AMENDENT TO H.R. 3660 TO ESTABLISH A NEW SUPPLEMENTAL RETIREMENT SYSTEM FOR MEMEBERS OF THE FOREIGN SERVICE OF THE UNITED STATES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP89-00066R000300070002-3
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 51
• Document Creation Date: December 22, 2016
• Document Release Date: February 28, 2011
• Sequence Number: 2
• Publication Date: March 18, 1986
• Content Type: REGULATION

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AMENDMENT TO H. R. 3660
TO ESTABLISH A NEW SUPPLEMENTAL RETIREMENT SYSTEM
FOR MEMBERS OF THE FOREIGN SERVICE
OF THE UNITED STATES
Redesignate title IV as V and immediately following
title III, insert the following:
TITLE IV--FOREIGN SERVICE
RETIREMENT
SEC. 401. SHORT TITLE. This title may be cited as the
Foreign Service Supplemental Retirement System Act of 1986.
SEC. 410. REDESIGNATION OF CERTAIN PROVISIONS OF THE
FOREIGN SERVICE ACT OF 1980.
(a) Chapter 8 of title I of the Foreign Service Act of
1980 (94 Stat. 2102; 22 U.S.C. 4041 et seg.) is amended--
(1) by striking out the caption of such chapter and
inserting in lieu thereof of the following:
'CHAPTER 8--FOREIGN SERVICE
RETIREMENT AND DISABILITY
'SUBCHAPTER I--FOREIGN SERVICE
RETIREMENT AND DISABILITY SYSTEM'
(2) by striking out 'this chapter' each place it appears
and inserting in lieu thereof 'this subchapter'; and
(3) by inserting 'under this subchapter' after 'payable
from the Fund' each place it appears.
(b)(1) Section 804(3) of such Act (94 Stat. 2103
22 U.S.C. 4044(3)) relating to the definition of 'court'
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is amended by striking out 'or of the District of Columbia' and
inserting in lieu thereof the following: ', the District of
Columbia, the Commonwealth of Puerto Rico, Guam, the Northern
Mariana islands, or the Virgin islands, and any Indian court as
defined by section 201(3) of the Act entitled 'An Act to
prescribe penalties for certain acts of violence or
intimidation, and for other purposes', approved April 11, 1968
(25 U.S.C. 1301(3); 82 Stat. 77)'.
(2) Section 808(d) of such Act (94 Stat. 2110; 22
U.S.C. 4048(d)) is amended--
(A) by striking out 'such subchapter' each place it
appears in the second and third sentences and inserting in lieu
thereof 'subchapter I of such chapter 8'; and
(B) by striking out 'Act each place it appears and
inserting in lieu thereof "subchapter'.
(3) Section 809(e) of such Act (94 Stat. 2111; 22 U.S.C.
4048(e) is amended by striking out 'Act' each place it appears
and inserting in lieu thereof 'subchapter'.
(c) Section 809(a) of such Act (94 Stat. 2111; 22
U.S.C. 4049(a)) is amended by striking out 'Act' anc inserting
in lieu thereof 'subchapter'.
(d) Add the following at the end of paragraph (10)
in section 804 (94 Stat. 2104; 22 U.S.C. 4044(10)) of such Act
and at the end of subsections 814(a)(1) and (b)(1) (94 Stat.
2113 and 2115; 22 U.S.C. 4054(a)(1) and (b)(1), respectively),
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and before the last sentence in subsection 815(i) (94 Stat.
2117;; 22 U.S.C. 4055(i)) of such Act:
"(The 'creditable service' referred to in the preceding
sentence means service that is creditable under both
subchapters I and II of this chapter.)'.
SEC. 411. CONTRIBUTIONS TO THE FOREIGN SERVICE
RETIREMENT AND DISABILITY SYSTEM.
Section 805 of the Foreign Service Act of 1980 (94 Stat.
2104; 22 U.S.C. 4045) is amended--
(1) by inserting 'Except as provided in subsection (g),'
before '7 percent' in the first sentence of subsection (a); and
(2) by adding at the end thereof the following new
subsection (g):
'(g) Effective with respect to pay periods
beginning after December 31, 1986, in administrating this
section with respect to an employee or member of the Service
who was a participant subject to this subchapter before.January
1, 1984, and whose service--
'(A) is employment for the purposes of title II of the
Social Security Act and chapter 21 of the internal Revenue Code
of 1954, and
'(B) is not creditable service for any purpose under
subchapter II of this chapter or chapter 84 of title 5, United.
States Code,--
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contributions to the fund and interest thereon shall be
computed as if 5 Section 8334(k) of title 5, United States
Code, were applicable, unless such an individual has made an
election described in paragraph (4) thereof.'.
SEC. 412. OFFSET OF ANNUITY BY THE AMOUNT OF
SOCIAL SECURITY BENEFITS.
Section 806 of the Foreign Service Act of 1980 (94 Stat.
2106; 22 U.S.C. 4046) is amended by adding at the end thereof
the following new subsection:
'(m) The annuity or survivor annuity payable to any
individual under this subshapter beginning with the month in
which such individual attains the minimum age for old age
benefits, or first becomes eligible, or would upon proper
application become eligible for disability or survivor benefits
based on the service of any individual under this subchapter
shall be computed as if section 8349 of title 5, United States
Code, were applicable, unless the individual on whose service
the benefit is based, has made an election described in
subsection (d) thereof.'.
SEC. 413. TREATMENT OF CERTAIN RECALL SERVICE.
Section 823 of the Foreign Service Act of 1980 (94 Stat.
2122;22 U.S.C. 4063) is amended by adding at the end thereof
the followinc new subsection:
'(c) If an annuitant becomes subject to subchapter II
of this chapter by reason of recall service--
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'(1) subsections (a) and (b) shall not apply to such
annuitant; and
'(2) section 824 shall apply to the recall service as if
such service were reemplooyment.'.
SEC. 414. REEMPLOYMENT.
Section 824 of the Foreign Service Act of 1980 (94 Stat.
2122; 22 U.S.C. 4064 is amended to read as follows:
'SEC. 824
REEMPLOYMENT.--(a)(1)(A) Except in the
case of an annuitant who makes an election under subsection
(b), if any employee or member of the Service who has retired
and is receiving an annuity under this subchapter or subchapter
II of this chapter becomes employed in an appointive or
elective position in the Government, payment of-any annuity
under either subchapter to the annuitant terminates effective
on the date of the employment and the reemployment service is
considered covered service under the rules of the system under
which the appointment is made.
'(B) If annuity is terminated and the individual
becomes covered under the same retirement system from which
annuity is terminated pursuant to paragraph (A), the individual
shall be entitled to a redetermination of rights under that
system upon termination of the employment.
"(C) if annuity is terminated and the individual
becomes covered under another contributory retirement system
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for Government employees pursuant to paragraph (A), the
individual shall be entitled to an annuity under that system
commencing on the first of the month following termination of
the employment. Such annuity shall be computed under sections
8415(a), 8419 and 8420, as appropriate, of title 5, United
States Code, based on the reemployed salary and service. In
addition, the individual shall be entitled to a resumption of
any annuity terminated by reason of the employment.
