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not be recomputed to reflect any increase in the rates of basic pay for members of the armed forces. In this section, "Index" means the Consumer Price Index (all items, United States city average) published by the Bureau of Labor Statistics.

(b) The Secretary of Defense shall determine monthly the percent by which the index has increased over that used as the basis (base index) for the most recent adjustment of retired pay and retainer pay under this subsection. [If the Secretary determines that, for three consecutive months, the amount of the increase is at least 3 percent over the base index, the retired pay and retainer pay of members and former members of the armed forces who became entitled to that pay before the first day of the third calendar month beginning after the end of those three months shall, except as provided in subsection (c), be increased, effective on that day, by the highest percent of increase in the index during those months, adjusted to the nearest one-tenth of 1 percent.] If the Secretary determines that, for three consecutive months, the amount of the increase is at least 3 per centum over the base index, the retired pay and retainer pay of members and former members of the armed forces who become entitled to that pay before the first day of the third calendar month beginning after the end of those three months shall, except as provided in subsection (c), be increased, effective on that day, by the per centum obtained by adding 1 per centum and the highest per centum of increase in the index during those months, adjusted to the nearest one-tenth of 1 per centum.

(c) Notwithstanding subsection (b), if a member or former member of an armed force becomes entitled to retired pay or retainer pay based on rates of monthly basic pay prescribed by section 203 of title 37 that became effective after the last day of the month of the base index, his retired pay or retainer pay shall be increased on the effective date of the next adjustment of retired pay and retainer pay under subsection (b) only by the percent (adjusted to the nearest one-tenth of 1 percent) that the new base index exceeds the index for the calendar month immediately before that in which the rates of monthly basic pay on which his retired pay or retainer pay is based became effective. (d) If a member or former member of an armed force becomes entitled to retired pay or retainer pay on or after the effective date of an adjustment of retired pay and retainer pay under subsection (b) but before the effective date of the next increase in the rates of monthly basic pay prescribed by section 203 of title 37, his retired pay or retainer pay shall be increased, effective on the date he becomes entitled to that pay, by the percent (adjusted to the nearest one-tenth of 1 percent) that the base index exceeds the index for the calendar month immediately before that in which the rates of monthly basic pay on which his retired pay or retainer pay is based became effective.

(e) Notwithstanding subsections (c) and (d), the adjusted retired pay or retainer pay of a member or former member of an armed force retired on or after October 1, 1967, may not be less than it would have been had he become entitled to retired pay or retainer pay based on the same pay grade, years of service for pay, years of service for retired or retainer pay purposes, and percent of disability, if any, on the day before the effective date of the rates of monthly basic pay on which his retired pay or retainer pay is based.

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S. Rept. 623

91ST CONGRESS 1st Session

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SENATE

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REPORT No. 91-624

AMENDING THE CENTRAL INTELLIGENCE AGENCY RETIREMENT ACT OF 1964 FOR CERTAIN EMPLOYEES, AS AMENDED

DECEMBER 19, 1969.-Ordered to be printed

Mr. STENNIS, from the Committee on Armed Services,
submitted the following

REPORT

[To accompany H.R. 14571]

The Committee on Armed Services, to which was referred the bill (H.R. 14571) to amend the Central Intelligence Agency Retirement Act of 1964 for Certain Employees, as amended, and for other purposes, having considered the same, reports favorably thereon without amendment and recommends that the bill do pass.

PURPOSE OF THE BILL

The purpose of the bill is to make certain changes in the CIA Retirement Act of 1964 which will conform to certain changes already enacted into law with respect to the Civil Service Retirement Act (Public Law 91-93, effective October 31, 1969).

Specifically, the bill amends the CIA Retirement Act as follows: 1. Uses high three average salary instead of high five for computing annuities;

2. Adds accumulated sick leave in computation of annuity;

3. Adds 1 percent to cost-of-living increases of annuities;

4. Authorizes surviving spouse to remarry after age 60 without loss of annuity and restoration of annuity on dissolution of remarriage before that age;

5. Upgrades survivorship benefits by increasing the fixed annuity for children; establishing a minimum survivor annuity; and reducing, in death in service cases, the minimum length of service requirement from 5 years to 18 months.

6. Increases agency and participant contributions to the fund from 6.5 percent to 7 percent of basic salary.

Certain provisions of the bill are given a retroactive effect in order for those CIA employees who retired on November 1 to have the same benefits as civil service employees who were retired on that date.

BACKGROUND

The CIA Retirement Act was enacted to provide a comprehensive retirement and disability program for a limited number of employees whose duties either were in support of Agency activities abroad, hazardous to life or health, or so specialized as to be clearly distinguishable from normal Government employment.

The Central Intelligence Agency operates under two retirement systems-the regular civil service retirement system for the majority of its employees and the one established under the CIA Retirement Act for a smaller number. The primary purpose of the latter system is to sustain a shorter career base for service where the conditions of employment are substantially different from those associated with normal Government employment. Key provisions of the CIA Retirement Act include a straight 2-percent factor in the computation formula and retirement eligibility at age 50 after 20 years of service, both modeled after civil service provision for certain personnel involved in law enforcement activities (5 U.S.C. 8336(c)). Other provisions of the CIA Retirement Act are, for the most part, also patterned after those of the civil service retirement system.

