/ f ^ tAy 
 
REPRINT OF 
 
 MESSAGE FROM THE 
 PRESIDENT OF THE UNITED STATES 
 
 AND REPORT OF THE COMMISSION ON 
 
 ECONOMY AND EFFICIENCY 
 
 RELATIVE TO 
 
 RETIREMENT FROM 
 
 THE CLASSIFIED CIVIL SERVICE 
 
 OF SUPERANNUATED 
 
 EMPLOYEES 
 
 WASHINGTON 
 
 GOVERNMENT PRINTING OFFICE 
 
 1912 
 
REPRINT OF 
 
 MESSAGE FROM THE 
 PRESIDENT OF THE UNITED STATES 
 
 AND REPORT OF THE COMMISSION ON TIXZ. 
 
 ECONOMY AND EFFICIENCY '7 ^ ^f 
 
 RELATIVE TO 
 
 RETIREMENT FROM 
 THE CLASSIFIED CIVIL SERVICE 
 OF SUPERANNUATED 
 ■ EMPLOYEES 
 
 I 
 
 WASHINGTON 
 
 GOVERNMENT PRINTING OFFICE 
 
 1912 
 

 Note. — The full report of the commission, including the appen- 
 dixes in detail, was published as House Document No. 732 (62d 
 'Cong., 2d sess.). The appendixes are not included in the present 
 reprint. 
 
MESSAGE. 
 
 To the Senate and House of Representatives: 
 
 I transmit herewith a report of the Commission on Economy and 
 Efficiency on the subject of the retirement from the classified civil 
 service of superannuated employees. To the plan proposed in this 
 report and set forth in detail in the accompanying draft of a bill I 
 give my unqualified approval, because I believe it to be sound in 
 principle and just both to the Government and to its employees. 
 
 Necessity for a Retirement Plan. 
 
 It is unnecessary at this time to discuss at length the necessity for 
 adopting some plan by which the service may be relieved of the loss 
 from the inefficiency of the personnel caused by the retention on the 
 rolls, after long and faithful service, of those who have passed the 
 age when they can perform a full day's work. The subject is one 
 with which all administrative officers are familiar. It has been 
 referred to in several messages which I have sent to the Congress and 
 in many reports of the heads of departments. It is conceded by 
 everyone acquainted with the situation that some action must be 
 taken. Under present conditions the loss to the Government wiU 
 continue to increase. Some method other than the summary dis- 
 charge of employees when they become inefficient on account of age 
 must be adopted. The present practice of retaining such employees 
 on the rolls and, as they grow older, expecting from them a smaller 
 quantity and lower grade of work can not continue indefinitely with- 
 out seriously impairing the efficiency of the entire service and impos- 
 ing upon the Government a cost that will be in excess of the expense 
 to be incurred by the adoption of a reasonable plan for remedying 
 existing conditions. 
 
 Proposed Plan of Retirement. 
 
 The plan submitted by the commission contemplates that each 
 employee in the classified service in the executive departments and 
 estabhshments at Wasliington shall be retired as soon as he reaches 
 the age of 70 years and shall receive thereafter an annuity equal to 
 one-half of his annual salary, with the provision that no annuity shall 
 exceed $600. 
 
 I invite particular attention to the fact that the plan provides that 
 each person hereafter entering the service shall pay the entire expense 
 
 1 
 
2 RETIREMENT OF SUPERANNUATED EMPLOYEES. 
 
 of liis own retirement by contribution from his salary, so that when he 
 reaches the age of 70 years the fund he has accumulated w^ill provide 
 his retirement allowance. In such a case the only contribution of 
 the Government, if any, will be the difference between the interest 
 earned by Ms savings deposited in the Treasury and invested by the 
 Government and the rate of 4 per cent per annum. So far as con- 
 cerns this class of persons, there certainly can be no reasonable ob- 
 jection to the plan, and I doubt if aiiy plan more beneficial both to 
 the Government and to the employee could be devised. 
 
 Employees Now in the Service. 
 
 It is evident that the application of the plan only to those who 
 hereafter enter the service would not relieve the present condition due 
 to superannuation nor save the Government from the constantly 
 increasing loss from that cause. It is not practicable for those now 
 70 years of age, or for those nearing that age, to provide the cost of 
 retirement entirely at their own expense. To meet the existing 
 situation and to put a retirement plan, into effect immediately there 
 must be some contribution by the Government. This contribution 
 need be little more in the aggregate than is now the Government's 
 loss from inefficiency due to superannuation. After a comparatively 
 short period of years the annual payments made by the Government 
 will be less than the loss it would sustain if no plan were adopted. 
 
 It is proposed that an employee now in the service who has reached 
 the age of 70 years shall be retired and be paid by the United States 
 an annuity equal to one-half of his average annual pay for the last 
 five years, but no such annuity to exceed $600. As to an employee 
 less than 70 years of age, it is proposed that he shaU be retired when he 
 reaches 70 on an annuity equal to one-half of his average annual pay 
 for the entire period of his service (no annuity to exceed $600), and 
 that there shall be deducted from his pay until he reaches 70 years 
 such an amount, not exceeding 8 per cent of his pay, as, with 4 per 
 cent interest, will purchase his annuity. In the case of an employee 
 who has but a few years to serve before reaching 70, some contribution 
 by the Government will be necessary to supplement his savings in 
 order to provide an annuity of a reasonable amount. 
 
 Annuities Limited to .1 
 
 A retirement plan is only a means to an end and that end is an 
 increase of efficiency in the public service. The Government is not 
 required to take charge of an employee's finances, nor is it justified 
 in doing so except so far as it is necessary to protect the Government 
 against the inefficiency of the employee due to superannuation. It 
 is my opinion, therefore, that a plan of retirement should be so 
 adjusted as to make the least possible demand upon the Government 
 
RETIREMENT OF SUPERANNUATED EMPLOYEES. 3 
 
 and at the same time draw from his personal control as little of an 
 employee's money as possible. The proposed plan meets these re- 
 quirements. Wliile the maximum annuity of $600 is not sufficient 
 to provide the luxuries of life, it is enough to insure an employee 
 against want, even if he has been so unfortunate as to have made no 
 other provision for his declining years. It is sufficient also to render 
 ineffectual the appeals so often made to the sympathy of adminis- 
 trative officers when they attempt to remove from office an employee 
 who has become inefficient through old age. At the same time the 
 amount withheld from an employee's salary in order to provide his 
 annuity is not sufficient to justify the thrifty in complaining that 
 they are being deprived of an excessive portion of their income which 
 they could invest more profitably. 
 
 Kate of Interest on Savings. 
 
 In any compulsory saving plan it is but just that the Government 
 should guarantee a reasonable rate of interest to its employees. Four 
 per cent is the rate now paid by the Government on deposits of enlisted 
 men of the Army and Navy and it is the rate paid by many savings 
 banks. The plan recommended by the commission contemplates the 
 investment of the savings of employees in the highest class of secu- 
 rities and that the United States shall contribute such amount, if any, 
 as may be needed to insure the employees receiving 4 per cent per 
 annum. 
 
 Application of Plan to Employees in the District of Columbia. 
 
 I am convinced that the application of the plan should be limited 
 for the present to the classified civil service in the executive depart- 
 ments and offices at Washington, where the loss from superannuation 
 is the greatest. While any plan is in its experimental stage it should 
 be kept within narrow limits. If successful in operation in Wash- 
 ington it can be extended as the needs of the service require. 
 
 Cost to the Government. 
 
 It being conceded that no immediate benefit to the Government 
 could accrue without some temporary help from it, I directed the 
 Commission on Economy and Efficiency to make an investigation 
 of the loss due to superannuation in the service at Washington. Its 
 report sets forth in detail the results of this investigation. It has 
 involved an examination of the efficiency of 22,754 employees, as 
 such efficiency was reported by the departments. At no other time 
 has such a thorough investigation been made of the service in Wash- 
 ington. An earnest effort was made to ascertain and to state in 
 money the financial loss which is sustained from the inefficiency of 
 aged persons in the service. Wliile the loss shown as the result of 
 
4 KETIREMENT OF SUPERANNUATED EMPLOYEES. 
 
 the investigation is undoubtedly much less than the actual loss 
 from superannuation, the figures are sufficiently large to justify the 
 Government in giving temporary aid in putting the plan into opera- 
 tion. Accepting the very conservative figures as to the loss now sus- 
 tained, the inefficiency in the service which is due to old age can be 
 wiped out immediately and permanently in Washington by an 
 average annual expenditure^ during the next 20 years of $226,986 
 over and above the annual loss that v/ill be sustained from superan- 
 nuation if no plan is adopted for avoiding it. The accompanying 
 report shows further that the saving to the Government that will 
 result from the adoption of the proposed plan will equal, in the 
 course of the succeeding 16 years, the entire cost of inaugurating the 
 plan. 
 
 Straight Pensions Not Advisable. 
 
 I am firmly convinced that the proposed plan is superior to any 
 form of straight pensions, in that an employee upon retirement at any 
 time may avail himself of his savings with the accrued interest, or his 
 representatives may do so in the event of his death, whereas any form 
 of pension or gratuity from the Government must inevitably be con- 
 sidered as a part of compensation and is available only to those 
 employees who succeed in living to a given age, in remaining in the 
 service to that ago, and in livmg a sufficient time beyond that age to 
 receive in pension payments the value of their deferred pay. Avoid- 
 ing, therefore, the dangers and disadvantages of the straight pension, 
 the proposed plan commends itself as satisfactory from the viewpoint 
 of the Government and the viewpoint of the employees. It is advan- 
 tageous to the Govejnment, since the efficiency of the service will be 
 increased by providing the means of retiring those who have reached 
 the age or decline. It is advantageous to the emplo3^ees, since it pro- 
 tects them from want in old age with the least interference in their 
 private affairs; and makes the service more attractive to the younger 
 employees by facilitating promotions to higher salaries and grades at 
 earlier ages than is possible under present conditions. 
 
 Conclusion. 
 
 A careful study of the existing situation with reference to super- 
 annuation, and a consideration of the worse conditions that wUl 
 appear in the future, leads me again to commend the subject to the 
 earnest consideration of the Congress. I believe that the plan pro- 
 posed in the commission's carefully prepared and exhaustive report is 
 the best that has been devised for meeting the present and future 
 needs of the service, and therefore I urge the enactment of the 
 necessary legishition to put it into effect at an early date. 
 
 Wm. H. Taft. 
 
 The White House, May 6, 1912. 
 
REPORT TO THE PRESIDENT 
 
 ON 
 
 RETIREMENT ALLOWANCES 
 
 SUBMITTED BY 
 
 THE COMMISSION ON ECONOMY AND EFFICIENCY 
 
 APRIL, 1912 
 
TABLE OF CONTENTS. 
 
 Page. 
 Retirement allowances 9 
 
 Efficiency and economy in public service require retirement plan 10 
 
 Need of retirement plan noted by Chief Executive and beads of departments.. 11 
 
 Straight-pension plans versus contributory plans ; 16 
 
 Objections to straight-pension plans 17 
 
 Costliness of straight-pension plan 17 
 
 Experience of England with straight-pension system 18 
 
 Demoralizing effect of straight-pension system on Government service 20 
 
 Straight-pension system would raise more questions than it would settle 21 
 
 Pension plans suitable for private corporations not appropriate for Gov- 
 ernment 21 
 
 Sound contributory plan solution of problem of superannuation In Government 
 
 service , 23 
 
 Sound contributory plans proposed in recent years 24 
 
 Calculations as to the cost of establishing these plans 24 
 
 Table I, showing annual appropriation necessary to provide monthly 
 
 annuity to persons in classified service June 30, 1903 25 
 
 Table II, showing annual appropriation necessary to provide quarterly 
 
 annuity to persons in classified service June 30, 1907 26 
 
 Table III, showing total and comparative cost to the Government of 
 • establishing plan for retiring employees under terms of Perkins and 
 
 Gillett bills ....:... 28 
 
 Difference in cost between straight-pension and contributory plan confer- 
 ring same benefits 31 
 
 Table IV, showing comparative cost to the Government during first 
 35 years of retiring employees on straight pensions and under the 
 
 Perkins bill 32 
 
 Table V, showing comparative cost to the Government during first 35 
 years of retiring employees on straight pensions and under the GU- 
 
 lett bill 34 
 
 Reluctance of Congress to provide for retirement of civil employees on account 
 
 of expense 36 
 
 Expense of establishing proposed contributory plan justified 36 
 
 Arguments of employees against contributory plan answered 36 
 
 Deductions from salaries of employees now in service should be limited. . . 37 
 
 Government should not penalize employees leaving service 38 
 
 Government should pay liberal rate of interest on enforced savings 38 
 
 Both annuity and cash settlements should be arranged to protect interests 
 
 of employee 39 
 
 No danger in savings fund 39 
 
 Commission's effort to ascertain annual loss to Government through inefficiency 
 
 of aged employees 40 
 
 Table VI, showing the number of employees in the classified civil service 
 in the District of Columbia 70 years of age and over, the amount of sala- 
 ries paid, the amount and per cent of salaries earned, and the amount and 
 
 per cent of salaries unearned, or the loss due to superannuation 41 
 
 45700°— 12 2 7 
 
8 TABLE OF CONTENTS. 
 
 Commission's effort to ascertain annual loss to Government, etc. — Continued. Page. 
 Reluctance of officers to report on individual employees makes figures of 
 
 loss less than the fact 41 
 
 Basis of estimate of future losses from superannuation 42 
 
 Table VII, showing the number of employees in the classified civil service 
 in the District of Columbia, distributed according to age, the total salaries 
 paid, the total salaries earned, the per cent of salary earned, and the per 
 
 cent of salary not earned 42 
 
 Per cent of salary earned at various ages 44 
 
 Age at which loss justifies retirement 44 
 
 Method of calculating future loss to Government from superannuation .... 46 
 Diagram showing the per cent of salary earned, based on department 
 
 reports, and the percentages found by graduation 47 
 
 Table VIII, showing the annual loss that will be sustained by the 
 Government during the next 36 years if no plan is adopted for retiring 
 employees now in the classified civil service in the District of Colum- 
 bia when 70 years of age 48 
 
 Commission's effort to determine what expense the Government is justified in 
 
 incurring to avoid loss from superannuation 48 
 
 Plan presented by the commission 50 
 
 Table IX, showing the total maximum cost of retiring at age 70 all employees 
 now in the classified civil service in the District of Columbia on annuities 
 equal to one-half pay (maximum |600), maximum deduction from salary 
 
 8 per cent 51 
 
 Cost of establishing proposed plan 51 
 
 Table X, showing the net cost to the Government of establishing the 
 
 plan and the gain to the Government from its establishment ... 53 
 
 Table XI, ehowilig the deductions required from salaries at various ages. 54 
 
 Recommendatibns of the commission 55 
 
 Di^ftofbill 58 
 
 Appendixes: ^ . . . 62 
 
RETIBEMENT ALLOWAl^OES. 
 
 April 18, 1912. 
 The President : 
 
 The Commission on Economy and Efficiency has the honor to sub- 
 mit the following report on "Retirement allowances." The report 
 and recommendations apply to the employees in the permanent 
 classified service in the executive departments and independent 
 Government establishments in the District of Columbia. The plan 
 submitted provides for three classes of employees: 
 
 (a) Employees in that service who have reached the age of 70 
 years when the plan is put into operation. 
 
 (b) Employees in that service who are less than 70 years of age 
 when the plan is put into operation. 
 
 (c) Persons who enter that service after the plan is put into opera- 
 tion. 
 
 The essential features of the plan, which are set forth in detail in 
 the draft of bill at the end of this report, and which require legisla- 
 tion to carry them into effect, are the following: 
 
 1, That an employee now in the service who is 70 years of age be 
 retired, and be paid by the United States an annuity equal to one- 
 half of his average annual pay for the past live years, but no such 
 annuity to exceed $600. 
 
 2, That an employee now under 70 years of age be retired when he 
 reaches that age and be paid an annuity equal to one-half of his aver- 
 age annual pay for the entire period of service, but no such annuity 
 to exceed $600; provided, that there shall be deducted from the pay 
 of such employee until he reaches 70 years an amount which, with 
 interest at 4 per cent, compounded annually, will purchase such 
 annuity, but no monthly deduction shall exceed 8 per cent of the 
 moiithly pay. 
 
 3. That a person first employed after the retirement plan is put 
 into operation shall provide for the entire cost of his retirement allow- 
 ance (which shall be an annuity of one-half of his average annual 
 pay during his entire service, but no annuity to exceed $600), by 
 deductions from his current pay of such amounts as may be required, 
 with interest at 4 per cent, compounded annually, to pay his annuity. 
 
 4. That any person separated from the service before the age of 60 
 shall receive the amount of deductions made from his pay, with 4 per 
 cent interest, compounded annually; after the age of 60, and before 
 reaching 70, he shall receive the amount with interest in 10 annual 
 installments, unless the total amount is less than $600, in which case 
 the aihouiit shall be paid at once. In case of death at any tinie before 
 
 9 
 
10 REPORT TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 
 
 reaching 70, the amount of deductions, with interest, shall be paid to 
 his legal representatives. In case of death after 70, the balance re- 
 maining to his credit over and above the sums paid to him in annuities 
 shall be paid to his legal representatives. 
 
 5. That the Secretary of the Treasury shall invest the deductions 
 and accrued interest thereon in bonds of the United States, States, 
 and municipalities; and the United States shall appropriate a sum 
 sufficient to assure to employees interest at 4 per cent per annum, 
 compounded annually, on all deductions from salaries. 
 
 In the discussion of the subject in this report, the commission has 
 presented its reasons for the conclusions it has reached concerning the 
 best plan for relieving the Government of the large direct and indirect 
 loss due to superannuation among its clerical force in the executive 
 service in the District of Columbia. The total cost to the Govern- 
 ment during the next 30 years, in payment of annuities to employees 
 to be now retired and of a part of the annuities of those hereafter re- 
 tired, will be but a small amount in excess of the loss from superannua- 
 tion that will occur if no retirement plan is adopted. The cost for 
 those retired on an annuity paid in part by the United States wUl soon 
 thereafter be reduced to an inconsiderable sum, and be much less than 
 would be the loss from superannuation. All employees retired after 
 30 years from the taking effect of the plan will provide all the money 
 needed to pay their own annuities. 
 
 Without doing an injustice to any faithful employee, but on the 
 other hand conferring an immediate benefit on many by more rapid 
 promotion, the plan will confer a definite and substantial benefit on 
 the service as a whole and increase to a marked degree the efficiency 
 of the personnel. 
 
 SAVINGS AND ANNUITY PLAN PROPOSED FOR RETIREMENT OF 
 CIVIL-SERVICE EMPLOYEES. 
 
 Efficiency and Economy in Public Service Require Retire- 
 ment Plan. 
 
 The Commission on Economy and Efficiency has made a thorough 
 investigation of the personnel of the civil service in the District of 
 Columbia and is convinced that the service can never be brought up 
 to the highest possible standard of efficiency until a satisfactory plan 
 for the retirement of the aged employees is adopted by the Govern- 
 ment. Any comprehensive scheme for the improvement of the civil 
 service must include a proper plan of retirement for civil servants. 
 While it is true that the laws regulating the civil service do not 
 insure a permanent tenure of office, but on the contrary specifically 
 provide for the removal of the inefficient, the fact is well known that 
 this provision of law is disregarded whenever inefficiency is the result 
 of old age; nor does this commission believe that Congress will insist 
 
EEPOET TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 11 
 
 upon administrative officers removing inefficient old people from the 
 service so long as no retiring allowance has been provided for them. 
 The work of the Government offices must therefore continue to be 
 retarded by the inefficiency of aged clerks imtil such time as a 
 retirement law is put into operation. The commission feels, there- 
 fore, that it can not lay too great emphasis on the fact that, without 
 a provision for retiring aged employees, it is idle to expect either 
 thorough efficiency in the public service or the closest economy in 
 the expenditure of salary appropriations. 
 
 Need of Retirement Plan Noted by Chief Executive and 
 Heads of Departments. 
 
 For years past heads of departments and chiefs of bureaus have 
 called attention in their annual reports to the need of a proper system 
 ■of retiring the aged employees, and recently the matter has received 
 the special attention of the Chief Executive. 
 
 The subject of superannuation in the public service has received the 
 a,ttention of President Taft in three annual messages to Congress. In 
 his message to Congress in 1909, under the caption of "Reduction in 
 the cost of governmental administration," he recommended legisla- 
 tion for the retirement of superannuated civU servants, couphng 
 with it a recommendation for an increase of salaries. He said: 
 
 More than this, every reform directed toward improvement in the average efficiency 
 of Government employees must depend on the ability of the executive to eliminate 
 from the Government service those who are inefficient from any cause, and as the 
 degree of efficiency in all the departments is much lessened by the retention of old 
 employees who have outlived their energy and usefulness, it is indispensable to any 
 proper system of economy that provision be made so that their separation from the 
 service shall be easy and inevitable. It is impossible to make such provision unless 
 there is adopted a plan of civil pensions. 
 
 Most of the great industrial organizations and many of the well-conducted railways 
 of this country are coming to the conclusion that a system of pensions for old employees 
 and the substitution therefor of younger and more energetic servants promotes both 
 economy and efficiency of administration. 
 
 I am aware that there is a strong feeling in both Houses of Congress, and possibly in 
 ihe country, against the establishment of civil pensions, and that this has, naturally, 
 grown out of the heavy burden of military pensions, which it has always been the 
 policy of our Government to assume; but I am strongly convinced that no other prac- 
 tical solution of the difficulties presented by the superannuation of civil servants can 
 be found than that of a system of civil pensions. 
 
 The business and expenditures of the Government have expanded enormously since 
 the Spanish War, but as the revenues have increased in nearly the same proportion as 
 the expenditures until recently the attention of the public and of those responsible 
 for the Government has not been fastened upon the question of reducing the cost of 
 administration. We can not, in view of the advancing prices of living, hope to save 
 money by a reduction in the standard of salaries paid. Indeed, if any change is made 
 in that regard, an increase rather than a decrease will be necessary; and the only 
 means of economy will be in reducing the number of employees and in obtaining a 
 greater average of efficiency from those retained in the service. 
 
12 REPORT TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 
 
 In his next annual message to Congress (19 JO) President Taf t went 
 still further and recommended a definite plan— the one discussed in 
 this report — -and a definite bill, the Gillett bill (H, R. 22013), as 
 the one, in his judgment, best calculated to solve satisfactorily the 
 problem of superannuation in the civil service. He said: 
 
 It is impossible to proceed far in such an investigation without perceiving the nee<J 
 of a suitable means of eliminating from the service the superannuated. This can be 
 done in one of two ways; either by straight civil pension or by some form of con- 
 tributory plan. 
 
 Careful study of experiments made by foreign governments shows that three serioua 
 objections to the civil pension payable out of the Public Treasm-y may be brought 
 against it by the taxpayer, the administrative officer, and the civil employee, respec- 
 tively. A civil pension is bound to become an enormous, continuous, and increasing 
 tax on the public exchequer; it is demoralizing to the service since it makes difficult 
 the dismissal of incompetent employees after they have partly earned their pension; 
 and it is disadvantageous to the main body of employees themselves since it is always 
 taken into account in fixing salaries, and only the few who siu-vive and remain in the 
 service until pensionable age receive the value of their deferred pay. For this reason 
 after a half century of experience under a most liberal pension system, the civil 
 servants of England succeeded, about a year ago, in having the system so modified 
 as to make it virtually a contributory plan with provision for refund of their theoretical 
 contributions. 
 
 The experience of England and other countries shows that neither can a contributory 
 plan be successful, human nature being what it is, which does not make provision for 
 the return of contributions, with interest, in case of death or resignation before pen- 
 sionable age, Followed to its logical conclusion this means that the simplest and 
 most independent solution of the problem for both employee and the Government is a 
 compulsory savings arrangement, the employee to set aside from his salary a sum suffi- 
 cient, with the help of a liberal rate of interest from the Government, to purchase an 
 adequate annuity for him on retirement, this accumulation to be inalienably his 
 and claimable if he leaves the service before reaching the retirement age or by his 
 heirs in case of his death. This is the principle upon which the Gillett bill now 
 pending is drawn. 
 
 The Gillett bill, however, goes further, and provides that the Government shall 
 contribute to the pension fund of those employees who are now so advanced in age 
 that their personal contributions will not be sufficient to create their annuities before 
 reaching the retii-ement age. In my judgment this provision should be amended so 
 that the annuities of those employees shall be paid out of the salaries appropriated 
 for the positions vacated by retirement, and that the difference between the annuities 
 thus granted and the salaries may be used for the employment of efficient clerks at the 
 lower grades. If the bill can be thus amended, I recommend its passage, as it will 
 initiate a valuable system and ultimately result in a great saving in the public ex- 
 pend! tiu-es. 
 
 In the President's message to Congress, December 21, 1911, it was 
 said : 
 
 I have already advocated, in my last annual message, the adoption of a civil-service 
 retirement system, with a contributory feature to it so as to reduce to a minimum the 
 cost to the Government of the pensions to be paid. After considerable reflection, I am 
 very much opposed to a pension system that involves no contribution from the em- 
 ployees. I think the experience of other Governments justifies this view; but the 
 crying necessity for some such contributory system, with possibly a preliminary gov- 
 ernmental outlay, in order to cover the initial cost and to set the system going at once 
 while the contributions are accumulating, is manifest on every side. Nothing will so 
 much promote the economy and efficiency of the Government as such a system. 
 
BEPORT TO THE PBESIBENT ON RETIREMENT ALLOWANCES. 18 
 
 In his report for 1911 the Secretary of tlie Treasury expressed him- 
 self in favor of a retiring allowance for the superannuated, as follows: 
 
 The executive departments are suffering exti-emely for want ol a retirement law; 
 and all improvements of the public service have to constantly meet the discourage- 
 ments of this condition, while much improvement is by this condition disco.uraged 
 even from a beginning. I appeal, therefore, to Congress again, as I have doAe each 
 year, in behalf of such a law. Every consideration of humanity, economy, and 
 efficiency that is conceivably related to the question calls for action at this session. 
 