'(b)(1) An employee or member of the Service who is
entitled to an annuity under this subchapter or subchapter II
of this chapter and becomes employed in an appointive or
elective position in the Government on a part-time,
intermittent or temporary basis may elect to continue to
receive either or both annuities as provided in this
subsection.
'(2) The total annuity payable under this chapter to an
annuitant making an election under paragraph (1) shall be
reduced during the part-time, intermittent or temporary
employment referred to in such paragraph as necessary to meet
the requirements of paragraph (3).
'(3) The sum of --
'(A) the total annuity payable under this chapter to an
annuitant making an election under paragraph (1), and
'(B) the annual rate of pay payable to the annuitant
during the part-time or temporary employment referred to in
such paragraph.
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may not exceed, in any year, the highest annual rate of pay
which is payable during such year for full-time employment in
the position in which the annuitant is employed.
'(4) Upon termination of the part-time, intermittent, or
temporary employment referred to in paragraph (1), payment of
the full annuity of an annuitant of an annuitant who has trade
an election under paragraph (1) of this subsection shall resume.
'(c) The amount of annuity which has been terminated or
reduced under this section by reason of the reemployment of the
annuitant and is resumed under this section shall be the amount
of the annuity which would have been payable if the annuitant
had not accepted the reemployment. The amount of an annuity
resulting from a redetermination of rights pursuant to
subsection (a) shall not be less than the amount of an annuity
resumed under the previous sentence.
'(d) If an individual whose reemployed service is
treated as covered service under subsection (a)(l)(A), dies
while so reemployed, survivor benefits and lump sum benefits
shall be paid under chapter 84, of title 5, United States Code,
based on the reemployed salary, service and contributions, as
if the annuitant had resumed retired status on the day of death.
'(e) The annuity rights of any employee or member of the
Service who is reemployed in the Federal Government shall be
determined under this section instead of section 8463 of title
5, United States Code.
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'f) When any such retired employee or member of the
Service is reemployed, the employer shall send a notice of such
reemployment to the Secretary of State, together with all
pertinent information relating to such employment, and shall
pay directly to such member the salary of the position in which
he or she is serving.
'(g) in the event of any overpayment under this section,
such overpayment shall be recovered by withholding the amount
involved from the salary payable to such reemployed member of
the Service or from any other moneys, including annuity
payments, payable under this chapter.'.
SEC. 415. COMPARABILITY BETWEEN THE CIVIL SERVICE
SUPPLEMENTAL RETIREMENT SYSTEM AND THE FOREIGN SERVICE PENSION
SYSTEM.
Section 827 of the Foreign Service Act of 1980 (94 Stat.
2124; 22 U.S.C. 4067) is amended by adding at the end thereof
the following new subsection:
'(c) The President shall maintain, under the same
conditions and in the same manner as provided in subsections
(a) and (b) existing conformity between the Civil Service
Supplemental Retirement System provided in chapter 84 of title
5, United States Code, and the Foreign Service Pension Systerr
provided in subchapter II of this chapter.'.
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SEC. 421. FOREIGN SERVICE PENSION SYSTEM.
Chapter 8 of title I of the Foreign Service Act of 1980
(94 Stat. 2102; 22 U.S.C. 4041 et seq.) is amended by adding at
the end thereof the following:
'SUBCHAPTER II--FOREIGN SERVICE PENSION
SYSTEM
'SEC. 851. Establishment.--(a) There is hereby
established a Foreign Service Pension System.
'(b)(1) Except as otherwise specifically provided in
this subchapter or any other provision of law, all participants
in the Foreign Service Pension System shall be subject to the
provisions of chapter 84 of title 5, United States Code, and
shall be treated in all respects as persons whose participation
in the Civil Service Supplemental Retirement System provided in
that chapter is required by its terms.
'SEC. 852. Definitions.--As used in this subchapter,
unless otherwise specified--
'(1) the term 'annuity' means the annuity which is
described in subchapter 11 of chapter 84 of title 5, United
States Code, and is payable to a participant;
'(2) the term 'court order' has the samie meaning given
in section 804(4);
'(3) the term 'dynamic assumptions' has the same meaning
as provided in section 8401(9) of title 5, United States Code.
'(4) the term 'Fund' means the Retirement and Disability
Fund maintained by the Secretary of the Treasury
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pursuant to section 802;
'(5) the term 'normal cost' means the entry-age normal
cost of the provisions of the System which relate to the Fund,
computed by the Secretary of State in accordance with generally
accepted actuarial practice and standards (using dynamic
assumptions) and expressed as a level percentage of aggregate
basic pay, and shall be used to value the cost of the System
for all purposes for which the cost of the System is required
to be determined;
'(6) the term 'participant' means a person who
participates in the Foreign Service Pension System;
'(7) the term 'pro rata share' in the case of any former
spouse of any participant or former participant means the
percentage which is equal to the percentage that (A) the number
of years during which the former spouse was married to the
participant during the service of the participant which is
creditable under this charter is of (B) the total number of
years of such service, disregarding extra credit under section
817;'.
'(8) the terry 'supplemental liability' means the
estimated excess of--
'(A) the actuarial present value of all future benefits
payable from the Fund under this subchapter, over
'(B) the sum of --
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'(i) the actuarial present value of deductions to be
withheld from the future basic pay of participants pursuant to
section 855;
'(ii) the actuarial present value of future
contributions to be made pursuant to section 856; and
'(iii) the balance in the Fund attributable to the
System on the date the supplemental liability is determined or
to the contributions made under section 204(b) or 205 of the
Federal Employees' Retirement Contribution Temporary Adjustment
Act of 1983 (97 Stat. 1106; 5 U.S.C. 8331 note); and
'(9) the term 'System' means the Foreign Service Pension
System.
'SEC. 853. Participants.--(a) Except for persons
excluded by subsection (b), (c), or (d), all members of the
Foreign Service, any of whose service after December 31, 1983,
is employment for the purpose of title II of the Social
Security Act and chapter 21 of the internal Revenue Code of
1954, who would, but for this section, be participants in the
Foreign Service Retirement and Disability System pursuant to
section 803 shall be participants in the Foreign Service
Pension System.
'(b) Members of the Service who were participants in the
Foreign Service Retirement and Disability System on or before
December 31, 1983, and who have not had a break in service in
excess of 1 year since that date, are not made participants in
the System by this section, without regard to whether they are
subject to title II of the Social Security Act.
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'(c) Individuals who become members of the Service
following a separation from Government employment during which
they were subject for a total of at least 5 years to the Civil
Service, Foreign Service or other contributory retirement
system for Government employees established prior to 1984 are
not participants in the System. .
'(d) The Secretary may exclude from the operation of
this chapter any member of the Foreign Service, or group of
members, whose employment is temporary or intermittent, except
a member whose employment is part-time career employment.
'SEC. 854. Entitlement to Annuity.--(a)
Any participant who retires voluntarily or mandatorily under
section 607, 608, 811, 812 or 813 under conditions authorizing
an immediate annuity for participants in the Foreign Service
Retirement and Disability System shall be entitled to an
immediate annuity computed under section 815(d) of title 5,
United States Code.
'b) A participant who is entitled to an immediate
annuity under subsection (a) shall be entitled to receive an
annuity supplement while the annuitant is under 62 year of
age. The annuity supplement shall be based on the total
creditable service of the annuitant and shall be computed and
increased in accordance with sections 8421(b) and (c) of title
5, United States Code.
