LETTER TO RUSSEL NEELEY FROM ROBERT W. MAGEE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP89-00066R000900050009-2
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 9
• Document Creation Date: December 22, 2016
• Document Release Date: January 13, 2011
• Sequence Number: 9
• Content Type: LETTER

Sanitized Copy Approved for Release 2011/01/13: CIA-RDP89-000668000900050009-2
Central Inidlit~~,cncr A~;cncy
Mr. Russel Neeley
CIA Budget Examiner.
National Security Division Room 8215
Office of Management and Budget
Washington, D.C. 20503
Enclosed are responses to questions raised at our initial
meeting on the Agency's retirement legislation and a follow-up
meeting you had with Following
that same meeting, we have been working with our consultant/
actuary to develop a more detailed spread sheet on the cost
comparison of the current and proposed systems and the
Roth/Stevens proposal. (This is included in Enclosure 6b.)
We recognize that you wanted dollar fiqur.es to go along with
the percentage costs, but there are some problems pointed out
by our consultant in developing meaningful figures.
We are available to discuss this and any ot:hPr aspect of
our responses at your earliest convenience. If desirable, we
can arrange to involve our consultant in those discussions to
assist in resolving any questions you may have on our figures.
Robert W. Magee
Director of Personnel
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TABLE OF CONTENTS
QUESTIONS FROM OPiB: RESPONSE
a) By implementing our retirement legislation, how much
of a percentage increase are we expecting in the
protection of information on Agency employees whic}~
is currently being maintained external to Agency
premises?
b) What are the cost of payroll increases for each of
the enhanced benefits provided for in the proposed
legislation and what are the justifications for
these enhancements?
c) What are cost of payroll figures for the proposed
Agency legislation broken out by CSRS, CIARDS,
aggregate cost in comparison to Stevens' plan?
Attachment 1
Attachment 2
Attachment 3
3) How will the Agency handle transfers in and out of
the Agency retirement plan? Attachment 4
~) How does the Agency plan to handle the funding of
the new plan, including how will monies be transferred Attachment S
to OPM or between us and OPM?
E) What are the differences between the Agency's proposed
plan and Stevens' proposal? What are the differences
between current CSRS and the Agency's proposed plan? Attachment 6a & 6l
Provide a summary of the differences, and 3
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INCREASED SECURITY PROTECTION
1. Except for a very few sensitive cases, (non-official
cover, etc.) 100$ of Agency employees ar.e identified to OPM at
some point either during employment or upon separation or
retirement.
2. Under the Agency's proposal all employees would be
protected while employed with the Agency. Upon retiring or
leaving the Agency only those with prior federal service
(approximately 118) would involve some form of identification
outside the Agency.
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Attachment 2
COST OF PAYROLL AND JUSTIFICA IONS
FOR ENHANCEMENTS TO RETIREMENT ~OGRAM
COST OF PAYROLL
CSRS CIARDS
These estimates are based on consultant actuarial assumptions
using Agency demographics and assumptions similar to those
utilized by Congressional Research Service for Government-wide
supplemental retirement studies. The est' a e ual dollar
increase to provide this enhancement is (calculated
by multiplying percentage times payroll.
Justification:
This benefit is seen as very desirable by Senators Roth/
Stevens for their Civil Service retirement programs. We want
to offer it in concert with the principal of equitable treatment
for all Agency employees. It is also attractive to more senior
individuals and would serve to retain the critical skills of
these individuals at a time when they are most marketable.
2. 2 1/28 Accrual Rate .48 6.48
for overseas/qualifying
service
The percentages are computed based on average overseas service
for Agency employees. The ual dollar increase to
provide this enhancement is This represents a 30
year amortization of the increased cost (the same method used
to amortize liberalized benefits and pay increases under
existing statutory funding requirements.) Employees would
revert to the appropriate accrual rate for domestic service,
i.e. 28 for special participant members and 1.58, 1.75$ etc for
members. (It is vital that this distinction in accrual rates
be maintained to ensure appropriate rewards and recognition for
the overseas career-oriented employees.)
.justification:
We are an overseas organization and the dangers faced
abroad by Agency employees are considerably more hazardous than
in the past. The fact that our employees are serving overseas
under cover expands the risks considerably. We feel that such
service for both members and special participant members should
be recognized at a minimum in the same fashion as currently
exists for law enforcement officers, fire fighters, etc.
Exposure of our employees to hostile intelligence, internal
security, and terrorist organizations increases daily. This is
an appropriate step to reflect the changing overseas
environment.
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'~`
U.S. GOVERNMENT COST OF PAYROLL FIGURES
ROTH/
STEVENS CSRS CIARDS AGGREGATE
CURRENT
PROPOSED
(Pre 1984
--
258
41$
34$
Employees)
--
26.88
49.4$
39.5
(Post 1983
Employees)
20.8$ *
27.3$ *
49.7$ *
39.8$
Comment: The above figures were developed by Ed Hustead of Hay
Associates who is providing actuarial services in connection with
our retirement programs. These figures are based on the same
actuarial and economic assumptions that are being utilized in the
evaluation of other retirement proposals being formulated in
Congress.
