OPTIONS AND CONSIDERATIONS RELATIVE TO STRATEGY FOR PROTECTING CIA SPECIAL NEEDS FOR A SUPPLEMENTAL RETIREMENT SYSTEM FOR NEW EMPLOYEES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP89-00066R000900020004-0
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 5
• Document Creation Date: December 22, 2016
• Document Release Date: January 11, 2011
• Sequence Number: 4
• Publication Date: February 7, 1984
• Content Type: MISC

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7 February 1984
Options and Considerations Relative to Strategy for
Protecting CIA Special Needs for a Supplemental
Retirement System for New Employees
I. Introduction
1. Current Congressional Efforts to Develop a Government-Wide
Supplemental Retirement System
a. The Senate Governmental Affairs Committee and the House
Post Office and Civil Service Comittee are now independently
researching and developing the general design and substance
of future proposals for supplemental retirement plans for
new employees.
It is expected that the research phase of Congressional action
will continue to the latter months of 1984 with the
introduction of legislative proposals in early 1985.
b. At this time, the thrust and substance of the Senate and
House versions of their respective plans have not been sur-
faced. A series of public hearings are scheduled for the
latter part of February 1984 where some early indicators
of direction may be made available and provide a basis
to evaluate their compatibility with the needs of CIA.
2. Economic and Political Environment in Which the Retirement
Issue s B ing sidered
a. Although, as previously stated, little substance is yet
available on the design and provisions of the retirement
plans which may be proposed, the political and economic
environment under which these efforts are being undertaken
indicate the following:
1. Both the Senate and House are disposed to reduce government
costs at large and Federal employee benefits, particularly
retirement benefits will be under close scrutiny if not
seige.
2. The Administration has not as yet specifically submitted
any proposals on the supplemental retirement issue but
continue to express convictions that Federal retirement
systems are costing the government too much and are cur-
rently providing excessive benefit levels for retirees.
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The President's budget message for 1985 includes
proposals that current retirement system employee
contribution rates be increased from 7% to 9% of
payroll in 1985 and to 11% in 1986 and the annuity
computation formula be changed from high-three average
annual salary to a high-five year basis.
3. At some point in late 1984 or early 1985 it can be
expected that the Administration and/or Congress will
initiate proposals for reforms of the current -Federal
retirement systems to reduce benefits. These proposals
can be expected to be along the lines of the severe
actions initiated and dropped in 1983.
3. Features of the Design and Provisions that Might be Expected
From Congressional al Efforts
a. Costs to Employees
Proposals can be expected that will establish contribution
costs for pension benefits (both the supplemental plan and
Social Security) to new employees at essentially the same
levels as current system employee costs (now 7% probably
increased to 9% in 1985). The new supplemental system
employee costs may be split between a low yield staff
defined benefit plan with a voluntary defined contribution
thrift plan, with or without matching government contributions.
b. Levels of Total Future Benefit Pay-Offs
The eventual total pay-off of benefits under both the current
systems and the new supplemental system will probably be
equal if employees work to age 65 or later.
c. Early Retirement Eligibility and Benefit Levels
It can be expected that proposals will be considered to
encourage Federal employees to work until 62 or 65. Early
retirement provisions will probably be offered but the
replacement income rate at younger ages (55 with 30) will
probably be at such a low percentage most eligibles would
not be financially able to retire unless they had made
substantial contributions to a voluntary thrift plan.
d. Offsets of Staff Retirement Annuities When Social Securijy_
Benefits are Paya le
Provisions will be made to offset a percentage of the staff
retirement plan annuity when Social Security payments begin
at age 62 or 65. This will be aimed at precluding dual or
excessive benefit entitlements to certain annuitants and to
mimimize the redistribution factor of Social Security payments
to others.
2
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e. Special Provisions for Hazardous Duty, Law Enforcement
Special
Air Traffic Controller tirement Coverage
The provisions in the current civil service system providing
early retirement without penalties and higher annuity
levels for special categories of employees can be expected
to be extended in some form to new employees.
Separately legislated systems such as Foreign Service
Retirement and CIARDS may or may not be addressed but
could be influenced by the actions taken by Congress on
the civil service system.
