THE THIRTY-FIRST AND THIRTY-SECOND ANNUAL REPORTS OF THE BOARD OF ACTUARIES OF THE CIVIL SERVICE RETIREMENT AND DISABILITY FUND FOR THE FISCAL YEARS ENDED JUNE 30,1951 AND JUNE 30, 1952

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CIA-RDP78-03721A000400010002-3
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January 1, 1954
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0,er-7311 4 ApprovegAT?Wmeesig001/03/92 : CIA-RDP78-03721A000400010002-3 _ HousNieicument No. 401 111111 THE THIRTY-FIRST AND THIRTY-SECOND ANNUAL REPORTS OF THE BOARD OF ACTUARIES OF iTHE CIVIL SERVICE RE- TIREMENT AND DISABILITY FUND FOR THE FISCAL YEARS ENDED JUNE 30, 1951 AND JUNE 30, 1952 25X1X8 UNITED STATES GOVERNMENT PRINTING OFFICE 47434 WASHINGTON : 1954 vegoi Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approved For ROlbase-2001/03/02 : CIA-RDP78-03721W0400010002-3 25X1 X8 HOUSE RESOLUTION 423 IN' THE HOUSE OF REPRESENTATIVES, January 27, 1954. t there be printed as a House document the Thirty- -second Annual Reports of the Board of Actuaries of e Retirement and Disability Fund for the fiscal years 1951, and June 30, 1952. Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approved For Wease 2001/03/02 : CIA-RDP78-U721A000400010002-3 Noir LETTER OF SUBMITTAL NEW YORK CITY, MCIV 28, 195g. UNITED STATES CIVIL SERVICE COMMISSION, Washington, D. C. LADIES AND GENTLEMEN: The Board of Actuaries, appointed under section 16 of the act of May 22, 1920, for the retirement of employees in the civil service of the United States, has the honor to submit here- with its 31st annual report on the operation of the fund. In accordance with the practice of the Board in the past, the report gives a statement of the appropriation required of the Government '100"4 under the Retirement Act, as amended, on the basis of the estimated membership of the fund as of June 30, 1951. Respectfully submitted. GEO. B. BUCK, R. R. REAGH, C. W. KROLL, Board of Actuaries, Civil Service Retirement and Disability Fund. \we AMMO. Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approved For%Rwelease 2001/03/02,:, CIA-RDP7W721A000400010002-3 Nue THIRTY-FIRST ANNUAL REPORT OF THE BOARD OF ACTU- ARIES OF THE CIVIL SERVICE RETIREMENT AND DISABILITY FUND The civil service retirement and disability fund was established in 1920 to furnish retirement benefits to officers and employees of the United States Government who become superannuated in govern- mental service, or incapacitated before attaining old age. The Retire- ment Act makes provision for a Board of Actuaries of the Civil Service Retirement Act and in section 16 defines the chief duties of the Board to be as follows: * * * to annually report upon the actual operations of this Act, with authority to recommend to the Civil Service Commission such changes as in their judg- ment may be deemed necessary to protect the public interest and maintain the system upon a sound financial basis, and they shall make a valuation of the "civil-service retirement and disability fund" at intervals of five years, or oftener if deemed necessary by the Civil Service Commission; they shall also prepare such tables as may be required by the Civil Service Commission for the purpose of computing annuities under this Act. * * * This report, which has been prepared as of June 30, 1951, is the 31st annual report of the Board of Actuaries. The report gives first a summary of the main benefit and contribution provisions of the act as amended to June 30, 1951. Then statements are included regarding the active and retired membership. Next the estimated appropriation recommended for payment by the Government on the basis of the estimated membership as of June 30, 1951, is given. This is followed by a statement giving the results of a valuation of the liabilities of the fund on account of annuities in force on the roll as of June 30, 1951. Finally a brief account of the mortality experience of annuitants for the past year is given, together with certain com- ments by the Board on the past year's operations. SUMMARY OF BENEFIT AND CONTRIBUTION PROVISIONS OF THE CIVIL SERVICE RETIREMENT AND DISABILITY FUND There were no amendments made during the past year which affect the main benefit and contribution provisions of the fund. The follow- ing summary states the main benefit and contribution provisions of the act, as they were interpreted by the Board of Actuaries. BENEFITS Service retirement Condition for eligibility.'?Rotirement is compulsory at age 70 after 15 years of service. Retirement is permissible at the option of the employee at age 60 after 30 years of service or at age 62 after 15 years of service. 1 certain employees who have rendered 20 years of service in the investigation, apprehension, or detention of persons suspected or convicted of offenses against the criminal laws of the United States are eligible to retire after age 60 and receive an annuity of 2 percent of average basic salary for any 5 consecutive years multiplied by the number of years of service not exceeding SO years. 1 Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approved For Re lease100M6410alkehetARDENAMA-1 21tifft 0400010002-3 At the option of the employee at age 55 after 30 years of service dook or upon involuntary separation not due to misconduct or delinquency after 25 years of service, an immediate annuity is payable equal to the regular annuity reduced by one-quarter percent for each month sk the employee is under age 60. Amount of beneft.2?The annuity is determined by 1 of 2 plans, whichever provides the larger benefit: Plan I. An annuity equal to 13 percent of average annual basic salary 3 for each year of service but no such annuity is to exceed 80 percent of average annual basic salary.' Plan II. An annuity equal to 1 percent of average annual basic salary 3 plus $25 for each year of service, but no such annuity is to exceed 80 percent of average annual basic salary.3 Disability retirement Condition for eligibility.?Retirement is permissible upon disability after 5 years of civilian service. Amount of benefit.?The benefit is determined by the same method as used for service retirement. Any compensation for disability paid from the United States employees' compensation fund is deducted from the annuity benefit payable on account of the same disability. Discontinued service retirement Condition for eligibility.?Upon separation from service after 5 or more years of civilian service, a deferred annuity is payable. Amount of benefit.?The deferred annuity begins at age 62 or at age of separation, if later, and is computed by the same method as the regular annuity but without choice of a joint and survivorship option. If the employee has less than 20 years of civilian service, he may elect to receive his contributions with interest at 4 percent to December 31, 1947, and 3 percent thereafter to date of separation in lieu of the deferred annuity. Return of contributions upon withdrawal from active service Return of total contributions is made upon withdrawal from active service before 5 years of civilian service. Interest at 4 percent to December 31, 1947, and at 3 percent thereafter is allowed if service is in excess of 1 year. Return of contributions on death before retirement On death before 5 years of civilian service or after 5 years of civilian service when there is no survivor entitled to an annuity, return of total contributions is made with interest at 4 percent to December 31, 1947, and 3 percent thereafter to date of death of the employee. Return of contributions on death before commencement of payment under a deferred annuity Return of total contributions is made upon death before commence- ment of deferred annuity. (Interest is allowed at 4 percent to Decem- ber 31, 1947, or to date of separation, whichever is earlier, and 3 per- cent thereafter to date of death.) 2 An additional annuity of $36 for each year of certain specified service in Alaska or on the Isthmus of Panama is allowed officers and employees who are citizens of the United States. "Average annual basic salary" is used to denote the average annual basic salary received by the employee during any S consecutive years of allowable service at the option of the employee. Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approved For ,I,ease 2001/03/02.LCIA-RlaTeLai7u4A000490010002-3 MTVIL SERVICE RETIREMEN I: AND DI B Return of contributions upon death after retirement Upon death before the payments of the annuity amount to contribu- tions (with interest at 4 percent to December 31, 1947, and 3 percent %.?ithereafter to date of retirement) the difference is paid, unless there is a survivor entitled to an annuity. Annuities to dependents upon death in active service Condition for eligibility.?Annuities to dependents are paid upon death of an employee in active service after 5 years of civilian service. Amount of benefit.?(a) If survived by a widow, an annuity begin- ning the first of the month following the death of the employee or widow's attainment of age 50, whichever later, equal to one-half regular annuity is payable to the widow until death or remarriage. (b) If survived by a widow and a child or children, in addition to (a), an immediate annuity equal to one-half regular annuity to the employee is payable to the widow until death, remarriage, or attain- ment of age 50. Also an immediate annuity equal to one-fourth of the regular annuity, not in excess of $900 divided by the number of -children, or $360, whichever is lesser, is payable to each child. The annuity payable to a child is terminated upon attainment of age 18, marriage, or death, whichever is earlier. (c) If survived by a child or children and there is no widow or widower, an immediate annuity equal to one-hall regular service annuity, not in excess of $1,200 divided by the number of children, or $480, whichever is lesser, is payable to each child until attainment of age 18, marriage, or death, whichever is earlier. **1?1 Upon death of the widow, the annuity payable under (b) to a child or children is recomputed and paid as provided in (c). Upon termination of the annuity of a child, the annuities to other NNW children are recomputed as though the child whose annuity was terminated had not survived the employee. Optional benefits At retirement a married employee may elect to receive in lieu of his or her regular annuity a reduced annuity payable during the employee's life and an annuity payable to the surviving widow or widower equal to 50 percent of the regular annuity before reduction. The annuity to the survivor commences upon the employee's death or the survivor's attainment of age 50, whichever is late', and ceases upon death or remarriage. The reduction in the employee's annuity is 5 percent of so much of the regular annuity as does not exceed $1,500, plus 10 percent of any excess over $1,500, plus three-fourths of 1 percent for each year the spouse lacks of being age 60 at the date of retirement, but in no case shall the reduced annuity be less than 75 pei cent of such regular annuity. At service retirement any unmarried employee in good health may elect to receive in lieu of his regular annuity a reduced annuity pay- able during his life and an annuity payable after his death to a sur- vivor annuitant equal to 50 percent of such reduced annuity and, upon death of a survivor annuitant, all payments cease. The annuity payable to the employee is as follows: 90 percent of life annuity if survivor is same age or older or is less than 5 years younger than annuitant; 85 percent of life annuity if survivor is 5 but less than 10 years younger than annuitant; 80 percent of life annuity if survivor Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approved For Releastgo2001/03/02 : CIA-RDP78-0372108100400010002-3 4 CIVIL aERVICE RETIREMENT AND DISABILITY FUND is 10 but less than 15 years younger than annuitant; 75 percent of life annuity if survivor is 15 but less than 20 years younger than annuitant; 70 percent of life annuity if survivor is 20 but less than 25" years younger than annuitant; 60 percent of life annuity if survivor- is 