Mr. WALTERS. Only by estimating at conventions and places like
that. I have asked for a show of hands on many of these things that I
asked about, and in many meetings there are not any hands that go
up. As far as I know, the Commission has no figures that would (Ave a
true picture and we do not have any, except we have instructed all of
our national officers, attending State federation meetings, to ask the
question, how many people here would be affected by the second
spouse, or if it was amended to include divorcees, or those who retired
without naming a survivor, and there are very, very few.
I was recently at the Illinois State Federation Convention and there
were less than La dozen hands that went up on all categories of this
statement. The costs are going to be much more in my opinion to
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recompute these widowers who have not remarried than it would to
name the second spouse. That is my guess.
Mr. DANIELS. On page 5 of your statement, you also recommend
extending the "remarriage of survivor annuitant provisions" of
Public Law 91-93 to pre-July 18, 1966, remarriages. You are aware,
are you not, that the subcommittee gave thorough consideration to
this question last year?
Mr. WALTERS. That is true. I thought perhaps some things maybe
had changed or we have become a little more liberal now than a year
ago and we might kick this back a few years, anyway. I would like to
see it eliminated, because the further back you go, Mr. Chairman,
the smaller in number you are going to have because of deaths and
so on. If you go back to 1940 or 1945, you would just have a handful.
Mr. DANIELS. If we did draw a new date line of equity we would
have to go back as far back as February 28, 1948, and cover all re-
marriages that occurred in the past 22 years, wouldn't we?
Mr. WALTERS. We would be happy if you would go back to 1948.
Mr. DANIELS. Do you recall the estimated cost of doing so would
be approximately a quarter of a billion dollars? That is my recollec-
tion of the testimony.
Mr. WALTERS. Nobody knows just how much that would cost,
because nobody knows, as far as I know, how many are married and
how many might marry.
Mr. DANIELS. Last year, when we considered survivor legislation,
we did go into that question. My recollection is that we had testimony
from the Civil Service Commission to the effect that it would cost a
quarter of a billion dollars to extend similar treatment to pre-1966
remarriages.
Mr. WALTERS. Wasn't that on the premise that all of them would
remarry? Wasn't that estimate predicated on the fact that all of these
survivors would remary?
Mr. DANIELS. Counsel states that it was based upon their prior
experience, even estimating the number of people who had remarried.
Mr. WALTERS. You are going to have to pay that survivor that
is living without remarriage. The fact that he or she marries does not
make it cost any more.
If this survivor is getting $100 a month now, and she will get that
as long as she lives, and then she remarries, she would still get that
$100. Of course, the statisticians in many cases predict how many
will remarry and how many will not in a thousand or 10,000. I do not
know how this cost was ascertained. I do not see how it could cost
much more than it is costing today because they are going to pay them
if they do not get, married. If they remarry, they do not increase it
anMr. DANIELS. In 1966, this subcommittee adopted the proposals for
continued payment of survivor annuity in the event of remarriage
after the attainment of age 60 on the premise that the ordinarily
accepted precepts respecting support by the new marriage partner
could no longer be accepted as valid. By advocating the elimination
of the age 60 stipulation from the retirement law, what warrant can
you find for such a change in cases involving the younger or middle
age survivor who would normally have an earning capacity, or whose
new marriage could reasonably be expected to be a self-sustaining
entity?
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Mr. WALTERS. I think we have to look at that from the point of
view that no law is perfect. Whatever law we pass as humans, as was
demonstrated by the chairman and Mr. Broyhill this morning, I think
the best we can do is to eliminate as many inequities as possible. I
would hope that we could eliminate that 60-year clause, because I do
not think there are too many real young survivors who would be
affected. There are a good number that are around 55, 56, and 57,
according to our mail and according to the people f have talked to. But
I think if we eliminated the 60 and put 2 or 3 years or some other kind
of protection in there, if need be, you would not run into too many pit-
falls. There are going to be some regardless of what we do. There is no
way of writing a perfect law, I don't guess. At least I have not seen
many of them in the 30-odd years I have been around here. They
always find some flaw in them.
I would be willing to take a chance on eliminating the 60.
Mr. DANIELS. I have just one final question. Your various sug-
gested amendments appear to have come quite close to covering about
every situation imaginable. In fact, it seems to me you have stopped
just short of advocating the ultimate; the ultimate being the providing
of survivor protection in almost any circumstance without cost to the
retiree.
From your years of experience, and seeing the changes that have
been made over the years in the Civil Service Retirement System, do
you foresee that ultimate evolving over the next few decades?
Mr. WALTERS. I take the position that I believe Congressman Broy-
hill (lid this morning, that somewhere along the line there may have
to be an increased deduction. I doubt seriously if the active employees
would oppose that too strenuously because they and their members
would be enjoying these things in time. We have always operated on
that type of theory-that the working help take. care of the retired,
and the rich help take care of the poor. I do not think that would be
a great hurdle. In fact, I do not think this bill is going to cost nearly
as much as some people think it is. I have no way of proving that. I
don't think they have any way of proving their estimates, either.
I used to sort of think that actuaries were like lobbies, you could
get most any figure you wanted and prove it. If you got two actuaries
they always came up with two different figures. We used to hire
actuaries when I was with the Government Employees Council and
they never came up with the same figures the Budget Bureau or
Civil Service actuaries came up with.
Mr. DANIELS. As you look down the road, do you foresee the
system evolving in the next decade or two, whereby the law will
eventually provide free survivor benefits?
Mr. WALTERS. I think that is sure coming because social security
is on the way now for that. The bill that passed the House, as I
understand it, the survivor would be at about the same amount as
the worker retired. The retirees under social security, as I understand
it, would not pay any additional. It would come out of the working
multitude and the employers that would help underwrite the cost of
this. I see no reason why this program could not follow along that
same line. Somebody has to pay for it. I will admit that. There is a
good strong precedent there in this bill that passed the House on the
social security with next to no votes against it.
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Mr. DANIELS. Mr. Walters, I have no further questions. I call upon
the distinguished chairman of the full committee, Mr. Dulski. Do you
have any questions to ask?
Mr. DILSKI. No, thank you.
I commend Mr. Walters on the fairness of his statements. As you
know, this is a rather complicated piece of legislation. The costs of
your proposals will have a large bearing on the extent of the remedies
the committee might reasonably adopt.
Mr. Brasco had to leave to attend another meeting, and asked me
to express his regrets.
I want to commend the counsel for submitting these questions, and
chairman Daniels for propounding them, because they are going to
play a very important role in the deliberation of this legislation.
I commend you on your statement and the frankness of the answers
to questions. Thank you, Mr. Daniels.
Mr. DANIELS. Mr. Walters, I want to compliment you for not only
a very fine statement, but also because of the sincerity and candidness
with which you answered the questions put to you by the Chair.
Some of them were very difficult questions to take a position on.
They did point up some issues with which this committee is faced.
The frankness and sincerity with which you answered the questions
certainly made an impression on me, and your position will be given
very serious consideration by the committee.
Mr. WALTERS. Thank you, Mr. Chairman. Regardless of how it
might affect me, with your permission and the permission of the
chairman, when this colloquy is ready, I would like to distribute to
our membership a copy just to let them know we are trying to play
this thing fair and square and trying to be honest. We have to make
a decision one way or another.
I am not going to try to hide behind any of these things for political
reasons.
Mr. DANIELS. You don't have to distribute to your membership.
I am coming to your convention this weekend and I shall tell the
membership personally.
Mr. WALTERS. That is right. The full committee chairman will be
at the convention also. We will move along with that. Thank you
very much.
Mr. DANIELS. You are welcome.
Our next witness is Mr. Carl K. Sadler, legislative representa-
tive of the American Federation of Government Employees, AFL-
CIO, who is appearing in the absence of Mr. John F. Griner, na-
tional president.
Mr. Sadler, you are free to testify in any manner you desire.
STATEMENT OF CARL K. SADLER, LEGISLATIVE REPRESENTATIVE,
AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO;
ACCOMPANIED BY JAMES H. LYNCH, ASSISTANT LEGISLATIVE
REPRESENTATIVE AND STEPHEN A. KOCZAK, DIRECTOR OF
RESEARCH
Mr. SADLER. Mr. Chairman, first of all, before I begin, let me
express President Griner's regrets at not being able to be here. He
intended to make this statement personally himself this morning, but
due to some very serious problems which arose during the night, he
was unable to be here.
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22
I would also like to compliment the gentlemen that testified earlier,
and especially Chairman Dulski for his introduction of this bill, which
we find resolves a great number of problems and would go a long way
toward solving the problems that need to be solved in the area of
retirement.
With your permission, I will read our statement into the record.
Mr. DANIEL s. Proceed.
Mr. SADLER. The American Federation of Government Employees
has an abiding interest in legislation to provide equitable retirement
programs to all career Federal employees.
Our direct interest arises from the fact that we represent 650,000
current Federal employees in officially recognized units and over
325,000 dues-paying members on the active payroll. We have an indi-
rect interest also because many retired employees still are enrolled as
our members.
But our greatest interest and claim to speak on this subject derives
from our past statements based on principles of equity. I have myself
appeared before you again and again to endorse bills sponsored by the
subcommittee's members to modernize and reform the civil service
retirement system. Once again I wish to thank this subcommittee and
its distinguished chairman, Congressman Daniels, for their initiatives
to pass Public Law 91-93 of October 20, 1969, which for the first time
in history assured the proper funding of the retirement fund and,
simultaneously, introduced the enlightened and equitable formula we
now have for the computation of retirement annuities.
I am happy to be here once again before you, therefore, to endorse
H.R. 3661, a fine bill introduced by Congressman Dulski of New York
to extend equity to a class of human beings who, even at this late date,
suffer discrimination and inequity. The other bills which I should like
to recommend to the favorably attention of your subcommittee are
H.R. 434, introduced by Congressman Edmondson from Oklahoma;
H.R. 468, sponsored by Congresswoman Griffiths of Michigan; and
H.R. 11120, introduced by Congressman Broyhill of Virginia. Our
organization endorses every one of these bills and we would appreciate
your subcommittee considering incorporating these three bills into
H.R. 3661 introduced by Congressman Dulski. We believe that such a
combined bill would eliminate many vestiges of inequity which still
exist in the Federal civil service retirement system.
H.R. 3661, introduced by Congressman Dulski, is intended to elimi-
nate one of the most serious inequities which still exists in the Federal
civil service retirement system.
Under present law, an annuitant who is concerned for his wife and
elects to provide a survivorship annuity for her in the event he dies
has his annuity automatically reduced. Even so, his widow would
receive only 55 percent of the annuity her spouse received.
The current formula provides a 2.5 percent reduction for the first
$3,600 and a 10 percent for all funds above that. This means that an
annuitant receiving $300 a month must suffer a reduction of $7.50 or
$90 a year; and, for example, an annuitant receiving $600 a month
must suffer a reduction of $37.50 per month or $450 per year.
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I wish to state here that I have heard many valid reasons why there
should be no reductions at all enforced on annuitants to provide for
their widows. I shall not cite them here simply because the bill, H.R.
3661, is not addressed to the general problem but only the specific
grave injustice and inequity suffered by annuitants receiving reduced
annuities whose wives die before them.
Once his wife dies, obviously the reason for the reduction in an-
nuity ceases to exist. Consequently, by all logic and fair treatment,
one would assume that the annuitant would experience a return to
the original level of annuity to which he was originally entitled. But
this is not the case. Under present law, the annuitant continues to
receive a reduced annuity, as if nothing at all had happened to his
wife. Even if he lives 40 years a widower, he would have to suffer a
reduction for providing a survivorship for his deceased spouse.
Let us take the case of an annuitant who lives 5 years beyond the
death of his spouse. If his original annuity had been $300 a month, in
5 years he would have paid in $450 to the retirement fund for a benefit
which he could not obtain. If his original annuity had been $600 a
month, he would have paid in $2,250 for a benefit he could never
obtain. This is an outrageous state of affairs.
But, the situation is even worse. If he were to remarry and die
before his second wife, his widow would not be entitled to a survivor-
ship annuity, even though her husband had had to continue his reduced
annuity to provide survivorship benefits for the first, already deceased
wife. Thus the two must live on a lower income for a benefit that
cannot be obtained.
The only word I know for this is-injustice, rank injustice.
Basing my computations on figures supplied by the Bureau+of
Retirement of the Civil Service Commission, I understand that
annually about 800 annuitants would die leaving subsequent spouses
as widows. To provide these 800 widows with survivorship benefits
would cost the retirement fund approximately $813,000 at the most
in fiscal year 1971; the following fiscal year, when the number7of
affected widows would be altogether approximately 1,500, the total
cost to the fund would not exceed at the very most $2.3 million.In
fiscal year 1971, this would be an average payment of about $1,000
per year, or $85 per month; and in fiscal year 1972, an average annual
payment of $1,560 per year, or $130 per month.
Considering the current grave injustice suffered by these annuitants
and their widows and bearing in mind the little money involved, I
sincerely beseech your subcommittee to report this bill as early as
possible.
H.R. 3661 has a further merit in that it seeks to provide equity not
only to annuitants who remarry but also to those who do not. Under
H.R. 3661, if the annuitant lives longer than his wife and does not
remarry, his annuity would be restored to its original level from the
date of his wife's death. In the event the annuitant remarries, of
course, he would have to pay back to the retirement fund the total
amount of additional money which he had received in the interval
between his first wife's death and his remarriage. And, of course, he
and his new spouse would have to return to the new reduced annuity.
This provision, moreover, is not mandatory. The choice would rest
with the annuitant and with his new spouse, who in any case could
not benefit until she was herself 60 years old.
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I believe that these new provisions are most equitable and I cannot
conceive anybody opposing them who is concerned with the problems
faced by retired Federal employees.
H.R. 3661 is silent regarding the. problem facing a Federal retiree
whose marriage is not terminated by death but by divorce. As the
law now reads, the annuitant must continue to suffer the reduction
even though his divorced spouse cannot benefit if she survives him
because she is no longer considered his ;legal widow. This situation
appears unfair both to the annuitant and to his divorced wife, who
otherwise might have been entitled to this survivorship benefit under
the divorce settlement. Under some circumstances, in fact, such an
entitlement might well have played a role in such financial matters as
the terms of alimony and the amount of payments for support.
Another serious inequity which exists in current retirement prac-
tices arises out of the fact that there is a lack of a single procedure for
granting "leave without pay" status to Federal employees retired
involuntarily on disability by their agencies and drawing benefit
payments front the Federal Employees' Compensation Fund.
Federal agencies resort to a wide variety of practices in these dis-
ability cases. Some agencies grant the disabled employee "leave
without pay" for the total time the employee is receiving disability
compensation, even if the employee never returns to work. Thus,
when the employee reaches that age when be would be entitled to
normal retirement under the civil service retirement system, he
benefits from this humane attitude of the agency by having the total
years of "leave of absence" included in the multiplier used. to compute
his civil service retirement annuity.
Other agencies, on the other hand, follow a highly questionable
policy of not granting the Federal employee any "leave of absence"
at all, or "leave of absence" covering only a few months. These em-
ployees; of course, even if they later return to work with the Federal
Government, now do not have any claim whatsoever on the civil
service retirement system for their period of separation under dis-
ability compensation.
Such a discrimination is obviously unfair and inequitable. H.R.
434 would eliminate this discrimination, at least in the case of those
employees placed on the disability compensation rolls who subse-
quently return to employment with the Federal Government. In
their cases, the period of their separation for disability compensation
would be included automatically in the multiplier used to compute
their retirement annuity.
This bill, H.R. 434, is eminently reasonable and it would eliminate
some discriminations and inequities which exist today. For this reason,
our organization urges its incorporation into H.R. 3661 and early
enactment into law.
II.R. 468
Although the U.S. Federal civil service has made great strides in
recent years to eliminate discrimination in Federal. employment, most
of all in the area of sex, the present retirement laws still seriously
discriminate against women employees who die while in the service
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leaving spouses as survivors. Under present laws, the only condition
under which a husband can benefit as a "survivor" is if he was already
"incapable of self-support by reason of mental or physical disability"
and if he already received "more than one-half of his support" from
his employed wife.
As the subcommittee members know, there is no such limitation
placed upon survivorship benefits for men who die while in the Federal
service. There is no "means" or "qualifying" test for their widows.
They can be millionairesses; they could have been working for the
Federal Government at the time of the death of their husbands.
Congresswoman Griffiths' bill, H.R. 468, intends to eliminate this
legal discrimination against women employees of the Federal Govern-
ment. Solely on this legal ground, it would appear that this bill should
be incorporated. into H.R. 3661 and enacted as soon as possible.
But there are other considerations of equity besides this formally
legal one of discrimination which justifies the enactment of this bill.
There are cases of real hardship and poverty arising out of this con-
tinuing bias against women.
I should like to cite for you a few selected typical cases of severe
hardship placed on these women and their families.
For example, when a woman employee now becomes seriously ill,
she would find it necessary to retire on disability, if possible, in order
to assure a survivor annuity for her husband. This situation would
involve a particularly difficult decision if the outcome of her illness
were questionable. She may have large quantities of sick leave which
would be forfeited completely under the present law. The male em-
ployee under such circumstances could continue in service, use his
sick leave and even be granted advanced sick leave, which is "forgiven"
in case of death. His widow would receive an annuity whether or not
he dies before retirement.
If a female employee and her husband are involved today in a com-
mon accident in which the wife is killed but the husband is not, even
though he may be incapable of self-support after the accident, he
could not under the present law be eligible for a "dependent widower's"
survivor annuity. The law is very explicit that the husband shall have
been dependent upon the female employee prior to her death.
In any circumstances when a female employee dies in service and
minor children are included in the family, the children would be
dependent upon the income of the father, unless, as is unlikely if both
parents work, the mother provided more than one-half of their support.
Current regulations on survivor annuities for minor children provide
for about $50 per month, a totally inadequate amount for their care.
A woman in good health and wishing to devote additional years to
the service would feel when she became eligible for retirement that she is
forced to retire in order to assure a survivor's annuity for her husband,
since an annuity for him would be unavailable in the event of her death
before retirement. A male. employee does not have this concern.
The current law provides that a dependent widower must have been
dependent on account of physical or mental disability. It does not
cover the situation of an older dependent widower, who was not
physically or mentally disabled but was unable to obtain or hold a posi-
tion on account of his age and who may have inadequate social security
or other retirement benefits of his own. It also does not cover the situa-
tion of an older husband who was not dependent prior to the employee's
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death but becomes incapable of self-support on account of mental or
physical disability or age after the employee's death in service. To re-
move the present discrimination, it is necessary to eliminate any pro-
vision related to the condition of dependency for the widower.
I believe these selected typical cases are sufficient to show that real
hardship is imposed on women employees because of the discrimination
still in force in our survivorship laws. These discriminations should
stop.
Basing my calculations on information supplied by the Civil Service
Commission, I understand about 900 women employees annually (lie in
the Federal service leaving husbands and families deprived of income
because of the'defects of our current laws. I am informed that this in-
equity could be corrected by the passage of H.R. 468. Its total cost in
fiscal year 1971 would be approximately $700,000. In fiscal year 1972,
it would be approximately $2.1 million. I therefore urge the incorpora-
tion of H.R. 468 into H.R. 3661 and early enactment into law.
H.R. 11120
A further inequity in retirement laws concerns those annuitants who
are recalled to active Federal service and whose surviving spouses are
denied any right to the supplemental annuities they have earned.
As the subcommittee is aware, if an annuitant who has voluntarily
retired returns to active civil service, he continues to receive his
annuity but an amount equal to that annuity is deducted from his
salary. Neither he nor the Federal employer makes contributions to
the retirement fund during this employment. However, if he serves
1 full year, he is entitled to a supplemental retirement annuity which
is computed by the normal retirement formula applicable to his case.
