PANAMANIAN RETIREMENT

HEARING

BEFORE THE

SUBCOMMITTEE ON

RETIREMENT AND EMPLOYEE BENEFITS

OF THE

COMMITTEE ON

POST OFFICE AND CIVIL SERVICE

HOUSE OF REPRESENTATIVES

NINETY-FOURTH CONGRESS

SECOND SESSION

ON

H.R. 11495-

A BILL TO AMEND SECTION 8335 OF TITLE 5, UNITED STATES

CODE, TO REDUCE THE MANDATORY RETIREMENT AGE FOR

NON-UNITED STATES CITIZEN EMPLOYEES OF THE PANAMA

CANAL COMPANY OR THE CANAL ZONE GOVERNMENT EMPLOYED ON THE ISTHMUS OF PANAMA TO SIXTY-TWO YEARS

OF AGE

FEBRUARY 17, 1976

Serial No. 94-64

'7 Printed for the use of the

toiimihittle on Post Office and Civil Service

GOVERNMENT PRINTING OFFICE

68-OO WASHINGTON : 1976
COMMITTEE ON POST OFFICE AND CIVIL SERVICE

DAVID N. HENDERSON, North Carolina, Chairman

MORRIS K. UDALL, Arizona, Vict Chairman

DOMINICK V. DANIELS, New Jersey EDWARD J. DERWINSKI, Illinois

ROBERT N. C. NIX, Pennsylvania ALBERT W. JOHNSON, Pennsylvania

JAMES M. HANLEY, New York JOHN 11. ROUSSELOT, California

CIARLES 11. WILSON, California ANDREW J. ILNSHAW, California

RICHARD C. WHITE, Texas JAMES M. COLLINS, Texas

WILLIAM D. FORD, Michigan GENE TAYLOR, Missouri

WILLIAM (BILL) CLAY, Missouri BENJAMIN A. GILMAN, New York

PATRICIA SCHROEDER, Colorado ROBIN L. BEARD, Tennessee

WILLIAM LEHMAN, Florida TRENT LOTT, Mississippi

GLADYS N. SPELLMAN, Maryland

STEPHEN L. NEAL, North Carolina

H ERBERT E. HARRIS, Virginia

WILLIAM M. BRODHEAD, Michigan

PAUL SIMON, Illinois

NORMAN Y. MINETA, California

JOHN W. JENRETTE, JR., South Carolina

STEPHEN J. SOLARZ, New York

JoHN 1I. MARTINY, C1ief CounSel

VICTOR C. SMIRoLDO, Staff Director and Counse

THEODORE J. KAZY, Associate Staff Director

ROBERT E. LOCKHART, CoUjift

JAMES PIERCE MYERS, Assi8tant Counsel

DAVID MINTON, Associate CounmIeI

SUBCOMMITTEE ON RETIREMENT AND EMPLOYEE BENEFITS

RICHARD C. WHITE, Texas, Chairman

DOMINICK V. DANIELS, New Jersey GENE TAYLOR, Missouri

IERBYRT E. HARRIS, Virginia ROBIN L. BEARD, Tennessee

GLADYS N. SPELLMAN, Maryland

NORMAN Y. MINETA, California

JOIN W. JENRETTE, JR., South Carolina

MORRIS K. UDALL, Arizona

Ex Officio Vot in g Members

DAVID N. HENDERSON, North Carolina EDWARD J. DERWINSKI, Illinois

(Ronald P. McCluskey, AssistantCounsel, Room B-345(d), Rayburn Building-Ext. 56831)

(n)
CONTENTS

Statement of- page

Constant, Thomas M., Secretary, Panama Canal Company, and

Assistant to the Governor, Panama Canal Zone Government_-.- 4

Murphy, Hon. John M., a Representative in Congress from the State

of New York.---------------------------------------------- 7

Tinsley, Hon. Thomas A., Director, Bureau of Retirement, Insurance, and Occupational Health, U.S. Civil Service Commission-. 1