 The retirem.ent system which I consider most in the interest of the clerks themselves 
 is the contributory system; and that would cost the Government no money whatever — 
 if that were thought to be desu'able. That this system could be put into operation 
 without increased expenditures, I believe is entirely true; and I think it could be 
 adopted with the provision that each department should put it into operation without 
 any cost to the Government; but it is at the same time a question whether that w;Quld 
 be the best course to pursue. This contributory system, if adopted, would leave the 
 claims of the clerks to revised or higher salaries unaffected. On the other hand, th'^ 
 so-called straight pension — the pension paid wholly by the Government — would take 
 the place of any possible advance in salaries for, at any rate, a considerable period, 
 notwithstanding the fact that under such a system comparatively few of the clerks 
 would ever become beneficiaries. 
 
 However, some system of retiring allowance is so greatly needed as an aid to economy 
 and efiiciency that I would be glad to see any system adopted which could be put 
 into effect immediately; for any system could bo changed after experience showed 
 its defects. (Annual Report of the Secretary of the Treasury, 1911, p. 7.) 
 
 In his report for 1911 the Secretary of War called attention to the 
 need of a plan for the retirement of the aged employees as follows: 
 
 I am heartily in favor of some measure by which employees of the Federal Gov- 
 ernment may be retired and pensioned when they reach a condition of impaired use- 
 fulness after years of faithful service. In taking such action we should only be fol- 
 lowing the world-wide trend of national Governments and large business corporations, 
 whether we find warrant for such action in humanitarian principles or considerations 
 of a sound business policy, or both combined. 
 
 The purely monetary rewards and opportunities of the Government service ought 
 not to be and never will be so great as those offered in the business and professional 
 world elsewhere, and if the Government service is to be maintained upon a high and 
 increasing level of proficiency it must meet the competition from other quarters by 
 some compensating features that will attract the best talent to its service and retain it. 
 
 While I am not prepared to express a decided conviction as between a straight-out 
 Government pension and one to which the employee himself shall have contributed 
 a portion, there is abundant proof that the Government, in effect, though indirectly, 
 has for many years throughout its service maintained a pension system without retire- 
 ment, and if it should now establish a pension system with retirement there is good 
 reason to believe that in the long run it would not only suffer no pecuniary loss, but 
 on the contrary would reap a substantial gain in the increased efficiency and improved 
 morale of the service. (Annual Report of the Secretary of War, 1911, p. 33.) 
 
 In his report f or 1911 the Postmaster General called attention to the 
 need of a, system of retiring the aged employees, as follows : 
 
 Almost without exception foreign nations provide for the pensioning of civil-service 
 employees when they become superannuated . Large corporations in this country are 
 rapidly adopting the sanie principle in the reliremout of their aged employees. On 
 business grounds, if for no other reason, the Government should do likewise. 
 
14 KEPOB-T TO THE PEESIDENT ON RETIREMENT ALLOWANCES. 
 
 While the compensation of postal (>mployees has been considerably increased dur- 
 i 11,^' the last few years, it is hardly more than sufficient to meet necessary living expenses 
 and consequently does not permit the putting aside of any considerable savings against 
 old age. It is believed that a civil pension based on length of employment should be 
 granted by the Government. Benefits to the service far outweighing the expense of 
 such pensions would undoubtedly result. (Annual Report of the Postmaster General, 
 .1911, p. 15.) 
 
 The Secretary of the Navy said in his annual report for 1911: 
 
 Not only should increased compensation be provided for the clerks, but legislation 
 should be enacted looking to the establishment of some form of civil-service retirement. 
 I am not prepared at this time to advocate any particular system, believing that this 
 is a matter which shoidd be determined by Congress after careful consideration; but 
 xmlesH some provision be made for the pensioning or retiring of superannuated civil 
 employees the Government can nev(>r ho])e to secure the most efficient and satisfactory 
 service. 
 
 There is no class of employees who are more deserving of increased compensation 
 and retirement with reasonable pay than the employees of the Government. Very 
 few of them are able to accumulate much, if anything, during their long years of 
 service, and when old-age disability does come to them they must either be carried 
 as a burden on the Government's rolls or thrown out on the world with, no suitable 
 }>rovision for tlieir last years. 
 
 But, aside from all sentimental considerations, I believe that civil-service retire- 
 ment by the Government would be along the line of sound business management. 
 Many railroads and industrial corporations have found it advisable to adopt such a 
 system, and the practice is a growing one. 
 
 I earnestly recommend that suitable legislation be had in this matter. (Annual 
 Report of the Secretary of the Navy, 1911, p. 18.) 
 
 In his last annual report (1911) the Secretary of the Interior treats 
 of the subject as follows. He says: 
 
 I earnestly recommend the enactment of legislation authorizing tlie retirement of 
 employees who, after long and faithful service, are disabled by age or infirmity from 
 the efficient performance of their duties. The civil servants of the Government, like 
 those in the military and naval service, are debarred from the chance of large gains, 
 the hope of which is a constant stimulus to men in ])rivate business. Moreover, those 
 of technical or superior administrative ability are and must continue to be paid smaller 
 salaries than they would command in private employment. It is therefore impossible 
 for them to acquire financial independence or make due provision for old age, either 
 by way of profits or by way of savings from their salaries. Considerations of humanity 
 and justice might well bo urged against the dismissal of employees who have given the 
 years of their strength to faithful and efficient public service and against their assign- 
 ment to the lower grades of menial or clerical duties as an alternative to dismissal. 
 But I prefer to put the matter on other and more selfish grounds. The Government 
 simply can not afford not to retire these employees with due and honorable provision 
 for their old age, and this for two reasons. 
 
 In the first place, many able and energetic men serve the Government at salaries 
 far below the commercial standard for like services. They choose to do so because 
 the public service saj;isfies their best and highest ideals of personal integrity and 
 professional achievement. Such men are continually forced out of the service by the 
 necessity of making due provision for themselves and their families before old age 
 comes upon them. If the Government would insure them against this peril, it could 
 continue to employ them at salaries far less tlian a private corporation would be com- 
 pelled to pay. Every consideration of economy and sound business policy requires 
 that tlieir services should be retained on terms so favorable to the Government. The 
 loss, taken in the mass, is irreparable, for the system operates as a survival of the 
 
REPORT TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 15 
 
 unfittest by continually drawing off the more energetic and abler men, leaving a 
 larger and larger proportion of the inefficient in the public service. In the second 
 place, the Government is paying much, if not most, of the cost of a proper retirement 
 system through the inevitable relative inefficiency of the present plan. Not only 
 are superannuated employees dropped to and retained in the lower grades because of 
 sympathy yielding to personal or political pressure, but in the higher grades, from 
 which the rank and file of the service inevitably derives its spirit and tone, there is a 
 tendency to retain men who have lost the alertness and qnthusiasm essential to the 
 highest efficiency of their own work, and still more essential for inspiring in and 
 requiring of their subordinates such alertness and enthusiasm. Not only do they 
 thus fail to make the positive contribution to the general efficiency of the service 
 which is due from men in their position, but they have a negative effect in the same 
 direction by blocking the avenues of promotion and legitimate ambition. The men 
 below them not only fail to receive the proper stimulus of precept and example, but 
 are at the same time deprived of the hope of promotion which ought to be the reward 
 of efficient service. 
 
 This condition is now becoming apparent. It has been delayed by the fact that the 
 widespread application of the principle of permanency in the public service goes back 
 less than one generation, and by the further fact that the industrial and social problems 
 of recent years have forced the Government into new fields of activity and thus com- 
 pelled the organization of new bureaus and departments. These new administrative 
 units have been largely recruited from young men who are still m the prime of life. 
 Many of the older bureaus and departments have from similar causes largely increased 
 their personnel, re(!ruiting them chiefly from young men. This sudden expansion of 
 governmental activities has postponed and mitigated the worst evils inherent in the 
 present system; but sudden expansion can not continue indefinitely. We must face 
 and provide for normal conditions of growth . Under such conditions general efficiency 
 in the public service is impossible without due provision for the retirement of aged 
 employees. This is attested by the experience and practice of foreign governments, 
 which have long had a permanent civil service, and by that of large railroad and com- 
 mercial corporations in our own country. (Annual Re])ort of the Secretary of the 
 Interior, 1911, p. 17.) 
 
 In his annual report for 1911 the Secretary of Commerce and Labor 
 points "wdth emphasis to the need of a suitable provision for the retire- 
 ment of the aged employees. He said: 
 
 Superannuation in the civil service and the proposed retirement of employees who 
 have passed their age of greatest usefulness have attracted much attention. Consider- 
 able discussion of the subject has appeared in the public press, and many Government 
 officials in reporting on conditions alTecting the personnel of their respective depart- 
 ments or offices have laid more or less stress on the evils of superannuation in the 
 service and the necessity of providing, as has been done by a number of countries and 
 private business concerns, some eauitable scheme of retirement of those who are no 
 longer able to render a fair degree of service, but who would be left without adequate 
 means of support if dismissed. Many difficulties, of course, may be expected to attend 
 the passage of any law looking to the retirement on pay of superannuated employees in 
 the civil service, whether such retirement is accompanied by annuities paid outright 
 by the Government or whether it is made possilWo by contribution in whole or in part 
 by the employees themselves. 
 
 Incomplete reports recently received from the bureaus show that there are 72 
 employees of this department who are more or less superannuated; that the aggregate 
 of their salaries is $73,385; and that their average age is 70 years. Perhaps a greater 
 amount of superannuation and consequent loss to the Government may be found in the 
 older departmenl,s and offices. As this department last year reported its opinion on 
 the subject of superannuation, it is unnecessary to again point out the advantage and 
 45700°— 12 3 
 
16 KEPORT TO THE PEESIDENT ON RETIEEMENT ALLOWANCES. 
 
 economy that would result from the retirement, which practically everybody admits 
 should be on an adequate annuity, of the civil employees of the Government who have 
 become inefficient through advancing age. (Annual Report of the Secretary of 
 Commerce and Labor, 1911, p. 33.) 
 
 The following is a partial list of references to reports and state- 
 ments of officers of the Government calling attention to the need of a 
 means of retiring the superannuated employees on proper allowances: 
 
 4 
 
 Annual messages to Congress of William Howard Taft, President of the United 
 States, 1909, 1910, 1911. 
 
 Annual reports of Franklin MacVeagh, Secretary of the Treasury, 1909, 1910, 1911. 
 
 Annual reports of Ethan A. Hitchcock, Secretary of the Interior, 1904, 1905. 
 
 Annual report of James R. Garfield, Secretary of the Interior, 1908. 
 
 Annual report of Richard A. Ballinger, Secretary of the Interior, 1909, 1910. 
 
 Annual report of Walter L. Fisher, Secretary of the Interior, 1911. 
 
 Annual report of Oscar S. Straus, Secretary of Commerce and Labor, 1908. 
 
 Annual reports of Charles Nagel, Secretary of Commerce and Labor, 1910, 1911. 
 
 Annual reports of Frank H. Hitchcock, Postmaster General, 1909, 1910, 1911. 
 
 Annual report of Joseph Stewart, Second Assistant Postmaster General, 1909. 
 
 Annual reports of Civil Service Commission, tenth, eleventh, nineteenth, twentieth, 
 twenty-second, twenty-fifth, and others. 
 
 Report of Committee on Department Methods (Keep Commission), 1907. 
 
 Annual reports of Merritt O. Chance, Auditor for the Post Office Department, 
 1909, 1910. 
 
 Hearings before the House Committee on Reform in the Civil Service, 1896, 1904, 
 1908, 1912. 
 
 Statement of E. F. Ware, Commissioner of Pensions, February 9, 1904. 
 
 Statement of Gen. F. C. Ainsworth, Chief of the Record and Pensions Office, War 
 Department, February 12, 1904. 
 
 Statement of Frederick I. Allen, Commissioner of Patents, February 26, 1904. 
 
 Statement of William H. Moody, Secretary of the Navy, March 5, 1904. 
 
 It is apparent from the foregoing that the executive officers of the 
 Government are agreed in thinkmg that the highest economy and 
 efficiency are not possible in the administration of the public offices 
 untn legislation is enacted for the retirement of superannuated 
 employees. Most of them hesitate to indicate preference for any 
 particular plan of retirement, feeling, apparently, that it is a matter 
 to be worked out by experts. 
 
 Straight-Pension Plans versus Contributory Plans. 
 
 The Commission on Economy and Efiiciencyhas given consideration 
 to the various plans that have been proposed for the retirement of 
 superannuated employees, and finds that they may be divided into 
 two groups : 
 
 First, noncontributory plans — commonly referred to as straight 
 pensions — proposmg the payment of annuities to the superannuated 
 employees out of the Federal Treasury; and, 
 
 Second, contributory plans proposing the deduction of stated 
 sums — more or less adeqtiate for the purpose in view — from the 
 salaries of all employees out of which to pay amiuities to retiring 
 employees. 
 
report to the president on retirement allowances. 17 
 Objections to Straight-Pension Plans. 
 
 The first group of plans — those proposing the payment of annuities 
 out of the Federal Treasury — are found on analysis to be so costly 
 and so demoralizing to the service as to make them incompatible with 
 any general scheme for economy and efficiency in the public service. 
 
 The cost of a civil pension in every country where it has been tried 
 for any considerable length of time is admittedly very great. How- 
 ever modest the pension roll in the beginning, it is bound inevitably 
 to grow in length and increase in costliness as time goes on. This is 
 due to the fact that, under any system which legalizes a draft on- the 
 Public Treasury, there is a constant tendency to extend its benefits 
 to new classes of public servants and to the dependents of deceased 
 employees. Under an elective Government, where those who control 
 the pension must depend on popular favor for their power, there is 
 a constant tendency also to lower the retirement age in order to 
 serve some political interest by creating a vacancy. Indeed, a pen- 
 sion system may easily become, in the hands of unscrupulous poli- 
 ticians, a means of removing political opponents to make places for 
 political adherents. This situation may even develop in a country 
 where there is a strong sentiment in favor of promotion on merit, for 
 a certain number of offices are likely always to be in the appointive 
 class and therefore not filled by promotion^ from below. If the 
 incumbents of these offices can be removed without serious oppo- 
 sition on their part by retiring them in the prime of life on life pen- 
 sions, the ministers of a hostile party are very likely to be strongly 
 tempted, as was the case 20 years ago in Canada, to eliminate them 
 thus at the expense of the public. This can be accomplished only 
 at imimense expense to the people, since the cost of a life annuity at 
 the younger ages is so much greater than at the older ages. 
 
 COSTLINESS OF STRAIGHT-PENSION PLAN. 
 
 A system of pensions paid from the Public Treasury usually starts 
 with a simple provision that employees who have served a given 
 number of years shall, on reaching a certain age, be retired on an 
 allowance. This allowance is customarily on the average salary 
 received by the employee during the last three or five years of service. 
 In the beginning, the system is attractive to the employee because 
 the pension appears to be an addition to his compensation. The 
 system once established, the pension is, in the very nature of things, 
 regarded by the employee as something to which he has a right. 
 Before long the families of employees who die a short time before 
 being placed on pension, or soon after retirement, begin to complain 
 that the loss of the pension on the death of the employee, who perhaps . 
 has served the Government long and faithfully, is a hardship to 
 
18 REPOET TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 
 
 which, they should not be subjected, and a movement is then set on 
 foot to continue the pension to the widows and orphans of such 
 employees. This extension of the pension benefits to the families of 
 deceased employees increases the expenditures for pensions at an 
 enormous rate, and finally the expenditures for pensions are regarded 
 by the Government as a part of the expenditures for salaries, being 
 spoken of, for instance, in England as "the ineffective vote" in con- 
 trast to "the effective vote" or salary list. Salaries are naturally 
 fixed thereafter with respect to the value of the prospective pension, 
 and persons considering the advisability of entering the public service 
 must, in the very nature of things, consider the pension in deciding 
 whether they* will accept Government employment. With new en- 
 trants, the prospective pension is even a greater and more direct con- 
 sideration for the service rendered than it is with the old incumbents, 
 showing that it comes inevitably to be regarded as part of the com- 
 pensation of the office. The result is that the pension tends to keep 
 the current pay inadequate. In England, for instance, pensionable 
 employees receive less compensation than nonpensionable employees. 
 Furthermore, until the benefits are extended to the widows and 
 orphans, the pension system works an injustice against the families 
 of those who die in the service, since it prevents them from receiving 
 the deferred portion of the employees' pay. Viewed in its proper 
 light, therefore, the civil pension must be regarded as a pure tontine 
 in which all persons lose except those who succeed in three things: 
 Living to a certain age, remaining in the service until that age, and 
 living beyond "that age long enough to get back the value of their 
 theoretical contributions. 
 
 EXPERIENCE OF ENGLAND WITH STRAIGHT-PENSION SYSTEM. 
 
 In this connection, the experience of England is especially note- 
 worthy and illuminating. A free and universal pension system for 
 the benefit of civil servants was established in 1859. The system was 
 popular at first, but soon came to be regarded with dislike by the 
 civil servants. They ceased to consider it as a pure gratuity and 
 came to think of it as a benefit paid for by themselves out of reduc- 
 tions in salary, since nonpensionable employees were shown to be 
 better paid than pensionable. Since statistics showed also that not 
 more than one out of seven entrants into the service remained to 
 pensionable age, they saw that their pensions were subject to large 
 chances of forfeiture by death or resignation and that their families 
 were then worse off than would have been the case had there been 
 no pension system. Approximately 70,000 of the 100,000 individ- 
 uals in the service in 1902 organized themselves into a committee 
 called the deferred-pay committee, in order to agitate for a change 
 in the pension system. Their claim that pensions were deferred 
 pay was sustained by the royal commission appointed to inquire into 
 the matter, and the employees then demanded that, on separation 
 
REPORT TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 19 
 
 from the service, the value of part of their theoretical contributions, 
 should, in justice to their families, be returned to them either in the 
 form of insurance or in cash. The pension system was accordingly 
 modified as follows : The pensions have been reduced from one-sixtieth 
 to one-eightieth of salary for each year of service, but in addition to his 
 pension the employee is given a cash sum equal to one- thirtieth of 
 his salary for each year of service, with a maximum of a year and a 
 half's pay, and the families of those who die after five years of service 
 receive a lump sum equal to one year's salary. 
 
 England's experience in granting pensions to its civil employees 
 is fully discussed in a recent report entitled '-'Civil Service Eetire- 
 ment in England and New Zealand," published as Senate Docu- 
 ment No. 290, Sixty-first Congress, second session. The conclusions 
 reached in that report are as follows : 
 
 The important point to note is that the commission conceded that something was 
 deducted from the employee's pay for the purpose of pensioning him at the end of his 
 period of service. The English pension system is therefore not a free and absolute sys- 
 tem of gratuities at all, but a system of theoretical contributions from the employees' 
 salai-ies, more or less adequate to pay the benefits given. Whatever it may have been 
 in the beginning, that is what it has become through the policy — a policy sure to 
 develop under a system of gratuities, human nature being what it is — of taking the 
 pension into consideration in fixing salaries. * * * 
 
 The question whether the present improved system is absolutely equitable as be- 
 tween individuals is difficult of satisfactory answer. It has been shown that it is more 
 equitable than the old system; but it can not be shown whether the amounts received 
 by the employee in the form of pension, insurance, and cash-surrender values corre- 
 spond with the amounts contributed l»y him, since it has not been ascertained what 
 percentage of salary is withheld as a contribution. The Courtney commission main- 
 tained that the theoretically contributed sum is no more, in the aggregate, than the 
 amount required for pensions, but this does not prove that the sum contributed by any 
 individual may not be more or less than what he should equitably contribute. A 
 deduction of a given percentage of salary may be entirely adequate to furnish given 
 benefits for a young man, while a deduction of the same percentage of salary will be 
 quite inadequate to provide the same benefits for an old man. The failure of the 
 Courtney commission to gratify the request of the employees for a full investigation 
 into the subject so that the amounts actually withheld might be definitely determined 
 makes any redistribution of benefits merely a guess rather than an exact calculation. 
 In the absence of the necessary data it is therefore impossible to answer the question: 
 Is the present system absolutely equitable as between individuals? 
 
 While it is to be assumed that the calculations made by the actuaries are unimpeach- 
 able, it IS to be noted that those calculations were limited in scope and undertaken 
 merely to ascertain what benefits could be given by reducing the pension one-quarter. 
 The problem of the actuaries wa,s to distribute equitably a definite sum. They were 
 not asked to go further back and devise a contributory scheme that would be just as 
 between the state and the individual or equitable as between different classes of 
 individuals. The amended system is held to be merely a scheme of redistribution, 
 but it should not be forgotten that only one-quarter of the amount to be distributed 
 has been subject to actuarial calculation . Whether the other three-quarters have been 
 equitably distributed can not be stated . 
 
 One thing, however, can be definitely stated regarding the present system in com- 
 parison with a system where the contributions are actually instead of only theoreti- 
 cally paid, and where they are funded and invested at interest. It is less economical. 
 
20 REPOET TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 
 
 Under the existing system, the necessary sum is appropriated each year out of the 
 Treasury for the payment of pensions. This sum amounts to from 16 to 20 per cent, in 
 the various departments, of the sums paid for salaries. Under a contributory system, 
 the necessary sum would be accumulated gradually from many contributions invested 
 at interest. By reason of the fact that wdth the help of compound interest at the rate of 
 3 per cent per annum, the sum of a given contribution per annum will double itself in 
 the course of a service of 42 years, and at 3^ per cent in 36 years, and at 4 per cent in 
 31 years, it follows that the total contributions of an employee who serves 40 years 
 need be less than half the amount required by direct appropriation from the Treasury 
 to give the same pension. The question naturally suggests itself then: Why would it 
 not be a wiser distribution of funds, if the British Government in appropriating a sum 
 for the maintenance of civil establishments (including an amount for salaries and 
 another amount for pensions) should increase the salaries by the amount of the sum 
 spent for pensions, but require employees to pay out of their salaries a contribution 
 sufficient to meet the cost of pensions? The net result of thus preferring a scheme of 
 actual contributions to one of theoretical contributions would be a general increase in 
 salaries without increasing the appropriations for either salaries or pensions, thus 
 effecting a saving of money to the employees that, under present conditions, is lost. 
 (See Civil Service Retirement in Great Britain and New Zealand, S. Doc. No. 290, 
 61st Cong., 2d sess., pp. 183-185.) 
 
 In view of this experience, the commission can not recommend any 
 system of retirement allowances to be granted as a reward for services 
 inadequately paid for at the time the service is rendered, for it believes 
 that the civil employees should receive proper and adequate compen- 
 sation for their services at the time the services are rendered. 
 
 DEMORALIZING EFFECT OF STRAIGHT-PENSION SYSTEM ON GOVERN- 
 MENT SERVICE. 
 
 Besides burdening the Government with an enormous expense for 
 personal services, which, m the nature of the contract, can not be 
 distributed among the employees in proportion to the value of the 
 services rendered, a straight pension is objectionable because it pro- 
 motes inefficiency. The argument is advanced by those who favor 
 the straight pension that the pension should be regarded not as part 
 payment for services rendered but as a reward for continuity of 
 service. This is in fact a distinction without a difference, since a 
 reward must, in the nature of things, be a compensation for some 
 service rendered. Whatever the theory advanced, the Government 
 is unable in practice to prevent the employee from taking the value 
 of the pension into consideration, whether his service be of long or 
 short duration. The promise of the reward is considered by the 
 employee as a part of his contract of employment. As soon as the 
 Government establishes this system of rewards for continuity of 
 service, it must immediately devise ways and means of honorably 
 terminating the contract with employees whom it is desirable to 
 remove. This means that it is necessary to establish a scale of sur- 
 render values which must be given employees dismissed from the 
 service to compensate them for the loss of the pension which they 
 have partly earned. This again results in an enormous increase in 
 
REPORT TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 21 
 
 the expense of running the Government offices, but there is no escape 
 for the Government that has once adopted a straight pension unless 
 it abandons its standard of efficiency. The two horns of the dilemma 
 which it thus creates for itself are either retention in office of all the 
 inefficients who are under the age of retirement or the increase of the 
 pension charge by the amount paid to all those removed before pen- 
 sionable age. There is no escape through the contention that the 
 pension is to be awarded only m case of faithful or efficient service, 
 since whether the service rendered has been of a quality that would 
 entitle the employee to a pension is always debatable. Certainly 
 without a system of ''gratuities" or ''compensation for loss of office" 
 in addition to the pension system the dismissal of the inefficient 
 becomes difficult, if not almost impossible, since it is hard for the 
 superior officer to cause his subordinate not only loss of position, 
 especially if he is without resources and has a family dependent on 
 him, but also loss of the pension which he has partly earned and 
 which he counts as an asset of office as much as he does his salary. 
 The result of this reluctance m such cases must be a breaking down 
 of the moral tone of the whole service. 
 
 Nor is this the whole catalogue of evils sure to spring from adopt- 
 ing the theory that a pension is a reward for continuity of service. 
 Not only is the Government forced to protect itself against the reten- 
 tion of the mcompetent by granting them a compensation for loss of 
 office, but it is logically obliged then to grant a gratuity to those who 
 voluntarily retire from the service before reaching pensionable age. 
 To do otherwise would be to put a premium on inefficiency. 
 
 Straight-Pension System Would Raise More Questions Than 
 
 IT Would Settle. 
 
 The commission desires, therefore, to emphasize the point that, 
 in considering the adoption of a system of pensions for Federal em- 
 ployees, the problem is not merely the cost and advisability of pen- 
 sioning the comparatively few employees now eligible for retirement, 
 but embraces a great deal more than that. It includes the question 
 of extending pension benefits to widows and orphans and giving the 
 commuted values of pensions or gratuities to all who leave the service 
 before pensionable age. In the opinion of the commission the estab- 
 lishment of a civil pension payable out of the Federal Treasury would 
 thus raise more questions than it would settle. 
 
 PENSION PLANS SUITABLE FOR PRIVATE CORPORATIONS NOT APPRO- 
 PRIATE FOR GOVERNMENT. 
 