Because he is being carried on the retirement rolls during this period,
the survivorship rights of his wife to his basic annuity are not affected,
of course, by his return to active civil service. However, after he
returns once more to retired status, his wife is not entitled under pres-
ent law to any survivorship claim on the supplemental annuity he
earned.
Congressman Broyhill's bill has the purpose of correcting this
inequity. It provides that his widow will have a claim also to 55
percent of this supplemental annuity provided that: (1) this supple-
mental annuity is reduced 10 percent (the normal reduction formula
for survivorship provisions); and (2) the annuitant (toes not elect to
exclude his spouse from this supplemental survivorship annuity.
Because Congressman Broyhill's bill eliminates a defect in present
law resulting in inequities, our organization requests that it also be
incorporated into H.R. 3661 and enacted into law.
SUMMARY AND CONCLUSION
Our organization endorses H.R. 3661 and i.ssures this subcommittee
that it, will devote its energies to assist in its early enactment. We also
request the subcommittee to incorporate into H.R. 3661 the provisions
of three other bills which would eliminate inequities existing in present
laws. H.R. 434 would relieve injustices suffered by those active Federal
employees who had been placed on disability rolls at some time in
their careers and who had not been granted leave of absences during
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this period. It provides that for such employees, if they return to
Federal employment, this period would be considered as leave of
absence. H.R. 468 seeks to eliminate vestiges of discrimination
suffered by Federal women employees in the matter of survivorship
annuities. And H.R. 11120 would provide equity for survivors in the
case of supplemental annuities earned by annuitants who return to
active civil service employment after voluntary retirement.
As I stated earlier, all these bills merit enactment on their own
terms. However, for the sake of expedition and practicality, it would
appear wise to incorporate their provisions into H.R. 3661 so that
the Congress could deal with all these issues of equity at the same
time.
In conclusion, I wish again to thank Congressman Daniels, the
chairman of this subcommittee, and its other members for your great
contributions in the past in retirement legislation and for the oppor-
tunity you have extended to me to testify today.
Mr. DANIELS. First, Mr. Sadler, let me commend you for a very
fine statement, and also for your cooperation with the committee in
summarizing your oral presentation.
I have prepared some questions and I would like to get the views of
your organization on the record.
Mr. SADLER. I would be happy to try to answer any questions.
Mr. DANIELS. Mr. Sadler, you refer in your statement to the cur-
rent reduction factors applicable to a retiree's full rate of annuity
when he elects to provide a survivor annuity; namely, 2% percent of
the annuity up to $3,600 and 10 percent of any annuity in excess of
$3,600. The retiree who uses $3,600 of his annuity as a base for the
survivor benefit gives up $90 a year to provide his surviving spouse
an annuity of $1,980. Reducing that to a monthly basis, he gives
up $7.50 per month in order to provide a $165 monthly benefit to his
spouse. In other words, for each $1 he gives up, he provides $22 of
survivor protection. Would you not agree that to the extent the
first $3,600, or less, of annuity, that the reduction is but a token?
Mr. SADLER. I agree that it is certainly a token, in the sense that
you put it.
Mr. DANIELS. Do you agree, at least with respect to the first $3,600?
Mr. SADLER. Yes, I agree.
Mr. DANIELS. Now with respect to any annuity in excess of $3,600,
the retiree gives up 10 percent of that portion of his benefit. Using
your example, he gives up $360 a year, or $30 a month, to provide
an additional $1,980 a year, or an additional $165 a month to his
spouse. In other words, for each additional $1 he gives up, he provides
$5.50 of survivor protection. This is not quite the "bargain basement"
rate as the 1 for 22 ratio, isn't that so?
Mr. SADLER. That is true.
Mr. DANIELS. Analyzing your cited example a bit further, the
$7,200 annuitant gives up $90 plus $360 or a total of $450 of his
annual benefit. For this investment he guarantees his spouse a maxi-
mum benefit of $3,960 per year.
Reducing that to a monthly basis, he gives up $37.50 to provide
$330 of survivor benefits. It means that, in combination, for every
dollar he gives up he provides $8.80 of survivor benefits. Would you
not agree that these reduction factors are far from being based upon
true actuarial considerations?
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Mr. SADLER. I assume, not being an actuary myself, this is trite,
Mr. Chairman.
Mr. DANIELS. The purpose of my line of inquiry is to arrive at my
ultimate question, and that is: In view of the relatively minimal
reduction in the retiree's annuity, do you feel that strong warrant
can be found to protect more than one spouse, yet restore full annuity
benefits during periods of nonmarital status?
Mr. SADLER. Are you asking, Mr. Chairman, if we should apply
annuities to more than one spouse at a time?
Mr. DANIELS. Well, should we protect any qualified spouse and
also restore full annuity to a retiree during times of nonmarriage?
Mr. SADLER. I would not say that we should provide more than one
survivor annuity at any one time. I think we should, however, require
that, the law provide a later spouse an annuity, which it does not at
this point.
Mr. DANIELS. In view of the reductions that I have pointed out in
my various examples, do you think we ought to do both?
Mr. SADLER. I think the ultimate, of course, would be that we do
both. However, I have to agree with the previous witnesses that I
realize that the chairman and the subcommittee have decisions to
make along this line that might not be in keeping with what we would
like to have. I would say that it is like taking it out of one pocket and
putting it in another in some cases, especially in view of the lower
annuity you referred to a moment ago, $165 a month. This is hardly
a livable income under any circumstances. The $7.50 which would be
the reduction amount is certainly a substantial amount to that
individual.
Mr. DANIELS. Mr. Sadler, as an organization representing primarily
active employees, you are no doubt aware that the liberalizations pro-
posed in H.R. 3661, as they apply to employees who retire in the
future, have "normal cost" implications; that is, expressed as a per-
centage of payroll the present normal retirement cost of 13.98 percent
would be raised to over 14 percent by its enactment. If your organiza-
tion were faced with the alternative of choosing between the restora-
tion. of full annuity without provision for a subsequent spouse, as
opposed to protecting a subsequent spouse without restoration of full
annuity, in order to maintain normal costs at the current employee
agency joint contribution of 14 percent, where do you think that
preference would lie?
Mr. SADLER. There would be no question but what we would select
the second spouse as the area that should be provided for. However,
Mr. Chairman, our figures show that there are now some 40,000
retirees whose spouses have died. Each year another 2,300 retirees
lose their spouses. Of these about 800, according to what we can
determine, would elect to designate the second spouse rather than
choose to return to the annual annuity. This is what we understand
the Commission finds as well as us. The cost of naming subsequent
spouses according, to our figures is not likely to exceed more than $2.3
million per year, while the cost of return to original annuity for the
rest of the annuitants would be in the area of $5 million or $6 million
per year. All together if everything that has been asked for here this
morning were granted, it would cost annually somewhere in the
neighborhood of $7,500,000 to $8,500,000, which seems to me, Mr.
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29
Chairman, to be not much more-and I stand to be corrected here-
than the amount of play that we have left in the retirement fund at
this point, which I understand is something like two-tenths of 1 per-
cent. We should also not overlook the fact that we are now receiving
into the retirement fund-because of the farsightedness of yourself,
Mr. Chairman, and the other members of this committee, and the
full committee-a much higher rate of interest on the moneys in the
fund as well as payments into the retirement fund as a result of the
passage of 91-93. It would seem to me that the cost of granting both
options in H.R. 3661 would not be excessive, assuming we are able to
get this from the overages which we believe we have left.
Mr. D views on this legislation, and therefore is unaware of the
estimated normal cost figures. In supplying the figures cited in your
statement, were you able to ascertain what normal costs and unfunded
liabilities would be involved here? Are your cited figures predicted
upon extending to the subsequent spouse the same rate of annuity
which would have been payable to the spouse named at the time of
retirement?
Mr. SADLER. Yes. We do not have what you refer to as "normal
cost figures." What I recited to you a moment ago was just the current
costs involved. If I may just touch on a point you made a moment
ago, although we have mostly active employees in our organization,
we have many thousands of employees within the organization who
remain in our organization as retired employees, and many times go
into other organizations as well.
Mr. DANIELS. Referring to the last paragraph on page 4 of your
statement, which refers to marriages terminated by divorce, rather
than death, after date of retirement. Are you suggesting the same
treatment proposed in case of death be accorded in case of marriage
dissolved by divorce, or are you intimating that the divorce should
not divest a former spouse of the survivor protection?
Mr. SADLER. I think there are two things to think about here, sir.
One is what the courts might decide as a result of this thing, if it were
possible to include an annuity that has been provided for this wife.
The other I think should be up to the individual who has provided the
annuity if any legal action is not involved.
Mr. DANIELS. You are not advocating an annuity be paid both to
the divorced wife as well as the subsequent spouse?
Mr. SADLER. No. We want to be completely reasonable, Mr.
Chairman, in our approach to these things, and I do not think it
would be a reasonable approach for the retirement fund to be burdened
with costs that are not provided for. I think there should be one
surviving recipient of an annuity but not two.
Mr. DANIELS. If it came to a choice between a divorced wife and a
subsequent spouse, which one would you recommend be given first
consideration, or priority consideration?
Mr. SADLER. I would have to say you put me much in the same
position you put the other witnesses this morning, in trying to make a
choice in that instance. I would think that it would depend much on
the circumstances of the first wife. It seems to me that some rule has
to be applied here. I would think in most cases the individual who has
provided the annuity, the retiree, would be responsible enough to
make the decision as to the need and who is to receive his annuity.
46-821-70-5
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Mr. DANIELS. Suppose he did provide for his first wife prior to the
divorce being granted, regardless of who obtained the divorce-I
think that is immaterial. He subsequently remarries, he had intended
to make a change, but failed to make a change. If this committee were
to act on this situation and would want to provide some measure of
relief, what would you recommend that the committee do? What do
you think would be fair and equitable under those circumstances?
Mr. SADLER. At this point, if I understand your question correctly,
you say he divorced his first wife.
Mr. DANIELS. Yes; after retirement, and having designated her to
receive a survivor annuity.
Mr. SADLER. And he subsequently remarried. At this point' a
decision has been made. He is going to pay the annuity to no one.
Further consideration must be given by the committee as to, if a
change is made here, who will get it. It seems to me that unless dis-
ability was involved or some possible qualifying instances you might
place into the law, that the retiree should make the choice.
Mr. DANIELS. Suppose he does not make a choice. He had intended
to make a change. He wanted to leave it to his new spouse who survived
him, but he failed to do it.
Mr. SADLER. I do not know just what the answer would be in that
instance.
Mr. DANIELS. Think that over and you can supplement your views
by sending in an additional statement.
Mr. SADLER. Very well.
Mr. DANIELS. If there are any of these questions you do not feel
competent to answer, if you want your colleagues to assist, they may.
Or you may supplement your views by filing additional ones.
Mr. SADLER. Thank you.
Mr. DANIELS. What are your views with respect to the relative
equity of an unmarried retiring employee who elects to accept even
a larger reduction in annuity than the married retiree does, in order
to provide a benefit to a person with an insurable interest, where the
named person predeceases the retiree?
Mr. SADLER. I think he should be allowed to do so if he has someone
else that has the insurable interest. I do not know that we would be
adverse to that possibility at all, sir.
Mr. DANIELS. Do you find any justification for allowing such a
retiree who later marries to withdraw from his original selection and
substitute his spouse, even though the person with an insurable interest
survives? You recall this morning I propounded similar questions to
Mr. Walters.
Mr. SADLER. Yes.
Mr. DANIELS. He said I gave him a tough question. I am just
wondering how you feel about the same question.
Mr. SADLER. Since you offered me the opportunity to allow one of
my colleagues to answer, I believe I will do that.
Mr. DANIELS. That is customary at these hearings, Mr. Sadler, as
you know.
Mr. KoczAK. Mr. Chairman, I think our whole interest is in equity.
And in matters of equity, the person closest to the problem usually is
the one to be given the choice. As I gather, if we might elaborate on
your example, this man was unmarried and had a sister whom he
elected and then subsequently he married. The presumption is that
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31
his interest and affection for his sister continues. He has a new interest
in his wife. I think these are matters fundamentally of conscience and,
in this sense they are matters of equity, and he should be given this
choice. There are other factors which the Congress and the community
may wish to have taken into account if, for example, he has a sister
who is totally disabled and it does develop that the wife has inde
pendent means. You might put some sort of proviso into the act to
give the Civil Service Commission the right to approve such elections,
so as to protect the interests of such persons as the sister we used in
the example. However, speaking generally, if we stress equity and
conscience, which is what we are striving to do, then the anizuitant,
should have the choice, other things being equal.
Mr. DANIELS. In the absence of any testimony directed to the par-
ticular point, I assume you are not now advocating a retiree who is
either unmarried at the time of retirement, or who declined to provide
survivorship protection, be given an opportunity to do so after
retirement?
Mr. SADLER. At this point I would not see any reason for that.
Mr. DANIELS. With regard to H.R. 434, the Edmondson bill, your
testimony serves as an acquittance of public hearings on that measure.
It occurs to me that your discussion of its merits is germane to the
subject under consideration since these employees' annuities deter,
mine the rate of their surviving spouses' benefits. Isn't it true that a,
spouse of a compensation beneficiary who is carried in leave without
pay status would derive a benefit to which the spouse of a separated
beneficiary would not be entitled, for the simple reason that the
former would be credited for service during which he was on the
compensation rolls, whereas the latter would not receive such credit
for retirement computation purposes?
Mr. SADLER. That would be true, Mr. Chairman.
We would have no objection to the committee amending this bill to
include the provisions of H.R. 434.
Mr. DANIELS. It is not in the present bill but it is Mr. Edmondson's
bill, H.R. 434. We will take a look at that.
You present some very persuasive arguments in behalf of married
female employees, in giving your organization's support to Mrs,
Griffith's bill, H.R. 468.
I take particular note of your comments in the middle of page 7 of
your statement, in which you refer to an inadequate amount of $50 a
month being provided for surviving children. You are aware, are you
not, that the Daniels-McGee Act of last October increased that basic
amount to $75, and that the November 1 cost-of-living adjustments
further increased it to $79?
Mr. SADLER. Yes, Mr. Chairman.
This was an oversight we made in preparing this statement that
we do now realize. It is a reminder again how much retired employees
are indebted to you and your committee and the committee in the
Senate.
Mr. DANIELS. I wanted to set the record straight.
In stating that each year the husbands and families of 900 married
female employees are deprived of income by reason of their deaths,
you are not saying that the survivors are being left destitute are you,
Mr. Sadler?
Mr. SADLER. I don't know that I am, Mr. Chairman.
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32
I know there are many instances when a survivor could well have
used the annuity. As a matter of fact, in most instances he could use
the annuity. So I just say that equity should be given to both sides
in this particular argument.
Mr. DANIELS. Isn't it true the survivor benefits are payable to
minor children even though the husband survives, and despite the
fact that he may be the primary support of the family?
Mr. SADLER. For dependents, yes.
Mr. DANIELS. Of the annual 900 surviving widowers you mention,
were you able to ascertain how many of them are determined to be
dependent upon their wives for support by reason of physical or
mental incapacitation?
Mr. SADLER. I have no figures on that, Mr. Chairman, although I
have discussed it with the members of your staff at different times in
the past. I find that there is a relatively small percentage of that
group who would actually be more than 50-percent dependent.
Mr. DANIELS. I, myself, am wondering if that is not somewhat in
conflict with the Civil Rights Act. I recall receiving a letter yesterday
from Mrs. Griffiths who is an advocate of the repeal of the section of
the law which discriminates against the husband unless the husband
is a dependent for at least more than 50-percent support.
She takes issue with an amendment to the proposed civil rights bill
which I think may come to the floor in the next week or two. I don't
recall who offered the amendment. I think the same argument that she
offered against the proposed amendment to the civil rights bill would
be applicable here.
Of course, I haven't gone into the question very deeply.
Mr. SADLER. This is a problem that is coming up more and more,
Mr. Chairman, today than ever before, and I think a lot of problems
are developing in this area.
Mr. DANIELS. Do you feel that is a discriminatory policy-the
fact that husbands must be dependent, and on the other hand, the
wives are not required to be dependent?
Mr. SADLER. Yes; I think so. I think any language on the one side
ought to be the same on the other.
Mr. DANIELS. With reference to the bill, H.R. 11120, to which Mr.
Broyhill alluded this morning, you are aware, aren't you, that an
identical measure was approved by the committee in the closing days
of the 90th Congress but that final action thereon could not be ac-
complished prior to adjournment?
Mr. SADLER. Yes.
Mr. DANIELS. I have no further questions.
I want to thank you and your colleagues for coming here today and
giving us the benefit of your views. I do, however, wish to recognize
my colleague, Mr. Hogan, from Maryland.
Mr. HOGAN. I have no questions, Mr.: Chairman; thank you.
Mr. SADLER. Thank you very much.
Mr. DANIELS. 1. want to commend you gentlemen for your testi-
mony here this morning.
The committee stands adjourned and will meet subject to the call
of the Chair.
(Whereupon, at 12:05 p.m. the subcommittee adjourned, subject
to the call of the Chair.)
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SURVIVOR ANNUITIES
TUESDAY, AUGUST 4, 1970
U.S. HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON RETIREMENT, INSURANCE,
AND HEALTH BENEFITS OF THE
COMMITTEE ON POST OFFICE AND CIVIL SERVICE,
Washington, D.C.
The subcommittee met, pursuant to notice, at 10:20 a.m., in room.
210, Cannon House Office Building, Hon. Dominick V. Daniels
(chairman of the subcommittee) presiding.
Mr. DANIELS. The Subcommittee on Retirement, Insurance, and
Health Benefits is meeting this morning to further consider H.R. 3661
and related bills which propose improvements in certain survivorship
provisions of the civil service retirement law.
Without objection, the administrative reports from the Civil
Service Commission and the Bureau of the Budget on H.R. 3661,
H.R. 5230, H.R. 468, and H.R. 11120 will be inserted in the record
at this point.
(The reports follow:)
U.S. CIVIL SERVICE COMMISSION,
Washington, D.C., June 10, 1970.
Hon. TIIADDEUS J. DULSICI,
Chairman, Committee on Post Office and Civil Service,
House of Representatives.
DEAR MR. CHAIRMAN: This is in further reply to your request for the Com-
mission's views on H.R. 3661, a bill "To amend chapter 83, title 5, United States
Code, to eliminate the reduction in the annuities of employees or Members who
elected reduced annuities in order to provide a survivor annuity if pre-deceased
by the person named as survivor and permit a retired employee or Member to
designate a new spouse as survivor if predeceased by the person named as survivor
at the time of retirement." This report also applies to H.R. 85, H.R. 5231, and
other identical and similar bills which, if enacted, would permit the retiree, upon
the death of his named survivor, to have his annuity recomputed and/or to name
a substitute survivor annuitant.
Under the Civil Service Retirement law, the annuity of a retiring married
employee is atuomatically reduced in order to offset a portion of the cost of
providing survivor benefits for his wife (or her husband), unless at time of retire-
ment the employee elects in writing to receive an unreduced single-life annuity.
The employee's decision in this matter is irrevocable; the law does not permit him
either to name another person for the survivor annuity or to change his reduced
survivor annuity to an unreduced single-life annuity should the named spouse
predecease him, or should the marriage relationship upon which the survivor
right was based be dissolved.
H.R. 3661, as we construe it, proposes to add to the survivor annuity option
the proviso that if the named spouse predeceases the retiree---
(1) The retiree's reduced survivor annuity would be recomputed under the law
in effect at the time he retired, as though he had not elected survivor benefits; and
(2) Upon remarriage, the retiree could again elect a reduced annuity with
survivor benefits to his (or her) new spouse. The survivor benefits tothe new spouse
would also be computed under the law in effect when the retiree retired. This elec-
tion could not be made, however, until the now spouse attained age 60 and the
(33)
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aggregate additional amount paid to the retiree as a result of the recomputation
in (1) above had been refunded to the Civil Service Retirement and Disability
Fund.
