Board of Actuaries of the Civil Service Retirement System fifty- third and fifty-fourth annual reports

MISSING IMAGE

Material Information

Title:
Board of Actuaries of the Civil Service Retirement System fifty- third and fifty-fourth annual reports communication from the chairman of the United States Civil Service Commission transmitting the fifty-third and fifty-fourth annual report of the Board of Actuaries of the Civil Service Retirement System, pursuant to 5 U.S.C. 8347 (f)
Physical Description:
vii, 41 p. : ; 23 cm.
Language:
English
Creator:
United States -- Office of Personnel Management. -- Board of Actuaries of the Civil Service Retirement System
United States -- Congress. -- House. -- Committee on Post Office and Civil Service
United States Civil Service Commission
Publisher:
U.S. G.P.O.
Place of Publication:
Washington
Publication Date:

Subjects

Subjects / Keywords:
Officials and employees -- Retirement -- United States   ( lcsh )
Officials and employees -- Pensions -- United States   ( lcsh )
Genre:
federal government publication   ( marcgt )
non-fiction   ( marcgt )

Notes

General Note:
At head of title: 94th Congress, 2d session. Committee print. Committee print no. 94-18.
General Note:
"Referred to the House Committee on Post Office and Civil Service."
General Note:
"September 20, 1976."

Record Information

Source Institution:
University of Florida
Rights Management:
All applicable rights reserved by the source institution and holding location.
Resource Identifier:
aleph - 030955729
oclc - 30662997
System ID:
AA00025288:00001

Full Text





94th Congress o TEPRN O MM
Sesio} COMMITTEE PRINT { M rrr18
2d Session PRINT No. 94-18





BOARD OF ACTUARIES OF THE CIVIL SERVICE RETIREMENT SYSTEM FIFTYTHIRD AND FIFTY-FOURTH *~N1A

REPORTS 044





COMMUNICATI(YNs"-' ...';."



THE CHAIRMAN OF THE UNITED STATES

CIVIL SERVICE COMMISSION


TRANSMrrMG

THE FIFTY-THIRD AND FIFTY-FOURTH ANNUAL REPORTS OF THE BOARD OF ACTUARIES OF THE CIVIL SERVICE
RETIREMENT SYSTEM, PURSUANT TO 5 U.S.C. 8347(f)



(Referred to the House Oommittee on Post Office and Civil Service)








SEPTEMB1R 20, 1976


Printed for the use of the Committee on Post Office and Civil Service


U.S. GOVERNMENT PRINTING OFFICE 76-787 0 WASHINGTON : 1976
























COMMITTEE ON POST OFFICE AND CIVIL SERVICE

DAVID N. HENDERSON, North Carolina, Chairman MORRIS K. UDALL, Arizona, Vice Chairman
DOMINICK V. DANIELS, New Jersey EDWARD 3. DERWINSKI, Illinois
ROBERT N. C. NIX, Pennsylvania ALBERT W. JOHNSON, Pennsylvania
JAMES M. HANLEY, New York JOHN H. ROUSSELOT, California
CHARLES H. WILSON, California ANDREW J. HINSHAW, California
RICHARD C. WHITE, Texas JAMES M. COLLINS, Texas
WILLIAM D. FORD, Michigan GENE TAYLOR, Missouri
WILLIAM (BILL) CLAY, Missouri BENJAMIN A. GILMAN, New York
PATRICIA SCHROEDER, Colorado ROBIN L. BEARD, Tennessee
WILLIAM LEHMAN, Florida TRENT LOTT, Mississippi
GLADYS N. SPELLMAN, Maryland STEPHEN L. NEAL, North Carolina HERBERT E. HARRIS, Virginia WILLIAM M. BRODHEAD, Michigan PAUL SIMON, Illinois NORMAN Y. MINETA, California JOHN W. JENRETTE, JR., South Carolina STEPHEN J. SOLARZ, New York

JOHN H. MARTIN, Chief Counsel VICTOR C. SMIROLDO, taff Director and Counsel THEODORE J. KAZY, Assoiate Saff Director ROBERT E. LOCKHART, Counsel J. PiERCE MYERS, Asistant Counsel DAVID MITON, Associate Counsel
(II)



















LETTER OF TRANSMITTAL


U.S. CIVIL SERVICE COMMISSION, Washington, D. C.
Hon. CARL ALBERT, Speaker of the House of Representatives, Washingt on, D.C.
DEAR MR. SPEAKER: The Commission is pleased to send you herewith the 53rd and 54th Annual Reports of the Board of Actuaries of the Civil Service Retirement System. These reports, showing the status of the retirement system on June 30, 1973 and June 30, 1974 respectively are submitted in pursuance of section 8347(f) of Title 5, United States Code.
The report has also been sent to the President of the Senate.
Sincerely yours,
ROBERT E. HAMPTON, Chairman.

