GRANDFATHER CLAUSE FOR HIGH-THREE TO HIGH-FIVE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP89-00066R000900080045-9
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 43
• Document Creation Date: December 22, 2016
• Document Release Date: January 14, 2011
• Sequence Number: 45
• Publication Date: February 1, 1985
• Content Type: MEMO

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MEMORANDUM FOR: Deputy Chief, Applied Technology Group/OTS
FROM: Robert W. Magee
Director of Personnel
SUBJECT: "Grandfather Clause" for High-Three to High-Five
REFERENCE: Your note to the DDCI, 25 Jan 85, Same Subject
The DDCI has forwarded your note to me and asked that I
respond directly to you concerning "grandfathering" of the
high-three provision for employees eligible to retire. You,
should be aware that this is indeed an issue which we are
addressing as part of our overall Agency retirement study in
order to obtain the maximum possible benefits for our employees.
With respect to the Administration and Congress, it is our
understanding there will be some form of grandfathering which at
a minimum would protect the high-three level in existence at the
time any legislation is enacted. In other words, an employee
eligible to retire upon enactment of new retirement legislation
would continue to receive the high-three calculation until such
time as the high-five calculation would result in a greater
annuity. We are following this and all other retirement matters
very closely and while there is still a lot of changes which will
likely be discussed over the next several months, it appears at
this time that the high-three "grandfathering" is under control.
Please be assured that the DCI, DDCI and our office will be doing
all possible to ensure existing levels of benefits are protected
and proper attention paid to recognizing the unique demands
placed upon the Agency and its employees.
Robert W. Magee
OP/EBS
Distribution:
Original - Addressee
1 - D/Pers
2 - DD/Pers/EBS
1 - C/RD
(1 Feb 85)
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Impacts of the FY-86 Budget Proposals
Relative to Retirement on the
Central Intelligence Agency
I. Background
The President's FY-86 Budget proposes a number of major
changes to the current provisions of the Civil Service Retirement
System (CSRS) and the CIA Retirement and Disability System
(CIARDS). These changes are as follows:
a. Increase voluntary retirement age with no reduction in
annuity for CIARDS participants from age 50 to 60 and CSRS
from 55 to 65 with a 5% reduction for retirements under age
60 and 65 respectively.
b. Change benefit calculation base from high-3 to high-5
average salary.
c. Eliminate unused sick leave credit toward years of
service (phased in over five years).
d. Cost-of-living (COLA) freeze on January 1986 and
reduced indexing for subsequent years.
e. Modify current death-in-service survivor benefit
rules to provide benefit only where there are children under
age 16.
II. Introduction
The FY-86 Budget proposals relative to changing key features
of current federal retirement systems were selected and designed
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to reduce costs through the practical elimination of the economic
feasibility of early retirement for most federal employees and
acceptance that the work of government can be performed by a
work-force of substantially advanced age and extended service.
The substantive implication of these effects on the Federal
establishment at large may appear to be of no great significance
or as beneficial to some observers.
The missions and functions of many domestic Federal depart-
ments and agencies are such that extended career employment is of
either no managerial consequence or may be considered desirable
and encouraged. In these circumstances, the retirement systems
are perceived simply as mechanisms for providing financial
security for those aging annuitants.
Such is not the case as regards the Central Intelligence
Agency (CIA) whose unique missions and significantly different
work force environments require effective managerial controls to
maintain a relatively young and resilient employee cadre with
provisions in its retirement systems that are fully supportive of
Agency managerial requirements.
As Congress addresses these Budget Proposals, it is critically
important that CIA's circumstances and needs are fully appreciated
and practical to preclude inadvertent application of proposals
that will inflict irreparable damage to the Agency's capacity to
effectively carry out its responsibilities so vital to the
national security interests of the United States.
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III. Employee Working Environment and Work Force Management
Requisites of the Agency's Retirement Systems
A. General Overview
The intelligence work world of the 1980's continues to carry
with it the heavy and unrelenting personal and managerial stresses
and pressures long associated with foreign intelligence functions;
but, in addition, presents a significant difference from earlier
decades with the emergence and increasing impact of organized
international terrorism under the sponsorship of governments
hostile to the United States.
Risk of injury and capture of CIA personnel and recent grim
increases in the loss of life, makes it painfully obvious that
overseas service with the CIA is extremely dangerous and stressful
to assignees and their families in "friendly" areas of the world
and severely exacerbated in hostile environments. At the present,
an anomalous situation exists in which employees serving overseas
suffering the same threats, risks, and disadvantages are covered
differently in their retirement benefits depending on whether they
have accumulated sufficient qualifying service for the preferred
CIARDS coverage.