The recomputation and reelection process could be repeated as often as the
designated spouse predeceases the retiree and he remarries. However, a divorce
from the designated spouse would not permit the retiree's annuity to be re-
computed, nor could he elect survivor benefits for his new spouse, should he
remarry.
H.R. 3661 would apply to people retired both before and after its enactment,
including people already retired whose spouses had died before enactment. In the
case of a retiree predeceased by a designated spouse after enactment, the recom-
putations in (1) or (2) above would be effective, respectively, the first day of the
month beginning after the spouse's death or the first day of the month beginning
after the new spouse attains age 60.
Insofar as cost is concerned, enactment of H.R. 3661 would increase the funded
liability of the Civil Retirement and Disability Fund by $1,008.4 million. Under
the financing provisions of Public Law 91-93, approved October 20, 1969, this
amount would be amortized in 30 annual installaments of approximately $53.1
million. The first $53.1 million would be payable in fiscal year 1970 if the bill is
enacted before June 30, 1970. The normal cost of providing retirement benefits
would be increased by 0.10% from 13.98% to 14.08%.
The Commission finds no justification for the provision of H.R. 3661 that would
eliminate the reduction in the annuity of a retiree who elected a survivor annuity,
if predeceased by the person named as survivor. The reduction originally was
equal to the full acturial cost of the survivor protection computed over the life
time of the retiree, taking into account that there will be instances where the sur-
vivor benefit will never be payable due to intervening death or divorce of the
named survivor. As shown in the following table, though, this reduction has been
decreased five times so that it now equals only a fraction of the cost of the survivor
protection.
Benefit to spouse named
Reduction in retiree's annuity at retirement
Retired between-
Jan. 1, 1940, and Mar. 31,1948---------- Full actuarial----------------------- 50 or 100 percent of retiree's
Apr. 1, 1948, and S29,1949--------- 10 percent, Plus reduced of eti
Sept. 3/a of 1 percent for 50 percent of r retire
ree's unre-
Sept. 30, 1949, and Sept. 30,1956------- 5 percent of first $1 500eand 10 60or- duDeo annuity.
cent of remainder, plus % of 1
percent for any years spouse under
a e60.
Oct. 1, 1956, and Oct. 10,1962---------- 2 percent of first $2,400 and 10 50 percent of the amount used
percent of any added amount used as survivor base.
as base for survivor benefit.
Oct 11, 1962, and present-------------- 234 percent of first $3,600 and 10 55 percent of the amount used
percent of any added amount used as survivor base.
as base for survivor benefit.
The Commission finds no justification for restoring a single life annuity to a
retiree whose spouse has predeceased him, but concurs in principle with the idea
of extending the survivor protection to the new spouse of a retired employee or
Member if the retiree's marriage to the spouse named as survivor at the time of
retirement is dissolved. The socio-economic need to provide survivor protection
for the new spouse is no less than the need to protect the former spouse. However,
we would suggest certain modifications in the provisions included in H.R. 3661
that are intended to effect this objective.
As noted above, H.R. 3661 would permit the election of a new spouse in cases
where the designated spouse predeceases the retiree, the new spouse has attained
the age of 60, the aggregate additional amount paid to the retiree as a result of
eliminating the reduction in the retiree's annuity has been refunded, and the
retiree's annuity is once again reduced.
We believe:
(1) Effective on enactment, the substitution of the new spouse should be
automatic, and without regard to age. If, as we recommend, the retiree's annuity
is (as under present law) continued at the reduced rate following the death of the
spouse initially designated as the potential recipient of survivor benefits, the
substitution of a new spouse would not necessitate the refund and reduction
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contemplated under H.R. 3661. Therefore, the automatic substitution of a new
:spouse could not adversely affect the retiree insofar as the amount of his annuity
is concerned. In addition, automatic substitution would simplify administration
and assure the new spouse the same survivor protection that had been provided
the former spouse.
(2) Provision for a spouse acquired after retirement should be effective when
the marriage has lasted at least 2 years or a child has been born of the marriage.
This proposed change is consistent with the automatic survivor annuity provision,
.already in the retirement law, for spouses of deceased employees. Its purpose is to
,deter "death-bed" marriages in order to provide annuity to the new spouse.
(3) The substitution of the new spouse should be permitted when the former
marriage ends because of divorce or annulment, as well as because of death. The
:reason why the former marriage ended has no bearing on the need for providing
survivor protection to a new spouse.
(4) Where a spouse acquired after retirement is, and upon marrying the retiree
remains, entitled to a survivor benefit under this or another retirement system
for Government employees, she should be paid an annuity under this provision
only if she elects to take it instead of the survivor benefit she already is entitled to.
(5) Provision should be made for the protection of a spouse acquired after
retirement by an annuitant who was unmarried at the time he retired:
(a) Where an unmarried retiree elected annuity without survivor benefit, he
should be permitted to change his election within one year after his marriage,
with a reduction in his annuity becoming effective on the first of the month fol-
lowing receipt of his election in the Commission;
(b) Where an unmarried retiree elected annuity with a survivor benefit to a
person having an insurable interest in his life, he should similarly be permitted
to change his election within one year after his marriage, with the reduction in
his annuity on account of his original election to be recomputed under the regular
option formula, effective on the first of the month following receipt of his election
in the Commission.
In summary, the Commission:
(1) Finds no justification for restoring a single-life annuity to a retiree whose
spouse has predeceased him.
(2) Agrees in principle with the idea of extending the original survivor election
to a new spouse, but recommends that, in lieu of the provision in H.R. 3661,
survivor protection be automatically extended to a spouse acquired after retire-
ment where the marriage has lasted at least 2 years or produced a child.
Accordingly with the changes discussed above the Commission recommends
,enactment of H.R 3661.
The recommendations above would increase the unfunded liability of the
Civil Service Retirement Fund by $1,077.4 million, which would be amortized in
:30 annual installments of approximately $56.1 million (beginning with fiscal year
1070 if the provision is enacted before July 1, 1970). The normal cost of the
retirement system would be increased by 0.11%, to 14.09%.
We note there are certain technical and conforming changes that should be
made in the text of H.R. 3661. Our technical staff will be available to advise on
this if the Committee so desires.
The Bureau of the Budget advises that from the standpoint of the Administra-
tion's program there is no objection to the submission of this report.
By direction of the Commission:
Sincerely yours,
ROBERT HAMPTON, Chairman.
EXECUTIVE OFFICE OF THE PRESIDENT,
BUREAU OF THE BUDGET,
Washington, D.C., June 11, 1970.
Hon. THADDEUS J. DULSKI,
Chairman, Committee on Post Office and Civil Service,
House of Representatives, Washington, D.C.
DEAR MR. CHAIRMAN: This is in reply to the Committee's request for the views
,of the Bureau of the Budget on H.R. 85, H.R. 3661 and H.R. 5231, identical
bills, "To amend chapter 83, title 5, United States Code, to eliminate the reduction
In the annuities of employees of Members who elected reduced annuities in order
to provide a survivor annuity if predeceased by the person named as survivor and
;permit a retired employee or Member to designate a new spouse as survivor if
ipredeceased by the person named as survivor at the time of retirement."
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In its report on the bills, the Civil Service Commission opposes the provision
that would eliminate the annuity reduction for the survivor option and restore
the single-life annuity to a retired employee whose designated spouse predeceases
him.
The Commission supports in principle the provision to extend the original
survivor option to new spouses, both of annuitants who were single at the time of
retirement and of those who were married at the time of retirement and sub-
sequently remarried, when the former marriage is dissolved by annulment, divorce,
or death. It recommends, however, that such survivor protection should be availa-
ble only when the new marriage has lasted two years or a child is born of the
marriage.
The Bureau of the Budget concurs in the Commission's views, and accordingly
would not object to enactment of any of the subject bills, if amended as suggested
by the Commission.
Sincerely,
WILFICED H. ROMMEL,
Assistant Director for Legislative Reference.
U.S. CIVIL SERVICP: COMMISSION,
Hon. THAnmius J. DULSKI Washington, D.C., June 10, 1970.
,
Chairman, Committee on Post Office and Civil Service,
House of Representatives
DEAR MR. CHAIRMAN: This refers further to your request for the Commission's
views on H.R. 5230, a bill "To amend section 8341 of title 5, United States Code, to
provide annuities for surviving spouses without deduction from a retired employee
or Member's annuity, and for other purposes."
Present law affords automatic survivor annuity to an eligible widow or depend-
ent widower of a covered employee dying after 18 months of civilian service. The
survivor received 55 % of the annuity computed on the service and salary of the
deceased, with a guaranteed minimum yearly annuity which is 55 % of the lesser of,
(a) 40?,, of the employee's or Member's high-3 average salary, or of the average
salary in effect during the entire period of their service where such service is less
than 3 years, or (b) the regular annuity obtained after increasing the deceased
employee's or Member's service by the period of time between the date of his death
and the date he would have attained age 60 (with credit for unused sick leave
added).
Also, under present law, a retiring employee may designate his spouse to receive
a survivor annuity of 550/0 of his earned annuity, with his earned annuity being
reduced by 232 percent of the first $3600 plus 10 percent of the excess over $3600.
As we construe H. It. 5230, its main purpose is to equalize survivor annuities
awarded in the past with those being awarded today. The bill intends to change,
on a retroactive basis, some of the present survivorship provisions, including the
following, among others:
1. Make annuity to a survivor of a deceased retiree automatic, without reduc-
tion in the retiree's annuity.
2. A spouse acquired after retirement and married to the retiree for at least three
years would qualify for a survivor annuity.
3. Eliminate the requirement that a widower be dependent upon the deceased
employee.
If the Committee wishes to give favorable consideration to this bill, we would
recommend that it be redrafted in its entirety to clearly specify all intended
results. Our technical staff would be made available to advise on this, if the
Committee so desires.
Jr any case, and as a matter of principle, the Commission would not concur
in the enactment of some of the main features of H.R. 5230. For example, we
would not concur with liberalizing the eligibility requirements or the annuity
benefit formula for survivors of retirees who have already died.
Liberalizing retirement or survivor benefits for the future is justifiable and
desirable from time to time to aid the retirement system in accomplishing one of
its major functions-helping to attract and retain competent Government
personnel. The same reason does not exist for retroactive application of liberali-
zations, with the Government called upon to bear the prohibitively high cost of
new or increased annuities. In many instances the proposed new benefits would
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apply in cases of retirees who could have but (often deliberately) did not elect
survivor benefits for their spouses. In other cases, benefits have already been
provided for the spouses either by elections under prior provisions of law or
under adjustment enactments affording gift annuities to widows and widowers.:
In these instances the carefully designed prior provisions of law would be set
aside and the proposed new benefits substituted. In total, the effect of the retro-
active features of this bill would be inconsistent with the annuity systems
principles.
For the reasons mentioned, the Commission recommends that adverse action
be taken on H.R. 5230.
The Bureau of the Budget advises that from the standpoint of the Adminis-
tration's program there is no objection to the submission of this report.
By direction of the Commission:
Sincerely yours,
ROBERT HAMPTON, Chairman.
EXECUTIVE OFFICE OF THE PRESIDENT,
BUREAU OF THE BUDGET,
Washington, D.C., June 9, 1970.
Hon. THADDEUS J. DULSKI,
Chairman, Committee on Post Office and Civil Service, House of Representatives?
Washington, D.C.
DEAR MR. CHAIRMAN: This is in reply to the Committee's request for .the
views of the Bureau of the Budget on H.R. 5230, "To amend section 8341 of
title 5, United States Code, to provide annuities for surviving spouses without
deduction from a retired employee or Member's annuity, and for other purposes.
The Bureau of the Budget concurs in the views expressed in the report the
Civil Service Commission is submitting to the Committee on H.R. 5230, and
accordingly recommends against its enactment.
Sincerely, WILFRED H. ROMMEL,
Assistant Director for Legislative Reference.
U.S. CIVIL SERVICE COMMISSION,
Washington, D.C., June 12, 1970.
Hon. THADDEUS J. Dus sKr,
Chairman, Committee on Post Office and Civil Service,
House of Representatives
DEAR MR. CHAIRMAN: This is in further reply to your request for the Com-
mission's views on H.R. 468, a bill "To amend the Civil Service Retirement Act to
provide equality of treatment with respect to widows and widowers of certain
employees who die in service."
The Bill would revise the civil service retirement system to provide automatic
survivor annuities for widowers of employees who die in service on the same basis
as for widows.
Section 8341 of title 5, United States Code, provides for automatic survivor
annuities for widows and "dependent" widowers of civil service employees who
die after 18 months of service.
To qualify as a "dependent widower" of an employee who dies in service for
purposes of a survivor annuity under the civil service retirement system, the
widower, among other things, must (a) be incapable of self-support because of
mental or physical disability, and (b) have received more than half of his support
from the employee. This bill would revise section 8341 of title 5 to remove the
requirement that the widower of an employee who dies in service must have
been a "dependent widower" in order to qualify for a survivor annuity.
In fiscal year 1969, 5933 widows and 17 dependent widowers of deceased em-
ployees were added to the benefit roll. If the amendment proposed by this bill
had been in effect, an-estimated additional 900 nondependent widowers would
have been added to the roll. The Commission estimates that enactment of this
bill would increase the normal cost of the retirement system by .04% of payroll.
It would add $196.1 million to the unfunded liability, to be amortized in equal
installments of $10.3 million a year for the next 30 years.
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The Commission favors the enactment of H.R. 468 for the following reasons:
1. The present provision for automatic survivor annuities reflects discrimina-
tion between the sexes. The non-dependent husband does not have equal protec-
tion against economic hazard; he has no entitlement to a survivor annuity whereas
the non-dependent wife is awarded a survivor benefit.
2. The present provision runs counter to the facts of current day living. By
and large, women work because the family needs the money, and the income
earned by women is significant in the support of the family. On the principle that
one purpose of a retirement system is to cushion family living standards against
loss of income caused by death, it is appropriate to drop the dependency require-
ment for husbands of working wives.
3. The provisions for annuities to surviving spouses of deceased annuitants do
not include it dependency test. It is inconsistent to apply such a test in the pro-
visions for annuities to surviving spouses of deceased employees.
4. From a practical viewpoint, the proposed provision would be easier to ad-
minister because the dependency determinations are usually time consuming and
frequently difficult to resolve satisfactorily.
This bill does not take into account the enactment of Public Law 89-554,
approved September 6, 1966. In addition there are a few technical changes which
should be made in the bill. Accordingly, if this bill is to be given further consider-
ation, we suggest amending H.R. 468 as follows:
A BILL To provide equality of treatment with respect to widows and widowers
of certain employees who die in service.
Be it enacted by the Senate and House of Representatives of the United States of
America in Congress assembled, That section 8341(a) of title 5, United States Code,
is amended-
(1) by inserting "and" after paragraph (2);
(2) by striking out paragraph (3) ; and
(3) by renumbering paragraph "(4)" as paragraph "(3)".
SEC. 2. Section 8341(d) of title 5, United States Code, is amended-
(1) by striking out "dependent widower" wherever it appears and inserting
"widower" in place thereof;
(2) by striking out paragraph (2) ; and
(() by renumbering paragraphs "(3)" and "(4)" as paragraphs "(2)" and
SEc. 3. Section 834.1(e) (2) of title 5, United States Code, is amended by striking
out "subsection (a) (4)" and inserting "subsection (a) (3)" in place thereof.
The Bureau of the Budget advises that from the standpoint of the Administra-
tion's program there is no objection to the submission of this report.
By direction of the Commission:
Sincerely yours,
EXECUTIVE OFFICE OF THE PRESIDENT,
BUREAU OF THE BUDGET,
Hon. THADDEUS J. l.)ULSIu Washington, D.C., June 30, 1970.
,
Chairman, Committee on Post Office and Civil Service,
House of Representatives, Washington, D.C.
DEAR DIR. CHAIRMAN: This is in reply to the Committee's request for the views
of the Bureau of the Budget on H.R. 468, "To amend the Civil Service Retire-
ment Act to provide equality of treatment with respect to widows and widowers
of certain employees who die in service."
The Bureau of the Budget concurs in the views expressed in the report the
Civil Service Commission is submitting on this bill, and accordingly favors the
enactment of H.R. 468.
Sincerely,
WILFRED H. ROMMEL,
Assistant Director for Legislative Reference.
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U.S. CIVIL SERVICE COMMISSION,
Washington, D.C., January 28, 1970.
Hon. THADDEUS J. DULSI{I,
Chairman, Committee on Post Office and Civil Service,
House of Representatives.
DEAR MR. CHAIRMAN: This refers further to your request for Commission
report on H.R. 11120, a bill "To amend title 5, United States Code, to provide.
for the inclusion of certain periods of reemployment of annuitants for the purpose
of computing annuities of surviving spouses.'
Except for retired Members of Congress, disability retirees whose annuities
have been terminated, and retirees with annuities based on involuntary separation
(not for cause or age), section 8344(a) of title 5, United States Code, sets the
conditions which apply to all annuitants reemployed in the Government service
regardless of when retirement occurred. When an annuitant is reemployed subject
to section 8344(a), his salary is reduced by the amount of the annuity he is re-
ceiving and he is considered covered by the retirement system, but no deductions
for the Civil Service Retirement and Disability Fund are withheld from his
salary. If an annuitant completes between one and five years of continuous full-
time reemployment service, he is entitled upon separation to a supplemental
annuity computed on the basis of his reemployment service and salary. The
supplemental annuity thus earned is a single-life benefit which does not increase
the benefit payable to any survivor. If an annuitant completes five or more years
reemployment service, he is also entitled to the supplemental annuity; however,
he may elect, instead of the supplemental annuity, to make deposit in the Civil
Service Retirement and Disability Fund covering the reemployment service and
have his annuity completely recomputed under current law based on his entire
service. The complete recomputation operates as though he were retiring for the
first time, with a new right of election as to type of annuity and the benefit of
liberalizing provisions enacted since his original retirement.
H.R. 11.120 would amend the supplemental annuity provision so as to pro-
vide a special formula to permit an annuitant who is reemployed for one or more
years to use the otherwise single-life annuity to increase the survivor benefit poten-
tially payable to his spouse. The amendment would apply only to an annuitant
whose reemployment ends on or after the date it is enacted. The additional sur-
vivor annuity would be payable if the retiree had elected a survivor annuity at the
time of his original retirement and only to the husband or wife he had then desig-
nated. The supplemental annuity normally payable to the retiree would be
reduced by 10% and the husband or wife would then be entitled to an increased
survivor benefit equaling 55% of the full supplemental annuity. The 10% reduc-
tion and the increased survivor benefit would be automatic unless the retiree
elected, before the supplemental annuity was awarded, to take a single-life
supplemental annuity.
At the time the supplemental annuity provision was enacted in 1956, experi-
ence indicated that the reemployment periods of annuitants were relatively brief
and that the resulting supplemental annuities were not large enough to provide a
significant increase in a spouse's potential survivor benefit. The supplemental
annuity was accordingly made a single-life benefit. Over the years this has been
a satisfactory arrangement in the vast majority of cases.
We recognize that there are instances of an annuitant working for an extended
period and earning a supplemental annuity large enough to provide a meaningful
increase in the spouse's potential survivor benefit. H.R. 11120 provides a workable
method of allowing use of supplemental annuities to increase benefits to potential
survivors, and the Commission has no objection to its enactment.
The number of reemployed annuitants who qualify for supplemental annuities
is small. We estimate that the probable cost of H.R. 11120 will be minimal.