(M)




















Digitized by the Internet Archive
in 2013














http://archive.org/details/boactuariesOOunit


















BOARD OF ACTUARIES, CIVIL SERVICE RETIREMENT SYSTEM, June 11, 1976.
U.S. CIVIL SERVICE COMMISSION, Washington, D.C.
DEAR COMMISSIONERS: The Board of Actuaries appointed under section 8347 (f) of Title 5, United States Code, has the honor to submit herewith its fifty-third annual report on the operation of the fund.
The report gives a statement of the contribution necessary to finance the fund on the method provided under Public Law 91-93, under the benefit and contribution provisions of the Act as amended through June 30, 1973, and on the basis of the estimated membership of the fund as of that date. The amounts indicated are based on a projection of the results from the June 30, 1972 valuation, the last completed valuation of the System.
Respectfully submitted,
EDWIN F. BOYNTON. RUSSELL R. REAGH. DOUGLAS C. BORTON.
(V)


















CONTENTS

Page
Fifty-third annual report--1-19
Introduction--------------------------1
Coverage as of June 30, 1973------ 2
Actual to expected experience--3 Actuarial costs-3 Method of financing system- -5 Appendix I-General provisions of Civil Service Retirement System-- 8 Appendix II-Investment of the fund on June 30, 1973 12
Appendix III-Employee and annuitant data summaries as of June 30,
1973:
A-Number and annual salaries of active members by age group- 13
B-Number and annuity of voluntary and involuntary retirees
by age group-14
C-Number and annuity of disability retirees by age group ---- 15
D-Number and annuity of survivors of deceased employees by
age group--16
E-Number and annuity of survivors of deceased annuitants
by age group-17
Appendix IV-Trends in deaths, retirement, and cost-of-living
increases:
A-Actual to expected deaths in 1973--18 B-Actual to expected retirements in 1973s18 C-Cost-of-living increases 1965-1976- 19
Fifty-fourth annual report- -- 21-41
Introduction__ --23 Coverage as of June 30, 1974- 24
Actual to expected experience-25 Actuarial costs-25 Method of financing system- -- -27
Appendix I-General provisions of Civil Service Retirement System- 30 Appendix II-Investment of the fund on June 30, 1974 34
Appendix III-Employee and annuitant data summaries as of June 30,
1974:
A-Number and annual salaries of active members by age group_- 35
B-Number and annuity of voluntary and involuntary retirees
by age group- ---- -36
C-Number and annuity of disability retirees by age group -- 37
D-Number and annuity of survivors of deceased employees by
age group-38
E-Number and annuity of survivors of deceased annuitants
by age group--39
Appendix IV-Trends in deaths, retirement, and cost-of-living
increases:
A-Actual to expected deaths in 1974 .---------------------- 40
B-Actual to expected retirements in 1974---------------------40
C-Cost-of-living increases 1965-1976-.............. 41
(VIU)
















FIFTY-THIRD ANNUAL REPORT OF THE BOARD OF ACTUARIES OF THE CIVIL SERVICE RETIREN ENT SYSTEM PREPARED AS OF JUNE 30, 1973


INTRODUCTION


The Civil Service Retirement System was established in 1920 to furnish pension benefits to officers and employees retiring from employment with the United States Government. The current system provides survivor and disability benefits as well as retirement benefits, after various age and service combinations are met. Title 5, United States Code, makes provision for a Board of Actuaries of the Civil Service Retirement System and in section 8347(f) defines the chief duties of the Board, as follows:

j(f) The Commission shall select three actuaries, to be
known as the Board of Actuaries of the Civil Service Retirement System. The Commission shall fix the pay of the members of the
Board, except members otherwise in the employ of the United
States. The Board shall report annually on the actuarial status of the System and furnish its advice and opinion on matters
referred to it by the Commission. The Board may recommend to the Commission and to Congress such changes as in the Board's
judgment are necessary to protect the public interest and maintain the System on a sound financial basis. The Commission
shall keep, or cause to be kept, such records as it considers
necessary for making periodic actuarial valuations of the System.
The Board shall make actuarial valuations every 5_years, or
oftener if considered necessary by the Commission.