'(c)(1) Any participant may be retired under the
conditions specified in section 811 and shall be retired under
the conditions specified in sections 812 and 813 and receive
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benefits under this subchapter.
'(2) For the purposes of this subsection--
'(A) the term 'participant', as used in the sections
referred to in paragraph (1), means a participant in the
Foreign Service Pension System; and
'(B) the term 'System', as used in those sections, means
the Foreign Service Pension System.
'(d) Any participant who is separated for cause under
section 610 shall not be entitled to an annuity under this
System when the Secretary determines that the separation was
based in whole or in part on disloyalty to the United States.
'SEC. 855. Deductions and Withholdings from Pay.--
(a) The employing agency shall deduct and withhold from
basic pay of each participant the following percentage of basic
pay: 7 1/2 percent reduced by the percentage then in effect
under section 3101(a) of the internal Revenue Code of 1954
(relating to the rate of tax for old age, survivors and
disability insurance).
'(b) Amounts deducted and withheld under this section
shall be deposited in the Treasury of the United States to the
credit of the Fund under such procedures as the Comptroller
General of the U.S. may prescribe.
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'SEC. 856. Government Contributions--(a)
Each agency employing any participant shall contribute
to the Fund the normal cost computed in a manner similar to
that used under section 8423(a) of title 5, United States
Code. The normal cost percentage for the Foreign Service
Pension System shall be determined by the Secretary of State.
'(b) The Secretary of Health and Human Services, the
Secretary of Commerce, and the Secretary of Defense shall make
contributions to the Fund to cover the cost of funding benefits
under this subchapter, as determined by the Secretary of State,
relating to military and naval service. Determinations and
payments under this subsection shall be similar to those under
section 8423(b) of title 5, United States Code. .
'(c)(1) The Secretary of State shall compute the amount
of the supplemental liability of the Fund as of the close of
each fiscal year beginning after September 30, 1987. The
amount of any such supplemental liability shall be amortized in
30 equal annual installments with interest computed at the rate
used in the most recent valuation of the System.
'(2) At the end of each fiscal year, the Secretary of
State shall notify the Secretary of the Treasury of the amount
of the installment computed under this subsection.
'(3) Before closing the accounts for a fiscal year, the
Secretary of the Treasury shall credit to the Fund, as a
Government contribution, out of any money in the Treasury of
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the United States not otherwise appropriated, the amount under
paragraph (2) of this subsection for such year.
'SEC. 857. Cost-of-Living Adjustments--
Cost-of-living adjustments for annuitants under this System
shall be granted under procedures in chapter 84, title 5, U.S.
Code applicable to special groups of employees under that
System such as law enforcement, firefighter and air traffic
controller personnel.
'SEC. 858. General And Administrative Provisions.--(a)
The Secretary of State shall administer the Foreign Service
Pension System except for matters relating to the Thrift
Savings Plan provided in subchapters III and VII of chapter 84
of title 5 U.S. Code. The Secretary of State shall, with
respect to the Foreign Service Pension System, perform the
functions and exercise the authority vested in the Office of
Personnel Management: or the Director of such Office by such
chapter 84, and may issue regulations for such purposes.
'(b) Determinations of the Secretary of State under the
Foreign Service Pension System which, if made by the Office of
Personnel Management under chapter 84 of title 5, United States
Code, or the Director of such Office, would be appealable to
the Merit Systems Protection Board, to such Office, or to the
Director of such Office shall, instead, be appealable to the
Foreign Service Grievance Board.
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'(c) At least every 5 years, the Secretary of the
Treasury shall prepare periodic valuations of the Foreign
Service Pension System and shall advise the Secretary of State
of (1) the normal cost of the System, (2) the supplemental
liability of the System, and (3) the amounts necessary to
finance the costs of the System.
'SEC. 859. Transition Provisions.-- The Secretary of
State shall issue regulations providing for the transition from
the Foreign Service Retirement and Disability System to the
Foreign Service Pension System in a manner comparable to the
transition of employees now subject to the Civil Service
Retirement and Disability System from that System to the Civil
Service Supplemental Retirement System. For this and related
purposes, references made to participation in the Civil Service
Retirement and Disability System in title 5, United States
Code, the Social Security Act, and the Internal Revenue Code of
1954 shall be deemed to refer to participation in the Foreign
Service Pension System and the Foreign Service Retirement and
Disability System, respectively.
'SEC. 660. Former Spouses.- (a)(1) In the absence of a
spousal agreement or court order governing disposition of
benefits under this subchapter to a former spouse who was
married to a participant for at least 10 years during service
of the participant which is creditable under this chapter with
at least 5 of such years occurring while the participant was
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a member of the Foreign Service, such former spouse is entitled
to a share, determined under subsection (a)(2), of all benefits
otherwise payable to such participant under this subchapter
after the divorce or annulment becomes final and before the
former spouse dies or remarries before age 55.
'(2) The share referred to in subsection (a)(1) equals--
'(A) 50 percent if such former spouse was married
to the participant throughout the actual years of service of
the participant which is creditable under this 'chapter; or
'(B) a pro rata share of 50 percent if such former
spouse was not married to the participant throughout such
creditable service.
'(3) A former spouse shall not be qualified for any
benefit under this subsection if, before the commencement of
any benefit, the former spouse remarries before becoming 55
years of age.
'(4) Payments to a former spouse under this section
represent income to the former spouse and not to the
participant for purposes of the United States Internal Revenue
Code. Although payments to a former spouse under this
subsection reduce payments to a participant or former
participant, such reduction shall be disregarded in calculating
the survivor annuity for any spouse, former spouse or other
survivor under this subchapter, and in calculating any
reduction in the annuity of the participant to provide survivor
benefits under this subchapter.
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'(5) Notwithstanding subsection (a)(1), in the case of
any former spouse of a disability annuitant--
'(A) the annuity of the former spouse shall commence on
the date the participant would qualify, on the basis of his or
her creditable service, for an annuity under this chapter
(other than a disability annuity) or the date the disability
annuity begins, whichever is later, and
'(B) the amount of the annuity of the former spouse
shall be calculated on the basis of the annuity for which the
participant would otherwise so qualify.
'(6) Any former spouse who becomes entitled to receive
any benefit under this subchapter which would otherwise be
payable to a participant or former participant shall be
entitled to.make any election regarding method of payment to
such former spouse that such participant would have otherwise
been entitled to elect, and the participant may elect an
alternate method for the remaining share of benefits. Such
elections shall not increase the actuarial present value of
benefits expected to be paid under this subchapter.
Notwithstanding the first sentence of this paragraph, a former
spouse may not elect a method of payment under subchapter II,
chapter 84, of title 5, United States Code, providing for
payment of a survivor annuity to any survivor of the former
spouse.
'(7) The maximum amount payable to any former spouse
pursuant to this subsection shall be the difference, if any,
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between 50 percent of the total benefits authorized to be paid
to a former participant by this subchapter, disregarding any
apportionment of these benefits to others, and the aggregate
payable to all others at any one time.
