MAY 23, 1949.-Committed to the Committee of the Whole House on the State of the Union and ordered to be printed

Mr. MORRISON, from the Committee on Post Office and Civil Service, submitted the following

REPORT

To accompany H. R. 2020

The Committee on Post Office and Civil Service, to whom was referred the bill (H. R. 2020) to enable certain officers or employees of the United States separated from the service subsequent to January 23, 1942, to elect to forfeit their rights to civil-service retirement annuities and to obtain in lieu thereof returns of their contributions with interest having considered the same, report favorably thereon without amendment and recommend that the bill do pass.

STATEMENT

The purpose of this bill is to enable certain former officers or employees of the Federal Government separated between January 23, 1942, and April 1, 1948, with less than 20 years' civilian service to elect to forfeit their rights to retirement annuities at age 62 and obtain in lieu thereof returns of their contributions with interest.

Public Law 426. Eightieth Congress, which was a general revision of the civil service retirement law, permits an employee separated on or after April 1, 1948, with less than 20 years' civilian service to elect a refund of his retirement deductions with interest in lieu of an annuity at age 62.

Prior to January 24, 1942, an employee separated from the Federa service could obtain a refund of his retirement deductions regardless of length of service.

Pursuant to an act of Congress effective January 24, 1942, employees separated from the Government with less than 5 years' service could obtain a refund of their retirement deductions. However, if such separated employees had 5 or more years' service, only those retirement deductions withheld prior to January 24. 1942, could be secured.

An amendment to the Civil Service Retirement Act which became effective June 30, 1947, provided that employees separated from the Government with less than 10 years' civilian service could obtain a refund of their retirement deductions.

Because of the enactment of Public Law 426, Eightieth Congress, the applicable provisions of which are discussed above, a situation was created wherein employees who were separated between January 24, 1942, and April 1, 1948, with more than 10 years' and less than 20 years' civilian service did not have the same rights to retirement refunds as those separated after April 1, 1948. The legislation corrects this inequity by allowing former employees who have been separated from the Federal service to withdraw their retirement deductions provided they had less than 20 years' civilian service.

The bill also provides that the separated employees covered by the legislation will receive refund of their tontine deductions ($1 per month service charge) when the separations were involuntary, not by removal for cause on charges of misconduct or delinquency.

Hearings were conducted at which time officials of the Civil Service Commission and representatives of the various Federal employee organizations appeared and supported the bill. They pointed out that many of the former employees who will be allowed the right to their refunds left the service in their youth and desire such refunds in order to go into business or need the refund for personal or family obligations of greater value to them than a deferred annuity at age 62. The Civil Service Commission estimates that not more than 10,000 former employees will be affected by this measure, and that small savings will be effected by the passage of this legislation. The report of the Civil Service Commission with respect to this legislation dated March 17, 1949, is as follows:

Hon. Toм MURRAY,

CIVIL SERVICE COMMISSION, Washington. D. C.. March 17, 1949.

Chairman. Committee on Post Office and Civil Service,

House of Representatives

DEAR MR. MURRAY: Further reference is made to your letter of February 7, 1949, regarding H. R. 2020, a bill to enable certain former officers or employees of the United States separated from the service subsequent to January 23, 1942. to elect to forfeit their rights to civil-service retirement annuities and to obtain in lieu thereof returns of their contributions with interest

The act of February 28, 1948, permits an employee separated on or after its effective date, April 1 1948, with less than 20 years' civilian service to elect a refund of his contributions to the retirement fund, with interest, in lieu of future annuity The bill will give retroactive effect to this provision of law so as to include such persons separated on or after January 24, 1942; for employees separated during this period the reason for separation would properly govern whether or not the so-called tontine of $1 per month would be included in the payment

The retirement aw accords each employee separated after years civilian service the right to a future annuity. The Commission has often expressed its belief that title to such annuity should vest automatically. thus providing an old-age benefit which, together with benefits under the Social Security Act and pension of retired plans of private industry, tends to provide for the welfare of officers and employees covering their entire working career The monetary return in the form of annuity is of far greater value to the individual than the refund payment, and after the refund is paid the law does not permit the individual to change his mind and return same in favor of annuity payments

The Commission, however, recognizes the fact that many of the employees who leave the service through resignation or by reduction in force are still in their vouth Undoubtedly some portion of these with five or more years of service to

their credit would prefer an immediate cash refund to a deferred annuity to become payable in the future. While withdrawal would be to the disadvantage of the employees, it would obviously be a saving to the Government, and would reduce the Government's cost of retirement to permit the payment of refunds as proposed. The Commission accordingly interposes no objection to approval of H. R. 2020. The Bureau of the Budget informally advises that there would be no objection to the submission of this report to your committee.

By direction of the Commission.

Very sincerely yours,

HARRY B. MITCHELL, President.

CHANGES IN EXISTING LAW

In compliance with paragraph 2a of rule XIII of the Rules of the House of Representatives, changes in existing law made by the bill, as introduced, are shown as follows (existing law proposed to be omitted is enclosed in black brackets; new matter is printed in italics; existing law in which no change is pro od is shown in roman):

SECTION 8 OF THE CIVIL SERVICE RETIREMENT ACT OF MAY 29, 1930, as

AMENDED

SEC. 8. In the case of any officer or employee who before the effective date of this Act shall have been retired on annuity under the provisions of the Act of May 22, 1920, as amended, or section 8 (a) of the Act of June 16, 1933, the annuity shall be increased, effective on the first day of the second month following the month in which this Act is enacted by 25 per centum or $300, whichever is the lesser: Provided, That each such annuitant may, prior to the effective date herein prescribed, elect to retain his or her present annuity, in lieu of the increased annuity provided by this section, and name his wife or her husband to receive upon his or her death one-half of his or her present annuity but not to exceed $600 per annum during the remainder of the life of such surviving husband or wife and upon the death of such survivor no further annuity shall be due or payable. Except as provided in this paragraph, the amendments made by this Act shall not apply in the case of officers and employees retired prior to the effective date of this Act.

In case any officer or employee shall have been separated subsequent to January 23, 1942, and prior to the effective date of this Act and have acquired title to nnuity under section 7 of the Act of May 29, 1930. as amended, beginning after such effective date, his rights shall be determined and annuity computed as though this Act had not been enacted: Provided, That any such officer or employee who has completed less than twenty years' civilian service may elect to forfeit his right to such annuity and elect to receive in lieu thereof the amount credited to his individual account together with interest compounded on December 31 of each year at the rate of 4 per centum to the date of his separation or December 31, 1947, whichever may be the earlier, and at the rate of 3 per centum for any period thereafter before April 1, 1948: Provided further, That if the separation of such officer or employee was involuntary, not by removal for cause on charges of misconduct or delinquency, the total amount of deductions, with such interest, shall be returned.

O