 It is true that in recent years many of our railroads and other large 
 business institutions have established pension systems under which 
 superannuated employees are retired on allowances provided by the 
 institution, without contribution by the employees, and that the 
 
22 EEPOET TO THE PRESIDENT ON EETIREMENT ALLOWANCES. 
 
 « 
 
 employers generally declare that such provision for the employees is 
 good business policy, since it results in creating among their subor- 
 dinates a sense of loyalty and an interest in the business, as well as a 
 feeling of permanency in their employment, which are of benefit to 
 the employer as well as to the employee. It would seem, at first 
 thought, that a policy that had been found advantageous by our 
 great commercial institutions in dealing with their employees would 
 be equally advantageous to the Government. A more careful com- 
 parison of the commercial and the Government services discloses the 
 fact, however, that conditions of employment in the two services 
 are wholly different, and that what has proved beneficial to one 
 would prove equally harmful to the other. This is clearly brought 
 out in the report entitled, "Savings and Annuity Plan Proposed for 
 Retirement of Superannuated Civil-Service Employees" (S. Doc. 
 No. 745, 61st Cong., 3d sess., pp. 56, 57, 58), and since the commission 
 concurs in the conclusions there set forth, the argument is given 
 below: 
 
 The question may be raised why a straight pension- should be demoralizing to the Gov- 
 ernment service, when the testimony of private employers is to the effect that they have 
 found it helpful in the maintenance of discipline. The answer is that conditions of em- 
 ployment in the Government service are diametrically different from those in private 
 service. A straight pension is a powerful aid to the ordinary employer in holding 
 his men and in keeping up their standard of efficiency, as brought out by the Hon. 
 Frank A. Vanderlip, president of the National City Bank of New York, in an article 
 on "Insurance for workingmen," published in the North American Review in Decem- 
 ber, 1905. Said he: 
 
 "When employees realize that unsatisfactory conduct may at any time lose them 
 not only their present position, a loss which in such a labor market as ours might be 
 easily made good, but that it entails further the loss of a very valuable asset — the 
 employee's right to a pension — the incentive to good conduct is greatly increased. It 
 operates especially as an incentive to hold men between the ages of 40 and 50, when 
 they have acquired the experience and skill which makes them especially valuable, 
 and prevents their being tempted away by slightly increased wages for a temporary 
 period." 
 
 This statement is entirely correct when applied to business institutions. It is not 
 wholly correct when applied to the Government service. A straight pension is a 
 powerful aid to the Government as well as to a corporation in holding its employees, 
 but there is this radical difference in its operation under the two conditions: In the 
 case of the Government it operates to hold the poor employees rather than the good 
 and to break down rather than to keep up the standard of efficiency. This is ex- 
 plained by two fundamental differences in the conditions of labor when a private 
 corporation is the employer and when the United States Government acts in that 
 capacity. These are, first, the fact that there is seldom any relationship between the 
 value and the cost of a Government output such as there always is in the case of a 
 commodity produced by a private corporation, and, second, the fact that the man 
 at the head of a Government office or shop has much less authority over his sub- 
 ordinates than has an executive officer similarly placed in a private business. 
 
 Business enterprises are conducted for the purpose of paying dividends, and as 
 inefficiency on the part of an employee has a direct bearing on the dividends it will 
 not be tolerated. On the other hand, the great majority of Government employees 
 are not engaged in the production of commercial articles which must be sold at a profit 
 in competition, and the loss to the Government through inefficiency is not so apparent 
 
REPORT TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 23 
 
 or so easily measured. It may, for instance, cost the Government a hundred thousand 
 ' dollars to get out a highly scientific or technical report which is, economically, either 
 at the time or ultimately in the course of years, well worth that sum of money to the 
 people of the United States, but which, commercially, would not bring in a thousand 
 dollars if placed on the market for sale. Since, the inefficiency of an employee 
 engaged in work that has such an uncertain market value is not so easily detected or 
 BO likely to be regarded as serious as would be the case in private business, he is 
 usually permitted to remain in the Government service, whereas he would be very 
 promptly dismissed by a private house. 
 
 The fact that the administrative ofiicials at the head of Government offices have 
 not entire control over the selection of their subordinates makes it impossible for those 
 officials to be held as strictly responsible for results as is the case in private business. 
 What is everybody's business is nobody's business. Since also the position of the 
 executive head of the office is not greatly endangered by the incompetency of his 
 assistants, especially where the effect of the incompetency can not be readily meas- 
 ured by reduction in actual output of some kind, it follows that he can afford to be 
 lenient with them. He is especially inclined to be so if the employee's inefficiency 
 is known to be the result of old age or any other cause which makes an appeal to the 
 natural feelings of humanity. In case the inefficient employee is working under a 
 pension system whereby he is entitled on reaching a certain age to retire on a com- 
 petence, the head of the office will be all the more reluctant to dismiss him "before he 
 reaches that age. But a pension system has exactly the opposite effect where the 
 private corporation is the employer. In that case the administrative official at the 
 head of an office is held directly responsible either to the owner of the business or a 
 board of directors for the inefficiency of his subordinates. The output can usually be 
 measured in terms of tons or dollars, and if it falls below the required amount the posi- 
 tion of the man in charge is jeopardized. In self-defense, therefore, he is obliged to 
 hold every subordinate up to the highest standard of efficiency and to stifle any feeling 
 of humanity or sympathy which might otherwise tempt him to show leniency. That 
 being his state of mind, a pension system becomes a powerful aid to him in his effort 
 to maintain discipline and secure obedience and industry, as explained by Mr. Van- 
 derlip in the article quoted above. Undoubtedly, the reason why railroads and 
 other corporations are disposed to favor the straight pension with entire control of the 
 pension fund, rather than any contributory plan with a fund in any way contrelled 
 by the employees, is that it helps them to approximate the establishment of military 
 discipline among their subordinates. They look on a pension as a useful kind of 
 strike insurance. For fear of forfeiting his pension, the employee, like the soldier, 
 will sacrifice much of his personal liberty, including his right to strike for better wages 
 or shorter hours. 
 
 It would seem proper to point out also the fact that a scale of bene- 
 fits that would be satisfactory for employees of a corporation would 
 be wholly inadequate for employees of the Government. 
 
 Sound Contributory Plan Solution of Problem of Super- 
 annuation IN Government Service. 
 
 The noncontributory form of pension being burdensome to the 
 taxpayer and detrimental to the service, the commission beUeves 
 that the only way to solve the problem of superannuation in the 
 service is to establish a sound contributory plan of retirement. Of 
 the various contributory plans proposed for the retirement of Govern- 
 ment employees in the years when the subject was first agitated, 
 some were unscientific and unsound, and all were inequitable as 
 45700°— 12 i 
 
24 KEPOET TO THE PKESIDENT ON EETIRBMENT ALLOWANCES. 
 
 between different classes of employees. Most of these early plans 
 contemplated the creation of a common fund made up of deductions 
 from the salaries of employees of different salaries and ages on a scale 
 that would be sufficient to pay the annuities to all employees, without 
 any aid from the Government m the payment of annuities to those 
 who were too old to provide their own annuities. This meant that 
 the young employees would be taxed sums not only sufficient to 
 provide their own annuities, but sums that would be sufficient to pay 
 the annuities to the aged employees as well. This method of provid- 
 ing for those who were too old to create their own annuities by 
 monthly deductions from their salaries was naturally opposed by the 
 younger employees, and very properly so. 
 
 Sound Contributory Plans Proposed in Recent Years. 
 
 Since 190S, however, a number of bills have been introduced in 
 Congress which are sound in principle and equitable as between 
 individuals. Briefly, these bills provide that each employee shall 
 receive an annuity based on his salary and length of service. They 
 are all based on two fundamental principles, that of graduating 
 deductions from salary according to the age of entrance into the 
 service and that of keeping separate present and future liabilities. 
 The annuities corresponding to services rendered prior to the adoption 
 of the plan are to be paid out of the Federal Treasury, and all annui- 
 ties corresponding to services rendered after the adoption of the plan 
 are to be provided by monthl}'' deductions from the salaries of the 
 employees, improved at compound interest. 
 
 calculations as to the cost of establishing these plans. 
 
 This proposal that annuities for services rendered prior to the 
 adoption of the plan be paid out of the Federal Treasury naturally 
 raised the question. For how long a period would the Government 
 be required to make appropriations for that purpose and how much 
 would have to be appropriated each year? Several elaborate cal- 
 culations have been made to ascertain what the cost would be under 
 various bills that have been introduced into Congress embodying 
 tliis principle. The results of these calculations are shown on page 
 159 and foUowing'of the report entitled "Savings and Annuity Plan 
 Proposed for Retirement of Superannuated Civil Service Employees." 
 (S. Doc. 745, 61st Cong., 3d sess.) 
 
 The ffi:st calculation was made for the Committee on Department 
 Methods (Keep Commission), and was based on table 67 of Census 
 Bulletin No. 12, entitled "The Executive Civil Service of the United 
 States," covering the classified employees as of June 30, 1903. The 
 total number of employees included in that calculation was 103,030, 
 
REPORT TO THE PRESIDENT ON RETIREMENT ALLOWANCES, 25 
 
 and the maximum cost of paying to the survivors annuities for 
 services rendered prior to the adoption of the plan equal to 1.5 per 
 cent of aggregate salary was found to amount to $66,985,778 in the 
 course of 67 years, as shown by the following table: 
 
 Table I. — Showing maximum amount of annual appropriation by the Federal Gov- 
 ernment necessary to provide a monthly annuity to each person in the classified civil 
 service June 30, 1903, upon attaining the retirement age of 10 years {the amount of 
 annuity to he 1.5 per cent of the employee's salary June 30, 1903, for each year of service 
 completed j^rior to that date). 
 
 [Based on census of employees as of June 30, 1903.] 
 
 Year. 
 
 1907 
 1908 
 1909 
 1910 
 1911 
 1912 
 1913 
 1914 
 1915 
 1916 
 1917 
 1918 
 1919 
 1920 
 1921 
 1922 
 1923 
 1924 
 1925 
 1926 
 1927 
 1928 
 1929 
 1930 
 
 Amount of 
 
 appropriar 
 
 tion. 
 
 $725, 
 811, 
 908, 
 1,025, 
 1,157, 
 1,258, 
 1,370, 
 1,466, 
 1,526, 
 1,570, 
 1, 579, 
 1,564, 
 1,550, 
 1, 534, 
 1,531, 
 1, 512, 
 1, 554, 
 1, 546, 
 1, 550, 
 1,555, 
 1,571, 
 1,589, 
 1,617, 
 1,663, 
 
 110 
 
 840 
 
 188 
 
 293 j 
 
 181 ' 
 
 725 [ 
 
 710 
 
 424 
 
 551 
 
 708 
 
 132 
 
 974 
 
 742 \ 
 
 636 
 
 851 
 
 159 
 
 718 
 588 
 682 
 167 
 302 
 981 
 
 Year. 
 
 1931. 
 1932. 
 1933. 
 1934. 
 1935. 
 1936. 
 1937. 
 1938. 
 1939. 
 1940. 
 1941. 
 1942. 
 1943. 
 1944. 
 1945. 
 1946. 
 1947. 
 1948. 
 1949. 
 1950. 
 1951. 
 1952. 
 1953. 
 1954. 
 
 Amount of 
 
 appropriar 
 
 tion. 
 
 699, 
 713, 
 724, 
 734, 
 736, 
 744, 
 746, 
 736, 
 718, 
 684, 
 635, 
 568, 
 492, 
 406, 
 314, 
 211, 
 103, 
 990, 
 889, 
 772, 
 069, 
 572, 
 484, 
 403, 
 
 Year. 
 
 1955. 
 1956. 
 1957. 
 1958. 
 1959. 
 1960. 
 1961. 
 1962. 
 1963. 
 1964. 
 1965. 
 1966. 
 1967. 
 1968. 
 1969. 
 1970. 
 1971. 
 1972. 
 1973. 
 1974. 
 
 Amount of 
 appropria- 
 tion. 
 
 S331,667 
 
 269,380 
 
 216,046 
 
 170,947 
 
 133,347 
 
 102, 450 
 
 77, 434 
 
 57, 499 
 
 41,884 
 
 29,877 
 
 20, 829 
 
 14,152 
 
 9,354 
 
 5,971 
 
 3,697 
 
 2,199 
 
 1,251 
 
 679 
 
 346 
 
 163 
 
 Total ' 66,985,778 
 
 The second calculation was made by the Bureau of the Census, and 
 was based on cards used in the compilation of Census Bulletin No. 94, 
 entitled ''Statistics of Employees of the Executive Civil Service of 
 the United States," covering the classified employees as of June 30, 
 1907. The total number of employees included in this inquiry was 
 170,228, and the maximum cost of paying annuities for services 
 rendered prior to the adoption of the plan on the same basis of 1.5 
 per cent of the employee's aggregate salary was found to amount to 
 S130,581,273, in the course of 78 years, as shown by the following 
 table. 
 
26 KEPOBT TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 
 
 Table II. — Showing maximum amount of annual appropriation by the Federal Gov- 
 ernment necessary to provide a quarterly annuity to each person in the classified civil 
 service June 30, 1907, upon attaining retirement age (the amount of annuity to be 1.5 
 per cent of the employee's salary for each year of service completed prior to that date). 
 
 [Based on census of employees as of June 30, 1907.] 
 
 Years after the introduction of the plan. 
 
 Aggregate annuities payable quarterly. 
 
 Total. 
 
 To general 
 employees 
 retiring at 
 age of 70. 
 
 To letter 
 carriers and 
 rural car- 
 riers retir- 
 ing at age 
 of 65. 
 
 To railway 
 
 postal 
 clerks retir- 
 ing at age 
 of 60. 
 
 $1, 121, 795 
 
 S706,290 
 
 $156,449 
 
 $259,056 
 
 1,261,819 
 
 803, 660 
 
 187,943 
 
 270,216 
 
 1,390,485 
 
 892,056 
 
 217,500 
 
 280,929 
 
 1,556,632 
 
 1,020,092 
 
 246,545 
 
 289,995 
 
 1,705,135 
 
 1,123,599 
 
 273,947 
 
 307,589 
 
 1,861,499 
 
 1,249,851 
 
 294,011 
 
 317,637 
 
 2,003,086 
 
 1,358,948 
 
 312,044 
 
 332,094 
 
 2, 129, 118 
 
 1,449,713 
 
 326,639 
 
 352,766 
 
 2,252,506 
 
 1,532,090 
 
 347,075 
 
 373,341 
 
 2,317,860 
 
 1, 553, 682 
 
 371,103 
 
 393,075 
 
 2,392,028 
 
 1,577,259 
 
 394, 799 
 
 419, 970 
 
 2,441,271 
 
 1,570,667 
 
 424, 154 
 
 446, 450 
 
 2, 491, 484 
 
 1,556,937 
 
 459,273 
 
 475,274 
 
 2,559,337 
 
 1,545,965 
 
 503, 673 
 
 509,699 
 
 2,621,035 
 
 1,537,544 
 
 542, 928 
 
 540.563 
 
 2,679,979 
 
 1,511,480 
 
 597,995 
 
 570,504 
 
 2,726,937 
 
 1,485,348 
 
 648, 186 
 
 593,403 
 
 2, 791, 401 
 
 1, 465, 143 
 
 708,207 
 
 618,051 
 
 2,871,945 
 
 1, 456, 133 
 
 776,330 
 
 639,482 
 
 2,940,921 
 
 1,438,410 
 
 839,736 
 
 662,775 
 
 3,047,310 
 
 1,465,515 
 
 892,680 
 
 6S9, 115 
 
 3,138,272 
 
 1,482,258 
 
 940,521 
 
 715,493 
 
 3,235,543 
 
 1,508,111 
 
 989,799 
 
 737,633 
 
 3,323,097 
 
 1,530,210 
 
 1,036,572 
 
 756,315 
 
 3,390,712 
 
 1,549,001 
 
 1,072,848 
 
 768,863 
 
 3,442,268 
 
 1,548,476 
 
 1,122,372 
 
 771,420 
 
 3,469,245 
 
 1,544,175 
 
 1, 154, 148 
 
 770,922 
 
 3, 481, 754 
 
 1,538,943 
 
 1,178,888 
 
 763,923 
 
 3,495,463 
 
 1,543,358 
 
 1,197,461 
 
 754,644 
 
 3,483,861 
 
 1,546,149 
 
 1,197,318 
 
 740,394 
 
 3,454,704 
 
 1,547,352 
 
 1,188,837 
 
 718,515 
 
 3,419,266 
 
 1,552,364 
 
 1,172,208 
 
 694, 694 
 
 3,373,275 
 
 1,561,293 
 
 1,146,978 
 
 665,004 
 
 3,314,099 
 
 1,564,071 
 
 1,114,770 
 
 635,258 
 
 3,232,814 
 
 1,551,927 
 
 1,079,298 
 
 601,589 
 
 3,135,067 
 
 1,529,148 
 
 1,040,360 
 
 565,559 
 
 3,021,176 
 
 1,498,314 
 
 994,292 
 
 528,570 
 
 2,901,416 
 
 1,463,090 
 
 946,731 
 
 491,595 
 
 2,767,554 
 
 1,421,790 
 
 892,842 
 
 452,922 
 
 2,618,430 
 
 1,367,819 
 
 836,651 
 
 413,960 
 
 2,466,544 
 
 1,313,333 
 
 778,416 
 
 374,795 
 
 2,302,036 
 
 1,245,255 
 
 720, 110 
 
 336,671 
 
 2, 132, 720 
 
 1,169,589 
 
 662,490 
 
 300,641 
 
 1,964,236 
 
 1,094,285 
 
 602,976 
 
 266,975 
 
 1,792,997 
 
 1,014,722 
 
 642,571 
 
 235,704 
 
 1,618,516 
 
 927,968 
 
 483,713 
 
 206,835 
 
 1,449,172 
 
 842,132 
 
 426,686 
 
 180,354 
 
 Less than 1 year 
 
 1 year 
 
 2 years 
 
 3 years 
 
 4 years 
 
 5 years 
 
 6years 
 
 7 years 
 
 8 years 
 
 9 years 
 
 10 years 
 
 11 years 
 
 12 years 
 
 13 years 
 
 14 years 
 
 15 years 
 
 16 years 
 
 17 years 
 
 18 years 
 
 19 years 
 
 20 years 
 
 21 years 
 
 22 years 
 
 23 years 
 
 24 years 
 
 25 years 
 
 26 years 
 
 27 years 
 
 28 years 
 
 29 years 
 
 30 years 
 
 31 years 
 
 32 years 
 
 33 years 
 
 34 years 
 
 35 years 
 
 36 years 
 
 37 years 
 
 38 years 
 
 39 years 
 
 40 years 
 
 41 years 
 
 42 years 
 
 43 years 
 
 44 years 
 
 45 years 
 
 46 years 
 
REPORT TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 27 
 
 Table II. —Showing maximum amount of annual appropriation by the Federal Gov- 
 ernment necessary to provide a quarterly annuity to each person in the classified civil 
 service June SO, 1907, etc. — Continued. 
 
 Years after the introduction of the plan. 
 
 47 years . . . 
 
 48 years... 
 
 49 years... 
 
 50 years . . . 
 
 51 years... 
 
 52 years... 
 
 53 years 
 
 54 years 
 
 65 years 
 
 56 years 
 
 57 years 
 
 58 years 
 
 69 years 
 
 60 years 
 
 61 years 
 
 62 years 
 
 63 years 
 
 64 years 
 
 65 years 
 
 66 years 
 
 67 years 
 
 68 years 
 
 69 years 
 
 70 years 
 
 71 years 
 
 72 years 
 
 73 years 
 
 74 years 
 
 75 years 
 
 76 years 
 
 77 years 
 
 78 years . . .* 
 
 Total 
 
 Aggregate annuities payable quarterly. 
 
 Total. 
 
 283,841 
 
 125, 133 
 
 977, 446 
 
 840, 125 
 
 714,958 
 
 602, 139 
 
 502,310 
 
 415,013 
 
 339, 457 
 
 274,814 
 
 220,096 
 
 174,269 
 
 136, 301 
 
 105, 195 
 
 80,036 
 
 59,950 
 
 44, 149 
 
 31, 914 
 
 22, 601 
 
 15, 645 
 
 10, 562 
 
 6,937 
 
 4,413 
 
 2,709 
 
 1,600 
 
 902 
 
 483 
 
 248 
 
 124 
 
 54 
 
 23 
 
 6 
 
 130, 581, 273 
 
 To general 
 employees 
 retiring at 
 age of 70. 
 
 $754,800 
 
 667,842 
 
 584,828 
 
 505,410 
 
 431, 711 
 
 364,316 
 
 304,260 
 
 251,508 
 
 205, 707 
 
 166, 464 
 
 133, 232 
 
 105,399 
 
 82,353 
 
 63,495 
 
 48,258 
 
 36, 114 
 
 26, 576 
 
 19,206 
 
 13,608 
 
 9,432 
 
 6,386 
 
 4,212 
 
 2,700 
 
 1,677 
 
 1,007 
 
 581 
 
 320 
 
 171 
 
 89 
 
 42 
 
 18 
 
 6 
 
 69,547,243 
 
 To letter 
 carriers and 
 rural car- 
 riers retir- 
 ing at age 
 of 65. 
 
 $372,822 
 
 322,910 
 
 277,866 
 
 237,479 
 
 201, 518 
 
 169,715 
 
 141,797 
 
 117, 483 
 
 96, 476 
 
 78, 473 
 
 63, 182 
 
 50, 321 
 
 39, 605 
 
 30,765 
 
 23,568 
 
 17,777 
 
 13,181 
 
 9,588 
 
 6,830 
 
 4,752 
 
 3,219 
 
 2,117 
 
 1,344 
 
 819 
 
 477 
 
 264 
 
 137 
 
 66 
 
 30 
 
 12 
 
 5 
 
 To railway 
 
 postal 
 clerks retir- 
 ing at age 
 of 60. 
 
 36,325,671 
 
 $156,219 
 
 134,381 
 
 114,752 
 
 97,236 
 
 81,729 
 
 68,108 
 
 56,253 
 
 46,022 
 
 37,274 
 
 29,877 
 
 23,682 
 
 18,549 
 
 14,343 
 
 10,935 
 
 8,210 
 
 6,059 
 
 4,392 
 
 3,120 
 
 2,163 
 
 1,461 
 
 957 
 
 608 
 
 369 
 
 213 
 
 116 
 
 57 
 
 26 
 
 11 
 
 5 
 
 24,708,359 
 
 The following table, taken from the report above referred to (p. 
 174), shows the total and comparative cost to the Government of 
 establishing a plan of retirement for employees under the terms of the 
 Perkins bill (S. 1944, 61st Cong., 1st sess.) and the Gillett bill (H. R. 
 22013, 61st Cong., 2d sess.). The annuities under the Gillett bill 
 (H. R. 22013) are also 1.5 per cent of salary for each year of service, 
 but the amount which the Government will contribute toward any one 
 employee's annuity is limited to the difference between the amount 
 which the employee's own savings will purchase and $600 a year. 
 This table contemplates the retirement of railway postal clerks at 
 age 60, of letter carriers at age 65, and of all other employees at age 70. 
 
28 KEPOET TO THE PKESIDENT ON RETIREMENT ALLOWANCES. 
 
 Table III. — Showing total and comparative cost to the Government of establishing plan 
 for retiring employees under terms of Perkins hill {S. 1944) and Gillett bill {H. R. 
 22013). 
 
 Period. 
 
 All employees. 
 
 Excess cost 
 of establish- 
 ing Perkins 
 bill (S. 1944) 
 for all em- 
 ployees over 
 cost of es- 
 tablishing 
 Gillett bill 
 (H.R. 22013) 
 for all em- 
 ployees. 
 
 Cost of es- 
 tablishing 
 Gillett bill 
 (H.R. 22013) 
 for all em- 
 ployees. 
 
 Cost of es- 
 tabhshLng 
 Perkins bill 
 (S. 1944) 
 for all em- 
 ployees 
 
 General employees. 
 
 Excess cost 
 of establish- 
 ing Perkins 
 bill (S. 1944) 
 
 for general 
 
 employees 
 over cost of 
 establishing 
 
 Gillett bill 
 (H.R. 22013) 
 
 for general 
 employees. 
 
 Cost of es- 
 tablishing 
 Gillett bill 
 (H.R. 22013) 
 for general 
 employees. 
 
 Cost of es- 
 tablishing 
 
 Perkins bill 
 
 (S. 1944) 
 for general 
 
 employees. 
 
 $43,525,993 $87,055,280 
 
 $130,581,273 
 
 $37,366,001 
 
 $32,181,242 
 
 Immediately 
 
 lyear 
 
 2years 
 
 Syears 
 
 4 years 
 
 5 years 
 
 6 years 
 
 7 years 
 
 Syears , 
 
 9 years 
 
 10 years , 
 
 11 years , 
 
 12 years , 
 
 13 years , 
 
 14 years 
 
 15 years 
 
 16 years 
 
 ITyears 
 
 18 years 
 
 19 years 
 
 20 years 
 
 21 years 
 
 22 years 
 
 23 years 
 
 24 years 
 
 25 years 
 
 26 years 
 
 27 years 
 
 28 years 
 
 29 years 
 
 30 years 
 
 31 years 
 
 32 years 
 
 33 years 
 
 34 years 
 
 35 years 
 
 36 years 
 
 37 years 
 
 38 years 
 
 39 years 
 
 40 years 
 
 41 years 
 
 143,251 
 169,714 
 188,507 
 220,200 
 249,315 
 287,703 
 327,280 
 355,677 
 389,989 
 407,830 
 429, 763 
 437,813 
 445,360 
 460,260 
 485,707 
 500,456 
 517,114 
 633,993 
 564,221 
 588,925 
 640,838 
 686,504 
 742,475 
 804,487 
 864,296 
 908,608 
 956,207 
 005,355 
 060, 186 
 125,442 
 180,277 
 227,543 
 304,964 
 365,805 
 408,406 
 431,587 
 440, 830 
 440,176 
 425,883 
 394,017 
 356,629 
 295, 772 
 
 978,544 
 1,092,105 
 1,201,978 
 1,336,432 
 1,455,820 
 1,573,796 
 1,675,806 
 1,773,441 
 1,862,517 
 1,910,030 
 1,962,265 
 2,003,458 
 2,046,124 
 2,099,077 
 2,135,328 
 2, 179, 523 
 2,209,823 
 2,257,408 
 2,307,724 
 2,351,996 
 2,406,472 
 2,451,768 
 2, 493, 068 
 2,518,610 
 2,526,216 
 2,533,760 
 2, 513, 038 
 2,476,399 
 2,435,277 
 2,358,419 
 2,274,427 
 2,191,723 
 2,068,311 
 1,948,294 
 1,824,408 ; 
 1,703,480 
 1,580,346 I 
 1,461,240 
 1,341,671 
 1,224,413 
 1,109,915 \ 
 1,006,264 . 
 
