oversight

Special Early Retirement Policy for Federal Law Enforcement Officers and Firefighters

Published by the Government Accountability Office on 1977-09-27.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                          DCCUMLNT FESUME
 03782 - [A2733975]
rSpecial Farly Retirement Policy fcr Federal Law Enforcemant
Officers and Firefighters]. Septemeri 27, 1977. 20 pp.

Testimony before the House Committee on Post Office and
Service: Compensation and Employee Benefits Sutcommittee;Civil
                                                           by H.
L. Krieger, Director, Federal Personnel and Compensation Div.
Issue Area: Personnel Manaa?.:ont anld Compensation: Compensation
     (305).
Contact: Federal Personnel and Compensation Div.
Budget Function: General Government: Central Personnel
    Management (805) .
Organizaticn Concerned: Civil Service Commissicno
Congressional Relevance: Hnuse Committee on Post Office and
    civi] Service: Compensation and Employee Benefits
    Subcommittee.

          Federal employees whose primary duties are: (1)
 investigating, apprehending, or detaining persons suspected or
convicted of Federal crimes; or (2) controlling and
extinguishing fires or maintaining and using firefighting
 apparatus and equipment are entitled to special retirement
benefits, including earlier retirement and a mcre generous
annuity formula than other Federal employees. About 52,000
employees in various Federal agencies and the District of
Columbia government are covered under the special retirement
program. Although there may have been a need
retirement program when it was established in for the special
                                               1947, the
continued need for the program is questionable. The special
retirement policy is an expensive methcd of marginally reducing
the age of retirement. The Congress should reevaluate the need
for providing the special retirement benefits to law enforcement
and firefighting personnel. If the special early retirement
policy continues, the Congress should: reevaluate the
eligibility criteria, mandatory retirement provision, and
benefit structure; and amend the law to require additional
retirement contributions by employing agencies. (SC)
     -A9)                                          FOR RELEASE ON DELIVERY
 X\\''                                             EXPECTED A1 9:30 A.M.
                                                   TUESDAY, SEPTEMBER 27, 1977
                                    STA1EMENT OF
co                            H. L, KR!EGER, DIRECTOR
                  FEDERAL PERSONNEL AND COMPENSATION DIVISON
                         U. S. GENERAL ACCOUNTING OFFICE
                                    BEFORE THE
              SUBCOMMITTEE ON COMPENSATION AND EMPLOYEE BENEFITS
               OF THE COMMITTEE ON POST OFFICE AND CIVIL SERVICE
                        U, S. HOUSE OF REPRESENTATIVES
                                       ON A
                   GENERAL ACCOUNTING OFFICE REPORT ENTITLED
                  "SPECIAL RETIREMENT POLICY FOR FEDERAL LAW
                  ENFORCEMENT AND FIKEFIGHTER PEDSONNEL NEEDS
                 REEVALUATION," FPCD-76-97, FEBRUARY 24, 1977

         MADAM CHAIR AND MEMBERS OF THE SUBCOMMITTEE:

              I AM PLEASED TO BE HERE TO DISCUSS THE GENERAL ACCOUNTING

         OFFICE S REPORT TO THE HOUSE COMMITTEE ON POST OFFICE AND

         CIVIL SERVICE ON THE SPECIAL, EARLY RETIREMENT POLICY FOR

       FEDERAL LAW ENFORCEMENT OFFICERS AND FIREFIGHTERS,

             THE SUBCOMMITTEE'S MEMBERS ARE UNDOUBTEDLY AWARE OF GAO's
       DEEP CONCERN ABOUT THE CIVIL SERVICE AND OTHER FEDERAL RETIRE-

       MENT SYSTEMS.       BEGINNING IN 1974, WE HAVE ISSUED A SERIES OF
       REPORTS COVERING A NUMBER OF ISSUES RELATED TO BASIC POLICIES,
       FINANCING, AD.-INISTRATION, AND BENEFITS OF THE VARIOUS RETIRE-
       MENT PROGRAMS.      IN THE LATEST REPORT, FOR EXAMPLE, ISSIIED ON
       AUGUST 3,   1977,
                       WE REPORTED IHAT THE ACTUAL COST OF THE CIVIL
       SERVICE SYSTEM IS ABOUT TWO AND ONE-HALF TIMES THE COST
       GENERALLY RECOGNIZED AND ALSO rOINTED OUT THAT MANY OF THE
       DIFFERING AND INCONSISTENT PROVISIONS OF THE VARIOUS SYSTEMS
ARE WITHOUT APPARENT EXPLANATION.    OUR REPORTS HAVE CONSISTENTLY

CALLED FOR THE ESTABLISHMENT OF AN OVERALL POLICY TO PROVIDE

OBJECTIVES AND PRINCIPLES TO GUIDE RETIREMENT SYSTEM DEVELOPMENT

AND IMPROVEMENT.    OUR PREVTOUS WORK HAS CONVINCED US OF THE

IMPORTANCE OF GIVING SERIOUS CONSIDERATION TO NEED, DESIGN,

EQUITY, AND THE COST OF ANY PROPOSED CHANGES OR IMPROVEMENTS TO
ThE RETIREMFNT PROGRAMS, PARTICULARLY WHEN THE CHANGEP APPLY ONLY

TO SELECTED GROUPS.

     AT THE REQUEST OF THE FORMER CHAIRMAN OF THE HOUSE COMMITTEE

ON POST OFFICE AND CIVI! SERVICE AND THIS SUBCOMMITTEE, GAO

EVALUATED THE ADEQUACY, EFFECTIVENESS,   REASONABLENESS, AND COSTS

OF THE GOVERdMENT'S POLICY OF PROVIDING EARLIER AND A,,ORE

GENEROUS RETIREMENT BENEFITS TO FEDERAL LAW ENFORCEMENT AND

FIREFIGHTER PERSONNEL.
EXISTING LU AND ITS HISTORY
     FEDERAL EMPLOYEES WHOSE PRIMARY DUTIES ARE (1) INVESTIGATING,

APPREHENDING,   OR DETAINING PERSONS SUSPECTED OR CONVICTED OF

FEDERAL CRIMES OR (2) CONTROLLING AND EXTINGUISHING FIRES OR

MAINTAINING AND USING FIREFIGHTING APPARATUS AND EQUIPMENT ARE

PERMITTED, BY LAW, TO VOLUNTARILY RETIRE AT AGE 50 AFTER 20


                                 2
YEARS OF SUCH SERVICE.      THESE EMPLOYEES' ANNUITIES ARE COMPUTED
AT THE RATE OF 2.5 PERCENT OF AVERAGE ANNUAL PAV (AVERAGE HIGH