25 or more years younger than annuitant. Annuities to dependents upon death after retirement Benefits to widows with children and to children upon death of annuitants are similar to those payable upon death of employee in active service, except that benefits are based on regular annuity paid to annuitant and the annuity payable to the widow with a child or children terminates upon death, remarriage, or attainment of age 50, unless an optional benefit was selected by annuitant. No benefits are payable to dependents of annuitants retired on account of dis- continued service. Benefits to annuitants retired prior to April 1, 1948 Benefits to annuitants retired prior to April 1, 1948, were increased by 25 percent or by $300, whichever was less, provided any such annuitant could, prior to April 1, 1948, elect to retain his ca her present annuity in lieu of the increased annuity and provide that one-half of such present annuity, but not to exceed $600, be continued to his wife or her husband until death. Effective September 1, 1950, the annuities of those who in 1948 elected survivor benefits were increased as stated above. Survivor benefits, as previously described, were granted those who in 1948 elected the increase, applicable in any case where death occurs after April 30, 1948, but no survivor annuity was payable for any period prior to September 1, 1950. No change was made in deferred annuities payable to employees " separated from service prior to April 1, 1948. CONTRIBUTIONS By employees Employees pay 6 percent of salary commencing July 1, 1948. Any employee may at his option and under regulations prescribed by the Civil Service Commission deposit additional sums in multi- ples of $25 but not to exceed 10 percent of his annual salary for service rendered since August 1, 1920, for the purchase of an addi- tional annuity. By Government Annual appropriations required in addition to employees' contribu- tions to support the plan are to be made by the Government. ESTIMATED ACTIVE MEMBERSHIP AS OF JUNE 30, 1951 The active membership of the fund as of June 30, 1951, was esti- mated by the Civil Service Commission to consist of 1,767,000 employees with an annual payroll of $6,723,435,000. ANNUITANTS ON THE ROLL AS OF JUNE 30, 1951 The following table summarizes the number and amount of annui- ties in force on June 30, 1951, classified according to cause of retire- ment for each sex, as shown by the records of annuitants maintained7 Approved For Release 2001/03/02 : CIA-RDP78-03721A00040000002-3 Approved For Wease 2001/03/02 : CIA-RDP78-U721A000400010002-3 TIVIL SERVICE RETIREMENT AND DISA.BILITY FUND 5 *ere' %ape by the Civil Service Commission. On pages 10 to 15 of this report, the distributions of the number and annuities of annuitants on the roll as of June 30, 1951, are given for each sex according to ages as of that date. The tabulations show survivors of deceased employees and survivors of deceased annuitants separately. TABLE I.-The number and annuities of annuitants on the roll June 30, 1951 Group Regular annuities Voluntary annuities Total annul- ties Number Amount Number Amount Retired on account of age and voluntary and involuntary separation: Men 102,892 $130, 276, 396 1, 552 $436, 514 $130, 712, 910 Women 17, 853 18, 839. 057 508 80, 806 18, 925, 873 Total 120, 745 149, 115, 463 2,090 523, 320 149, 638, 783 Retired on account of disability: Men 35, 463 33, 997, 909 285 43, 148 34, 041, 057 Women 10,472 9, 124, 765 126 14, 088 9, 138,853 Total 45, 935 43, 122, 674 411 57, 236 43,179, 910 Survivors of deceased employees: Widows under sec. 12 (c) (1) 6,835 3, 994, 424 3, 994, 424 Widows under sec. 12 (c) (2) 2, 865 1, 220, 040 1, 220, 040 Children under sees. 12 (c) (2) and (3) _ __ 6,342 1, 192, 116 1, 192, 116 Total 16, 042 6,406, 580 6, 406, 580 Survivors of deceased annuitants: 1 Widows under sec. 12 (e) (2) 291 110, 661 140, 664 Widows other than under sec. 12 (c) (2) __ 13,039 6, 577, 773 6, 577, 773 Children under sees. 12 (e) (2) and (3). __ 759 164, 138 164, 138 All others: Men..288 92,944 92,944 Women 49 20, 325 20,325 Total 14,420 6, 995, 844 6, 955, 844 Grand total_ 197, 148 205, 640, 561 2,471 580, 556 206, 221, 117 1 Includes voluntary annuities continued to survivors. COST OF BENEFITS PAYABLE UNDER FUND Each employee pays 6 percent of his compensation into the fund. The amounts so contributed are credited to the employee's individual account and, if he leaves service or dies before he has completed 5 years of civilian service, his total credits with interest are returned to him or to his beneficiary. If an employee leaves service after com- pleting 5 years but before 20 years of civilian service, he may elect to have his contributions returned to him with interest, or, in lieu thereof, he may apply for a deferred annuity beginning at age 62 computed by the same method as a regular annuity but without choice of a joint and survivorship option. If he leaves after 20 years of civilian service, he is paid a deferred annuity beginning at age 62 computed by the same method as a regular annuity but without choice of a joint and survivorship option. When the employee qualifies for retirement, he receives the stipulated retirement allowance based on his service and salary and if he dies before the payments of this allowance are equal to his contributions with interest to the retirement date, the balance is paid to his beneficiary or estate unless there are survivors entitled to an annuity. 47434-54-2 Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approved For Releagi62001/03/02 : CIA-RDP78-037210600400010002-3 6 CIVIL SERVICE RETIREMENT AND DISABILITY FUND The Retirement Act does not set a definite percentage contribution rate to be paid by the Government but provides that an estimate of the appropriation necessary to finance the fund be submitted each 101%, year to the Bureau of the Budget. Two annual contributions are payable to the fund, namely, a "normal" contribution and a "de- ficiency" contribution. The normal contribution rate is the average percentage of the salaries of all new employees that is required to be paid into the fund from the time they enter service until they leave service in order to accumulate sufficient funds to pay their benefits. Part of this normal contribution is met by the employees' contribu- tions and the remainder represents the normal contribution rate of the Government. The deficiency contribution is required because at the time of the establishment of the fund, employees then in service were given credit for their prior service during which no contributions had been made by the Government. Therefore, there was an accrued liability or deficiency to be met by the Government at that time. Further increases in the deficiency have come about through changes in the benefit provisions, through the addition of new groups of em- ployees to whom credit for service rendered prior to their admission was allowed, and through the fact that the Government's appropria- tions have not been sufficient to meet the current costs of the fund.. ANNUAL APPROPRIATIONS OF GOVERNMENT ON BASIS OF ESTIMATED PAYROLL AS OF JUNE 30, 1951 In accordance with the procedure followed in previous reports, the Board has prepared the following statement as of June 30, 1951, which gives an estimate of the appropriation required of the Government on the basis of the estimated payroll of the membership as of that date. The estimate is based on the cost of the amended act as prepared by the Board of Actuaries in cooperation with the Civil Service Commission. TABLE 2.?Estimated annual contributions required to support the Civil Service Retirement and Disability Fund prepared as of June 30, 1951 Contribution Normal cost as? Deficiency cost as? Total cost as? Percent- age of payroll Annual amount Percent- age of payroll Annual amount Percent- age of payroll Annual amount Total Payable by employees Payable by Government 8.78 $590, 317, 593 2.90 $194, 979,619 11.68 $786, 297, 205 6.00 2. 78 403, 406, 100 186, 911,493 2. 90 194, 070,689 6.00 5.68 403, 406, 100 381, 891, 108 The preceding table shows the normal cost to support the benefits accruing on account of current service to be equivalent to 8.78 percent of payroll. The employees contribute 6 percent toward the normal cost and, therefore, there remains 2.78 percent to be paid by the Gov- ernment. On the basis of the estimated payroll as of June 30, 1951, this represents an annual payment of $186,911,493. The deficiency ask cost, or the annual cost due to the accrued liability, is shown by the ?I -- table to be $194,979,615. This entire deficiency contribution is a. Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approved For kejease 2001/03/02 : CIA-RDP78-0.30721A000400010002-3 CIVIL SERVICE RETIREMENT AND DISABILITY FUND 7 liability of the Government. Therefore, the total annual contribution recommended for payment by the Government on the basis of the estimated payroll as of June 30, 1951, is $381,891,108. The actual e appropriation for the fiscal year 1952 was approximately $313,500,000. The normal percentage rate of contribution of 2.78 percent was de- veloped on the basis of the valuation as of September 30, 1947, prepared by the Civil Service Commission, with an adjustment estimated to cover the increased cost due to the optional benefits as amended by Public Law 310, effective September 30, 1949. The deficiency rate of 2.90 percent represents the percentage of payroll as of June 30, 1951, which produces 4 percent interest on the estimated deficiency as of that date. This is the minimum payment which will keep the principal amount of deficiency from increasing. The amount of annual defi- ciency payment is greater than that shown in last year's report because the payment made during the year was less then interest at 4 percent on the deficiency. Hence the deficiency increased during the year so that a larger payment is needed for the current year to provide the accruing interest. The percentage rate of payment of 2.90 percent is less than the corresponding rate last year because the payroll of mem- bers to which the rate is applied has increased with the result that a lower percentage of payroll will meet the minimum payment. LIABILITIES OF FUND ON ACCOUNT OF ANNUITANTS ON THE ROLL AS OF JUNE 30, 1951 Awe' A valuation of the liabilities of the fund on account of annuitants on the roll as of June 30, 1951, was prepared and the results of the valuation are summarized in table 3 below. The mortality tables used for the valuation were those used in the quinquennial valuation Nese made as of Juno 30, 1940. These tables are given in the 22d annual report of the Board and therefore have not been reproduced in this report. TABLE 3.-Liabilities on account of annuitants as of June 80, 1951 Group Present value of benefits to annuitants on the roll Regular annuities Voluntary annuities Total annuities Retired on account or age and voluntary and involuntary separation $1,217,820,360 $4, 992, 482, $1,222, 812, 842 Retired on account of disability 438,131,583 651,672 438, 783, 265 Reversionary annuities to designated beneficiaries 1 201,873,391 201, 873,891 Survivorship annuities 152,582,170 152, 582, 170 Total 2, 010, 407, 504 6, 644, 154 2,016,051, 668 Includes voluntary annuities. In the 30th annual report of the of annuities payable to annuitants were shown to be $1,780,220,393, as of June 30, 1951, or an increase in during the last year. *se' Board, the liabilities on account on the roll as of June 30, 1950, compared with $2,016,051,658 as liabilities of nearly $236 million Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approved For Relea02001/03/02 : CIA-RDP78-037200400010002-3 8 CIVIL SERVICE RETIREMENT AND DISABILITY .FUND SUMMARY OF MORTALITY EXPERIENCE OF ANNUITANTS FOR THE YEAR ENDED JUNE 30, 1951 For the purpose of making a check of the mortality tables for annuitants, the actual and expected number of deaths and of annuities canceled by death during the past year were prepared separately for men and women who had retired on account of age, voluntary and involuntary separation from service, and for men and women who had retired on account of disability. The following table summarizes the results of the comparison. TABLE 4.?Summary of the comparisons of the actual and expected deaths among annuitants, July 1, 1950, to June 80, 1951 Group Number of deaths Annuities terminated by deaths Actual Expected Difference Actual Expected Difference Employee annuitants retired on account of age, voluntary and involuntary separation: Men 5,448 5, 492.0 +44 0 $6,967,308 $7, 015, 541 +$48,233 Women 511 641.0 +130.0 517,925 663,680 -F145,755 Employee annuitants retired on account of disability: I Men 2, 286 1, 502. 