Evening star. [volume] (Washington, D.C.) 1854-1972, 1907-07-13
PENSION THE CLERKS
Bill to Be introduced Next Win
ter in Congress.
THE KEEP COMMISSION
VIII Recommend It as It Is Drawn by
Subcommittee.
DETAILS OF THE MEASURE
DETAILS OF THE MEASURE
How a Fund for Retirement Can Be
Created - Especial Consideration
for Those in Postal Service.

1OT those IN fOSLdl service.
Pensions for employees of the government
will be the subject of a bill to be introduced
in Congress next winter with a recon-
mendaton of the Keep commission.
This bill is described in detail in a report
to the Keep commission by the subcommit-
tee appointed to frame it, the subcommittee
being composed of Messrs Arthur P Davis
George w. Leadley, John w. Holcombe,
George r. Wales. Charles Lyman, John C.
Scofed, A. zappone, H. C. Gauss and
Bayard Wyman.
The Star has previously announced the
general purport of this bill After recitng
that the high living expenses in this city
make it difficult for government employees
to lay up money for old age, the report, in
describing in detail the effect of the pro-
posed bill, says:
Fund for Retirement.
THE general idea is that each individual
shall provide the necessary fund for his
own retirement. In presenting the plan it
is well to divide the exposition into two
parts: The first part makes provision for
those whose service begins after the enact
ment of the law; the second part makes
provision for those who have been in the
civil service at the time of the passage of
the measure for d longer or shorter period.
1t is proposed to pay every employe in
the civil service, on arriving at the age of
seventy years, an annuity equal to 1.5 per
cent of his pay for every year of service.
For the purpose of iliustr- ton assume that
an employe entered the service at twenty
years of age and received salary of 81 200
per annum through fifty years, when he
reached the retiring age Of seventy. One
l,,l = - 80
amount (s1S) multiplied by his years of
service (hfty) gives $500, which would be
the amount of his annuity for the remain
der of his life.
to pay the proposed annuity of 10 per cent
of the employees salary for each year of
service, deduction is to be made from the
monthly salary of the employee which will
be sufficient, with interest at 1 per cent, to
purchase such annuity on arrival of the en-
ploye al the age of seventy.
Annuity at Seventy.
I'm the above illustration it was found
that the annuity to be provided for at sew
enty was $500 per year for the remainder
of the employees life The next step is to
ascertain the cost of annuity Of 5000 for
life beginning at the age of seventy. The
cost of an annuity is based on the probable
length OF life from a given age and in
terest at given rate on the purchase
price. The amount charged by insurance
companies for an annuity of 800 on the
non participating plan, beginning at sew
enty, is S1i2. Therefore, the annuity OF
$500 desired in this illustration would cost
nine times $142, OF $6,67S.
The cost of this annuity being ascer-
tanned, the next step is to determine what
sum must be set aside monthly to accumu-
late, with per cent interest, $6G1s during
the employees fifty years of service, from
twenty 10 seventy. BY reference to an in
terest table it viii be that a deposit
u nit ,,t..
est compounded annually at per cent
amounts TO Sl,sIl.iS. The number OF dollars
per month that would be necessary to ac-
cumuiate So, :ite is ascertained by dividing
$6.GiS by SlS714S. This gives S5.5I as the
amount to be deducted from the salary of
$lGO per month for d service OF fifty years,
i'll order to accumulate SG6Is, which is
sufficient to purchase annuity of $500
per annum beginning at the age OF seventy
years.
The amounts deducted from sa aries will
vary with the age of entering the service
and with the amount of the salary. Deduc-
tons DO not increase with age, but only
with TIE increase OF salary. 1hey Will in
sense be an Assessment, unjustly
burden.ng the younger employees for the
benefit OF the older. Instead, they sums
set aside savings in the United States
Treasury by each individual emp!oye for
his own Ultimate benefit, or that of his
family. and with the knowledge that under
the operations OF compound interest. the
total viii, at the age OF seventy years, be
y.
He will in no way contribute to the retire
ment of other employees. nor will the saw
inSs of other employees be diverted to his
use.
Amount Put Aside.
"A man entering the service, aged forty
five years, at $lC0 a month. would have to
put aside SG.53 month in order to aCcumu-
late at per cent compound interest $3.50,
which is the cost of an annuity Of $3.50 a
year, beginning at the age of seventy. 1t
will be observed that this annuity is also
1.5 per cent of his pay for each year of
service the length of service liz this case
having been twenty-five years
These illustrations show that the an
nuity accruing TO the benefit of the EN-
Poye who gives many years of his life to
the government service is proportionatey
larger than that accumulated by the one
who comes in at the same salary but too
late in life to render long service.
The plan contemplates four methods of
settlement for the employe on arrival at
the age Of retirement. He may convert his
savings with the increment of interest into
one of the following options:
One cash sum.
AN annuity payable throughout life
An annuity payable throughout life with
the provision that in of death of the
annuitant before he has received in annui-
ties the amount of his savings with interest,
the balance shall be paid to his estate
An annuity for a limited term of years
These options are advisable, because the
circumstances of employees vary SO greatly
that a settlement which would be desirable
Tor one might not be wise for another.
May Leave Fund on Deposit.
But a further alternative is given. A
man need not necessarily convert his fund
Immediately upon retirement; but may leave
1t On deposit after separation from the serv-
ice at any age, bearing interest at the rate
of > per cent per annum for period not
exceeding twenty years. Ii not Withdrawn
within that time the money SO left on de-
post will be covered into the treasury as a
miscellaneous receipt.