.   YEPRS' PAY INCLUDING ADMINISTRATIVELY UNCONTROLLABLE OVERTIME

FOR LAW ENFORCEMENT OFFICERS) FOR THE FIRST 20 YEARS OF SERVICE

P.US   2 PERCENT   OF AVEDAGE PAY FOR EACH YEAR OF COVERED SERVICE
THEREAFTER.     EMPIOYEES AND EMPLOYING AGENCIES EACH CONTRIBUTE
7.5    PERCENT OF BASIC PAY TOWARD RETIREMENT.     EFFECTIVE
JANUARY 1,    1978, THE LAW REQUIRES MANDATORY RETIREMENT OF SUCH
EMPLOYEES AT AGE 55 OR UPON CAO$PLETION OF 20 YEARS OF SERVICE,

WHICHEVER COMES LATER.      THE HEAD OF THE AGENCY CAN, HOWEVER,
RETAIN AN EMPLOYEE TO AGE 60.
       IN COMPARISONJ FEDERAL EMPLOYEES UNDER THE REGULAR CIVIL

SERVICE RETIREMENT PROVISIONS ARE GENERALLY ELIGIBLE FOR

VOL.,NTARY RETIREMENT AT AGE 55 AFTER    30   YEARS OF SERVICE, AT
AGE 60 AFTER 20 YEARS OF SERVICE, OR AT AGE 62 AFTER 5 YEARS
OF SERVICE.     THEIR ANNUITIES ARE COMPUTED AT THE RATE OF 1.5
PERCENT OF AVERAGE ANNUAL PAY (HIGHEST AVERAGE ANNUAL SALARY

FOR 3 CONSECUTIVE YEARS, GENERALLY EXCLUDING ALL PREMIUM PAY)

FOR THE FIRST 5 YEARS OF SERVICEj 1.75 PERCENT FOR THE NEXT
5 YEARS, AND   2 PERCENT   FOR EACH YEAR OF SERVICE BEYOND 10 YEARS.
RETIREMENT IS MANDATORY AT AGE 70 AFTER 15 OR MORE YEARS OF
SERVICE.     EMPLOYEES AND EMPLOYING AGENCIES EACH CONTRIBUTE 7
PERCENT OF PAY TOWARD RETIREMENT.




                                3
      THE CONGRESS' OBJECTIVE IN PROVIDING EARLY RETIREMENT TO

 LAW ENFORCEMENT AND FIREFIGHTING PERSONNEL WAS TO IMPROVE THE

 QUALITY OF THESE SERVICES BY HELPING TO MAINTAIN A YOUNG,

 VIGOROUS WORK FORCE.        ,HE MORE GENEROUS ANNUITY FORMULA WAS
DESIGNED TO MAKE EARLY RETIREMENT rCONOMICALLY FEASIBLE--NOT

TO REWARD THOSE EMPLOYEES FOR PERFORMING DEMANDING OR SOMETIMES

HAZARDOUS DUTIES.

      IN   1947   THE CONGRESS ENACTED LEGISLATION PERMITTING FEDERAL
BUREAU OF" INVESTIGATION       (FBI)    AGENTS TO RETIRE WITH AN INCREASED
ANNUITY AT AGE 5J AFTER 20 YEARS OF SERVICE.               MANY AGENTS HAD
BEEN LEAVING THE      FBI   TO RECEIVE HIGHER SALARIES IN THE NON-
FEDERAL SECTOR.       1HE SPECIAL RETIRFMENT PROVISIONS WERE BELIEVED
NECESSARY TO OFFSET THE LURE OF THE HIGHER NON-FEDERAL SALARIES

AND HELP THE FBI BECOME A CAREER SERVICE.               ALSO, A YOUNG,
VIGOROUS FORCE WAS DESIRED BECAUSE            FBI   AGENTS WORKED LONG
HOURS; MAINTAINED IRREGULAR EATING AND REST SCHEDULES; WERE

SUBJECT TO MANY PRESSURES, RISKS, AND HAZARDS; TRAVELED FOR

LONG PERIODS; AND WERE EXPOSED TO ADVERSE ENVIRONMENTAL

CONDITIONS.       CONGRESSIONAL TESTIMONY INDICATED THAT THE COST
OF THIS LIBERALIZED RETIREMENT PROGRAM WOULD NOT BE GREAT

BECAUSE ONLY 30 AGENTS WOULD BE ELIGIBLE TO RETIRE WHEN THE

LAW WAS PASSED AND ONLY       64   AGENTS WOULD BECOME ELIGIBLE FOR
RETIREMENT DURING THE NEXT         5 YEARS,


                                    4
       ALMOST IMMEDIATELY, OTHER EMPLOYEE GROUPS
                                                    BEGAM REQUESTING
  EQUIVALENT BENEFITS.  IN 1948 THE CONGRESS EXTENDED SPECIAL
  RETIREMENT BENEFITS TO ALL EMPLOYEES IN
                                           POSITIONS WITH DUTIES
  THAT WERE PRIMARILY INVESTIGATING, APPREHcNTING,
                                                      OR DETAINING
  PERSONS SUSPECTED OR CONVICTED OF COMMITTING
                                                 FEDERAL CRIMES,
  IN 195E THE CONGRESS FURTHER EXTENDED COVERAGE
                                                   TO EMPLOYEES OF
 CORRECTIONAL INSTITUTIONS V.HO HAD FREQUENT
                                               AND DIRECT CONTACT
 IN THE DETENTION, DIRECTION, SUPERVISION,
                                              INSPECTION, TRAINING,
 EMPLOYMENT, CARE, TRANSPORTATION, OR REHABILITATION
                                                         OF PERSONS
 SUSPECTED OR CONVICTED OF ViOLATING THE
                                          CRIMINAL LAWS OF THE
 UNITED STATES; THE DIS'RICT OF COLUMBIA,
                                            )R THE UNIFORM CODE
OF MILITARY JUSTICE.        IN 1972, THE LIBERAL;LED RETIREMENT
PROVISiONS WERE ACCORDED TO EMPLOYEES
                                       IN POSITIONS WHOSE DUTIES
PRIMARILY INVOLVED CONTROLLING AND EXTINGUISHING
                                                  FIRES OR
MAINTAINING AND USING FIREFIGHTING EQUIPMENT.
                                                IN ADDITION,
THESE LAWS PROVIDE COiERAGE FOR EMPLOYEES
                                           WHO ARE TRANSFERRED
TO SUPERVISORY OR ADMINISTRATIVE POSITIONS,