This inequity is stark when, as previously noted, approxi-
mately 62% of CIA's overseas assignees are only covered by regular
CSRS retirement benefits accorded ordinary Civil Service
employees.
The increase, and regrettably the expectation, of the
continuing incidence of CIA casualties abroad in the ongoing
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future presents mounting security requirements to ensure protec-
tion of the identities of sensitive CSRS and CIARDS personnel and
their families throughout their working careers and after retire-
ment and in the secure handling of death and/or disability
benefits outside of Agency channels. Specific problems are
foreseen in assuring secure processing of casualty benefits for
CSRS and CIARDS-covered employees hired on or after 1 January 1984
who may be eligible for Social Security benefits. Under current
jurisdictional authorities, CSRS cases have to be handled by both
the office of Personnel Management (OPM) and the Social Security
Administration to adjudicate claims and preclude the possibility
of dual benefit payments. This results in the divulging of
detailed information on the individual and circumstances of his
or her death or disability to numerous non-Agency personnel. The
risk of disclosure of security sensitive information to
unauthorized individuals under these circumstances is of consider-
able concern to the CIA.
B. Working Environment Factors Applicable to All CIA
Personnel
All CSRS and CIARDS CIA employees have access to security
sensitive and highly classified national security information.
All employees, therefore, are subject to the same stringent
security clearance standards. This includes polygraph examination
as part of initial clearance processing and periodic repolygraph-
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ing and reinvestigation at scheduled intervals throughout their
careers, a requirement not required of regular Government Civil
Service applicants and employees.
Civil Service and CIARDS employees assigned to certain
activities and locations (both domestic and overseas) are required
to live under cover for the duration of such assignments. Protec-
tion of such cover imposes unique social restrictions and
additional security burdens on such individuals that are not
required of Federal employees in "normal" Governmental employment.
All employees and former employees are required to submit all
writings or outlines of oral presentations, including fiction,
which deal with intelligence activities for prior review,
modification and approval before publication.
Upon separation, all employees, including fully overt
personnel, must receive security approval of descriptions of work
performed while employed by CIA for use in subsequent job
applications or interview. Security considerations may require
deletions of substantial blocks of experience which would be
attractive to future employers and thus hinder efforts to obtain
other employment.
C. Work - Environment Factors and Work Force Management
Requisites Applicable to CIARDS-Type Employees
1. Work Environment Factors - CIARDS
The majority of employees engaged in support of the operation-
al work of the CIA generally have to be relatively young to middle
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age to blend into the level of cover "slots" that are available
Maintenance of personal and organizational cover calls
for the exercise of stringent trade craft to protect the
cover with added dimensions in areas where hostile intelli-
gence and internal security services or terrorists
organizations operate.
Many employees under cover must effectively perform
with the
stress and inconvenience of long and strenuous hours.
Prospects of assignments in hostile, disruptive or
physically unhealthy areas abroad have negative impacts on
personal and family affairs.
Prolonged service in operational environments increases
the risk of identification of individuals to hostile
intelligence, internal security, or terrorist organizations
thus greatly increasing personal risk, blown cover, and
diminution of the utility of such individuals for future
assignment.
The nature and conditions of operations work in itself
leads to relatively early employee "burnout" and diminishing
effectiveness.
Operational and physical environments abroad demand
sustained high motivation, courage, good health, adapt-
ability, and vigor in these employees.
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2. Work - Management Requisites - CIARDS
As a management mechanism, CIARDS has been woven intimately
into the personnel management system of the operational cadre and
its supporting elements.
It has contributed most effectively in fulfilling such
essential managerial needs as:
? Providing the Agency with a secure mechanism for the
Administration of retirement affairs for members of the
CIARDS.
? Enabling the Agency to recruit and retain the type and
quality of work force essential to fulfilling critical work
requirements and the capability for timely retirement of
those individuals who have passed their peak performance.
Mandatory retirement at age 60 and voluntary early retire-
ment (50 with 20 years) without penalty reduction of
benefits are essential contributors to meeting managerial
objectives of keeping the operational cadre fully effective;
permits the flow-through of new employees providing
opportunities for employee developmental assignments;
timely promotions; and, in meeting reduced personnel
ceilings when required. If the mandatory and voluntary
retirement eligibility ages were to be extended and current
annuity levels reduced for CIARDS, severe problems would be
created in terms of an unacceptable aging of the overall
operational cadre; the diminution of vigor and adaptability
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among its ranks, and increased difficulty in arranging
cover. Effective management of the cadre would be severely
weakened in terms of attracting recruits in the first
place; the creation of severe blockages in essential
flow-through assignment opportunities within the ranks;
promotion; and timely retirement.