'(b)(1) In the absence of a spousal agreement or court
order governing survivorship benefits under this subchapter to
a former spouse married to a participant or former participant
for the periods specified in subsection (a)(1), such former
spouse is entitled to a share, determined under subsection
(b)(2), of all survivor benefits that would otherwise be
payable under this subchapter to an eligible surviving spouse
of the participant.
'(2) The share referred to in subsection (b)(1) equals--
'(A) 100 percent if such former spouse was married
to the participant throughout the entire period of service of
the participant which is creditable under this chapter; or
'(B) a pro rata share of 100 percent if such
former spouse was not married to the participant throughout
such creditable service.
'(c) A participant or former participant shall not make
any election or modification of election under 5 U.S.C. 6417,
8433, or other section relating to the participant's account in
the Thrift Plan or-annuity under the basic plan that would
.diminish the entitlement of a former spouse to any benefit
granted to the former spouse by this section or in a current
spousal agreement.
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'(d) If a participant has more than one former spouse
eligible for benefits under this section, benefits shall be
awarded on a first-come first-served basis.
'(e) If a member becomes a participant under this
subchapter after qualifying for benefits under subchapter I
and, at the time of transfer, has a former spouse entitled to
benefits under subchapter I which, as determined by the
Secretary of State, are similar in amount to a pro rata share
division under section 814 or 815 and the service of the member
as a participant under this subchapter is not recognized in
determining that pro rata share, then subsections (a) and (b)
of this section shall not apply to such former spouse.
'(f) If a participant dies after completing at least 18
months of service or a former participant dies entitled to a
deferred annuity, but before becoming eligible to receive the
annuity, and such participant or former participant has left
with the Secretary of State a spousal agreement promising a
survivor annuity under subchapter IV, chapter 84, title 5, U.S.
Code, to a former spouse to whom married for the periods
specified in subsection (a)(1), such survivor annuity will be
paid under the terms of this subchapter as if the participant
had retired on the day of death and elected the survivor
annuity.
'SEC. 861. Spousal Agreements.--A spousal agreement is
any written agreement (properly authenticated as determined by
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the Secretary of State) between a participant or former
participant and his or her spouse or former spouse on file with
the Secretary of State. A spousal agreement must be consistent
with the terms of the Act and applicable regulations and, if
executed at the time a participant or former participant is
currently married, must be approved by such current spouse. It
may be used to fix the level of benefits payable under this
subchapter to a spouse or former spouse.'.
SEC. 422. TABLE OF CONTENTS. The table of contents in
section 2 of such Act is amended--
(a) by striking out the item relating to chapter 8 and
inserting in lieu thereof the following:
'CHAPTER 8--FOREIGN SERVICE
RETIREMENT AND DISABILITY
'SUBCHAPTER I--FOREIGN SERVICE
RETIREMENT AND DISABILITY SYSTEM'
(h) by inserting after the iten. relating to section 827
the following:
'SUBCHAPTER II-- FOREIGN SERVICE PENSION
System
'SEC. 851. Establishment.
'SEC. 852. Definitions.
'SEC. 853. Participants.
'SEC. 854. Entitlement to annuity.
'SEC. 855. Reduction and withholding from pay.
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'SEC. 856. Government contributions.
dSEC. 857. Cost-of-living adjustments.
'SEC. 858. General and administrative provisions.
'SEC. 859. Transition provisions.
'SEC. 860. Former spouses.
'SEC. 861. Spousal agreements.'.
SEC. 423. EFFECTIVE DATE.
Notwithstanding section 501(a) of this Act, as
redesignated by this amendment, the authority of the Secretary
of State to issue regulations under subchapter II of title 8 of
the Foreign Service Act of 1980, as added by this title shall
have effect on the date of enactment of this Act.
Redesignate the succeeding title and sections
accordingly..
Drafted:M/DGP/PC:RBHull:cff
Wang Doc 0705B
3/13/86
REVISED 3/18/86
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ANALYSIS OF FOREIGN SERVICE AMENDMENT March 18, 1986
This amendment adds a new title IV to Y.R. 3660 to establish a
Foreign Service Pension System (FSPS). The new System, would provide
retirement benefits for members appointed after 1983, and is very
similar to the Civil Service Supplemental Retirement System (CSSRS)
established by the bill for new appointees in the Civil Service
after 1983. All Foreign Service members who become participants in
the FSPS would be subject to all provisions of the comparable CSSRS
unless specifically provided otherwise by law. All the exceptions
are stated in this proposed amendment to H.R. 3660.
The Foreign Service has always had its own retirement system
separate from the Civil Service retirement system. The basic reason
for this is that the Foreign Service needs special provisions for
early retirement to permit operation of its up-or-out personnel
system. A number of Foreign Service members are mandatorily retired
every year to permit advancement of the more competitive and most
able personnel This system was endorsed and expanded by the Foreign
Service Act Amendments of 1980. The special provisions are also
necessary to permit the early retirement of members who, for various
reasons, are no loncer able to serve abroad after completing a
career in dangerous and difficult environments.
The FSPS proposed in this amendment would preserve the early
retirement and other special features needed by the Foreign
Service. It would permit members to retire voluntarily at age 50
with 20 or more years of service with the same benefit as provided
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by the bill for special category personnel such as law enforcement,
firefighter and air traffic controller personnel. Secondly, like
the bill the system would permit Foreign Service members who are
retired mandatorily at an early age to receive the basic (mid-tier)
benefit based on high-3 salary without penalty for early
retirement. The third basic special provision, substantialy like
the bill, would provide an annuity supplement equivalent to a Social
Security benefit based on salary and creditable service--from the
date of retirement to ace 62 when the annuitant would be eligible
for the actual Social Security benefit.
A defination-by-Section analysis follows:
The amendment establishes a new title IV of the bill and
renumbers existing title IV and sections accordingly.
Section 401 provides a short title for the new title IV for
ease of furture reference.
Section 410(a) amends chapter 8 of the Foreign Service Act of
1980, which contains the authority for the existing FSRDS, to
designate the existing portion as 'Subchapter I' and makes. several
technical conforming amendments.
Section 410(b)(1) amends the definition of 'court' in the
current Act to broaden it to include territorial and Indian courts.
The proposed definition is identical to the definition under the
Civil Service adopted by the Civil Service Spouse Equity Act of
1984. The amendment is necessary to permit the Secretary to
recognize orders by territorial and Indian courts affecting
distribution of Foreign Service retirement benefits.
Paragraphs (2) and (3) of subsection 410(b) make additional
technical conforming amendments in section 808 of the Foreign
Service Act.
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Section 410(c) makes a technical confirming change in section
809 of such Act.
Section 410(d) makes an indentical amendment to sections 804,
814, and 815 of such Act relating to 'creditable service' to insure
an equitable distribution of 'pro rata share' benefits to former
spouses. This amendment is related to proposed section 860(e) being
added to such Act by section 421 of the bill and is discussed
further in the explanation of that section.
RETIREMENT CONTRIBUTIONS UNDER FSRDS
Section 411 amends section 805 of the Foreign Service Act of
1980, relating to deductions from a participant's pay and
contributions for prior service for Foreign Service Retirement and
Disability System coverage. An employee who was covered by the
FSRDS on December 31, 1983, and who was subsequently covered by
Social Security will continue in the FSRDS at a reduced
contribution. The contribution to the FSRDS will be equal to the
excess of the employee's normal FSRDS contribution over the OASDI
portion of the Social Security tax. A similar rule will apply to
those recalled to the Foreicr, Service after a break in service of
more than one year and who have more than 5 years prior service
credit. This provision and the one described below added by section
412 parallel comparable amendments in the bill for the Civil Service.
