IMPROVED RETIREMENT AND DISABILITY SYSTEM FOR CERTAIN EMPLOYEES OF THE CENTRAL INTELLIGENCE AGENCY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-03721A000300040006-7
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 14
• Document Creation Date: November 11, 2016
• Document Release Date: March 18, 1999
• Sequence Number: 6
• Content Type: REPORT

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88th Congress HOUSE OF REPRESENTATIVES Report
1st Session No.
IMPROVED RETIREMENT AND DISABILITY
SYSTEM FOR CERTAIN EMPLOYEES OF THE
CENTRAL INTELLIGENCE AGENCY
Mr. Rivers of South Carolina, from the Committee on Armed Services,
submitted the following
REPORT
(To accompany H. R. 8422)
The Committee on Armed Services, to whom was referred the
bill (H. R. 8427) to provide an improved retirement and disability system
for certain employees of the Central Intelligence Agency, having considered
the same, report favorably thereon without amendment and recommend
that the bill do pass.
PURPOSE
The purpose of this bill is to provide an improved retirement
and disability system for certain employees of the Central Intelligence
Agency,
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NEED FOR LEGISLATION
At the present time all employees of CIA are limited to the
normal Civil Service Retirement benefits. On the other hand improved
retirement benefits have been authorized for the Foreign Service and
for certain personnel engaged in investigation and detection of crime and
apprehension of criminals. However, many CIA employees serve under
conditions which are at least as difficult and onerous as the conditions
which led to improved retirement benefits for the Foreign Service and
certain personnel of the FBI and other agencies. CIA employees who will
come under this proposed system are obliged to serve anywhere in the
world according to the' needs of the Agency as'is the case in the Foreign
Service and the military and unlike the normal Civil Service employee.
The need was stressed for the Agency to maintain a young service by
encouraging earlier retirement and in some cases directing earlier
retirement. The voluntary early retirement features of this bill will
serve this end.
Since the Agency is unable in fact to provide full-term careers for
many individual officers, it is necessary to minimize the adverse effects
of the required programs of managed attrition and to preserve its ability
to recruit and retain the high-caliber personnel it needs. Therefore, the
Agency must make reasonable provision for the futures of those individuals
who must be separated before completing a full-terra career of thirty or
so years.
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NATURE OF LEGISLATION
It was determined that rather than attempt to devise an entirely
new system the Agency would follow the precedent established in this
field by the Foreign Service retirement legislation. Thus, H. R. 8427
authorizes the establishment of a separate integrated retirement system
for a portion of the employees of the Agency which is comparable to that
provided for the Foreign Service.
COMMITTEE DELETIONS
H. R. 84ZT is a clean bill resulting from careful deliberations of
this Committee after four days of hekrings on H. R. 7216 which was the
original bill referred to this Committee for consideration. That bill had
as its primary purpose to establish an improved retirement system for
a limited number of CIA employees. In addition, however, H. R. 7216
included a series of amendments of a technical nature to update the
Central Intelligence Agency Act of 1949 and other provisions which would
grant certain new authorities for the Agency. Early in the consideration
of H. R. 7216, the Committee determined H. R. 7216 in its entirety was
of such wide scope that it should be so revised as to limit it to those
provisions relating to establishment of an improved retirement system
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for certain CU employees. It was believed that an improved retirement
system was of paramount importance and that full attention should be given
to this complex subject. Accordingly, H. R. 8427 doss not include the'
following items which were present in H. R. 7216:
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(1) Certain technical amendments designed solely to update
cods citations in the CIA Act of 1949 in connection with procurement
authorities.
(2) Authorisation to pay travel expenses of employses and
members of their families from certain unhealthful posts to other
locations abroad having better environmental conditions for
purposes of rest and recuperation.
(3) Authorisation to pay travel expenses for dependents
accompanying an officer who is temporarily assigned to a training
station while on route to his post of assignment.
(4) Authorisation to provide appropriate orientation and
language training to dependants in anticipation of an assignment
abroad.
(5) Authorization to approve home leave upon completion of
three years' service abroad and in certain cases to approve home
leave after completion of eighteen months' service abroad.
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(6) Authorization to pay certain travel expenses for
employees and dependents to the nearest locality at which they
could obtain suitable medical can.
(7) Authorisation to pay costs of medical treatment for
employees and dependents in certain circumstances.
(8) A provision entitling a person to reemployment in
another Government agency upon completion of assignment
with the Agency where the assignment was approved by the
agency concerned and CIA.