D. Working Environment Factors and Work Force Management
Requisites Applicable to CSRS-Type Employees
1. Working Environment Factors - CSRS
Civil Service employees who are assigned in support of the
Agency's operational activities abroad perform these services
under the same extremely stressful and hazardous conditions as
those individuals who have already qualified for CIARDS.
Typically, these personnel serve approximately six to eight or
more years before accruing sufficient qualifying service for the
special provisions of CIARDS. During this period they and their
dependents are covered under the regular Civil Service disability
and death benefit provisions.
Employees, such as Intelligence Analysts and Administration
Specialists, who spend their Agency careers solely in overt
domestic assignments are not exposed to the special employment
conditions encountered by CIARDS and pre-CIARDS personnel.
However, these careerists are subject to the unique conditions
common to all Agency employees cited previously in this report
that are clearly a typical of "normal" domestic Federal
employment.
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In addition, the nature of current intelligence work with the
vital national interest of its product, brings with it a
continuing plethora and relentless volume of critical priorities,
short deadlines, and serious national security consequence of
error.
These factors create continuous stress, attrition of
effectiveness, and patterns of burnout at ages somewhat older
than those in the operational milieu; but, nonetheless at
relatively young ages.
2. Work Force Management Requisites - CSRS
(a) CSRS Employees in Non-Operational Activities
Just as the special management requirements of the
Agency's clandestine service have been effectively accom-
modated through the CIARDS mechanism, the provisions of Civil
Service retirement, particularly the early optional retirement
feature with non-reduced annuities at 55 with 30 years of
service, have proven to be most effective tools for Agency
managers in accommodating the different but equally important
requirements served by CIA's analytical, scientific, and
support cadres by providing:
? Recruitment inducement in the face of intense
competition with the private sector (where higher
salaries are frequently available) of the best expertise
in a broad spectrum of professional disciplines and
fields of specialization.
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? Predictability of the projected patterns of the timing
and numbers of future retirements that enable Agency
managers to establish employee career development,
progression, and replacement on a definitive basis.
Retention of substantive analysts, scientific and
technical experts, and administrative specialists
through their most productive years with sustained
currency in their areas of expertise and state of the
art.
? Capability of managers of these non-operational cadres
to encourage voluntary retirement at appropriate
combinations of age and service compatible with
organizational needs.
(b) CSRS Employees Supporting Operational Activities
As previously cited earlier in this section serious problems
currently exist as regards those Agency CSRS-covered employees
who are serving in support of operational activities.
The managerial problems are of two dimensions. The first
is the obvious inequity of CSRS and CIARDS-covered employees
serving in the same locales under the same stresses and
hazards but with different benefit protections.
The second is the need to establish fully secure mechanisms
for protecting identities of sensitive CSRS personnel durinq
their employment and post-employment years and to assure
secure processing of casualty benefits which now must be
processed through non-CIA controlled channels.
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IV. Specific Proposals Which Would Inflict Most Extensive Damage
to CIA's Intelligence Capabilities
a. Among the several FY-1986 Budget proposals relative to
retirement submitted to the Congress, two proposals, (1) to
extend retirement ages for full annuities, and (2) the imposition
of severe penalties for early retirement, would inflict grievous
damage to the CIA's capability to maintain the essential charac-
teristics and quality of our foreign and domestic work forces
required to effectively accomplish critical intelligence require-
ments of vital importance to the national security of the United
States.
The intelligence missions and responsibilities charged to the
CIA impose singularly unique combination of work force charac-
teristics, and managerial requisites that are not found in other
Federal agencies although some of these factors exist in the FBI,
Foreign Service, and the military services.
The CIA, because of the nature of its mission, must prioritize
the needs of the Agency and the personal interests of our
employees.
Consistent with this concept, CIA management utilizes its
retirement system (i.e., CSRS and CIARDS) as primary management
tools to effect control over the age and service patterns of
employees retention and separation to support the attainment of
organizational objective.
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To meet these objectives, CIA must maintain a relatively
young, competent, vigorous and fully effective work force through
its most productive years and a capacity to induce retirement at
relatively early ages before continued employment becomes
detrimental to the best interests of the Nation.
The current provisions of both CIARDS and CSRS have been
fully integrated into the Agency's overall personnel management
system providing the needed managerial flexibility and control
that produce predictable patterns of retirements.
This base then permits the establishment of definitive
recruitment need, individual employee development, timely
employee advancement, and replacement planning.
