SEPARATION FROM AGENCY EMPLOYMENT OF PARTICIPANTS IN THE CIA RETIREMENT AND DISABILITY SYSTEM WHO HAVE NOT COMPLETED 5 YEARS OF AGENCY SERVICE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-03092A000100110003-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 3
• Document Creation Date: December 9, 2016
• Document Release Date: May 14, 2001
• Sequence Number: 3
• Publication Date: May 25, 1965
• Content Type: MEMO

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2 5 MAY 1965
CIA Rstirent Board
separation From Agency tmployment of Participen
in the CIA Retirement and Disability System Who
Rave Not Completed 5 Years of Agency Service
briefing presented to the Staff of this Office by
Financial Adviser to the Retirement Board, on
on subject of CIA Retirement System, a problem of
significance was disclosed which I feel needs to be resolved, at an early
date, if this has not already been accomplished.
2. As you know, provides that an employee may be considered
for nomination as a parl4cipant after completion of 3 years of Agency service.
Public Lew 88-643 provides at Section 234(a) that, "Any participant who
separates from the Agency after having Rerformed not less than five years
of eervice 4th the Agency, may, upon separation from the Agency or at
ahy-timepriAmr to becoming eligible for an annuity, elect to have his
contributions to the fund returned to him in accordance with the provisions
of Section 241 or to leave his contributions in the fUnd and receive
an annuity ... commencing at the age of sixty-two years." (Underscoring
supplied for emphasis.) Section 241(a) provides that, *Whenever a partici-
pant becomes separated from the Agency without becoming eligible for an
annuity or a deferred annuity ... the total amount of contributions from
his salary with interest thereon ... *hall be returned to him."
3. As indicated above, therefore, under the Agency retirement
system "not less than 5 years service with the Agency" would be required
before a participant acquires, upon separation, an option to leave his
contributions in the Auld and drew a deferred annuity. The Civil Service
Retirement System requires 5 years of civilian service to acquire the
option of waiting for a deferred annuity. The Foreign Service retirement
system provides for "obtaining at least 5 years of service credit toward
retirement under the System," to acquire a deferred annuity but does not
limit such service requirement to time spent under the Foreign Service
retirement system.
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4. This problem will arise only in those cases where an individual
had two or more years of creditable service in the Federal Goverument prior
to entrance on duty with the Agency, had been designated a participant
under the CIA Retirement System upon the coppletion of three years service
in the Agency, and separates before completing five years of Agency service.
For example, if an individual with 12 years of other Federal service becomes
a participant under the CIA Retirement System after completing three years
of Agency service were to separate from Agency employment during his fourth
year of Agency service, he would receive from the Agency a refund of his
contributions for over 15 years of Federal service, with no option extended
to him to elect a deferred annuity.
5. His separation before completion of five years of Agency service
'meld deny to him a substantial retirement benefit unwired prior to his
Agency employment which he would have retained had he remained under the
Civil Service Retirement System. Oace separated from Agency service, the
individual would have to obtain other Federal employment under Civil
Service in order to re-establish any retirement benefits and permit him to
purchase credit for the periods covered by his refund from the Agency. This
would be extremely unfair and it is believed that such a denial to an in-
dividual was not intended.
6. It is reqeested that this problem be given prot consideration
so that separations of participants will not act to deprive them of deterred
annuity benefits to which they would otherwise be entitled, It is recognized
that this problem will not affect the first employees being considered for
nomination as participants because they all have ten or more years of
Agency service; however, it could affect other employees who may be con-
sidered for participation in the near future.
7. One method of obviating the extremely unfair situation discussed
herein would be to advise all Career Services to defer recommending any
employee as a participant who has two or more years of prior Federal Service
until such person has completed at least five years of Agency service.
Such action would reqeire no changes to either the Agency regulations or
the Ant. Such employees would retain any accrued option they may L'.47f
acquired to deferred retirement benefits under Civil Service Retirement.
Likewise, an employee made a participant in the C/A system after five
years of Agency service would retain his option to deferred retirement
benefits.
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8. A variation of the foregoing solution for consideration would be
to defer recommending any employee as a participant until after completion
of at least 5 years of Agency service. This variation vould simplify
admInistration, but would reduce the income to the fund by the amount of
the Agency's contributions matching the employee's contributionn for the
additional tvo.year vatting period and the interest which these Amille
Might earn if invested in Government bonds.
9, Your consideration of the problem and advice of action taken
will be appreciated.
FOIAb3b
R. E. FUONS
Director of Finance
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