Evening star., 1939-06-11
Discusses Finuncino of
OId-Age Pensions
By O1Uen L. Scott.

SlOnS as q matter OF rlgnt, rather than OF
charity.
At that time checks will start to flow
to workers who have reached the age
of IS and who decide that they want to
give up their jobs. Congress is prepar-
ing now to complete the details for a
January l start.
The checks that Washington will offer
are not going to be as attractive as the
$200amonth checks promised by Dr..
Charles Townsend out of his proposed
old-age revolving fund. DR.. Townsends s
plan has been defeated in Congress.
But while the New Deals promised
annuity fails to match that of the Town
send plan, it is going to be much higher
than originally planned upon. Likewise,
due In part to desire to get on the
right side Of the old people before 1910
elections, the old-age insurance pay
ments ere to start next January instead
Of in January, 1910, as at first scheduled
Once the checks start to flow, this
Nation will be launched on a pension
venture that will rise to staggering pro-
portions in the years ahead.
The starting offer, however, looks mild
enough.
To q married worker who reaches the
age Of 65 next year and who has had a
record of earnings over the last three
ernment will agree to pay 1888 each
month for the remainder of his life and
to pay pension to his widow when he
dies. This worker must retire from his
job to get the annuity.
To married worker who reaches 65
with an earnings record of $3.50 month,
the Government will agree to pay SCI 80
each month for the rest Of his life, with
a pension to his widow when he dies.
Again-the worker first must retire.
Those are just samples to show the
size of payments. They are smaller for
unmarried workers. There also are to be
graduated pensions for widows with
minor children. AS the years go by, the
size of annuities paid to workers who
retire in those later years will rise as
their record of contributions to the re-
tlrement fund rises.
The worker who has been earning an
average OF 500 month and who retires
next January will have contributed Sl2
year to the old-age insurance system
for three years, making a total of s36
His employer will have contributed a
like amount. so that the Government
will have collected s72 toward support
OF this annuity. Two months of annuity
payments at 1888 month will offset
that contribution and thereafter the re-
tired worker will be living off the con-
tribulons from younger workers who
have not retired.
The worker who has been earning an
average of $3.50 month and retres will
have contributed $50 a year for three
years and his employer will have con-
trlbuted like amount, so that total pay
ments in this case would be $3.50. Three
months Of pensions at s6l 80 will more
than make up for the contributions.
During the first year, 1910. the Gov
ernment experts figure that relatively
few workers will reach the age Of IS and
will want to retire. But as the years 90
by the number becomes cumulative until
before many years it will reach a flood
stage.
Treasury payments in 1910 NAV be
little more than 100000 900. Five wears
later they will be approaching $1,000
100000 year Fifteen years after that
pension payments will near $4,000. 900 900
year. The entire cost Of the Federal
Government before 1929 was little more
than $4,000 000 900 each year.
Yet these costs are based upon what
might be termed modest" old-age pen
sion payments, judged by the size of de-
mands for payments.
And where is the money to come from
to pay the cost of the coming pensions?
Right now the Government is collect
ing about $500 900 600 each year through
per cent tax on the payrols of the
country, with workers and EMPLOYERS
sharing the tax, each paying per cent.
Ihls tax had been scheduled to rise a
total of l per cent on next January l
and to continue to rise at the rate of
l per cent each three years until it
reached per cent.
But Congress now is going to delay the
increase scheduled for January.
That delay, according to the privately
expressed opinion of men who are
closely in touch with problems of social
security financing, is going to mean the
end of any further pay roll tax increases
now or in the future. They are con-
vinced that political pressures are de-
veloping that will prevent further in
creases
Yet the cost Of old-age annuities, under
the rather conservative plan that Con-
gress is to approve, will exceed $780,
100000 year within about four years.
After that this cost will rise by leaps
and bounds. To meet the cost of the
system in future years will require tax
on pay rolls of at least 10 per cent. If
Congress in the future decides to liberal
lze pensions further that tax will have
to rise higher than 10 per cent or some
other source of revenue will need to be
found. Lacking revenue, the Government
would need further to upset Its budget
to meet the obligation that it now is
assuming.
Here is the recognized danger in the
social security system.
Those who have planned the system
realize there will be rising demands from
millions of voters for more and more
liberal annuity payments. There will be
demands from more and more groups to
be included within the retirement sys-