OFFSET RELATING TO CERTAIN SOCIAL SECURITY BENEFITS
Section 412 amends section 806 of the Act to require that
annuities of retirees and survivors under the current FSRDS who are
entitled to Social Security benefits for Federal service have their
annuities reduced when they first become eligible for such benefits.
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RECALL SERVICE
Section 413 amends existing section 823 of the Act which deals
with retirement benefits of retired Foreign Service members who are
recalled to active duty. The amendment provides that members who
are rcalled in the future and who come under FSPS will receive the
same benefits as reemployed annuitants.
REEMPLOYMENT
Section 414 amends existing section 824 of the Act which
concerns reemployed annuitants. The Foreign Service has long had a
distinctive rule on reemployed annuitants to permit use of retired
members who are uniquely qualified to perform certain essential
tasks. The existing Civil Service rule on this subject offers next
to no incentive for retired persons to return to work for the
Government. This amendment would adapt the current Foreign Service
rule in section 824 of the Act for use under both FSRDS and the
FSPS. This amendment recognizes that some reemployed annuitants
will have an annuity under both the new and old systems. It also
recognizes that it would be difficult or inappropriate to recompute
a Foreign Service annuity following employment under the new Civil
Service Supplemental Retirement System.
This amendment would permit annuitants reemployed on a
part-time, intermittent or temporary basis to elect to continue to
receive their annuity while reemployed up to a ceiling amount. The
annuity would be reduced as necessary so that in any year annuity
payments when added to salary does not cause the total to exceed the
current annual salary rate for the reemployed position when occupied
on a full-time basis. Such employees would receive no other
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retirement benefits for the reemployed service. The proposed ciling
amount is different from the ceiling currently specified in section
827. The latter is the basic annual salary rate of the member at
the time of initial retirement. The ceiling proposed herein is
taken from section 8468(b) of S. 1527, a similar section.
Reemployed annuitants not making the above election would have
their service treated as covered service and make current
contributions to the applicable retirement system. Their Federal
annuity would be terminated during reemployment. Upon completion of
the Federal employment, they would become eligible either to a
recomputation of. their annuity, if reemployed under the same
retirement system, or if not, to an additional annuity based on
salary and service during the period of reemployment. The
additional annuity would be computed under the rules for the general
Civil Service.
This amendment covers reemployment under both the present FSRDS
and the proposed FSPS. The phrase 'employee or member' refers to
members of the Foreign Service and to employees who are former
,,:embers of the Service who elected under section 2106 of the Foreign
Service Act of 1980 to remain participants in the FSRDS.
MAINTENANCE OF COMPARABILITY BETWEEN FSPS AND CSSRS
Section 415 amends section 827 of the Act to extend the
existing 'Executive order' procedure for maintaining conformity
between the Civil Service and Foreign Service retirement systems to
the new CSSRS and FSPS.
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FOREIGN SERVICE PENSION SYSTEM
Section 421 is the major substantive amendment. It adds
subchapter II of chapter 8 of the Foreign Service Act of 1980,
entitled 'Foreign Service Pension System', comprised of sections 8511
through 861.
APPLICABILITY OF CHAPTER 84, TITLE 5 U.S. CODE
Section 851 provides that participants in the new FSPS shall be
subject to all provisions in chapter 84, title 5, U.S. Code
governing CSSRS except where otherwise specifically provided by
law. The exceptions are all stated in this amendment.
DEFINITIONS
Section 852 provides definitions of the following terms:
annuity, court order, dynamic assumptions, Fund, normal cost,
participant, pro rata share, supplemental liability, and System.
PARTICIPATION
Section 853 provides, in general, that all members of the
Foreign Service whose service after 1983 brings them under Social
Security and who would, save for this section, be participants in
the FSRDS, shall be participants in the FSPS. Three excep_ions are
stated relating to continuity of employment and temparary or
intermittent employees, which are identical to exceptions under
CSSRS.
ENTITLEMENT TO ANNUITY
Section 854 provides special rules governing entitlement to
annuity under FSPS. Any entitlement or requirement not mentioned
here would automatically, pursuant to section 851, be governed by
chapter 84 of title 5, U.S. Code..
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Subsection 854(a) provides that members retiring voluntarily or
mandatorily under the conditions of existing section 607, 608, 811,
812, or 813 shall receive an annuity computed under proposed new
section 8415(d) applicable to 'special category' personnel in CSSRS.
Subsection 854(b) provides that those retired under subsection
(a) above, will be entitled to an annuity supplement from the
effective date of retirement to age 62 based on total creditable
service of the member and computed under section 8421 of title 5.
Subsection 854(c) makes participants in the new system subject
to existing provisions for voluntary and mandatory retirement of
existing section 811, 812 and 813.
Subsection 854(d) carries forward to the new System the
provision denying pension benefits to a member separated on ground
of disloyalty to the U.S.
DEDUCTIONS FROM SALARY
Section 855 requires agencies employing members of the Foreign
Service in FSPS to deduct and withhold 7-1/2 percent of their pay,
reduced by the then current Social Security withholding tax rate,
for deposit in the Foreign Service Retirer-:er.- Fund. This is the
percentabe applicable to special category personnel under CSSRS.
GOVERNMENT PAYMENTS TO FUND
Section 856 provides for Government contributions to the Fund
comparable to those made under CSSRS. Subsection (a) requires
employing agencies to contribute the 'normal cost' as determined by
the Secretary of State. Subsections (b) and (c) provide for payment
of the cost of military service and amortization of the
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supplemental liability, respectively. The tern. "military and naval
service" used in section 856(b) is intended to be the same as that
term is defined in section 804(a) of the Foreign Service Act.
COST-OF-LIVING
Section 857 provides that annuitants under FSPS receive
cost-of-living adjustments under procedures applicable to special
groups of employees (annuitants) under CSSRS.
GENERAL AND ADMINISTRATIVE PRO`7ISIONS
Subsection 858(a) provides that the Secretary of State shall
administer the FSPS exclusive of matters pertaining to the Thrift
Savings Plan. It also grants the Secretary the same authority
granted to the Office of Personnel Management and its Director by
chapter 84, Title 5, U.S. Code. For example, application of the
disability retirement provision by regulation might differ slightly
from the similar CSSRS provision because of the Foreign Service
being a rank-in-person and service-abroad Syste,. under which members
are appointed to a class, not to a position. The thrift plan would
be administered as provided in subchapters III and VII of chapter
84, title 5, O.S. Code.
Subsection 858(b) provides that matters in dispute under FSPS
be appealed to the Foreign Service Grievance Board--a Board
established by chapter ii of the Foreign Service Act of 1980
experienced in Foreign Service matters--rather than the Merit
Systems Protection Board or OPM.
Subsection 858(c) provides that the Secretary of Treasury
provide actuarial services for the FSPS similar to the services
provided for the FSRDS.