The provisions in the Civil Service Retirement Act amended by Public Law 91-93 form the basis for comparable provisions in the CIA Retirement Act. A change for one has equal merit for the other. Without conforming changes, annuities under the CIA Retirement Act will fall substantially behind civil service in the following critical

areas:

1. Annuities of retirees;

2. Widows' annuities in death in service cases where less than 20-years service is involved;

3. Surviving children annuities;

4. Cost-of-living adjustments for annuitants.

The CIA Retirement Act must keep pace with the new concepts and increased benefits approved for the civil service retirement system. Failure to do so especially where comparability once existed, as is the instant case, would completely undermine the effectiveness of the CIA Retirement Act.

Public Law 90-539 (by which the cost-of-living provision of the CIA Retirement Act was brought back into consonance with the civil service retirement system) serves as precedent for the approval of conforming amendments for the CIA Retirement Act as proposed in this report.

SECTIONAL ANALYSIS

Set forth below is a sectional analysis which covers the various provisions of the bill:

Section 1 increases both the Agency's and the participant's contributions to the fund from 612 percent to 7 percent of basic salary. Section 2(a) revises the formula for computing annuities by basing "average basic salary" either on the highest 3 consecutive years rather

S. Rept. 91-624

than the highest 5 consecutive years, or over a shorter period, where applicable, to obtain the increased survivor protection afforded by section 4.

Section 2(b) provides for retention of annuity following remarriage under the conditions spelled out in section 2(d).

Section 2(c) increases the annuities of children of deceased annuitants.

Section 2(d) permits payment of annuity to surviving spouse upon remarriage occurring on or after age 60, and on or after July 18, 1966, and provides restoration of annuity terminated for remarriage prior to attaining age 60 if remarriage is dissolved.

Section 2(e) authorizes the crediting of accumulated sick leave for annuity computation purposes.

Section 3 preserves for survivors of participants retired for disability the additional service credit which may have been granted to such retirees.

Section 4 increases survivorship protection in death in service cases: by reducing the minimum length of service requirement from 5 years to 18 months; by establishing a minimum survivor annuity; and by incorporating the provisions in section 2 relating to remarriage.

Section 5(a) adds 1 percent to each cost-of-living adjustment effected under the cost-of-living provision of the act.

Section 5(b) assures that the new annuities for surviving children will be adjusted in accordance with the cost-of-living provisions of the

act.

Section 6 provides effective dates in phase with similar amendments approved for the civil service retirement system.

FISCAL DATA

It is estimated that the additional cost for fiscal year 1970 is $130,000 and for fiscal year 1971, $270,000.

DEPARTMENTAL DATA

Enactment of this legislation has the support of the Central Intelligence Agency and the approval of the Bureau of the Budget as evidenced by the letter from the Director of the Central Intelligence Agency dated October 23, 1969, which is set out below and made a part of this report.

Hon. SPIRO T. AGNEW,
President of the Senate,
Washington, D.C.

CENTRAL INTELLIGENCE AGENCY,
Washington, D.C., October 23, 1969.

MY DEAR MR. PRESIDENT: This letter transmits for the consideration of the Congress a proposed draft bill to amend the Central Intelligence Agency Retirement Act of 1964 for Certain Employees, as amended. The proposed bill brings the CIA Retirement Act into consonance with certain provisions of the civil service retirement system.

Public Law 91-93, approved October 20, 1969, made significant improvements in the benefits of the civil service retirement system. Contribution rates were increased also. The improvement in benefits in

S. Rept. 91-624

cludes using "high three" instead of "high five" for computing annuities, permitting accumulated sick leave to be added in the computation of annuities, adding 1 percent to cost-of-living adjustment for annuitants, making the remarriage provisions partially retroactive, and improving survivor benefits.

A number of key features in the CIA Retirement Act, as passed in 1964, were adopted from provisions of law then applicable to civil services retirees. These features included the provisions amended by Public Law 91-93.

The reasons for changing these benefits under the civil service retirement system apply with equal force to the CIA system. This CIA retirement system would be completely undermined if it did not keep pace with the improved benefits and effective dates of Public Law 9193. On the other hand, enactment of the proposed bill will assure that appropriate provisions of the CIA retirement system remain in line with those of the civil service system.

We would appreciate early and favorable consideration of the proposed bill. The Bureau of the Budget has advised that there is no objection to presenting the proposed bill to the Congress from the standpoint of the administration's program.

Sincerely,

RICHARD HELMS,

Director.

CHANGES IN EXISTING LAW

In compliance with subsection 4 of rule XXIX of the Standing Rules of the Senate, changes in existing law made by the bill as reported are shown as follows (existing law in which no change is proposed is shown in roman; existing law proposed to be omitted is enclosed in black brackets; new matter is shown in italic):

Central Intelligence Agency Retirement Act of 1964 for Certain Employees, as amended (78 Stat. 1043; 50 U.S.C. 403 note).

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TITLE II-THE CENTRAL INTELLIGENCE AGENCY RETIREMENT AND DISABILITY SYSTEM

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PART B-COMPULSORY CONTRIBUTIONS

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SEC. 211. (a) [Six and one-half] Seven per centum of the basic salary received by each participant shall be contributed to the fund for the payment of annuities, cash benefits, refunds and allowances. An equal sum shall also be contributed from the respective appropriation or fund which is used for payment of his salary. The amounts deducted and withheld from basic salary together with the amounts so contributed from the appropriation or fund shall be deposited by the Agency to the credit of the fund.

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PART C-COMPUTATION OF ANNUITIES

SEC. 221. (a) The annuity of a participant shall be equal to 2 per centum of his average basic salary for the highest [five consecutive

S. Rept. 91-624

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