This report, which has been prepared as of June 30, 1973, is the

fifty-third annual report of the Board of Actuaries, but does not include an actuarial valuation of the System. The last complete actuarial valuation of the System was carried out as of June 30, 1972 and the results were presented in the fifty-second annual report. The current report includes estimates to update certain figures from the 1972 valuation and presents statistical data for fiscal year 1973 in the attached tables. It might be noted that the














76-787 0 76 2







2



Board itself no longer carries out the valuation of the System as implied in section 8347(f) quoted above. The valuation is conducted by the actuarial staff of the Commission using methods and assumptions which are approved by the Board.

Appendix I is a summary description of the major provisions of the Civil Service Retirement System.


COVERAGE AS OF JUNE 30, 1973


The active membership of the Civil Service Retirement System as of June 30, 1973 was estimated by the Civil Service Commission to consist of 2,630,800 employees with an annual payroll of $31.7 billion. Although the number of covered employees has decreased by .6% since June 30, 1972, the total covered payroll has increased by 4.9%. The increase in payroll is primarily due to general salary increases during fiscal year 1973. A distribution by age group and sex of the number of active employees and their compensation is shown in Appendix III-A.

Annuitant data is shown in Appendices III-B through III-E.following the text of the report. As of June 30, 1973 there were 843,520 retired employees receiving benefits totaling $316.3 million per month. In addition, there were 348,945 survivors of employees and annuitants receiving benefits of $51.4 million per month. The total annualized annuity for these recipients is $4.41 billion, which represents an increase of 21.8% over the total in 1972. The increase is primarily attributable to a cost-of-living annuity' increase of 4.8% during fiscal year 1973, an overall increase in number of recipients of 9.2%, and an increase in average pension at retirement. By law, annuity increases are triggered each time the Consumer Price Index increases by 3% or more.








3



ACTUAL TO EXPECTED EXPERIENCE


Appendix IV contains a comparison of actual mortality and retirement experience to that expected using rates from the 1972 valuation. Actual deaths were 7.8% higher than expected. Retirements were substantially higher than expected-over 68% higher overall and four times expected for one group. This experience is attributable to a surge in all retirement categories before the cost-of-living increase on July 1,,1973. In addition to the normal surge attributable to cost-of-living increases, a large portion of the government was undergoing a major reduction-in-force. After the July 1, 1973 increase, retirements in aggregate returned to a level closer to that expected. The periodic "surge" in the number of retirments attributable to im-inent-CBI adjustments which has occurred in the past is Likely to diminish in the future due to a change in the System which provides that the pension payable after the date of a CPI adjustment will be at least as large as the amount payable just before the CPI adjustment.

In any event, the aggregate rates of retirement, including such surges, will be examined before the next regular actuarial valuation and adjustments made in the rates of retirement, if deemed appropriate.


ACTUARIAL COSTS

The entry age-normal cost rate was determined by the 1972 valuation of the System to be 13.64% of payroll. This rate is the level percentage of salaries of new employees that is required to be paid into the fund during their working careers in order to provide the benefits payable on their account (employee pensions plus survivor benefits), based on the valuation assumptions adopted by the Board for the 1972 valuation. Since there was no actuarial valuation of the System as of June 30, 1973, the normal cost rate applicable to fiscal year 1973 is assumed to remain at 13.64%, the rate determined as of the June 30, 1972 valuation.







4



The normal cost has historically been compared with the combined agency and employee contribution rate, currently 14.00%, as a measure of adequacy, although there is no statutory basis for so doing. The imputed 1973 normal cost of L3.64%, computed on static assumptions, is slightly below the 14.00% combined contribution rate now being assessed employees and the agencies. The Board, in its 1972 Report, showed the results of two alternate dynamic valuations which illustrated the cost of the inflationary components of the System. The normal cost on the dynamic basis would range from 21.56% to 28.74% of payroll, depending on the assumptions used. The Board believes that it is no longer appropriate to set the contribution rate at one-half of the normal cost. Instead, the employee contribution should be set at a fixed level with the balance of the normal cost to be paid by agencies.