If the Committee wishes to give favorable consideration to this bill, there are
certain technical and conforming changes that should be made in the text. In this
regard, substitute language for subsection (a) of the first section of H.R. 11120
is attached to this report. Also, it should be noted that section (3) proposing an
exception to the restriction on the use of the retirement fund imposed by sec-
tion 8348(g) of title 5, United States Code, is inappropriate and should be deleted
in view of amendments to the retirement law made by section 103 of Public
Law 91-93, approved October 20, 1969.
The Bureau of the Budget advises that from the standpoint of the Adminis-
tration's program there is no objection to the submission of this report.
By direction of the Commission:
Sincerely yours,
ROBERT HAMPTON, Chairman.
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SUBSTITUTE LANGUAGE FOR SUBSECTION (A) OF THE FIRST SECTION OF H.R,. 1.1120
That (a) section 8344(a) of title 5, United States Code, is amended by insert-
ing after the fourth sentence the following new flush sentence: "If the annuitant
on termination of employment is married to a spouse potentially entitled to
annuity as surviving spouse under section 8341 of this title, the supplemental
annuity payable under the fourth sentence of this subsection is reduced by 10
percent and the spouse is entitled to an annuity equal to 55 percent of the supple-
mental annuity commencing and terminating at the same times as the survivor
annuity payable under section 8341 of this title, unless at the time of claiming
the supplemental annuity the annuitant notifies the Civil Service Commission,
in writing that he does not desire his spouse to receive this annuity."
EXECUTIVE OFFICE OF THE PRESIDENT,
BUREAU OF THE BUDGET,
Hon. THADDEUS J. DuasxI Washington, D.C., February 20, 1970..
,
Chairman, Committee on Post Office and Civil Service, House of Representatives,
Washington, D.C.
DEAR MR. CHAIRMAN: This is in response to your request of May 14, 1969,
for the views of the Bureau of the Budget on II.R. 11120, a bill "To amend title
5, United States Code, to provide for the inclusion of certain periods of reemploy-
ment of annuitants for the purpose of computing annuities of surviving spouses."
We concur in the views expressed in the report the Civil Service Commission
is submitting to your Committee on H.R. 11120 and, accordingly, do not object
to its enactment if amended as suggested by the Civil Service Commission.
Sincerely,
WILFRED 11. ROMMEL,
Assistant Director for Legislative Reference.
Mr. DANIELS. These measures propose to:
1. Restore the full single life rate of annuity when the retiree is
predeceased by the designated spouse.
2. Extend the survivor protection to the spouse of a subsequent
marriage.
3. Grant annuity benefits to the husbands of deceased female
employees, regardless of dependency status.
4. Permit periods of reemployment of annuitants in computing the
spouse's ultimate benefit.
The subcommittee is pleased to have as its first witness this morning
a gentleman who has made innumerable and invaluable contributions
over the years to this subcommittee's legislative endeavors. The
Chair extends It warm welcome to the able representative of the Civil
Service Commission, the Director of its Bureau of Retirement, Insur-
ance, and Occupational Health, Mr. Andrew Ruddock.
STATEMENT OF ANDREW E. RUDDOCK, DIRECTOR, BUREAU OF
RETIREMENT, INSURANCE, AND OCCUPATIONAL HEALTH, U.S.
CIVIL SERVICE COMMISSION
Mr. RUDDOCK. Thank you, Mr. Daniels, for those kind words.
It is always a pleasure for me to appear before you. I do have a
prepared statement and with your permission I would like to read it.
Mr. DANIELS. You may proceed.
Mr. RUDDOCK. Mr. Chairman and members of the subcommittee,
I am glad to have the opportunity to present the position of the U.S.
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41
Civil Service Commission on a number of bills, currently under con-
sideration by this subcommittee, that are intended to improve the
survivorship protection provided under the civil service retirement
system.
The first of these bills, H.R. 3661, proposes to amend the survivor
annuity option of a retiring employee by providing that if the named
spouse predeceases the retiree-
1. The retired employee's annuity would be recomputed, under
the law in effect at the time he retired, and paid prospectively as
though he had not elected survivor benefits; and
2. If he remarries, the retiree could again elect a reduced annuity
with survivor benefits to his (or her) new spouse. The survivor bene-
fits to the new spouse would be computed under the law in effect
when the employee retired.
Under this proposal, the election to substitute a second spouse
could not be made until the new spouse attained age 60. The total
additional annuity paid to the retired employee as a result of recom-
puting his annuity after the first spouse died would have to be re-
funded to the civil service retirement and disability fund.
I note that you have inserted in the record the Commission's
official report dated June 10, 1970.
As stated in its official report, the Commission does not believe it
desirable at this time. to restore the full annuity of a retiree who
elected a survivor annuity if he is predeceased by the person named as
survivor. The reduction in the retiree's annuity when our system first
offered survivor benefits in 1940, was equal to the full actuarial cost of
the survivor protection computed over the lifetime of the retiree, tak-
ing into account that there will be instances where the survivor benefit
will never be payable due to intervening death or divorce of the named
survivor. However, as a result of liberalizing legislation over the years,
this reduction has been decreased so that now it is a token reduction
that equals only a fraction of the cost of the survivor protection. Con-
sequently, eliminating the reduction where the retiree is predeceased
by his spouse is not supported by any concept that retirees are paying
too much for survivor protection.
Nor can eliminating the reduction be justified on the basis of need.
Eliminating the reduction when the spouse predeceases the retiree
would result in higher total benefits becoming payable to the retiree
.alone than had been provided both the retiree and his spouse. In other
words, we would create the somewhat anomalous situation of providing
more in benefits when the economic need becomes less.
On the other hand, the Commission concurs in principle with the
idea of extending survivor protection to the new spouse of a retired
,employee if the retiree's marriage to the spouse named as survivor at
the time of retirement is dissolved. The socioeconomic need to provide
survivor protection for the new spouse is no less than the need to
protect the former spouse. We suggest certain modifications in the
provisions of the bill that are intended to achieve this objective.
These suggestions, and the considerations for them, are spelled out in
some detail in our official report, but stated very briefly, they include
the following:
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1. Substitution of a new spouse should be automatic, and without
regard to age. This would simplify administration and assure the new
spouse the same survivor protection that had been provided the former
spouse.
2. Substitution of a new spouse should be permitted when the
former marriage ends because of divorce or annulment, as well as
because of death. The reason for termination of the former marriage
has no bearing on the need for providing survivor protection to a new
spouse.
3. Provision should be made for the protection of a spouse acquired
after retirement by an annuitant who was unmarried at the time he
retired.
4. An unmarried retiree who elected annuity with a survivor
benefit to a person. having an insurable interest in his life should be
permitted to change his election to protect a subsequently acquired
spouse.
Another bill, H.R. 468, proposes to amend the civil service re-
tirement law to provide equality of treatment with respect to widows
and widowers of employees who die in service. The Commission has
long supported the principle that all employees should be treated
alike for retirement purposes and, by letter dated June 12, 1970,
the Commission reported its favorable position on this bill.
Under the present law, in order to be eligible for a survivor annuity
in the case of an employee who (lies in service, a widow must have been
married to the employee for at least 2 years immediately before his
death or, if married less than 2 years, she must be the mother of a
child born of the marriage. However, for a widower to qualify for a
survivor benefit, in addition to meeting either the marriage or par-
entage requirement I just mentioned, he must be incapable of self-
support by reason of mental or physical disability, and must have
received more than one-half support from his wife. The Commission
has received many complaints about this difference in the survivor-
ship protection provided men and women employees.
I believe I should make it clear at this point that the difference in
the survivorship protection provided men and women employees in
service does not exist with respect to the survivorship protection
available after retirement. There are no marriage, parentage, disability
or dependency requirements to be met on the part of either a widow
or a widower where an employee, at retirement, chooses a reduced
annuity in order to provide a survivor benefit for his or her spouse.
The present provision for annuities to surviving spouses of deceased
employees reflects a difference in treatment that is based exclusively
on whether the employee is a man or woman. The woman employee's
nondependent widower has no entitlement to a survivor annuity
whereas the male employee's nondependent widow is awarded a
survivor benefit. The present provision runs counter to the facts of
current-day living. By and large, women work because the family
needs the money, and the income earned by women is significant in.
the support of the family and in maintenance of the family's standard
of living.
The Commission recommends enactment of H.R. 468.
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A third bill relating to improving survivorship protection, H.R.
11120, would provide for the inclusion of certain periods of reemploy-
ment of an annuitant for the purpose of computing the annuities
provided his (or her) surviving spouse.
Under the present law, with a few exceptions, when an annuitant
is reemployed, he is considered covered. by the retirement system, but
no deductions are withheld from his salary. If he completes 5 or more
years of continuous, full-time reemployment service, he may elect
to make a deposit to the civil service retirement and disability fund
covering that service, have his annuity recomputed on the basis of
his entire service, and elect survivor benefits based on the resulting
increased annuity.
Alternatively, he, and also an annuitant who completes between
1 and 5 years of continuous full-time reemployment service, is entitled
upon separation to a supplemental annuity based only on the reem-
ployment service. The supplemental annuity, however, does not
increase the benefits potentially payable to any survivor. This has
been a reasonably satisfactory arrangement for annuitants whose
reemployment service is relatively brief, because the resulting supple-
mental annuities are not large enough to provide a significant increase
in a spouse's potential benefit. Nonetheless, we recognize that there
are instances of an annuitant working for an extended period and
earning a supplemental annuity large enough to provide a meaningful
increase in the spouse's potential survivor benefit.
H.R. 11120 provides a workable method of allowing use of supple-
mental annuities to increase benefits to potential survivors, and, as
stated in our report on this bill dated January 28, 1970, the Commis-
sion has no objection to its enactment.
I thank you for the privilege of appearing to testify today on these
very significant bills. I will be glad to try to answer any questions you
may have.
Mr. DANIELS. Mr. Ruddock, thank you for a very fine statement,
I am pleased to hear your testimony to the effect that you support
some, if not most, of the provisions that are contained in the various.
bills under consideration this morning.
The Chair does have a few questions.
Mr. Ruddock, in years past, various Chairmen of the Civil Service
Commission and the various administrations apparently found no
justification for an employer policy of providing costly survivor bene-
fits to a spouse acquired after termination of the employer-employee
relationship.
From your statement and the administrative reports on H.R. 3661,.
the present Commission and administration obviously favor a de-
parture from the original concept of contractual principles whereby
only the spouse to whom an employee is married at the time of retire-
ment is recognized as having a vested right to survivorship protection.
Do I interpret correctly that the Commission's limited departure
from that concept is predicated upon the economic needs of spouses"
acquired subsequent to retirement?
Mr. RUnnocx. Yes, I think that is exactly right. The position in
the past has been, it seems to me, one.of looking at the retirement
system as being a plan in which all the benefits were earned benefits.
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and considering some obligation on the part of the employer flowing
toward the wife to whom. the employee was married at the time of
retirement, without seeing any similar obligation, if you will, toward
It Spouse acquired after retirement.
1 think the current position is more realistic. The position is a
recognition of a need of our society to provide some income for widows.
While it would be difficult to say that this is a responsibility of the
employer that flows from the employment itself, it does seem this
is a very reasonable way of providing survivor protection to the
second spouse.
Mr. DANIELS. Is my interpretation correct, that the reason upon
which the Commission predicates extending the survivor protection
to a subsequent spouse-that is, socioeconomic need-is the same
reason whereby it objects to restoration of the full single life rate
upon termination of the marriage?
Mr. RUDDOCK. I would agree with that, too. The restoration of the
rate would mean only paying a higher annuity to the retired employee
and that would be a nice benefit for him. But; you cannot use the
argument of a social need to provide protection as justification for
increasing annuity, as you can for providing annuity to a second
Spouse.
Air. DANIELS. I believe that there is a consensus that the existing
reduction factors amount to relatively little Inure than a token and
that they are far from being based upon full actuarial considerations.
In your opinion, Mr. Ruddock, could greater warrant be found for
restoring to the retiree the full annuity rate if the reduction percent-
ages were based upon true actuarial factors?
Mr. RUDDOCK. Yes. I think that would be particularly true if in
calculating your actuarial reductions you calculated them with the
assumption that you would restore the full rate if the wife died first.
There are some systems in which survivor annuity is purchasable and
,you many buy it on either a basis of no restoration if the spouse dies
first, or with a provision for restoration if the spouse died first. Ob-
viously, to buy that kind of protection with the provision for restoring
full annuity if the wife dies first is much more expensive.
1\41'. DANIELS. Are these commercial insurance policies?
Mr. RUDDOCK. I believe there is a provision--i am not the expert
-01 1, I believe there is a provision similar to that in connection
with the survivor protection available to retired military personnel.
Mr. DANIELS. Anywhere else that it may be available, if you know?
Mr. RuDDorcK. I am sure that that would be a provision available
through commercial insurers.
Mr. DANIELS. In attempting to establish an order of precedence of
treatment to the various circumstances of these retirees, is it your feel-
ing that the priority position should be accorded the retiree who
did in fact elect a reduction in annuity, whose marriage has been
terminated, who continues to receive a reduced benefit even though he
has remarried, and who is presently precluded from providing survivor
protection to his subsequent spouse?
Mr. RUDDOCK. If we are looking toward those who are deserving
of consideration, I think he would be very high on the list. Ile has
done everything within his power to make the election and to pay
whatever price was required to set up a survivorship annuity for the
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surviving widow. It seems to me that he is certainly in a better pri-
ority position than a person who did not make a similar election at
the time of retirement.
Mr. DANIELS. Would you agree that this is the classic example
and that having the greatest degree of merit?
Mr. RIIDDOCK. Yes, I would.
Mr. DANIELS. If this legislation were adopted substantially as
introduced, whereby the retiree's full rate of annuity is restored and
survivorship protection extended to a subsequent spouse only on the
condition that he refund the amount of annuity so restored, could
you conceive of situations where the retiree's financial resources would
be such that he could not come up with the amount due?
Mr. RUDDOCK. Yes, sir, I certainly could. That is the primary
reason for our recommendation that the second spouse be substituted
without any requirement for return of the money. As we propose it,
the annuity would continue to be paid at the reduced rate after the
death of the first wife so that you would not have this problem of
having restored the full rate and then having the annuity to a subse-
quently acquired spouse payable only if that extra payment were
returned to the fund.
Mr. DANIELS. As you propose it, the annuity would be payable to
the subsequent spouse automatically?
Mr. RuDDOCK. Paid automatically and without election. We would
avoid the problem of the retired employee remembering to do it and
taking the necessary action to make the election.
Our proposal, we believe, with the automatic protection of the
second spouse, would result in protecting more second widows than
would any of the alternatives.
Mr. DANIELS. Mr. Ruddock, by your proposal that the legislation
be expanded to permit an unmarried retiree to designate a subsequent
spouse, you do not advocate that he pay into the retirement fund the
amount that would have been deducted from the date of retirement
had he otherwise been married?
Mr. RUDDOCK. No. We propose only that he be required to make
the election within a year after his marriage. When he makes the
election, protection would begin prospectively and he would begin to
have his annuity reduced only prospectively.
Mr. DANIELS. What are your views with respect to the retiree who
is eligible to designate his spouse as a survivor annuitant but declines
to do so? Should such a person be accorded further consideration?
Mr. RUDDOCK. I wouldn't recommend any further consideration at
this time. The extremely low cost of the survivor protection, with
reduction of only 2j2 percent from the first $3,600 of annuity makes,
it quite an attractive bargain. This is explained in the application
for retirement so that it is brought to the attention of the individual.
If we have a retiring married man who sends us an application in
which he says he does not want the survivor protection, then we
routinely write to him giving him the rates with and without the
survivor protection and ask him to confirm his election just on the
off-chance that he has made an error of some kind. By the time we
begin to pay a full annuity without survivorship protection, we are
pretty certain that the individual has understood what he was doing.
Mr. DANIELS. Therefore, you make sure that he understands the
situation and what his rights are?
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46
Mr. RUDDOCK. That is right.
Mr. DANIELS. That he may designate a spouse but if he elects not
to do so, you again obtain his position in writing?
Mr. RUDDOCK. Yes, sir. We have him confirm that. Very frankly,
there are some instances in which a married man does not want to
set up survivor protection for his potential widow. There are other
cases in which the individual has made other financial arrangements
for her and is not counting on the annuity as a part of her widow's
protection.
Mr. DANIELS. As introduced, H.R. 3661 purports to allow the
retiree to designate a subsequent spouse on attainment of age 60. I
believe that you have answered the question that I am about to put
to you in your statement, but for the record I would like to have your
reply with a little more emphasis.
Do I understand correctly that the Commission recommends
automatic protection for a subsequent spouse rather than an affirma-
tive action by the retiree, and that such automatic protection vests
at the time the marriage has existed for 2 years rather than upon her
attainment of age 60?
Mr. RIIDDOCK. Yes, sir. We think if we put the age factor in, it
would be a mistake. To cite one example, if an employee retired, say,
at age 55 and remarried at age 58, there is a good chance that he
would forget that there is an affirmative action he needs to initiate
when his wife reaches age 60. We think that we would end up with
just too many cases in which that kind of an affirmative action was
not initiated at the time the second wife attained age 60. It is not the
sort of thing where we could send some kind of a reminder from the
Civil Service Commission because in most cases we would not be
aware of the remarriage until the annuitant initiated some action to
tell us about it. As we propose it, we wouldn't need to know he had
remarried until the time of this death. At that time, while adjudicating
the claim for death benefits and ascertaining the family relationships,
we would find that he is currently married, and is survived by a widow
to whom. he has been married for 2 years, or a widow who is the mother
of a child born of the marriage. She would automatically be entitled
to a survivor annuity. Her situation would be the same as that of
the widow of a man who dies in the service.
Mr. DANIELS. I am inclined to agree with your thinking on that.
I am pleased to see that the Commission is taking a very, very liberal
view on this question.
Mr. HOGAN. Does she have to be 60 years of age?
Mr. RIIDDOCK. No, sir.
Mr. HOGAN. Regardless of the age at his death?
Mr. Runnocx. I think the age 60 problem was put in as a safe-
guard, if you will, against an annuitant advanced. in years marrying
someone much younger than himself. We think that the provision
which would require that the marriage be in existence for at least
2 years or that there be a child born of the marriage is enough of a
safeguard against the deathbed marriage.
Mr. HOGAN. Thank you.
Thank you, Mr. Chairman.
Mr. DANIELS. The 2-year marriage requirement that you recom-
mend and which applies with respect to employees who die when
actively employed, does not apply when designating a survivor
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41
annuitant at the time of retirement. Are there any reasons why the
2-year requirement should or should not be made applicable in the
case of retiring employees?
Mr. RUDDOCK. Let me say only that we have not experienced any
major problem with respect to employees, at the time of retirement,
naming a wife to whom they have been married for only a short time.
There seem to be more marriages that occur considerably before
retirement and second marriages that occur after retirement, but it is
a fairly uncommon thing for a marriage to occur at or about the time
of retirement.
It could be put in as an additional safeguard. It is one that we have
not felt the need for.
Mr. DANIELS. If a man marries on the day he retires, and accepts
a reduced annuity, she would automatically be entitled to a benefit
after his death, under existing law?
Mr. Runnocx. She would if they were married before he retired or
even on the day he retired. But in order to set up the survivor pro-
tection for a wife acquired after retirement, as I understand the bill
as introduced and with our proposed modifications, he would either
have to be an individual who was married, and elected reduced annuity
benefit at the time of retirement, or if unmarried at that time and he
married after retirement, he would have to make affirmative election
within a year after that marriage which would set up the potential
survivor annuity and which would require, prospectively a reduction
in his annuity.
In the sequence that you gave, if he retired one day and married the
next and died the third, there would not be time to set up the election
of the survivor annuity.
Mr. DANIELS. I presume that is right. It would have to be arranged.