V. Aggregate Impacts on the CIA Should All of the Retirement
Proposals be Imposed on the CIA
As previously stated, imposition of the proposals to extend
retirement ages for full annuities and install service penalties
for early retirement would essentially destroy the Agency's
capability to maintain the type of work force required to attain
organizational objectives. The composite effect of all of these
proposals are expected to produce a sequence of other negative
results as follows:
a. Loss of many of our more senior and most valuable
employees now eligible for retirement. Of the Agency's
Senior Intelligence Service (SIS) level officers (equivalent
to the Senior Executive Service in other agencies) 39 percent
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are now eligible for retirement with an extremely higher
percent of the Operations Directorate officers eligible (66
percent). These are the top managers and most senior
substantive officers in the Agency's operational, analytical,
high technology, and support areas. There is serious concern
that many of these eligibles will elect to retire in larger
numbers in compressed time frames as they foresee succession
prospects fade as more senior, non-eligible incumbents extend
their departure dates to future years.
The "feeder" group for the SIS cadre comes from the GS-15
and GS-14 level officers pool. There are approximately 16
percent of our GS-14 and GS-15 officers now eligible to
retire (29 percent in operations Directorate). This overall
number of eligibles may appear relatively low but within
these numbers are a very high percentage of employees in
relatively critical occupational areas in each of the
directorate.
b. Institution of early retirement penalties will severely
reduce the future flow of retirements and create blockages of
developmental assignments and dry-up promotion headroom.
c. Loss of the most promising of our mid-level and younger
officers who would seek careers elsewhere when blockages for
assignments and advancement occur.
d. Increased turnover in the ranks of intelligence
personnel will make it increasingly difficult to safeguard
national security information.
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e. Elimination of the strongest inducements for
recruitment, the ability to offer--in return for service in
demanding and often unique circumstances--the prospects of a
career with reasonable developmental opportunity, timely
promotions, and retirement with non-reduced annuities at a
relatively young age.
VI. Conclusion
? Imposition of extended retirement ages and early retirement
penalties would severely damage CIA's effectiveness and the
expertise and skill of the work force.
? Would destroy young and vigorous work force as we know it.
? Potentially stand to lose significant portion of existing
senior management and feeder groups.
? Immoral to force those people out who essentially feel they
have a work lifetime contract for protection of their
retirement benefits.
? It is essential to the national security interests of the
U.S. that the Nation's intelligence capabilities be
strengthened in these critical times.
? In CIA, the retirement provisions of current CIARDS and
CSRS, particularly early retirement without annuity
reduction, are critical to maintenance of full capability
to merit requirements.
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The attached tables show the effect of proposed retirement plan
changes on typical employees now in CSRS and CIARDS.
The benefit is projected for ten years to assume retirement in
1995. Benefits payable under the current systems are compared to the
benefits resulting from the following reductions:
Change the high-three pay base to high-five,
Reduce the CSRS benefit by 5% for each year under age 65 at
retirement; and the CIARDS benefit by 5% for each year under
age 60,
The benefit which would result if all three reductions is also
shown.
The benefit is compared to the current contributions and the
annuity that could be purchased by those contributions if the
individual were to leave today, invest the refund, and use those funds
to purchase an annuity at the retirement age.
The salary projections were based on current earnings of an
average individual in each grade. These were assumed to grow by 5%
each year for the next ten years. This assumption anticipates moderate
general wage growth and within grade increases. Promotions were not
assumed. If promotions were to occur, the benefits, and reductions
would be larger.
Other assumptions were that the average interest rate will be 6%,
the average inflation rate will be 4% and that unused sick leave is
accumulated at seven days a year.