 1,121,795 
 1,261,819 
 1,390,485 
 1,556,632 
 1,705,135 
 1,861,499 
 2,003,086 
 2, 129, 118 
 2,252,506 
 2,317,860 
 2,392,028 
 2,441,271 
 2,491,484 
 2,559,337 
 2,621,035 
 2,679,979 
 2,726,937 
 2,791,401 
 2,871,945 
 2,940,921 
 3,047,310 
 3,138,272 
 3,235,543 
 3,323,097 
 3,390,712 
 3,442,268 
 3,469,245 
 3,-481, 754 
 3,496,463 
 3,483,861 
 3,454,704 
 3,419,266 
 3,373,275 
 3,314,099 
 3,232,814 
 3,135,067 
 3,021,176 
 2,901,416 
 2,767,554 
 2,618,430 
 2,466,544 
 2,302,036 
 
 125,977 
 
 152,962 
 
 171,345 
 
 202,051 
 
 228,645 
 
 266,036 
 
 303,523 
 
 329,671 
 
 360, 856 
 
 375,951 
 
 392, 179 
 
 395, 125 
 
 397,661 
 
 405,974 
 
 421,344 
 
 426,420 
 
 434, 885 
 
 442, 684 
 
 461,991 
 
 476, 140 
 
 514,059 
 
 547, 619 
 
 689, 807 
 
 638,533 
 
 683, 759 
 
 717,688 
 
 756,450 
 
 799,975 
 
 849,367 
 
 907,003 
 
 961,377 
 
 1,019,701 
 
 1,091,157 
 
 1,156,078 
 
 1,203,244 
 
 1,233,396 
 
 1,250,015 
 
 1,256,497 
 
 1,251,669 
 
 1,229,301 
 
 1,201,914 
 
 1,156,808 
 
 580,313 
 
 650, 698 
 
 720, 711 
 
 818,041 
 
 894,954 
 
 983,815 
 
 1,055,425 
 
 1,120,042 
 
 1,171,234 
 
 1,177,731 
 
 1,185,080 
 
 1,175,542 
 
 1,159,276 
 
 1,139,991 
 
 1,116,200 
 
 1,085,060 
 
 1,050,463 
 
 1,022,459 
 
 994, 142 
 
 962,270 
 
 951,456 
 
 934, 639 
 
 918,304 
 
 891,677 
 
 865, 242 
 
 830,788 
 
 787, 725 
 
 738,968 
 
 693,991 
 
 639, 146 
 
 585,975 
 
 532,663 
 
 470, 136 
 
 407,993 
 
 348,683 
 
 295, 752 
 
 .248,299 
 
 206,593 
 
 170, 121 
 
 138,518 
 
 111,419 
 
 88,447 
 
 9,547,243 
 
 706,290 
 803,660 
 892,056 
 1,020,092 
 1,123,599 
 1,249,851 
 1,358,948 
 1,449,713 
 1,532,090 
 1,553,682 
 1,577,259 
 1,570,667 
 1,556,937 
 1,545,965 
 1,537,544 
 1,511,480 
 1,485,348 
 1,465,143 
 1,456,133 
 1,438,410 
 1,465,515 
 1,482,258 
 1,508,111 
 1,530,210 
 1,549,001 
 1,548,476 
 1,544,175 
 1,538,943 
 1,543,358 
 1,546,149 
 1,547,352 
 1,552,364 
 1,561,293 
 1,564,071 
 1,551,927 
 1,529,148 
 1,498,314 
 1,463,090 
 1,421,790 
 1,367,819 
 1,313,333 
 1,245,255 
 
EEPOET TO THE PEESIDENT ON KETIEEMENT ALLOWANCES. 29 
 
 Table III.— Showing total and comparative cost to the Government of establishing plan 
 for retiring employees under terms of Perkins bill {8. 1944) and Gillett bill (E. R. 
 ig^Oi^)— Continued. 
 
 Period. 
 
 All employees. 
 
 Excess cost 
 of establish- 
 ing Perkins 
 bill (S. 1944) 
 for all em- 
 ployees over 
 cost of es- 
 tablishing 
 Gillett bill 
 (H.R. 22013) 
 for all em- 
 ployees. 
 
 Cost of es- 
 tablishing 
 Gillett bill 
 (H.R. 22013) 
 for all em- 
 ployees. 
 
 Cost of es- 
 tablishing 
 Perkins bill 
 
 (S. 1944) 
 for all em- 
 ployees. 
 
 General employees. 
 
 Excess cost 
 of establish- 
 ing Perkins 
 bill (S. 1944) 
 
 for general 
 
 employees 
 over cost of 
 establishing 
 
 Gillett bill 
 (H.R. 22013) 
 
 for general 
 employees. 
 
 Cost of es- 
 tablishing 
 Gillett bill 
 (H.R. 22013) 
 for general 
 employees. 
 
 Cost of es- 
 tablishing 
 
 Perkins bill 
 
 (S. 1944) 
 
 for general 
 
 employees. 
 
 42 years 
 
 43 years 
 
 44 years 
 
 45 years 
 
 46 years 
 
 47 years 
 
 48 years, 
 
 49 years , 
 
 50 years 
 
 51 years, 
 62 years 
 
 53 years, 
 
 54 years, 
 
 55 years, 
 
 56 years, 
 
 57 years, 
 
 58 years , 
 
 59 years , 
 
 60 years 
 
 61 years 
 
 62 years 
 
 63 years 
 
 64 years 
 
 65 years 
 
 66 years 
 
 67 years 
 
 68 years 
 
 69 years 
 
 70 years 
 
 71 years 
 
 72 years 
 
 73 years 
 
 74 years 
 
 75 years 
 
 76 years 
 
 77 years 
 
 78 years 
 
 230, 176 
 
 161,036 
 
 087,321 
 
 004,177 
 
 918,052 
 
 827, 277 
 
 735,221 
 
 646, 230 
 
 560, 782 
 
 481,136 
 
 407, 756 
 
 342,084 
 
 284,093 
 
 232,472 
 
 189,890 
 
 152, 794 
 
 121,568 
 
 95,576 
 
 74,186 
 
 56,796 
 
 42,844 
 
 31,810 
 
 23,210 
 
 16,613 
 
 11,648 
 
 7,978 
 
 5,333 
 
 3,461 
 
 2,176 
 
 1,320 
 
 768 
 
 424 
 
 225 
 
 115 
 
 51 
 
 23 
 
 6 
 
 S902,544 
 
 803,200 
 
 705,676 
 
 614,339 
 
 531, 120 
 
 456,564 
 
 390, 112 
 
 331,216 
 
 279,343 
 
 233, 822 
 
 194,383 
 
 160, 226 
 
 130,920 
 
 106, 985 
 
 84,924 
 
 67,302 
 
 52,701 
 
 40, 725 
 
 31,009 
 
 23, 240 
 
 17, 106 
 
 12,339 
 
 8,704 
 
 5,988 
 
 3,997 
 
 2,584 
 
 1,604 
 
 952 
 
 533 
 
 280 
 
 134 
 
 59 
 
 23 
 
 9 
 
 3 
 
 $2, 132, 720 
 
 1,964,236 
 
 -1,792,997 
 
 1,618,516 
 
 1,449,172 
 
 1,283,841 
 
 1, 125, 133 
 
 977,446 
 
 840, 125 
 
 714,958 
 
 602, 139 
 
 502,310 
 
 415,013 
 
 339,457 
 
 274,814 
 
 220,096 
 
 174, 269 
 
 136,301 
 
 105, 195 
 
 80,036 
 
 59,950 
 
 44,149 
 
 31,914 
 
 22,601 
 
 15,645 
 
 10,502 
 
 6,937 
 
 4,413 
 
 2,709 
 
 1,600 
 
 902 
 
 483 
 
 248 
 
 124 
 
 54 
 
 23 
 
 6 
 
 11,100, 
 
 1,039, 
 
 974, 
 
 897, 
 
 820, 
 
 739, 
 
 657, 
 
 577, 
 
 500, 
 
 428, 
 
 362, 
 
 303, 
 
 250, 
 
 205, 
 
 166, 
 
 133, 
 
 105, 
 
 82, 
 
 63, 
 
 48, 
 
 36, 
 
 26, 
 
 19, 
 
 13, 
 
 9, 
 
 9i 
 
 i, 
 
 2, 
 
 1, 
 
 1, 
 
 326 
 925 
 240 
 200 
 001 
 508 
 626 
 702 
 504 
 226 
 955 
 432 
 338 
 181 
 381 
 348 
 493 
 258 
 114 
 576 
 206 
 608 
 432 
 386 
 212 
 700 
 677 
 007 
 581 
 320 
 171 
 89 
 42 
 18 
 6 
 
 S69, 212 
 
 54,287 
 
 40,396 
 
 30,043 
 
 21,892 
 
 15,600 
 
 10,841 
 
 7,320 
 
 4,784 
 
 3,009 
 
 1,812 
 
 1,034 
 
 553 
 
 275 
 
 126 
 
 51 
 
 18 
 
 5 
 
 2 
 
30 REPORT TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 
 
 Table III. — Showing total and comparative cost to the Government of establishing plan 
 for retiring employees under terms of Perkins bill (S. 1944) and Gillett bill (H. R. 
 -Continued. 
 
 Period. 
 
 Immediately 
 
 1 year 
 
 2 years 
 
 3 years 
 
 4 years 
 
 5 years 
 
 6 years 
 
 7 years 
 
 8 years 
 
 9 years 
 
 10 years 
 
 11 years 
 
 12 years 
 
 13 years 
 
 14 years 
 
 15 years ..... 
 
 16 years 
 
 17 years 
 
 18 years 
 
 19 years 
 
 20 years 
 
 21 years 
 
 22 years 
 
 23 years 
 
 24 years 
 
 25 years 
 
 26 years 
 
 27 years 
 
 28 years 
 
 29 years 
 
 30 years 
 
 31 years 
 
 32 years 
 
 33 years 
 
 34 years 
 
 35 years 
 
 36 years 
 
 37 years 
 
 38 years 
 
 39 years 
 
 40 years 
 
 41 years 
 
 42 years 
 
 43 years 
 
 Mail carriers. 
 
 Excess cost 
 of establish- 
 ing Perkins 
 bill (S. 1944) 
 
 for mail 
 carriers over 
 cost of es- 
 tablishing 
 Gillett bill 
 (H.R. 22013) 
 for mail 
 carriers. 
 
 $1,393,106 
 
 789 
 
 352 
 
 515 
 
 616 
 
 758 
 
 833 
 
 1,070 
 
 1,141 
 
 1,500 
 
 1,914 
 
 2,159 
 
 2,653 
 
 2,846 
 
 3,157 
 
 3,361 
 
 3,991 
 
 4,744 
 
 4,550 
 
 6,028 
 
 7,013 
 
 8,213 
 
 10, 120 
 
 12,559 
 
 15,689 
 
 20, 100 
 
 25, 237 
 
 29, 099 
 
 32, 859 
 
 36, 263 
 
 44, 234 
 
 46,288 
 
 47,214 
 
 46,975 
 
 47,062 
 
 47,721 
 
 48, 613 
 
 48,674 
 
 50, 036 
 
 49, 472 
 
 48, 877 
 
 47,566 
 
 42,367 
 
 42,717 
 
 42,981 
 
 Cost of es- 
 
 tabUshing 
 
 Gillett bill 
 
 (H.R. 22013) 
 
 for mail 
 
 carriers. 
 
 $34, 932, 565 
 
 155 
 187 
 216 
 245 
 273 
 293 
 310: 
 325 
 345 
 369 
 392: 
 421 
 
 456; 
 
 500; 
 539 
 
 594 
 643 
 703 
 770; 
 
 832; 
 884; 
 
 930, 
 977 
 
 1,020; 
 
 1,052 
 
 1,097 
 
 1,125 
 
 1,146 
 
 1,161 
 
 1,153 
 
 1,142 
 
 1,124 
 
 1, 100; 
 
 1,067 
 
 1,031 
 
 991 
 
 945 
 
 896 
 
 843 
 
 787 
 
 730; 
 
 677 
 619 
 559 
 
 Cost of es- 
 tablishing 
 Perkins bill 
 (S. 1944) 
 for mail 
 
 156; 
 
 187 
 217 
 246; 
 273 
 294 
 312; 
 326; 
 347 
 371 
 394 
 424 
 
 459; 
 
 503 
 542; 
 597 
 
 648; 
 708; 
 
 776 
 
 839; 
 
 892; 
 
 940, 
 
 989 
 
 1,036 
 
 1,072 
 
 1,122 
 
 1,154 
 
 1,178 
 
 1,197 
 
 1,197, 
 
 1, 
 
 1,172 
 
 1, 146, 
 
 1,114 
 
 1,079 
 
 1,040 
 
 994 
 
 946 
 
 892; 
 
 836; 
 
 778 
 
 720 
 
 662; 
 
 602 
 
 Railway postal clerks. 
 
 Excess cost 
 of estabhsh- 
 ing Perkins 
 bill (S. 1944) 
 
 for railway 
 postal clerks 
 
 over cost of 
 estabUshing 
 
 Gillett bill 
 (H.R. 22013) 
 
 for railway 
 postal clerks. 
 
 S4, 766, 886 
 
 16,485 
 
 16, 400 
 
 16,647 
 
 17, 533 
 
 19,912 
 
 20, 834 
 
 22, 087 
 
 24,865 
 
 27, 633 
 
 "29,965 
 
 35, 425 
 
 40,035 
 
 44, 853 
 
 51,129 
 
 61,002 
 
 70,045 
 
 77, 485 
 
 86,759 
 
 96, 202 
 
 105, 772 
 
 118,566 
 
 128,765 
 
 140,109 
 
 150,265 
 
 160, 637 
 
 165,683 
 
 170, 658 
 
 172, 521 
 
 174, 556 
 
 174, 205 
 
 172, 612 
 
 160, 628 
 
 166, 832 
 
 162,665 
 
 157,441 
 
 149, 578 
 
 142, 141 
 
 133,643 
 
 124, 742 
 
 115, 839 
 
 107, 149 
 
 96,597 
 
 87,082 
 
 78.057 
 
 Cost of es- 
 tablishing 
 Gillett bill 
 
 (H.R. 22013) 
 for railway 
 
 postal clerks. 
 
 819,941,473 
 
 242, 571 
 253, 816 
 264,282 
 272,462 
 287,677 
 296, 803 
 309, 407 
 327, 901 
 345,708 
 363, 110 
 384, 545 
 406,415 
 430, 421 
 458,570 
 479,561 
 500,459 
 515,918 
 531,292 
 543, 280 
 557, 003 
 570, 549 
 586,728 
 597, 524 
 606,050 
 608, 226 
 605,737 
 600, 264 
 591, 402 
 580,088 
 566,189 
 545, 903 
 534,066 
 498, 172 
 472, 593 
 444, 148 
 415,981 
 386,429 
 357, 952 
 328,180 
 298, 121 
 267, 646 
 240, 074 
 213,559 
 188,918 
 
 Cost of es- 
 tablishing 
 
 Perkins bill 
 
 (S. 1944) 
 for railway 
 
 postal clerks. 
 
 ,708,359 
 
 259,056 
 270, 216 
 280,929 
 289,995 
 307,589 
 317,637 
 332, 094 
 352,766 
 373,341 
 393,075 
 419, 970 
 446,450 
 475,274 
 509, 699 
 540,663 
 570, 504 
 593, 403 
 618, 051 
 639, 482 
 662,775 
 689,115 
 715, 493 
 737,633 
 756,315 
 768,863 
 771, 420 
 
 770. 922 
 
 763. 923 
 754,644 
 740,394 
 718,515 
 694, 694 
 665,004 
 635, 258 
 601,589 
 565,559 
 528,570 
 491,595 
 452,922 
 413,960 
 374,795 
 336,671 
 300,641 
 266,976 
 
EEPOKT TO THE PEESIDENT ON EETIEEMENT ALLOWANCES. 31 
 
 Table 111. Showing total and comparative cost to the Government of establishing plan 
 for retiring employees under terms of Perlins hill (8. 1944) and Gillett bill (H. R, 
 22013)— Contmued. 
 
 Period. 
 
 44 years . 
 
 45 years . 
 
 46 years . 
 
 47 years . 
 
 48 years . 
 
 49 years. 
 
 50 years . 
 
 51 years . 
 
 52 years. 
 
 53 years . 
 
 54 years . 
 
 55 years . 
 
 56 years . 
 
 57 years . 
 
 58 years . 
 
 59 years . 
 
 60 years . 
 
 61 years . 
 
 62 years . 
 
 63 years . 
 
 64 years . 
 
 65 years . 
 
 66 years . 
 
 67 years . 
 
 68 years . 
 
 69 years . 
 
 70 years . 
 
 71 years . 
 
 72 years . 
 
 73 years. 
 
 74 years . 
 
 75 years . 
 
 76 years. 
 
 77 years. 
 
 Mall carriers. 
 
 Excess cost 
 of establish- 
 ing Perkins 
 bill (S. 1944) 
 
 for mail 
 carriers over 
 cost of es- 
 tablishing 
 Gillett bill 
 (H.R. 22013) 
 for mail 
 carriers. 
 
 $43,441 
 
 44,656 
 
 43,612 
 
 40, 704 
 
 36,894 
 
 33,277 
 
 29,840 
 
 26,622 
 
 23, 612 
 
 20,809 
 
 18,217 
 
 15,838 
 
 13,054 
 
 11, 677 
 
 9,895 
 
 8,303 
 
 6,883 
 
 5,641 
 
 4,564 
 
 3,637 
 
 2,847 
 
 2,193 
 
 1,656 
 
 1,218 
 
 875 
 
 608 
 
 408 
 
 261 
 
 161 
 
 92 
 
 48 
 
 23 
 
 9 
 
 5 
 
 Cost of es- 
 tablishing 
 Gillett bill 
 (H.R. 22013) 
 for mail 
 carriers. 
 
 $499, 130 
 
 439,057 
 
 383,074 
 
 332, 118 
 
 286,016 
 
 244,589 
 
 207, 639 
 
 174,896 
 
 146, 103 
 
 120, 988 
 
 99,266 
 
 80, 638 
 
 64,819 
 
 51,505 
 
 40,426 
 
 31, 302 
 
 23,882 
 
 17, 927 
 
 13,213 
 
 9,544 
 
 6,741 
 
 4,637 
 
 3,096 
 
 2,001 
 
 1,242 
 
 736 
 
 411 
 
 216 
 
 103 
 
 45 
 
 18 
 
 7 
 
 3 
 
 Cost of es- 
 tablishing 
 Perkins bill 
 (S. 1944) 
 for mail 
 
 $542,571 
 
 483, 713 
 
 426, 686 
 
 372,822 
 
 322, 910 
 
 277,866 
 
 237,479 
 
 201,518 
 
 169, 715 
 
 141, 797 
 
 117, 483 
 
 96, 476 
 
 78, 473 
 
 63, 182 
 
 50, 321 
 
 39, 605 
 
 30,765 
 
 23,568 
 
 17,777 
 
 13, 181 
 
 9,588 
 
 6,830 
 
 4,752 
 
 3,219 
 
 2,117 
 
 1,344 
 
 819 
 
 477 
 
 264 
 
 137 
 
 66 
 
 30 
 
 12 
 
 5 
 
 Railway postal clerks. 
 
 Excess cost 
 of estabUsh- 
 ing Perkins 
 
 bill (S. 1944) 
 for railway 
 
 postal clerks 
 over cost of 
 establishing 
 (iillett bill 
 
 (H.R. 22013) 
 for railway 
 
 postal clerks. 
 
 $69,554 
 
 61,596 
 
 54,200 
 
 47,373 
 
 41, 126 
 
 35, 445 
 
 30,316 
 
 25, 812 
 
 21,640 
 
 18,049 
 
 14, 921 
 
 11,202 
 
 9,898 
 
 7,936 
 
 6,292 
 
 4,925 
 
 3,810 
 
 2,897 
 
 2,166 
 
 1,597 
 
 1,157 
 
 812 
 
 560 
 
 374 
 
 246 
 
 153 
 
 91 
 
 52 
 
 26 
 
 12 
 
 6 
 
 3 
 
 Cost of es- 
 tablishing 
 Gillett bill 
 
 (H.R. 22013) 
 for railway 
 
 postal clerks. 
 
 $166, 150 
 
 145,239 
 
 126, 154 
 
 108,846 
 
 93,255 
 
 79,307 
 
 66,920 
 
 55, 917 
 
 46,468 
 
 38,204 
 
 31, 101 
 
 26,072 
 
 19,979 
 
 15,746 
 
 12,257 
 
 9,418 
 
 7,125 
 
 5,313 
 
 3,893 
 
 2,795 
 
 1,963 
 
 1,351 
 
 901 
 
 583 
 
 362 
 
 216 
 
 122 
 
 64 
 
 31 
 
 14 
 
 5 
 
 2 
 
 Cost of es- 
 tablishing 
 
 Perkins bill 
 (S. 1944) 
 
 for railway 
 postal clerks. 
 
 $235, 704 
 
 206,835 
 
 180,354 
 
 156,219 
 
 134,381 
 
 114,752 
 
 97,236 
 
 81,729 
 
 68, 108 
 
 56,253 
 
 46,022 
 
 37,274 
 
 29,877 
 
 23,682 
 
 18,549 
 
 14,343 
 
 10, 935 
 
 8,210 
 
 6,059 
 
 4,392 
 
 3,120 
 
 2,163 
 
 1,461 
 
 957 
 
 608 
 
 369 
 
 213 
 
 116 
 
 57 
 
 26 
 
 11 
 
 6 
 
 DIFFEEENCE IN COST BETWEEN STEAIGHT PENSION AND CONTEIBU- 
 TOEY PLAN CONFEEEING SAME BENEFITS. 
 
 The following table, taken from the report referred to (p. 48), shows 
 that the cost of a civil pension conferring the same benefits as the 
 Perkins bill (S. 1944) and payable entirely out of the Public Treasury 
 would be $232,773,690 during the next 35 years, as contrasted with 
 the cost of the Perkins bill for the same period at $97,553,023. 
 
32 REPORT TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 
 
 Table IV. — Showing comparative cost to the Government during first S5 years of retiring 
 employees on straight pensions and under the Perkins bill (S. 1944)- 
 
 Period, 
 
 All employees. 
 
 Excess cost 
 of retiring all 
 employees 
 on straight 
 pensions 
 over cost of 
 retiring all 
 employees 
 tmder Per- 
 kins bill dur- 
 ing first 35 
 years. 
 
 Cost of retir- 
 ing all em- 
 ployees 
 im'der 
 Perkins bill 
 shown for 
 period of 
 35 years. 
 
 Cost of retir- 
 ing all em- 
 ployees on 
 straight pen- 
 sions confer- 
 ring benefits 
 of Perkins 
 bill during 
 first 35 years. 
 
 General employees. 
 
 Excess cost 
 of retiring 
 general em- 
 ployees on 
 straight pen- 
 sions over 
 cost of retir- 
 ing general 
 employees 
 under Per- 
 kins bill dur- 
 ing first 35 
 years. 
 
 Cost of retir- 
 ing general 
 employees 
 
 under 
 
 Perkins bill 
 
 during . 
 
 first 35 years. 
 
 Cost of retir- 
 ing general 
 employees 
 on straight 
 
 pensions 
 conferring 
 benefits of 
 Perkins bill 
 
 . shown 
 during first 
 
 35 years. 
 
 Immediately. 
 
 I year 
 
 2years 
 
 3 years 
 
 4years 
 
 5 years 
 
 6 years 
 
 7 years 
 
 Syears 
 
 9 years 
 
 10 years 
 
 II years 
 
 12 years 
 
 13 years 
 
 14 years 
 
 15 years 
 
 16 years 
 
 17 years 
 
 18 years 
 
 19 years 
 
 20 years 
 
 21 years 
 
 22 years 
 
 23 years 
 
 24 years 
 
 25 years 
 
 26 years 
 
 27 years 
 
 28 years 
 
 29 years 
 
 30 years 
 
 31 years 
 
 32 years 
 
 33 years 
 
 34 years 
 
 35 years 
 
 $135,220,667 
 
 $97,553,023 
 
 $232,773,690 
 
 $52,850,870 
 
 $51,397,218 
 
 $104,248,088 
 
 14,008 
 
 36, 503 
 
 76,513 
 
 127, 822 
 
 196, 141 
 
 277,148 
 
 370, 553 
 
 473,740 
 
 572,679 
 
 707,058. 
 
