Evening star., 1926-03-29

digest of the report of the board
of dctuGrieS on the retirement fund,
giuen out through the Department of
the Interior today, is as follo1cs:
The report of the board of ac-
tuaries gives the results of the valua-
ton of the retirement fund showing
| its financial condition as of June 80,
1925. Following this valuation of the
existing plan are figures showing the
cost of amending the present act in
| accordance with certain proposals on
which the joint committee on civil
| service of the Senate and House of
| Representatives desired information.
| These proposals are discussed and
changes are recommended in the
form of revised bill prepared by the
! board. Full figures of cost under the
| changes recommended are also in
| cluded.
For the first time the report con-
tainS complete tabulation of actual
membership of the retirement fund
1t shows that there are 3S8,622 Gov.
ernment employees under civil service
| participating in the fund with an an
nual pay roll Of $748,542, ,430. The
retired members drawing annuities
from the fund total 1859, the total
being paid them annually amounting
TO $6.S6S,9S3 as of June 80, 1925.
/
present fund, the report points out
that it was necessary for the board
10 determine on the basis of the data
collected as of June 80, 1925. the
| actual percentage of the salary of
new employees, which, if set aside an.
nually, would be adequate to provide
during the active service of the EN-.
ployeS or benefits allowable on their
| account.
This percentage of salary. which
dndlcates the actual cost of benefits
Ior new employees, may be termed the
! normal cost of the fund.- the repOrt
! states. Contributions at This rate
alone would not be sufficient to pro.
Vlde the benefits for present EMPLOYEES
because OF the fact that contributions
in their behalf have not been made at
d normal rate in the past"
3.35 Per Cent Is REQUIRED.
On the basis of these calculations
the report continues, approximately
go per cent of the pay roll is re-
! CURED annually as a normal contri.
| pullon II benefits are to be continued
at thelr present rate and If a. fund is
| 10 pe accumulated during the active
service of employees which will be ade.
quate at the time when they retire
| 70 PROVIDE their benefits. EMPLOYEES
Oh the active service, therefore, in
paying ~ per cent of their salaries
! cohtrloute approximately rs per cent
OF the normal cost of benefits. The
| normal rate of 3.35 per cent is the
rate applicable to the average new
employe. II new employees enter at the
| average entrance age of the present
| hctlVe force. The cost of benefits for
iholVldual entrants varies according
TO the employees age at entrance.
Inc report then tai es up the con.
trlbutlons required in addition to the
hoIllial contributions to provide the
| DenentS covered by the present re-
tlrement fund on June 80, 1925,
Vaiutlon is given of the total LA
pllltIes of the fund on account of the
prospective benefits payable to pre.
sent annultantS and emDloves. AS
an offset against theese liabilities
! there are available the contributions
ALREADY made by employees which have
not been used for the. payment of
| oenehts and the prospective contribu-
| lions or employees at 215 per cent Of
salary. The remainder represents the
liabilities which are not covered by
employes contributions at 2h per cent
of salary.
Estimates U. S. Share.
The tabulation of the assets and
liabilities of the present retirement
fund as of jane 80, 1925, shows the
present value of payments to be re
ceived through contributions of EN-.
pIoyes at 212 per cent of their salary,
making a total of $219,935, 1874; the
liabilities of the fund as given by
the board is $626.492, ,636, the remain
der of which amounting to 1851, S91, :
4b3, the boards report states, must be
made up out of appropriations by the
| Government. Discussing this valua-
| tion the report states:
This balance sheet shows that the
present value of the prospective con
tributions of employees at 212 per cent
amounts to $2l9,935,394. If the Gov
ernment were to make a contribution
of .S5 per cent of the pay roll annually,
this contribution, together with that
of 212 per cent by the employees, would
| equal 3.35 per cent, which is the nor
NAL contribution. This contribution
| would be sufficient to cover the con-
tinuing or normal cost, but it is not
sufficient to cover the liability on ac-
| count of service rendered by employees
prior to the establishment of the fund
in 1920, when no contributions were
made, nor does it cover credit for
service since that date, during which
time the Government has made no
contribution whatever.
| The liability on account of this
| past service may be obtained by de-
| Quoting from the total liability of the
! Government the value of future con-
| tributions which would be payable by
the Government at the normal rate of
| .85 per cent of salaries. An actuarial
calculation shows that a contribution
from the Government equal to 85 per
cent of the pay roll of present en-
/ nInUoc ha c of
4S0. If the latter amount be deducted
from the item of 1851, ,891 ,463, shown
| as the value of the Government S
| prospective appropriations, $2S6,632 :
983 is left as the amount which must
be placed in the fund to offset the lack
of contributions in. the past.
Too Large for One Payment.
"This amount, technically known as
the accrued liability is ordinarily too
large" the report goes on, Ito be
| covered by a. single payment at the
| establishment of a retirement fund.
Usually some method of spreading the
payment over a period of years is
employed. If an attempt should be
made to cover the accrued liability of
the Government in 80 years, it is fig
ured that 1.53 per cent of the pay roll
annually would liquidate this liability
in 80 years, assuming that the pay roll
of all employees will increase by about
per cent of itself each year"
The report estimates the annual re-
ceilts to the fund required to take
care of this accrued liability and for
the support of the fund, including
both the normal cost and the defici-
ency cost, at q total of $50, ,529 ,491.
The annual contributions by the EN-.
ployes are shown at $1S,713,561, leav.
ing an annual amount payable by the
Government of $17,S15,9 $50, or 23S
per cent of the pay roll.