Evening star. [volume] (Washington, D.C.) 1854-1972, 1907-06-25
DRAFT OF BILL PREPARED
Each Employe Will Contribute Month
ly Toward His Own Annuity.
ASSISTANCE BY GOVERNMENT
In Time It Is Claimed the System Pro-
posed Will Become Self
Supporting.

The subcommittee on personnel in the ex-
ecutive departments, formed a year ago by
the Keep committee on department meth
DDS, has completed a report on the retire
ment of aged and incapacitated employees of
the government, accompanied with draft
Of bill In proper form for submission to
Congress. The committee disapproves equal
ly any proposal that pensions be paid to re-
tired employees wholly out Of the federal
treasury and all measures providing Tor a
uniform deduction of given per cent Or
''fiat-rate'' assessment on salaries, all such
proving on analysis unfair either to tax
payers or employees.
In reference to the plan recommended by
them, the members of the committee say
they have taken pains not only to study
the details of this plan. well as many
others. but to submit ii to the criticism of
several expert professional actuaries, and
to have computations made so that all
necessary data may be at hand. The gen.
eral idea of their measure is that each indi-
vidual shall provide the necessary fund for
his own retirement.
Annuity on Reaching Seventy.
1t is proposed to pay every employee in
the civil service on retiring at the age of
seventy years or upward an annuity equal
to Is per cent of his pay for every year
of service. To illustrate, take an employe
who entered the service at twenty years
Of age and received a salary of $1,000
year through fifty years and retired at
seventy. One and one-fifth per cent of
$1,000 is SIS. This amount multiplied by
fifty (his years of servlce) gives $500, the
amount of his annuity for the remainder
of his life. To provide the fund from
which to pay this annuity deduction will
be made from the monthly salary of the
employe Of such amount as will be suf1i-
cent, with per cent compound interest
to purchase such annuity on the arrival of
the employe at the age of seventy years.
Calculating Monthly Reduction.
From accepted calculations Of insurance
companies it is found that $6,67S is the sum
which must be accumulated to purcha Sc
annuity of 500 for life for a person
seventy years of age The next step Is to
determine what sum must be set aside
monthly to accumulate at per cent in
terest $6,676 during the employees fifty
years of service. A deposit of 81 per month
for fifty years, with interest compounded
at per cent, amounts to s1,S7i.4S The
number OF dollars Ter month necessary to
accumulate T.6IS is obtained by dividing
66IS by 1,S1l.4S This gives 3d. 81 to be de-
Quoted from a salary Of 500 a month to
provide the annuity of 5000 a year
The arithmetical process above Illustrated
applied to all rates of salary and all terms
of service will result in an annuity for
each person proportioned to the amount of
his salary and the number of years he has
served the government.
Proper provision is made for the with.
drawal of the employees accumulated saw
ings with interest in case he leaves the
service before reaching the age of retire
ment. While the age of retirement Is fixed
at seventy generally, yet in certain lines
it is recommended that il be made sixty
five and sixty years Retirement is not al
together compulsory, as competent persons
may be retained as long as they wish to
remain and can render adequate service
To provide for the retirement of employees
who are in the service when the bill is
passed 1t is proposed that the government
shall contribute the amount necessary to