 844, 518 
 
 1,013,466 
 
 1,211,119 
 
 1,412,728 
 
 1,641,434 
 
 1,875,576 
 
 2, 158, 712 
 
 2, 489, 837 
 
 2, 688, 165 
 
 3,268,212 
 
 3, 667, 342 
 
 4,134,194 
 
 4,661,693 
 
 5,171,470 
 
 5,741,268 
 
 6,308,259 
 
 6,853,926 
 
 7,472,324 
 
 8,068,838 
 
 8,700,020 
 
 9,358,111 
 
 10, 020, 239 
 
 10,644,040 
 
 11,226,124 
 
 11,736,887 
 
 1,121,795 
 1,261,819 
 1,390,485 
 1,556,632 
 1,705,135 
 1,861,499 
 2,003,086 
 2, 129, 118 
 2,252,506 
 2,317,860 
 2,392,028 
 2,441,271 
 2,491,484 
 2,559,337 
 2,621,035 
 2,679,979 
 2,726,937 
 2,791,401 
 2,871,945 
 2,940,921 
 3,047,310 
 3,138,272 
 3,235,543 
 3,323,097 
 3,390,712 
 3,442,268 
 3,469,245 
 3,481,754 
 3, 495, 463 
 3,483,861 
 3, 454, 704 
 3,419,266 
 3,373,275 
 3,314,099 
 3,232,814 
 3,135,067 
 
 1,121,795 
 1,275,827 
 1,426,988 
 1,633,145 
 1,832,957 
 2,057,640 
 2,280,234 
 2,499,671 
 2,726,246 
 2,890,639 
 3,099,086 
 3,285,789 
 3, 504, 950 
 3, 770, 456 
 4,033,763 
 4,321,413 
 4,602,613 
 4,950,113 
 5,361,782 
 5,629,086 
 6,315,522 
 6,805,614 
 7,369,737 
 7,984,790 
 8,562,182 
 9, 183, 536 
 9,777,504 
 10, 335, 680 
 10,967,787 
 11,562,699 
 12, 154, 724 
 12,777,377 
 13,393,514 
 13,968,139 
 14,468,938 
 14,871,954 
 
 6,834 
 
 20,428 
 
 45, 745 
 
 77,505 
 
 125,051 
 
 179,179 
 
 240,654 
 
 298,473 
 
 341,583 
 
 405,951 
 
 463,689 
 
 528,099 
 
 596,568 
 
 669, 621 
 
 738,254 
 
 813,344 
 
 902,076 
 
 1,006,032 
 
 1,107,669 
 
 1,284,459 
 
 1, 428, 818 
 
 1,611,255 
 
 1,814,930 
 
 2,010,982 
 
 2,192,352 
 
 2,375,382 
 
 2,513,964 
 
 2,721,595 
 
 2,927,127 
 
 3, 177, 801 
 
 3,449,223 
 
 3,762,363 
 
 4,061,247 
 
 4,350,884 
 
 4,601,733 
 
 706,290 
 803,660 
 892, 056 
 1,020,092 
 1,123,599 
 1,249,851 
 1,368,948 
 1,449,713 
 1,532,090 
 1,553,682 
 1,577,259 
 1,570,667 
 1,556,937 
 1,645,965 
 1,537,644 
 1,511,480 
 1,485,348 
 1,465,143 
 1,456,133 
 1,438,410 
 1,465,615 
 1,482,268 
 1,508,111 
 1,530,210 
 1,549,001 
 1,648,476 
 1,544,175 
 1,538,943 
 1,543,358 
 1,546,149 
 1,547,362 
 1,552,364 
 1,561,293 
 1,564,071 
 1,551,927 
 1,529,148 
 
 706,290 
 810, 494 
 912,484 
 1,065,837 
 1,201,104 
 1,374,902 
 1,538,127 
 1,690,367 
 1,830,563 
 1,895,265 
 1,983,210 
 2,034,356 
 2,085,036 
 2,142,533 
 2,207,165 
 2,249,734 
 2,298,692 
 2,367,219 
 2,402,165 
 2,546,079 
 2,749,974 
 2,911,076 
 3,119,366 
 3,346,140 
 3, 569, 983 
 3,740,828 
 3,919,657 
 4,052,907 
 4,264,953 
 4,473,276 
 4, 725, 163 
 6,001,687 
 6,323,656 
 5, 625, 318 
 5,902,811 
 6,130,881 
 
KEPOET TO THE PRESIDENT ON KETIEEMENT ALLOWANCES. 
 
 33 
 
 Table IV. — Showing comparative cost to the Government during first 35 years of retiring 
 employees on straight pensions and under the Perkins bill (S. 1944) — Continued. 
 
 Period. 
 
 Mail carriers. 
 
 Excess cost 
 of retiring 
 maU carriers 
 on straight 
 pensions over 
 cost of retir- 
 ing mail car- 
 riers under 
 Perkins bill 
 during first 
 35 years. 
 
 Cost of retir- 
 ing mail car- 
 riers under 
 Perkins bill 
 during first 
 35 years. 
 
 Cost of retir- 
 ing mail car- 
 riers on 
 straiglit pen- 
 sion confer- 
 ring benefits 
 of Perkins 
 bill during 
 first 35 years. 
 
 Railway postal clerks. 
 
 Excess cost t 
 of retiring ] 
 railway 
 postal clerks 
 on straight i 
 pensions over 
 cost of retir- 
 ing railway 
 postal clerks 
 
 under 
 Perkins bill j 
 during first 
 35 years. | 
 
 Cost of retir- 
 ing railway 
 postal clerks 
 
 under 
 
 Perkins bill 
 
 during first 
 
 35 years. 
 
 Cost of retir- 
 ing railway 
 postal clerks 
 on straight 
 pension con- 
 ferring bene- 
 fits of 
 Perkins bill 
 during first 
 35 years. 
 
 Immediately. 
 
 1 year 
 
 2 years 
 
 3 years 
 
 4 years 
 
 5 years 
 
 6 years 
 
 7 years 
 
 8 years 
 
 9 years 
 
 10 years 
 
 11 years 
 
 12 years 
 
 13 years 
 
 14 years 
 
 15 years 
 
 16 years 
 
 17 years 
 
 18 years 
 
 19 years 
 
 20 years 
 
 21 years 
 
 22 years 
 
 23 years 
 
 24 years 
 
 25 years 
 
 26 years 
 
 27 years 
 
 28 years 
 
 29 years 
 
 30 years 
 
 31 years 
 
 32 years 
 
 33 years 
 
 34 years 
 
 35 years 
 
 S57,621,100 
 
 S26,153,595 
 
 $83,774,695 
 
 824,748,697 $20,002,210 
 
 6,192 
 13,082 
 24,852 
 39,109 
 53,876 
 72, 925 
 94,918 
 126,468 
 166, 020 
 214,695 
 272, 414 
 345,597 
 435,729 
 523,164 
 638,916 
 757,141 
 899,543 
 070,775 
 101,083 
 426, 888 
 589,794 
 774, 483 
 985,086 
 182, 184 
 453,504 
 717,028 
 001,041 
 290,758 
 555, 998 
 828,792 
 100,427 
 369, 182 
 605, 161 
 833,217 
 051,058 
 
 150,449 
 
 187, 943 
 
 217, 500 
 
 246,545 
 
 273,947 
 
 294,011 
 
 312,044 
 
 326,639 
 
 347, 075 
 
 371,103 
 
 394,799 
 
 424,154 
 
 459,273 
 
 503,673 
 
 542,928 
 
 597,995 
 
 648,186 
 
 708,207 
 
 776,330 
 
 839,736 
 
 892,680 
 
 940,521 
 
 989,799 
 
 1,036,572 
 
 1,072,848 
 
 1,122,372 
 
 1,154,148 
 
 1,178,888 
 
 1,197,461 
 
 1,197,318 
 
 1, 188, 837 
 
 1, 172, 208 
 
 1,146,978 
 
 1,114,770 
 
 1,079,298 
 
 1,040,360 
 
 156,449 
 
 194, 135 
 
 230, 582 
 
 271,397 
 
 313, 056 
 
 347, 887 
 
 384,969 
 
 421,557 
 
 473,543 
 
 537,123 
 
 609, 494 
 
 696,568 
 
 804, 870 
 
 939,402 
 
 1,066,092 
 
 1,236,911 
 
 1,405,327 
 
 1,607,750 
 
 1,847,105 
 
 1,940,819 
 
 2,319,568 
 
 2,530,315 
 
 2,764,282 
 
 3,021,658 
 
 3,255,032 
 
 3, 575, 876 
 
 3,871,176 
 
 4,179,929 
 
 4,488,219 
 
 4,753,316 
 
 5,017,629 
 
 5,272,635 
 
 5,516,160 
 
 5,719,931 
 
 5,912,515 
 
 6,091,418 
 
 982 
 
 2,993 
 
 5-, 916 
 
 11,208 
 
 17, 214 
 
 25,044 
 
 34, 981 
 
 48,799 
 
 65, 076 
 
 86,412 
 
 108, 415 
 
 139,770 
 
 178, 822 
 
 219,943 
 
 264,264 
 
 305,091 
 
 357,093 
 
 413, 030 
 
 479, 413 
 
 556,865 
 
 648, 730 
 
 748, 456 
 
 861,677 
 
 978,304 
 
 1,095,412 
 
 1, 215, 849 
 
 1,338,921 
 
 1,459,971 
 
 1,585,713 
 
 1,693,427 
 
 1, 808, 461 
 
 1,888,694 
 
 1,977,632 
 
 2,042,023 
 
 2,084,096 
 
 259,056 
 270,216 
 280,929 
 289,995 
 307, 589 
 317,637 
 332,094 
 352,766 
 373,341 
 393,075 
 419,970 
 446,450 
 475,274 
 509,699 
 540,563 
 570,504 
 593,403 
 618,051 
 639,482 
 662,775 
 689,115 
 715,493 
 737,633 
 756,315 
 768,863 
 771,420 
 770, 922 
 763,923 
 754,644 
 740,394 
 718,515 
 694,694 
 665,004 
 635,258 
 601,589 
 565,559 
 
 844,750,907 
 
 259,056 
 
 271,198 
 
 283,922 
 
 295, 911 
 
 318,797 
 
 334, 851 
 
 357,138 
 
 387,747 
 
 422, 140 
 
 458,151 
 
 606,382 
 
 554, 865 
 
 615, 044 
 
 688,521 
 
 760,506 
 
 834,768 
 
 898, 494 
 
 975,144 
 
 1,052,512 
 
 1, 142, 188 
 
 1,245,980 
 
 1,364,223 
 
 1,486,089 
 
 1,617,992 
 
 1,747,167 
 
 1,866,832 
 
 1,986,771 
 
 2,102,844 
 
 2,214,615 
 
 2,326,107 
 
 2,411,942 
 
 2, 503, 155 
 
 2,553,698 
 
 2,612,890 
 
 2,64.3,612 
 
 2,649,655 
 
 The following table, taken from the report referred to (p. 50), 
 shows that the cost of a civil pension conferring the same benefits as 
 the GiJlett biU (H. R. 22013) and payable entirely out of the Pubhc 
 Treasury would be $232,773,690 during the next 35 years, as con- 
 trasted with the cost of the Gillett bill for the same period at 
 $73,136,765. 
 
34 REPORT TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 
 
 Table V. — Showing comparative cost to the Government during first 35 years of retiring 
 employees on straight pensions and under the Gillett bill (H. R. 2201S). 
 
 r'eriod. 
 
 Immediately. 
 
 lyear 
 
 2 years 
 
 Syears 
 
 4years 
 
 5 years 
 
 6 years 
 
 7years 
 
 Syears 
 
 9 years 
 
 10 years 
 
 11 years 
 
 12 years 
 
 13 years 
 
 14 years 
 
 15 years 
 
 16 years 
 
 17 years 
 
 18 years 
 
 19 years 
 
 20 years 
 
 21 years 
 
 22 years 
 
 23 years 
 
 24 years 
 
 25 years 
 
 26 years 
 
 27 years 
 
 28 years 
 
 29 years 
 
 30 years 
 
 31 years 
 
 32 years 
 
 33 years 
 
 34 years 
 
 35 years 
 
 All employees. 
 
 Excess cost 
 
 of retiring all 
 
 employees 
 
 on straight 
 
 pensions 
 
 over cost of 
 
 retiring all 
 
 employees 
 
 under Gillett 
 
 bill during 
 
 first 35 years. 
 
 $159,636,925 
 
 143,251 
 183, 722 
 225,010 
 296,713 
 377, 137 
 483,844 
 604,428 
 726,230 
 863,729 
 980,509 
 136,821 
 282, 331 
 458,826 
 671,379 
 898,435 
 141,890 
 392, 690 
 692, 705 
 054,058 
 277,090 
 909,050 
 353,846 
 876, 669 
 466, 180 
 035,966 
 649,876 
 264, 466 
 859,281 
 532,510 
 194,280 
 880,297 
 585, 654 
 325,203 
 009,845 
 634,530 
 168, 474 
 
 Cost of retir- 
 ing all em- 
 ployees un- 
 der Gillett 
 bill for first 
 35 years. 
 
 $73,136,765 
 
 978,544 
 1,092,105 
 1,201,978 
 1,336,432 
 1,455,820 
 1,573,796 
 1,675,806 
 1,773,441 
 1,862,517 
 1,910,030 
 1,962,265 
 2,003,458 
 2,046,124 
 2,099,077 
 2, 135, 328 
 2,179,523 
 2,209,823 
 2,257,408 
 2,307,724 
 2,351,996 
 2,406,472 
 2,451,768 
 2,493,068 
 2,518,610 
 2,526,216 
 2,633,660 
 2,513,038 
 2,476,399 
 2,435,277 
 2,358,419 
 2,274,427 
 2, 191, 723 
 2,068,311 
 1,948,294 
 1,824,408 
 1, 703, 480 
 
 Cost of retir- 
 ing all em- 
 ployees on 
 straight pen- 
 sions confer- 
 ring benefits 
 of Perkins 
 bill shown 
 for first 35 
 years. 
 
 S232,773,690 
 
 1,121,795 
 1,275,827 
 1,426,988 
 1,633,145 
 1,832,957 
 2,057,640 
 2,280,234 
 2, 499, 671 
 2,726,246 
 2,890,539 
 3,099,086 
 3,285,789 
 3,504,950 
 3, 770, 456 
 4,033,763 
 4,321,413 
 4,602,513 
 4,950,113 
 5,361,782 
 5,629,086 
 6,315,522 
 6,805,614 
 7,369,737 
 7, 984, 790 
 8,562,182 
 9,183,536 
 9,777,504 
 10, 335, 680 
 10, 967, 787 
 11,552,699 
 12,154,724 
 12,777,377 
 13,393,514 
 13, 958, 139 
 14, 458, 938 
 14,871,954 
 
 General employees. 
 
 Excess cost 
 of retiring 
 general em- 
 ployees on 
 straight pen- 
 sions over 
 cost of retir- 
 ing general 
 employees 
 under Gillett 
 bill for first 
 35 years. 
 
 573,291,503 
 
 125,977 
 
 159,796 
 
 191,773 
 
 247,796 
 
 306,150 
 
 391,087 
 
 482,702 
 
 570,325 
 
 659,329 
 
 717,534 
 
 798, 130 
 
 858,814 
 
 925,760 
 
 1,002,542 
 
 1,090,965 
 
 1, 164, 674 
 
 1,248,229 
 
 1,344,760 
 
 1,468,023 
 
 1,583,809 
 
 1,798,518 
 
 1, 976, 437 
 
 2,201,062 
 
 2, 453, 463 
 
 2,694,741 
 
 2, 910, 040 
 
 3,131,832 
 
 3,313,939 
 
 3,570,962 
 
 3,834,130 
 
 4, 139, 178 
 
 4, 468, 924 
 
 4,853,520 
 
 5,217,325 
 
 5,554,128 
 
 5,835,129 
 
 Cost of retir- 
 ing general 
 employees 
 
 under GiUett 
 
 bill shown 
 
 for first 35 
 
 years. 
 
 $30,956,585 
 
 580,313 
 
 650, 698 
 
 720, 711 
 
 818,041 
 
 894,954 
 
 983,815 
 
 1,055,425 
 
 1,120,042 
 
 1,171,234 
 
 1, 177, 731 
 
 1,185,080 
 
 1,175,542 
 
 1,159,276 
 
 1,139,991 
 
 1,116,200 
 
 1,085,060 
 
 1,050,463 
 
 1,022,459 
 
 994, 142 
 
 962,270 
 
 951, 456 
 
 934, 639 
 
 918, 304 
 
 891, 677 
 
 865,242 
 
 830,788 
 
 787,725 
 
 738,968 
 
 693, 991 
 
 639, 146 
 
 585,975 
 
 532,663 
 
 470, 136 
 
 407, 993 
 
 348, 683 
 
 295,752 
 
 Cost of retir- 
 ing general 
 employees 
 on straight 
 pensions con- 
 ferring bene- 
 fits of Per- 
 kins bill 
 shown for 
 first 35 years. 
 
 $104,248,088 
 
 706,290 
 810, 494 
 912,484 
 1,065,837 
 1,201,104 
 1,374,902 
 1,538,127 
 1,690,367 
 1,830,563 
 1,895,265 
 1,983,210 
 2,034,356 
 2,085,036 
 2,142,533 
 2,207,165 
 2,249,734 
 2,298,692 
 2,367,219 
 2,462,165 
 2,546,079 
 2,749,974 
 2,911,076 
 3, 119, 366 
 3,345,140 
 3,559,983 
 3,740,828 
 3,919,557 
 4,052,907 
 4,264,953 
 4,473,276 
 4,725,153 
 5,001,587 
 5,323,656 
 5,625,318 
 5,902,811 
 6,130,881 
 
REPORT TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 
 
 35 
 
 Table V. — Showing comparative cost to the Government during first 35 years of retiring 
 employees on straight pensions and under the Gillett bill (H. R. 22013) — Continued. 
 
 Period. 
 
 Immediately 
 
 1 year 
 
 2 years 
 
 3 years 
 
 4years 
 
 5 years 
 
 6 years 
 
 7years 
 
 Syears 
 
 9 years 
 
 10 years 
 
 11 years 
 
 12 years 
 
 13 years 
 
 14 years 
 
 15 years 
 
 16 years 
 
 17 years 
 
 18 years 
 
 19 years 
 
 20 years 
 
 21 years 
 
 22 years 
 
 23 years 
 
 24 years 
 
 25 years 
 
 26 years 
 
 27 years 
 
 28 years 
 
 29 years..... 
 
 30 years 
 
 31 years 
 
 32 years 
 
 33 years 
 
 34 years 
 
 35 years 
 
 Mail carriers. 
 
 Excess cost 
 of retiring 
 man carriers 
 on straiglit 
 pensions over 
 cost of retir- 
 ing mail car- 
 riers under 
 Gillett bUl 
 during first 
 35 years. 
 
 $58,189,336 
 
 7S9 
 
 6,544 
 
 13,597 
 
 25,468 
 
 39,867 
 
 54,709 
 
 73,995 
 
 96,059 
 
 127,968 
 
 167,934 
 
 216,854 
 
 275, 067 
 
 348,443 
 
 438,886 
 
 526,525 
 
 642,907 
 
 761,885 
 
 904,093 
 
 1,076,803 
 
 1,108,096 
 
 1,435,101 
 
 1,599,914 
 
 1,787,042 
 
 2,000,775 
 
 2,202,284 
 
 2,478,741 
 
 2,746,127 
 
 3,033,900 
 
 3,327,021 
 
 3,600,232 
 
 3,875,080 
 
 4,147,641 
 
 4,416,157 
 
 4,652,223 
 
 4,880,938 
 
 5,099,671 
 
 Cost of retir- 
 ing mail car- 
 riers under 
 Gillett bill 
 shown for 
 first 35 years. 
 
 §25,585,359 
 
 155,660 
 
 187,591 
 
 216,985 
 
 245,929 
 
 273, 189 
 
 293, 178 
 
 310,974 
 
 325,498 
 
 345,575 
 
 369,189 
 
 392,640 
 
 421,501 
 
 456,427 
 
 500,516 
 
 539,567 
 
 594,004 
 
 643,442 
 
 703,657 
 
 770,302 
 
 832, 723 
 
 884,467 
 
 930,401 
 
 977, 240 
 
 1,020,883 
 
 1,052,748 
 
 1,097,135 
 
 1,125,049 
 
 1,146,029 
 
 1,161,198 
 
 1,153,084 
 
 1,142,549 
 
 1,124,994 
 
 1,100,003 
 
 1,067,708 
 
 1,031,577 
 
 991,747 
 
 Cost of retir- 
 ing mail car- 
 riers on 
 straight pen- 
 sions confer- 
 ring benefits 
 of Perkins 
 bill shown 
 for first 35 
 years. 
 
 S83, 774, 695 
 
 156,449 
 
 194,135 
 
 230,582 
 
 271,397 
 
 313,056 
 
 347,887 
 
 384,969 
 
 421,557 
 
 473,543 
 
 537,123 
 
 609,494 
 
 696, 568 
 
 804,870 
 
 939,402 
 
 1,066,092 
 
 1,236,911 
 
 1,405,327 
 
 1,607,750 
 
 1,847,105 
 
 1,940,819 
 
 2,319,568 
 
 2,530,315 
 
 2,764,282 
 
 3,021,658 
 
 3,255,032 
 
 3,575,876 
 
 3,871,176 
 
 4,179,929 
 
 4,488,219 
 
 4,753,316 
 
 5,017,629 
 
 5,272,635 
 
 5,516,160 
 
 5,719,931 
 
 5,912,515 
 
 6,091,418 
 
 Railway postal clerks. 
 
 Excess cost 
 
 of retiring 
 
 railway 
 
 postal clerks 
 on straight 
 
 pensions over 
 cost of retk- 
 ing railway 
 
 postal clerks 
 
 under GUlett 
 
 bill for first 
 
 35 years. 
 
 828,156,086 
 
 16,485 
 
 17,382 
 
 19,640 
 
 23,449 
 
 31,120 
 
 38,048 
 
 47, 731 
 
 59,846 
 
 76,432 
 
 95,041 
 
 121,837 
 
 148,450 
 
 184, 623 
 
 229,951 
 
 280, 945 
 
 334,309 
 
 382,576 
 
 443,852 
 
 509,232 
 
 585,185 
 
 675,431 
 
 777,495 
 
 888, 565 
 
 1,011,942 
 
 1,138,941 
 
 1,261,095 
 
 1,386,507 
 
 1,511,442 
 
 1,634,527 
 
 1,759,918 
 
 1,866,039 
 
 1,969,089 
 
 2,055,526 
 
 2,140,297 
 
 2,199,464 
 
 2,233,674 
 
 Cost of retir- 
 ing railway 
 postal clerks 
 under Gillett 
 bill shown 
 for first 35 
 years. 
 
 $16,594,821 
 
 242,571 
 253,816 
 261,282 
 272,462 
 287,677 
 296,803 
 309,407 
 327,901 
 345,708 
 363,110 
 384,545 
 406,415 
 430,421 
 458,570 
 479,561 
 500,459 
 515,918 
 531,292 
 543, 280 
 557,003 
 570,549 
 586, 728 
 597,524 
 606,050 
 608,226 
 605,737 
 600,264 
 591,402 
 580,088 
 566,189 
 545,903 
 534,066 
 498, 172 
 472,593 
 444,148 
 415,981 
 
 Cost of retir- 
 ing railway 
 postal clerks 
 on straight 
 pensions con- 
 ferring bene- 
 fits of 
 Perkins bill 
 shown for first 
 35 years. 
 
 $44,750,907 
 
 259,056 
 
 271,198 
 
 283,922 
 
 295,911 
 
 318,797 
 
 334,851 
 
 357,138 
 
 387,747 
 
 422,140 
 
 458, 151 
 
 506,382 
 
 554,865 
 
 615,044 
 
 688,521 
 
 760,506 
 
 834,768 
 
 898,494 
 
 975,144 
 
 1,052,512 
 
 1,142,188 
 
 1,245,980 
 
 1,364,223 
 
 1,486,089 
 
 1,617,992 
 
 1,747,167 
 
 1,866,832 
 
 1,986,771 
 
 2,102,844 
 
 2,214,615 
 
 2,326,107 
 
 2,411,942 
 
 2,503,155 
 
 2,553,698 
 
 2,612,890 
 
 2,643,612 
 
 2,649,655 
 
36 report to the president on retirement allowances. 
 
 Reluctance of Congress to Provide for Eetirement of Civil 
 Employees on Account of Expense. 
 
 Congress has not been willing to pass any of these bills. Its reluc- 
 tance would seem to be due to the fact that it is not yet satisfied that 
 the expense incident to establishing these plans — through the pay- 
 ment of annuities from the Federal Treasury to those who were too 
 old to provide for themselves — is justified by the loss incurred through 
 the inefficiency of aged employees. No calculations were made to 
 show the saving that would result to the Government through removal 
 of the superannuated as an offset to the expense necessarily incurred 
 in retiring them. This calculation w^as not possible at the time, as 
 no statistics showdng the actual amount of work performed by the 
 . aged employees were available on which to base such calculations. 
 
 expense of establishing proposed contributory plan justified. 
 
 It can not be denied that any reasonably adequate plan of retire- 
 ment will probably require for a number of years an appropriation 
 fully equal to any reasonable estimate of the loss now suffered through 
 the inefficiency of the aged. The commission believes, however, that 
 such expenditure would be more than justified if at the time the plan 
 takes effect a scale of deductions from the salaries of those below the 
 age of retirement or thereafter entering the service is established 
 which will result in 'the annual cost to the Government, say, in 20 
 years being reduced to an amount less than the loss that will then 
 be incurred by the Government if no plan of retirement is adopted, 
 and which ultimately, say by the time all employees now in the service 
 are dead, will be completely self-supporting except for the cost of 
 administration and any expense that might be incurred by the Gov- 
 ernment through failure to reahze the rate of interest guaranteed on 
 the deposits of the employees. 
 
 Arguments of Employees Against Contributory Plan Answered. 
 
 Many of the employees have opposed these bills. Their opposi- 
 tion is based on the following arguments : 
 
 (1) That the deductions from salary would be burdensome and 
 could only be met by an increase in salaries, which would be in effect 
 a pension in disguise, since the Government would be meeting the 
 expense of retiring its employees. 
 
 (2) That a cash sum to the credit of an employee, which could only 
 be obtained by resignation, would offer a constant temptation to him 
 to leave the service. 
 
 (3) That the rate of interest guaranteed on deposits of the employ- 
 ees is below the rate at which the employees can safely invest their 
 own savings. 
 
EEPORT TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 37 
 
 (4) That either of the two ways generally proposed on which an 
 employee's account with the Government could be settled on his 
 retirement from the service is objectionable; on the one hand, the 
 granting of annuities on terms which mean the forfeiture of the accu- 
 mulation not consumed in pension payments prior to death would 
 cause dissatisfaction to his family, and on the other hand, the return 
 in one cash sum of the entire amount to the credit of the employee 
 at retirement would, in many cases, result in unwise investments and 
 loss of savings, so that such employee would be worse off than if no 
 plan of retirement had been provided for him. 
 
 (5) That the fund accumulated would finally become so large as 
 to be a source of graft and political demoralization. 
 
 DEDUCTIONS FROM SALARIES OP EMPLOYEES NOW IN SERVICE SHOULD 
 
 BE LIMITED. 
 