Webber, Clyde M., national president, American Federation of Government Employees ----------------------------------------- 8

Additional material:

Copy of H.R. 11495 ------------------------------------------ 11

Administration report from U.S. Civil Service Commission---------- 9

Summary of recommendations --------------------------------- IV

(Inz)
R'coMMENI)ONs ox II'. 11495, PANA-MANIAN RETIREMENT

H on. Thomas A. Tinsley, Director, Bureau of Retirement, Insura nce, and Occupational 1lealtlh, U.S. Civil Service Commission:

(1) Ameid the bill so as to give an individual time (1 year)

to adjust any reduction in b incme and living standards that

would result from enactment of this bill

Iton. Ihomas M. Constant, Secretary, Panama Canal Co., and

Assistarnt to the Governor of the Panama Canal Zone Government:

(1) This legislation should be enacted in order to: (a) increase

the efficiency of the work force of the Canal organization; and

b) provide increased employment opportunities for younger

Pana manians.

(2) Delay the effective date of the; bill 1 ear so as to permit

the employees time to adjust themselves to their retirement in the

Republic of Panama across tie border and find suitable housing.

(IV)
PANAMANIAN RETIREMENT

TUESDAY, FEBRUARY 17, 1976

U.S. HOUSE OF REPRESENTATIVES,

COM.iTTEE ON POST OFFICE AND CIVIL SERVICE,

SUBCOMMITTEE ON IRETIREME NT AND EMPLOYEE BENEFITS.

a8hingtonD.C.

The subcommittee met at 9:30 a.m. in room 311, Cannon House

Office Building, Hion. Richard C. White (chairman of the subconunittee) presiding.

Mr. WHITE. The subCOmittee will COme to order.

The subcommittee has convened this morning' to consider the merits

of H.R. 11495, a bill introduced by Conlressman John -J. 1u'rphy of

New York.

The effect of the bill would be to establish the same reqiiuem-ient for

mandatory retirement under the Civil Service Retirement Act for nonU.S. citizen employees of the Panm a Canal Co. and the Canal Zone

government employed on the Isthmus of Parmuna as that which

has been in effect for most of the U.S. citizen employees of tie (anL

enterprise since July 1926 and for all such workers since July 1931.

Our first witness this morning will be Thomas A. T insley. director 

Bureau of Retireiment, Tnsuirance, and Occupational Health. U.S. (ivil

Service Commission.

STATEMENT OF THOMAS A. TINSLEY, DIRECTOR, BUREAU OF RETIREMENT, INSURANCE, AND OCCUPATIONAL HEALTH, U.S. CIVIL

SERVICE COMMISSION

Mr. TINSLEY. Mr. Chairman, I have a very brief prepared statement

which can be submitted for the record.

Mr. WnrrE. Without objection, the statement cn be placed in the

record in full at this point.

[The complete statement follows:]

PREPARED STATEMENT OF TilOMAs A. TINSLEY

Xr. Chairman and Members tf Ith Sub, mmfit I '.I pvrUi ! 'ji ip,-

tunnify to appear before your subcommittee to give the Coinimissi(i'mIC; vicws wt

H.R. 11495.

The Lill would, in effect, establish tie snie niandatory retr mono t 'iz fir

non-U.S. citizen employees of the Panauma C anal (C1

Qmnl)hy 1nd ThO Cilnl ZLue

Government employed oil the Istmus oi Panama as that which i n I : e

for most U.S. citizen employees of the Canal enterpri e since JulY . :iv isi

all such U.S. citizens since July i931.

The present mandatory retirement at age 02 after 1 yciVi-s -rvJ, ii!

Isthmus of Panama applies only to U.S. Citizens. We have no oc icn to th 11

sane provision for non-U.S. citizens.