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TRANSITION AND CONVERSION TO FSPS
Section 859 authorizes and directs the Secretary of State to
issue regulations for the transition to the FSPS, and conversion of
current employees, in a manner comparable to that provided for Civil
Service employees. Under this authority, for example, members of
the Foreign Service could be given an opportunity to make an
election regarding participation in FSRDS or FSPS similar to the
election afforded civil service personnel under section 302 of the
bill.
FORMER SPOUSES
Sections 860 and 861 conform the FSPS with the existing
provisions on former spouses added to the Foreign Service Retirement
System by the landmark revision of the Foreign Service Act of 1980.
These sections do two basis things: first, with respect to certain
former spouses, section 860 mandates a pro rata share division of
retirement and survivor benefits when a different distribution has
not been ordered or approved by a court or agreed to by the
parties. Secondly, section 861 authorizes a participant in the new
S1'steii to 'contract" with his or her spouse or former spouse on a
mutually agreed upon distribution of benefits under the System.
Section 860 deals with benefits for certain former spouses.
Subsection(a) covers all benefits otherwise payable under the
Foreign Service Pension System to a partcipant, as distinguished
from, survivor benefits. It is applicable only to former spouses
married to a participant for at least 10 years which are creditable
as service under either the existing Foreign Service Retirement
System or the proposed Foreign Service Pension System provided at
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least 5 of those years occurred while the participant was a member
of the Foreign Service. It provides, in the absence of a court
order or spousal agreement to the contrary, for payment to a
qualified former spouse of up to 50 percent of the benefits
otherwise payable to a former participant under the Foreign Service
Pension System after the divorce becomes final and before the former
spouse dies or remarries prior to becoming age 55.
Subsection (a)(2) provides that the maximum share, 50 percent,
would be payable in case a marriage endured during the entire period
of a former participant's Government career -- during all of the
creditable service. In other cases, a pro rata share of 50 percent
would be payable to the former spouse.
Subsection (a)(3) makes a former spouse who remarries before
age 55 before commencement of benefits ineligible for benefits under
this section.
Subsection (a)(4) makes payments to a former spouse under this
section income for purposes of the U.S. Internal Revenue Code..
Subsection (a)(5) makes a former spouse ineligible for any
s:-.are of a disability annuity under the subsection. However, it
provides that the former spouse would be eligible for a pro rata
share distribution of the basic annuity under subchapter II, chapter
64, title 5, U.S. Code, that a disabled former participant
eventually becomes entitled to receive. This subsection is similar
to existing subsection 814(a)(6), the purpose of which is to base
pro rata share payments to former spouses on earned benefits rather
than subsidized payments based on disability.
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Subsection (a)(6) authorizes a former spouse to make any
election regarding method of payment of benefits to which the former
spouse becomes entitled which a participant may make.
Subsection (a)(7) deals with the situation where there is more
than one former spouse entitled to benefits otherwise payable to a
former participant under the Foreign Service Pension System. This
subsection provides that the maximum payable pursuant to this
subsection, i.e. in the absence of a court order or spousal
agreement, is the difference between 50 percent of the total benefit
and the aggregate payable under this subchapter to all others.
Subsection 861(b) deals with survivor benefits to former
spouses married to a participant for the same periods as specified
in subsection 861(a)(1).
Subsection (b)(1) authorizes payment to a qualified former
spouse of a share of survivor benefits otherwise payable to a
surviving spouse unless a court order or spousal agreement governs
the distribution of survivor benefits.
Subsection (b)(2) provides that the share payable to a former
spouse shall be equal to 100 percent of the benefits payable to a
surviving spouse if the former spouse was married to the deceased
for the entire period of the deceased's creditable service. If the
marriage did not endure throughout the creditable service, a pro
rata share of 100 percent of the survivor benefit would be payable
to the former spouse.
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Matters such as reduction of the member's annuity to provide
the survivor.annuity, deposits, commencement, termination, and
maximum payable in the event of more than one claim not dealt with
in this subchapter will be governed by the corresponding rules for
survivor benefits to former spouses under chapter 84, title 5, U.S.
Code pursuant to section 851 establishing the Foreign Service
Pension System.
Subsection 861(c) prohibits a participant from making an
election concerning payment of annuity or thrift account that would
diminish benefits provided to a former spouse pursuant to this
section or a spousal agreement.
Subsection 861(d) states that if a participant has more than
one former spouse, benefits shall be payable on a first come, first
served basis.
Subsection 861(e) covers the situation where a member becomes
entitled to benefits under both the Foreign Service Retirement
System and the Foreign Service Pension System and has a former
spouse at the time of transfer to the latter System. in the common
situation were benefits are apportioned p'-,suant to a court order or
spousal agreement, the intent may be to provide a pro rata share
distribution but the language of the instrument may base the share
on length of the marriage during service creditable only under the
Retirement System, and not under the Pension System:. This will
provide an especially large share of the Retirement System;
benefits. if such an order or spousal agreement is not amended, it
would not be fair to provide, under this section, an additional pro
rata share of Pension System benefits to the former spouse. The
purpose of subsection(e) is to prohibit this possibility.
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Similarly, in the case where a former spouse is entitled to a
pro rata share of Retirement System benefits based on years married
during the entire Government career, it would be unfair not to
provide the former spouse the same share of Pension System
benefits. Section 861 serves this purpose. A related amendment is
made to existing sections of the Act by section 410(d) of the bill.
The purpose is to assure that two former spouses married for the
same period to members who have identical careers, one of whop:
transfers to the new Pension System and the other remains under the
old Retirement System, will each receive the same share of benefits
under this chapter, if payments are based on pro rata share
distributions.
Subsection 861(f) authorizes payment of a survivor annuity to a
former spouse following the death of a participant during active
service or after separation with entitlement to a deferred annuity,
but before commencement of the annuity. Payment would be made
provided the deceased left with the Secretary of State a valid
spousal agreement providing for suC~: survivor annuity and provided
the marriage had endured for the periods specified in subsection
(a)(1).
Section 862 defines "spousal agreement" as an authenticated
agreement between a participant and a spouse or former spouse. A
participant who is currently married may not enter into a spousal
agreement with a former spouse without the consent of the current
spouse. A spousal agreement may be used to guarantee that certain
benefits, otherwise payable under this subchapter, will be paid to a
spouse or former spouse.
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TABLE OF CONTENTS
Section 422 of the bill amends the table of conents in section
2 of the Foreign Service Act of 1980 to reflect amendments made by
the bill.
Section 423 makes the Secretary's authority to regulate,
granted by the bill, effective upon enactment to facilitate
implementation of the new Syster.
DGP/PC:RBHu11
Wanae 227G/GLWieckoski
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i 7 ncr anor~~ ? . 1 ~`.
From
T -7,1e.
COMMITTEE ON POST OFFICE
AND CIVIL SERVICE
,U.S. HOUSE OF REPRESENTATIVES
Representative William D. Ford, Chairman
309 Cannon House Office Building Telephone
Washington. D.C. 20515 (202) 225-054
FOR IMMEDIATE RELEASE: FOR MORE INFORMATION:
October 9, 1985 Contact Tom Joyce
[phone]
Details of a proposed supplemental retirement plan for
Federal employees were unveiled today by Chairman William D. Ford
of the House Post Office and Civil Service Committee and
Congresswoman Mary Rose Oakar, Chair of the. Subcommittee on
Compensation and Employee Benefits..