0 ?784.0 2, 186, 948 1,400, 139 ?786, 809 Women 403 337.0 ?66.0 340, 243 284,526 ?55,717 I The expected cases of disability are calculated on an aggregate rather than a se ect table, which tends to show a more favorable experience than would be indicated if select tables were used, due to the sizable increase in the number of annuitants in recent years. However, the last test of the mortality of deceased annuitants indicated that the difference in mortality by duration did not, in the opinion of the board, justify the use of select tables. A check of the mortality tables used for widows was also prepared this year. The following table summarizes the comparison. TALL 5.?Summary of the comparisons of the actual and expected deaths among survivor annuitants July 1, 1950, to June 30, 1951 Group Number of deaths Annuities terminated by deaths Actual Expected Difference Actual Expected Difference Widows under secs. 12 (c) (1) 12 (c) (2) 78 102. 6 +24. 6 $16944 $57, 605 +$10, 661 Widows under sec. 4 (b) 19 20. 3 +1.3 13, 188 17, 376 +4, 188 Widows under ser 8 256 29.8 +13.8 130, 216 131, 429 +1,213 Total 353 392. 7 +39.7 190, 348 206,410 +16,O2 COMMENTS ON ANNUITANTS' EXPERIENCE The actual experience of annuitants during the year ended June 30, 1951, has been compared with the experience of previous years and the following points noted. In general, the actual experience of annuitants during the year ended June 30, 1951, followed the trend of previous years. In the case of pensioners retired on account of age or voluntary separation, the actual death rates are proving less than the expected rates. In the case of men, the actual number and annuities canceled by death were only slightly under the expected, and there was very little change over that shown last year in the deviation of actual experience from the expected. However, in the case of women, the departure of the actual Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approved For Release 2001/03/02 : CIA-RD1:7143F7upA0004p0010002-3 .111fIVIL SERVICE R M ETIREMENT AND S MT experience from the expected was more pronounced, and the difference was more marked in the year ended June 30, 1951, than in the previous year, indicating a decreasing rate of mortality among women. The - = experience to date indicates that more conservative mortality tables will probably be required for service pensioners. With respect to employees retired on account of disability, the actual deaths during the past year exceeded the expected deaths and the actual annuities terminated by death exceeded the expected annuities by a wide margin. This condition is consistent with past experience. The actual deaths among widows and the annuities canceled by death were less than expected during the past year. However, the experience to date for widows is limited, and no conclusions can be reached regarding the use of the present tables until more experience has accumulated. CONCLUSION During the past year there was no legislation adopted which affected the general structure of the retirement system. However, certain amendments proposed under Senate bill 995, 82d Congress, have been under consideration, and under date of July 11, 1951, the Board of Actuaries prepared a report giving an estimate of the cost of the pro- posed amendments and commenting on the provisions of the bill. The Board has been particularly concerned with the provision of the proposed bill which would change the method of financing the fund from the reserve method heretofore followed. Under the present method, the Board determines each year the appropriation needed to 'wow' support the fund on a sound reserve basis as described on pages 5 and 6 of this report. Under the method proposed, the annual appropria- tion would be the amount needed each year to make the balance in the fund equal to the sum of the total deductions and deposits in the fund for persons not retired plus the total present value of all future payments to persons then on the retirement roll. This would mean ? that the liabilities to be met by the Government on account of active members would not be covered as they rendered the service that gives rise to such liabilities, but would be deferred to be met by future generations of taxpayers or by a reduction in annuities should appro- priations not be made to pay them. The Board is glad to report that the Civil Service Commission sup- ports its viewpoint that the standard full reserve method of financing should be employed. Under the reserve method the true cost of benefits is taken into account and provision made for meeting the cost during the active service of the members. When the Retirement Act is amended to liberalize benefits, the cost of the new benefits is im- mediately reflected in the appropriations required for the support of the fund if the full reserve method of financing is used. The Congress then knows to what extent it is committing taxpayers to pay for bene- fits and employees know that present assets are not being dissipated so as to impair the payment of their future annuities. The reserve method is used by the majority of sound retirement plans for govern- mental employees in the various States, and it has been proved to offer the best protection both to members and to taxpayers. To members it gives assurance that their benefits will be paid when due and to taxpayers it gives assurance that no amendments are adopted which carry a concealed cost to be met at some later date. 14111?' The quinquennial valuation of the system is due in 1952 but will probably have to be postponed because an appropriation to cover the Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approved Thor Ret,T.,englippui?,iEq ITAA-ADDF:11- 0 3 7 2 1 A00 4 0 0 0 1 0 0 0 2 - 3 FD expenses of the valuation has not been made. The intent of the law is that an actuarial valuation of the fund should be made at least once in every 5-year period and oftener if deemed necessary by the Civil Service Commission. The Board feels that a valuation should be made in 1952 or as soon thereafter as the data can be collected. So many changes affecting the membership and their compensation have taken place since 1947 when the last valuation was made that it would seem that the Congress would want to have the results of an actuarial valuation to furnish the facts on which to base sound business judgment in considering the various changes in the act which are proposed. The Board is advising with the Civil Service Commission in regard to the establishment of a central record system for the fund. As stated in previous reports, the establishment of a central record system is believed to be very important. It does not appear appropriate for the United States Government to maintain its own retirement system without adequate records, when it requires such records for private funds as a basis for obtaining Treasury approval for tax purposes. The Government should operate its own system with as much precision as similar funds in the various States and cities of the country are operated. ? SUMMARY OF TABULATIONS OF ANNUITANTS' DATA The following tables give the number of annuitants and their annuities as of June 30, 1951, distributed by age for men and women separately, which were used as a basis for the valuation. TABLE 6.-The number and regular annuities of annuitants on the roll, classified by sex and age as of June SO, 1951-retired on account of age and voluntary and involuntary separations Age Men Women Age Men Women Num- ber Annuities Num- ber Annuities Num- ber Auities nn Num- ber . Annuities 41 2 $372 74 woovo w. 061 03.,C4 Cat-,4W $5, 897, 016 726 $773,080 42 75 5,579, 627 691 731,377 43 76 4, 703, 893 585 595,439 44 1 732 1 $1, 392 77 3,983, 710 510 318,358 45 9 5,640 1 804 78 3, 341, 349 400 428,182 46 13 9,768 3 2,340 79 2,993, 617 377 387,044 47_ 18 12,060 5 4,440 80 2,402, 864 269 268, 679 48 15 8,994 5 4,368 81 2, 101, 528 259 286,848 49 28 21,118 10 9, 192 82 1, 733, 078 210 210,550 ao 63 48,413 18 18,922 83 1, 389, 672 182 178,709 51 78 94,617 as 32,277 84 1, 061, 099 145 135,723 62 77 98,457 28 35,477 85 795, 382 119 116, 770 53 94 126,598 26 37,668 86 592,609 82 78,237 54 94 123,180 25 32,998 87 477,626 66 62,314 55 222 263,042 47 56,603 88 376, 298 51 45, 680 56 661 678,034 159 194,434 89 273, 645 29 27, 140 57 848 834,407 206 220,378 90 176, 584 28 27,781 58 1,091 1,105,434 260 296,402 91 149,701 12 14,002 59 1, 505 1, 393, 232 246 276,669 92 96,964 11 11,043 60 1,859 1,863, 148 288 329,713 93 55,272 9 ? 9,342 61 2,477 3, 033, 321 380 494, 405 94 26,691 4 4,657 62 3, 149 3, 976, 082 537 850, 761 95 20,823 5 4,688 63 4, 952 5, 751, 655 960 980, 186 06 9, 449 3 2, 792 84 5,200 6, 139,360 944 923,857 97 1,428 3 2,548 65 5,619 6,681, 809 1,057 1,070,288 98 5,580 66 1,248 6, 482, 066 1,028 1, 041, 468 99 598 67 5,688 7, 185, 988 1,048 1, 048, 177 100 3, 221 68 5,478 7, 168,854 1,023 1, 050, 320 101 754 69 5,484 7,049, 100 917 948, 705 102 70 5,648 7,968,939 950 1,060,607 103 71 6,354 9, 064, 747 1,028 1, 132, 267 104 1 1, 125 72 6,833 7,943,320 981 1,050,971 102,892 130, 276, 396 17,863 18, 839,067 73 8,184 8, 903, 824 859 920,544 Total_ talk lek Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approved For QVnegssRig0;151NiflE2 : IsFr t-Tff RI:A7BW7 2 1 A 0 0 0 4 FUND Fp? 1 0 0 0 2 - 3 Noe TABLE 7.-The number and voluntary annuities of annuitants on the roll, classified by sex and age as of June SO, 1951-retired on account of age and voluntary and involuntary separations Age Men Women Age Mon Women Num- ber Annuities Num- ber Annuities Num- ber Annuities Num- ber Annuities 50 1 $350 71 113 $30,431 28 $5,107 61 1 942 72 86 28,512 27 4,874 52 2 549 73 70 19,961 20 3,362 53 3 $844 74 61 16,851 17 2,281 54 1 74 75 56 15,164 16 2,428 55 4 1,079 1 13 76 39 13,686 12 1,228 56 10 3,268 4 702 77 25 6,703 0 1,141 67 11 3,560 8 1,315 78 28 8,262 7 1,150 58 26 6,213 13 3,188 79 12 4,080 5 1,420 59 24 7,646 8 673 80 13 6,553 7 513 TO 30 8,466 7 1,755 81 11 5,432 1 294 81 32 5,379 14 1,836 82 3 1,860 82 56 13,207 18 2,345 83 1 97 A3 82 18,635 42 7,278 84 4 3,186 -64 108 31,865 25 4,923 85 1 214 85 117 30,360 44 7,452 86 86 106 26,772 39 5,100 87 t7 127 35,181 46 9,152 88 t8 110 33,448 39 6,869 89 2 1,259 89 95 21,691 19 2,902 1, 552 436,514 508 86,861 70 95 26,575 28 5, 664 Total _ TABLE 8.-The number and regular annuities of annuitants on the roll, classified by sex and age as of June 30, 1951-retired on account of disability Age Alen Women Age Alen Women Num- ber Annuities ber Annuities Aaumities Num- ber 'J' ber Amenities Annuities 24 ? ocom-ao040C,c0 cnw ..?..4.,-,e0ob0,NW.L00.40topt0046b4N 'CaDoino.o.w 000.i.4.0.4.4.0.WW.NaDb2.WW00.b: $444 63 ..,Wb.Db5C441100et,-,w..1 WNNO.?=0,00W=Nopmpas,wwm.