Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-01-10
BY DONALD A. CRAIG.

| appear tomorrow.
BY DONALD A. CRAIG.
One of the arguments most fire.
quently employed by those who advo-
cate substantial increases in the an
nuities paid to retired Government en-
ployes is that there is plenty of money
| in the civil service retirement and dis
ability fund to pay the increases. They
point to the fact that the fund has
been increasing, due to contributions
! from employees salaries and appropri-
ations by Congress, while the annuities
and refunds have been paid right along
as they have fallen due.
Did not the contributions from en-
p,oyeS' salaries in the last fiscal year
| amount to $28, 1872 GAL, they ask, to say
nothing of $40 900 900 appropriated py
Congress for the fund during the last
two years and the promise Of at least
$40, 100000 each year in the future?
| Did not the total amount of annuities.
refunds and allowances in the last fiscal
wear amount to only $16,072, 472? What
| is Congress going to do with that big
difference?
| These figures are accurate, explain
| the Treasury experts, but they do not
tell the complete story.
| Under the theory of the law it is nee
essary to build up great fund to meet
future demands-or, as the financial
men say, to take care OF accrued na-
bilities. Nobody-not even the board OF
| actuaries-can foretell at this time how
large this fund may have to be. II
might be considered necessary to have
| a fund of several hundred millions OF
dollars, in order to place the system
upon a sound financial basis, for the eX-
penditures for annuities and REFUNDS
are bound to increase.
| In any event the present fund OF
something like STAG, 000,000 is not likely
to be considered large enough; ane
drag on the fund has not yet begun,
said Joseph S. Mccoy, United States
Government actuary, the other day.
Drag" Future Matter.
Mr., Mccoy and other Treasury ex-
perts explained that the drag" on the
fund will come at some future time
perhaps in about 80 years-when the
great army of younger employees, large
number of whom entered the service
during the war period and just after
ward, reach the retirement age. Then,
too, it must be remembered that many
, of these younger employees will die be-
fore they reach the retirement age, ana
| the amount they have paid into the
! fund, plus per cent interest, COM
pounded annually, must be paid to their
estates out of the fund.
OF course, substantial increases In
the annuities can be met by an increase
in the 31a per cent rate OF deduction
from employees salaries, or oy greaIliy III
creased appropriations by the Govern
ment out of all proportion 10 the
scheme of the present law. Such meth
! DDS are not likely to meet with the ap-
proval of Congress-not now, anyway.
Now that Congress has adopted the
policy of appropriating annually us
share of the accrued liability to take
care of future demands upon the 1uno,
Government experts believe that the
| retirement system is on a sound imam
cial basis.
The Dale-Lehlbach bill, proposing
some increases in annuities, which was
passed by the Senate this week and Is
pending in the House, was drafted with
this policy in view.
The additional cost under this bill is
estimated to be about $3,500,00o an
nually. Under the bill, with the en-
ployes' contributions remaining the
same, it is estimated that the cost to
| the Government will continue to be less
than l per cent of the total pay roll,
although it will be more than the pres
ant rate of Government appropriation,
| which is a trlf1e under one-nal1 OF
per cent of the pay roll.
Eventually, when a fund Is built up
| large enough to take care Of the &C
crued liabilities, the annual contribu-
lions of employees, 1t is estimated. will
take care of the current or the new La
! bilities.
The total amount Of the fund jan
uary /, 1880, was approximately $l46,-
900 900, it was learned from Treasury
officials. At the beginning of the pres
ent fiscal year, July l last, 1t amounted
to about $140, 000, 900.
At the beginning of the present new
calendar year 1905 annuitants were on
the roll. At the close of the fiscal year
| 1929-six months ago-there were 49,
| sol annuitants on the roll. At that
| time 1855 of these were living in the
/ District of Columbia. The proportion
residing here remains about the same
from year to year.
Financing Plan Simple.
The plan of financing the retirement
system is Every simple" according to
/ actuaries.
It provides that each year Congress
shall appropriate for the fund an
amount to cover the liability OF the
Government, which has accrued during
| that year, and that in addition the
Government shall give to the fund, by
| annual payments spread over long
period of years, the amount OF the La
! bility which accrued prior to the estab-
Iishment of the retirement and disabil-
! ity fund.
1t should be remembered, say the
I Treasury experts, that when the law
went into effect a number of employees
were at once put on the annuity pay
roll who had paid nothing, or very lit
! tie, into the fund from which they were
paid. In other words, they were paid
and are being paid today from money
contributed by other employees still at
work.
ITO illustrate how the method works" "
. the actuaries say, IAN example may be
taken Of man entering the Govern
| ment service at the age of Is. The law
requires the employe to contribute 3R
per cent of his salary to the fund, with
| the condition that II he leaves the serv-
ice for any cause he may withdraw his
contributions with per cent interest.
"If he dies his estate Is entitled to
| his contributions with interest, and II
| he retires he is entitled to a benefit
greater than his own contributions with
| interest.
This extra benefit is provided by the
! Government. Under no condition Is
the payment made by the fund on the
account of any employe less than his
contributions with interest"
The contributions of the employc here