II. Consideration of Courses of Action Available to the Agency
1. Seek the Establishment of a Separate CIA lemental Retire-
nt Plan for all New Agency o ees
a. The special circumstances of the CIA mission and
requirements impacting on our work force would appear
to be best served by establishment of an Agency
managed supplemental retirement plan covering all
employees independent of a government-wide system which
might be legislated by the Congress. The provisions
of this plan would be proposd along essentially the
same patterns as our current CSR and CIARD systems coverage
but with some enhancement of both CIARDS and CSRS type
benefits.
b. Such a new system will require strong support and
sponsorship of special legislation in a Congress actively
involved in developing general retirement legislation for
the government at large.
c. Since all new Agency employees are initially provided Civil
Service retirement coverage for the first five to eight
years (i.e. future CIARDS type entrants must be on-board
for from five-eight years before eligibility) a sense of
urgency may not be displayed by Congress to accommodate
operational type employees until later years.
It is our conviction that the establishment of special
provisions for future CIARDS employees at the onset
provides a strong inducement for recruitment and retention
of the types of people needed for operational and operational
support requirements.
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2. Special Provisions for CIA Civil Service in a
Government-wide Retirement stem and Amendment o the
CIARDS Act of
a. Should the "most preferred" approach for an independent
system be not feasible because of lack of external
support or strong opposition, the best alternative
will be for special provisions for CIA Civil Service
type employees which will retain essentially the same
basic provisions for early retirement and retention of
employee eligibility and benefit levels provided under the
current CSR system. Amendments would also have to be
proposed to CIARDS law adding a new supplemental system
covering future CIARDS participants or try for an amendment
to CIARDS that would provide for full participation by future
CIARDS members in the current CIARDS system and dropping
Social Security coverage.
b. Whether special provisions within the as yet unknown government-
wide system would meet our requirements is unknown at this
time since we can only speculate as to the possible accepta-
bility of the future proposals at large.
3. Acceptance of the Inclusion of CIA new employees Into the Government-
Wide Supplemental stem
a. As regards this option we can anticipate that both the
Senate and House will press for participation by all Federal
agencies in the government-wide system that will be discussed
and finally proposed.
The Agency must keep its options open without any early
commitment to participate until the form and substance of
the proposals are known to be consistent with CIA interests
and requirements.
b. It is possible that as we monitor the efforts of Congress
and the provisions of the system take shape, the supplemental
system that emerges may be compatible for the Agency, either
as presented or with some modifications or amendments
protecting Agency needs.
III. Considerations cf Stategy on Approaches
S
1. Development of Understanding and
7Fs Regards Future Retirement Relat
ort for the Agency's Needs
Legislation
a. Early Actions
1. It is timely now to initiate "light" action to alert
both the administration and the appropriate sub-committees
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in Congress of the Agency's concern regarding the
retirement issue and to update understanding of the CIA
particular needs and solicit support to accommodate
Agency interests as work proceeds on development
of supplemental retirement system proposals.
2. It may also now be appropriate to explore responsiveness
and support possibilities of both the White House and
Congressional committees for a separate CIA supple-
mental retirement system. Based on return from these
responses, the Agency will be in a position to focus
on whatever on-going efforts are required.
b. Subsequent Actions
1. It is essential that close liaison be maintained with the
Senate and House sub-committees actually developing
the supplemental system proposals in order to keep
currently abreast of developments.
2. It is also essential that on-going support be sustained
by the Agency oversight committees whether it relate to
supporting separate legislation or the inclusion of
special provisions for CIA coverage in a government-wide
plan.
2. Internal Actions
a. Development of Data
1. Efforts should continue to design and develop a working
draft of the primary provisions of a CIA supplemental
retirement plan which will provide various alternatives
(fully staffed out as to cost if applicable).
This data can subsequently be used in a composite
single plan proposal or separated into selected parts
should it be necessary or preferred to seek only specific
provisions for part of the work force (i.e. CSRS or
future CIARDS types) coverage and/or specific special
provisions for all CIA employees.
2. Working papers and data should be modified and expanded
as input is received from monitoring the on-going
efforts, biases, and direction of Congressional progress
on developing the new s
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