* Differences between pce-1984 and post-1983 figures are
attributable to intregration of social security for post-1983
employees.
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TRANSFERS IN AND OUT
OF THE SYSTEM
? Individuals transferring into the system with prior
federal service will be handled the same as with
current procedures and given credit for that service
under CIA formulas. The money plus interest from the
other federal retirement funds will be transferred into
the Agency's retirement fund but will not be requested
until actual retirement.
? Money in a government-wide Capital Accumulation Plan
(CAP) (employee and government. contribution plus
accrued investment income) will be transferred to the
Agency CAP, but. again not requested until retirement.
? Individuals who transfer to other federal retirement
systems who are not eligible for a retirement benefit
again will be handled the same as under current
procedures and have their contributions, government
? contributions and appropriate interest transferred to
the other fund.
? Similarly, the individual's contributions, and
government. contributions to the Agency CAP and
resulting investment income will be transferred to the
government-wide CAP.
Note: According to our actuarial consultant the above methods
for transferring funds will not incur any great unfunded
.liability.
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FUNDING OF NEW PLAN
Pending discussion with OPM and further study our initial
views are that the Agency proposal would be funded through:
? A single retirement fund (for all active employees,
CIARDS retirees and future CSRS retirees) that includes:
? Monies from existing CIARDS fund
? Transfer of money (no names) from CSRS fund for on
board employees (employee contribution + government
contribution + interest). An option would be to
have the monies transferred at the time of
retirement or some other mutually agreed
arrangement between OPM and the Agency. Procedures
are to be determined.
? Future employee/government contributions
Additional funding through existing statutory
provisions which are:*
Interest on Unfunded Liability
Residual Normal Cost
Annuity Payments Attributable to
Military Service
30 Year Amortization of Unfunded
Liability Created by General Salary
Increases, Liberalization of Benefits
*Subject to modification to correspond to any changes in
statutory requirments.
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Pension
11.7$
FEGLI
.28
CAP (Thrift)
3.08
OAS DI
5.98
Total/Stevens
20.88
---------------------------------------------------
Additions (Reductions) for Ayency Proposal
------
CSRS
?
Maintain High-3 vs high 5
.98
?
Unreduced Retirement Benefits
(55 CSRS)
.48
?
Maintain existing survivor/disability/
involuntary retirement benefits
.38
?
Maintain Equivalent Accrual Rates
(1.5 1st 5 yrs. etc)
for CSRS
? 1.48 CSRS
Basic Accrual Rates
? Supplemental equal to Social
Security from retirement to
2.78
age 62
.78
?
Maintain Full COLA
4.08
?
Maintain Employee Contributions at 78
(-1.1)
?
No Increased FEGLI
(-.2)
?
Establish CAP with 508 Match
(-1.6)
CIARDS
There has not
been an analysis
completed by
the Congressional
Research Service
(CRS) on the special
provisions (law
enforcement, etc.)
of the Stevens' Plan.
As such no comparable
comparisons currently
available between
CIARDS & the
appropriate Stevens'
provisions. This
will be provided
once data available.
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STAT
Cost of Payroll Comparisons Between Current Systems,
Agency
Proposal a
nd Roth/Stevens Bill
CIARDS
Roth/Stevens
Proposed
CSRS
Post-1983
Current
CIARDS
Proposed
Pre-1984
Proposed
Post-1983
Special Current
Catagories CSRS
Proposed
Pre-1934
Proposed
Post-1983
Optional Retirement
37.8
42.8
35.1
Roth/
23.2
23.6
15.4
Involuntary Retirement 1.9
2.2
1.2
Stevens
1.8
1.8
.8
Disability 2.2
2.5
2.2
has not
2.i
2.1
1.8
Deferred Vested
1.0
1.1
1.2
as yet
.9
.9
1.0
Survivors
5.1
5.8
9.0
provided
4.0
4.0
2.1
l P
i
C
t
48
0
54
4*
43
7*
a n ?,~
comparable
fi
f
?2
0
32
4*
2
1*
Tota
ens
on
os
.
.
.
gures
or
.
.
1.
Paid by Employee
7.0
7.0
1.5
special
categories
7.0
7.0
1.1
Emplo;~er Cos t
Pension
41.0
47.4
42.2
25.0
25.4
20.0
Thrift Plan
0
2.0
2.0
0
1.4
1.4
Social Security
0
G
5.5
0
0
5.9
FEGLI
Total Employer Cost
0
41.0
0
49.4
0
49.7
0
25.0
0
26.8
0
27.3
Comments: ;lj Or,ly enhance^ients over existing plans are:
(a) 2 i/~ accrual rate for overseas service; and
(b? a voluntar,; Thrift Plan for all agenc,~ eT;ployees
Roth/Stevens
Proposed
Post-1983
8.5
.9
1..
.6
1.2
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