     FINALLY,   A   1974   LAW (1) FURTHER LIBERALIZED THE BENEFITS,
(2) DELETED ALL REFERENCES TO EMPLOYEE HAZARD
                                              AS A BASIS FOR
COVERAGE, (3) EMPHASIZED IN ITS LEGISLATIVE
                                             HISTORY THAT THE
SPECIAL. RETIREMENT PROVISIONS ARE PROVIDED
                                            TO IMPROVE THE
QUALITY OF LAW ENFORCEMENT AND FIREFIGHTING
                                             SERVICES BY HELPING
TO MAINTAIN A YOUNG AND VIGOROUS WORK
                                       FORCE AND THAT THE
GENEROUS BENEFITS ARE PROVIDED TO MAKE
                                       EARLIER RETIREMENT

                                  5
ECONOMICALLY FEASIBLE, AND (4) ESTABLISHED,
                                            EFFECTIVE JANUARY
1978,   MANDATORY RETIREMENT AT AGE 55 OR UPON
                                               COMPLETING 20
YEARS OF COVERED SERVICE, WHICHEVER
                                     COMES LATER,
     THE CIVIL SERVICE COMMISSION (CSC)
                                         IS RESPONSIBLE FOR
ADMINISTERING THE SPECIAL RETIREMENT
                                      PROVISIONS AND CERTIFYING
EMPLOYEES' ELIGIBILITY.



     MANY OCCUPATIONAL GFOUPS OF EMPLOYEES
                                           ARE ElIGIBLE FOR
BENEFITS. EXAMPL.ES OF THE TYPES OF
                                    POSITIONS INCLUDED FOLLOW.
    JNYESTIGATION AND     REHESION     OF CRIMINALS--INCLUDES
    SUCH EMPLOYEES AS SPECIAL AGENTS
                                     IN THE FBI,     INTERNAL
    REVENUE SERVICE (IRS), SECRET SERVICE,
                                           AND DRUG
    ENFORCEMENT ADMINISTRATION,      CUSTOMS AND IMMIGRATION
    BORDER PATROL OFFICERS AND AIRPLANE
                                        PILOTS. GAME
    WARDENS, POSTAL INSPECTORS, AND BUREAU
                                           OF INDIAN AFFAIRS
    AND PANAMA CANAL ZONr POL:CE ALSO
                                      RECEIVE BENEFITS.

    DIIETI   _Q
              OF 5CRIMINNALS--INCLUDES ALL EMPLOYEES
                                                      WORKING
    INSIDE THE WALLS OF A FEDERAL OR DISTRICT
                                                 OF COLUMBIA
   DETENTION FACILITY, COVERED POSITIONS
                                              INCLUDE NOT
   ONLY CORRECTIONAL OFFICERS BUT ALSO
                                          COOKS, PLUMBERS,
   CARPENrERS, PAINT FOREMEN MAILCLERKS,
                                            TELEPHONE OPERATORS,
   ACCOUNTANTS, AND SECRETARIES. ALSO
                                          COVERED ARE RESEARCH
   CHEMISTS, PHARMACOLOGISTS, PHYSICISTS,
                                             AND PHOTOGRAPHERS
   AT A DRUG ADDICTION CENTER AND PAROLE
                                            HEARING EXAMINERS
   IN THE DEPARTMENT OF JUSTICE.

                            6
      EIHTNIN    FIRF--INCLUDES EMPLOYEES FIGHTING BOTH

      STRUCTURAL AND FOREST FIRES.     IN ADDITIONj THE ELIGIBILITY
      CRITERIA HAVE BEEN INTERPRETED TO COVER SUCH POSITIONS

     AS TANKTRUCK OPERATORS, CERTAIN AIRPLANE PILOTS, AND

     CERTAIN FORESTERS.

     SUPERVISORY AND ADMINISTRATIVE PIRSNNEL--INCLUDES

     EMPLOYEES WHO TRANSFERRED FROM COVERED OPERATING POSITIONS

     TO POSITIONS RESPONSIBLE FOR SUPERVISING OPERATING-LEVEL

     EMPLOYEES OR TO POSITIONS WHERE OPERATING EXPERIENCE IS

     REQUIRED TO PERFORM THE VARIOUS ADMINISTRATIVE DUTIES.

     INCLUDED ARE PROGRAM ADMINISTRATORS IN HEADQUARTERS

     ORGANIZATIONS, ACCOUNTANTS, PERSONNEL OFFICERS, ADMINIS-

     TRATIVE OFFICERS, AND TRAINING COURSE DEVELOPERS AND
     INSTRUCTORS.


     CSC REGULATIONS SPECIFICALLY EXCLUDE EMPLOYEES IN POSITIONS

WHOSE PRIMARY DUTIES INVOLVE (1) MAINTAINING LAW AND ORDER,

(2) PROTECTING LIFE AND PROPERTY, OR    (3)CUARDING AGAINST OR
INSPECTING FOR VIOLATIONS OF LAW OR INVESTIGATING PERSONS

OTHER THAN THOSE SUSPECTED OF VIOLATING CRIMINAL LAWS,     ALSO
EXCLUDED ARE EMPLOYEES WHOSE DUTIES ONLY OCCASIONALLY OR

INCIDENTALLY REQUIRE THE INVESTIGATIONj APPREHENSION, OR

DETENTION OF PERSONS SUSPECTED OR CONVICTED OF VIOLATING

CRIMINAL LAWS,

                              7
        ABOUT   52,000   EMPLOYEES IN VARIOUS FEDERAL AGENCIES AND
THE DISTRICT OF COLUMBIA GOVERNMENT ARE COVERED UNDER THE
SPECIAL RETIREMENT PROGRAM. As OF JUNE 30, 1976, 11,603
RETIRED EMPLOYEES WERE RECEIVING ANNUITIES TOTALING ABOUT
$150    MILLION A YEAR.