Mr. Runnocx. If he were married at the time of retirement and
his wife died the next day and he remarried the third day and he
died the fourth day, we would have automatic substitution. I think
that is a very unlikely situation.
Mr. DANIELS. There will be all kinds of situations arise, I am sure.
Mr. Runnocx. You have heard it said anything that can happen
will happen.
Mr. DANIELS. Truth is stranger than fiction, so I suppose unusual
cases will occur.
In recommending extending survivor protection to postretirement
marriages, are you suggesting that the surviving spouses of retirees
who die, or have died, prior to the date of enactment of this legisla-
tion be automatically covered?
Mr. Runnocx. No, sir. What we had in mind was this legislation
would apply not only in all future retirements but it would also
apply to those currently on the retirement rolls whether or not is it
the First wife or the second wife, but where the death of the retired
employee occurs on or after the date of enactment. In other words,
we would not propose to go back over the last 30 years of our retire-
ment system history and reopen settled cases of annuitants who had
died and the final payoff had been made in order to do something
different at this time.
Mr. DANIELS. In other words, it is not to be retroactive?
Mr. RUDDOCK. It would be prospective with respect to all deaths
occurring from this point forward.
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Mr. DANIELS. The Commission's administrative report on H.R.
3661 as amended in accordance with your recommendations, and H.R.
468 estimate that the enactment of these bills will increase the retire-
ment, system's known cost by a total of fifteen one-hundredths of 1
percent, or from a present normal cost of 13.98 percent of payroll to
14.13 percent of payroll. While enactment would require amortizing
the unfunded liability thus created by approximately $66.5 million
annually over the next 30 years, the Commission is not suggesting
that the joint employee-agency contributions of 14 percent be in-
creased at this time?
Mr. RUDDOCK. No, sir.
As all the members of this committee will remember, the retirement-
financing legislation which was enacted last October was originally
introduced with a provision that would automatically have adjusted
both the employee deduction and the agency contribution rates when
the normal costs changed. As I remember, they would have been
adjusted to the nearest one-quarter of 1 percent. The automatic
provision was deleted. It is now the kind of a situation where the
Commission from time to time could recommend to this committee a
change in the employee deductions or the agency contributions that
would he considered by this committee. We are not making that
recommendation on the basis of this particular legislation.
Mr. DANIELS. I recall that situation because I was a sponsor of the
original bill containing that provision. There was so much objection
voiced to it that on further thought I and my colleagues deemed it
advisable to delete the provision. In the future, if you feel there should
be an increase, you will come to Congress and make your position
known?
Mr. RUDDOCK. Yes, sir.
Mr. DANIELS. The Commission's letter of June 10, 1970, estimates
that the cost of H.R. 3661, as introduced, would increase the un-
funded liability of the retirement system by slightly over $1 billion
and increase normal costs by one-tenth of 1 percent.
Are you able to tell us the various costs involved if we were to
adopt both of the proposals embodied in H.R. 3661, and also adopt
the amendment suggested by the Commission?
Mr. RunDOcK. No, sir; I cannot give you that precisely. I would
be happy to supply it for the record.
The increase in normal costs, I believe, would be in the neighbor-
hood of 0.12 or 0.13. I cannot be certain just where that would fall.
I need to supply for the record that additional computation.
Mr. DANIELS. I am quite sure that if this legislation is approved
by the subcommittee and the full committee, one of my colleagues
will ask that question on the floor, so we will need that information. I
would appreciate it if you would submit it. We will hold the record
open for a couple of weeks so that that may be done.
Will 2 weeks' time be sufficient?
Mr. RUDDOCK. Yes, sir. I will have it for you within a day or two._
(The cost estimate follows:)
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COST ESTIMATE
If the Commission's proposal for second survivors were modified to provide for
restoration of the full annuity rate when the spouse predeceases the retired em-
ployee, but without requiring repayment of the extra annuity in order to provide
survivor annuity to a second spouse, the present normal cost of the system would
be increased by 0.12 percent. The unfunded liability would be increased by $1,208.2
million, which would be funded by 30 equal annual installments of $63.5 million.
Mr. DANIELS. Mr. Nix, do you have any questions?
Mr. Nix. Thank you, Mr. Chairman.
First of all, I apologize for being late this morning. It is not my
practice.
You have not mentioned anything about third wives. I think they
need representation-and fourth wives. Is there any protection af-
forded them?
Mr. RUDDOCK. The automatic protection which we have proposed
be added to the bill as introduced would apply equally to a third
wife or fourth wife. In other words, it would apply to the woman who
is the widow at the time of death.
Mr. DANIELS. You are envisioning a pretty strong man.
Mr. Nix. Thank you, Mr. Chairman.
Mr. DANIELS. I recognize my colleague from Maryland, Mr. Hogan.
Mr. HoGAN. Mr. Ruddock, I appreciate your testimony today.
May the retiree, assuming he is divorced after retirement, choose to
have his divorced wife continue to receive the benefits if he so desires?
Mr. Runnocx. No, sir.
Mr. HOGAN. He may not?
Mr. RUDDOCK. There is no such provision in either present law or
in any of the proposals before us today.
Mr. HOGAN. I can envision a situation where he divorces his wife
but wants to care for her future, and this would seem to be an option
that ought to be open to him. Has the Commission given any con-
sideration to this?
Mr. RUDDOCK. No, sir.
In fact, the first time this particular problem was called to my
attention was within the past 6 months. I cannot over remember its
having come up before. It is not apparently something that occurs
very often.
Mr. HOGAN. Would the Commission oppose giving this option to
the retiree?
Mr. Runnocx. I cannot commit the three Civil Service Commis-
sioners to a policy position on that. It is something they would have
to consider. It would seem to me the occurrence of it would be so
infrequent that its cost would be extremely small, and if the Commis-
sioners believe that it is a problem of sonic significance I think they
would be favorably inclined toward it. That is not my committing
them to that position.
Mr. HOGAN. Thank you.
I can envision a set of circumstances where the new wife was very
well to do and didn't need any additional compensation in the years
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50
ahead and the wife he was divorcing, to whom he felt a sense of
loyalty and gratitude, would want to provide for her future. I think
that is something the subcommittee ought to consider.
Mr. RunnocK. I would suggest, whatever we do, that we limit
the protection to one wife at a time.
Mr. HOGAN. Yes.
Mr. DANIELS. Would the gentleman yield?
If we may pursue this question which Mr. Hogan brought up, for I
think it is a very pertinent question. I think we ought to be absolutely
clear what we are doing in this legislation.
You state, Mr. Ruddock, that it makes no difference whether the
first marriage is terminated by death or divorce, the second spouse
will automatically receive her annuity in case her husband should
predecease her?
Mr. RUDDOCK. Yes, sir.
Mr. DANIELS. That will be so regardless of the fact that at the
time of his retirement he specifically states in writing that Mary
Jones, his wife, is to be the beneficiary?
Mr. RUDDOCK. Yes. Actually what he is doing is--
Mr. DANIELS. In other words, to make the point clear, A is married
to B and A is a Federal employee. When he retires he designates B,
his wife, as the beneficiary. Subsequently that marriage is terminated
by divorce. He remarries C. Can B, the divorced wife, make claim to
the annuity by virtue of the fact that he did so in writing? Never
changed it to provide for C, his second spouse?
Mr. RUDDOCK. No. Because the provision is that B is going to
receive the annuity if she is the surviving widow of the employee. If
they are divorced she is not the surviving widow. If there is any
intention to provide continued protection for her after the divorce,
we would have to do that affirmatively.
Mr. DANIELS. It is the point I want to get clear. In other words, a
surviving spot;,;o in order to qualify for the annuity must be the legal
widow of the person?
Mr. RUDDOCK. Yes, sir.
Mr. DANIELS. The person who died?
Mr. RUDDOCK. Yes, sir.
Mr. DANIELS. If that marriage is terminated either by divorce or
through death, then the second spouse would automatically be en-
titled to the annuity?
Mr. RUDDOCK. Yes, sir.
Mr. DANIELS. Any further questions?
Mr. HOGAN. This might be one of the things we will want to look
at. I think there might be an area there that we ought to seek an
amendment to.
I assume from your previous testimony, the so-called deathbed
marriage problem is avoided by establishing the 2-year rule. The widow
would have to have been his wife 2 years prior to his death.
Mr. RUDDOCK. Yes.
Mr. HOGAN. So if we had a vourm lady, marrying him for hi., an-
nuity, who had the endurance to hang in for 2 years, then we would
have the same problem.
Mr. RUDDOCK. Might I say she has earned it?
Mr. HOGAN. Very good, Mr. Ruddock.
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I have no further questions.
Mr. Nix. Did I understand you to say that the annuity is predi-
cated upon a marriage of 2 years, at least 2 years before that?
Mr. RUDDOCK. Yes, sir.
Mr. Nix. What is the rationale behind the fixing of the 2-year
period?
Mr. RTDDOCK. The 2 years itself is somewhat arbitrary, but this
sort of provision came into the law, as I understand it, primarily
because of marriage to Civil War and Spanish-American War veterans
who were potentially in the position of leaving a widow's annuity.
There was something approaching a minor scandal that had to do
with marriages to these veterans shortly before their deaths. Some of
the marriages actually occurred in hospitals where it was known that
the veteran was dying. So there was a marriage which was a marriage
in name only and solely for the purpose of setting up a widow's
benefit.
Now, that is the extreme. But that type of provision, that type of
protection, has now been built into beneficial legislation for many,
many years and it is for protection against the deathbed marriage.
Mr. Nix. Do you not think it is time to get it out of the law? I
cannot for the life of me see any merit to such reasoning. I do not
think that the man has to be protected in that way at all. I do not
think we should have that limitation.
Mr. RUDDOCK. T am not sure it is a protection of the individual, as
much as it is a protection of the fund that is going to be used to pay
the benefits.
Mr. Nix. That is what I was looking for. What you are really doing
is trying to save funds, to.save money. Are you protecting the fund?
Mr. RUDDOCK. I think the objective is primarily protection of the
fund, sir. I do not believe it is a matter of saving the fund for the
fund's sake, but rather a desire to channel disbursement into areas
in which it is most needed and most deserved.
Mr. Nix. I can think of a lovesick female who admired a man
over the years and suddenly there comes this opportunity to join him
in marriage. I think it is a frustration to a great number of people
not to be allowed to marry, even if he only has 6 months. Look at
the happiness you rob him of in the waning moments of his life.
Mr. Runnocx. Sir, this provision would not in any way prohibit or
inhibit the marriage.
Mr. Nix. I know. The other inducement would be the annuity.
Mr. RUDDOCK. Yes. This would remove annuity as a motivation
for the marriage.
Mr. DANIELS. Would my colleague yield?
Mr. Nix. Yes, of course.
Mr. DANIELS. With reference to the point that you have just
raised, Mr. Nix, do you not think that if an elderly man married a
young wife, and she knew about this provision of the law, that she
would have to be married to him for 2 years, that it would be conducive
on her part to try to prolong his life and make him as healthy and
happy as possible?
Mr. HOGAN. Maybe that is not what he had in mind, Mr. Chairman.
Mr. Nix. I would never attribute such base motives to the female.
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Mr. DANIELS. It would not be base. I think this is just.the purpose
for marriage, that they should be a happy couple and they should enjoy
their communal relationship for a long, long period of time.
Mr. Nix. I can only say that money has made many marriages much
happier.
M r. DANIELS. It is an important factor I think.
Mr. Nix. Yes; I think so.
X1r. HOGAN. Mr. Chairman, there was a sage who defined a wife as a
young man's lover, middle-aged man's companion, and an old man's
nurse. This may be applicable.
In this context, Mr. Ruddock, is there a limitation on the number of
annuities that one individual widow could receive?
M1'. Runnoew. Yes. We would propose that if she happens to be
entitled to a widow's annuity based on service of another Federal
employee, she would be choosing one in lieu of the other, not both.
X4. HOGAN. So she could not collect multiple annuities?
Mr. Runnoex. No, sir.
Mr. HOGAN. '['hank you.
Mr. DANIELS. With further reference to the question my colleague
raised, it is my recollection that in 1948 when the Senate was con-
sidering the survivor benefits legislation in committee, they had a
provision that the employee had to be married to a spouse for a
period of 5 years before she could qualify for benefits. It is my further
understanding that when that bill reached the Senate floor, it was
reduced to a 2-year period of time, the period of time that is presently
in the law. Is that correct?
Mr. Runnoex. 'T'here was some compromise involved. I do not
remember where it, occurred. I would expect that your recollection is
precisely correct.
The original 5-year proposal was just as arbitrary as 2 years. I do
not think there is magic in either one. But that was compromised
downward during the legislative process.
Mr. DANIELS. It is the recommendation of the Commission as
well as the Bureau. of the Budget that we carry over this 2-year period
of time to the subsequent marriage?
Mr. RUllnoCK. Yes.
Mr. DANIELS. I have no further questions.
'1'hzcnk you, Mr. Ruddock. Your testimony is most helpful.
Mr. Ruonoex. Thank you.
Mr. DANIEL S. Our next witness is Mr. C. L. Dorson, president,
Retirement Federation of Civil Service Employees.
STATEMENT OF C. L. DORSON, PRESIDENT, RETIREMENT
FEDERATION OF CIVIL SERVICE EMPLOYEES
Mr. DoRSON. Mr. Chairman and members of the subcommittee,
my name is C. I.. Dorson. I am president of the Retirement Federation
of Civil Service Employees, a national organization, with offices at
501 13th Street, NW., in this city.
H.R. 3661 proposes the elimination of the reduction in the annuities
of employees or members who elected reduced annuities in order to
provide a survivor annuity, if predeceased by the person named as
survivor, and permitting a retired employee or member to designate
a new spouse as survivor if predeceased by the person named as
survivor at the time of retirement.
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We `support in principle the aim of II.R. 3661 to effect a change in
the provisions of present law which create problems of considerable
magnitude for some retired Federal employees. However, we have
reservations concerning some of the bill's provisions and suggest
several amendments which would, in our opinion, make the legislation
more equitable.
The first of these amendments concerns both sections 1 and 2,
which require that the designated spouse predecease the employee
or member as the only condition under which his annuity could be
restored to the full amount, or which would permit him to designate
a subsequent spouse as survivor annuitant. While the dissolution
may not be quite final, marriages are dissolved for reasons other
than death. It seems to us that, for whatever reason a marriage is
dissolved, the effect is the same and, under the terms of present law,
divorce or annulment of a marriage terminate the eligibility of a
designated survivor annuitant as effectively as does death. Therefore,
we suggest that H.R. 3661 be amended so as to make the retired
employee or member eligible for a recomputation of his annuity, or to
name a subsequent spouse as survivor annuitant, when the marriage
is dissolved for any reason.
H.R. 3661 would not permit the designation of a new spouse as
survivor annuitant until such new spouse has attained the age of 60.
We believe that this provision would create additional inequities
and can find no justification for such stipulation on the basis of present
law. The need and desire to provide economic security, at least to
some degree, for the new spouse can be as great before the spouse
reaches age 60 as after. Therefore, we suggest that the bill be amended
so as to permit the election of a new spouse as survivor annuitant
without regard to age.
There are additional problems concerning survivor annuities which
H.R. 3661 overlooks. One involves the annuitant who at the time of
retirement was unmarried and designated a person with insurable
interest as survivor annuitant. These annuitants, while paying a much
higher price for a smaller benefit, often find themselves continuing to
pay a very high price for a benefit no one can receive because the
intended survivor has not survived. In addition, marriage, uncontem-
plated at retirement, sometimes takes place thereafter and the
annuitant continues to be saddled with his original election.
We suggest that it would be appropriate to also amend H.R. 3661
so as to allow these annuitants a recomputation of their annuities if
the designated survivor dies, or permit them to change their election
to a spouse whom they marry after retirement. When the latter event
occurs, the cost to the annuitant should be adjusted, beginning with
the effective date of election of the spouse, to the lower rate which
would have applied had the spouse been elected as survivor annuitant
at retirement.
The other problem overlooked involves the unmarried employee
who retires without naming a survivor. If such an employee marries
after retirement, we think he should have the right to name the spouse
as survivor annuitant within a reasonable time thereafter. In such
event, his annuity should be reduced, under the applicable formula,
beginning with the effective date of his election.
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Finally, we are concerned with the intended purpose of section 3
and suggest that the entire section be eliminated from H.R. 3661.
Perhaps we fear it because we are not sure of its implications. The
section of the civil service retirement law, 8348(g) of title 5, which
section 3 proposes to evade, says in part:
"At the end of each fiscal year the Commission shall notify the
Secretary of the Treasury of the amount equivalent to (1) interest
on the unfunded liability computed for that year at the rate used
in the then most recent valuation of the system * * *"
The section also provides a schedule for the payment of such
interest as a government contribution to the fund by the Secretary.
As this subcommittee so very well knows, a battle of many years'
duration for improvement in the funding of the civil service retire-
ment system was finally resolved last year with the enactment of
the Daniels-McGee Act, Public Law 91-93. Since H.R. 3661 was
introduced long before the enactment of Public Law 91-93, it probably
refers to the then existing section 8348 (g), which had a meaning
entirely different than the present. In any event, we believe section 3
serves no good purpose.
Mr. DANIELS. I concur in your observation there. l\MZr, Dorson.
Mr. DonsoNL. Thank you, Mr. Chairman.
H.R. 468 proposes the correction of another inequity in the civil
service retirement law by providing equality of treatment with
respect to widows and widowers of Federal employees who die in
service. The bill would accomplish this by eliminating the term
"dependent widower" from section 8341 of title 5, chapter 83, sub-
chapter III, of the United States Code.
The civil service retirement system is one of the few remaining
retirement systems which retain dependency requirements for wid-
owers without the same requirement for widows. Pension plans in
the private sector have been required to eliminate such provisions by
a ruling of the Equal Employment Opportunity Commission, dated
February 4, 1970, which cites them as an unlawful employment
practice in violation of title VII of the Civil Rights Act of 1964. We
think it appropriate that the Federal Government "practice what it
preaches" with respect to its own employees.
There is no requirement in the present law that the widower of a
retiring employee be dependent upon the employee as a condition of
qualification for being named as survivor annuitant, nor do we believe
there should be such condition. Neither is there a requirement that
the spouse named as the survivor annuitant of a retiring employee shall
be married to the employee for at least 2 years immediately prior to
the employee's death or be the parent of a child of the marriage, but
there is such a requirement for the widows and widowers of employees
or members who die in service. Both, it seems to us, need correction.
We suggest, therefore, that while this committee and the Congress
are considering the question of survivor annuities, it would be appro-
priate to correct as many inequities ?ts possible. For this purpose, we
urge that you not only eliminate the dependency requirement for the
widowers of employees who die in service, but that you also eliminate
the 2-year marriage requirement for both widows and widowers.
With the inclusion of the amendments suggested, we urge that you
favorably report, and the Congress speedily enact, H.R. 3661 and
H. R. 468.
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Mr. Chairman, we are grateful to the subcommittee for its interest
in the subject matter and for the opportunity you have afforded us
to express our views.
Mr. DANIELS. Mr. Dorson, thank you for your testimony.
You are undoubtedly pleased with the testimony of the previous
witness, Mr. Ruddock, who recommended that H.R. 3661 be amended
to accomplish almost all of the objectives that you propose.
Mr. DORSON. Yes, sir; I am grateful for that, except I was sorry
to hear him include the further extension of the 2-year marriage
requirement.
Mr. DANIELS. Mr. Nix seems to concur in your recommendation.
On page 2 of your statement, Mr. Dorson, referring to paragraph 2,
you suggest that any reference to a spouse's age be eliminated.
Mr. DoRSON. Yes, sir.
