Evening star., 1924-03-28
DENIES EMPLOYEES
PAY ANNUITY COST
LehIbach Says increased
Contribution Does Not Gov
er Retirement Pay.

While the increased contribution by
government employees from 21s per
cent to 3ia per cent under the new re-
tirement bill is expected to absorb
Il very substantial part Of the in
creased cost under the changes pro-
posed" Chairman Lehlbach of the
House committee on the civil service,
| who is author of the new bill. said in
his report today:
1t is untrue and silly to assert that
tho cost of the retirement system is
borne wholly by the employees and to
allude to the temporary cash balance
in the retirement fund as a surplus
/ Chairman Lehlbach today submit
ted to the House the report unani-
mously ordered by the civil service
committee, urging prompt enactment
of the new retirement bill.
! Discussing in this report the pur-
! pose and scope of the retirement Sys-
TEN, Chairman Lehlbach says:
Congress in 1920 instituted the
/ present retirement system in the
classified civil service in order to pro-
mote efficiency, eliminate incompe-
| tencE due to superannuation. and
| extend to the employees of the gov
crnment that recognition for pro-
/ tracted faithful service which pri-
vate employers generally extend.
congress did not intend to engage in
the insurance business, selling an
nu1ties below cost proportioned to
the premium paid.
Underlying Principle.
The principle underlying the gov
ernment plan is as follows: Govern
ment employees, like other people,
fnr old
age and the resultant impairment of
earning capacity as their circum-
stances will permit. Hence, there is
deducted from the salary OF such en-
can well afford to invest to this pur-
! pose. This deduction or contribution,
as 1t is called, is held in trust for the
employe and earns interest at the rate
6f 4 per cent compounded annually.
J Moderate annuities are provided
varying with length of service and
average salary. but with a maximum
limit barely sufficient for maintc-
! nance without actual want.
Generally, the sum contributed by
the employe is less than the cost of
the annuity and the difference is
paid by the government. The higher
the salary Of an employe, the greater
his own contribution toward his
! annuity and the less the government
must pay.
These deductions are returned TO
the employe for whom they are held
in trust in every possible contingency
either in annuity payments or in
cash. Hence, any employe who deems
! his proposed annuity inadequate, may.
instead of retiring when his term
, of service is ended by the law, resign
withdraw his contributions with
compound interest in cash, and make
his own provision for his closing
years.
Cost of Retirement system.
Thus far. no appropriations for the
retirement fund have been made. This
fLaS been possible by using the money
held in trust for contributors still in
active service to Pay the annutties
of those retired. The money thus
borrowed must. of course. be return
ed with compound interest out of the
United States Treasury. As the
amount Of contributions for the time
being exceeds the annuity payments
and Withdrawals this system of bor
rowing is feasible But the time will
come when the cash balance in the