(9) Authority for the Director to settle claims against the
United States arising out of Agency activities abroad.
(10) Authority for the Director to receive gifts and administer
them for the benefit or welfare of the Agency or its employees.
CREDIT FOR SERVICE AT UNHEALTHFUL POSTS
H. R. 7216 provided authority at Section 253 permitting extra service
credit toward retirement for service at unhealthful posts. Upon review,
it was the Committee's judgment in the light of previous Congressional
action concerning similar benefits formerly credited the Military service,
that such service credit is not appropriate.. In consequence, this section
has been stricken from the bill.
LIMITED NUMBER OF EMPLOYEES
TO BE COVERED
During the hearings it was emphasised by the 'witnesses before
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the Committee that this proposed retirement system would encompass only
a portion of Agency employees and was intended to cover those who were
engaged in the conduct and support of intelligence activities whose conditions
of employment in many ways were substantially similar to those of Foreign
Service officers. It was estijnated that a maximum of only 30% of the
Agency's employees would qualify for coverage under the proposed
system. In view of the fact that the great majority of CIA employees
will continue to be covered under the normal Civil Service Retirement
system, the Committee amended the bill explicitly to provide in its
statement of purpose and in section 201 (a) that the system would be "for
a limited number of employees. " In addition, the Committee amended
the bill to include in the Short Title of section 101 that the system was
only "for certain employees.
COMMITTEE AMENDMENTS
Consideration was given to inclusion of the Deputy Director of
Central Intelligence within the meaning of "Director" in the definitions
at section 111 (2). However, the Committee believed it more appropriate
that the "Director" refer only to the Director of Central Intelligence
recognising that the Director appropriately could and would delegate certain
of his authorities under the bill.
A new section 201 (c) was included to provide that determinations
made by the Director under the provisions of this law would be deemed
final and conclusive and not subject to review by any court. This was in
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recognition of the fact that the security classification of information
concerning the service of Agency employees.and the facts pertinent to
determinations made under the Act would ordinarily be of such a nature
that they should not be publicly disclosed. This further recognizes the
responsibility placed on the Director of Central Intelligence by section
102 (d) (3) of the National Security Act of 1947, as amended, to protect
intelligence sources and methods from unauthorised disclosure. Thu,;,
section 201 (c) provides as follows:
In the interests of the security of the foreign intelligence
activities of the United States and in order further to implement
the proviso of section 102 (d) (3) of the National Security Act of
1947, as amended, (50 U. S. C. 403 (d) (3) that the Director of
Central Intelligence shall be responsible for protecting intelli-
gence sources and methods from unauthorized disclosure, and
notwithstanding the provisions of the Administrative Procedure
Act (5 V.S. C. 1001 et jj.) or any other provisions of law. any
determinations by the Director authorized by the provisions of
this Act shall be deemed to be final and conclusive and not subject
to review by any court.
Section 203 authorizes the Director to designate those employees
who would be covered under the system. However, it was contemplated
that. if upon review, an employee under the system was no longer in
qualifying service, he would be removed from this system. It was the
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Committee's view that an employes with long service with the Agency
whose career is determined by the Director as being within the concept
of qualifying service should have tha right to remain under this retirement
system for the remainder of his ernplgyment with the Agency upon corn-
pletton of fifteen years' service. The Committee added an amendment
which reads as follows:
Any participant who has completed fifteen years
of service with the Agency and whose career at that tins is
adjudged by the Director to be qualifying for the system may
elect to remain ,& participant of such system for the duration
of his employment by the Agency and such election shall not
be subject to review or approval by the Director.
The specific purpose of adding the phrase "and such election shall not be
subject to review or approval by the Director" was to make it clear that
the nonreviewable provisions of section 201(c) pertaining to determinations
by the Director should not defeat the pnnposs of this amendment which was
to vest a right in the employee to remain in the system after fifteen years'
service.
The Committee, in the interest of clarity of intent, amended
section 204(b) (1) and (2). These two paragraphs are set forth below with
deletions in brackets and the additions underlined:
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(1) "Widow" means the surviving wife of a participant who
was married to such participant for at least two years immediately
preceding his death or is the mother of issue by /such1 marriage
to the participant.
/ "/ (2) "Dependent widower" means the surviving husband of a
participant who was married to such participant for at least two
years immediately preceding her death or is the father of issue by
jsuch1 marriage to the participant. and who is incapable of self-
support by reason of mental or physical disability, and who
received more than one-half of his support from such participant.
