Evening star., 1926-04-06


I'm preparing this estimate, the
actuaries have completely ignored tne
provision In the law which perml'S
employees to remain in active service
after retirement age for successive
two-year periods upon certl1lcatlon OF
continued efficiency, and nave as
sumed that every employe VIII re-
tire at the earliest opportunity. Inc
fact is that in 1925 3,422 employees OF
the retirement age were still In the
active service as against ll.oS9 on
the retirement roll. Consequently,
the above estimate includes the pay,
ment during the year OF over o'4VV
annuities which actually were hot
paid. and includes the same numpef
OF contributions from employees on tne
pay roll Obviously, this TENDS SUD
stantially to initiate the percentages
Of the total cost and the gross amount
and particularly tends TO innate tne
percentage and amounts for Whlch lhe
Government .is liable. This same in
nation exists in similar estimates for
proposed changes in the law. 1t may
be suggested that increased annultieS
tend to lessen continuance in service
beyond retirement age.
Retention of Some Urged.
InlS ulSCTeDdilCy DcbNtCi SoAt'' ~
and annuities even with the proposed
Increases Is still sufficiently drastic TO
constitute an adequate motive for
persons to remain in service who are
able to carry on their work. The tend
ency is more than offset by the new
provision in the bin with respect to
such continuances. In various
branches Of the Government, at varl-
Gus times, there was apparent pur
pose to compel retirement upon ar
rival at the age limited by withhold
ing efficiency certificates, regardless
Of the ability of the applicant e1ec'
lively to continue his work.
THE bill proposes to remedy this
situation by compelling the retention
after retirement age of willing EN-
ployes when their complete efficiency
has been demonstrated by a pre-
scrihed procedure The importance OF
this feature in the bill in reducing
the cost Of the retirement system
should not be underestimated. The
cost of an annuity drops materially
in each succeeding year toward the
close of life and this lessened cost is
enhanced by the continued contribu-
tion of the employe.
"The actuaries were not requested
to estimate on the exact provisions
of the bill as it Is herewith reported.
For the purpose of comparison. Mr..
Iehlbach submits a table showing the
costs II all employees were eilglpie
for optional retirement.
THE bill, in place of proVldlng re-
tirement for all groups Of employees
at so years of age" he explained,
provides optional retirement after ~
years of service at the age OF oo years
for the railway postal clerk group az
the age of 62 years for the mechanics
group. and at the age Of 90 years
for other employees. The bill eXacts
the contribution by employees of
per cent Of their salaries, instead OF
Az per cent. The bill also regroups
the employees. adding a small numpef
to the railway postal group and IN
Guiding laborers with mechanics. Inc
effect of these changes on the total
cost Is negligible"
After presenting q series of tables
to show how the cost estimates are
worked out, Mr.. Lehlbach conclude
that: "It Is reasonable to assume that
by the time the deficiency cost Is our
Of the way and all beneficiaries are
full contributors, the 4 per cent con
tribution will be ample to carry the
total cost and the fund will then be
selfsupporting.
In explaining the financing of the
fund, Mr.. Lehlbach emphasizes that
mo considerations of sound policy
dictate the creation OF huge reserve
nv transferring vast sums of none
from the Treasury to the retirement
fund in anticipation Of contingent liza
bilities to be met In the remote III
ture.
"On the other hand, a policy tha
ignores all Government liability an
- oil nhlirQftnnG
the fund out of the contributions Q
the employes and their earnings Will
have this result. Eventually the
outgo will exceed the income and tn
cash balance in the fund will be gone
Thereafter, it will be incumbent OF
the Government to appropriate an
nTally to pay all annuities. and to r
turn all refunds with accumulated IN
terest. less only the contributions for
that year. To saddle upon future
generations such an unWarranteo eA-
penditure Is unconsclonable.
THE income of the fund Will ex'
ceed the payments out or II Ior ap-
proximately Is years under the pro-
visions of the proposed bill. DR.. A
II. Thompson of the Pension Bureau
has estimated that in 1941 the pal
ance to the credit of the fund with
a 3h per cent contribution would ex1
ceed $175, ,00O, 900. 1t is now approx.
imately $5O,O00,000. Accordingly, a
per cent contribution would raise the
balance to more than $250,O0O, ,oeo.
The earnings of this balance at ahs
per cent will be $26.250.0OO annually.
This is in excess of the total of an.
nuitles that will then be payable and
the difference can be added to the
cash balance and enhance the ac-
cresions.
Peak In 40 Years.
'srhe cash obligation Of the Govern
ment to the fund each year Is the
annuities paid out. less the contribu-