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Table 1
Civil Service Retirement System Benefits
Effect of Various Changes in Formula
Employee now age 45 with 20 years of service
Retiring at age 55 with 30 years of service
Benefit in current
system
19568
23832
42474
56142
Benefit reduced for
High-5 pay base
18666
22733
40516
53553
5% under age 65
9784
11916
21237
28071
No sick leave credit
18942
23069
41115
54345
All three
9034
11003
19610
25920
Current contributions
16469
20057
35747
47250
Benefit purchased at
age 55 by contributions
1476
1798
3204
4235
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Table 2
Civil Service Retirement System Benefits
Effect of Various Changes in Formula
Employee now age 50 with 20 years of service
Retiring at age 60 with 30 years of service
9
11
15
SES
Benefit in current
system
19568
23832
42474
56142
Benefit reduced for
High-5 pay base
18666
22733
40516
53553
5% under age 65
14676
17874
31855
42106
No sick leave credit
18942
23069
41115
54345
All three
13551
16504
29414
38880
Current contributions
16469
20057
35747
47250
Benefit purchased at
age 60 by contributions
1681
2048
3650
4824
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Table 3
CIA Retirement System Benefits
Effect of Various Changes in Formula
Employee now age 45 with 20 years of service
Retiring at age 55 with 30 years of service
Benefit in current
system
20873
25420
45305
59884
Benefit reduced for
High-5 pay base
19910
24248
43217
57123
5% under age 60
15654
19065
33979
44913
No sick leave credit
20246
24658
43946
58088
All three
14485
17641
31440
41557
Current contributions
16469
20057
35747
47250
Benefit purchased at
age 55 by contributions
1476
1798
3204
4235
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Table 4
CIA Retirement System Benefits
Effect of Various Changes in Formula
Employee now age 40 with 15 years of service
Retiring at age 50 with 25 years of service
9
11
15
SIS
Benefit in current
system
17394
21184
37755
49904
Benefit reduced for
High-5 pay base
16592
20207
36014
47603
5% under age 60
8697
10592
18877
24952
No sick leave credit
16872
20548
36622
48407
All three
8047
9800
17467
23087
Current contributions
14351
17478
31151
41175
Benefit purchased at
age 50 by contributions
1147
1397
2490
3292
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ANNUITY ESTIMATES
CIARDS
CURRENT VS FY-86 BUDGET PROPOSALS
(REDUCTIONS FOR UNDER AGE 60 ONLY)
ASSUMES: (1) Employee Who Is Currently Age 45 With 20 Years Service
(2) Constant High-3 Average of SIS-2 ($61,615)
ANNUITY ESTIMATES IF EMPLOYEE RETIRES
AT
25
Age 50
w
years serv.
Age 51
w
26 years serv.
Age 55
w
30 years serv
Current CIARDS
$30,808
$32,040
$36,96Q
Phase-In Budget
Proposals
$23,106
$24,831
$32,348
Difference
$ 7,702
$ 7,209
$ 4,621
Percent Reduction
25%
22.5%
12.5%
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ANNUITY ESTIMATES
CIARDS
CURRENT VS FY-86 BUDGET PROPOSALS
(REDUCTIONS FOR UNDER AGE 60 ONLY)
ASSUMES: (1) Employee Who Is Currently Age 45 With 20 Years Service
(2) Constant High-3 Average of GS-15/5 ($57,227)
ANNUITY ESTIMATES IF EMPLOYEE RETIRES
AT
25
Age 50
w
years serv.
Age 51
w
26 years serv.
Age 55
w
30 years serv
Current CIARDS
$28,614
$29,758
04,336
Phase-In Budget
Proposals
$21,461
$23,062
$30,044
Difference
$ 7,153
$ 6,696
t 4,292
Percent Reduction
25%
22.5%
12.5%
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ANNUITY ESTIMATES
CIARDS
CURRENT VS FY-86 BUDGET PROPOSALS
(REDUCTIONS FOR UNDER AGE 60 ONLY)
ASSUMES: (1) Employee Who Is Currently Age 45 With 20 Years Service
(2) Constant High-3 Average of GS-13/5 ($41,172)
ANNUITY ESTIMATES IF EMPLOYEE RETIRES
25
Age 50
w
years serv.
AT
Age 51
w
26 years serv.
Age 55
w
30 years serv.
Current CIARDS
$20,586
$21,409
$24,703
Phase-In Budget
Proposals
$15,440
$16,592
$21,615
Difference
$ 5,146
$ 4,817
$ 3,088
Percent Reduction
25%
22.5%
12.5%
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 Sanitized Copy Approved for Release 2011/01/14: CIA-RDP89-00066R000900080045-9
ANNUITY ESTIMATES
CIARDS
CURRENT VS FY-86 BUDGET PROPOSALS
(REDUCTIONS FOR UNDER AGE 60 ONLY)
ASSUMES: (1) Employee Who Is Currently Age 45 With 20 Years Service
(2) Constant High-3 Average of GS-11/5 ($28,889)
ANNUITY ESTIMATES IF EMPLOYEE RETIRES
AT
25
Age 50
w
years serv.
Age 51
w
26 years serv.
Age 55
w
30 years serv
Current CIARDS
$14,445
$15,022
$17,333
Phase-In Budget
Proposals
$10,834
$11,642
$15,166
Difference
$ 3,611
$ 3,380
$ 2,167
Percent Reduction
25%
22.5%
12.5%
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 Sanitized Copy Approved for Release 2011/01/14: CIA-RDP89-00066R000900080045-9
ANNUITY ESTIMATES
CIARDS
CURRENT VS FY-86 BUDGET PROPOSALS
(REDUCTIONS FOR UNDER AGE 60 ONLY)
ASSUMES: (1) Employee Who Is Currently Age 45 With 20 Years Service
(2) Constant High-3 Average of GS-9/5 ($23,874)
ANNUITY ESTIMATES IF EMPLOYEE RETIRES
AT
25
Age 50
w
years serv.