Since 1984 new Federal employees have been covered by the
Social Security System. The plan announced today is the result of
three years of study and is carefully designed to provide
equitable. retirement benefits for those new employees.
When added to social security benefits, the proposed new plan
would. provide retirees, disabled employees and survivors with
total benefits comparable to the existing Civil Service Retirement
System, said Chairman Ford and Representative Oakar.
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The total employer cost of the plan, including social
security, would be about 25.5 percent of salary, higher than in
the average private sector plan.
"What must be kept in mind," said Ford and Oakar, "is that
Federal employees, whose pay already has been frozen through 1986,
will fall more than 16 percent behind workers in the private
sector when total pay and benefits are compared. To reduce
pension benefits for Federal workers would increase this unfair
differential and make it even harder for the federal government to
compete with the private sector for the best and the brightest to
design and operate space programs, fight disease and pestilence,
guarantee the safety of our food and drugs, administer the law,
and do all those other things so vital to our society."
When it was first proposed that new Federal employees be
covered under social security Ford, along with House Speaker
Thomas P. O'Neill and Ways and Means Committee Chairman Dan
Rostenkowski, said in a letter to House members:
"We believe that new Federal employees who become covered
under social security should be provided retirement benefits
comparable to those under the Civil Service Retirement System."
Ford and Oakar said that the proposal presented today "keeps
faith with that principle."
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At the beginning of extensive and searching hearings earlier
this year, Ford said a supplemental plan "must be designed in a
manner which will not threaten in any way the integrity of the
existing Federal retirement system." He said benefits earned
"must be protected and that a supplemental system must be
compatible with the existing system to preclude the situation
where employees working side by side would perceive themselves as
being treated differently."
Today Ford said that he is "well satisfied" that those goals
have been reached in this proposal.
Both Ford and Oakar praised the Congressional Research
Service and Hay/Huggins Company, Inc., a prestigious consulting
firm with extensive experience in the area of private retirement
plans, for their research on retirement system design and cost.
The Hay/Huggins assistance stretched over a three-year period.
Both Ford and Oakar stressed that the plan is a proposal
being offered for full committee consideration.
The proposed plan is based on three principles:
The system should have benefits of the same value as the
Civil Service Retirement System (CSRS).
The system should include the best design features of
private sector plans and CSRS.
The total cost -- including social security -- should
approximate the cost of CSRS.
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It includes these key provisions:
Full eligibility to retire at the current CSRS retirement
ages of 55 with 30 years of service; 60 with 20 years of
service; or 62 with 5 years of service.
Full protection against inflation after retirement or
disability.
Continuation of mandatory employee contributions of 7% of
pay to the total retirement system.
Continuation of the same levels of protection against
disability.
A thrift plan with matching contributions from the Federal
government.
Attached is a fact sheet and a copy of plan design
specifications.
Attachments
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 Sanitized Copy Approved for Release 2011/02/28: CIA-RDP89-00066R000300070002-3
October 9, 1985
FACT SHEET ON PROPOSED
CIVIL SERVICE SUPPLEMENTAL RETIREMENT SYSTEM (CSSRS)
Retirement Benefits
The Civil Service Supplemental Retirement System (CSSRS)
provides retirement benefits of 1% of high-three average salary for
each year of service. The benefits are payable in full at age 55
with 30 years of service; age 60 with 20 years of service; or age 62
with 5 years of service.
To provide a steady level of retirement income for those
eligible to retire before age 62, a supplement equal to the
federally-earned social security benefit is paid up to that age.
For the average employee retiring after a full career with the
government, the combined benefits provided by CSSRS and social
security are similar to the benefits of the Civil Service Retirement
System (CSRS). However, because of the distribution of social
security benefits, lower-paid employees receive somewhat more and
the higher-paid employees somewhat less than under CSRS.
CSRS has been carefully designed to provide for retirement of
employees who face hazardous duty or strenuous conditions over their
careers. It is in the best interest of the government to maintain a
young, vigorous workforce in these categories. CSSRS continues this
approach by providing for a consistent level of retirement income at
earlier ages for Federal law enforcement personnel, firefighters,
and air traffic controllers. The added cost of these benefits is
paid by the employees and their agencies.
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Disability Benefits
A disabled employee who is unable to perform the duties of his
.or her current position will be eligible.f or disability benefits.
The benefit. will be the accrued retirement benefit, but with a
minimum based on service projected for 20 years. or to age 60 if
earlier.
A disabled employee eligible for social security will typically
receive replacement income of 50% of salary. This is somewhat
higher than in CSRS, but lower than the typical private sector
benefits of 60% to 75% of salary.'
Disabled employees unable to perform the duties of their current
or similar positions, but not qualifying under the stricter social
security definition, will receive.a supplement to make up for the
lack of a social security benefit.:
Survivors
As in private'sector plans and CSRS, the spouse of a deceased
employee will be eligible to receive 50% of the employee's pension.
earned at death. The employee can continue this survivor protection
after retirement by accepting approximately a 10% reduction in the
basic retirement annuity..
Social security pays surviving spouse benefits averaging 20% to
25% of salary. However, there is a "blackout period" between when
the spouse's youngest child turns;age 16 and the spouse reaches age
60. CSSRS provides a constant level of income throughout this
blackout period. It ensures a minimum guarantee equal to the
regular CSSRS benefit (up to 22% of high-three salary) plus the
social security benefit that would be paid to the widow at age 60.
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 Sanitized Copy Approved for Release 2011/02/28: CIA-RDP89-00066R000300070002-3
The new system also recognizes that while adequate benefits are
paid to eligible children under social security, these are
discontinued at age 18, or age 19 if the child is in school. CSRS
benefits are continued until age 22 if the child is in school.
CSSRS fills in this gap by providing benefits as in CSRS from age 19
to age 22 if the child is in school.
Capital Accumulation Plan
The new retirement system combines a traditional defined-benefit
retirement plan with a capital Accumulation Plan (CAP) to encourage
employee participation in building retirement income. The CAP has
the same design as the most common system provided by private sector
employers. Employees can voluntarily contribute up to 10% of salary
to the CAP with the government matching half of the first 6% of
salary.
The employee contribution will be allocated, at the discretion
of the employee, among investment funds maintained by an independent
Civil Service Investment Board. The options will include funds that
specialize in a particular type of investment such as Federal
securities or equities. Matching government contributions will be
invested in a Treasury bond fund for the first five years, and
thereafter at the discretion of the employee.
Employee Contributions
Employees will be required to make contributions to the
retirement fund equal to 7% of salary, less the contributions to
OASDI (currently 5.7%).
Employees will be fully vested in their contributions and
entitled to withdraw the contributions, plus interest, at the time
of leaving Federal service. After five years of service, employees
will be vested in a deferred benefit, payable at age 62, reduced by
the value of any withdrawn contributions.
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 Sanitized Copy Approved for Release 2011/02/28: CIA-RDP89-00066R000300070002-3
Cost-of-Living ?Protection
All benefits under CSSRS are fully protected against inflation
by annual adjustments equal to the increase in the consumer Price
Index. The formula for the timing and amount of the increase is the
same as under CSRS.