-,,,,,,, E.D.01-,COCOOMODOWCPOODO,4N4= www.w 81,682,115 395 $366 018 25 1,092 2 $564 64 1,314,042 341 316,522 26 2,808 6 1,332 65 1,134,203 350 316,234 27 1,944 6 1,224 68 083,889 336 302,383 286,175 5 1,225 67 868,981 284 255,189 29 8,736 13 3,824 68 711,035 235 208,125 80 13,953 11 3,602 69 699,427 239 212,368 31 11,164 12 4,009 70 609,006 207 185,421 32 18,983 13 4,748 71 626,998 214 182,886 33 19,413 22 6,704.72 606,374 207 191,638 34 29,806 21 8,248 73 572,315 173 159,568 35 32,394 19 6,561 74 516,940 146 134,467 36 48,015 32 12,442 75 457,291 148 138,366 -37 54,625 36 14,763 76 374,186 125 123,687 .38 50,565 44 18,530 77 202,777 103 06,338 JAI 67,681 37 17,303 78 219,924 107 100,794 40 82,782 53 23,972 79 236,702 81 75,592 41 111,797 47 24,811 80 179,358 71 74,353 42 120,390 70 36,455 81 145,820 67 65,752 43 160,482 95 62,600 82 89,619 34 38,830 44 194,313 88 54,058 83 59,193 25 27,198 45 193,807 103 69,624 84 60,784 15 15,840 46 234,355 108 69,811 85 52,510 13 11,178 47 272,611 142 92,050 86 29,305 11 12,464 48 316,476 147 99,591 87 23,688 1 1,110 49 418,154 226 165,857 88 12,176 5 5,740 50 428,817 216 170,795 89 6,538 1 964 -51 710,231 294 232,479 90 8,961 7 7,280 52 751,795 339 309,617 91 1,246 3 2,285 .53 1,013,019 382 343,256 92 1,080 64 1,203,582 351 319,707 93 2 1,168 55 1,571,784 420 384,563 94 556 1 746 56 1,817,922 446 419,180 95 2,725 1 1,058 67 1,927,821 438 413,997 96 68 2,000, 950 425 402,368 97 1 846 59 2,056,087 494 453,054 98 -60 1,903,469 471 426,013 99 283 81 1,812,351 431 392,722 35,463 33,997,909 10,472 9,124,765 A2 1,757,431 460 442,774 Total.. Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approved For ReleagP2001/03/02 : CIA-RDP78-03721000400010002-3 12 CIVIL zmRVICE RETIREMENT AND DISABILITY FUND TABLE 9.?The number and voluntary annuities of annuitants on the roll, classified by sex and age as of June 30, 1,951?Retired on account of disability Age Men Women Age Men Women Num- ber Annuities um- N ber Annuities Num- ber Annuities Num ber Annuities 33 4..4 ci CV e0 CV Cg t'? ? $25 59 17 4- J.- ,-? ...- 1-...,-$...1...F,P` 00 a, c. to ,p.. 4, ? cc toot 4,- op 00 . o CO o o Oa 0 ...4.4 0 03 CI. b., t..D Qin Co.". 0 0 t?.. 14.? GO ... 0 toot ...1 IP. 0 00 0 NIA 0 0 PC, 1." . V CO 1--, CO 14 $2,212 34 60 22 6 168 35 61 17 3 169 36 3 62 22 13 1,064 37 14 63 16 5 506 88 1 $16 64 12 6 734 39 173 65 9 5 523 40 66 10 6 sso 41 59 67 6 2 707 42 68 4 3 129 43 152 69 7 3 667 44 268 70 5 6 1,106 45 303 1 3 71 2 4 356 46 608 72 2 2 116 47 508 1 11 73 3 3 479 48 209 1 101 74 4 2 60 49 195 75 3 1 44 50 322 3 27 76 3 51 858 1 40 77 3 52 630 5 507 78 1 1 117 53 949 4 277 79 51 649 2 257 80 55 1,755 5 422 81 1 61 56 1,925 5 756 285 43, 148 126 14,088 57 2,096 7 1,195 Total_ 58 3.736 4 680 TABLE 10.?The number and annuities of survivor annuitants on the roll, classified AllA by age as of June 30, 1,951, survivors of deceased employees CHILDREN Age Number Annuities Age Number Annuities Under 6 months 20 $3,228 23 years 5 $960 1 year 60 9, 000 24 years 11 3, 156 2 years 119 15,900 25 years 6 1,176 3 years 199 27, 552 26 years 8 2, 448 4 years 257 38,564 27 years 5 1, 116 5 years 249 40,860 28 years 10 1,488 6 years 275 42, 612 29 years 8 1, 824 7 years 299 48, 240 30 years 3 816 8 years 319 52,428 31 years 4 1,032 9 years 358 61,848 32 years 2 528 10 years 358 65,664 33 years 6 1, 596 11 years 393 73,212 34 years 3 636 12 years 406 80, 016 35 years 5 1, 380 13 years 433 84, 504 36 years 5 1, 308 14 years 499 96, 588 37 years 1 312 15 years 547 116,580 38 years 3 636 16 years 664 117,936 39 years 4 1,176 17 years 611 135,708 40 years 18 years 262 54, 168 41 years 3 960 19 years 3 504 42 years 1 120 20 years 9 2,436 43 years 2 144 21 years 3 828 6,342 1,192, 116 22 years 7 1, 188 Total Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approved For Release 2001/03/02 : CIA-RDP78-U721A000400010002-3 CIVIL SERVICE RETIREMENT AND DISABILITY FUND 13 NIS TABLE 10.?The number and annuities of survivor annuitants on the roll, classified by age as of June 80, 1951, survivors of deceased employees?Con. WIDOWS Age Number Annuities Age Number Annuities r?, 000 C 0000-' 0000 tO 000 400 tO 1-st.D N cm Go CD 0 Co C.D Co CO O. WM... MO> MO 18 years 53 years 577 $298, 572 19 years 54 years 462 257, 172 20 years 55 years 478 262, 304 21Iyears 56 years 493 265, 380 22 years 57 years 467 289,092 23 years 58 years 436 249, 408 24'years 69 years 418 259, 620 25 years 60 years 378 220,328 26 years 61 years 320 202, 620 27iyears 62 years 332 217, 260 28Iyears 63 years 300 190, 860 29 years 64 years 197 128,484 30 years 65 years 186 113, 520 31 years 66 years 171 111,060 32 years 67 years 160 104,472 33 years 68 years 129 87,048 34 years 69 years 104 56, 748 35 years 70 years 87 58256 36 years 71 years 79 47, 268 37 years 72 years 58 29, 568 381years 73 years 50 26, 724 39 years 74 years 36 19, 632 40)years 75 years 20 8, 160 41 years 76 years 11 3,804 42 years 77 years 9 5, 640 43 years 78 years 7 1,644 44 years 79 years 1 120 45lyears 80 years 2 300 46'years 81 years 2 864 47 years 82 years 3 1500 481years 83 years 1 2, 748 49 years 84 years 1 144 50Iyears 86 years 1 264 511years 9, 700 5, 214,464 52;years Total TABLE 11.?The number and annuities of survivor annuitants on the roll, classified Now by age as of June 80, 1951?Survivors of deceased annuitants' CHILDREN Age Number Annuities Age Number Annuities 1 0-400000004,4,000000000 NO?-400N-4WWCAWOO,W00-.3W $288 18 49 $12,780 2 1,284 19 2 708 3 1,440 20 2 372 4 3,348 21 1 96 5 6,312 23 2 720 6 5,124 25 2 216 7 7,848 29 2 672 8 6,732 30 3 1,032 0 8 628 31 1 360 10 9,288 33 2 720 11 9,679 35 1 228 12 7,404 37 2 540 13 11,047 38 1 360 14 15,252 41 1 84 15 14,884 47 1 480 16 17,940 759 164, 138 17 18,612 Total Includes voluntary annuities continued to survivors. 47484-54-8 Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approved For Releagt2001/03/02 : CIA-RDP78-03721000400010002-3 14 CIVIL SERVICE RETIREMENT AND DISABILITY FUND TABLE 11.-The number and annuities of survivor annuitants on the roll classified by age as of June SO, 1951-Survivors of deceased annuitants 1-Continued WIDOWS UNDER SEC. 12 (c) (2) Age Number Annuities Age Number Annuities 25 00 -.II-, 0 -4a 0 -4 ,Ss 00 G) C CO CTS 0 0 05 0 00 0. 00 0 g, to to too Cm too 000 4, 0 CT CO CO -4 0> CT 51, 05 0 13 $5,572 29 13 6,420 30 23 11,826 31 11 5,496 32 18 9,228 33 29 15,336 34 24 13,927 35 25 13,584 36 11 5,796 37 7 6,000 38 3 1,524 39 291 140,664 40 41 WIDOWS OTHER THAN UNDER SEC. 12(c) (2) 22 1 $435 62 457 $239,373 25 1 127 63 491 265,722 29 2 255 64 459 252,057 30 2 380 65 525 292,828 31 4 950 66 525 294,382 32 5 1,409 67 617 336,550 33 4 1,076 68 530 286,182 34 6 1,688 69 513 267,268 35 13 3,911 70 470 245,670 36 15 3,364 71 510 262,533 37 17 5,919 72 461 246,373 38 20 6,437 73 451 228,448 39 27 7,742 74 436 228,580 40 24 8,179 75 423 217,116 41 35 10,719 76 336 161,173 42 44 16,495 77 309 148,771 43 54 21,072 78 245 130,301 44 51 15,700 79 243 120,136 45 53 16,959 80 183 92,794 46 76 27,848 81 136 66,165 47 77 29,670 82 107 49,538 48 103 39,979 83 94 45,180 49 94 33,574 84 63 30,954 50 130 61,882 85 45 21,628 51 219 94,842 86 39 16,697 52 212 95,980 87 23 10,954 53 243 115,425 88 14 . 7,098 54 252 113,966 89 10 4,618 55 268 126,106 90 3 1,860 56 327 162,743 91 4 1,766 57 300 150,187 92 3 1,093 58 369 181,857 93 2 548 59 369 182,091 100 1 241 60 420 227,635 13,039 6,577,773 61 483 246,634 Total 1 Includes voluntary annuities continued to survivors. Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approved For Rurease 2001/03/02 : CIA-RDP78-0,3.721A000400010002-3 CIVIL SERVICE RETIREMENT AND DISABILITY FUND 15 TABLE 11.-The number and annuities of survivor annuitants on the roll classified by age as of June 30, 1951-Survivors of deceased annuitants '-Continued ALL OTHERS Naroof Age Men Women Age Men Women Num- ber Annuities Num- ber Annuities Num- ber A nnues iti Num- ber Annuities 19 1 $516 63 7 $2,243 1 $1,160 22 1 26 64 4 1,151 1 322 27 28 1 137 1 $612 65 66 8 7 3,268 1,839 1 324 31 1 237 67 8 2,910 1 794 33 1 164 68 9 2,345 2 1,812 36 37 1 1 388 91 1 81 69 70 5 6 1,467 1,894 3 3,240 38 39 2 328 2 2 644 444 71 72 16 14 5,294 9,990 1 387 40 3 492 1 344 73 3 1,221 1 399 11 12 1 3 553 618 2 1 1,313 28 74 75 11 8 3,982 2,805 1 278 43 1 147 1 225 76 10 3,078 14 45 2 3 1,795 786 1 1,303 77 78 8 9 2,253 2,918 1 384 16 1 498 1 216 79 6 1,127 17 2 463 2 618 80 6 1,901 18 2 261 1 117 81 7 1,584 19 1 447 82 4 1,930 50 6 886 1 576 83 7 3,058 51 52 1 5 195 1,735 1 - 68 84 85 1 3 331 869 1 155 53 3 638 1 181 86 1 596 54 3 578 2 421 87 1 342 55 4 1,940 1 64 88 1 39 56 10 3,211 1 969 89 2 877 57 11 3,347 1 142 90 1 315 58 11 4,086 2 364 91 1 270 59 8 1, 907 4 1,239 94 1 308 40 41 5 10 1,817 3,613 1 428 99 1 37 42 9 3,2115 2 282 Total_ 288 92, 944 49 20.325 1 Includes voluntary annuities continued to survivors. Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approved For Its lease 2001/03/02 : CIA-RDP78-U721A000400010002-3 THIRTY-SECOND ANNUAL REPORT OF THE BOARD OF ACTUARIES OF THE CIVIL SERVICE RETIREMENT AND DISABILITY FUND AS OF JUNE 30, 1952 17 Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approved For Ra lease 2001/03/02 : CIA-RDP78,03721A000400010002-3 LETTER OF SUBMITTAL NEW YORK CITY, July 29, 1953. UNITED STATES CIVIL SERVICE COMMISSION, Washington, D. C. LADIES AND GENTLEMEN: The Board of Actuaries appointed under section 16 of the act of May 22, 1920, for the retirement of employees in the civil service of the United States, has the honor to submit herewith its 32d annual report on the operation of the fund. In accordance with the practice of the Board in the past, the report gives a statement of the appropriation required of the Government under the Retirement Act, as amended, on the basis of the estimated membership of the fund as of June 30, 1952. Respectfully submitted. GEO. B. BUCK, R. R. REAGH, JOHN P. JONES, Board of Actuaries, Civil Service Retirement and Disability Fund. ID Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 THIRTY-SECOND ANNUAL REPORT OF THE BOARD OF AC- TUARIES OF THE CIVIL SERVICE RETIREMENT AND DIS- ABILITY FUND The civil service retirement and disability fund was established in 1920 to furnish retirement benefits to officers and employees of the United States Government who become superannuated in govern- mental service or incapacitated before attaining old age. The Retirement Act makes provision for a Board of Actuaries of the Civil Service Retirement Act and in section 16 defines the chief duties of the Board to be as follows: * * * to annually report upon the actual operations of this Act, with authority to recommend to the Civil Service Commission such changes as in their judgment may be deemed necessary to protect the public interest and maintain the system upon a sound financial basis, and they shall make a valuation of the "civil-service retirement and disability fund" at intervals of five years, or oftener if deemed necessary by the Civil Service Commission; they shall also prepare such tables as may be required by the Civil Service Commission for the purpose of computing annuities under this Act * * * This report, which has been prepared as of June 30, 1952, is the 32d annual report of the Board of Actuaries. The report gives first a 'grow summary of the main benefit and contribution provisions of the act as amended to June 30, 1952. Then statements are included regarding the active and retired membership. Next the estimated appropria- lis, tion recommended for payment by the Government on the basis of the estimated membership as of June 30, 1952, is given. This is followed by statements giving the results of a valuation of the liabilities of the fund on account of annuities in force on the roll as of June 30, 1952, and the results of the mortality experience of annu- itants for the past year. In conclusion the Board gives certain comments on the history of the fund and its financial operation. SUMMARY OF BENEFIT AND CONTRIBUTION PROVISIONS OF THE CIVIL SERVICE RETIREMENT AND DISABILITY FUND The retirement act was amended as of July 16, 1952, to provide temporary increases in annuities for persons then receiving or entitled to receive annuities. The increases will terminate not later than June 30, 1955, and their payment until that date is contingent upon the receipt of special appropriations to cover the amount of the increase. The following summary states the main benefit and con- tribution provisions of the act, as they were interpreted by the Board of Actuaries. BENEFITS Service retirement Condition for eligibility.i?Retiroment is compulsory at age 70 after New" 15 years of service. 1Certain employees who have rendered 20 years of service in the investigation, apprehension, or detention of persons suspected or conuicted of offenses against the criminal laws of the United States are eligible to Ng/ retire after age 50 and receive an annuity of 2 percent of average basic salary for any 5 consecutive years multiplied by the number of years of service not exceeding 30 years. 