Age 51
w
26 years serv.
Age 55
w
30 years serv
Current CIARDS
$11,937
$12,414
$14,324
Phase-In Budget
Proposals
$ 8,953
$ 9,621
$12,534
Difference
$ 2,984
$ 2,793
$ 1,790
Percent Reduction
25%
22.5%
12.5%
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 Sanitized Copy Approved for Release 2011/01/14: CIA-RDP89-00066R000900080045-9
CURRENT VS FY-86 BUDGET PROPOSALS
(REDUCTIONS FOR UNDER AGE 65 ONLY)
ASSUMES: (1) Employee Who Is Currently Age 45 With 20 Years Service
(2) Constant High-3 Average of SIS-2 ($61,615)
ANNUITY ESTIMATES IF EMPLOYEE RETIRES
AT
30
Age 55
w
years serv.
Age 56
w
31 years serv.
Age 60
w
35 years serv
Current CSRS
$34,658
$35,891
$40,820
Phase-In Budget
Proposals
$17,329
$19,740
$30,615
Difference
$17,329
$16,151
$10,205
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 Sanitized Copy Approved for Release 2011/01/14: CIA-RDP89-00066R000900080045-9
ANNUITY ESTIMATES
CSRS
CURRENT VS FY-86 BUDGET PROPOSALS
(REDUCTIONS FOR UNDER AGE 65 ONLY)
ASSUMES: (1) Employee Who Is Currently Age 45 With 20 Years Service
(2) Constant High-3 Average of GS-15/5 ($57,227)
ANNUITY ESTIMATES IF EMPLOYEE RETIRES
AT
30
Age 55
w
years serv.
Age 56
w
31 years serv.
Age 60
w
35 years serv
Current CSRS
$32,190
$33,334
$37,913
Phase-In Budget
Proposals
$16,095
$18,334
$28,435
Difference
$16,095
$15,000
$ 9,478
Percent Reduction
50%
45%
25%
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 Sanitized Copy Approved for Release 2011/01/14: CIA-RDP89-00066R000900080045-9
ANNUITY ESTIMATES
CSRS
CURRENT VS FY-86 BUDGET PROPOSALS
(REDUCTIONS FOR UNDER AGE 65 ONLY)
ASSUMES: (1) Employee Who Is Currently Age 45 With 20 Years Service
(2) Constant High-3 Average of GS-13/5 ($41,172)
ANNUITY ESTIMATES IF EMPLOYEE RETIRES
AT
30
Age 55
w
years serv.
Age 56
w
31 years serv.
Age 60
w
35 years serv
Current CSRS
$23,159
$23,983
$27,276
Phase-In Budget
Proposals
$11,580
$13,190
$20,457
Difference
$11,579
$10,793
$ 6,819
Percent Reduction
50%
45%
25%
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 Sanitized Copy Approved for Release 2011/01/14: CIA-RDP89-00066R000900080045-9
ANNUITY ESTIMATES
CSRS
CURRENT VS FY-86 BUDGET PROPOSALS
(REDUCTIONS FOR UNDER AGE 65 ONLY)
ASSUMES: (1) Employee Who Is Currently Age 45 With 20 Years Service
(2) Constant High-3 Average of GS-11/5 ($28,889)
ANNUITY ESTIMATES IF EMPLOYEE RETIRES
AT
30
Age 55
w
years serv.
Age 56
w
31 years serv.
Age 60
w
35 years serv
Current CSRS
$16,250
$16,828
$19,139
Phase-In Budget
Proposals
$ 8,125
$ 9,255
$14,354
Difference
$ 8,125
$ 7,573
$ 4,785
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 Sanitized Copy Approved for Release 2011/01/14: CIA-RDP89-00066R000900080045-9
CURRENT VS FY-86 BUDGET PROPOSALS
(REDUCTIONS FOR UNDER AGE 65 ONLY)
ASSUMES: (1) Employee Who Is Currently Age 45 With 20 Years Service
(2) Constant High-3 Average of GS-9/5 ($23,874)
ANNUITY ESTIMATES IF EMPLOYEE RETIRES
AT
30
Age 55
w
years serv.
Age 56
w
31 years serv.
