Evening star., 1945-09-01

| Civil Service
| Benefits
No. 6-Sovings
BY ROBERT J. MYERS AND
IRVING LADIMER.
Besides the compulsory contribu-
tions and benefits aspect Of the Re-
'tirement Act there is a voluntary
savings feature whereby you can
increase the size Of your old-agel
income. Under this plan all money
put In the fund earns 3 per cent
compound interest and the ac-
Emulation is used at time Of re-
tirement to purchase additional
annuity amounts.
The voluntary contributions must
be in units Of $25 and may be made
directly to the Civil Service Com
mission or, in some agencies, by
automatic payroll deductions. You
may deposit up to 10 per cent OF
your current salary and, in addi-
ton, amounts up to 10 per cent of
your creditable earnings back to
August, 1920. This is, of course,
sufficient leeway for most people.
Unlike money in savings bank
or insurance fund, the money in
the voluntary account cannot be
withdrawn or borrowed against at
will. The full amount Cthere is no
"tontine'o plus interest is paid in a
lump sum only upon death or sep
aration from service.
Savings Versus Purchase.
When should you use the volun-
tary savings system and when
should you purchase service credit,
if you have some noncontributory
service? In most instances, the vol
untary program is better, since you
do not lose the tontine and since
you always get the full advantage
Of the deposit (some service credit
purchases do not increase the reg
ular annuity by cent?, even
though interest is at a rate of only
3 per cent rather than per cent
as under the compulsory plan. How
ever, If you have a redeposit Of
previous refund yet to make, do so
before using the voluntary system,
since otherwise you will not get
credit for the Governments share
If the annuity for the period cover
ing the refund.
You may also ask yourself whether
1t Is desirable to use this voluntary
plan rather than outside means of
savings such as banks, Government
bonds or private insurance. The
voluntary system not only provides
a good interest return but also, more
important, the actuarial factors used
to determine how much annuity can
be bought are very liberal at pres
ent. However, unlike an insurance
company contract, these rates are
not guaranteed and can be changed;
it is likely that they will always be
kept on a generous basis but you
can't count on any definite amount
Another possible disadvantage is the
freezing" of your funds during your
Government service. All in all,
rather than use the voluntary saw
ings program it would seem to be
better for most people to buy land
hold War Bonds and then, at re-
tirement age, to deposit the proceeds
in the voluntary fund to purchase
a life annuity at favorable rates.
Forms and Proofs.
1t cannot be overemphasized that
the benefits described do not come
to him who waits but rather to him
who does. Even If you retire while
in service and have the assistance
of your agency in filing claims, you
yourself should decide well in ad-
vance of retirement exactly what
form of annuity is most beneficial.
This determination can be made
only in the light Of your personal
view of the future, your savings and
private insurance, dependents and,
most important, the state of your
health.
When you reach retirement age,
file your annuity claim promptly.
Also be sure to preserve a COPY of
your beneficiary form so that the
person you have selected can receive
promptly any lump-sum due upon
your death.
Summary of Provisions.
In summary, the retirement sys-
tenn offers very adequate old-age
and disability pension plan, but
only very meager survivor protec-
ton. Unemployment insurance fea-
lures are completely lacking, ex-
cept insofar as accumulated annual
leave may serve to cushion a period
OF joblessness. The only survivor
benefit of any account is the Joint
and-survivor option available at re-
tlrement, but to date this has been
little used, probably because of the
sharp reduction which must be
made in the single life annuity.
The disability annuity provides good
protection against permanent total
disability, but benefits are very small
for employees who have short periods
OF service. On the other hand, most
short-time illnesses are covered BY
the sick-ieave provisions, while