The unfunded liability of the System, as defined in the law (which does not reflect potential future increases due to inflation), was estimated to be $75,485 million as of June 30, 1972. It is estimated that the unfunded liability has increased to $81,375 million as of June 30, 1973. The following table shows the major components of the increases:

1. Unfunded liability as of June 30, 1972 $75,485 million

2. Interest on unfunded liability and

benefits due to military service in

excess of amounts paid for these items Z,987

3. Liability for cost-of-living increases 2,841

4. Other items 62

5. Estimated unfunded liability as of

June 30, 1973 81,375


The above estimates of the normal cost rate and unfunded liability

are based on the static assumptions contemplated in the law. The Board's







5



1972 report included figures on alternate dynamic assumptions. The Board continues to believe that some recognition should be given to funding for future cost-of-living annuity increases and salary increases. During fiscal year 1973 alone the unfunded liability was increased by approximately $2.8 billion as a result of one cost-of-liviug increase.

Appendix IV-C sets forth a summary of previous percentage increases in System benefits for retired employees due to the operation of the cost-ofliving adjustment, together with the liability created thereby. The Appendix indicates that from December, 1963 to March, 1976 there have been cumulative increases of 104.4% in Civil Service pensions, with total liabilities of $31.359 billion being added due to such increases. More than $22 billion of this has been added since 1972, reflecting the rapid inflation in the last few years.


METHOD OF FIUMCING SYSTEM

Each employee contributes 7 percent of compensation and each employing agency matches the contributions of its employees to the Civil Service Retirement Fund. In addition, Section 8348(f) of the Act provides that the Government make direct appropriations to liquidate, in level annual installments over 30 years, any, increase in unfunded liability resulting from any statute enacted after October 20, 1969 which authorizes new or Liberalized benefits, extension of coverage to new groups of employees or increases in salaries on which benefits are based. The Act also provides that the Secretary of the Treasury shall transfer to the fund the following percentages of the amounts equivalent to interest on the unfunded liability and annuity disbursements on account of military service: 10 percent at the end of fiscal year 1971, 20 percent at the end of fiscal year 1972, etc., until 100 percent is reached for fiscal years after 1979. The unfunded liability is defined for this purpose as that portion of the liabilities not met by





6



present assets and the present value of future employees' and matching employing agencies' contributions, together with the present value of future 30 year payments under Section 8348(f).

The Fund balance as of June 30, 1973 stands at $31.0 billion. A

breakdown of the investments of the Fund on a cash basis is given in Appendix



1974 Contribution Levels

Both the employee and agency contributions will be 7% of the total covered payroll during 1974. The payment required on the statutory unfunded liability in fiscal year 1974 would be 40% of the interest on the estimated unfunded liability as of June 30, 1973. The unfunded liability as developed in the June 30, 1972 valuation was $75,485 million. Based on this figure the Civil Service Commission estimated the June 30, 1973 tufunded liability to be $81,375 million. The Civil Seriice Commission also estimates that military service credit payments of $322 million will be made during fiscal year 1974, of which 40% would be paid.

The total government payments scheduled under Section 8348(f) on

June 30, 1972 were $609,561,000. During fiscal year 1973 there were'additional salary increases and benefit liberalizations for certain groups which required annual payments of $232,894,000. Therefore, total annual payments under 8348(f) were scheduled to be $842,455,000 as of June 30, 1973. Additional salary increases and bene-fit liberalizations during fiscal year 1974 required annual payments of $248,600,000, bringing the total payments under 8348(f) to $1,091,055,000 as of June 30, 1974. The table below indicates the total government payment which would be made during fiscal year 1974 if the $31.7 billion payroll and all the factors were to remain at their June 30, 1973 level (cols (2) and (4)). The table also shows what the total payment would be if 100% of the interest on the unfunded liability and military credit




7



payments were to be made during fiscal year 1974 (cols (1) and (3)).