Mr. DANIELS. How do you feel about Mr. Ruddock's recommen-
dation that the 2-year marriage be substituted in lieu of this require-
ment? You just made reference to that.
Do you disagree with Mr. Ruddock's views?
Mr. DoRSON. Yes, sir; I do.
I think, as he suggested, if I understood him correctly, the 2-year
marriage requirement would apply regardless of age.
I would suspect if we had to choose between one requirement or the
other, I would prefer the age 60 rather than the 2 years. I do not fear,
as Mr. Ruddock seems to or at least as the official position of the
Civil Service Commission seems to, that there will be a great many
so-called deathbed marriages. I think the imposition of either an
age 60 or a 2-year marriage requirement could create a good many
inequities.
What would you do about the widow married to the guy for 1 year
and 11 months, or who was 59 years, 11 months old? These things
always arise. I know they are not intended to, but tliey do. It is
hard to explain to the person that it happened to that this makes any
sense.
Mr. DANIELS. You do not feel that we should guard against so-
called graveyard marriages?
Mr. DoRSON. No, sir; I do not think there is any need to.
Mr. DANIELS. Of the two situations, the so-called graveyard
marriages and the age 60 that you propose, which of the two do you
believe would create greater inequities?
Mr. DoRSON. I think the 2-year marriage requirement would
create greater inequity than the age 60. Because, in the cases we are
talking about, I think age 60 would probably be less of a problem than
the 2 years. For a follow who is beyond the age at which he retired to
even live 2 years might be something of a problem in some instances.
Whereas, his marrying a woman, or in the case of a woman marrying a
man, much, much younger, I think would be relatively rare.
Mr. DANIELS. Mr. Dorson, what would be the position of your
organization if the subcommittee had to make a choice between
restoration of full annuity versus survivor protection for subsequent
spouses?
Mr. DORSON. I think, Mr. Chairman, if a choice had to be made,
that we would agree that the better choice would be an annuity for the
subsequent spouse rather than restoration. But I am sure there would
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be a great many howls from those who did not, or did not intend to,
remarry.
Mr. DANIELS. One final question.
Do you care to hazard a guess as to how active employees might
react to this legislation if it were necessary to simultaneously increase
retirement deductions to 7.1 percent to cover its normal costs and to
preclude underfinancing what is essentially a retiree benefit?
Mr. DORSON. I am sure since it would come on the heels of a recent
increase that it would not produce any great shout of joy, Mr. Chair-
inan, but I think they recognize that they have to pay a fair share of
the benefits and this would at some time affect them. As long as the
increase was in the area of one-tenth of 1 percent, there would probably
not be too much objection. I would be willing to risk it if the com-
mittee found it necessary.
Mr. DANIELS. I am very sympathetic to many of the problems that
confront retirees. I would like to accommodate them in a great many
instances on legislation that they propose. But, of course, we Members
of Congress have to act responsibly. These benefits do cost money.
The money has to come from somewhere.
I am sure you were in the room when Mr. Ruddock testified that he
is not recommending to Congress any proposal to increase the con-
tributions.
Mr. DORSON. Yes, sir. It seems to me, if I understood correctly,
that presently they are getting 14 percent of payroll whereas actual
cost is 13.98. So perhaps what they have been getting in excess could
absorb some of this, at least for a time.
Mr. DANIELS. Thank you, Mr. Dorson.
Mr. Nix, do you have any questions?
Mr. Nix. No questions.
But l make the observation, Mr. Dorson, that the excellence of your
statement is enhanced only by the fact that I am in complete accord
with you.
Mr. DonsoN. Thank you, Mr. Nix.
Mr. DANIELS. The gentleman from Maryland.
Mr. HOGAN. I have no questions.
Mr. Dou.soN. Thank you, Mr. Chairman.
Mr. DANIELS. Our next witness is Mr. Dan Jaspan, legislative
representative, National Association of Postal Supervisors.
STATEMENT OF DAN JASPAN, LEGISLATIVE REPRESENTATIVE,
NATIONAL ASSOCIATION OF POSTAL SUPERVISORS
Mr. JASPAN. Mr. Chairman, members of the subcommittee, my
name is Daniel Ja.span. I am the legislative representative of the
National Association of Postal Supervisors, composed of more than
34,000 postal supervisors, with members in all 50 States and in Guaira,
Puerto Rico, and the Virgin Islands. Our members are employed in
post offices, branches, stations, motor vehicle facilities, maintenance
units, air mail facilities, and mobile units.
It is always a pleasure to appear before this subcommittee which
has such an enviable record of accomplishments under the able leader-
ship of Chairman Daniels.
Mr. DANIELS. Thank you for that compliment.
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Mr. JASPAN. We appreciate all you have done for us, you and the
rest of the subcommittee. We know without your perseverance our
retirees would not be enjoying the benefits they are and which we hope
to enjoy in the future.
Thousands of retired employees and survivors are enjoying a better
life and the millions of employees on the civil service rolls hope
eventually to benefit from the interest and foresight of this subcom-
mittee. For all that you have done for the benefit of past and future
retirees, we thank you sincerely.
It was very interesting to note that for the first time in the 14 years
I have been on this job, the Civil Service Commission has supported
almost completely proposed legislation. It appears you will not have
the usual objections to your ideas that you have had before. It was
very, very gratifying to hear Mr. Ruddock's statements, generally in
:support of the legislation.
Inasmuch as we represent a generally older segment of the postal
population, retirement legislation is of the utmost importance to our
members. At our conventions, many resolutions are considered which
are of interest to retired employees. Resolutions to eliminate deduc-
tions to provide survivor annuities have been adopted regularlyy
It is generally pointed out that retirees under the Railroad Retire-
ment Act and social security do not have any deductions in their
annuities in order to provide survivor benefits. And instead of re-
ceiving only 55 percent of the employee's annuity, social security
survivors receive 82.5 percent.
We would much prefer that the deductions in annuities be elimi-
nated completely, and that survivor benefits be automatic. However,
until this objective is attained, H.R. 3661 appears to be the best
solution. Even though retirement annuities have been increasing over
the years, due to the work or this subcommittee, it is still very difficult
to live on the usual annuity. Employees who have taken reductions
in their small annuities in order to provide survivor benefits feel that
it is an unjust penalty for them to continue to have the deductions
made when the designated spouse dies first. Even though the formula
has been liberalized over the years, Mr. Chairman, annuitants must
deprive themselves of many things in order to live within their income.
The restoration of the full annuity when a spouse predeceases the
retiree would be most helpful and would be appreciated. We hope
that such legislation becomes law this year.
We have also had many resolutions over the years requesting that,
when the designated survivor annuitant predeceases the retiree, he be
permitted to name his new wife as a survivor annuitant. We favor
such treatment.
We also suggest that if the retiree is not married at retirement, he
be permitted to designate his wife acquired after retirement for
survivor annuity.
I just had a letter last week from one of our members who wanted
to retire on July 31, again to take advantage of the excellent retire-
ment law. He is married, divorce is pending, he will not have it until
possibly this week, and be has another future wife selected. He was
undecided as to whether to retire or not. He did retire, and unless
the law is passed, his future wife will not receive the benefits.
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58
Mr. DANIELS. You had better advise him to wait a little while.
Mr. JASPAN. Always conscious of the solvency of the retirement
fund, we realize that there must be some safeguards and would not
object to having a minimum age for the designated spouse-or an age
differential.
Mr. Nix brought up an interesting point about the 2-year marriage.
There are still many widows on the rolls whose husbands died when
there was a 5-year rule in effect. That is still in effect for those widows.
I have been testifying for many years to try to have that changed
also. I believe those whose husbands retired or died prior to 1948 had
to have been married to them for 5 years. I know when I came on
this job some years ago, I had a letter from one of the widows who
was married to her husband for 4 years and 10 months and she did
not meet the 5-year requirement. She has never been able to get a
survivor annuity because of that.
I would suggest, Mr. Chairman, since there are very few of these
widows left, and the cost would be minimal, that the committee does
look into that and see whether it could reduce that 5-year period to
2 years.
Mr. DANIELS. Mr. Jaspan, they were the pre-1948 widows?
Mr. JASPAN. Pre-1948.
Mr. DANIELS. How many are in that category?
Mr. .JASPAN. It would be a handful. That is so many years ago,
most of them were probably-that is already 22 years. They would
have been possibly 30, 40, 50 years of age at that time. This woman in
particular was close to 80 years old when she wrote to me but did not
meet that 5-year requirement.
I think the cost would be almost negligible. It would be doing a good
deed for those few who are left.
Mr. DANIELS. I might say to you, I have not received any criticism
or complaints along that score. I hear about almost every other situa-
tion. I have not received any letters on that, at least in recent years.
Mr. JASPAN. I think the reason for that is they have given up hope;
22 years have gone by, nothing happened. They have just about given
up hope.
Once in a while I do come across cases like that. It is pathetic. These
people have absolutely no income except what they can earn at their
advanced ages. There is very little money they can earn.
The letter I am referring to is really heartbreaking. So I hope that
the committee can look into it, check with the Civil Service Commis-
sion. I doubt whether they would object at this late stage of giving
these people some annuity for the few remaining years they have. It
would remove a great burden from them.
As there are more and more women being employed under the civil
service, we firmly urge the passage of H.R. 468 to remove the words
"dependent widower" from the law. Since the same deductions are
made from the pay of a female employee as a male employee for
retirment purposes, it is our belief that the restriction for the widower
to be dependent is unwarranted.
Inasmuch as all actuarial figures show that the husband usually
predeceases the wife, this should not burden the retirement fund with
any exorbitant cost.
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As mentioned above, our long-range objective is to eliminate deduc-
tions completely to provide for survivor benefits. We also strongly
urge consideration of increasing the survivor annuity from the present
55 percent to 75 percent-which is still well below the 82.5 percent
granted under social security without any deductions from the
annuity of the retiree.
Last year President Nixon made a statement that under social
security the survivor should receive 100 percent of the annuity. So I
do not think we are asking too much if we ask that the survivor
annuities under our own system be increased to just 75 percent.
Mr. DANIELS. How does he feel today?
Mr. JASPAN. He has not said anything about if for quite a while, but
he did say it after be became President.
Mr. DANIELS. Did you read his statement of just a few days ago
about bringing expenditures in line with income?
Mr. JASPAN. I read that. But I am sure he has not changed his mind
within the past year and. a half when he made that statement. I
believe he was sincere at the time.
Mr. DANIELS. I read in this morning's paper he made a statement
somewhere out West yesterday and then when his plane arrived last
night, there was modification of that statement. So you see he does
change his mind from time to time.
Mr. JASPAN. Yes. I think all of us are guilty of that.
In the meantime, the enactment of H.R. 468 and H.R. 3661 would
be a giant step forward in correcting present inequities.
We appreciate the opportunity of appearing before this subcom-
mittee to express our views and urge rapid action by the subcommittee,
the full comittee, and the Congress.
Mr. DANIELS. Thank you, Mr. Jaspan. I have just two questions
to ask.
Your statement indicates that the National Association of Postal
Supervisors would not object to a minimum age requirement, or an
age differential factor, with respect to allowing a retiree who is un-
married at time of retirement to designate the spouse of a later
marriage. What is your reaction to the Civil Service Commission's
suggestion that such a person be permitted to do so within one year
of such a marriage but irrespective of the spouse's age?
Mr. JASPAN. As long as the Civil Service Commission is in favor
of it, I would also be in favor of it.
I had it in my testimony, feeling they would oppose it, but since
they are more liberal than our testimony is, I would go along with
theirs.
Mr. DANIELS. Referring to page 3 of your statement, your organi-
zation's long-range objective is to eliminate any reduction in annuity
to provide survivorship protection. Would you agree with my obser-
vation that if the retirement law were to eventually provide for both
restoration of full benefits and protection of all spouses that the next
logical step might be to provide free survivor benefits?
Mr. JASPAN. I think this is a long way toward that goal, Mr.
Chairman. This is a real step forward. I can see why there should be
some time in the near future that there should be free survivor benefits
as we have suggested many times.
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Mr. DANIELS. In such event, do you not agree that it would be
necessary to increase both the employee and the agency contributions?
Mr. JASPAN. No, Mr. Chairman. I do not see why we should be
wedded to a 50-50 division. I think the time should be coming when
the Government can pay more than 50 percent of the cost. The fact
that we have had 50-50 over the years does not mean that is the only
solution. We are paying 7 percent now, which is a considerable amount
of the employee's earnings.
The formula was set up so many years ago, with respect to the 50-50
rate, that for some reason or other there seems to be hesitancy to
change that 50-50.
Mr. DANIELS. I am sorry to interrupt you, but I have heard it said
time and time again that the Federal employees' retirement system
is one of the best in existence. It has been acclaimed time and time
again.
Do you disagree with those statements?
Mr. JASPAN. I agree with you 100 percent. I have said that all
over the country.
Mr. DANIELS. But you would like to make it better?
Mr. JASPAN. I tell everybody I meet that we have the best system
that could be devised at present, but we will think it can be im-
proved a little bit, otherwise your committee would not be in existence,
Mr. Chairman.
Mr. DANIELS. You mean I would be out of a job?
The gentleman from Pennsylvania, Mr. Nix, do you have any
questions?
Mr. Nix. Thank you, Mr. Chairman.
Mr. Jaspan, I want to compliment you on the generosity that
you show when you agree with the Civil Service Commission.
I want to join you in expressing my deep appreciation for the
contributions the chairman has made and is making in this field.
I consider him to be the most knowledgeable man in the House in
this field and I think he is doing a marvelous service to a great number
of people in this country.
Thank you, Mr. Chairman.
Mr. I)ANIELS. Thank you, Mr. Nix, you are very generous.
Mr. JASPAN. There is no doubt about that, Mr. Nix. We all feel
if it had not been for the perseverance and persistence of Chairman
Daniels, we would not have had all the benefits we have had in these
recent years.
'I'bis committee has done an outstanding job in my opinion. It
has worked harder, accomplished more under the chairmanship of
Mr. Daniels than any other subcommittee, with due respect to all
the other subcommittees.
Mr. DANIELS. Mr. Hogan, if you care to join in this testimonial,
the Chair will be delighted to recognize you.
Mr. HOGAN. I will join if you promise not to use it in your cam-
paign. Thank you, Mr. Jaspan, for your testimony. I have no
questions.
Mr. DANIELS. Thank you, Mr. Jaspan.
Our last witness is Mr. Nathan T. Wolkomir, president of the
National Federation of Federal Employees.
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I understand you want to submit your statement for the record.
Mr. WOLKOMIR. If you do not mind.
Mr. DANIELS. If there is no objection, the statement of the gentle-
man will be inserted in the record immediately following his testimony.
STATEMENT OF NATHAN T. WOLKOMIR, PRESIDENT, NATIONAL
FEDERATION OF FEDERAL EMPLOYEES, ACCOMPANIED BY
BENJAMIN E. HINDEN, LEGISLATIVE REPRESENTATIVE, NNFFE
Mr. W0LK0MIR. I would like to highlight some of the statements
from my prepared testimony, plus be subject to any questioning
later.
I, too, would like to commend not only the chairman but all mem-
bers of the subcommittee on the excellent job that they have done on
retirement. I think we have accomplished more since your chairman-
ship of this subcommittee than we have in the history of the whole
retirement law, which goes back a good many years.
Mr. DANIELS. Thank you.
Mr. WOLKOMIR. We and our members are certainly most grateful
for this.
For the record., my name is Dr. Nathan T. Wolkomir. To my right,
from our legal staff, is Benjamin Hinder, our legislative representa-
tive. I am. president of the National Federation of Federal Employees,
which is the first and largest of the independent general organizations
of Federal employees, with members in virtually all Government
departments and agencies worldwide. Generally we concur with all
statements that have been made previously and, in spite of the fact
that the Commission has been in the affirmative on several of these
bills, we agree with them except on one issue.
We wholeheartedly support the restoration of full annuities to
Federal retirees when the designated spouse dies. Such restoration
would not only correct an inequity, but would give financial relief to
the sorrow-stricken retiree when he most needs it.
I have listened on a number of occasions to the unfortunate circum-
stances of a retiree losing his spouse with attendant expenses of last
illness and funeral and he continuing to receive the reduced annuity.
The reason for reducing the annuity has ceased to exist. It is only fair
and equitable that the reduction be eliminated. Presently lie is
denied this right because, as long as he lives, the retiree has continued
to receive a reduced amount for nonapplicable survivor benefits.
We are particularly desirous of seeing the enactment of this pro-
vision into law. While we endorse the idea of allowing the retiree to
designate a new spouse, we feel that the first step is to restore the full
annuity to the annuitant himself.
In all other matters, I think you will find general concurrence.
Mr. Chairman, we would like to see the law amended so that the
husband of a deceased female Government employee may qualify as
a survivor for receiving an annuity without establishing that he is
incapable of self-support by reason of physical or mental disability.
This requirement discriminates against female employees as there is
no such condition in effect for male Government employees who die
in the Federal service. Also this requirement is not applicable to the
payment of a survivor annuity to a husband when the wife dies
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after having retired from the Federal Government. We feel that.
since women and men are required to contribute to the retirement
fund in the sarne manner, they should be afforded equal protection
under the law.
We also find it rather incongrous in the testimony that MVir. Ruddock
gave this morulin~ in, first of all, stating that the Commission was not
for the restoration of the full annuity, at the same time while pleading
the fact that this is an unfunded liability and would be costly, they
turn right around and do indicate the fact that we should have open
house as far as second, third, or fourth spouse is concerned, which is
also unfunded.
Actually, we find it an incongruous sort of logic. If you start with
a false premise, you are bound to wind up with it false conclusion.
Also on page 3 of his testimony, .I call your attention to the follow-
in('. lie says that:
Consequently, eliminating the reduction where the retiree is predeceased by his
spouse is not suuported by any concept that retirees are paying too much for
survivor protection.
I do not know why he even brings that argument into it. I have not
heard of any in our 53 years of existence. Our poople have never com-
plained about paying too niuch for survivor protection. I think this is
really a false syllogism to prove a point. It is incongruous in terms of
the testimony. Outside of this we are generally in accord, in spite of
the fact that the Commission is affirmative this time on many issues,
we must agree with the mn except on this one restoration. point.
We certainly thank you and the full committee for the opportunity
to present our testimony, and would be glad to answer any questions.
(Prepared statement follows:)
PREPARED STATEMENT OF NATHAN T. WorroMIR, PE ESn)r.NT, NATIONAL
FEDERATION OF FE!)E.RAL EMPLOYEES
Mr. Chairman and members of the subcommittee, my name is Nathan T.
Wolkomir. I am President of the National Federation of Federal Employees,
which is the first and largest of the independent general organizations of E'ederal
employees with members in virtually all Government dcpartinents and agencies
world-wide. For over 50 years the NFFE has been promoting the welfare of
Federal employees and the public interest.
The Subcommittee is holding hearings on House Bill, II.R. 3661 and related
bills. H_.R. 3661 would restore the full annuity of a Federal retiree who elected a
reduced annuity in order to provide a survivor annuity to the designated spouse
when the spouse predeceases the retiree. Said Bill also would allow the retiree to
designate a new spouse when such spouse has attained the age of sixty years and
restored amounts by reason of prior designations have been repaid. We thank the
Subcommittee for affording us the opportunity to submit our views on this most
important subject. Mr. Chairman, we are grateful to you and to the Members of
the Subcommittee for the interest manifested on the matters of equitable treat-
ment for annuitants and survivors within the Civil Service Retirement System.