Age 60
w
35 years serv
Current CSRS
$13,429
$13,907
$15,817
Phase-In Budget
Proposals
$ 6,715
$ 7,649
$11,863
Difference
$ 6,714
$ 6,258
$ 3,954
Percent Reduction
50%
45%
25%
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 Sanitized Copy Approved for Release 2011/01/14: CIA-RDP89-00066R000900080045-9
Examples of Retirement Penalties For Early Retirement
Under FY 86 Budget Proposals
Annuities Would Be Reduced Under Budget
Proposals As Follows If Employee:
Age in 1985
Retires Age 50
Age 51
Age 55
Age 60
50 or older
None
0
0
0
49
5%
4.5%
2.5%
0
48
10%
9%
5%
47
15%
13.5%
7.5%
46
20%
18%
10%
45
25%
22.5%
12.5%
44
30%
27%
15%
43
35%
31.5%
17.5%
42
40%
36%
20%
41
45%
40.5%
22.5%
40 or younger
50%
45%
25%
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 Sanitized Copy Approved for Release 2011/01/14: CIA-RDP89-00066R000900080045-9
Examples Of Retirement Penalties For Early Retirement
Under FY 86 Budget Proposals
Age in 1985
Age 55
Age 56
Age 60
Age 65
55 or older
None
0
0
0
54
5%
4.5%
2.5%
0
53
10%
9%
5%
0
52
15%
13.5%
7.5%
0
51
20%
18%
10%
0
50
25%
22.5%
12.5%
0
49
30%
27.9%
15%
0
48
35%
31.5%
17.5%
0
47
40%
36%
20%
0
46
45%
40.5%
22.5%
0
45 or younger
50%
45%
25%
0
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 Sanitized Copy Approved for Release 2011/01/14: CIA-RDP89-00066R000900080045-9
P
The attached tables show the effect of proposed retirement plan
changes on typical employees now in CSRS and CIARDS.
The benefit is projected for ten years to assume retirement in
1995. Benefits payable under the current systems are compared to the
benefits resulting from the following reductions:
Change the high-three pay base to high-five,
Reduce the CSRS benefit by 5% for each year under age 65 at
retirement; and the CIARDS benefit by 5% for each year under
age 60,
Eliminate the credit for unused sick leave.
The benefit which would result if all three reductions is also
shown.
The benefit is compared to the current contributions and the
annuity that could be purchased by those contributions if the
individual were to leave today, invest the refund, and use those funds
to purchase an annuity at the retirement age.
The salary projections were based on current earnings of an
average individual in each grade. These were assumed to grow by 5%
each year for the next ten years. This assumption anticipates moderate
general wage growth and within grade increases. Promotions were not
assumed. If promotions were to occur, the benefits, and reductions
would be larger.
Other assumptions were that the average interest rate will be 6%,
the average inflation rate will be 4% and that unused sick leave is
accumulated at seven days a year.
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 Sanitized Copy Approved for Release 2011/01/14: CIA-RDP89-00066R000900080045-9
Table 1
Civil Service Retirement System Benefits
Effect of Various Changes in Formula
Employee now age 45 with 20 years of service
Retiring at age 55 with 30 years of service
9
11
15
SES
Benefit in current
system
19568
23832
42474
56142
Benefit reduced for
High-5 pay base
18666
22733
40516
53553
5% under age 65
9784
11916
21237
28071
No sick leave credit
18942
23069
41115
54345
All three
9034
11003
19610
25920
Current contributions
16469
20057
35747
47250
Benefit purchased at
age 55 by contributions
1476
1798
3204
4235
El 30'7 kq~ .4Vf,'736 ? ~3,3LS'
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 Sanitized Copy Approved for Release 2011/01/14: CIA-RDP89-00066R000900080045-9
Table 2
Civil Service Retirement System Benefits
Effect of Various Changes in Formula
Employee now age 50 with 20 years of service
Retiring at age 60 with 30 years of service
Benefit in current
system
19568
23832
42474
56142
Benefit reduced for
High-5 pay base
18666
22733
40516
53553
/7 j 1 2.
; - 0S3
3716q
j/9t / Z4
5% under age 65
6
1.2OU
31855-
4;;"
No sick leave credit
18942
23069
41115
54345
/$'511
9A5
31/32.0
4(S5
All three
1.Mir4
-~4
Current contributions
16469
20057
35747
47250
Benefit purchased at
age 60 by contributions 1681
2048
3650
4824
lam. .~0'- C ' . rc_ ) ,4 //~d
r~
7s rI. co 9/40L ii 01P7 afcS1f1.
