PAID ACTIVE RESERVE PROGRAM PROPOSAL AND ITS RELATIONSHIP TO CIA RETIREMENT PROBLEMS

Document Type: 
Collection: 
Document Number (FOIA) /ESDN (CREST): 
CIA-RDP78-03091A000200020018-7
Release Decision: 
RIPPUB
Original Classification: 
U
Document Page Count: 
4
Document Creation Date: 
December 9, 2016
Document Release Date: 
March 27, 2000
Sequence Number: 
18
Case Number: 
Publication Date: 
March 29, 1968
Content Type: 
MF
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PDF icon CIA-RDP78-03091A000200020018-7.pdf319.27 KB
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Approved For Release 2002/05 THAI'Y> 0-3a9=GU WQZ0?I? 7 2 ~ MAR 1968 MEMORANDUM FOR: Deputy Director for Support SUBJECT : Paid Active Reserve Program Proposal and Its Relationship to CIA Retirement Problems 1. The Agency has the need to make voluntary or involunta retirement under the CIA Retirement System less financially hazardous or punitive. It is also highly desirable to minimize the resentment of individuals who may be involuntarily retired and to deter them from taking adverse action in self-vindication or, retaliation. These objectives would be attained in part if the individual were to receive supplementary compensation from CIA In addition to his annuity for a period of several years. In the first year it is desirable to assure no diminution in the employee's net ex- pendable income. Since there will be no retirement deductions after retireme and since the annuity received will be non-taxable for a period of 24-36 months and since most early retirees will enter other employment before a year has passed, a sum: considerably less than the difference between the annuity and former gross salary would be adequate. 2. The Agency recognizes that its age 60 retirement policy for employees under Civil Service Retirement, although necessary in the Agency's beat interests, is prejudicial to those of the individual. Not only is the individual deprived of salary, but his annuity is 2% x high five less by each year of service he might otherwise have served. Since the average Civil Service retiree does so between his 65th and 66th year of age, it is a fair assumption that the average person's annuity will be at least 10% less than it otherwise would have been. (NOTE: 1070 ignores the probable increase in high five that would occur during the period of additional employment . ) 3. CIA has a need to maintain a reserve corps of personnel. trained and experienced in Agency methodology, who would be available for immediate duty in the event of a national emergency or if there were an abrupt Increase In the need for skills in any particular field of work. Prompt availability would require continuance of medical and security clearance and willingness to be recalled either as an employee or in contract status. The problem is to provide an incentive system that would ensure a viable reserve corps. Approved For Release 2002/05/01 : CIA-RDP78-03091A000200020018-7 "TAT USE ONLY Approved For Release 26811/biR~6V 13P+$- T4'Abb 20018-7 4. It is believed that the incentive/compensatory needs in problems 1 and 2 above can be reasonably satisfied at the same time that a compensation program is devised for the CIA Reserve Corps. Proposal and Related Prfnci es That employees who retire with an immediate annuity for reasons other than cause and disability be eligible to join the CIA Active Reserve. To `or reserve compensation they must obligate themselves to return to duty if asked to do so. If recalled the reservist would receive the then equivalent of his terminal salary. Additionally and alternatively, the reservist would be obligated to perform appropriate small tasks and services without fwrther compensation if not requiring more than 20 hours per month and in the absence of very special circumstances warranting additional compensation. 2. The maximum period of active reserve status with compensation years. 3. The maximum age for participation in. the paid active reserve shall a. Age 60 for retirees in the CIA Retirement System. b. Age 63 for retirees in the Civil Service Retirement System . The lower age limit for those in the CIA. Retirement System Is consistent with the argumentation presented by CIA to Congress justifying retirement as early as age 50 and the granting of a more favorable annuity formula, i.e., CIA's inability to use effectively after age 50 the services of all employees whose careers have been oriented toward the conduct and support of intelligence activities abroad. To qualify for the full three year active reserve term, the employee would have to retire before attaining age 57. Thus, this age 60 maximum age will consistently foster early retirement. 4. For every month an individual in the CIA Retirement System remains in service after attaining age 57, an equivalent reduction will be made in his total period of eligibility to participate in the paid Active Reserve. In determining reserve compensation, such reductions shall first be applied to the compensation scale for the first 12 months of active reserve status. Approved For Release 2002/05/01 : CIA-RDP78-03091A00020002QL18-7 a ~,31A ti QTR^~TI1` :.1 .iE YL t' a'u . Approved For Release 209 QIp kk-iWP78 9 AOOQElt!OO2O018-7 5. For every month an employee in the Civil Service Retirement System remains in service in excess of three an equivalent reduction will be made in his total period of eligibility for paid active reserve status. The three month leeway is to give the Agency some latitude in setting the retirement date which by law it does not have with respect to the CIA Retire- meat System. 6. Reserve compensation shall be suspended during periods of recall to duty, but the permissabie period of paid active reserve status shall not be extended by reason of recall. Compensation Formulae Considerations Problem 1, the encouragement of early retirement, seems to call for full preservation of the individual's expendable income during the first year of retirement. 'The individual should be financially unimpaired In preparing himself for and in locating other employment. Making allowances for the termination of retirement deductions and a greatly reduced income tax base, I believe reserve compensation at approximately 80% of the difference between the former salary and the annuity will leave the individual's expendable income unimpaired. To a no less important degree, unimpaired expendable income equally vital to the age 60 Civil Service retiree who may also need to locate supplementary employment or who is in the process of adjusting to a lower standard of living. In each of the following two years it is logical that there be downward ogresslon in reserve compensation. The value of a former employee's services decreases with the individual's loss of current knowledge about Agency activities, the likelihood that the Agency will need his services diminishes, and the reservist's willingness to fulfill his obligation will lessen he establishes himself if a new vocational field or settles into full retire- 'The scale of compensation to be paid must meet numerous tests It must first. of all be reasonable and defensible in terms of the Active Reserve program. It should, however, logically be influenced by the need of the Agency to make our early retirement policies effective and equitable. Approved For Release 2002/05/01u;1G~~A,,RDP78,rfl3O919 10.0 0084018-7 y 3_ii Approved For Release 2002/05/01 : CIA-RDP78-03091A0002Q 020018-7 ADMINISTRATIVE - INTERNAL USE ONLY is suggested that sample computations at several grade levels , including Agency average grade, be made. I suggest the following formulae in the initial testing: lst 2nd ear 80% 40% 80% 60% 20% 40% It is then suggested that the examples, using estimated Federal and State tax rates and retirement deductions, demonstrate unimpaired expendable income in the first year of paid reserve status. To the extent there IS impair- melt in the 2ud And 3rd years, it can easily be seen how much the individual will have to reduce his standard of living or earn supplemental funds. Leo suggested that the annual cost of the reserve program be projected for a span of years ahead to establish the rough budgetary implications Special Assistant to the Deputy Director for Support for Special Studies SA-DD/S/SS/EDE:bak(29 Mar 68) Distribution: Orig. ;,Addressee (then to DD/S Subject) STATINTL 1 - DD/S Chrono 1 Mr. Houston 1 Mr. Warner 1 - Mr. Wattles Approved For Release F.002/05/01~: CFA-RDP7g=03001-A0'b6W020018-7