CONTIJUED LIEED FORSPECIAL
RETIREMENT IS QUESTIONABILE
       A NEED FOR THE SPECIAL RETIREMENT PROGRAM MAY HAVE
EXISTED IN 1947, WHEN THE PROGRAM WAS ESTABLISHED TO MAKE
CERTAIN FEDERAL JOBS MORE ATTRACTIVE AND TO MAKE IT ECONOMICALLY
FEASIBLE FOR EMPLOYEES IN SUCH JOBS TO RETIRE AT A YOUNGER
AGE. BUT THE CONTINUED NEED FOR SPECIAL RETIREMENT IS
QUESTIONABLE BECAUSE
       -- REGULAR CIVIL SERVICE RETIREMENT BENEFITS HAVE BEEN
         INCREASED SUBSTANTIALLY, THUS REDUCING THE AVERAGE
         RETIREMENT AGE FOR ALL CIVIL SERVANTS;
       -- COVERED EMPLOYEES ARE NOT RETIRING MUCH EARLIER THAN
          EMPLOYEES WHO DO NOT RECEIVE THE ADDITIONAL BENEFITS
         BUT THE COSTS OF COVERED EMPLOYEES' BENEFITS ARE MUCH
         GREATER;
       -- MANY COVERED EMPLOYEES COULD CONTINUE TO PERFORM THEIR
          JOBS SATISFACTORILY AFTER AGE 50 AND OTHERS COULD BE
        ASSIGNED TO LESS DEMANDING JOBS; AND

                                  8
       -- CIVIL SERVICE DISABILITY RETIREMENT
                                              AND FEDERAL WORKERS'
         COMPENSATION BENEFITS ARE AVAILABLE
                                             TO EMPLOYEES WHO
         CAN NO LONGER PERFORM THEIR DUTIES.
       THE SPECIAL RETIREMENT POLICY FOR
                                         LAW ENFORCEMENT AND
 FIREFIGHTER PERSONNEL IS AN EXPENSIVE
                                       METHOD OF MARGINALLY
 REDUCING THE AGE OF RETIREMENT.
                                    IN 1947 THE POLICY OFFERED
 A POTENTIAL REDUCTION OF 10 YEARS
                                   IN THE MINIMUM RETIREMENT
 AGE OF COVERED EMPLOYEES COMPARED
                                   TO MOST OTHER CIVIL SERVANTS.
 HOWEVER, LIBERALIZED PAY AND RETIREMENT
                                         BENEFITS FOR ALL CIVIL
 SERVANTS HAVE REDUCED THE OVERALL
                                   AVERAGE RETIREMENT AGE.     THIS,
COMBINED WITH THE FACT THAT MOST
                                  COVERED EMPLOYEES CHOOSE NOT
TO RETIRE WHEN FIRST ELIGIBLE,
                               HAS REDUCED THE POTENTIAL DECREASE
OF 10 YEARS IN AVERAGE RETIREMENT
                                   AGE TO AN ACTUAL DECREASE
OF ABOUT 1 TO 3 YEARS. COVERED
                                 EMPLOYEES ARE RETIRING AT
EARLIER AGES BUT THEN SO ARE ALL
                                  OTHER FEDERAL EMPLOYEES.
 MANDATORY RETIREMENT WILL, OF
                                 COURSE, FURTHER REDUCE THE
 AVERAGE RETIREMENT AGE OF COVERED
                                     EMPLOYEES BEGINNING IN 1978.
 HOWEVER, WE QUESTIOiN WHETHER FURTHER
                                         REDUCTIONS IN RETIREMENT
AGES WILL BE GREAT ENOUGH TO JUSTIFY
                                         THE HIGH COSTS OF THE
SPECIAL BENEFITS,        MANDATORY RETIREMENT AT AGE 55
                                                          WILL
STILL PERMIT MOST COVERED EMPLOYEES
                                       TO WORK A FULL 25- TO
3 0 -YEAR
          CAREER AND TO RECEIVE GREATER BENEFITS
                                                   THAN REGULAR
CIVIL SERVICE EMPLOYEES WITH SIMILAR
                                        EARNINGS AND YEARS OF
SERVICE. ALSO, MANY OF THE COVERED
                                       EMPLOYEES WHO WILL BE
MANDATORILY RETIRED AT AGE 55 WILL
                                     BE SUPERVISORS OR

                             9
ADMINISTRATORS WHO GENtRALLY DO NOT NEED TO BE ANY MORE
VIGOROUS THAN ANY OTHER FEDERAL SUPERVISOR OR ADMINISTRATOR.
     To   ACHIEVE THE CURRENT 1- TO 3-YEAR REDUCTIONi   IN THE
AVERAGE RETIREMENT AGE OF COVERED EMPLOYEES, THE GOVERNMENT
PAYS HEAVILY.    BASED ON CSC ACTUARIAL ESTIMATES, THE
GOVERNMENT'S ANNUAL NORMAL COST WAS $311 MILLION IN 1976--
$118 MILLION (61 PERCENT) MORE THAN THE COST OF PROVIDING
REGULAR OPTIONAL BENEFITS TO THESE EMPLOYEES (ASSUMING A 3-
PERCENT ANNUAL SALARY ADJUSTMENT AND A 4-PERCENT ANNUAL ANNUITY
ADJUSTMENT).    CSC ESTIMATED THAT THE UNFUNDED LIABIL!TY OF
THE SPECIAL RETIREMENT PROGRAM WAS $5.3 BILLION UNDER THOSE
ASSUMPTIONS.    'HE NORMAL COST OF THE SPECIAL RETIREMENT
BENEFITS--THE PRESENT VALUE OF ALL BENEFIT RIGHTS EARNED
ANNIJALLY, EXPRESSED AS A PERCENTAGE OF TOTAL PAYROLL--WITHOUT
CONSIDERING GENERAL PAY INCREASES AND ANNUITY COST-OF-LIVING
ADJUSTMENTS (STATIC BASIS) WAS ESTIMATED BY CSC TO BE 19.7
PERCENT OF PAY, CONSIDERABLY MORE THAN THE COMBINED AGENCY-
EMPLOYEE CONTRIBUTION RATE OF 15 PERCENT.       ON A DYNAMIC BASIS--
ASSUMING 3 PERCENT PAY AND 4 PERCENT ANNUITY INCREASES--THE
ESTIMATED COST WAS   43.6   PERCENT OF PAY.   BY COMPARISON, THE
COMPOSITE NORMAL COST OF THE CIVIL SERVICE RETIREMENT SYSTEM,
INCLUDING THE SPECIAL RETIREMENT PROVISIONS, WAS ESTIMATED BY
CSC TO BE ABOUT 13.6 PERCENT OF PAY ON A STATIC BASIS AND        28.7
PERCENT OF PAY IF THE CONSERVATIVE ASSUMPTIONS OF 3 PERCENT