The first sentence of aaction 221 (f) provides that an unmarried
participant retiring under the Act may under certain conditions elect a
reduced annuity and designate in writing a beneficiary to receive an annuity
equal to 50% of his reduced annuity after his death. It was believed the right
to designate a beneficiary should be limited. Therefore, the Committee
amended this provision by requiring that such designated beneficiary must
have an insurable interest (as that term is used in 5 U. S. C. 2259 (h) relating
to such designations under the Civil Service Retirement Act) in the partici-
pant in order to be eligible to receive an annuity after the participant's
death.
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In connection with retirement for disability or incapacity under
section 231, reference was made to a physical examination to determine
disability. In the titLe of Part D and in section Z31 (b), the phrase
"physical examination" was amended to road "medical examination"
to make it clear that it was intended that examinations could be for the
purpose of determining either physical or mental illness.
Section 233, one of the most important sections in the Act as
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proposed, provided as follows:
Any participant in the system who is at least fifty years
of age and has rendered twenty years of service may on his own
application and with the consent of the Director be retired from
the Agency and receive benefits in accordance with the provisions
of section 221.
Since, under other provisions of the Act, creditable service can be allowed
for prior civilian and military service, the Committee believed it
desirable to require an individual to have at least five years of service
with the Agency in order to be eligible to retire under, this section.
Consequently, the Committee added an amendment as follows: "provided
he has not less than five years of s ervice with the Agency. " The Committee
'was also mindful of the requirement that the employee must apply for this
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retirement and receive the consent of the Director in order to be
retired. The Committee viewed this section in its entirety to provide for
the retirement of such an individual under circumstances of convenience
for the individual and the Agency.
Section 234 specifies the benefits in the event of discontinued
service retirement. One of the key features is paragraph (c) which
authorized the Director to retire participants in grade GS-14 and above
"to promote the efficiency of the Agency. " The Committee was of the
view that the words quoted did not serve a useful purpose and, consequently,
those words were deleted. Paragraph (c) further provided that participants
in grade GS-14 and above when so retired would receive an immediate
earned annuity. The Committee believed that there should be minimum
periods of service-before such individuals could be eligible to receive an
immediate annuity. Therefore, the Committee added the following
amendments "provided they have in each, case, not less than five years
of qualifying service and a total of ten years of service with the Agency. "
The words "qualifying service" were intended to encompass. that type of
service which the Director determines to be of a nature which would qualify
the individual to become a participant in the system. If an individual of
grade GS-,i4 and, above were so retired and did not meet the requirements
.
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of the Committee's proviso, such individual then would receive benefits
in accordance with the formula authorised for individuals similarly
retired but in grade GS-13. The Committee believed this situation
should be made explicit and, consequently, added the following sentence
at the end of paragraph (c): "Any individual so retired who does not most
these service requirements shall receive the benefits provided for
individuals in grade GS-13 as set out in paragraph (d) of this section. "
In line with the reasoning set forth above, the Committee also deleted the
words "to promote the efficiency of the Agency" in paragraph (d) relating
to the retirement by the Director of participants in grade GS-13 and
below.
TAX EXEMPTION FOR DISABILITY ANNUITIES
H. R. 7216 included a provision which would have exempted from
gross income for Foderal tax purposes a disability annuity awarded under
section 231. This specific section is set forth below:
Paragraph (4) of section 104(a) of the Internal Revenue Code
of 1954 (26 U. S. C. 104(a)(4) ) (relating to the exclusion from gross
income of compensation for injuries and sickness) is hereby
amended to read as follows:
"(4) amounts received as a pension, annuity, or similar
allowance for personal injuries or sickness resulting from
active service in the armed forces of any country or in the
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Coast and Geodetic Survey or the Public Health Service,
or as a disability annuity payable under the provisions of
section 831 of the Foreign Service Act of 1946. as &mended
(22 U. S. C. 1081; 60 Stat. 1021), or as a disability annuity payable
under title 11 of the Central Intelligence Agency Act of 1949.
as amended (50 U. S. C. 403(a) It seta . )."
The House Ways and Means Committee has not had the opportunity to
complete appropriate action on this provision which would amend the
Internal Revenue Code of 1954. Consequently, the Committee has
deleted this provision pending further action by the House Ways and
Mean Committee.
COSTS
There will be certain increased coats for the administration of the
retirement system. For reasons of sficiency and security, it is considered
essential that full administration of the program be accomplished within the
Agency. It is estimated that this cost would approximate $85, 000 per year
by the end of the first five years. Program costs cannot be precisely
estimated. However, the additional annuity costs under the proposed
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