 (1) In order to meet the objections of the employees concerning 
 the amount of the monthly deductions required by the proposed 
 contributory plans, the commission believes that the Government 
 should not only agree to pay the full amount of annuities to all em- 
 ployees retiring immediately, but that it should also agree to make up 
 any deficit in the sum which a maximum deduction of 8 per cent from 
 the salary of any employee will provide. The commission believes 
 that by limiting the deduction which may be made from the salary of 
 any employee to 8 per cent the objection as to the amount of the de- 
 ductions will, in the main, be removed. Certainly, if the salaries 
 of any of the Government's employees are so low that the saving of 8 
 per cent of such salaries would work a hardship on any considerable 
 number of employees, it is beyond argument that such salaries should 
 be increased. If the margin between the amount of the salary and 
 the cost of the bare necessities of life is so narrow as to make the 
 saving of this amount impossible, then employees so situated are as 
 certain to become a burden to the Government when age overtakes 
 them as they are to live. It is manifest that the more quickly this 
 condition is remedied by the payment of adequate salaries the less 
 will be the future cost of superannuation. This commission would 
 certainly recommend an increase of salaries, if such an increase is 
 necessary to put the employees on a basis that would make it possible 
 for them to save 8 per cent of their salaries. But the commission 
 holds that such an increase, which would be a reward for services at 
 the time they are rendered and for all those in the service, would be 
 distinctly different from the grant of a straight pension, which would 
 be a reward for services after they were rendered, and for only the 
 very few who had lived to reach a certain age. As pointed out in the 
 quotation from the report on civil-service retirement in Great Britain 
 hereinafter referred to, the operation of compound interest would 
 
38 EEPORT TO THE PRESIDENT ON EETIEEMENT ALLOWANCES, 
 
 make it possible to increase salaries and establisli a contributory 
 system of retirement at less cost to the employees than to give them a 
 pension system under which the benefits are paid directly from the 
 Treasury, but considered a part of the payroll. An increase in salary 
 is, therefore, decidedly not "a pension in disguise." 
 
 GOVERNMENT SHOULD NOT PENALIZE EMPLOYEES LEAVING SERVICE. 
 
 (2) The commission believes that there is little foundation m fact 
 for the argument that a cash sum to the credit of an employee would 
 cause him to leave the service. If a cash sum to his credit would 
 enable him to better his condition outside the service, it is surely to 
 his interest to have such a cash sum, rather than that a plan of retire- 
 ment should be adopted which would attach a penalty to separation 
 from the service, as would be the case if a civil pension were estab- 
 lished under which an employee leaving the service would forfeit his 
 partly earned pension. The commission believes that the Govern- 
 ment should pay reasonable and fair compensation to its employees 
 at the time the services are rendered, and should endeavor to hold 
 its employees fairly in competition with private employers. No just 
 Government will wish to do anything that could be construed as 
 penalizing its employees. 
 
 GOVERNMENT SHOULD PAY LIBERAL RATE OF INTEREST ON ENFORCED 
 
 SAVINGS. 
 
 (3) The commission believes that the rate of interest guaranteed 
 on deposits of the employees should not be below the rate at which 
 the average employee can safely invest his savings. The rate of 
 interest named m most of the contributory plans that have been 
 proposed has been 3| per cent, compounded annually. The com- 
 mission believes that it would be fair both to the Government and to 
 the employees to guarantee a minimum rate of mterest of 4 per cent, 
 compounded annually, and that durmg a long period of years the Gov- 
 ernment would be able to realize nearly, if not quite, this rate of 
 interest if the fund were invested in the securities prescribed in the 
 contributory bills heretofore proposed. These bills authorize the 
 investment of the fund in substantially the classes of bonds in which 
 the New England savings banks may invest their funds. If any aid 
 is to be given by the Government to a plan of retirement, other than 
 that necessary to establish the plan, such aid can be given most 
 equitably by guaranteeing the minimum rate of interest which shall 
 be paid to the employees on their deposits. On short periods of 
 service there is little difference between the results obtained at 3^ 
 and 4 per cent, but on long periods the results at 4 per cent are con- 
 siderably greater than at 3^ per cent. A higher rate of interest 
 
REPORT TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 39 
 
 would be desirable for two reasons : (1 ) It would mean lower monthly 
 deductions from salaries, and (2) a considerably greater return to the 
 employees who entered the service early in life and remained to the 
 age of retirement than to the employees who entered late and retired 
 eariy. It is believed also that the deposits of employees leaving the 
 service or dying in the service should be returned with interest at 4 
 per cent, compounded annually, the same rate as it is proposed to 
 pay to those who are retired for age. 
 
 BOTH ANNUITY AND CASH SETTLEMENTS SHOULD BE ARRANGED TO 
 TROTECT INTERESTS OF EMPLOYEE. 
 
 (4) The commission believes that either of tlie two ways generally 
 proposed for settling an employee's account on retiring is inadvisable, 
 but that these settlements could be so adjusted that either one of them 
 would be satisfactory. 
 
 The commission agrees with the arguments that annuities which 
 mean the forfeiture of the accumulation not consumed in pension 
 payments prior to death would cause dissatisfaction, and, therefore, 
 believes that the annuities should be based on rates of premium which 
 will enable the Government to return to the family of the deceased 
 employee any balance to his credit not paid to him prior to his death. 
 
 The commission agrees with those who contend that the return in 
 one cash sum of the entire amount to the credit of the employee at 
 retirement would result, in many cases, in unwise investments and 
 loss of savings, and believes that an employee leaving the service after 
 the age of 60 should be paid the sum to his credit, when in excess of 
 S600,in not less tlian 10 annual installments. The unpaid balance of 
 such deposit should be credited annually with interest at 4 per cent. 
 
 NO DANGER IN SAVINGS FUND. 
 
 (5) The commission believes that there is little, if anything, in the 
 history of any government to justify the argument that the fund ac- 
 cumulated under a contributory system would ultimately become so 
 large as to cause graft and political demoralization. The system of 
 postal savings banks, so well thought of in other countries as well as 
 in the United States, provides for the accumulation of a trust fund at a 
 far greater rate than would be possible under any plan of retirement 
 based on savings of the employees. The neighboring Government of 
 Canada has, moreover, not only created a trust fund by the estab- 
 lishment of postal savings banks, but, satisfied with its success in that 
 field, has recently established a system of Government annuities which 
 enables not merely officeholders, but any citizen of the country, to 
 purchase annuities From the Government. 
 
40 report to the president on retirement allowances. 
 
 Commission's Effort to Ascertain Annual Loss to Government 
 Through Inefficiency of Aged Employees. 
 
 With these ideas in mind, this commission has endeavored to 
 ascertain definitely the annual loss due to the incompetence of the 
 aged employees, as nearly as it can be calculated, and to determine 
 what expense the Government would be justified in incurring in 
 order to wipe out that loss. It has also sought to modify the sug- 
 gested bills in such a way as to answer the purpose of the Govern- 
 ment in passing a retirement bill and at the same time meet the 
 objections of the employees as far as possible. 
 
 The only statistics that have ever been compiled concerning the 
 loss sustained by the Government through superannuation were 
 collected by the Civil Service Commission in 1906 and covered 
 only the classified service in the District of Columbia. They showed 
 the loss for one year only, and were so presented that a satisfactory 
 basis for calculating the probable future loss could not be derived 
 from them. On the other hand, all of the statistics that have been 
 prepared thus far concerning the cost of estabhshing the various 
 plans have covered the entire classified civil service and have been 
 worked out to show the amount that would have to be appropriated 
 by the Congress, not only the first year after the adoption of the 
 plan but each year thereafter until all employees now in the service 
 will have died. It will thus be seen that the statistics as to cost 
 and those available as to loss were not comparable. The commis- 
 sion felt that the statistics as to loss should be made complete in 
 order that both sides of the account could be presented, i. e., the 
 amounts that will have to be appropriated annually, on one side, 
 and the savings that will result from such appropriations, on the 
 other side. 
 
 In order to consider both sides of the problem — the saving as 
 well as the cost — the commission prepared a schedule, the form of 
 which is shown as Appendix E of this report. The heads of depart- 
 ments and bureaus were requested to fill one of these schedules for 
 each member of the permanent classified civil service in the depart- 
 ments and independent offices at Washington, D. C. (excluding all 
 field or local service in the District of Columbia, but including per- 
 sons covered by Schedule A of the civil-service rules, and including 
 persons holding unclassified positions but having ehgibility for 
 transfer to the competitive classified service). Schedules covering 
 22,754 employees coining under this definition were returned to the 
 commission, and the statistics presented in this report are based 
 on the facts given in those schedules. They show that the loss from 
 superannuation in the classified service in the District of Columbia 
 
REPORT TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 41 
 
 at the time the schedules were filled amounted to $220,954, dis- 
 tributed according to ages as shown in the following tables : 
 
 Table VI. — Showing the number of employees in the classified civil service in the District 
 of Columbia 70 years of age and over, the amount of salaries paid, the amount and per 
 cent of salaries earned, and the amount and per cent of salaries unearned or the loss due 
 to superannuation. 
 
 Number 
 of em- 
 ployees. 
 
 Total salaries. 
 
 Paid. 
 
 Earned. 
 
 Amount. Per cent 
 
 Unearned. 
 
 Amount. Per cent 
 
 80 years and over 
 
 79 years 
 
 78 years 
 
 77 years 
 
 76 years 
 
 75 years 
 
 74 years 
 
 73 years 
 
 72 years ...... 
 
 71 years 
 
 70 years 
 
 Total 
 
 100 
 117 
 169 
 189 
 
 S71,790 
 
 33,660 
 
 44,470 
 
 53,405 
 
 64,425 
 
 96, 185 
 
 103,250 
 
 131,980 
 
 144,955 
 
 211,865 
 
 240,325 
 
 27, 980 
 
 31,499 
 
 42, 394 
 
 53,479 
 
 79,038 
 
 81,519 
 
 105,048 
 
 121,287 
 
 180,564 
 
 206,062 
 
 64.75 
 83.13 
 70.83 
 79.38 
 83.01 
 82.17 
 78.95 
 79.59 
 83.67 
 85.23 
 85.74 
 
 $25,304 
 5,680 
 12,971 
 11,011 
 10,946 
 17,147 
 21,731 
 26,932 
 23,668 
 31,301 
 34,263 
 
 35.25 
 16.87 
 29.17 
 20.62 
 16.99 
 17.83 
 21.05 
 20.41 
 16.33 
 14.77 
 11.26 
 
 951 
 
 1,196,310 
 
 975,356 
 
 81.53 
 
 220,954 
 
 18.47 
 
 Calculations based on these schedules show, furthermore, that this 
 loss is increasing steadily and will be doubled in the course of 20 
 years. These figures are not merely conservative; they are known ta 
 be less than the fact. 
 
 RELUCTANCE OF OFFICERS TO REPORT ON INDIVIDUAL EMPLOYEES 
 MAKES FIGURES OF LOSS LESS THAN THE FACT. 
 
 In order to make the inquiry wholly impersonal, and thus remove, 
 as far as possible, the natural reluctance of officers to give facts con- 
 cerning the efficiency of individual employees, the commission re- 
 quested the heads of departments and bureaus to detach the stub 
 bearing the name of the employee at the head of the schedule before 
 returning the schedule to the commission. The commission is con- 
 vinced, however, that the officers making the reports were still 
 reluctant to turn in schedules that rated anyone as notably inefficient, 
 and that the schedules, in the aggregate, greatly understate the loss 
 which the Government is sustaining through the retention of em- 
 ployees who are no longer able to render efficient service. Believing, 
 however, that it would be preferable to accept the returns as made by 
 the departments rather than to undertake to secure any revision 
 which might make it appear that the commission was endeavoring ta 
 "make a case," and had thus presented statistics of loss due to super- 
 
42 EEPOET TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 
 
 annuation that were greater than the fact, the commission has not 
 attempted to modify the returns in any way, although it is apparent 
 that the results are more than conservative, and perhaps do not show 
 much more than half the actual loss sustained by the Government. 
 The figures are useful, however, for it is possible to derive from them 
 tables showing the future growth of superannuation that will take 
 place if no plan of retirement is adopted. They also enable the com- 
 mission to show, as an absolute offset to the cost which must be 
 incurred by the Government in establishing the plan, the minimum 
 amount the Government will save from the adoption of the plan of 
 retirement. 
 
 BASIS OF ESTIMATE OF FUTURE LOSSES FROM SUPERANNUATION. 
 
 The number of employees reported by the departments as belong- 
 ing to the classified civil service in the District of Columbia, distrib- 
 uted according to age, salary paid, salary earned, the per cent of 
 salary earned, and the per cent of salary not earned at the various 
 ages, is shown by the following table, which is the basis used in 
 estimating future losses from superannuation : 
 
 Table VII. — Showing the number of employees in the classified civil service in the District 
 of Columbia, distributed according to age, the total salaries paid, total salaries earned, 
 the per cent of salary earned, and per cent of salary not earned. 
 
 Age. 
 
 (a) 
 
 16 years 
 
 17 years 
 
 18 years 
 
 19 years 
 
 20 years 
 
 21 years 
 
 22 years 
 
 23 years 
 
 24 years 
 
 25 years 
 
 26 years 
 
 27 years 
 
 28 years 
 
 29 years 
 
 30 years 
 
 31 years 
 
 32 years 
 
 33 years 
 
 34 years 
 
 35 years 
 
 36 years 
 
 37 years 
 
 
 
 Number of 
 
 
 
 Paid 
 (amount). 
 
 (6) 
 17 
 
 (c) 
 $6,575 
 
 134 
 
 55,728 
 
 190 
 
 91,695 
 
 247 
 
 158,787 
 
 279 
 
 197,371 
 
 372 
 
 313,780 
 
 397 
 
 336,089 
 
 491 
 
 429, 138 
 
 505 
 
 485,025 
 
 512 
 
 513,169 
 
 553 
 
 596,750 
 
 564 
 
 614,945 
 
 564 
 
 632, 416 
 
 547 
 
 618,371 
 
 666 
 
 792,012 
 
 638 
 
 727,416 
 
 624 
 
 739,959 
 
 623 
 
 792,951 
 
 625 
 
 786,547 
 
 645 
 
 795,190 
 
 636 
 
 792,864 
 
 589 
 
 752,496 
 
 Salary. 
 
 j Earned 
 Earned i (percent), 
 (amount). (<^) 
 
 (c) 
 
 (d) 
 
 $6,575 
 55,428 
 91,185 
 158,009 
 197,111 
 313,350 
 . 336, 509 
 428,368 
 483,751 
 511,039 
 595,048 
 613,103 
 628,996 
 614,991 
 788,376 
 724,541 
 735,737 
 790,161 
 782,472 
 791,130 
 788,729 
 749,683 
 
 (e) 
 
 100. 00 
 99.46 
 99.44 
 99.51 
 99.87 
 99.86 
 99.83 
 99.82 
 99.74 
 99.58 
 99.71 
 99.70 
 99.46 
 99.45 
 99.54 
 99.60 
 99.43 
 99.65 
 99.48 
 99.49 
 99.48 
 99.63 
 
 Unearned 
 
 (per cent). 
 
 100- (e) 
 
 (/) 
 
 0.00 
 .54 
 .56 
 .49 
 .13 
 .14 
 .17 
 .18 
 .42 
 .26 
 .29 
 .30 
 .54 
 .55 
 .40 
 .40 
 .57 
 .35 
 .52 
 .61 
 .52 
 .37 
 
EEPORT TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 43 
 
 Table VII. — Showing the number of employees in the classified civil service in the District 
 of Columbia, distributed according to age, the total salaries paid, total salaries earned, 
 the per cent of salary earned, and per cent of salary not earned — Continued. 
 
 Age. 
 
 Number of 
 employees. 
 
 Salary. 
 
 Paid 
 (amount). 
 
 Earned 
 (amount). 
 
 Earned 
 
 (percent). 
 
 id) 
 
 (c) 
 
 Unearned 
 
 (per cent). 
 
 100- (e) 
 
 (a) 
 
 38 years 
 
 39 years 
 
 40 years 
 
 41 years 
 
 42 years 
 
 43 years 
 
 44 years 
 
 45 years 
 
 46 years 
 
 47 years 
 
 48 years 
 
 49 years 
 
 50 years 
 
 51 years 
 
 52 years 
 
 53 years 
 
 54 years 
 
 55 years 
 
 56 years 
 
 57 years 
 
 58 years 
 
 59 years 
 
 60 years 
 
 61 years 
 
 62 years 
 
 63 years v 
 
 64 years 
 
 65 years 
 
 66 years 
 
 67 years 
 
 68 years 
 
 69 years 
 
 70 years 
 
 71 years 
 
 72 years 
 
 73 years 
 
 74 years 
 
 75 years 
 
 76 years 
 
 77 years 
 
 78 years 
 
 79 years 
 
 80 years 
 
 81 years 
 
 82 years 
 
 83 years 
 
 84 years 
 
 85 years and over. 
 
 (&) 
 
 615 
 603 
 495 
 620 
 609 
 570 
 474 
 500 
 444 
 405 
 382 
 388 
 397 
 401 
 386 
 380 
 303 
 301 
 267 
 260 
 261 
 203 
 220 
 202 
 218 
 201 
 207 
 188 
 242 
 236 
 211 
 196 
 189 
 169 
 117 
 100 
 84 
 79 
 49 
 42 
 35 
 27 
 
 (c) 
 S791, 795 
 762,361 
 661,908 
 831,090 
 835, 573 
 772,955 
 648, 285 
 702, 532 
 602,346 
 555,435 
 521,387 
 533, 208 
 554,740 
 571,574 
 530,320 
 499,682 
 401,540 
 406, 220 
 355, 043 
 341, 386 
 344,050 
 265,020 
 295, 893 
 250, 860 
 275,470 
 242,425 
 271,250 
 245,550 
 315,796 
 315,045 
 281,525 
 253,275 
 240,325 
 211, 865 
 144,955 
 131, 980 
 103, 250 
 96,185 
 64, 425 
 53, 405 
 44, 470 
 33,660 
 
 (d) 
 $785,351 
 758, 131 
 657,439 
 825, 225 
 828, 588 
 766,635 
 642,665 
 696,472 
 594,874 
 548,893 
 514,771 
 523,063 
 547,382 
 562, 842 
 519,138 
 493, 175 
 391,285 
 398, 436 
 344,674 
 328,716 
 337,946 
 256,560 
 285, 188 
 234,518 
 259,993 
 229,921 
 250,327 
 229,501 
 292, 816 
 285,391 
 253,816 
 222,626 
 206,062 
 180, 564 
 121,287 
 105,048 
 81,519 
 79,038 
 53, 479 
 42, 394 
 31,499 
 27, 980 
 
 («) 
 99.19 
 99.45 
 99.32 
 99.29 
 99.16 
 99.18 
 99.13 
 99.14 
 98.76 
 98.82 
 98.73 
 98.10 
 98.67 
 98.47 
 97.89 
 98.70 
 97.45 
 98.08 
 97.08 
 96.29 
 98.23 
 96.80 
 96.38 
 93.49 
 94.38 
 94.84 
 92.29 
 m. 46 
 92.72 
 90.59 
 90.16 
 87.90 
 85.74 
 85.23 
 83.67 
 79.59 
 78.95 
 82.17 
 83.01 
 79.38 
 70.83 
 83.13 
 68.37 
 69.48 
 66.12 
 53.30 
 81.74 
 48.70 
 
44 EEPORT TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 
 
 It will be observed that the trend of the figures showing the per 
 cent of salary earned is shghtly downward from a very early age. 
 This does not mean that, on the average, efficiency begins to decline 
 from the earliest age given in the table, but it merely shows the effect 
 of the present system of promoting employees with length of service 
 without changing the character of their work. In order to take into 
 account the loss growing out of this system of promotions, and the 
 loss resulting from the practice of transferrmg the older clerks to 
 work of a lower class without a corresponding reduction in salary, 
 rating officers were requested to state the amount of salary earned 
 by each clerk on the basis of "an efficient employee engaged on the 
 class of work assigned to the employee rated," and an ''efficient 
 clerk" was defined to mean "such a clerk as the Government may 
 reasonably require for the salary paid." It will be seen, therefore, 
 that the loss reported and shown in the table as salary unearned is 
 due to the present system of disregarding to a large extent the char- 
 acter of an employee's work in fixing his salary; i. e., of (a) increasing 
 his salary with length of service without assigning him to a higher 
 class of work ; (h) of not decreasing his salary when by reason of his 
 advanced age he is assigned to a lower grade of work ; and (c) of not 
 decreasing his salary when at any age he is found inefficient. 
 
 PER CENT OF SALARY EARNED AT VARIOUS AGES. 
 
 The per cent of salar}^ earned at the various ages remains above 99 
 from the youngest age at which persons are employed in the classified 
 service up to age 46, at which age the per cent of salary earned falls 
 to 98.76. . From age 46 to 51, inclusive, the per cent of salary earned 
 remains at 98 and a fraction. From this point on, two increasing 
 tendencies in the trend of the per cents are apparent — (a) an increase 
 in the variation from year to year and (b) an increase in the per 
 cent of salary unearned. The increasing variation from year to year 
 is due to two causes — (a) the diminishing number of employees at the 
 higher ages and (b) the increasing variation in the degree to which 
 individuals retain their mental and physical activity as age advances. 
 It is common observation that while some aged people retain their 
 mental and physical activity, others are less fortunate. 
 
 AGE AT WHICH LOSS JUSTIFIES RETIREMENT. 
 
 One of the purposes of this inquiry was to ascertain at what age 
 the amount of loss is sufficient to justify retirement. If no aid were 
 to be given by the Government to employees below the ages at which 
 the salary unearned would be sufficient to pay theu* entire annuities, 
 it will be seen by reference to the foregoing table that the proper age 
 of retirement (assuming that the schedules show the full loss sus- 
 
EEPORT TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 45 
 
 tained b.y the Government from superannuation) would perhaps be 
 85 years. Of the total salaries paid employees aged 85 years and 
 over, they are reported to earn but 48.70 per cent. (See Table VII, 
 p. 43.) It would seem apparent, therefore, that the Government 
 would be the gainer by retiring all employees 85 years of age or over, 
 on, say, half pay. The commission believes, however, that a plan 
 of retirement which would provide only for people 85 years of age 
 or over would be practically of no value, and that if the returns made 
 by the departments had expressed the full loss due to superannuation, 
 the results would have shown an immediate gain by retiring all persons 
 at an age much below 85. 
 
 Viewed in this light, the commission holds that it would be in the 
 interest of good administration to adopt some lower age than the one 
 at which the loss from superannuation equals the cost of retirement. 
 It is believed that the statistics justify the adoption of age 70 as the 
 proper age of retirement for employees in the departmental service in 
 Washington. This belief is based on three grounds: (1) The fore- 
 going table shows that at age 70 the loss from superannuation is con- 
 siderable (14.26 per cent) ; (2) an inquiry covering the employees in 
 one of the large offices of the Government in which the work is of such 
 a character as to be capable of accurate measurement, both as to 
 quantity and quality, and where it is known that the officer at the 
 head of the bureau undertook to answer the commission's inquiry by 
 basing the returns on an accurate record of work performed, shows 
 that employees 70 years of age and over earn but 56.31 per cent of the 
 salaries paid them. In this office there are 33 employees 70 years of 
 age and over, the total salaries paid them amount to $40,600, and of 
 this amount they are reported as not earning $17,740. Each of these 
 employees could therefore be retired on $600 a year at a total cost 
 to the Government the first year, over and above the present loss, of 
 but $2,060; (3) 70 years is the oldest age adopted by any foreign 
 Government for the retirement of civil employees. 
 
 For these reasons the commission has adopted age 70 as the proper 
 age for the retirement of employees in the classified service in Wash- 
 ington. The commission believes that age 70 would also be the 
 proper age of retirement for most of the employees engaged in clerical 
 and professional occupations in the various services outside of Wash- 
 ington. It is of course apparent that employees engaged in lines of 
 work requiring special physical activity, such as that required of rail- 
 way postal clerks, letter carriers, and persons employed in various 
 mechanical trades, should be retired at an earlier age than 70 years. 
 Earlier retirement for these classes of employment is justified because 
 the physical energy usually begins to fail at an earlier age than does 
 the mental. 
 
46 REPORT TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 
 
 METHOD OF CALCULATING FUTURE LOSS TO GOVERNMENT FROM SUPER- 
 ANNUATION. 
 
 Having adopted the age of 70 as the age of retirement, it will be 
 necessary to consider briefly the method of treating the statistics of 
 the departments in calculating the future loss which the Government 
 will sustain from superannuation if no retirement plan is adopted. 
 (The statistics themselves show the amount of the loss at the present 
 time.) While the percentages of loss due to superannuation given in 
 Table VII, printed above, show a general tendency to increase after 
 age 70, yet they present irregularities wholly inconsistent with nature, 
 due to the fact, as stated above, that in the advanced ages the number 
 of persons reported on is so small as not to give true averages, and 
 because of the fact that with increasing age comes greater variation 
 in the mental and physical activity of individuals. It would be 
 wholly inconsistent with nature to assume, as the table shows, for 
 example, that a greater degree of efficiency exists among persons 84 
 years of age than exists among persons 83 years of age. These 
 irregularities may be made to counterbalance each other, however, 
 by graduation, using either a mathematical formula or the graphic 
 method, or a combination of the two. In selecting a method of grad- 
 uating statistics of this sort it is essential to select a method which 
 will remove the inconsistencies, and yet follow faithfully the general 
 tendencies of the ungraduated material. 
 
 The method adopted by the commission for accomplishing this 
 purpose was a combination of a modification of a formula first used 
 by Woolhouse, the eminent English actuary, in graduating certain 
 English mortality tables, and the graphic method. The greatest 
 irregularities shown in the table were removed by two applications 
 of this modification of Woolhouse's formula. 
 
 The results of the second graduation were then plotted on cross- 
 section paper ruled 10 by 10 to the centimeter and the remaining 
 irregularities removed graphically by means of a spline. The 
 ungraduated per cents, together with the results of the first and 
 second graduations and the final results obtained b}^ the use of the 
 spline, are shown in the diagram on the page following. 
 