                                10
    PAY AND 4 PERCENT ANNUITY
                              INCREASES ARE USED IN THE
                                                        COST
    CALCULATIONS.
         MAINTAINING A TRAINED, ALERT,
                                        AND VIGOROUS WORK FORCE
                                                                  IS
   DIFFICULT, BUT SUCH PROBLEMS
                                 EXIST, TO VARYI:G DEGREES,
                                                              IN
   MOST FEDERAL OCCUPATIONS.
                               SUCH PROBLEMS ARE NORMALLY
                                                           RESOLVED
   BY USING AVAILABLE PERSONNEL
                                 MANAGEMENT TECHNIQUES, OTHER
                                                                CIVIL
   SERVICE RETIREMENT PROGRAMS,
                                 AND, IF NEEDED FOR RECRUITMENT
                                                                  AND
   RETENTION PURPOSES. SPECIAL
                                RATES OF PAY. ErPLOYEES
                                                          WHO CANNOT
   PERFORM SATISFACTORILY BEFORE
                                  THE OPTIONAL RETIREMENT
                                                           AGE
   SHOULD BE REASSIGNED TO LESS
                                DEMANDING DUTIES OR, AS A LAST
  RESORT, RETIRED UNDER EXISTING
                                 CIVIL SERVICE OR FEDERAL
                                                          WORKERS'
  COMPENSATION PROGRAMS.

      THE CONGRESS SHOULD REEVALUATE
                                     THE NEED FOR PROVIDING   SPECYAL RETIREMENT
 BENEFITS TO LAW ENFORCEMENT AND
                                 FIREFIGHTING PERSONNEL.
   -ENLY -AND UNION 2OQ~I1NJ-.
  ONNUEEDLF_'_SeCjEjALaEfIjS

       THE CIVIL SERVICE COMMISSION
                                    AGREED THAT THF SPECIAL
 RETIREMENT POL!CY NEEDS
                          TO BE REEVALUATED BUT WITHHELD
                                                          COMMENT
 ON THE CONTINUED NEED FOR
                            SPECIAL BENEFITS, PENDING
                                                      THE
 COMPLETION OF ITS OWN REVIEW,


      OPERATING AGENCIES AND EMPLOYEES
                                         UNIONS GENERALLY DISAGREED
 WITH GAO's CONCLUSIONS,
                           THEY SAID IT WAS PREMATURE
                                                       13 QUESTION
 THE EFFECTIVENESS OF SPECIAL
                               BENEFITS IN H'LPING TO MAINTAIN
                                                                 A
YOUNGER, MORE VIGOROUS WORK
                              FORCE BECAUSE (1) THE CURRENT
                                                              ANNUITY
FORMULA HAD BEEN IN EFFECT
                             ONLY SINCE JULY 1974 AND
                                                       (2; THE
MANDATORY RETIREMENT PROVISION
                                 BEGINNING IN 1978 WILL EVENTUALLY
RESULT IN EARLIER AND MORE
                            EQUITABLE RETIREMENTS FOR
                                                        COVERED EMPLOYEES

                                      -Ult~N          S O     OEEDEP~ES
 rHEY ALSO SAID THE SPECIAL RETIREMENT BENEFITS ARE NECESSARY FOR

RECRUITING AND RETAINING EMPLOYEES, MAINTAINING A HIGH LEVEL
OF EMPLOYEE MORALE, AND REWARDING EMPLOYEES FOR DOING DEMANDING

AND DANGEROUS JOBS,

GA.   EYALUAIION OF AGENCY
AN..UND
     U       -MMENT
      WE DO NOT BELIEVE THOSE ARE COMPELLING REASONS FOR NOT

REEVALUATING THE CONTINUED NEED FOR THE SPECIAL RETIREMENT

BENEFITS.     THE INEFFECTIVENESS OF THE SPECIAL RETIREMENT
BENEFITS IN HELPING TO MAINTAIN A YOUNGER, MORE VIGOROUS WORK

FORCE IS ONLY ONE OF SEVERAL FACTORS WHICH RAISE SERIOUS

QUESTIONS ABOUT THE CONTINUED NEED FOR THE SPECIAL RETIREMENT

POLICY.     OVER THE EARLY RETIREMENT POLICY'S 30-YEAR HISTORY,

INCLUDINC PERIODS WHEN THERE WERE SUBSTANTIAL DIFFERENCES

BETWEEN THE SPECIAL AND REGULAR RETIREMENT BENEFIT STRUCTURES,

COVERED EMPLOYEES HAVE NEVER RETIRED MUCH EARLIER THAN EMPLOYEES

UNDER THE REGULAR CIVIL SERVICE OPTIONAL RETIREMENT PROVISIONS.

IE BELIEVE THAT A 30-YEAR PERIOD IS LONG ENOUGH TO JUDGE THE
SPECIAL POLICY'S OVERALL EFFECTIVENESS.

      BECAUSE IHE SPECIAL BENEFITS FOR CERTAIN LAW ENFORCEMENT

PERSONNEL HAVE EXISTED FOR 30 YEARS, WE COULD NOT DETERMINE

EXACTLY WHAT EFFECTS THEY HAVE HAD ON RECRUITMENT AND RETENTION.

WIE COULD ALSO NOT ASCERTAIN EXACTLY WHAT IMPACT ELIMINATING OR

REDUCING THE SPECIAL BENEFITS WOULD HAVE ON THE RECRUITMENT

AND RETENTION OF PROSPECTIVE EMPLOYEES.    THE SPECIAL BENEFITS
OBVIOUSLY ENHANCE RECRUITMENT AND RETENTION.    BUT ARE THEY

JUSTIFIED AND NECESSARY TO ATTRACT AND RETAIN COMPETENT PEOPLE ?