(1)
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Mr. TINSLEY. No. the general formula contained in the Retirement

Act is applicable in either case. An individual with 15 years of service.

reiardless of whether it was on the Isthmus or someplace else, would

receive 261 percent of his high 3 salary; 20 years' service would be

3G6j percent.

Mr. WhIT Suppose he came back to the United States, would lie

have a term that would allow him that complete amount of time ?

Mr. T1LNSLEY. Yes, sir: the full 15 years.

Mr. WN)rrE. Vll this change the law to benefit our status there in

relation to the Government of Panama? Are present negotiations

underway?

Mr. Wiirrr. That im not certain of, Mr. Chairman, that would be

a matter the State Department would be more competent to comment

on rather than I.

I do not know if the State Department has reviewed this bill. Perhaps the people from the Panama Canal Company would know. However. they should be aware of it. and I know of no objection that they

have entered.

Mr. WNirTrE. Was the early retirement for 17.S. citizens oriQinallv

established because the American citizen was working outside the

United States, and, if so, how does this apply as in noncitizens from

this country originally ?

Mr. TIN5LEY. The original provision contained in the law. M.

Chairman. goes back quite a number of years. back to 1920. And I

believe when one considers conditions in the world. particularly in the

tropics at that period of time, it would not have been unusual to provide for certain earlier type retirement benefits and certain other benefits for employees that had spent a considerable period of time working

in that climate and environment.

Mr. WITE. im advised that a number of the employees of the

Panama Canal Zone have indicated they would like the effect of this

bill to be delayed 1 year so that they could, I presume. adjust themselves rather than have the 62 years of retirement age imposed on them

at this time.

Do you have ,)iy comments on that ?

Mr. TINSLEY. The Conmission would have no ojection to that type

of amendment to the bill, Mr. Chairman. In fact, I personally think i

would be well to so amend the, bill and give an individual a time to

adjust to any reduction in income, and living standards that would

result.

Mr. WNi\ TE. Thank you. very much.

Mr. Harris, do you have any questions?

Mr. H.xnris. No questions.

Mr. Wm!TE. Thank yon, Mr. Tinsley.

We have Mr. Thomas M. Constant, Secretary of the Panama Canal

Company, and Assistant to the Governor of the Panama Cmnal Zone

Government.
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to give the employees over age 62 sufficient time to prepare for retirement. This

is particularly desirable in the case of Canal Zone residents where termination

of employment will also involve loss of rights to Canal Company quarters and

the need to locate private housing in the adjacent Republic of Panama. Such a

result could be accomplished by amending Section 2 of the bill to read as follows :

"Sec. 2. This Act shall become effective one year after enactment."

I appreciate very much this opportunity to appear before this Subcommittee,

and I shall be pleased to answer any questions the Members may have.

Mr. CONSTANT. Mr. Chairman, and members of the committee, it is

a pleasure to be here this morning, and I appreciate this opportunity

to provide testimony regarding the bill, H.R. 11495, which was introduced on January 26, 1976, by Congressman Murphy of New York.

The bill would amend section 8335 of title 5, United States Code, to

reduce the mandatory retirement age of non-U.S.-citizen employees of

the Panama Canal Company or the Canal Zone Government employed

on the Isthmus of Panama f rom 70 to (.2 years.

On behalf of the Panama Canal Company and the Canal Zone Government, I urge that this subcommittee favorably consider H1.1. Il 195.

It is the position of the canal agencies that reduction in tVe manlatory

retirement age for non-U.S. citizens would result in an increase in

efficiency of that portion of the work force. We have. approximately

11,000 non-U.S. employees of the Canal Company and the Canal Zone

Government. Some 500 of the employees are 62 years of ag or over. and

following that about 150 to 200 each year for the next S tears would

be involved.

Due to their age these workers are often found not to have the nility

and physical stamina necessary to meet the demands of the jo. Meny

of them are in blue-collar positions as. for example, se ,sV1oring, or handling the heavy mooring lines, or much of theni work required climbing Jacob's ladders on ships which is diflilut work for

people their age.