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 Sanitized Copy Approved for Release 2011/01/14: CIA-RDP89-00066R000900080045-9
Table 3
CIA Retirement System Benefits
Effect of Various Changes in Formula
Employee now age 45 with 20 years of service
Retiring at age 55 with 30 years of service
Benefit in current
system
High-5 pay base
5% under age 60
No sick leave credit
All three
Current contributions
Benefit purchased at
age 55 by contributions
9
11 15
SIS
20873
25420 45305
59884
19910
24248 43217
57123
/s z63
-7,2,2 4'2 -3964//
4a3991
440!~%
44065 335
-
449+3
246
24658 43946
58
/6 fat
3o 5'82 366a3
yew&Sr
-***e5
T 91.,-40
4-1557
16469
20057 35747
47250
1476
1798 3204
4235
9S 3Z7 //6og3 Z004 .73. 0+/
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 Sanitized Copy Approved for Release 2011/01/14: CIA-RDP89-00066R000900080045-9
Table 4
CIA Retirement System Benefits
Effect of Various Changes in Formula
Employee now age 40 with 15 years of service
Retiring at age 50 with 25 years of service
Benefit in current
system
17394
21184
37755
49904
Benefit reduced for
High-5 pay base
16592
20207
36014
47603
5% under age 60
8697
10592
18877
24952
No sick leave credit
16872
20548
36622
48407
All three
8047
9800
17467
23087
Current contributions
14351
17478
31151
41175
Benefit purchased at
age 50 by contributions
1147
1397
2490
3292
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 Sanitized Copy Approved for Release 2011/01/14: CIA-RDP89-00066R000900080045-9
FAMILY
CODE
OCCUPATIONAL FAMILY GROUPS
FAMILY GROUP
Policy Direction Group
Career and Student Trainee
Economics (Intelligence and Social Science)
Intelligence Production: General, Resources
Intelligence: Processing, Reports and Estimates
Intelligence: Officer Program, Military
Intelligence Operations:' General, Psychological,
Political, Foreign Intelligence
Operations Support
Intelligence Operations Research
Geography, History -
Personnel Administration
General Clerical and Administrative
Courier
Info Receptionist, Info Control 4nd Records,
Correspondence Clerk Steno and Reporter
Secretary
Clerk Typist
Computer Systems Administration, Computer
Operation, Computer Specialist, Computer Aid
and Technician
Administrative Assistant and Officer, Office
Services Support and Supervisor
Management Analysis, Management Specialist,
Program Analysis
Office Machine, Data Transcriber, Coding,
Electric Accounting, Telephone
Telegraphic Typewriter, Communication, General
Management, Special
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FAMILY
CODE
FAMILY GROUP
Accounting and Budget
Medical and Medical Intelligence Psychology
Engineering
Legal
Information and Arts
Physical Sciences
Library and Archives
Mathematics, Statistics and Cryptographic
Training
Security, Investigation and Inspection
Business, Industry, Equipment, Facilities,
Services, Logistics Transportation
Biological and Vetinary Science
Trades, Crafts and Labor
Printing, Paper Making, Photography, Bookbinding
Firefighter and Guard
Military MOS and Specialties
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 Sanitized Copy Approved for Release 2011/01/14: CIA-RDP89-00066R000900080045-9
FAMILY
CODE
OCCUPATIONAL FAMILY GROUPS
FAMILY GROUP
Policy Direction Group
Career and Student Trainee
Economics (Intelligence and Social Science)
Intelligence Production: General, Resources
Intelligence: Processing, Reports and Estimates
Intelligence: Officer Program, Military
Intelligence Operations:' General, Psychological,
Political, Foreign Intelligence
Operations Support
Intelligence Operations Research
Geography, History -
Person;el Administration
General Clerical and Administrative
Courier
Info Receptionist, Info Control 4nd Records,
Correspondence Clerk Steno and Reporter
Secretary
Clerk Typist
Computer Systems Administration, Computer
Operation, Computer Specialist, Computer Aid
and Technician
Administrative Assistant and Officer, Office
Services Support and Supervisor
Management Analysis, Management Specialist,
Program Analysis
Office Machine, Data Transcriber, Coding,
Electric Accounting, Telephone
Telegraphic Typewriter, Communication, General
Management, Special
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 Sanitized Copy Approved for Release 2011/01/14: CIA-RDP89-00066R000900080045-9
FAMILY
CODE
FAMILY GROUP
Accounting and Budget
Medical and Medical Intelligence Psychology
Engineering
Legal
Information and Arts
Physical Sciences
Library and Archives
Mathematics, Statistics and Cryptographic
Training
Security, Investigation and Inspection
Business, Industry, Equipment, Facilities,
Services, Logistics Transportation
Biological and Vetinary Science
Trades, Crafts and Labor
Printing, Paper Making, Photography, Bookbinding
Firefighter and Guard
Military MOS and Specialties
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