                                   1?
        IN THAT REGARD, CSC RECENTLY SAID THAT, NATIONWIDEJ THERE
WERE AIPUT 24 APPLICANTS FOR EVERY FEDERAL JOB OPENING--ABOUT
30 APPLICANTS FOR EVERY FEDERAL JOB IN THE WASHINGTON, DC,
AREA.    THERE WERE REPORTEDLY ABOUT 1,000 QUALIFIED APPLICANTS
FOR FBI SPECIAL AGENT JOBSj BUT NO OPENINGS,     IN COMPARISON
WITH LOCAL, GOVERNMENTS' RETIREMENT SYSTEMS, BUREAU OF LABOR
STATISTICS COMPENSATION SURVEYS IN MAJOR U.S. CITIES SHOWED
THAT THE BEiNEFITS OF 38 OF 147 LOCAL POLICE AND FIREFIGHTER
RETIREMENT SYSTEMS ARE GENERALLY LESS LIBERAL THAN       Hi'E   SPECIAL
FEDERAL BENEFITS.    IN RELATION TO THE 38 LOCAL RETIREMENT
SYSTEMS, THE FEDERAL SYSTEM GENERALLY HAD MORE    '   IBERAL MINIMUM
AGE AND SERVICE REQUIREMENTS AND PROVIDED A HIGHER PERCENTAGE
OF SALARY.    ALSO, A RECENT CSC STUDY SHOWIED THAT FEDERAL
CRIMINAL INVESTIGATORS AND FIREFIGHTERS ARE GENERALLY PAID
MORE THAN THEIR NON-FEDERAL COUNTERPARTS,
     LIKE ALL OTHER FEDERAL WHITE-COLLAR POSITIONS, LAW
ENFORCEMENT AND FIREFIGHFER JOBS ARE PLACED IN APPROPRIATE
GRADES IN ACCORDANCE WITH THEIR DUTIES, RESPONSIBILITIES, AND
QUALIFICATION REQUIREMENTS.     THE KNOWLEDGE, SKILLS, AND
ABILITIES REQUIRED BY THESE JOBS' CHAPACTERISTICS HAVE BEEN
CONSIDERED IN SETTING POSITION CLASSIFICATIONS WHICH IN TURN
ESTABLISH BASIC RATES OF PAY,     JOB CHARACTERISTICS (FOR
EXAMPLE, HAZARD; WORKING CONDITIONS; AND THE PHYSICAL, MENTAL,
AND EMOTIONAL STRESS COMMGrj_Y ASSOCIATED WITH LAW ENFORCEMENT




                                 13
 AND FIREFIGHTING OCCUPATIONS) ARE GENERALLY NOT CONSIDERED
 DIRECTLY IN VALUING OR CLASSIFYING FEDERAL POSITIONS,             iF IT
  IS CONSIDERED NECESSARY FOR RECRUITMENT, RETENTION, OR OTHER

 PURPOSES TO PROVIDE ADDITIONAL COMPENSATION FOR CERTAIN
 FEDERAL JOBS BECAUSE OF SUCH FACTORS, THAT ADDITIONAL
 COMPENSATION SHOULD BE REFLECTED IN PAY, NOT IN RETIREMENT

 BENEFITS.

 SEVERAL MATTERS NEED REEVALUATIOiN IF
 SPECIAL RETIREMENT POLICYLCOTIJUE           S
      IF THE SPECIAL, EARLY RETIREMENT POLICY CONTINUES, WE
 BELIEVE THE CONGRESS SHOULD (1) REEVALUATE THE ELIGIBILITY
 CRITERIA, MANDATORY RETIREMENT PROVISION, AND BENEFIt
 STRUCTURE AND (2) AMEND THE LAW TO REQUIRE ADDITIONAL RETIREMENT
 CONTRIBUTIONS BY EMPLOYING AGENCIES.

 ELIGILITY CRITERIA--
 PRACTI CAL CON-S!)E~PA I!I
     DESPITE THE CONCERN OVER MAINTAINING A VIGOROUS WORK
FORCE, THE PRESENT RETIREMENT ELIGIBILITY CRITERIA DO NOT
ADDRESS THE NEED FOR VIGOROUS INCUMBENTS IN DETERMINING
COVERAGE.    INSTEAD, BENEFITS ARE PROVIDED TO ALL EMPLOYEES WHO
OCCUPY CERTAIN POSITIONS.          AS A RESULT OF THESE OCCUPATIONALLY
BASED CRITERIA, MANY INDIVIDUALS RECEIVE COVERAGE EVEN THOUGH

THE PRIMARY DUTIES OF THEIR POSITIONS DO NOT REQUIRE
EXTRAORDINARY VIGOR.

     THESE OCCUPATIONAL CRITERIA ARE PROBABLY THE RESULT OF
LAW ENFORCEMENT AND FIREFIGHTER PERSONNEL PERSUASIVELY
                                                       STATING
TH-IR CASE TO LEGISLATORS AND THE PUBLIC OVER THE YEARS.
                                                          ON
THE OTHER HAND, MANY OTHER GROUPS HAVE SOUGHT AND BEEN
                                                       DENIED
COVERAGE THROUGHOUT THE       3 0 -YEAR
                                          HISTORY OF THE PROGRAM BECAUSE
OF THE OCCUPATIONALLY BASED ELIGIBILITY CRITERIA.            INCLUDED
                                   1l
  AMONG THESE GROUFS HAVE BEEN CUSTOMS
                                        AND IMMIGRATIONS INSPECTORS,
  AIRCRAFT PILOTS, COAL MINE INSPECTORS,
                                          AND EMPLOYEES WITH
 ABNORMAL EXPOSURE TO DISEASE OR ACCIDENT.
                                              THE LAW AUTOMATICALLY
 EXCLUDES COVERAGE OF THESE POSITIONS
                                        BECAUSE THE DUTIES DO NOT
 ERiMAR1B Y INVOLVE THE "INVESTIGATION,
                                         APPREHENSION, OR DETENTION"
 OF CRIMINALS OR THE 'CONTROL AND
                                   EXTINGUISHMENT OF FIRES," AND
 NOT BECAUSE THE POSITIONS DO NOT
                                   REQUIRE EXCEPTIONAL VIGOR.
      To MORE FULLY MEET THE LAW'S OBJECTIVE, THE ELIGIBILITY
 CRITERIA WOULD HAVE TO BE BASED ON
                                     THE NEED FOR EXTRAORDINARILY
 VIGOROUS EMPLOYEES. ESPECIALLY VIGOROUS
                                           EMPLOYEES COULD BE
 NECESSARY WHERE LAPSES IN PERFORMANCE
                                        SIGNIFICANTLY AND
 IMMEDIATELY INHIBIT ACCOMPLISHMENT
                                    OF THE AGENCY MISSION AND
 WHERE THE DUTIES OF THE POSITION
                                  REQUIRE
      --EXTRAORDINARY PHYSICAL STAMINA AND
                                           CONTINUAL MENTAL
         ALERTNESS OVER LONG PERIODS OR
     -- FREQUENT SHORT-TERM EXTRAORDINARY
                                          PHYSICAL EXERTION
        UNDER ENVIRONMENTALLY ADVERSE CONDITIONS.