1974 Contribution Levels


Contribution Percentage of Payroll Amount (in millions)
Total Paid Total Paid
(1) (2) (3) (4)

By Employing Agencies 7.00% 7.00% $2,219 $2,219

Accruing Interest on

Unfunded Liability

(40% payable) 12.83 5.13 4,069 1,628

Military Service Credit

(40% payable) 1.02 .41 322 129

Payment under Section

8348(f) 3.44 3.44 1,091 1,091

Total 24.29% 15.98% $7,701 $5,067




8



Appendix I
General Provisions of the Civil Service Retirement System
(Except for item J, description is of provisions for the typical employee.
Certain special provisions are briefly summarized in item J)

A. General

1. Service Employee must have at least five years of civilian service for any retirement benefit or eighteen months for an employee survivor benefit. Military service not used for Social Security entitlement is credited for eligibility and benefit computation. Unused sick leave is credited only for benefit computation.

2. Salary base Benefits based on average salary for the highest three consecutive years.

3. Employee Contributions Employees contribute 7% of covered salary.

If employees did not contribute for, or had received a refund for, prior covered service, benefits are reduced unless contributions are made for this service.

If not eligible for immediate benefit, employee may receive lump sum payment but forfeits right to deferred benefit. If not entitled to deferred benefit, lump sum includes interest. After all benefits have been paid to annuitant and/or survivors, beneficiaries are paid the difference between total contributions and total benefits, if any.

B. Voluntary Retirement

1. Conditions Age 55 with 30 years of service; age 60 with 20 years; or age 62 with 5 years.

2. Benefit Percentage of salary base is total of 1-1/2% for each
of first five years of service plus 1-314% for each of next five years plus 2% for each year thereafter. Maximum percentage is 80% plus percentage due to unused sick leave.

C. Mandatory Retirement

1. Conditions Age 70 with 15 years of service.

2. Benefit Same as voluntary benefit.







9



D. Involuntary Retirement

1. Conditions Age 50 with 20 years of service, or any age with 25 years.

2. Benefit-- Voluntary benefit reduced by 1/6 of 1% for each full
month under age 55 at retirement.

E. *Disability

1. Conditions Any age with 5 years of service.

2. Benefit Voluntary benefit but no less than the smaller of
(a) and (b):
(a) 40% of salary base
(b) Benefit projected to age 60.

F. Deferred annuity

1. Conditions Any age with 5 years of service, unless forfeited by payment or refund.

2. Benefit Accrued benefit at termination payable at age 62.

G. Survivors of deceased employees'

1. Condition 18 months service.

2. Spouse's benefit 55% of disability benefit paid till death of spouse or remarriage before age 60,

3. Children's benefit
(a) Amount (as adjusted for COL increases)
W If survived by widow(er), each child receives smallest of
(a) 60% of average salary divided by number of children
(b) $3,279 divided by number of children or
(c) $1,093
(ii) If surviving child(ren) but no widow(er), each child receives smallest of:
(a) 75% of average salary divided by number of children
(b) $3,934 divided by number of children, or
(c) $1,311
(iii) Flat amounts are increased in line with all CFI adjustments since ll/l/69.



















76-787 0 76 3







10



H. Survivors of deceased annuitants

1. Conditions Spous6 receives annuity if annuitant had elected to receive reduced annuity. Reduction is 2-1/2% of designated amount up to $3,600 plus 10% over $3,600 a year. Eligible children receive annuity In any event after death of annuitant.

2. Spouse's benefit 55% of unreduced designated annuity paid till death of spouse or remarriage before age 60.

3. Children's benefit Same as children of deceased employee.

4. Insurable interest Unmarried annuitant in good health may
designate an individual with an insurable interest to receive a benefit of 55% of the reduced amount. Reduction of 10% to 40% is based on difference in age.

I. Cost-of-Living Adjustments

Employee and survivor annuities are adjusted upward effective the first day of the third month after a rise in the monthly consumer
price index published by the Bureau of Labor Statistics of at
least 3 percent for 3 consecutive months. The percentage increase
is 1 percent plus the highest percentage rise noted in the 3 months,
rounded to the nearest 1/10 of I percent.

J. Special Groups

1. Members of Congress
(a) Conditions voluntary retirement at age 60 with 10 years of service or age 62 with 5 years. Involuntary at age 55 with 30 years of service; 50 with 20 years; any age with 25 years; age 50 and have serveA in nine Congresses.