We wholeheartedly support the restoration of full annuities to Federal retirees
when the designated spouse dies. Such restoration would not only correct an
inequity but would give financial relief to the sorrow stricken retiree when he
most needs it. I have listened on a number of occasions to the unfortunate cir-
cumstances of a retiree losing his spouse with attendant expenses of last illness
and funeral and he continuing to receive the reduced annuity. The reason for
reducing the annuity has ceased to exist. It is only fair and equitable that the
reduction be eliminated. Presently he is denied this right because as long as he
lives the retiree has to continue to receive a reduced amount for nonapplicable
survivor benefits. We are particularly desirous of seeing the enactment of this
provision into law. While we endorse the idea of allowing the retiree to designate
a new spouse we feel that the first .step is to restore the fullannuity to the annuitant
himself.
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I would like to bring to your attention another situation which literally cries out
for correction. As you know, those who retired prior to October 11, 1962 and wished
to provide a survivor annuity to the designated spouse had to take a reduction in
their annuity of as much as 25 percent. This percentage figure is out of line today
with the present 2ii percent of the first $3,600 of the annuity and 10 percent of the
amount above the $3,600. We understand that there are approximately 220,000
retirees in this group. Mr. Chairman, in addition, these annuitants retired on
much smaller annuities than those who retired after this date. The average
annuity of those who retired prior to October 11, 1962 is only $166 per month.
Section 1 of II.R. 86 would permit recomputation of these annuities to bring
them in line with present reductions for providing a survivor annuity fora spouse
in accordance with the provisions of section 8339(1) of Title 5, United States
Code.
Mr. Chairman, you and the Subcommittee have continually recognized in-
equities in the laws and have taken active and positive action to correct them
when possible. This penalization of those who retired prior to October 11, 1962
especially in light of their smaller annuities makes this group second class retirees
simply on the basis of having retired prior to the enactment of more liberalizing
legislation. The NFFE strongly recommends the enactment of the provisions in
Section 1 of II.R. 86 which can be combined with the provisions in H.R. 3661.
Mr. Chairman, we would like to see the law amended so that the husband of
a deceased female Government employee may qualify as a "survivor" for receiv-
ing an annuity without establishing that he is incapable of self-support by reason
of physical or mental disability. This requirement discriminates against female
employees as there is no such condition in effect for male Government employees
who die in the Federal service. Also this requirement is not applicable to the
payment of a survivor annuity to a husband when the wife dies after having
reqired from the Federal Government. We feel that since women and men are
required to contribute to the retirement fund in the same manner they should be
afforded equal protection under the law.
Congresswoman Martha W. Griffiths has introduced legislation to provide
equality of treatment in this matter with respect to widows and widowers of
employees who die in service. At our last national convention held in St. Louis,
Missouri, resolutions on said subject were introduced and adopted. The NFFE
recommends the enactment of provisions which would eliminate the requirement
that the husband of a deceased female Government employee to qualify as a
"survivor" establish that he is incapable of self-support by reason of physical
or mental disability.
In closing, Mr. Chairman and Members of the Subcommittee, I am certain
you are aware that we should not disregard the valuable contributions made by
Federal retirees. They and present Federal employees have a share in making the
country the great democracy it is. Without their devotion to duty, this nation
would not have advanced as far or as quickly as it has. We owe a debt of gratitude
to our Federal retirees and we should not permit inequities in the Retirement
System to exist without taking remedial legislative action.
Again, Mr. Chairman, I wish to express my thanks to you and the members
of the Subcommittee for the opportunity to state the views of the National
Federation of Federal Employees.
Mr. DANIELS. Thank you for your testimony. It is always a
pleasure to have you before this committee and listen to what you
recommend.
On page 2 of your statement you mention the expenses attendant
to the terminal illness and burial of a spouse. Is not one of the purposes
of the life insurance and health benefits program designed to lessen
the impact of these kinds of expenses?.
Mr. WOLKOM1u,. This is true. But we find in actually a calamity
type, which is a severe illness; terminal illness, our health insurance
does not take care of these costs. Certainly a small annuity based on
the average annuity does not take care of such calamity cases.
We testified before the Health Committee in this respect. There is
too much of this and we got so many complaints from our people with
reference to this sort of a calamity hitting them.
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If we actually were to compute the annuity in torus of the average
annuitant, what they are receiving, if our figures are correct-and I
believe the staff can correct me-I think we find that the average
income of an annuitant, runs between $3,500 and $4,500. When you
take the 10 percent plus the 212 percent figure, what does it come to?
It does not come to much money.
I do not understand the $1 billion figure that Mr. Ruddock talked
about. I believe you brought it up, Mr. Chairman. We discussed this
with the Commission earlier this week in attempting to get some
computations, to get some figures in anticipation of this testimony.
We find that in actuality, they claim that maybe 20 to 25 percent of
the people who would be affected, of all the annuitants, is the figure
that they are going by. That is approximately one-fifth of all annuitants.
In asking them. in the dollars and cents cost, what would it ac-
tually cost should we go back to the restoration of the full annuity, they
gave me a figure of $20 million. I do not know where this $1 'billion
came from. This was this we got in preparation for this hearing. So
there is something incongruous about our actuarial. figures and sta-
tistics that we are using. 1 think these bear close investigation.
In anticipation perhaps of another question, I would like to say this:
that in the hundreds of resolutions we receive every one of our con-
ventions, where we receive anywhere from 800 to 1,000 resolutions,
that we discuss very thoroughly, more than 25 percent of these
resolutions are on retirement. This is our biggest committee and the
one that gives us most time and most heartaches at our conventions.
Invariably our members have indicated they are always willing to
pay their way.
Mr. DANIELS. I believe about 50 percent of the legislation that is
referred to the full committee comes within the jurisdiction of this
particular subcommittee. So this subcommittee has a great deal of
work on its hands.
Mr. WOLKOMIR. I compliment your staff, Mr. Chairman. They
have been most cooperative in all of our efforts and in any informa-
tion we need. They do a thorough job.
Mr. DANIELS. f am pleased to hear that.
What is your reaction to the Civil Service Commission's position
whereby there is objection to increasing the retiree's benefit when
his obligation seemingly decrease upon the spouse's death?
Mr. WOLKOMIR. I am really not clear on what their position was.
I could not understand how he was attempting to justify the stand
that they did take.
With the chairman's permission, I would appreciate your inter-
pretation of what their stand was. I did not understand what Mr.
Ruddock was saying at the time.
Mr. DANIELS. 'Cho Commission is recommending that we take
care of the subsequent spouses because of the economic need to do so.
Mr. WOLKOMIR. Certainly, in spite of the fact that the Commission
is for it, we are for it. Yes, sir. We are for it.
Also, with reference to the 2-year clause, we believe this 2-year
clause has really outlived its usefulness. It brings to mind only the
"camp-wife" concept during World War II, the camp wife who
married because of insurance. I think as far as Civil Service is con-
cerned, we are past this period, we do not need any such period of,
may I. say, a trial test period of 2 years. We do not need this any more.
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Mr. DANIELS. Thank you. Mr. Nix, do you have any questions?
Mr. Nix. No. I just thank Dr. Wolkomir for his appearance.
Mr. DANIELS. Mr. Hogan, do you have any questions?
Mr. HOGAN. I have no questions, but thank you for coming and
presenting your testimony, Mr. Wolkomir.
Mr. WoLxoMIR. Thank you, Mr. Chairman.
Mr. DANIELS. This concludes today's hearing. I wish to announce
that the committee will hold the record open for at least 10 days, so
anybody desiring to furnish. a statement to the committee may do so.
The committee stands adjourned.
(Whereupon, at 11:45 a.m., the subcommittee adjourned.)
(The statements which follow were received by the subcommittee
for inclusion in the record.)
STATEMENT OF HON. MARTHA W. GRIFFITHS, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF MICHIGAN
Mr. Chairman, since 1965, I have introduced legislation to provide equality of
treatment with respect to widows and widowers of certain employees who die in
service.. Therefore, I am pleased that my bill in this Congress, H.R. 468, to revise
the existing civil service retirement system to provide automatic survivor an-
nuities for widowers of employees who die in service on the same basis as for
widows, is being considered for passage.
Under present law, both men and women Federal employees can leave survivor
annuities to their spouses if they die after retirement, but only the man can un-
restrictedly do so, if the employee's death occurs while still in service. A woman
Federal employee who dies while in service cannot leave a survivor's annuity to
her husband unless he was dependent on her during the year preceding her death.
It is incredible as well as unjustifiable, for example, that if I die while 'l am in my
present position as a Member of Congress, my husband has no survivor rights in
my pension; but if any of my male colleagues die, their widows will be covered by
our pension program without any questions asked. Certainly, I am happy that the
U.S. Civil Service Commission has finally awakened to this discrimination against
women and their husbands and now supports my bill, II.R. 468, to correct this
inequity in the law, which is long overdue.
Certainly, I trust that if my bill, H.R. 468, is included in Chairman Dulski's
bill, H.R. 3661, that it will read a Federal retiree who remarries after the death
of his first wife can provide survivor annuities for his second wife. Legislation
correcting these injustices in existing law should be adopted in this Congress.
STATEMENT OF HON. JOEL T. BROYHILL, A REPRESENTATIVE IN CONGRESS FROM
THE STATE OF VIRGINIA
In my testimony before the subcommittee on June 10, I had indicated I would
submit a statement for the record regarding the plight of retired Federal em-
ployees who were mandatorily retired between the date of the July 13, 1969,
Federal pay bill and the effective date of the changes to the October 20, 1969
Federal Retirement Act.
It is my understanding that approximately 875 civil service employees were
mandatorily retired during this period. At the time of their retirement many of
these retirees who had given of their talent and labor to the Federal Government
believed something would be done by the Congress to provide them with the
advantages and benefits brought about under the new changes to the civil service
retirement law. As the committee knows, no action was taken to bring these
former hard-working and loyal civil servants under the benefits of the civil service
retirement amendments effective October 20, 1969.
I have been asked to bring this matter to the attention of the distinguished
subcommittee in the form of a recommendation to amend the United States Code,
relating to civil service retirement, so as to provide that Federal employees manda-
torily retired between July 13, 1969, and November 20, 1969, may use their
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accumulative sick leave to carry them on the employed rolls from their manda-
tory retirement date through October 20, 1969 and thus permit those former
employees to be retired under the provisions of the amended United States Code,
relating to civil service retirement that became effective on October 20, 1969.
Hopefully, the subcommittee will take action to obtain a report on this proposal
and to take the recommendation up for consideration. Certainly, the Congress
did not intend to penalize this group of former Federal employees when it allowed
employees who retired a few days later to utilize their accumulated sick leave to
obtain additional service credits.
STATEMENT OF HON. FRED SCHWENGEL, A REPRESENTATIVE IN CONGRESS
FROM THE STarE OF IOWA
Mr. Chairman, during the past 45 years there have been many changes in our
civil service retirement system. For many years, most of the changes Were retro-
active to provide benefits for those previously retired commensurate with the
benefits granted to those who would retire in the future. However, during the
1950's and 1960's, the liberalizations of retirement benefits have not been made
retroactive, with the result that many inequities have arisen. There must be
some measure of correlation between the benefits awarded prospectively during
the past 15 years and the benefits now paid to those who retired prior to the
effective dates of such prospective legislation. Otherwise, how can present Federal
employees have any assurance that they too, will not be forgotten as soon as
they leave the active working force? How long can the morale of the present
active working force be sustained under such conditions?
It is for this reason, that I appear before your committee this morning, to
offer my strong support for H.R. 3661, and the companion bill which I have
introduced, H.R. 7773.
The present retirement law provides that a retiree at time of retirement may
elect to take a reduced annuity to provide a survivor annuity for his spouse. This
cost at the present time is 2,z percent on the first $3,600 and 10 percent on the
remainder, if any. The law also states that only one election can be made, and that
at time of retirement.
When a retiree is predeceased by the named spouse he must continue to pay
this cost through this reduced annuity as long as he lives, although there never
will be anyone who can receive the survivor annuity he is paying for, even though
he remarries.
H.R. 3661 and 11.11. 7773 provide for the restoration of the full annuity and/or
permits the retiree to name his second spouse to a survivor annuity if the named
survivor predeceases the retiree, and the second :spouse has attained the age of 60.
Out of approximately 900,000 retirees and survivors, there are several thousand
that this would apply to. When enacted into law, this legislation will correct some
of these injustices and yet protect our older annuitants by providing that their
second or third spouse must be at least 60 years of age in order to participate in
this legislation. I am sure that a good percentage of our colleagues are not fully
aware of this great injustice that prevails in thousands of the homes of our retirees
from the Federal service. I strongly urge that your committee give serious Con-
sideration to this legislation.
Finally, I would like to ask that you give special consideration to amending
section 205 of Public Law 91-93, the section which provides for the continuance of
a survivor's annuity upon remarriage if the survivor's remarriage occurred on or
after July 18, 1966, and after attaining age 60. The 60-year age limit and the
July 13, 1966, date should be eliminated from section 205. Survivor annuitants
remarried before Judy 18, 1966, and before attaining age 60 cannot understand why
they are being discriminated against in this provision, and there seems to be no
feasible explanation for the discrimination.
ST.VrEMsNT OF HON. J. HERRIEERT BuRKE, A REPRESENTATIVE IN CONGRESS FROM
THE STATE OF FLORIDA
Mr. Chairman, I deeply appreciate this opportunity to appear before this sub-
committee in behalf of my own bill, H.R. 8269, and in support of similar legislative
proposals which would provide for the restoration to full annuity the benefits of
Federal employees who elected to take reduced annuities in order to provide a
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survivor annuity, if predeceased by the person named as survivor, and which
would also permit retired Federal employees to designate a new spouse as survivor
if predeceased by the person named as survivor at the time of retirement.
Because of the population makeup of the 10th Congressional District of Florida,
which I am privileged to represent in Congress, which is constituted of so many
retirees and senior citizens, I am perhaps more acutely aware than many other
Members of Congress of the hardships this law has imposed on our retired civil
service workers.
Every day I am made more aware of the inequities that exist in many of our
laws which affect retired persons, and I have made a concerted effort to correct
these inequities. I feel strongly that our senior citizens and retirees, particularly
those who have spent a lifetime in service to their own government, should be
allowed to live out their lives in some relative degree of comfort and security.
The proposals here defore us today would affect the lives of several thousand
Federal retirees, although I am advised that there is no exact count of the number
of persons who would benefit from a change in the existing laws. Over the years,
the Congress has recognized the plight of both active and retired Federal employees
in many instances, and I feel that the assistance of the Congress is needed in this
area more urgently perhaps than in any other.
As the law exists now, a Federal Government employee may, when he retires,
elect to name a survivor, but in so doing, he must take a reduction in his own
annuity. If the Federal retiree is predeceased by that person designated as his
survivor, he will continue to receive the reduced benefit and he may not designate
a new survivor in the event of his remarriage. He is, in essence, then, contributing
toward a protection plan for which he cannot possibly derive any benefit.
The present law is of particular hardship to many persons residing in the 10th
Congressional District of Florida, who, having married a widow or widower re-
ceiving a civil service annuity, assume they, too, will be entitled to a survivor
annuity as was the first spouse. Many of these persons have been civil service
retirement annuitants themselves, In such cases, the widow or widower who re-
married prior to July 18, 1966, lost his or her own survivor's benefit as a result of
the remarriage and was not eligible for survivor benefits from the second spouse.
The Congress has, I believe, a moral responsibility to former Federal employees
to correct this situation. The number of persons would not be great and the cost
minimal when the age of these Federal retirees is taken into full consideration.
Another portion of these legislative measures affects the Federal employee who
elects to receive a reduced annuity in order to provide a survivor's benefit and who
is subsequently predeceased by the person named as survivor at the time of re-
tirement. These retirees are forced to continue to take a reduced annuity with no
opportunity to ever designate a new survivor, and they may themselves never
draw their own full annuity. They are in the inequitable. position of being forced
to pay into a retirement program for which they are unable to derive any tangible
benefits.
I sincerely urge this subcommittee, the full Post Office and Civil Service Con-1
mittee, and the Congress to approve legislation to correct the inequities outlined
above in the present civil service retirement laws.
The Congress has, I believe, a moral responsibility to former Federal employees
to correct this situation. The number of persons would not be great and the cost
minimal when the age of these Federal retirees is taken into full consideration.
Another portion of these legislative measures affects the Federal employee who
elects to receive a reduced annuity in order to provide a survivors benefit and who
is subsequently predeceased by the person named as survivor at the time of
retirement. These retirees are forced to continue to take a reduced annuity with
no opportunity to ever designate a now survivor, and they may themselves never
draw their own full annuity. They are in the inequitable position of being forced
to pay into a retirement program for which they are unable to derive any tangible
benefits.
I sincerely urge this subcommittee, the full Post Office and Civil Service Com-
mittee, and the Congress to approve legislation to correct the inequities outlined
above in the present civil service retirement laws.
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GOVERNMENT OF THE DISTRICT OF COLUMBIA,
COMMISSION ON THE ST,\TUS OF WOMEN,
Hon. DoMINICK V. DANIELS, Washington, D.C., August 3, 1970.
Chairman, Subcommittee on Retirement, Insurance, and Health Benefits,
House of Representatives, Washington, D.C.
DEAR MR. CHAIRMAN: Having just learned of the hearing scheduled for
August. 4, the District of Columbia Commission on the Status of Women is unable
to appear before your subcommittee but would appreciate your including our
views in the record of the proceedings.
We are strongly in favor of H.R. 468, a bill to provide equality of treatment for
widows and widowers of civil service employees who die in service. This bill,
while applicable throughout the Federal Government, is of particular importance
in the District of Columbia where the major employer is Uncle Sam.
The many thousands of District women who work for the Federal and District
governments are entitled to equal treatment with male employees as a matter of
right and justice. In addition, these women are employed predominantly in the
lower grades and their families are likely to be in real need of their annuities
toward which they have been required to contribute from their wages. This
oquitable amendment of the Civil Service Retirement Act will have greater impact
in Washin,ton, D.C., than in any other community. We sincerely trust that it
will be acted on promptly and favorably by your committee and by the Congress.
Sincerely yours,
1)r. DOROTHY B. FERE BF:E, Chairman.
INTERNATIONAL ASSOCIATION OF
MACHINISTS & AEROSPACE WORKERS,
Washington, D.C., July ,28, 1970.
Hon. DOMINICK V. DANIELS,
U.S. House of Representatives, Subcommittee on Retirement, Insurance, and Health
Benefits, Washington, D.C.
DEAR MR. CHAIRMAN: I am pleased to note by your press release of July 23'
1970, that you have directed hearings to commence on August 4, 1970 on H.R
3661 and II.R. 468, and other related bills dealing with survivorship protection
under the U.S. civil service retirement system.
Inasmuch as prior commitments prevent me from asking for the opportunity
to personally testify, I would very much like to have your permission to place
into the record of hearings this organization's wholehearted endorsement of H.R.
3661 which was introduced by the distinguished chairman of the full committee,
the Honorable Thaddeus J. Dulski.
H.It.:3661 is a very much needed improvement in the retirement system so as
to remove a very glaring inequity which forces an annuitant to take the reduced
annuity when predeceased by a designated survivor, and further, to provide such
retiree the opportunity to designate a new spouse as a survivor if predeceased by
the person named as the survivor at the time of retirement.
Simple ;justice would dictate early in speedy enactmen? of H.R. 3661, and in
behalf of this organization which represents over one million workers, many of
whom are working for the Federal Government, I urge that this beneficial change
be enacted into law in this second session of the 91st Congress.
With best wishes and kindest personal regards, I remain
Si n et'rely,
WILt.InM H. RYAN,
National Coordinator, IAMAW, Government Employees Department.
STATEMENT OF PATRICK J. MILAN, LEOISLATIvE DIRECTOR, L, NITED FEDERATION
OF POSTAL CLERICS (AFL-CIO)
Mr. Chairman and members of the committee, for the record, I am Patrick J.