Government Cost
The total employer cost of the retirement system, including
social security, will be about 25.5% of salary. Details of the cost
are in the attached table. The additional .5% of salary over. the
CSRS cost of 25% of salary is needed to compensate for the
redistribution of benefits under the social security system. At its
slightly higher cost, CSSRS provides benefits that are worth, in
total, the same as the CSRS benefits.
The decision to provide a new system with the same value as CSRS
was based on a detailed study of total compensation, including
retirement, performed in 1984 by Hay/Huggins. While retirement
benefits provided by CSRS are worth 6.4% more than those of average
private sector plans, the total Federal compensation package falls
more than 16% behind that of the average private sector employer.
Since 1984. Federal employees have received one 3.5% pay increase
and there is no increase scheduled through the end of 1986. It is
expected that private sector pay will have increased 12.5% in 1985
and 1986.
Chairman Ford and Chair Oakar believe that it is important to
preserve the value of the only major part of the compensation
package that is more valuable than in the private sector. A strong
retirement system will help to attract and retain employees who
would otherwise look for other jobs with higher salaries and
superior fringe benefits.
Sanitized Copy Approved for Release 2011/02/28: CIA-RDP89-00066R000300070002-3
 Sanitized Copy Approved for Release 2011/02/28: CIA-RDP89-00066R000300070002-3
PLAN DESIGN SPECIFICATIONS
FOR THE
CIVIL SERVICE SUPPLEMENTAL RETIREMENT SYSTEM
I. DEFINED BENEFIT RETIREMENT
A. BASIC PLAN DESIGN
B. REQUIRED EMPLOYEE
CONTRIBUTION
C. VESTING
D. SALARY BASE.
E. RETIREMENT BENEFIT
FORMULA
F. UNREDUCED RETIREMENT
BENEFITS
G. INVOLUNTARY EARLY
RETIREMENT BENEFITS
Defined benefit, not explicitly
integrated with social security
(add-on plan).
7% of salary less OASDI
contribution.
5 years.
Average High-3 salary.
1.0% x years of service.
Age
55
with
30
years
of
service;
Age
60
with
20
years
of
service;
Age
62
with
5
years
of
service.
Supplement paid prior to age 62
equal to social security benefit.
Age 50 with 20 years of service.
Any age with 25 years of service.
Full accrued benefit payable at
age 62 with at least 5 years of
service.
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Civil Service Retirement System
The CSSRS deals exclusively withFederal"employees covered by
social security. While benefits were designed to be consistent with
those of CSRS, the benefits of current annuitants and employee
members of CSRS are not affected by any of the provisions of CSSRS.
The funding of CSSRS will be combined with CSRS in one
retirement fund, in order to assure all annuitants, survivors and
disabled employees that the funds needed for benefits from both CSRS
and CSSRS will be available when needed. By fully funding the CSSRS
benefits from the date of employee entrance into the system, the
plan guarantees a continuous flow of funds to provide retirement
benefits to all Federal annuitants.
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Employees may withdraw
contributions plus interest.
Any withdrawn contributions will
be deducted from the vested
benefit value.
J. COST-OF-LIVING Annual adjustment equal to the
ADJUSTMENT increase in the Consumer Price
Index.
For employees eligible for
social security benefits no less
than the lesser of:
(a) 20% of high-three
salary, or
(b) the retirement
benefit projected to
age 60
Employees not eligible for
social security benefits receive
the above formula plus a
supplemental benefit until
old-age social security benefits
become payable at age 62.
L. HAZARDOUS DUTY EMPLOYEES Federal Law Enforcement officers
may retire after age 50 with 20
years of service.
Firefighters may retire after
age 50 with 20 years of service.
Air Traffic Controllers may
retire after 25 years of service
or after age 50 with 20 years of
service.
The annual retirement credit is
1.7% times years of service up
to 20 years plus 1.5% for years
in excess of 20 years.
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HAZARDOUS DUTY EMPLOYEES Supplement payable from
(contd) ? retirement to age 62.
Employee pays an additional .5%
of pay for benefit.
M. POST-RETIREMENT SPOUSE Automatic unless jointly waived.
SURVIVOR BENEFITS
Those electing option have
annuity reduced by 10%.
Payment to surviving spouse is
half of the unreduced annuity.
N. PRE-RETIREMENT SPOUSE Any age with 18 months of
SURVIVOR BENEFITS service.
The same benefit that would be
payable to a surviving spouse of
a retired employee.
The minimum surviving spouse's
benefit is no less than the
lesser of:
(a) 22% of high-three salary, or
(b) the projected combined
retirement system and
social security benefit at
the widow(er)'s age 60.
less
social security
Annual benefit of $2.800
increased by future CPI growth,
and fully offset for the
children's portion of any social
security benefit. Benefits paid
until age 18 for a child not in
school and until age 22 for a
child in school. Benefits are
continued after age 22 for a
disabled child.
Sanitized Copy Approved for Release 2011/02/28: CIA-RDP89-00066R000300070002-3
 Sanitized Copy Approved for Release 2011/02/28: CIA-RDP89-00066R000300070002-3
II. VOLUNTARY CAPITAL
ACCUMULATION PLAN
A. ALLOWABLE EMPLOYEE
CONTRIBUTIONS
Up to 10% of pay to thrift plan.
B. GOVERNMENT MATCHING
CONTRIBUTIONS
For each $1 contributed by
employee up to 6% of pay.
Government contributes $0.50.
Employee contributions
immediately vested. Government
matching contributions vested
20% after 1 year, 40% after 2
years, 60% after 3 years. 80%
after 4 years, and fully vested
after 5 years.
Employees may choose to invest
their contributions in any of
the investment vehicles provided
in the capital Accumulation
Plan.
Government contributions are
invested in Treasury securities
for the first five years of the
Capital Accumulation Plan.
After this period, Government
contributions may be invested in
any of the investment vehicles
as elected by the employee.
Current employees may not elect
into CSSRS. They may
participate in the Capital
Accumulation Plan, but do not
receive Government matching
contributions.
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III. SOCIAL SECURITY
A. OLD AGE, SURVIVORS, AND All affected employees covered.
DISABILITY INSURANCE
B. EMPLOYEE CONTRIBUTION Employee contribution of 5.7% of
pay (6.06% in 1988; 6.2% in
1990) for OASDI coverage, up to
maximum taxable wage base
($39,600 in 1985.)
Sanitized Copy Approved for Release 2011/02/28: CIA-RDP89-00066R000300070002-3
 Sanitized Copy Approved for Release 2011/02/28: CIA-RDP89-00066R000300070002-3
Cost Table
Civil Service Supplemental Retirement System
PROGRAM COMPONENT ESTIMATED NORMAL COST
(percentage of payroll)
TOTAL DEFINED BENEFITS 19.3%
CAPITAL ACCUMULATION PLAN 4.3%
SOCIAL SECURITY
TOTAL BENEFITS
EMPLOYEE CONTRIBUTIONS
Defined Benefit -1.1%
Capital Accumulation Plan -2.9%
Social Security -5.9%
Subtotal
TOTAL EMPLOYER COST 25.5%**
** Total cost to replicate current benefit levels is slightly higher
than the current system costs.
Sanitized Copy Approved for Release 2011/02/28: CIA-RDP89-00066R000300070002-3