      THESE CRITERIA COULD ENCOMPASS, FOR
                                           EXAMPLEj THE DUTIES
OF AN INDIVIDUAL FREQUENTLY REQUIRED
                                       TO MAINTAIN CONTINUAL
ALERTNESS DURING ALL NIGHT INVESTIGATIVE
                                           SURVEILLANCES OR TO
MAKE ARRESTS OF DANGEROUS CRIMINALS
                                     OR FIGHT FOREST OR
STRUCTURAL FIRES,   IN SUCH SITUATIONS, LAPSES COULD RESULT
                                                             IN
IMMEDIATE NEGATIVE CONSEQUENCES.
                                   HOWEVtR, WE KNOW OF NO
PRACTICAL ELIGIBILITY CRITERIA OR
                                   ADMINISTRATIVE PROCEDURES




                            15
WHICH WOULD MAKE CERTAIN THAT SPECIAL RETIREMENT IS GRANTED

ONLY TO EMPLOYEES WHOSE DUTIES REQUIRE EXCEPTIONAL YOUTH AND

VIGOR.

     CO1NSIDERING THE ADMINISTRATIVE AND FINANCIAL BURDEN THAT

WOULD BE INCURRED IN TRYING TO IDENTIFY SPECIFICALLY WHICH

FEDERAL EMPLOYEES PERFORM DUTIES THAT REQUIRE YOUTH AND VIGOR
AND CONSIDERING THE EMPLOYEE ROTATIONAL POLICIES EMPLOYED BY

SOME AGENCIES, WE BELIEVE THAT CONTINUING TO GRANT SPECIAL

RETIREMENT COVERAGE ON THE BASIS OF THE PRIMARY DUTIES OF

OVERALL JOB CLASSIFICATION MAY BE THE MOST PRACTICAL CRITERIA

FOR COVERAGE UNDER THE SPECIAL RETIREMENT PROGRAM,

AERCY ANI) UNION_COTMENS
ON ELI JBILITY CRITERIA_
     CSC WITHHELD COMMENT PENDING COMPLETION OF ITS INDEPENDENT

REVIEW.   OPERATING AGENCIES GENERALLY BELIEVED THAT THE
ELIGIBILITY CRITERIA SHOULD BE LEFT ALONE.    SOME AGENCIES SAID,
HOWEVER, THA'   COVERAGE HAS BEEN UNDULY EXPANDED OVER THE YEARS
TO POSITIONS THAT DO NOT REQUIRE EXCEPTIONAL YOUTH AND VIGOR

THROUGH CHANGES IN LAWj INNOVATIVE INTERPRETATIONS OF LAW AND

MODIFICATIONS TO OR INTERPRETATIONS OF JOB DESCRIPTIONS.

EMPLOYEE UNIONS SAID THE ELIGIBILITY CRITERIA SHOULD BE EXPANDED

TO SPECIFICALLY INCLUDE OTHER FEDERAL JOBS WHICH INVOLVE HAZARD

OR PHYSICAL STRESS.




                              16
MANDATORY RETIREMENT PROVISI0N
MAY ENICOMPASS TOO MAY
     EFFECTIVE JANUARY 1, 1978, ALL COVERED EMPLOYEES MUST
RETIRE WHEN THEY REACH AGE 55 OR COMPLETE 20 YEARS OF SERVICE,

WHICHEVER COMES LATER,   AGENCY HEADS MAY GRANT INDIVIDUAL
WAIVERS UP TO AGE 60 ON A SELECTED BASIS.

     THE MANDATORY RETIREMENT PROVISION BEGINNING IN 1978 WILL

APPLY TO ALL COVERED EMPLOYEES, INCLUDING SUPERVISORS AND

ADMINISTRATORS WHO FREQLUENTLY POSSE3S VALUABLE EXPERIENCE,

ESPECIALLY YOUNG AND VIGOROUS INDIVIDUALS ARE NORMALLY t'T

NEEDED TO PERFORM SUPERVISORY OR ADMINISTRATIVE DUTIES OR

MANY COVERED OPERATING DUTIES.      THE PREMATURE RETIREMENT OF
SUCH EMPLOYEES THROUGH THE GENERALIZED APPLIC.;TION OF TMHE

MANDATORY RETIREMENT PROVISION MAY UNNECESSARILY COST THE

GOVERNMENT THE VITAL RESOURCE      OF EXPERIENCE.
AGENCY AND UNION COMMEN.S
ON MANDA/QRYRElRENE-T.

     CSC WITHHELD COMMENT PENDING COMPLETION OF ITS INDEPENDENT
REVIEW,   OPERATING AGENCIES INDICATED THAT THEY DO NOT PLAN TO
SEEK EXCEPTIONS TO THE AGE 55 MANDATORY RETIREMENT PROVISION,

EMPLOYEE UNIONS GENERALLY WERE OPPOSED TO MANDATORY RETIREMENT
AT AGE 55.
AN ALTERNATIVE BEEEFI
STRUCTURE ISAVAILABLE
     THE EXISTING BENEFIT FORMULA--2.5 PERCENT OF AVERAGE
PAY FOR EACH OF THE FIRST 20 YEARS AND 2 PERCENT OF AVERAGE


                             ].7
PAY FOR EACH YEAR THEREAFTER--PROVIDES AN ECONOMIC INCENTIVE
FOR LAW ENFORCEMENT AND FIREFIGHTER PERSONNEL TO RETIRE AT

AN EARLIER AGE AND WITH FEWER YEARS OF SERVICE THAN REGULAR

CIVIL SERVICE EMPLOYEES,   BUT, THE PROGRAM GOES BEYOND
COMPENSATING FOR AN ASSUMED OCCUPATIONALLY SHOi(TENED CAREER

BY CONTINUING TO EXTEND LIBERAL BENEFITS !,HEN FULL CAREERS

ARE SERVED.   THAT IS, COVERED PERSONNEL WHO WORK FULL 30-YEAR
CAREERS RECEIVE GREATER BENEFITS THAN REGULAR EMPLOYEES WITH

SIMILAR PRERETIREMENT EARNINGS AND YEARS OF SERVICE.     To CORRECT
THIS, THE BENEFITS COULD BE RESTRUCTURED LIKE THOSE FOR AIR

TRAFFIC CONTROLLERS.