We believe that manldatorv retirement af ate C2 would incre WA the

efficiency of the work force of the Canal organizations becaulso it would

permit replacement of the older employees with yomnger workers who

are physically agile and more capable of performing heavy manual

labor in the unskilled and semicskilled categories.

We feel, also, that an earlier mandatory retirement age would provide increased employment opportunities for vounier Panamanians

whose primary hope for employment in the Canal Zone lies with the

Panama Canal Company or the Canal Zone Government, sinoe we

employ approximately 75 percent of all the work force in ti Canal

Zone.

We repomnmend one substantive chance in this bill which we felt

would help. The initial sum of the initial 500 who woul rotir' would

be] ivinl in the Canal Zone in gil -.rters provided by the P; nama C'1'al

Company. If te offeetive dbte of hibis ill were del"ved I ye: wt .v ;k

this would pernit the (enDOv s to adljpct themves eS 0 r I

ment in the Pepubbe ef Pin n eri os the V'rdef >and; *in 11 it bl

houcino. Sr we do feel tIt he ,yI- I Vy "o i n the f eiN(I M 0 (l1

be appropriate.

lW b- I appreciate very 11ne ti opportuinitV to :a ppear h1'1 ) 

committee. am(l T shall be pleoised to answer anv q1eSo

M!. Wwrm. Tllank vn very muwlh. In tlis cnse, I w linw 11 i;i

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Mr. WmTE. Thank you very much, we appreciate your coming

before us.

Mr. CONSTANT. Thank you very much, sir. I appreciate the

opportunity.

Mr. NVHTE. There being no further business, the subcommittee is

adj oirned.

[Whereupon, at 9 :40 p.m., the hearing was adjourned.]

[The statements which follow were received for inclusion in the

1'(cord.]

PREPARED STATEMENT OF ION. JOHN -'. -MURPHL A REPPRESENTATIVE IN CONGRESs

FROM THE STATE OF NEW XORK

Mr. Chairman, and members of the committee. I appreciate the opportuniity

to appear before the suheoommittee and convey to you my views on II.R. 11495. a

bill which would lower the mandatory retirement age of non-I.S. employees of

the Panama Canal Organization from 70 to 62 years of age. Although 11.R. 11493

a ffects fewer employees than many pieces of legislation before this subcommittee,

it is legislation which is very important to the Panama Canal Organization.

and both U.S. and non-U.S. employees of the Canal.

In iMarch 1972, as Chairiman of the Subcommittee on the Panama Canal,

I led a Congressional inspection visit to the Panama Canal Zone. That tour

involved a number of meetings with governmental ad citizen representative.

as well as an enormous amount (f discussion as to the chest political posture for

the United States to assume duringg these volatile political times in the Rllepublic

of Panama.

The summary report of the inspecting Congressional Delegation, published on

March 9, 1972, proposed several changes in U.S. policy in the Canal Zone. One of

the changes advocated was a reduction of the mandatory retirement age for nonU.S. employees from 70 to 62 years, a matter that had been raised by the Canal

Organization on several occasions, both for the purposes of equity to the V.S.

inployees of the Canal. and for the improvement of the unemployment situation

in the Canal Zone. Mr. Chairman. the basic conditions which stimulated the 1972

report and my co-sponsorship of this legislation several years ago still exists

today.

First, there is a b:sIe question as to whether a U.S.-owned and V.-iperated

facility built on territory acquired by the United States should engage in treatnment that is necessarily preferential for non-F.S. citizens. In my view it should

t. 1 urthermn ire. the continued disparity in miandatory retirement ages is the

kind of rule which could discourage U.S. citizens who might otherwise be attracted to employment in the Zone, thus weakening U.S. control of the Canal in

the long run.

