ROTH/STEVENS EARLY OUT RETIREMENT BILL

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP89-00066R000300100003-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 3
• Document Creation Date: December 22, 2016
• Document Release Date: March 4, 2011
• Sequence Number: 3
• Content Type: MISC

Sanitized Copy Approved for Release 2011/03/04 :CIA-RDP89-000668000300100003-8
S E C R E T ~~
ROTH/STEVENS "EARLY OUT" RETIREMENT BILL
PROVISIONS OF BILL
? Would permit goverment employees (including Agency) to voluntarily
retire (at employee's option) earlier than normal.
? Would also establish ceiling reductions by:~ (1) establishing a
ceiling equal to on duty strength as of 1 July 86 (2) reducing
ceiling further by restricting the hiring of replacements for
those retiring between 1 July 86 & 1 Jan 87, and (3) maintaining
new ceiling through 1991.
? Would allow employees to retire taking a reduction in annuity of
2$ for each year under age 55; under the following liberalized
criteria:
-Any
age
with
25 years
of
service
-Age
50
with
20
years
of
service
-Age
55
with
15
years
of
service
-Age
57
with
5
years of service
Must retire between 1 July 86 and 1 January 87.
POTENTIAL ItdPACT ON AGENCY
? Would increase eligibles to retire by 31 Dec 86 from 1428 (8~ of
Agency) to 3656 (20$ of Agency).
? 60~ of Agency SIS employees would be eligible; 80~ in DO.
? 37~ of Agency GS 14/15's would be eligible; 46~ in DO & DA.
CURRENT STATUS OF LEGISLATION
Senate Hearing held 15 May - D/OPM testified stating: concept
acceptable with modifications; President must be given authority
to exempt any agency he feels should be excluded; greater
flexibility required to hire replacements; potential serious
harm to national defense and other critical programs.
Senator Roth acknowledged modifications required. Other Committee
Members expressed concern for negative impact.
House has not, as yet, developed a similar bill.
Administration still not clear on extent it could support
such a Bill.
Unions generally supportive, but have reservations on loss of jobs
and potential "contracting out".
No further Senate hearings have been scheduled.
Readings from SSCI staffer is that Bill not going anywhere soon -
if ultimately considered will probably not look like original
proposal, but will adhere generally to Administration's desires.
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RETIREMENT ANNUITY TAXATION LEGISLATION
PROVISIONS OF HOUSE BILL:
-- Eliminates "Three-Year Rule" that allows tax-free period
immediately after retirement until employee contributions
,are recovered.
-- Applies "General Rule" to all annuities, prorating recovery
of contributions over actuarial life expectancy of
annuitant.
-- Effective for annuities beginning after 1 July 1986.
PROVISIONS OF SENATE FINANCE COMMITTEE PROPOSAL:
-- Same provisions as House Bill with two exceptions:
A. Phased in over a two-year period;
B. Effective for annuities beginning after
1 January 1988.
AFFECT ON EMPLOYEES:
-- These bills would cause high-ranking employees to incur as
much as $20,000 in additional tax liability in the first
year of retirement. Lower ranking employees would also
incur additional tax liability in first year.
CURRENT STATUS OF LEGISLATION
-- House Bill approved by full House;
-- Senate Finance Committee proposal not yet approved by full
Senate. Senate to consider in early June;
-- House/Senate Conference required to work-out differences in
respective tax reform bills;
-- Resolution by Congress not expected by the 1 July effective
date contained in House Bill;
-- Guess is that Congress will pass Bill but with an effective
date no earlier than 1 January 1987 and perhaps as late as
1 January 1988.
PERCENTAGES ELIGIBLE TO RETIRE AS OF 1 MAY 1986
BREAKDOWN OF ELIGIBLE RETIREES BY DIRECTORATE
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