Nilan, national legislative director of the United Federation of Postal Clerks
(AFL-CIO) with offices at 817 14th Street NW, Washington, D.C. I am very
pleased to present this statement concerning H.R. 3661 and similar bills on behalf
of the United Federation of Postal Clerks.
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We speak in behalf of the Nation's 310,000 postal clerks, for whom we are the
exclusive national representative for labor-management relations and collective
bargaining with the Post Office Department. Our membership is exclusively in
the postal clerk craft and is employed in post offices in all 50 States, the District
of Columbia, Puerto Rico, the Virgin Islands, and Guam.
Mr. Chairman and members of the committee, we support H.R. 3661 as intro-
duced by the Honorable Thaddeus J. Dulski, chairman of the House Post Office
and Civil Service Committee. This legislation proposes to amend chapter 83,
title 5, United States Code, to eliminate the reduction in the annuities of employees
or Members who elected reduced annuities in order to provide a survivor annuity
if predeceased by the person named as survivor and permit a retired employee
or Member to designate a new spouse as survivor if predeceased by the person
named as survivor at the time of retirement.
We believe the proposed amendments to the civil service retirement program
are long overdue and consistent with liberalized annuity benefits for Federal
employees. The legislation, H.R. 3661, proposes to establish by law that:
If the designated spouse predeceases the employee or Member making
such election, the reduction shall be restored to the employee or Member
and the annuity of such employee or Member shall be computed without
regard to any election made under this subsection: Provided, That any such
employee or Member may elect to designate a new spouse as survivor when
such new spouse has attained the age of sixty and all reductions by reason
of prior designations that have been restored to such employee or Member
have been repaid to the retirement fund.
This improvement in the civil service retirement system would establish an
equitable improvement in the area of annuitant and survivorship benefits. Under
present law, an annuitant who designates his spouse for a survivorship annuity
in the event he dies, must suffer a reduction in the basic annuity to which he
would otherwise have been entitled.
As an example, the current formula provides a 2.5 percent reduction for the
first $3,600 and a 10 percent for all funds above that. This means that an annuitant
receiving $300 a month must suffer a reduction of $7.50 or $90 a year; and, for
example, an annuitant receiving $600 a month must suffer a reduction of $37.50
per month or $450 per year.
Once the spouse of an annuitant dies, obviously the reason for the reduction
in annuity ceases to exist. As a result, we believe that ordinarily it would be
assumed that the annuitant could expect a return to the original level of annuity
to which he was originally entitled. However, this is not the case. Under present
law, the annuitant continues to receive a reduced annuity, as if the spouse was
still alive. Even if the annuitant lives forty years a widower, he would have to
suffer a reduction for providing a survivorshi]) for his deceased spouse.
Mr. Chairman and members of the committee, we are aware the other Federal
employee labor organizations have and will submit additional testimony in
support of this legislation, H.R. 3661; therefore, not to be repetitious of such
testimony, we will conclude this statement by again endorsing H.R. 3661 and
urge this committee to favorably report this legislation and urge the 91st Con-
gress to subsequently enact this bill into law prior to adjournment.
Thank you Mr. Chairman and members of the committee for scheduling these
important hearings. We will be happy to cooperate with you in seeking enactment
of II. R. 3661.
STATEMENT OF JAMES H. RADEMACHER, PRESIDENT, NATIONAL ASSOCIATION OF
LETTER CARRIERS (AFL-CIO)
Mr. Chairman and members of the committee, for the record, my name is
James H. Rademacher. I am president of the National Association of Letter
Carriers, with headquarters at 100 Indiana Avenue NW., Washington, D.C.
We have approximately 215,000 members in roughly 6,600 local branches in
every State of the Union and in every one of our territorial possessions. Of this
number, almost 20,000 are retirees.
I think you know, Mr. Chairman, that the NALC is unique among unions of
Federal employees, in that we welcome and cherish retirees as members, The
NALC is generally credited with leading the 31-year fight which led finally to the
enactment of the original retirement bill in 1920. We have been in active support
of every attempt to liberalize the retirement law during the intervening 50 years,
and we intend to continue such support whenever the occasion arises.
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Therefore, Mr. Chairman, we congratulate you on continuing hearings on
this potentially helpful bill, just as we congratulate the chairman of the full
committee for having introduced it in the first place.
I am certain there is nothing I can add to your knowledge of the hardships
and the unnatural conditions which the present law imposes on civil service
annuitants.
Despite your best efforts, Mr. Chairman, and the best efforts of so many other
members of the committee, the annuity of a retired letter carrier is still shamefully
low, and is scarcely adequate for sustaining a decent life, particularly for older
people who inevitably find the expenses of day-to-day living increasing as their
infirmities become more burdensome.
It is therefore, in our opinion, unjust to penalize a retired Federal employee
financially just because he has guessed wrong, about the longevity of his spouse.
lie has tried to do the decent thing by providing for his wife after his departure
from this world and, when his wife dies before him, he is punished for his decency.
And, of course, Mr. Chairman, the present restriction against an annuitant
designating a second spouse as a survivor (provided, naturally, that the first spouse
has died) is really a most unfair and unnatural prohibition.
Most people, as they grow old, become more and more dependent. The process
of growing old can be a very lonely business and, if a man can find a compatible
woman to share and brighten these declining years, he should be encouraged to do
so, and not discouraged.
'['he whole point of the retirement program is to make the twilight years as
happy as possible, and this is a restriction which merely clouds those days further
for many of our annuitants. It would take a brave woman to enter into a marriage
contract with a letter carrier annuitant when there is no protection whatever for
her final years if her husband dies before she does.
As we all know, the present laws have forced many perfectly decent and straight-
forward men and women to enter into an unofficial, technically adulterous
common-law arrangement because of these stringent restrictions. No one in his
right mind could blame these partners for snatching at a bit of life and companion-
ship in the only way economically available to them-but nonetheless, many of
these worthy persons feel shamed and degraded by the irregularity of their position.
So, Mr. Chairman and members of the committee, I hope fervently that you do
approve H.R. 3661 and that the Congress will agree with your thinking.
1 have not only a professional interest in the plight of the retirees; I have a
very personal interest as well. My own father is a retired letter carrier and I know
personally of his problems.
The present annuities must be improved to an extent greater than the present
cost-of-living increases are improving them. Very deserving people who have spent
their entire working lives in the service of their country are going without decent
food, without decent housing, and without decent clothing. We all must devise a
practical way to alleviate this shameful condition.
Perhaps the committee could give, favorable consideration to H.R. 3662-
which would improve the lot of the retiree on a graduated basis. In my opinion, it
is a very reasonable bill.
Also' ~l sincerely believe that you-and the rest of Congress-should give serious
consideration to legislation which would exempt retirees from paying income tax
on the first $5,000 of their annuities. This has a doubly attractive feature: It
would provide relief for those annuitants who need it most, and it would not
affect the somewhat precarious condition of the civil service retirement fund.
Now that we are entering into an era of postal reform, I hope we can also enter
into an era of retirement reform. The membership of the National Association of
Letter Carriers has mandated me to concentrate our legislative efforts on carrying
out this mission of retirement reform, and I devoutly hope and pray that you
gentlemen will be able to cooperate with us.
Later, we plan to ask this subcommittee to approve legislation so that an
employee with 20 years of postal service can consider retiring. When letter carriers
daily meet the pressures of postal employment with its many distasteful elements,
including the weather, they should have the option of retiring after 20 years of
such service and at any age.
Thank you very much for permitting me to express these views for your con-
sideration.
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STATEMENT OF HERBERT F. AurallY, PnI:SIDIINT, NATIONAL RURAL LETTER
CAIIIIIIIms' ASSOCIATION
Mr. Chairman and members of the subcommittee, my name is Herbert F.
Alfrey. I am president of the National Rural Letter Carriers' Association, an
organization representing approximately 62,000 regular, retired and substitute
rural letter carriers.
Mr. Chairman, we appreciate this opportunity to submit this brief statement
in support of the liberalizations to the Retirement Act dealing with survivorship
protection.
The proposal to restore the reduction in annuity for those annuitants where
the designated spouse predeceases the employee is, unquestionably, one of the
liberalizations most desired by the annuitant group. We do strongly endorse this
liberalization.
The privilege for such employee to elect to designate a new spouse as survivor
also has considerable merit based on the qualifications that the new spouse has
attained age 60 and that the annuitant will be required to refund the complete
reduction which was restored.
On behalf of the National Rural Letter Carriers' Association we do urge this
committee to favorably consider these changes in the Retirement Act.
STATEMENT OF JAMES D. HILL, EXECUTIVE DI1IECTOR, NATIONAL FEDERATION
OF PROFESSIONAL ORGANIZATIONS
Mr. Chairman and members of the committee, our Organization is a Federation
composed of the following 14 professional societies of Federal employees:
Air Traffic Control Association, Inc.,
Airways Engineering Society,
Association of Senior Engineers of the Naval Ship Systems Command,
Federal Plant Quarantine Inspectors' National Association,
National Association of Federal-State Employees,
National Association of Federal Veterinarians,
National Association of Government Engineers,
National Labor Relations Board Professional Association,
National Society of Professional Engineers,
Naval Civilian Administrators Association,
Navy Field Safety Association,
Organization of Professional Employees of the U.S. Department of Agri-
Culture,
Patent Office Professional Association, and
Society of Real Estate Appraisers.
A number of our constituent member societies have received correspondence
and complaints from their members concerning the continuing deduction of
monies from their civil service annuities for a designated survivor annuity after
their spouse has died or has been divorced, and also concerning what they regard
as discrimination as between the rights of male and female Federal employees to
designate a survivor. As a result of this, we have interest in H.R. 3661 and H.R.
468.
With respect to H.R. 3661, we understand that Civil Service Commission data
shows that the average wife of a civil servant lives 4 years longer than her husband,
and is 3 years younger, thus surviving him by 7 years. In circumstances, the sur-
vivors annuity is a most valuable portion of the Federal retirement system, and
should be preserved. However, correspondence received from members indicates
that the continuing obligation to pay fora survivors` annuity when no longer needed
is one of the most aggravating sore points of the retirement system. We commend
the subcommittee for investigating into this problem and we strongly urge that
corrective legislation proposed by H.R. 3661 be approved by the subcommittee,
and by the Congress. Aside from our general approval for the purposes of this bill,
we have the following specific comments:
1. The bill, as presently drafted, is limited to annuitants whose spouses are
deceased. We have at least one reported case of an annuitant who has been divorced
from his wife since retirement; he, like annuitants whose spouses are deceased,
continues to suffer a reduction in his annuity for a survivors annuity, although
he will not be survived by a spouse entitled to receive a survivor's annuity. We
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believe that divorced annuitants are as fully entitled to the relief proposed by
H.R. :;661 as are widower annuitants and that the measure reported by this
committee should include both. We therefore respectfully recommend that
H.R. 3661 be amended by the subcommittee in the following respects:
Page 1, line 6, after the word "election", add a comma and the words
"or the marriage is terminated by divorce,".
Page 2, line 6, after the word "Act", insert a comma and the words "or
whose marriage is terminated by divorce,".
Page 2, line 14, after the word "death", at the end of the line add the
words "or divorced".
2. It is our understanding that the deduction for survivors annuity is actuarily
unsound in that the deduction does not cover the cost of the increased protection,
and that this is slightly, although not wholly, ameliorated by the fact that de-
ductions for survivors annuity continue even in those cases where the spouse
predeceases the annuitant and no survivors annuity will ever be paid. If these
premises are correct., it would seem necessary that enactment of H.R. 3661 should
be accompanied by an increase in the cost of the survivors annuity now specified
in 5 U.S.C., section 8339(i). Correspondence received by our member associations
indicates that those who complain are proceeding on the assumption that liberali-
zation of the retirement system in this respect can be accomplished free.
It appears to its that epnployee groups such as ours who urge enactment of this
legislation must face reality and be prepared to recognize that it will require an
increase in the cost of a survivor annuity. Our federation fully agrees to the
necessity of this. On this understanding we still fully support the legislation. In
our view, it could create a more equitable system in that those who continue to
need the survivors annuity will pay for it, and those who no longer need it may
drop it. Some annuitants will no longer have to pay for the benefits of others;
each will pay for what he receives. The present obligation of an annuitant to con-
tinue to pay for a benefit no longer desired appears to be the cause of excessive
and unnecessary dissatisfaction with the present retirement system, and an in-
equity which ought to be removed.
We also hope that the committee will look with favor on 11.It. 468, the so-called
widowers bill. This bill would provide equality of treatment with respect to the
surviving spouses of male and female employees who die in service. At present,
both male and female Federal employees can leave survivor annuities to their
spouses if they die after retirement, but only the male can unrestrictedly do so, if
the employee's death occurs while still in service. A female Federal employee who
dies while in service cannot leave a survivor's annuity to her husband unless he
was dependent on her during the year preceding her death. This distinction be-
tween a widower's survivor annuity rights, depending on whether his wife was or
was not retired it the time of her death, seems to be without any logical reason. It
results in capricious and irrational differences of treatment between the widowers
of female Federal employees, depending on whether their wives were retired or in
active service at the time of death, even though their contributions into the fund
may have been equal.
We urge favorable committee consideration of both of these bills. We greatly
appreciate this opportunity to express our views.
STATEMENT OF JOHN A. MCCART, OPERATIONS DIRECTOR, GOVERNMENT l M-
PLOYEES COUNCIL, AFL-CIO
Mr. Chairman and members of the subcommittee, the Government Employees
Council desires to endorse the pending bill.
Thirty-four AFL-CIO unions, representing more than 1 million Federal classi-
fied, postal, and wage board employees, comprise the council. They join in com-
mending Representative Thaddeus J. Dulski, chairman of the full House Post
Office and Civil Service Committee, and you and the members of this subcominit-
tee for your interest in correcting the retirement inequity underscored by the
introduction of H.R. 3661.
The bill deals with two problems. First, there is the situation involving a retired
Federal worker who accepts a reduction in pension to provide survivorship
benefits for the spouse, if the annuitant predeceases. In the event the spouse dies
before the annuitant, and the retired employee remarries, the second spouse hn,
no entitlement to survivor benefits.
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Second, when the original spouse dies before the retiree, the latter continues to
receive a reduced annuity, even though a second spouse will receive no benefits.
When a prospective annuitant decides to provide an annuity for the survivor-
55 percent of his pension-his retirement benefit is reduced by 2% percent for
the first $3,600 and 10 percent for all above that amount.
In instances where the survivor dies before the retired workers, the reduction
continues. In our view, this situation is inequitable. When the reason for the
initial reduction is removed by the death of the spouse, it is logical that the
reduced income the retired employee was required to accept should be removed
also. The full pension should be restored to the annuitant.
The basic unfairness of the present arrangement is demonstrated by the
situation where a retired worker may live as a widower for many years and
still find it necessary to exist on a lower income. Moreover, when the death of
the spouse precedes that of the retiree, the possibility of obtaining the benefit
contemplated by the annuitant in providing the survivorship pension is termi-
nated. Yet, the pensioner must continue to incur the reduction.
The other aspect of the injustice involves the inability of a second spouse
to realize any annuity rights in the situation.
Originally, the annuitant accepted a reduction in monthly benefits to provide
a very modest income to the survivor. There was no way of knowing which
of the two would survive the other. Is it not logical that remarriage following
the death of the original survivor should entitle the second spouse to the same
benefit the worker contemplated for the first wife or husband?
In choosing a survivor annuity, a prospective retiree accepts a reduction in
pernion, which is not insignificant. Assuming an annuitant's pension is $3,600
annually, $90 must be forfeited each year to retain the survivor benefit. Once
that decision has been made, it cannot be retracted. All of us are aware that the
general level of pensions in this country are inadequate to meet necessary living
costs. Yet, in this instance the individual pensioner must agree to the reduction
with the knowledge that neither he, nor his present spouse, nor a future wife may
realize any benefit from the transaction.
H.R. 3661 remedies these deficiencies. It permits a second spouse through
remarriage, following the demise of the original spouse, to acquire survivorship
rights. For the annuitant who does not remarry when the survivor spouse pre-
deceases, the reduction in pension would be restored.
There is one amendment to the bill to which the subcommittee should extend
favorable consideration. It involves termination of a marriage with survivor
benefits by divorce. In that case, the divorced survivor is not entitled to an
annuity when the retiree dies. However, the annuitant must continue to accept
the reduced pension. We believe an amendment should be added to H.R. 3661
to correct this inequity. Mr. Chairman, with the addition the council has proposed,
we earnestly seek early, favorable action by the subcommittee on the pending bill.
THE DISTRICT OF COLUMBIA,
Washington, D.C., August 10, 1970.
Hon. THADDEUS J. DULSKI,
Chairman, Committee on Post Offices and Civil Service,
U.S. House of Representatives, Washington, D.C.
DEAR MR. DULSEI: The Commissioner of the District of Columbia desires to
report on H.R. 468, a bill "To amend the Civil Service Retirement Act to provide
equality of treatment with respect to widows and widowers of certain employees
who die in service."
The bill would revise the existing civil service retirement system to provide
automatic survivor annuities for widowers of employees who die in service on the
same basis as for widows. Under the current system, only widowers who prove
they are "dependent" are eligible for automatic survivors' annuities. This legisla-
tion is of particular importance in the District of Columbia because of the large
number of survivors of former Federal or District Government employees who now,
or will in the future, reside in this city.
The U.S. Civil Service Commission, in a letter to your committee dated June
12, 1970, favored enactment of H.R. 468, with some technical amendments, for
the following reasons:
1. The present provision for automatic survivor annuities reflects dis-
crimination between the sexes. The nondependent husband does not have
equal protection against economic hazard: he has no entitlement to a survivor
annuity whereas the nondependent wife is awarded a survivor benefit.
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3. The present provision runs counter to the facts of current day living.
By and large, women work because the family needs the money, and the
income earned by women is significant in the support of the family. On
the principle that one purpose of a retirement system is to cushion family
living standards against loss of income caused by death, it is appropriate to
drop the dependency requirement for husbands of working wives.
3. The provisions for annuities to surviving spouses of deceased annui-
tants do not include a dependency test. It is inconsistent to apply such a test
in the provisions for annuities to surviving spouses of deceased employees.
1. From a practical viewpoint, the proposed provision would be easier to
administer because the dependency determinations are usually time-con-
suming and frequently difficult to resolve satisfactorily.
The Commissioner of the District of Columbia concurs in the comments of the
U.S. Civil Service Commission and favors enactment of 11. 11. 468, amended as
suggested by the Cvil Service Commission.
The District of Columbia Council concurs in! the views expressed by the
Commissioner in this report.
The Office of Management and Budget advises that from the standpoint of the
administration's program there is no objection to the submission of this report.
Sincerely yours,
GRAHAM W. WATT,
Assistant to the Commissioner.
For WALTER E. WASHINGTON,
Commissioner.
THI9 FEDERAL PROFESSIONAL ASSOCIATION,
Washington, D.C., August 1,2, 1970.
Ilon. DOMINICK V. DANIELS,
Chairman, Subcommittee on Retirement, Insurance and Health Benefits, Committee
on Post Office and Civil Service, House of Representatives, Washington, D.C.
DEAR MR. CHAIRMAN: In lieu of presenting testimony before your committee
on August 4, 1970, relating to H.R. 3661, H.R. 468, and related bills, the Federal
Professional Association desires to be on record in support of the purpose for
amending certain sections relative to survivorship protection as provided under
the civil service retirement system.
We understand that these measures provide for equality of treatment regarding
survivor annuity option of a retiring employee, and also with respect to widows
and widowers of certain employees who die in service.
This association pursues a policy of treating alike men and women employees
in the same circumstances regarding employment, pay, and retirement and
retirement benefits.
We appreciate this opportunity to make known our support of these measures.
LIONEL V. MURPHY,
R'xecutive Director and Acting Legislative Director.
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