21 Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approved For Rele" 2001/03/02 : CIA-RDP78-0372M00400010002-3 22 CIVIL SERVICE RETIREMENT AND DISABILITY FUND Retirement is permissible at the option of the employee at age 60 after 30 years of service or at age 62 after 15 years of service. At the option of the employee at age 55 after 30 years of service or upon involuntary separation not due to misconduct or delinquency after 25 years of service, an immediate annuity is payable equal to the regular annuity reduced by % percent for each month the employee is under age 60. Amount of benefit.2?The annuity is determined by one of two plans, whichever provides the larger benefit: Plan I. An annuity equal to 1% percent of average annual basic salary for each year of service but no such annuity is to exceed 80 percent of average annual basic salary.3 Plan II. An annuity equal to 1 percent of average annual basic salary plus $25 for each year of service, but no such annuity is to exceed 80 percent of average annual basic salary.3 Disability retirement Condition for eligibility.?Retirement is permissible upon disability after 5 years of civilian service. Amount y benefit.?The benefit is determined by the same method as used for service retirement. Any compensation for disability paid from the United States employees' compensation fund is deducted from the annuity benefit payable on account of the same disability. Discontinued service retirement Condition for eligibility.?Upon separation from service after 5 or more years of civilian service, a deferred annuity is payable. Amount of benefit.?The deferred annuity begins at age 62 or at age of separation, if later, and is computed by the same method as the regular annuity but without choice of a joint and survivorship option. If the employee has less than 20 years of civilian service, be may elect to receive his contributions with interest at 4 percent to Decem- ber 31, 1947, and 3 percent thereafter to date of separation in lieu of the deferred annuity. Return of contributions upon 'withdrawal from active service Return of total contributions is made upon withdrawal from active service before 5 years of civilian service. Interest at 4 percent to December 31, 1947, and at 3 percent thereafter is allowed if service is in excess of 1 year. Return of contributions on death before retirement On death before 5 years of civilian service or after 5 years of civilian service when there is no survivor entitled to an annuity, return of total contributions is made with interest at 4 percent to December 31, 1947, and 3 percent thereafter to date of death of the employee. Return of contributions on death before commencement of payment under a deferred annuity Return of total contributions is made upon death before commence- ment of deferred annuity. (Interest is allowed at 4 percent to Decem- ber 31, 1947, or to date of separation, whichever is earlier, and 3 per- cent thereafter to date of death.) ?rhs An additional annuity of $36 for each year of certain specified service in Alaska or on the Isthmus of Panama is allowed officers and employees who are citizens of the United States. ? 8 Average annual basic salary is used to denote the average annual basic salary received by the employee darin am/ 5 consecutive years of allowable service at the option of the employee. Approved F of Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approved For Ri2jease 2001/03/02 : CIA-RDP78-U721A000400010002-3 CIVIL SERVICE RETIREMENT AND DISABILITY FUND 23 view' Return of contributions upon death after retirement Upon death before the payments of the annuity amount to con- tributions (with interest at 4 percent to December 31, 1947, and 3 Award percent thereafter to date of retirement) the difference is paid, unless there is a survivor entitled to an annuity. Annuities to dependents upon death in active service Condition for eligibility.?Annuities to dependents are paid upon death of an employee in active service after 5 years of civilian service. Amount of benefit.?(a) If survived by a widow, an annuity begin- ning the first of the month following the death of the employee or widow's attainment of age 50, whichever later, equal to one-half regular annuity is payable to the widow until death or remarriage. (b) If survived by a widow and a child or children, in addition to (a), an immediate annuity equal to one-half regular annuity to the employee is payable to the widow until death, remarriage, or attain- ment of age 50. Also an immediate annuity equal to one-fourth of the regular annuity, not in excess of $900 divided by the number of children, or $360, whichever is lessor, is payable to each child. The annuity payable to a child is terminated upon attainment of age 18, marriage, or death, whichever is earlier. (c) If survived by a child or children and there is no widow or widower, an immediate annuity equal to one-half regular service annuity, not in excess of $1,200 divided by the number of children, or $480, whichever is lesser, is payable to each child until attainment of age 18, marriage, or death, whichever is earlier. NNW Upon death of the widow, the annuity payable under (b) to a child or children is recomputed and paid as provided in (c). Upon termination of the annuity of a child, the annuities to other Now, children are recomputed as though the child whose annuity was terminated had not survived the employee. Optional benefits At retirement a married employee may elect to receive in lieu of his or her regular annuity a reduced annuity payable during the em- ployee's life and an annuity payable to the surviving widow or widower equal to 50 percent of the regular annuity before reduction. The annuity to the survivor commences upon the employee's death or the survivor's attainment of age 50, whichever is later, and ceases upon death or remarriage. The reduction in the employee's annuity is 5 percent of so much of the regular annuity as does not exceed $1,500, plus 10 percent of any excess over $1,500, plus three-fourths of 1 per- cent for each year the spouse lacks of being age 60 at the date of retire- ment, but in no case shall the reduced annuity be less than 75 percent of such regular annuity. At service retirement any unmarried employee in good health may elect to receive in lieu of his regular annuity a reduced annuity pay- able during his life and an annuity payable after his death to a sur- vivor annuitant equal to 50 percent of such reduced annuity and, upon death of a survivor annuitant, all payments cease. The an- nuity payable to the employee is as follows: 90 percent of life annuity if survivor is same age or older or is less than 5 years younger than annuitant; 85 percent of life annuity if survivor is 5 but less than 10 years younger than annuitant: 80 percent of life annuity if survivor Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approved For Relea02001/03/02 : CIA-RDP78-03721000400010002-3 24 CIVIL SLuVICE RETIREMENT AND DISABILITY FUND is 10 but less than 15 years younger than annuitant; 75 percent of life annuity if survivor is 15 but less than 20 years younger than annuitant; 70 percent of life annuity if survivor is 20 but less than 25 years younger than annuitant; 60 percent of life annuity if survivor is 25 or more years younger than annuitant. Annuities to dependents upon death after retirement Benefits to widows with children and to children upon death of annuitants are similar to those payable upon death of employee in active service, except that benefits are based on regular annuity paid to annuitant and the annuity payable to the widow with a child or children terminates upon death, remarriage, or attainment of age 50, unless an optional benefit was selected by annuitant. No benefits are payable to dependents of annuitants retired on account of dis- continued service. Benefits to annuitants retired prior to April 1, 1948 Benefits to annuitants retired prior to April 1, 1948, were increased by 25 percent or by $300, whichever was less, provided any such annuitant could, prior to April 1, 1948, elect to retain his or her present annuity in lieu of the increased annuity and provide that one-half of such present annuity, but not to exceed $600, be continued to his wife or her husband until death. Effective September 1, 1950, the annuities of those who in 1948 elected survivor benefits were increased as stated above. Survivor benefits, as previously described, were granted those who in 1948 elected the increase, applicable in any case where death occurs after April 30, 1948, but no survivor annuity was payable for any period prior to September 1, 1950. No change was made in deferred annuities payable to employees separated from service prior to April 1, 1948. CONTRIBUTIONS By employees Employees pay 6 percent of salary commencing July 1, 1948. Any employee may at his option and under regulations prescribed by the Civil Service Commission deposit additional sums in multiples of $25 but not to exceed 10 percent of his annual salary for service rendered since August 1, 1920, for the purchase of an additional annuity. By Government Annual appropriations required in addition to employees' contribu- tions to support the plan are to be made by the Government. ESTIMATED ACTIVE MEMBERSHIP AS OF JUNE 30, 1952 The active membership of the fund as of June 30, 1952, was esti- mated by the Civil Service Commission to consist of 1,700,000 em- ployees with an annual payroll of $6,468,500,000. ANNUITANTS ON THE ROLL AS OF JUNE 30, 1952 The following table summarizes the number and amount of annuities in force on June 30, 1952, as shown by the records of annuitants maintained by the Civil Service Commission. On pages 33 to 37 of h Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approved For,&lease 2001/03/02 : CIA-RDP78Q721A000400010002-3 CIVIL SERVICE RETIREMENT AND DISABILITY FUND 25 this report, the distributions of the number and annuities of annuitants on the roll as of June 30, 1952, by age are given for men and women separately. The tabulations show survivors of deceased employees and survivors of deceased annuitants separately. TABLE 1.- The number and annual annuities of annuitants on the roll Tune 80, 1952 roup ? Regular annuities Voluntary annuities Total annul- ties Number Amount Number Amount Retired on account of age and voluntary and Involuntary separations: Men Women Total 108, 293 19, 760 $141, 21, 455, 358, 001 821 1, 747 604 $503, 214 110,388 $141, 21, 958, 469, 248 212 128, 053 162, 813, 828 2, 351 613, 632 163, 427, 460 Retired on account of disability: Men Women Total 37, 220 11, 057 36, 9, 224, 737, 820 424 322 137 52, 224 15, 420 36, 9, 277, 752, 044 844 48, 277 45, 962, 244 459 67, 644 46, 029, 888 Survivors of deceased employees: Widows under sec. 12 (c) (1) 9, 216 5, 533, 836 5, 533, 836 Widows under sec. 12 (c) (2) 3, 725 1, 601, 508 1, 604, 508 Children under secs. 12 (c) (2) and (3) _ __ Total 8.107 1, 537, 518 5,537, 548 21,047 8, 675, 892 8, 675, 892 Survivors of deceased annuitants: 1 Widows under sec. 12 (c) (2) 405 196, 500 196, 500 Widows other than under sec. 12 (c) (2)__ 16, 958 8, 743, 272 8, 743, 272 Children under secs. 12 (c) (2) and (3) _ __ 1, 062 228, 852 228, 852 All others: Men 372 120, 192 120, 192 Women 58 25, 968 25, 968 Total Grand total 18, 855 9, 314, 784 9, 314, 784 216, 232 226, 766, 748 2, 810 681, 276 227, 448, 024 1 Includes voluntary annuities continued to survivors. COST OF BENEFITS PAYABLE UNDER FUND Each employee pays 6 percent of his compensation into the fund. The amounts so contributed are credited to the employee's individual account and, if he leaves service or dies before he has completed 5 years of civilian service, his total credits with interest are returned to him or to his beneficiary. If an employee leaves service after com- pleting 5 years but before 20 years of civilian service, he may elect to have his contributions returned to him with interest, or, in lieu thereof, he