 Having established the per cent of salary unearned at age 70 and 
 all ages above 70, it was possible, by making certain assumptions, to 
 calculate with fair accuracy the probable future loss which the 
 Government will sustain from superannuation during a period of 
 years to come if no plan of retirement is adopted. In this calcula- 
 tion it was assumed that the per cent of salary now unearned at a 
 given age mil also be unearned by employees hereafter reaching that 
 age. Since the lieads of departments and bureaus were requested 
 in filling the schedules to give the ages of employees at last birthday, 
 
REPORT TO THE PRESIDEITT OX RETIREMENT ALLOWANCES. 47 
 
 
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48 REPORT TO THE PRESIDENT ON RETIREIVLENT ALLOWANCES. 
 
 it was also assumed that employees, on the average, were six months 
 older than the ages reported. For calculating the probability of 
 living from the various ages to age 70, the Aijaerican Experience Table 
 of J^CortaUty was used because that table was thougjit to represent 
 fairly the probable mortality among Government employees up to 
 age 70, but for calculating the probability of living from age 70, the 
 Combipied or Actuaries' Table of Mortality was used because it shows 
 a greater expectation of life after the age of 70 than does the Ameri- 
 can table ajid was therefore a more conservative basis for the calcula- 
 tion. 
 
 The following table sl^ows the annual loss which the Government 
 will sustain during the next 36 years if no plan of retirement is adopted: 
 
 Table VIII. — Showing the annual loss that will he sustained by the Government during 
 the next 36 years if no plan is adopted for retiring employees now in the classified civil 
 service in the District of Columbia when 70 years of age. 
 
 Year. 
 
 Amount. 
 
 Year. 
 
 Amount. 
 
 Year. 
 
 Amount. 
 
 . .. 
 
 '$228,387 
 253,019 
 278,604 
 303,163 
 320, 7!)\ 
 332,943 
 342,297 
 349,276 
 354,325 
 357,967 
 360,367 
 362,970 
 367,308 
 
 13. '. 
 
 S370,481 
 375,040 
 381,338 
 390,221 
 403,111 
 417,749 
 432,277 
 444,267 
 453,885 
 463, 181 
 474,234 
 489,358 
 504,507 
 
 26. 
 
 $520,864 
 542,952 
 565, 615 
 
 1 
 
 14. 
 
 27 
 
 28 
 
 29 
 
 2 
 
 15. 
 
 3 
 
 16 
 
 17 
 
 580,885 
 592,148 
 606,004 
 617,826 
 627, 915 
 
 4 
 
 30.. . . 
 
 6 
 
 18 
 
 31 
 
 6 
 
 19 
 
 20 
 
 32 
 
 7 
 
 33 
 
 8 
 
 21 
 
 34 
 
 637,618 
 
 9 
 
 22 
 
 23 
 
 24 
 
 25 
 
 35 
 
 645,448 
 
 10 
 
 36 
 
 651,641 
 
 11 
 
 
 
 12 ; 
 
 
 
 
 
 1 The amount of the loss reported by the departments and independent Government establishments is 
 shown at the bottom of Table VI, on p. 41, as $220,954. This amount represents the annual loss on Nov. 3D, 
 1911, while the loss shown above represents the loss that wUl take place during the following year. The 
 difference in the amounts represents the increase that will take place during the year. 
 
 Commission's Effort to Determine What Expense the .Gov- 
 ernment IS Justified in Incuriiing to Avoid Loss from Super- 
 annuation. 
 
 Having ascertained the amount of the loss which the Government 
 Avill sustain among employees 70 years of age and over if no plan of 
 retirement is adopted, the next step was to determine what expense 
 the Government may reasonably incur in order to avoid that loss. 
 Very little study of the problem suffices to show that the amount of 
 loss sustained by the Government from superannuation is not great 
 enough to justify the enormous expense of a straight pension system, 
 especially when the effect on the service is considered. Although the 
 loss due to superannuation will increase as long as the service continues 
 
BEPORT TO THE PRESIDENT ON RETIKEJVIBNT ALLOWANCES. 49 
 
 to grow, the cost of a straight pension will increase much more rapidly, 
 being twice as great the first year as the loss from superannuation and 
 continuing to grow at a greater rate than the loss from superannua- 
 Jtion. There are in the departments at Washington ,951 employees 
 70 years of age or older who would be ehgible for retirement immedi- 
 ately. If each of these employees were pensioned at half pay with a 
 maximum of $600 a year, the cost the first year would be approxi- 
 mately $468,960, while the loss, as shown in the foregoing table, is 
 only $228,387. This additional outlay of $240,573 the first year, and 
 an increasing amount each year thereafter, can not be justified on 
 any ground, when the abuses sure to result from a civil pension are 
 considered. It is probable, of course, that the losses reported by 
 the departments were greatly understated, but even if the loss is 
 twice as great, or $456,774 a year, it still would not warrant the estab- 
 lishment of a plan of retirement the probable future cost of which 
 can not be calculated. 
 
 A straight-pension plan being dismissed from consideration, the 
 alternative is a contributory plan. We have seen that even a con- 
 tributory plan that will ultimately be self-supporting can not be 
 established mthout some expense to the Government. The Gov- 
 ernment will have to incur expense in two ways: (1) In retiring 
 employees who are at or above the retirement age when the plan 
 takes effect, who will have no time to save the money on which to 
 retire themselves; and (2) in assisting in the retirement of employees 
 who are below the retirement age when the plan takes effect, and 
 who will not have enough time to accumulate the whole of the amount 
 necessary to retu-e themselves. In considering the amount that the 
 Government can properly appropriate for such a purpose, two fac- 
 tors besides the loss from superannuation must be taken into account. 
 They are the maximum deduction which can reasonably be withheld 
 from the employee's salary and the minimum annuity w'hich must 
 be provided the employee on retirement in order to make practicable 
 his elimination from the service when he reaches the age at which 
 inefficiency usually begins to show. 
 
 In the opinion of the commission, 8 per cent of salary is the maxi- 
 mum amount which should be withheld from employees already in 
 the service. Employees entering hereafter should be required, how- 
 ever, to lay aside whatever per cent of salary is necessary to provide 
 the required retirmg allowance. Reference to Table XI, on pages 54 
 and 55, will show that the deductions from the salaries of new en- 
 trants will not be burdensome except in the case of those who enter 
 at advanced age. The commission thinks that the entrance of aged 
 people into the service should be discouraged. 
 
 In the opinion of the commission the minimum annuity which 
 should be adopted is half pay, with a maximum of $600. The com- 
 
50 EEPORT TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 
 
 mission believes that a scale of annuities governed entirely by salary 
 and length of service would in many cases retire employees who 
 entered the service late in life on annuities wholly inadequate for their 
 maintenance, however simple their needs might be, while on the other 
 hand, employees who had received large salaries for long periods 
 might be retired on annuities considerably in excess of the amounts 
 necessary to maintain them. The commission believes that a plan of 
 retirement should be merely a means to an end, and that that end is 
 greater efficiency in the public service through the retirement of 
 employees after they have passed their period of greatest usefulness, 
 and that this should be accomplished with as little tax upon either 
 the employees or the Public Treasury as is possible. It is not the duty 
 of the Government to assume control of the finances of the employees 
 beyond the point that is necessary to protect itself against the reten- 
 tion through sympathy of employees who are no longer capable of 
 earning their salaries. The commission believes that a fair annuity 
 on which employees may be retired if retained in the service to age 70 
 is one-half pay, with a maximum annuity of $600. WhUe $600 is not 
 sufficient to purchase the luxuries of life, it is nevertheless sufficient to 
 save the employee from destitution, even if he has been so unfortunate 
 as to make no other provision for his declining years. 
 
 Plan Presented by the Commission. 
 
 Having determined the amount of loss which the Government is 
 now sustaining through the inefficiency of the aged, and settled on the 
 maximum deduction from salaries which can be required, and the 
 maximum annuity that should be provided, the problem was to show 
 what it would cost to establish a savings and annuity plan with such 
 limitations and to compare that cost with the present loss through 
 superannuation. The plan therefore provides for the retirement of 
 all classified civil-service employees in the District of Columbia, at 
 the age of 70, on half pay, with a maximum annuity of $600, the 
 annuity to be paid by the Federal Government in the case of those 
 retiring immediately, but by contributions from their salaries in the 
 case of all others, the Government to pay 4 per cent interest on all con- 
 tributions, and the contributions never to exceed, in the case of those 
 now in the service, 8 per cent of salary, the Government to provide 
 the difference whenever such deduction is not sufficient to provide 
 the annuity. (For the deductions from salary at various ages, see 
 Table XI, pp. 54 and 55.) The total cost of such annuities, minus the 
 amount contributed by the employees, would be the amount which 
 the Government would be required to contribute. The following table 
 shows these three items. 
 
BBPOBT TO THE PEESIDENT ON KETIEEMENT ALLOWANCES. 51 
 
 Table IX. — Showing the total maximum cost of retiring at age 70 all employees now in 
 the classified civil service in the District of Columbia on annuities equal to one-half pay 
 {maximum, ^600), maximum deduction from salary, 8 per cent. 
 
 Age 
 
 95 
 89 
 
 88 
 87 
 86 
 84 
 83 
 82 
 81 
 80 
 79 
 78 
 77, 
 76, 
 75, 
 74, 
 73, 
 72, 
 71. 
 70. 
 69. 
 68. 
 67. 
 66. 
 65. 
 
 Total 
 
 annuity 
 
 payments. 
 
 S440 
 
 1,831 
 
 2,840 
 
 2,743 
 
 3,815 
 
 8,533 
 
 12,829 
 
 18,834 
 
 19,103 
 
 45,987 
 
 66,406 
 
 96,767 
 
 120,603 
 
 150,696 
 
 248,374 
 
 288,289 
 
 377,877 
 
 440,793 
 
 682,419 
 
 821,822 
 
 870,826 
 
 860,220 
 
 908,883 
 
 883,662 
 
 663,669 
 
 Total 
 
 annuity 
 
 payments 
 
 provided by 
 
 employees. 
 
 $9, 115 
 29,038 
 52,092 
 71,382 
 70,034 
 
 Total 
 
 appropria- 
 
 tions.i 
 
 1,831 
 
 2,840 
 
 2,743 
 
 3,815 
 
 8,533 
 
 12,829 
 
 18,834 
 
 19,103 
 
 45,987 
 
 66,406 
 
 96,767 
 
 120, 603 
 
 150, 596 
 
 248,374 
 
 288,289 
 
 377,877 
 
 440,793 
 
 682,419 
 
 821,822 
 
 861, 711 
 
 831, 181 
 
 856,791 
 
 812,279 
 
 593,635 
 
 Age.. 
 
 64 
 63 
 62 
 61 
 60 
 59 
 58 
 57 
 56 
 65 
 54 
 53 
 52 
 51 
 50 
 49 
 48, 
 47, 
 46, 
 45 
 44, 
 43, 
 42, 
 41, 
 40, 
 
 Total 
 
 annuity 
 
 payments. 
 
 Total 
 
 annuity 
 
 payments 
 
 provided by 
 
 employees 
 
 $699, 769 
 645, 381 
 685, 290 
 604, 578 
 669,234 
 594,045 
 721,696 
 718,241 
 729, 886 
 804, 545 
 799, 299 
 978, 348 
 988,731 
 1,011,781 
 915, 718 
 867, 145 
 866,990 
 819,300 
 788, 195 
 902, 360 
 700,869 
 764,682 
 656,828 
 685,733 
 575,422 
 
 $91, 916 
 96,897 
 124,295 
 127, 394 
 167,831 
 163, 116 
 227, 740 
 244, 931 
 277,896 
 341,960 
 362, 722 
 485,594 
 645, 409 
 618,021 
 556,412 
 556,688 
 598,878 
 579,828 
 582, 994 
 709,016 
 572,033 
 646,633 
 572,463 
 633,866 
 563,528 
 
 Total 
 appropria- 
 tions.! 
 
 $607,853 
 648,484 
 560, 995 
 477, 184 
 501,403 
 430, 928 
 493, 956 
 473,310 
 451, 990 
 462, 586 
 436,678 
 492,754 
 443,322 
 393, 760 
 359,307 
 310, 557 
 268, 112 
 239, 471 
 205, 201 
 193, 343 
 128, 836 
 118,049 
 84,365 
 51,867 
 11,894 
 
 I For net cost to Government after deducting future loss from superannuation, see Table X, p. 53. 
 
 COST OF ESTABLISHING PROPOSED PLAN. 
 
 The foregoing table shows merely the aggregate appropriations 
 required of the Government during the next 50 years, distributed 
 according to the present age of the employees who are to receive 
 them, and takes no account of the saving that would result from the 
 removal of the superannuated. In considering any plan of retire- 
 ment it is but fair to consider not only the expense which the Gov- 
 ernment must incur to establish the plan, but also the saving resulting 
 from its establishment. The total appropriations given in the pre- 
 ceding table are shown in the table that follows, distributed according 
 to amount required each year until the plan is. finally self-supporting, 
 and as an offset to these appropriations is given the loss that will 
 result each year from superannuation if no plan of retirement is 
 established. In the last column of this table is shown the maximum 
 annual cost over the loss from superannuation, or the actual cost of es- 
 
52 EEPOET TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 
 
 t ablishing the proposed plan. With each year, following the twentieth^ 
 the annual apf)r6priati6'n required for the plan will be less than the 
 amount that the Government will' lose through superannuation if no 
 plan is adopted. The amounts prefixed by a minus sign ( — ) in the last 
 column of the table are the annual and increasmg gains to the Gov- 
 ernment under the plan. At the end of 36 years the saving under 
 the plan will exceed the amount advanced in excess of the loss from 
 superannuation during the first 20 years. With each succeeding 
 year the saving will increase, because the appropriation required will 
 diminish, imtil finally, at the end of 50 years, the plan will be self- 
 supporting and no further appropriations will be required. On the 
 other hand, if no plan of retirement is adopted the loss from super- 
 annuation will increase as long as the service continues to grow. 
 
 It should be remembered also that the estima»te of loss from super- 
 annuation is based on the very conservative returns made by depart- 
 ment chiefs, and the commission believes that in fact the loss from 
 superannuation will equal the cost of the proposed plan in possibly 
 8 or 10 years instead of in 20 years, and that the Government will have 
 saved the entire cost of the plan in the course of 20 years instead of 
 in 36 years. 
 
REPORT TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 53' 
 
 TabIiE X. — Showing (a) the maximum amount required to he appropriated by the Govetn- 
 ment to retire 22,754 employees now in the permanent classified civil service in the Dis- 
 trict of Columbia on annuities equal to half pay (maximum annuity, ^600), provided 
 each employee below 10 years of age be required to deposit with the Government monthly 
 siich sum as will, with interest at 4 per cent, compounded annually, provide such annuity 
 on reaching age 70, provided that no monthly deposit by any employee now in the service 
 shall exceed 8 per cent of the monthly pay (where such monthly deposit of 8 per cent, with 
 interest, will not provide the required annuity, the Government to provide the difference); 
 (b) the amount of salaries paid but not earned that would be saved if all employees 
 were retired at age 70; and (c) the net cost to the Government of establishing the plan, 
 and the gain to the Government from its establishment. 
 
 In years. 
 
 
 
 1 
 
 2 
 3 
 4 
 5 
 6 
 7 
 8 
 9 
 10 
 11 
 12 
 13 
 14* 
 15 
 16 
 17 
 18 
 Id 
 20 
 21 
 22 
 23 
 24 
 25 
 
 Maximum 
 
 annual 
 
 appropriar 
 
 tion. 
 
 (a) 
 $468,960 
 522, 516 
 567,460 
 610,584 
 643,904 
 648, 172 
 651, 903 
 646,901 
 642, 127 
 626,873 
 614, 183 
 593,564 
 580,957 
 566, 555 
 550, 577 
 537,099 
 521,838 
 514,465 
 502,525 
 486,369 
 468,058 
 446, 161 
 421,685 
 396,424 
 369,837 
 344,615 
 
 Annual 
 loss from 
 superan- 
 nuation if 
 no plan of 
 retirement 
 is adopted. 
 
 Net annual 
 cost over 
 loss from 
 superan- 
 nuation 
 (a)- (6). 
 
 (6) 
 $228,387 
 253,019 
 278, 604 
 303, 163 
 320, 751 
 332,943 
 342,297 
 349,276 
 354,325 
 357,967 
 360,367 
 362,970 
 367,30^ 
 370,481 
 375,040 
 381,338 
 390,221 
 403,111 
 417,749 
 432,277 
 444,267 
 453,885 
 463, 181 
 474,234 
 489,358 
 604,507 
 
 (c) 
 $240, 
 269, 
 288, 
 307, 
 323, 
 315, 
 309, 
 297, 
 287, 
 268, 
 253, 
 230, 
 213, 
 196, 
 175, 
 155, 
 131, 
 111, 
 84, 
 54, 
 23, 
 
 - 7, 
 
 - 41, 
 
 - 77, 
 -119, 
 -159, 
 
 In years 
 
 27 
 28 
 29 
 30 
 31 
 32 
 33 
 34 
 35 
 36 
 37 
 38 
 39 
 40 
 41 
 42 
 43 
 44 
 45 
 46 
 47 
 48 
 49 
 50 
 
 Maximum 
 
 annual 
 appropria- 
 tion. 
 
 (a) 
 
 $314,697 
 
 286, 556 
 
 257, 506 
 
 227,781 
 
 196,617 
 
 167,354 
 
 141,271 
 
 118, 195 
 
 97,944 
 
 80,331 
 
 65,155 
 
 52,219 
 
 41,317 
 
 32,242 
 
 24,786 
 
 18,747 
 
 13,930 
 
 10, 151 
 
 7,238 
 
 5,035 
 
 3,406 
 
 2,231 
 
 1,407 
 
 849 
 
 486 
 
 Annual 
 loss from 
 superan- 
 nuation if 
 no plan of 
 retirement 
 is adopted. 
 
 Net annual 
 cost over 
 loss from 
 superan- 
 nuation 
 (a)- (6). 
 
 (b) 
 $520,864 
 542,952 
 565,615 
 580,885 
 592, 148 
 606,004 
 617,826 
 627,916 
 637,618 
 645,448 
 651,641 
 
 (1) 
 
 (c) 
 -$206, 167 
 
 - 256,396 
 
 - 308,109 
 
 - 353,104 
 
 - 395,631 
 
 - 438,650 
 
 - 476,655 
 
 - 509,720 
 
 - 539,674 
 
 - 565,117 
 
 - 586,486 
 
 («L 
 
 1 The increasing aimual loss that will take place if no plan of retirement is adopted can not be shown 
 beyond the thirty-sixth year because of the large number of persons who will hereafter enter the service 
 at ages above 34, and hence reach the age of 70 (frbm which age thfe loss is calculated) within the next 36 
 yeafsl. 
 
 s The gain to the Government from the establishment of the plan will continue to increase because the 
 Government will be relieved of the increasing burden of superannuation, while the appropriation required 
 to piit the plan into operation will diminish until finally at the end of 50 years it will cease. 
 
 The following table shows the deductions that are required at 
 various ages to provide the annuities of half pay, with maxinaum 
 annuity of $600. The deductions are based on the Combined Experi- 
 ence Table of Mortality and interest at 4 per cent, compounded 
 
54 REPORT TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 
 
 annually, and are sufficient to perniit (1) the return to an employee 
 leaving the service prior to the age of retirement, of all contribu- 
 tions with interest at 4 per cent, compounded annually; and (2) the 
 return to the legal representatives of an employee dying after retire- 
 ment, of any balance of the amount on hand at the date of retirement 
 not paid in annuities. These rates are made possible by the use of 
 4 per cent interest instead of 3^ per cent interest, and the elimination 
 of optional settlements with retiring employees under which a selec- 
 tion would be exercised against the Government, since employees in 
 poor health would take cash and employees physically above the aver- 
 age would take annuities. Under the proposed plan all employees 
 remaining in the service to age 70 are required to take the one form 
 of annuity settlement. 
 
 Table XI. — SliovAng the amount required to he deposited monthly from various ages to 
 age 70 to provide an annuity payable quarterly during remainder of life {first payment 
 in 3 months after reaching age 70), such annuity to equal half pay (maximum annuity, 
 §600), ivith provision for return at death of annuitant of balance on deposit at date of 
 retirement and not thereafter paid in annuities. 
 
 [Combined Experieace Table of Mortality; interest at 4 per cent, compounded annually.] 
 
 
 
 
 
 $9.10 (purchase 
 
 
 
 Monthly de- 
 
 
 
 
 
 price of an an- 
 
 jA.niour't to 
 
 
 duction (ad- 
 
 
 
 
 
 nuity of $1, 
 
 ^xtItipIi fi f?p- 
 
 
 justed to near- 
 
 Age of 
 
 • 
 
 Age of 
 entrance 
 
 Years of 
 
 Amount of 
 
 payable quar- 
 terly, first pay- 
 ment in 3 
 months, with 
 
 WJ-1-IL<JJ. £l UC* 
 
 posit of $1 per 
 
 month will 
 accumulate at 
 4 per cent in- 
 terest com- 
 pounded an- 
 nually, in years 
 shown in col- 
 umn (c). 
 
 Monthly 
 
 deduction 
 
 from 
 
 salary 
 
 est tenth of a 
 dollar) from 
 salary of em- 
 ployee. (For 
 
 retire- 
 ment. 
 
 to serv- 
 ice. 
 
 service. 
 
 annuity.! 
 
 provision for 
 
 return at 
 death of bal- 
 ance of pur- 
 chase price not 
 
 employees in 
 service when 
 law takes ef- 
 fect, maximum 
 deduction lim- 
 
 
 
 
 
 paid in an- 
 
 
 ited to 8 per 
 
 
 
 " 
 
 
 nuities) X $600. 
 
 
 
 cent of salary .)2 
 
 (a) 
 
 (6) 
 
 (c) 
 
 (d) 
 
 («) 
 
 (/) 
 
 (<7) 
 
 (ft) 
 
 70 
 
 20 
 
 50 
 
 S600. 00 
 
 $5,460.00 
 
 $1,871.48 
 
 2.917 
 
 2.90 
 
 70 
 
 21 
 
 49 
 
 600.00 
 
 6,460.00 
 
 1,787.71 
 
 3.054 
 
 3.10 
 
 70 
 
 22 
 
 48 
 
 600.00 
 
 5.460.00 
 
 1,707.16 
 
 3.198 
 
 3.20 
 
 70 
 
 23 
 
 47 
 
 600.00 
 
 5,460.00 
 
 1,629.72 
 
 3.350 
 
 3.40 
 
 70 
 
 24 
 
 46 
 
 600.00 
 
 5,460.00 
 
 1,555.25 
 
 3.511 
 
 3.50 
 
 70 
 
 25 
 
 45 
 
 600.00 
 
 5,460.00 
 
 1,483.64 
 
 3.680 
 
 3.70 
 
 70 
 
 26 
 
 44 
 
 600.00 
 
 5,460.00 
 
 1,414.79 
 
 3.859 
 
 3.90 
 
 70 
 
 27 
 
 43 
 
 600.00 
 
 5,460.00 
 
 1,348.59 
 
 4.049 
 
 4.00 
 
 70 
 
 28 
 
 42 
 
 600.00 
 
 5,460.00 
 
 1,284.94 
 
 4.249 
 
 4.20 
 
 70 
 
 29 
 
 41 
 
 600.00 
 
 5,460.00 
 
 1,223.73 
 
 4.462 
 
 4.50 
 
 70 
 
 30 
 
 40 
 
 600.00 
 
 5,460.00 
 
 1,164.87 
 
 4.687 
 
 4.70 
 
 70 
 
 31 
 
 39 
 
 600.00 
 
 5,460.00 
 
 1,108.28 
 
 4.927 
 
 4.90 
 
 70 
 
 32 
 
 38 
 
 600.00 
 
 5,460.00 
 
 1,053.87 
 
 5.181 
 
 5.20 
 
 70 
 
 33 
 
 37 
 
 600. 00 
 
 5,460.00 
 
 1,001.55 
 
 5.452 
 
 5.50 
 
 70 
 
 34 
 
 36 
 
 600.00 
 
 5,460.00 
 
 951. 24 
 
 5.740 
 
 5.70 
 
 70 
 
 35 
 
 35 
 
 600.00 
 
 5,460.00 
 
 902.87 
 
 (5.047 
 
 6.00 
 
 70 
 
 36 
 
 34 
 
 600. 00 
 
 5,460.00 
 
 856.36 
 
 6.376 
 
 6.40 
 
 70 
 
 37 
 
 33 
 
 600.00 
 
 5,460.00 
 
 811.63 
 
 6.727 
 
 6.70 
 
 1 For annual salaries of $1,200 or less the annuity will be 50 per cent of salary, 
 $1,200 the annuity will be $600. 
 
 % For annual salaries of $1,200 or less the figures shown in column (ft) are per cents of salaries, 
 salaries above $1,200 the figures are dollars. 
 
 For annual salaries above 
 
 For annual 
 
REPORT TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 55 
 
 Table XI.- — Showing the amount required to be deposited monthly from various ages to 
 age 70 to provide an annuity payable quarterly during remainder of life, etc. — Con. 
 
 
 
 
 
 159.10 (purchase 
 price of an an- 
 nuity of $1, 
 
 Amount to 
 which 3. (Ib* 
 
 
 Monthly de- 
 duction (ad- 
 justed to near- 
 
 Age of 
 retire- 
 ment. 
 
 Age of 
 entrance 
 to serv- 
 ice. 
 
 Years of 
 service. 
 