     THE LAW ALSO PROVIDES SPECIAL RETIREMENT BENEFITS TO AIR
TRAFFIC CONTROLLERS.   CONTROLLERS ARE ELIGIBLE TO RETIRE ON AN
IMMEDIATE ANNUITY AFTER 25 YEARS OF SERVICE OR UPON REACHING

AGE 50 AFTER 20 YEARS OF SERVICE.   LIKE LAW ENFORCEMENT AND
FIREFIGHTER PERSONNEL, THE PURPOSE OF SPECIAL RETIREMENT FOR

CONTROLLERS IS TO IMPROVE PUBLIC SAFETY BY MAINTAINING A YOUNG,

VIGOROUS WORK FORCE.   CONTROLLERS' ANNUITIES ARE NOT, HOWEVER,
COMPUTED UNDER A MORE GENEROUS BENEFIT FORMULA.     INSTEAD, THEIR
ANNUITY IS EQUAL TO THE HIGHER OF (1) THAT PRODUCED BY THE

REGULAR CIVIL SERVICE FORMULA OR (2) 50 PERCENT OF AVERAGE PAY.
THUS, CONTROLLERS MEETING THE AGE/SERVICE CRITERIA ARE GUARANTEED

AN ANNUITY OF AT LEAST 50 PERCENT OF AVERAGE PAY.    THE SPECIAL
RETIREMENT PROVISIONS FOR CONTROLLERS PROVIDE AN ECONOMIC

INCENTIVE TO RETIRE EARLY, BUT THEY DO NOT PERMIT CONTROLLERS

CHOOSING TO SERVE FULL 30-YEAR CAREERS TO RECEIVE GREATER

RETIREMENT BENEFITS THAN OTHER CIVIL SERVICE EMPLOYEES.

                               i8
AGENCY AND UNION COMMENTS
ON BENEFIT STRUCTURE
     CSC WITHHELD COMMENT PENDING COMPLETION OF ITS INDEPENDENT

REVIEW┬░   OPERATING AGENCIES GENERALLY TOOK THE POSITION THAT

COVERED EMPLOYEES SHOULD RECEIVE GREATER BENEFITS THAN OTHER

EMPLOYEES WITH SIMILAR EARNINGS AND YEARS OF SERVICE.      IN THAI
REGARD, MOST AGENCIES BELIEVED THE BENEFIT STRUCTURE USED FOR

AIR TRAFFIC CONTROLLERS WOULD NOT BE APPROPRIATE FOR LAW

ENFORCEMENT OR FIREFIGHTER PERSONNEL.   EMPLOYEE UNIONS SAID

IHE MORE LIBERAL BENEFIT STRUCTURE IS JUSTIFIED.

FULL COSTS Df RETIRENT BENEFITS
SHOULD BE_Rfi GNIZEDA ND FUNDED
     IN PREVIOUS REPORTS TO THE CONGRESS AND THE POST OFFICE

AND CIVIL SERVICE COMMITTEES AND TESTIMONY BEFORE THIS
SUBCOMMITTEE WE HAVE TAKEN THE POSITION THAT THE FULL COSTS

OF CIVIL SERVICE RETIREMENT BENEFITS, INCLUDING EXPECTED PAY

AND ANNUITY INCREASES SHOULD BE FULLY RECOGNIZED AND FULLY

FUNDED.   THIS APPLIES EQUALLY TO THE ADDITIONAL COSTS OF THE

SPECIAL RETIREMENT BENEFITS,   THE PROPER RECOGNITION OF
RETIREMENT COSTS WOULD ENABLE THE CONGRESS NOT ONLY TO MAKE

WELL-INFORMED DECISIONS ON RETIREMENT MATTERS BUT ALSO TO

BETTER EVALUATE THE COST EFFECTIVENESS OF AGENCY PROGRAMS.
IN OUR OPINION, THE PREFERABLE APPROACH TO RETIREMENT FUNDING

WOULD REQUIRE COST RECOGNITION AND FUNDING ON A "DYNAMIC"

BASIS, WITH FULL CONSIDERATION OF THE EFFECT OF PAY RAISES AND


                               19
COST-OF-LIVING ADJUSTMENTS ON ULTIMATE ANNUITY
                                                PAYMENTS, AND
ALLOCATION OF ALL GOVERNMENT RETIREMENT COSTS
                                               TO AGENCY
OPERATIONS,

     UNTIL THE TRUE COSTS OF CIVIL SERVICE RETIREMENT
                                                       BENEFITS
ARE FULLY RECOGNIZED AND FULLY FUNDED, THE
                                            CONGRESS SHOULD
AMEND THE LAW TO REQUIRE CONTRIBUTIONS FROM
                                             EMPLOYING AGENCIES
EQUAL TO THE DIFFERENCE BETWEEN EMPLOYEE
                                         CONTRIBUTIONS
(CURRENTLY 7.5 PERCENT OF PAY) AND THE STATIC
                                               NORMAL COST OF
SPECIAL BENEFITS (CURRENTLY ABOUT 20 PERCENT
                                              OF PAY),  SUCH
ADDITIONAL CONTRIBUTIONS WOULD SERVE TO BETTER
                                                RECOGNIZE THE
COSTS OF SPECIAL RETIREMENT BENEFITS AND LAW
                                              ENFORCEMENT/
FIREFIGHTING FUNCTIONS.




     THIS CONCLUDES MY STATEMENT, MADAM CHAIR,
                                               AND I WILL BE
PLEASED TO ANSWER QUESTIONS,




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