may apply for a deferred annuity beginning at age 62 computed by the same method as a regular annuity but without choice of a joint and survivorship option. If he leaves after 20 years of civilian service, he is paid a deferred annuity beginning at age 62 computed by the same method as a regular annuity but without choice of a joint and survivorship option. When the employee qualifies for retirement, he receives the stipulated retirement allowance based on his service and salary and if he dies before the payments of this allowance are equal to his contributions with interest to the retirement date, the balance is paid to his beneficiary or estate unless there are survivors entitled to an annuity. The Retirement Act does not set a definite percentage contribution rate to be paid by the Government but provides that an estimate ol , Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approved For ReleaseM01/03/02 : CIA-RDP78-037211080400010002-3 26 CIVIL SERVICE RETIREMENT AND DISABILITY FUND the appropriation necessary to finance the fund be submitted each year to the Bureau of the Budget. Two annual contributions are payable to the fund, namely, a "normal" contribution and a "defi- ciency" contribution. The normal contribution rate is the average percentage of the salaries of all new employees that is required to be paid into the fund from the time they enter service until they leave service in order to accumulate sufficient funds to pay their benefits. Part of this normal contribution is met by the employees' contribu- tions and the remainder represents the normal contribution rate of the Government. The deficiency contribution is required because at the time of the establishment of the fund, employees then in service were given credit for their prior service during which no contributions had been made by the Government. Therefore, there was an accrued liability or deficiency to be met by the Government at that time. Further increases in the deficiency have come about through changes in the benefit provisions, through the addition of new groups of em- ployees to whom credit for service rendered prior to their admission was allowed, and through the fact that in certain years since the fund- ing policy was adopted the Government's appropriations have not been sufficient to meet the current costs of the fund. ANNUAL APPROPRIATIONS OF GOVERNMENT ON BASIS OF ESTIMATED PAYROLL AS OF JUNE 30, 1952 In accordance with the procedure followed in previous reports, the Board has prepared the following statement as of June 30, 1952, which gives an estimate of the appropriation required of the Government on the basis of the estimated payroll of the membership as of that date. TABLE 2.?Estimated annual contributions required to support the Civil Service Retirement and Disability Fund prepared as of June 30, 1952 Contribution Normal cost as? Deficiency cost as? Total cost as? Percent- age of payroll Annual amount Percent- age of payroll Annual amount Percent- age of payroll Annual amount Total Payable by employees Payable by Government 8. 78 $567, 934, 300 3.06 $197, 936,100 11.84 8763,870,400 0.00 2.78 388, 110.000 179, 824, 300 3.06 197, 936, 100 0.00 5.84 388, 110, 000 377, 760,400 Arek The preceding table shows the normal cost to support the benefits accruing on account of current service to be equivalent to 8.78 percent of payroll. The employees contribute 6 percent toward the normal cost and, therefore, there remains 2.78 percent to be paid by the Government. On the basis of the estimated payroll as of June 30, 1952, this represents an annual payment of $179,824,300. The de- ficiency cost, or the annual cost due to the accrued liability, is shown by the table to be $197,936,100. This entire deficiency contribution is a liability of the Government. Therefore, the total annual contri- bution recommended for payment by the Government 'Onthe basis of the estimated payroll as of June 30, 1952, is $377,760,400. The actual appropriation for the fiscal year 1953 was approximately $325,304,154. The normal percentage rate of contribution of 2.78 percent was Oak developed on the basis of the valuation as of September 30, 1947, Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approved Foraelease 2001/03/02 : CIA-RDP78a3721A000400010002-3 "TIVIL SERVICE RETIREMENT AND DISABILITY FUND 27 prepared by the Civil Service Commission, with an adjustment esti- mated to cover the increased cost due to the optional benefits as amended by Public Law 310, effective September 30, 1949. The de- ficiency rate of 3.06 percent represents the percentage of payroll as of June 30, 1952, which produces 4 percent interest on the estimated deficiency as of that date. This is the minimum payment which will keep the principal amount of deficiency from increasing. The amount of annual deficiency payment is greater than that shown in last year's report because the payment made during the year was less than in- terest at 4 percent on the deficiency. Hence the deficiency increased during the year so that a larger payment is needed for the current year to provide the accruing interest. LIABILITIES OF FUND ON ACCOUNT OF ANNUITANTS ON THE ROLL AS OF JUNE 30, 1952 A valuation of the liabilities of the fund on account of annuitants on the roll as of June 30, 1952, was prepared and the results of the valuation are summarized in table 3 below. The mortality tables used for the valuation were those used in the quinquennial valuation made as of June 30, 1940. These tables are given in the 22d annual report of the Board and therefore have not been reproduced in this report. TABLE 3.-Liabilities on account of annuitants as of June 30, 1952 Group *me Present value of benefits to annuitants on the roll Regular annuities Voluntary annuities Total annuities Retired on account of age and voluntary, and involuntary separation Retired on account of disability $1, 329, 929, 205 464, 326, 889 $5, 834, 110 752,819 $1, 335, 465, 703,315 079, 708 Reversionary annuities to designated beneficiaries 1 216, 927,312 216, 927, 312 :Survivorship annuities 1 203, 243, 076 203, 243, 076 Total 2,214,426,482 6, 586, 929 2,221, 013,411 Includea voluntary annuities. In the 31st annual report of the Board, the liabilities on account -of annuities payable to annuitants on the roll as of June 30, 1951, were shown to be $2,016,051,658, as compared with $2,221,013,411 as -of June 30, 1952, or an increase in liabilities of nearly $205 million -during the past year. SUMMARY OF MORTALITY EXPERIENCE OF ANNUITANTS FOR THE YEAR ENDED JUNE 30, 1952 For the purpose of making a check of the mortality tables for annuitants, the actual and expected number of deaths and of annuities canceled by death during the past year were prepared separately for men and women who had retired on account of age, or voluntary or involuntary separation from service, and for men and women who had Now' retired on account of disability. The following table summarizes the results of the comparison. vow' Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approved For Releast,001/03/02 : CIA-RDP78-03721"0400010002-3 28 CIVIL SERVICE RETIREMENT AND DISABILITY FIIND TABLE 4.?Summary of the comparisons of the actual and expected deaths among annuitants July 1, 1951, to June 30, 1952 Group Number of deaths Annuities terminated by deaths Actual Expected Difference Actual Expected Difference Employee annuitants retired on account of age, voluntary, and involuntary separation: Men Women Employee annuitants retired on account of disability: Men Women 6, 845 587 2,406 424 5, 891. 8 720. 3 1, 590.7 356.1 +46.8 +133.3 ?815.3 ?67.9 $7,484, 400 596,772 2,348,148 374,472 $7,654,104 755,820 1, 495, 056 302,172 +$169, 704 +159,048 ?853,092 ?72, 300 I The expected cases of disability are calculated on an aggregate rather than a select table, which tends to show a more favorable experience than would be indicated if select tables were used, due to the sizable increase in the number of annuitants in recent years. However, the last test of the mortality of deceased annuitants indicated that the difference in mortality by duration did not, in tho opinion of the Board, justify the use of select tables. A check of the mortality tables used for widows was also prepared this year. The following table summarizes the comparison. TABLE 5.?Summary of the comparisons of the actual and expected deaths among survivor annuitants, July 1, 1951, to June 80, 1952 Group Number of deaths Annuities terminated by deaths Actual Expected Difference Actual Expected Difference Widows under secs. 12 (c) (1) and 12 (e) (2) 114 148. 5 +34. 5 $65, 484 $85,524 +$20, 040 Widows under sec. 4(b) Widows under sec. 8 25 382 37.6 412.9 +12. 6 +30. 9 24,048 179,424 32,364 198,432 +8, 310 40111 +19,008 , Total 521 599.0 +78.0 268,956 316,320 +47, 361 COMMENTS ON ANNUITANTS' EXPERIENCE The actual experience of annuitants during the year ended June 30, 1952, has been compared with the experience of previous years and the following points noted. In general, the actual experience of annuitants during the year ended June 30, 1952, followed the trend of previous years. Again among pensioners retired on account of age or voluntary separation, there were fewer deaths than expected. In the case of men, however, the actual number of deaths were 99 percent of the expected which was the same relationship as obtained during the previous year and the actual amounts of annuities canceled by death represented about the same percentage of the annuities expected to be canceled as in the previous year. In the case of women, the departure of the actual experience from the expected continues to be more pronounced than in the case of men but there was not much change in the experience of the past year from that of the previous year. By number, the actual deaths represented 81.5 percent of the expected as contrasted with 79.7 per- cent the previous year and by annuities the percentages were 79 per- A0110A cent during the past year as contrasted with 78 percent during the previous year. 4111kt Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approved For kejease 2001/03/02 : CIA-RDP78-U721A000400010002-3 CIVIL SERVICE RETIREMENT AND DISABILITY FUND 29 With respect to employees retired on account of disability, the experience followed that of past years. The actual deaths during the past year exceeded the expected deaths and the actual annuities terminated by death exceeded the expected annuities by a wide margin. The table used for widows is the same as for women employees and as in the case of women employees the actual experience is showing that the table is not conservative. The Board recommends that when a new valuation of the fund is prepared, the matter of mortality tables to be used be reviewed, with the thought that at least for women more conservative tables should be used. REVIEW OF HISTORY OF CIVIL SERVICE RETIREMENT AND DISABILITY FUND The civil service retirement and disability fund was established under an act of Congress May 22, 1920. A retirement age of 70 was set as the normal retirement age for general employees and the maxi- mum pension payable was $720 per annum. Employees were required to pay 2Y2 percent of their pay. No appropriations by the Govern- ment were payable. The first annual report of the Board of Actuaries, which was issued as of June 30, 1921, showed that the cost of the bene- fits promised under the act was equivalent to an annual contribution of 5.87 percent of payroll and with the employees paying 2.50 percent of salary an unfunded cost was accruing equivalent to 3.37 percent of New payroll. The fund continued without change until 1926 when the benefits were increased to provide annuities based on the average cornpensa- Iwo tion of the last 10 years of service, with a maximum annuity of $1,000 per annum to an employee with 30 or more years of service at retire- ment. At the same time employees' contributions were increased to 3Y2 percent of payroll. No appropriations were payable by the Gov- ernment and the fund continued to be supported on the basis of em- ployees' contributions, with the interest