 Amount of 
 annuity.' 
 
 payable quar- 
 terly, lir.st pay- 
 ment in 3 
 
 months, with 
 
 provision for 
 return at 
 
 death of bal- 
 
 posit of $1 per 
 
 month will 
 accumulate at 
 4 per cent in- 
 terest com- 
 pounded an- 
 nually, in years 
 shown in col- 
 
 Monthly 
 
 deduction 
 
 from 
 
 salary 
 
 {e)Hli- 
 
 est tenth of a 
 dollar) from 
 salary of em- 
 ployee. (For 
 employees in 
 service when 
 law takes ef- 
 
 
 
 
 
 ance of pur- 
 
 
 fect, maximum 
 
 
 
 
 
 chase price not 
 paid in an- 
 
 umn (c). 
 
 
 deduction lim- 
 ited to 8 per 
 
 
 
 
 
 nuities) X $600. 
 
 
 ig) 
 
 cent of salary .)2 
 
 (ft) 
 
 (a) 
 
 (6) 
 
 (c) 
 
 id) 
 
 (0 
 
 (/) 
 
 70 
 
 38 
 
 32 
 
 S600. 00 
 
 t'5,400.00 
 
 $768. 63 
 
 7.1(H 
 
 7.10 
 
 70 
 
 39 
 
 31 
 
 600.00 
 
 5,460.00 
 
 727.28 
 
 7.507 
 
 7. ,50 
 
 70 
 
 40 
 
 30 
 
 600.00 
 
 5,400.00 
 
 687. 52 
 
 7.942 
 
 7.90 
 
 70 
 
 41 
 
 29 
 
 600.00 
 
 5,460.00 
 
 649. 29 
 
 8.409 
 
 8.40 
 
 70 
 
 42 
 
 28 
 
 600.00 
 
 5,460.00 
 
 012.53 
 
 8.914 
 
 8.90 
 
 70 
 
 43 
 
 27 
 
 600.00 
 
 5,460.00 
 
 577. 18 
 
 9.460 
 
 9.50 
 
 70 
 
 44 
 
 26 
 
 600.00 
 
 5,400.00 
 
 543.20 
 
 10.0.52 
 
 10.10 
 
 70 
 
 45 
 
 25 
 
 600.00 
 
 5,460.00 
 
 510. .52 
 
 10. 695 
 
 10.70 
 
 70 
 
 46 
 
 24 
 
 600. 00 
 
 5,460.00 
 
 479. 10 
 
 11.396 
 
 11.40 
 
 70 
 
 47 
 
 23 
 
 600.00 
 
 5,460.00 
 
 448.88 
 
 12. 164 
 
 12.20 
 
 70 
 
 48 
 
 22 
 
 600.00 
 
 5,460.00 
 
 419. 8;i 
 
 13.005 
 
 13.00 , 
 
 70 
 
 49 
 
 21 
 
 600.00 
 
 5,460.00 
 
 391.90 
 
 13. 932 
 
 13.90 
 
 70 
 
 50 
 
 20 
 
 600.00 
 
 5,400.00 
 
 .305.04 
 
 14. 957 
 
 15.00 
 
 70 
 
 51 
 
 19 
 
 600.00 
 
 5,400.00 
 
 339.21 
 
 10.096 
 
 10. 10 
 
 70 
 
 52 
 
 18 
 
 600. 00 
 
 5, 400. 00 
 
 3 14. .38 
 
 17. 368 
 
 17.40 
 
 70 
 
 53 
 
 17 
 
 600. 00 
 
 5,400.00 
 
 290.50 
 
 18. 795 
 
 18.80 i 
 
 70 
 
 54 
 
 10 
 
 COO. 00 
 
 5,400.00 
 
 207.54 
 
 20.408 
 
 20.40 1 
 
 70 
 
 55 
 
 15 
 
 600.00 
 
 5,400.00 
 
 245.40 
 
 22.243 
 
 22.20 
 
 70 
 
 50 
 
 14 
 
 600.00 
 
 5,400.00 
 
 224. 23 
 
 24.350 
 
 24.40 
 
 70 
 
 57 
 
 13 
 
 600.00 
 
 5,400.00 
 
 203.82 
 
 20.788 
 
 20.80 
 
 70 
 
 58 
 
 12 
 
 600.00 
 
 5, 400. 00 
 
 184. 19 
 
 29. 643 
 
 29. CO ' 
 
 70 
 
 59 
 
 11 
 
 600.00 
 
 5,400.00 
 
 105.32 
 
 33.027 
 
 33.00 
 
 70 
 
 CO 
 
 10 
 
 600.00 
 
 5, '400. 00 
 
 147. 18 
 
 37.097 
 
 37.10 
 
 70 
 
 01 
 
 9 
 
 600.00 
 
 5,400.00 
 
 129.73 
 
 42.087 
 
 42.10 
 
 70 
 
 02 
 
 8 
 
 600.00 
 
 5, 400. 00 
 
 112.95 
 
 48. .340 
 
 48.30 
 
 70 
 
 C3 
 
 7 
 
 600.00 
 
 5, 400. 00 
 
 90.82* 
 
 56.393 
 
 66.40 
 
 70 
 
 64 
 
 
 
 600.00 
 
 5, 400. 00 
 
 81.31 
 
 67. 150 
 
 07.20 
 
 70 
 
 65 
 
 5 
 
 COO. 00 
 
 5, 4(». 00 
 
 00.40 
 
 82.228 
 
 82.20 
 
 70 
 
 60 
 
 4 
 
 600.00 
 
 5, 4(iO. 00 
 
 52.06 
 
 104.879 
 
 104.90 
 
 70 
 
 07 
 
 3 
 
 600.00 
 
 5,400.00 
 
 38.27 
 
 142.670 
 
 147.70 1 
 
 70 
 
 08 
 
 2 
 
 600.00 
 
 5,400.00 
 
 25.01 
 
 218. 313 
 
 218.30 { 
 
 70 
 
 09 
 
 1 
 
 000.00 
 
 5,400.00 
 
 12.26 
 
 445.351 
 
 445.40 
 
 iFor annual salaries of $1,200 or less the annuity will be 50 per cent of Silary. For annual salaries 
 above $1,200 the annuity will be $600. 
 
 2 For annual salaries of $1,200 or le.ss the figures .shown in column (ft) are per cjiits of salaries. For 
 annual salaries above $1,200 the figures are dollars. 
 
 Recommendations of the Commission. 
 
 As a result of its investigation, the commission makes four rec- 
 ommendations, the first three referring respectively to those at the 
 age of retirement when the plan goes into effect, to those remaining 
 in the service after the plan goes into effect, and to those who shall 
 come into the service after the plan goes into effect. The fourth 
 
56 EEPOET TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 
 
 recommendation merely limits the application of the plan for the 
 present. The recommendations are given below with the reasons 
 for each: 
 
 (1) Every employee who is 70 years of age or over should be 
 retired at once on an annuity paid from the Federal Treasury equal 
 to half pay, the maximum annuity to be $600. 
 
 It has been shown that the age of 70 is the one most suitable as 
 the general age of retirement for members of the civil service of the 
 coiantry. All employees at that age or over when a retirement plan 
 goes into effect should be retired at once in order that the benefit to 
 the service from the establishment of a retirement plan may begin 
 at once. The improved efficiency of the service is desired now, not 
 a generation hence. The Government must assume all liability for 
 annuities payable to these employees, because there is no other way 
 of retiring them. They can not provide for themselves at this late 
 date, and it would not be just to tax the younger employees for their 
 benefit. Besides, the Government itself is the principal beneficiary 
 from their retirement. 
 
 (2) Every employee remaining in the service after the law takes 
 effect should be required to lay aside monthly such sum as will, with 
 interest at 4 per cent, compounded annually, provide an annuity of 
 half pay on retirement at the age of retirement, the maximum annuity 
 to be $600, such monthly deduction, however, to be in no case more 
 than 8 per cent of the employee's salary, and in case the fund accumu- 
 lated by the employee by this deduction is not sufficient to provide 
 the annuity of half pay, with a maximum of $600, the Government 
 should make up the difference between the sum so accumulated and 
 the amount necessary to provide the annuity. In the case of em- 
 ployees who retire before the age of 60, their contributions should 
 be returned to them with the interest credited thereon in one sum. 
 In the case of employees who retire after the age of 60 but before 
 reaching the age of 70 years, their contributions when in excess of 
 $600 should be returned to them with the interest credited thereon 
 in not less than 10 annual installments. In the case of employees 
 who remain in the service to the age of 70, their contributions should 
 be returned only in the form of an annuity with a payment at death 
 of the difference between the amount on deposit at the date of 
 retirement and the amount paid in annuities. 
 
 The annuity has been limited to $600 a year because of the com- 
 mission's belief that the only interest which the Government has in 
 cooperating in the establishment of a retirement plan is to relieve 
 itself from the inefficiency due to superannuation, which is at present 
 causing it considerable loss and will inevitably cause it much greater 
 loss as the number of its aged employees increases. The commission, 
 is of the opinion that, after the Government has protected itself 
 
REPORT TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 57 
 
 against this loss by making retirement at a given age compulsory 
 under conditions which make the destitution of the employee impos- 
 sible (and such would be the case on an annuity of $600 a year), it 
 has, on the one hand, little if any interest in compelling its employees 
 to save money, and, on the other hand, a very questionable right to 
 force those employees tg make an investment which may be less 
 profitable than some of them can themselves make. 
 
 The per cent of deduction has been limited to 8 per cent of salary 
 because the commission believes that any greater deduction would be 
 very burdensome to many employees. 
 
 The commission's reasons for recommending the three methods of 
 settlement stated above, and onlythose three, at the various ages are: 
 That employees retiring before reaching the age of 60 years are 
 ordinarily fully capable of managing their own affairs, and if they 
 should, through unwise investment or othermse, lose their savings, 
 they are still young enough to secure employment; that the amount to 
 the credit of employees between the ages of 60 and 70 would be con- 
 siderably larger than at the earlier ages, and its loss at those ages 
 would probably be a far more serious matter than at an earlier age, 
 and be more likely to result in an effort on the employee's part to 
 reenter the service ; that the amount to the credit of employees retiring 
 at age 70 should be paid only in the form of a life annuity, with return 
 at death of any balance of deposit not received in annuities, {a) because 
 cash settlements undoubtedly would, in many cases, result in the loss 
 of the employee's savings through unwise investments, so that the 
 employee would fuially be worse off than if no plan of retirement had 
 been provided; (6) because if a straight annuity were granted in 
 which the employee forfeited his entire principal in case of death soon 
 after entering on the annuity, great dissatisfaction would result among 
 the families of employees who elected to take such settlements, and 
 possibly claims might be presented to the Government for the refund 
 of the money paid for such annuities, on the ground that the employee 
 was incompetent at the time of making the selection; (c) because by 
 requiring all employees 70 years of age to accept this settlement, the 
 so-called "selection" against the Government — through robust 
 employees taking annuity settlements and employees in poor health 
 taking cash — would be removed, and the rates charged the employees 
 as a whole could safely be based on a mortality table that contem- 
 plated a somewhat higher rate of mortality, and consequently a lower 
 price fixed for the annuities. 
 
 (3) Persons entering the service after the law takes effect should 
 be required to lay aside the full amount necessary, with interest at 4 
 per cent, compounded annually, to provide their own annuities of 
 half pay with a maximum of $600. The methods of settlement on 
 retirement for this group of employees should be the same as for those 
 employees already in the service as described in the preceding section. 
 
58 EEPOKT TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 
 
 To limit the deduction from the salary of a person entering the 
 service after the law takes effect to 8 per cent would place a continu- 
 ing burden on the Government, the amount of which could not be 
 calculated in advance, and put a premium on old people entering the 
 service. On the contrary, by limiting the aid from the Government 
 to those already in the service now eligible for retirement and to those 
 already in the service who can not provide the full annuity for them- 
 selves before reaching the age of retirement, the total maximum cost 
 to the Government can be definitely known in advance. The increas- 
 ing deduction recjuired with advancing age of entrance to the service 
 would practically prohibit aged people from entering the service, and 
 this is, the commission believes, as it should be. 
 
 (4) This retirement plan should be restricted in the beginning to 
 employees in the District of Columbia. 
 
 As superannuation is very much greater in the District than it is 
 outside the District, the need of a retirement plan is much more urgent 
 there than elsewhere. The statistics collected by the commission 
 show that of the 22,754 employees in the classified service in the 
 District of Columbia on November 1, 1911, 2,024 were 65 years of age 
 or over, or a little less than 1 in 11. Employees 70 years of age or 
 over numbered 951 . Aside from the fact that a retirement law is more 
 needed in the District of Columbia than elsewhere, the advisability of 
 thus restricting the plan at the outset is urged on the ground that it is 
 desirable to proceed slowly in the inauguration of new measures. If 
 the operation of the system adopted proves to be successful, it will be 
 comparatively easy to extend its application, with such modification 
 in detail as may seem desirable, to the Government service as a whole. 
 
 The commission believes that the proposed savings and annuity 
 plan meets all the objections that may be brought against it, and that 
 the cost of establishing it is kept within the sum which, it has been 
 shown in the course of this investigation, the Government will have 
 to lose in the next 36 years through superannuation if no plan is 
 adopted. In 20 years the annual loss from superannuation, which is 
 an increasing amount, will equal the annual cost of establishing the 
 retirement plan, which is a decreasing amount. In the last 16 years 
 of that 36-year period the saving to the Government will equal the 
 cost in the first 20 years. 
 
 The commission presents as a result of its investigation the draft 
 of a bill based on the same fundamental principles set forth in the 
 preceding recommendations: 
 
 Draft of a Bill for the Retirement of Employees in the Civil Service in 
 THE District op Columbia. 
 
 Section 1. That begmning with the first day of July next following the passage of 
 this act there shall be deducted and withheld from the monthly salary, pay, or com- 
 pensation of every oflScer or employee of the United States to whom {his act applies 
 
REPORT TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 59 
 
 an amount computed to the nearest tenth of a dollar that will be sufficient, with interest 
 thereon at four per centum per annum, compounded annually, to purchase from the 
 United States, under the provisions of this act, an annuity, payable quarterly through- 
 out life, for every such employee on arrival at the age of retirement, as hereinafter 
 provided. The deductions herein provided for shall, in the case of employees who 
 are in the service of the Government at the time this act goes into effect, not exceed 
 eight per centum of the said salary, pay, or compensation; and shall be based on 
 such annuity table as the Secretary of the Treasury may direct, and interest at the 
 rate of four per centum per annum, compounded annually, and shall be varied to 
 correspond to any change in the rate of salary, pay, or compensation of the employee. 
 
 Sec. 2. That the amount so deducted and withheld from the salary, pay, or com- 
 pensation of every employee to whom this act applies shall be deposited in the Treas- 
 ury of the United States and shall be credited, together with interest at four per centum 
 per annum, compounded annually, to an individual account of the employee from 
 vhose salary, pay, or compensation the deduction is made, and the Secretary of the 
 Treasury is hereby *directed to invest and reinvest such funds or any portion of such 
 funds in any of the following securities, viz: Bonds of the United States, bonds or 
 other interest-bearing obligations of any State of the United States or any legally 
 authorized bonds issued for municipal purposes by any city or town which has 
 been in existence as a city or town for a period of twenty-five years, and which for 
 a period of ten years previous to such investment has not defaulted in the payment 
 of any part of either principal or interest of any funded debt authorized to be con- 
 tracted by it, and which has at such date more than 25,000 inhabitants as established 
 by the last national census and whose net indebtedness dees not exceed five per 
 centum of the valuation of the taxable property therein, to be ascertained by the last 
 preceding valuation of the property for the assessment of taxes; or any legally author- 
 ized bonds issued for municipal purposes by any city or town in the United States 
 which has been in existence as a city or town for a period of twenty-five years, and 
 which for a period of ten years previous to such investment has not defaulted in the 
 payment of any part of either principal or interest on any funded debt authorized to 
 be contracted by it, and which has at such date more than 200,000 inhabitants as 
 established by the last national census, and whose net indebtedness does not exceed 
 seven per centum of the valuation of the taxable property therein, to be ascertained 
 by the last preceding valuation for the assessment of taxes. In this clause the 
 words "net indebtedness" mean the indebtedness of any city or town, omitting 
 debts created for supplying the inhabitants with water and debts created in antici- 
 pation of taxes to be paid within one year and deducting the amount of sinking 
 funds available for the payment of the indebtedness included. 
 
 The moneys deducted from salaries and the income derived therefrom shall be held 
 and invested, as above described, by the Secretary of the Treasury until paid, as ia 
 hereafter provided. Any deficiency in the fund hereby created to carry out the pro- 
 visions of this act shall be paid out of any money in the Treasury not otherwise 
 appropriated. 
 
 For the purpose of aiding the Secretary of the Treasury in investing the funds 
 created by this act, a board of investment is hereby created, composed of the Treasurer 
 of the United States, the Comptroller of the Currency, the person appointed by the 
 Secretary of the Treasury to enforce, under his direction, the provisions of this act, 
 and two persons to be designated by the President from among the employees of the 
 classified civil service. The members of the board of investment shall be sworn and 
 shall hold office until others are appointed and qualified in their stead. 
 
 Sec. 3. That the retirement age herein referred to shall be seventy years, and that 
 after this act takes effect no employee to whom it applies shall be permitted to remain 
 in the service of the United States after attaining the age of retirement. 
 
60 EEPOKT TO THE PEESIDENT ON EETIREMENT ALLOWANCES. 
 
 Sec. 4. That upon absolute separation from the classified civil service covered by 
 this act prior to the age of sixty years, and only upon such separation, the employee 
 may withdraw his savings in one sum, together with interest at four per centum per 
 annum, compounded annually, then credited to his account, as hereinbefore provided. 
 In case of the death of an employee while in the service, the amount of his savings, 
 together with the interest then credited thereon, shall be paid to his legal repre- 
 sentatives. 
 
 Sec. 5. That upon separation from the classified civil service prior to the retirement 
 age, but after reaching the age of sixty years, the employee shall be entitled to receive 
 the amount of his savings, including the interest credited thereon, in one payment, 
 but if the amount exceeds six hundred dollars payment shall be made in ten annual 
 installments, the first (to be paid one year after separation) being one-tenth, with 
 one year's interest at four per centum per annum, and each installment thereafter 
 being one-tenth and interest at the same rate for the preceding year on the balance to 
 his credit at the beginning of the year. In case of the death of an employee so sepa- 
 rated from the service, the amount of his savings, together with the interest then 
 credited thereon, shall be paid to his legal representatives. 
 
 Sec. 6. That in case of reinstatement in the classified civil service any person 
 who at the time of his separation therefrom received a refund under section 
 four of this act shall for the purposes of this act be deemed to be a new entrant to 
 the service and the monthly deduction from his salary shall be computed from the 
 date of such reinstatement, unless he shall within ninety days after reinstatement 
 pay to the Treasurer of the United States the amount refunded to him, with interest 
 at four per centum per annum, compounded annually, in which case the same shall 
 be placed to the credit of his account and the former period of service shall be counted. 
 
 Sec. 7. That beginning with the first day of July next following the passage of this 
 act every employee to whom this act applies who, at that time, shall have reached 
 the retirement age shall be retired from the service and shall receive from the United 
 States during the remainder of his life an annuity (payable quarterly) equal to one- 
 half of the average annual salary, pay, or compensation received during the five 
 years immediately preceding the taking effect of this act, such annuity not to exceed 
 a maximum of six hundred dollars and to cease and determine at his death. 
 
 Sec. 8. That beginning with the first day of July next following the passage of this 
 act every employee who shall remain in the service to which this act applies shall, 
 on reaching the retirement age, be retired from the service and shall receive such 
 annuity, payable quarterly, as can be purchased from the United States with the de- 
 ductions theretofore made from his salary, pay, or compensation, and the interest 
 credited thereon as heretofore provided; and in case such annuity is less than one- 
 half of his average annual pay during his entire period of service, an annuity equal 
 to the difference between such annuity purchased from the United States and an 
 annuity equal to one-half of his average annual salary, pay, or compensation during 
 his entire period of service shall be paid to him by the United States during the 
 remainder of his life, but the one annuity or the sum of the two in no case to exceed 
 six hundred dollars. On the death of a person receiving an annuity under the 
 provisions of this section the annuities shall cease and determine; provided, that in 
 case he shall not have received in annuities sums equal to the amount of the de- 
 ductions from his salary, pay, or compensation, with interest as hereinbefore pro- 
 vided, the United States shall pay to his legal representatives the balance remaining 
 to his credit. 
 
 Sec. 9. That every employee to whom this act applies who shall enter the service 
 of the United States after the first day of July next following the passage of this act 
 shall, upon reaching the age of retirement, be retired from the service and shall receive 
 from the United States during the remainder of his life an annuity, payable quarterly, 
 equal to one-half of his average annual salary, pay, or compensation which he shall 
 
REPOET TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 61 
 
 have received during his entire period of service, such annuity not to exceed a 
 maximum of six himdred dollars. In case of the death of such an employee prior 
 to the payment to him in annuities of sums equal to the amount of the deductions 
 from his salary, pay, or compensation, with interest as hereinbefore provided, the 
 United States shall pay to his legal representatives the balance remaining to his 
 credit. 
 
 Sec. 10. That every employee to whom this act applies who shall continue in the 
 classified service after the passage of this act, as well as every person to whom this act 
 applies who may hereafter be appointed to a position or place, shall be deemed to 
 consent and agree to the deductions made and provided for herein and shall receipt 
 in full for the salary, pay, or compensation which may be paid monthly or at any 
 other time, and such payment shall be a full and complete discharge and acquittance 
 of all claims and demands whatsoever for all services rendered by such person during 
 the period covered by such payment, except his claim for the benefits to which he may 
 be entitled under the provisions of this act, notwithstanding the provisions of sections 
 one hundred and sixty-seven, one hundred and sixty-eight, and one hundred and 
 sixty-nine of the Revised Statutes of the United States and of any other law, rule, or 
 regulation affecting the salary, pay, or compensation of any person or persons employed 
 in the classified civil service to whom this act applies. 
 
 Sec. 11. That the Secretary of the Treasury shall prepare and keep all needful 
 tables, records, and accounts required for carrying out the provisions of this act. The 
 records to be kept shall include data showing the mortality experience of the employ- 
 ees in the service to which this act applies and the rate of withdrawal from such 
 Bervice, and any other information pertaining to such service that may be of value and 
 may serve as a guide for future valuations and adjustments of the plan for the retire- 
 ment of employees. The Secretary of the Treasury shall make a detailed comparative 
 report annually to Congress showing all receipts and disbursements under the provi- 
 sions of this act, together with the total number of persons receiving annuities and 
 the amounts paid them. 
 
 Sec. 12. That the provisions of this act shall apply only to persons in the classified 
 civil service in the executive departments and independent Government establish- 
 ments in the District of Columbia whose salary, pay, or compensation is paid from 
 moneys of the United States. No person serving in a position excepted from exami- 
 nation as defined in the civil-service rules shall be included within the provisions of 
 this act. Whenever any person becomes separated from the classified civil service 
 by reason of appointment in the unclassified service, such separation shall operate 
 to take him out of the provisions of this act, except as to payment of any amount 
 that may be due him. The President shall have power, in his discretion, to exclude 
 from the operation of this act any group of employees whose tenure of office is inter- 
 mittent or of uncertain duration. 
 
 Sec. 13. That none of the moneys mentioned in this act shall be assignable, either 
 in law or equity, or be subject to execution or levy by attachment, garnishment, or 
 other legal process; nor shall any moneys paid to any employee, or to the legal repre- 
 sentatives of a deceased employee, be subject to the payment of the debts of such 
 employee. 
 
 Sec. 14. That for the clerical and other service and all other expenses necessary in 
 carrying out the provisions of this act during the fiscal year nineteen hundred and 
 , including salaries and rent in the District of Columbia, there is hereby appro- 
 priated the sum of twenty thousand dollars, out of any money in the Treasury not 
 otherwise appropriated. No officer or employee receiving a regular salary or com- 
 pensation from the Government shall receive any additional salary or compensation 
 for any service rendered in connection with the system of retiring employees pro- 
 vided for by this act. 
 
/7/ ,, 
 
 62 REPORT TO THE PRESIDENT ON RETIREMENT ALLOWANCES. 
 
 Sec. 15. That the Secretary of the Treasury is hereby authorized to perform or 
 cause to be performed any or all acts, and to make such rules and regulations as may be 
 necessary and proper for the purpose of carrying the provisions of this act into full force 
 and effect; and his decision as to the amount to be deducted, the amount of interest 
 to be credited, the amount of an annuity or refund to be paid, in any case, shall be 
 final and conclusive, and shall not be subject to review by any other ofScer or 
 authority. 
 
 Appendixes. 
 
 The commission has not undertaken to discuss the actuarial prin- 
 ciples involved in the statistics presented for the reason that they 
 are fully set forth in Senate Document No. 745 (61st Cong., 3d sess.), 
 entitled " Savings and Annuity Plan Proposed for Retirement of Super- 
 annuated Civil Service Employees," and it was thought better to 
 attach that document as an appendix to this report. (Appendix A.) 
 
 The commission has not undertaken to review in its report the 
 history of other countries in retiring civil employees. The expe- 
 rience of England and two of its principal colonies in retiring their 
 civil employees has been fully discussed in Senate Document No. 
 290 (61st Cong., 2d sess.), entitled " Civil Service Retirement, Great 
 Britain and New Zealand," and Senate Document No. 420 (61st 
 Cong., 2d sess.), entitled ''Civil Service Retirement, New South 
 Wales, Australia." It was thought better to attach these docu- 
 ments as appendixes rather than to repeat their substance in the 
 body of the commission's report. (Appendixes B and C.) 
 
 The commission has not undertaken to discuss in detail the vari- 
 ous bills presented to Congress for the retirement of civil employees. 
 Copies of House bill 9242, House bill 19399, and Senate bill 5863, 
 all of the Sixty second Congress, are, however, attached to this 
 report. These bills, together with the bills set forth in Senate Docu- 
 ment No. 745, above referred to — namely, bills known as the Perkins 
 bill, Gillett bill, and the Austin bill — comprise the most important 
 bills that have been before Congress relative to the subject of retire- 
 ment allowances. (Appendix D.) 
 
 The commission attaches to this report; a copy of the schedule 
 which it prepared and distributed through the ojBices of the civil 
 service in the District of Columbia, calling for information with 
 regard to each employee. It is the information collected on the 
 22,754 schedules returned by the departments and independent 
 Government establishments which formed the basis of the calcula- 
 tion as to the amount of loss sustained by the Government through 
 the inefficiency of its aged employees. (Appendix E.) 
 
 Respectfully submitted. 
 
 F. A. Cleveland, CJmirman. 
 
 W. F. WiLLOUGHBY. 
 
 W. W. Warwick. 
 Frank J. Goodnow. 
 M. O. Chance, Secretary. 
 
 LB '12 O 
 
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