Ii the ia4 fwo years there las been in the Panama Canal Zone a major drive

toward equality and parity of benefits for U.S. and iion-U.S. employees. Mfany of

the issues joined over the last t wo years are ones that my colleagues and I pushed

in 1972. In 1975, for exam ii e. non- U.S. employees of the (anal ( Organizatiol1 were

granted a leave system which ves t hem parity with V.S. citizen employees Oil

the Camial, except home travel benefits. Another recent example of this drive

toward parity occured N whenm tile Govvirnior of the Caniial Zonie imlplemlleted p irop saIs to consolidate school systems in tile Zone, as wvell as the separate hiousinIIg

commiitits exmt ig there. All three of the moves I I a ve cited re*ponld to lon 

time aspirations of the Latin American community in the Canal Z1 one. Now thiat

thly hlave I been a cconpl ishlied, I (;!not see hoW aiyne could Ittack the c(nc I t of

re0 ireiient 1pority o5 it is contained in this bill.

IUii.nemploymiient pro)b)lims still exist in the Canal Zone a t fhe Reollie If

Pautiama. A 1974 survey (t hW GAO report oi personnel policies, Ma v 28, 175

indicleled that ,just over one-hird of Tlle re'eit graduates of tle h ail Amoli1cail

Iligh Schools in the ('anal Zone were unemployed. As long as the (1a1Ial i the

major Ictor in emlploymcent fn the Ishimnus 'f 11itm. I ILink we ca H do he; ev

in hiring graduates from a I .S. rull school system wilill the Zome. I 1111 it

suggesting that we should remove senior citizens from their jobI as if they ere

5o'mi kindl of g css enmniibiance. h'ly are dedicated and loyal employees f to le

Ca mal regardless of the pollical situation in Pana m a d regardle's of aIy probleimos that may have arisen fromil Canal treaty negotiations. But while recognizinig
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ployees, who are mandatorily retired at age 70 after 15 years of service while

those serving on the Isthmus suffer discrimination.

U.S. citizen employees in the Canal Zone therefore are now unfairly deprived

of 8 years potential service compared to U.S. citizens working elsewhere. But

they have lesser rights even than non-citizens in the Canal Zone. Moreover, only

U.S. citizens in the Isthmus suffer this discrimination while non-citizens can

work till age 70. We believe that both of these circumstances are improper and

should not be allowed.

Congressman Murphy has seen, of course, the inequity of the treatment as to

citizens and non-citizens in the Zone, and we appreciate his insight and initiative to remove it. But there still remains the inequity of employees in the Isthmus

compared with Federal employees in the United States.

We feel that there is a better way to achieve his goal by removing all discriminations against Federal employees solely because they work on the Isthmus

either for the Panama Canal Company or the Canal Zone Government.

Consequently, our organization recommends that Public Law 89-554 be repealed.

We have a further reason for recommending a different route to equity than

the one chosen- in H.R. 11495.

All of us are aware of the serious tensions that currently exist in Panama and

the Canal Zone now over the issue of sovereignty. H.R. 11495 might well contribute to increasing those tensions by affording an opportunity to those in

Panama who argue that the only way to protect the fate and security of Panamanian employees in the Canal Zone is to officially and permanently transfer

sovereignty over the Canal Zone from the United States government to the

Panamanian government. They might cite the change in status of non-citizens.

depriving them of eight potential years of service as evidence of the indifference

by U.S. authorities to their needs.

We would request you, therefore, to weigh the advisability of the Congress taking such legislative action at this time which might provoke hostile reaction

from Panamanian nationals, especially since there is a basic issue of equity at

stake. Besides this issue of basic equity, we fear that it might become politically

and diplomatically embarrassing to the United States to allow such a change in

status to exacerbate conditions on the Isthmus.

We, therefore. respectfully urge this subcommittee to substitute for this Bill

a simple revision which would have as its sole purpose the repeal of Public Law

89-554.