earnings, until the fiscal year 1929 when the first annual appropriation was made by the Govern- ment. During the years that had elapsed since the fund was estab- lished the annuity roll had increased from $3,650,000 per annum to over $12,300,000. The annuitants themselves had contributed for very short periods and had covered by their own contributions only a very small part of the cost of their annuities, and therefore the contri- butions of employees in active service were being drawn upon to pro- vide the current payments to annuitants. Since employees were entitled to receive annuities in excess of what their own contributions would provide, if they stayed in until retirement, and to receive the amount contributed with interest, if they left before retirement or died before retirement, a deficiency was developing in the fund which would have to be paid up sooner or later if the contributing employees were to receive their full benefits. The Republican administration at that time took the position that the public should know what costs the taxpayers were accruing on account of civil service annuities and N.,er should meet the accruing cost by appropriations to the fund. The first appropriation on this basis was made for the fiscal year 1929. Nupl Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approved For Relea02001/03/02 : CIA-RDP78-037200400010002-3 30 CIVIL SERVICE RETIREMENT AND DISABILITY FUND Employees were not satisfied with the retirement provisions. A. number of proposals for liberalizing the benefits were submitted. The Board of Actuaries made numerous estimates of the cost of the various proposals so that Congress would know what liability was, being incurred by any change and would not adopt any liberalizing amendment without knowledge of its cost. The employees were particularly anxious for a 30-year retirement provision. Under amendments effective May 29, 1930, a provision was adopted for retirement 2 years before the normal retirement age provided the employee had at least 30 years of service. This meant a minimum normal retirement age of 68 for general employees. Also the benefit was increased to $900 per annum after 30 years of service plus the annuity that the members' contributions would provide or, if greater, a benefit based on average final salary but not exceeding an annuity of $1,200 per annum. Employees' contributions were not changed but provision was made for deducting from their contributions $1 per month. This contribution went into a general fund and not to the employee's credit in determining his refund at resignation or his annuity at retirement. In 1939 a new minimum benefit was included, namely, that the Government annuity be at least equal to the annuity provided by the member. Then in 1942 the act was further amended to permit retire- ment at age 60 after 30 years of service or at age 62 after at least 15 years of service. A further minimum was added fixed at the rate of one-seventieth of average compensation of the last 5 years of service for each year of service. Vesting benefits after 5 years of service were added. The employees' contributions were increased to 5 percent of salary. Again in 1948 the act was amended to provide death benefits Am& to widows and children, and to introduce an entirely new benefit formula of 1% percent of the average salary of the last 5 years of service for each year of service but not less than 1 percent of such average salary plus $25. The employees' contributions were increased to 6 percent and the deduction of $1 from credited contributions was eliminated. During this period of liberalization of the benefits of the fund no, change in the retirement law regarding appropriations by the Govern- ment was made. Each year the Board of Actuaries gave in its report the percentage of payroll which if paid by the Government would meet its share of the cost of benefits on account of the service being rendered by employees then in active service and the percentage of payroll which would if paid over a long period of years gradually liquidate the deficiency which had arisen on account of the crediting of service rendered prior to the establishment of the fund and deficits in past appropriations. For several years beginning with the fiscal year 1929 appropriations were made based on these estimates. Then appropria- tions were made at amounts less than needed for this purpose so that each year a deficit was added to the unfunded obligations of the Government. While the Government increased its appropriation over the years from 1935 until the present year, the amounts appropriated failed to keep abreast with the increase in benefits and the increase in coverage. For the fiscal year 1954 no appropriation has been made 401% pending a study of the policies to be followed by the Government in funding its obligations under the act. 41,1 Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approved For Wease 2001/03/02 : CIA-RDP78-a721A000400010002-3 CIVIL SERVICE RETIREMENT AND DISABILITY FUND 31 Nevi -Now; Nor, The argument has been made that reserves should not be built up to meet the Government's obligations, that since any moneys set aside are to be invested in the Government's own securities, the Govern- ment is in effect borrowing from itself and in the end the outlay would be the same whether the Government set aside a lesser amount now and paid its interest or appropriated a greater amount later. In support of this argument the hypothetical case of a government with- out a debt was cited and it was stated that in order to have a reserve fund such a government would need to go into debt in order to issue the bonds in which to invest. This argument is novel and it would seem to mean one of two things. It might mean that a government, without a debt, would have the privilege of incurring any deferred pension liabilities for the public to meet that it wishes to incur, be- cause if it does not take such deferred liabilities into account in its bookkeeping, it is in a good financial position. We would assume that in such a case any system would have to be noncontributory because there would be no way of investing reserves arising from em- ployees' contributions. This theory has operated to the disadvan- tage of taxpayers in many cases where it has been used, and to a loss to employees in others. The other alternative would seem to be that such a government should set aside funds to meet its obligations, when it incurs them, but not invest them but hold them in cash. Perhaps there is a third possibility, namely, that if no provision to meet pension costs is made as the costs accrue future pensions may be cut if future costs are too high. This argument may be sound in a system like the Social Security System, where almost the entire pub- lic is involved, but it hardly applies to a staff pension system where employees are rendering definite service to the employer in return for a definite promise of a stated pension. In the latter case the pension is not like social insurance, but it is in the nature of deferred compen- sation. CONCLUSION The Board of Actuaries has watched the development of the civil service retirement and disability fund through its 32 years of opera- tion. The Board has seen the system start with a coverage of ap- proximately 330,000 civil service employees and increase to 5 times that number. It has seen the covered payroll increase to 15 times the payroll of 1921. It has seen the annual annuity roll increase from $3,650,000 in 1921 to $226,800,000 in 1952. There are few organiza- tions of which the Board has knowledge which carry as heavy an obligation for annuitants. The Board has seen the accrued liability of the Government increase from almost $250 millions in excess of the funds in hand of slightly under $10 millions as of June 30, 1921, to approximately $4,940 millions in excess of the funds in hand of over $5,000 millions as of June 30, 1952. One point has been noted in the history of funds operating on the reserve basis which the Board believes should be considered in con- nection with the civil service retirement and disability fund. When a fund operates for a small part of the population or for the employees of one organization there are always demands for increased benefits Now' and for reduction in employees' contributions. If the system operates on a reserve basis then whenever benefits are liberalized, immediate increases in the budget of the employer result. This causes the Nor' Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approved For Releattk001/03/02 : CIA-RDP78-03721000400010002-3 32 CIVIL SERVICE RETIREMENT AND DISABILITY FUND #11111 employer to weigh the demands of the employees and to grant only those demands which justify an increase in the expense of the organ- ization. If the civil service retirement and disability fund is operated on a reserve basis, liberalization would mean an increase in the future budget in the year following the adoption of the more liberal benefits. For example, if the system had not been put on a reserve basis be- ginning with the appropriation made in the fiscal year 1929, the Con- gress probably would have granted retirement after 30 years of service regardless of age, because there was a strong demand for such a change and the only resistance to it seemed to stem from the fact that the increase in cost under the reserve basis was immediate. There is no method known to the Board of Actuaries which puts a better brake on unwarranted liberality of benefits than the reserve system which requires the cost of liberalizing benefits to be paid as it accrues. While employees would seem to have less liberal treatment under such a system, the fact is that for employees as a whole it is better to have reasonable benefits that can be depended upon than to have higher benefits paid to those retiring in the immediate future with substantially reduced benefits to those retiring in the distant future when more nearly the true cost of the program emerges. According to the Board of Actuaries' estimate, appropriations ap- proximately equal to members' contributions are needed from the Government in order to build up the reserves for the annuities which are being earned by present employees and take care of the deficit which has developed because of benefits based on service rendered prior to the establishment of the fund and insufficient appropriations in the past. If no appropriations for the time being are made, pos- sibly appropriations at double this rate will be required eventually to meet the disbursements from the fund. It would seem an unsatisfac- tory outlook for the younger employees to have to depend on future taxpayers to make a much higher appropriation for their annuities than present taxpayers are willing to make who have had the benefit of their services. In the opinion of the Board, consideration should be given to having the Government contribute on a reserve basis as employees are doing or else contributions of both the employees and the Government should be reduced to a nonreserve basis. For example, if both employees and taxpayers need to pay approximately 6 percent of payroll to support the present benefits on a reserve basis, both should pay at this rate. If, however, the Government would decide to pay less than 6 percent at this time with the thought that the children of present taxpayers, that is, future taxpayers, should pay more than 6 percent, then the employees should likewise be per- mitted to pay less than 6 percent. If the concept of contributions for the social security benefits should be changed resulting in reduced contributions, it is fair to suppose that the contributions of both employees and employers would be reduced rather than to expect that the employers' contributions would be discontinued and the employees' contributions continued in full. It seems unreasonable to expect employees to continue their full contributions under the civil service retirement and disability fund and not have the Govern- ment make any contributions. From the viewpoint of both the employees and the taxpayers it is Amok the hope of the Board of Actuaries that the fund may be maintained in the future on a full reserve basis. Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approved For ltejgreZ901/R0341921/41:ECIAA;11:20103.7i. 121;1140004(E1010002-3 Nisevi SUMMARY OF TABULATIONS OF ANNUITANTS' DATA The following tables give for men and women separately the number of annuitants and their annuities as of June 30, 1952, distributed by age as used as a basis for the valuation. TABLE 6.-The number and regular monthly annuities of annuitants on the roll classified by sex and age as of June SO, 1952-retired on account of age and voluntary and involuntary separations Age Men Women Age Men Women Num- her Monthly annuities Num- ber Monthly annuities Num- ber Monthly annuities Num- ber Monthly annuities 41 1 $27 73 5,531 $633, 579 972 $86, 621 42 1 15 74 4,970 347,661 848 75,040 43 75 4,808 464, 749 713 62, 608 44 2 87 76 4, 111 487,872 664 58,444 45 2 111 1 3116 77 3,455 866,387 567 48,200 46 15 685 1 67 '78 2,921 309, 716 491 41,977 47 15 909 5 369 79 2,373 254,268 383 34,077 48 19 934 7 580 80 2,163 224,284 354 30,344 49 23 1,607 9 804 81 1,898 181;o52 249 20,697 50 47 3,346 13 1,017 82 1,461 154, 959 240 20, 586 51 75 6,374 22 1,882 83 1, 173 123, 947 200 16, 208 52 102 11, 766 33 3,263 84 950 103, 279 171 14, 117 53 99 12,310 40 4,660 85 720 78, 787 132 10,221 54 129 16,502 35 4,410 86 520 55, 362 98 7, 774 55 211 23,314 73 8,174 87_ _ _ _ ___ 396 41,211 73 5,847 66 615 68,790 171 10,604 88 302 32, 290 54 4,387 57 855 85, 626 221 25, 378 89 227 24,006 42 I 3, 158 58 1,080 08273 254 25,516 90 176 18,644 25 1,930 59 1,276 124,268 315 33, 274 91 116 11, 736 23 1, 951 60 1,770 172, 243 308 33, 389 92 81 8,097 9 776 61 2,477 278,547 397 46, 054 03 59 6,070 7 1582 62 3,827 367,382 546 66, 092 94 34 8, 587 7 577 63 4,658 420,580 901 84, 846 95 16 1,364 2 238 64 5,721 578, 481 1,132 97, 705 96 11 1,096 3 274 65 5,744 588,466 1,067 88,307 97 7 579 3 233 66 6, 188 638, 203 1, 108 103, 170 98 3 212 67 5,608 600,404 1, 145 08, 539 99 2 183 68 5,018 639,842 1,137 07,617 100 69 5, 624 650,683 1,096 95, 795 101 3 106 70 6, 213 726, 041 1,091 100,350 108,293 11,787,917 10,760 1, 779, 902 71 6,518 816,131 1,116 107, 836 Total__ 72 -6, 166 726, 239 1,034 94,070 TABLE 7.-The number and voluntary monthly annuities of annuitants on the roll, classified by sex and age as of June 30, 1962-retired on account of age and voluntary and involuntary separations Age Men Women Age Men Women Num- ber Monthly annuities Num- ber Monthly annuities Num- ber Monthly annuities Num- ber Monthly annuities - 49 1 $18 71 125 $3,221 38 $644 50 1 $53 1 1 72 110 2,334 29 446 51 1 29 73 89 2,462 29 410 62 1 79 . 74 65 1,606 21 312 53 2 46 75 50 1, 426 15 186 54 5 156 1 2 76 51 1,087 16 203 55 5 90 1 13 77 39 1, 111 12 104 56 12 232 7 115 78 24 629 9 97 57 17 468 8 149 79 28 692 6 76 68 19 520 12 227 80 10 247 5 120 59 31 674 14 286 81 12 410 6 42 60 25 680 9 96 82 10 433 1 25 61 38 947 14 313 83 3 155 62 46 773 24 343 84 1 8 63 97 2, 216 37 492 85 4 266 64 92 1,827 48 775 86 1 18 65 124 3,352 27 424 87 66 135 2,915 46 669 88 67 121 2,672 47 601 89 68 132 3,075 48 828 90 2 105 69 115 2,005 40 605 1,747 41,937 604 9, 199 70 108 2,282 28 423 Total _ Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approvegfor RatefiN2911/M2341A-MANA3pieltI00400010002-3 TABLE 8.-The number and regular monthly annuities of annuitants on the roll, classified by sex and age as of June 30, 1952-retired on account of disability Age Men Women Age Men Women Num- bet Monthly annuities Num- bar Monthly annuities Num- ber Monthly annuities Num- bet Monthly annuities 24 1 $15 63 1.4 0 GO GP 1-1 0 0 IP 00 0 0 .14 1-4 ?G+ 1.1 CO 00 0 I-- PI 00 PI 0 0 PI 0 00 GC go .0. r-1 00 0 GP .0 0 GO 0 0 CO GO CO 0 el. ri 0 0 VG V PI 1-1 0 0 CI 00 0 GO 0 .2 0 00 el 1.. 1-1 ? ? $142, 978 457 $36, 713 25 a 106 3 $77 64 134,712 389 29, 497 28 4 88 4 102 65 105,423 341 26,090 27 11 281 5 106 66 91,371 342 25,512 28 10 288 8 131 67 77,338 333 24,831 29 38 1,002 9 262 68 67,468 272 20,356 30 44 1, 176 16 400 69 55, 135 230 16,773 31 38 1,052 16 440 70 55,538 234 17,349 32 47 1, 430 13 383 71 47, 255 202 14,859 33 64 1,900 18 516 72 48.641 208 14,471 34 76 2,672 21 601 73 47, 503 200 15,420 35 92 3,048 25 920 74 44,481 162 12,326 36 99 3,329 25 730 75 40,003 138 10, 731 37 124 4,783 38 1,356 76 34,773 143 11, 109 38 147 5,729 40 1,456 77 28,406 118 9,431 39 145 3,347 57 2,013 78 22,232 94 7,497 40 170 8,888 49 2,078 79 18,370 101 7,937 41 181 7,730 as 2,222 80 17,446 69 5,381 42 230 11,535 58 2, 646 81 13, 175 63 5,497 43 234 11,817 80 3, 689 82 10,336 as 4, 733 44 262 14,384 103 4, 700 83 6,348 26 2, 429 45 316 18,488 104 5, 591 84 4,396 22 2,006 46 300 18, 281 121 6,056 85 3,978 13 1, 185 47 379 23,074 124 6,845 86 4, 100 11 756 48 380 28,152 175 10,061 87 2,025 9 860 49 414 29,264 172 10,084 88 1, 749 50 528 38,572 242 15, 033 89 898 3 289 61 572 42,696 242 16,335 90 387 1 80 62 859 68,307 347 24, 166 91 644 5 388 53 937 75,611 392 30,964 92 104 1 125 64 1,208 98, 483 433 32,930 93 50 65 1,486 120,098 401 32,299 84 2 97 56 1,922 159, 070 492 40,063 95 46 1 62 57 2,097 176,006 498 40,143 96 102 1 88 58 2, 181 187, 910 480 40,062 98 1 71 69 2, 190 196, 529 474 38,465 100 24 80 2,270 198, 228 542 42,416 37,230 3, 018, 735 11,057 811,452 51 1,972 174, 108 484 36,780 Total_ 62 1,875 157, 789 433 33,182 TABLE 9.-The number and voluntary monthly annuities of annuitants on the roll, classified by sex and age as of June 30, 1952-retired on account of disability Age Men Women Age Men Women Num- bet Monthly annuities Num- bet Monthly annuities Num- bet Monthly annuities Num- bet Monthly annuities 34 1 E0 W.. GI.. ts0 IO .69 f?L A Og C tst A kA ka N 81 29 $399 6 $14 37 8 62 17 255 4 32 38 1 es 26 301 12 88 39 1 $1 64 15 137 5 43 40 1 65 13 134 6 62 42 3 66 9 38 6 60 44 4 67 9 71 6 49 45 2 1 1 68 6 92 2 59 46 3 1 69 6 39 3 11 47 7 70 7 161 3 56 48 5 2 3 71 4 76 6 92 49 2 1 8 72 2 12 4 30 50 3 73 2 38 2 10 61 2 3 2 74 3 37 3 40 52 5 1 3 75 5 47 2 6 53 9 4 41 76 3 152 64 8 5 30 77 3 42 55 7 3 23 78 3 70 56 14 7 39 79 1 5 1 10 57 22 7 71 82 1 6 58 14 8 131 322 4,352 137' 1,285 69 17 6 79 Total_ 60 27 15 187 Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approvegfor RatefiN2911/M2341A-MANA3pieltI00400010002-3 TABLE 8.-The number and regular monthly annuities of annuitants on the roll, classified by sex and age as of June 30, 1952-retired on account of disability Age Men Women Age Men Women Num- bet Monthly annuities Num- bar Monthly annuities Num- ber Monthly annuities Num- bet Monthly annuities 24 1 $15 63 1.4 0 GO GP 1-1 0 0 IP 00 0 0 .14 1-4 ?G+ 1.1 CO 00 0 I-- PI 00 PI 0 0 PI 0 00 GC go .0. r-1 00 0 GP .0 0 GO 0 0 CO GO CO 0 el. ri 0 0 VG V PI 1-1 0 0 CI 00 0 GO 0 .2 0 00 el 1.. 1-1 ? ? $142, 978 457 $36, 713 25 a 106 3 $77 64 134,712 389 29, 497 28 4 88 4 102 65 105,423 341 26,090 27 11 281 5 106 66 91,371 342 25,512 28 10 288 8 131 67 77,338 333 24,831 29 38 1,002 9 262 68 67,468 272 20,356 30 44 1, 176 16 400 69 55, 135 230 16,773 31 38 1,052 16 440 70 55,538 234 17,349 32 47 1, 430 13 383 71 47, 255 202 14,859 33 64 1,900 18 516 72 48.641 208 14,471 34 76 2,672 21 601 73 47, 503 200 15,420 35 92 3,048 25 920 74 44,481 162 12,326 36 99 3,329 25 730 75 40,003 138 10, 731 37 124 4,783 38 1,356 76 34,773 143 11, 109 38 147 5,729 40 1,456 77 28,406 118 9,431 39 145 3,347 57 2,013 78 22,232 94 7,497 40 170 8,888 49 2,078 79 18,370 101 7,937 41 181 7,730 as 2,222 80 17,446 69 5,381 42 230 11,535 58 2, 646 81 13, 175 63 5,497 43 234 11,817 80 3, 689 82 10,336 as 4, 733 44 262 14,384 103 4, 700 83 6,348 26 2, 429 45 316 18,488 104 5, 591 84 4,396 22 2,006 46 300 18, 281 121 6,056 85 3,978 13 1, 185 47 379 23,074 124 6,845 86 4, 100 11 756 48 380 28,152 175 10,061 87 2,025 9 860 49 414 29,264 172 10,084 88 1, 749 50 528 38,572 242 15, 033 89 898 3 289 61 572 42,696 242 16,335 90 387 1 80 62 859 68,307 347 24, 166 91 644 5 388 53 937 75,611 392 30,964 92 104 1 125 64 1,208 98, 483 433 32,930 93 50 65 1,486 120,098 401 32,299 84 2 97 56 1,922 159, 070 492 40,063 95 46 1 62 57 2,097 176,006 498 40,143 96 102 1 88 58 2, 181 187, 910 480 40,062 98 1 71 69 2, 190 196, 529 474 38,465 100 24 80 2,270 198, 228 542 42,416 37,230 3, 018, 735 11,057 811,452 51 1,972 174, 108 484 36,780 Total_ 62 1,875 157, 789 433 33,182 TABLE 9.-The number and voluntary monthly annuities of annuitants on the roll, classified by sex and age as of June 30, 1952-retired on account of disability Age Men Women Age Men Women Num- bet Monthly annuities Num- bet Monthly annuities Num- bet Monthly annuities Num- bet Monthly annuities 34 1 E0 W.. GI.. ts0 IO .69 f?L A Og C tst A kA ka N 81 29 $399 6 $14 37 8 62 17 255 4 32 38 1 es 26 301 12 88 39 1 $1 64 15 137 5 43 40 1 65 13 134 6 62 42 3 66 9 38 6 60 44 4 67 9 71 6 49 45 2 1 1 68 6 92 2 59 46 3 1 69 6 39 3 11 47 7 70 7 161 3 56 48 5 2 3 71 4 76 6 92 49 2 1 8 72 2 12 4 30 50 3 73 2 38 2 10 61 2 3 2 74 3 37 3 40 52 5 1 3 75 5 47 2 6 53 9 4 41 76 3 152 64 8 5 30 77 3 42 55 7 3 23 78 3 70 56 14 7 39 79 1 5 1 10 57 22 7 71 82 1 6 58 14 8 131 322 4,352 137' 1,285 69 17 6 79 Total_ 60 27 15 187 Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approved ForRepAsnI0g1/2E3T/ISILFTATIDDIfs7A1,03721,1600400010002-3 TABLE 1 1 .- The number and monthly annuities of survivor annuitants on the roll, classified by age as of June 30, 1952-survivors of deceased annuitants'. CHILDREN Age Number Monthly annuities Age Number Monthly annuities 1 $74 20 4 $106 2 161 21 2 31 3 243 22 1 8 4 289 24 2 60 6 540 26 2 44 6 791 26 5 115 7 806 27 1 30 8 802 29 1 30 9 1,007 30 2 56 10 1,111 31 4 110 11 1,121 32 1 30 12 1,102 34 3 89 13 1,011 36 1 30 14 1,713 38__ 3 67 15 1,937 39 3 83 16 1,940 42 1 7 17 2,428 48 1 40 18 1,049 1,062 19,071 19 10 Total WIDOWS UNDER SEC. 12(c) (2) 26 3 ' 2=8VV41.tttt ? 0 g4 NWWN.NNN. $1,077 28 4 837 20 2 1,320 30 1 1,255 31 2 742 32 6 1,225 33 4 1,543 34 13 1,618 35 10 1,074 36 17 328 37 10 500 38 14 127 39 16 405 16,375 40 23 41 17 WIDOWS OTHER THAN UNDER SEC. 12(c) (2) 23 1 ......... .1111111 ....... ..... 111111111111111111111111 ? 111.111 1 ? ........ ......... 11111111 111111111111111111111111 111111111 1111111.111.11111111/111 11.111111 1.1111 ..... 1?pt1111111. VSVciAgaiggPngiVgl:ngREOTo2.382F,A-DOS%85Pagg.e. e.D....soone.egoo..t.....m.d.,..o.o.Nmoom,=.mr-Ncoctoon.cocco 626 $28,295 26 1 684 32,055 27 1 619 29,061 30 4 604 33,111 31 2 683 31,699 32 5 812 37,283 33 a 679 30,87( 34 4 678 30,611 36_ 9 606 27,024 36_. 16 669 28,009 37 10 592 26,702 38 24 670 24,062 39 25 630 22,979 40 32 504 21,651 41 34 418 17,109 42 44 371 15,434 43 55 301 13,448 44 68 286 11,657 45 68 206 8,920 46 65 169 6,846 47 92 122 4,747 48 95 105 4,262 49 139 67 2,770 50 148 49 1,964 51 210 41 1,545 62 307 23 876 63 200 13 646 64 317 10 431 56 348 2 100 56 382 4 147 37 432 3 91 58 425 2 45 59 481 2 70 60 ' 515 16,958 728,606 61 518 62 647 1 Includes voluntary annuities continued to survivors. 0141 Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3 Approved For Release 2001/03/02 : CIA-RDP7E43721A000400010002-3 CIVIL SERVICE RETIREMENT AND DISABILITY FUND 37 -Amer 'TABLE 11.?The number and monthly annuities of survivor annuitants on the roll classified by age as of June 30, 1952?survivors of deceased annuitants Con. ALL OTHERS Age Men Women Age Mon Women Num- ber Monthly annuities Num- ber Monthly annuities Num- ber Monthly annuities Num- ber Monthly annuities 9 .W.0W.MN =0 0.000 CON00,4, -.1 , .00=0MODWODWW0MGCM,,,.-4-,3000000= OWN.000.400..PWL..000-4001.P.W0.0=0,0....W ,9 0 ? 8282 2 $24 20 1 $43 298 1 97 23 1 2 120 1 27 28 1 11 435 1 27 29 225 32 263 1 66 34 239 3 291 36 1 11 202 3 270 37 1 32 194 1 96 38 1 8 508 I 32 39 1 34 599 40 2 27 228 41 3 42 479 1 23 42 1 46 302 43 a 51 347 44 3 58 212 1 32 45 2 150 347 46 3 65 145 47 1 42 245 48 3 53 115 49 3 38 170 50 1 37 238 51 10 181 28 1 13 52 3 59 73 53 5 154 50 54 4 69 42 55 4 98 44 56 5 176 73 57 14 365 26 58 12 284 23 59 15 494 51 60 13 320 3 61 5 152 10,056 58 2, 164 62 10 308 1 Includes voluntary annuities continued to survivors. Approved For Release 2001/03/02 : CIA-RDP78-03721A000400010002-3