We thank the subcommittee for this opportunity to make our views known

on this legislation, and we wish particularly to reemphasize our high regard for

Congressman Murphy who has done all of us a favor by raising the fundamental

issue of equity in H.R. 11495.

UNITED STATES CIVIL SERVICE COMMISSION, Washington, D.C., February 18, 1976.

lon. DAVID N. HENDERSON,

Chairman, Committee on Post Office and Civil Service, House of Representatives,

Washington, D.C.

DEAR MR. CHAIRMAN: This is in further response to your request for the Commission's views on H.R. 723, a bill "To amend section 8335 of title 5, United States

Code, to reduce the mandatory retirement age for non-United States citizen employees of the Panama Canal Company or Canal Zone Government employed on

the Isthmus of Panama to sixty-two years of age", and on H.R. 11395, a similar

bill.

The effect of either bill would be to establish the same age requirement for

mandatory retirement under the Civil Service Retirement law for non-U.S. citizen

employees of the Panama Canal Company and the Canal Zone Government employed on the Isthmus of Panama as that which has been in effect for most of the

U.S. citizen employees of the Canal enterprise since July 1926 and for all such

workers since July 1931. The only difference is that I.R. 723 would be effective

on enactment, while HR. 11495 would be effective on October 1, 1976 or enactment, whichever is later. We understand the Panamia Canal Company is recommending a deferred effective (late provision to give employees sufficient time to

prepare for retirement.

The Canal Zone Government has advised us that, altogrether, there are approxi- mately 11,000 non-U.S. citizen employees of whom 500, or about 4.5'%, are age 62

and over.
10

These 500 non-U.S citizen employ es would be mandatorily retired at the time

the law takes effect, and it is estimated that for five years thereafter there would

be from 150 to 200 mandatory retirements annually in excess of the normal rate

of voluntary retirements.

The Commission does not have any objection in principle to enactment of the

bill which would put non-U.S. citizen employees on the Isthmus on the same

mandatory retirement footing as U.S. citizen employees.

Enactment of H.R. 723 or H.R. 114,5 would not increase the normal cost of

the Civil Service Retirement System. It would, however. increase the unfunded

liability of the Civil Service Retirement and Disability Fund by about $7.4

million. This amount would be amortized in 30 equal annual installments of

approximately $459,000.

The Office of Management and Budget advises that, from the standpoint of

the Administration's program, there is no objection to the submission of this

report.

By direction of the Commission:

Sincerely yours,

RODE11T HAMPTON, Chairmain.
11

94Th CONGRESS

2D SESSION Ho R. 11495

IN T1IE ITOUSE 1? REPRESENTATIVES

JxAN \PY26, 1976

Mr. iMfunr11v of New Yorks mil<oluced t lie followillo- Ii11: whici wa!V re 1-im

to the Committee oil Post ofiwe and Civil Service

A BILL

To fllend -section 82#5 of title 5, I i ()J S(tes Code, 4' rednce

the m andatty retir('1lI lt age foP l iii-! lit(ld Stat, c(,itill

c11ployces of the Palnama Canil Comnpaniy Or the ( iul ZoLne

Government employed Oil tie 1 tllfllh of Pailania t' sxtytwo vcars of age.

1 Be it ciiacted bI he Senate and House of R presen;atives of the Unitd States of America in Confgrcs. asqsembw1cd,

Thiat sections 8)q (e) of tiVte , 1nited Stat(s Code, is

4 icaiieded (0 read as fOllows

(e) Tiis section applie to ii emplyC o tle AOlaf k

6 RailIuad ill Llka dto am cIHpI)lO(QY of the Pan-aa C 4a1u

7 (o11ill" oI tle Ca Zl0110 Ne (loi'nmellt on. tle IStiuIlls; of

s Panama, wlho becomee sixty-two yvars of age and completes
UNIVERSITY OF FLORIDA

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6 ( I i diW tic of cllc:tlli-lli f llli- , ol.

(2) Ortwbur 1. 1 97.

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