(b) Benefit 2-1/2% of average salary for each year of
service. Benefit reduced if under age 60 at retirement. Reduction is 1% per year (calculated by months) for first 5 years before age 60, plus 2% per year prior to age 55.

(c) Contributions 8% of covered salary.











2. Congressional Employees
(a) Conditions same as regular conditions.
(b) Benefit -.2-1/2% of average salary for each year of service.
(c) Contributions 7-1/2% of covered salary

3. Hazardous duty employees
(a) Conditions Regular conditions or age 50 with 20 years of hazardous duty service.
(b) Benefit 2% of average salary for each year of service.








12



Appendix II

INVESTMENTS OF THE FUND ON JUNE 30, 1973

Table 1 below shows the distribution by interest rate for special issues and by interest rate group for marketable issues.


RATE OF INVESTMENT (AT PAR)
TYPE OF SECURITY INTEREST Amount
(In Thousands) Percent

Special Issues: 3-3/4% $ 929,344 3.0%
3-7/8 1,147,551 3.7
4-1/8 2,745,210 8.9
4-3/4 1,758,171 5.7
5-5/8 1,628,319 5.3
5-3/4 3,980,233 12.9
6-1/8 5,828,489 18.9
6-1/2 2,909,257 9.4
6-5/8 3,951,273 12.8
7-5/8 2,951,729 9.6

Total 5.855 $27,829,576 90.2%


Marketable Issues: 3 to 3-1/2% $ 355,474 1.2%
4 to 4-1/4 777,579 2.4
5 to 5-7/8 174,300 .6
6-1/5 to 6-1/2 1,363,750 4.4
7-1/2 to 7-3/4 299,500 1.0
8 65,600 .2

Total 5.472 $ 3,036,203 9.8%


Grand Total 5.817 $30,865,779 100.0%



On June 30, 1973, the fund held $30,865,779,000 (par value) of public debt obligations of the United States. Of this total $27,829,576,000 or 90.2% was in special non-marketable securities mostly issued on a sevenyear maturity basis; the remaining $3,036,203,000 was invested in public marketable issues. On June 30, 1972, investments on the coupon basis were $3,036,203,000, while investments on the market yield basis were $24,631,986,000. Since June 30, 1972 the average yield on all issues has improved from 5.647% to 5.817%.








13




r-I r-4 0 tA f%- 0 4 0 ON co
4 %0 -* 0 In w 10 0 in 0 cn 4
0 r C71 q-4 t*- "4 0 -..t ON r-I r-. 4 -.T
V4 ^ Am^^^ ^0% #%^ 0%
1$41 MMW In 0 r4o 0 MM r%Cd W M Cn r-- W C7% 4 % O v-4 v-4 N
9.4 N W "4 r-4 W r,% r0% ^ ft ON ^ Ift
r-4 Ul III m 1-4 w-4
VIP


%0 0 %0 0
$4 r-4 ON P- m m 0
w ul 0 rA 0 ul W
P- kD U1 r-4 ON Vj M C
r-4 V) M U1 111 N Uj M M ce)
z v-4 Y-4
1-4 C14


r-4 P- C*4 N C14 0 ON r-I ON
M r- ON -..t %D 0 CY) Cn f- M '%0 0
0 4) (ON 00 %D 0 r-4 r--. r-.. m C'4 r tn
r4 ^ ^ 0% 4% 4% 4% 0% Ai on 4% 4%
k f-4 N v-4 00 In r-4 -..t ON C14 C*4 v-4
cd %0 0 %* r-I %D %D M r-4 %0 0 Cn 0
s-4 %,0 M 0 f-4 t- 4 r-4 C14
z z ^ 4% 4%
4 :D v-4 v-4 rlEn z V)0
w 0 0
H H :3: 0 M f-4 ON %0 00 en C) (:) N 04
H cn -4 00 r- -1 %D 00 V-4 co m r--. V-4 'D
z V-1 %0 00 In r-4 0 r-4 0 % O
1-4 ft oft 4% 0% ^ 0% 0% 0% ^
x %..* t4 0 r4 In in M t,- r-I -.0 W N r4
-r-I 0 r4 W 0 t-- %D r,- 0 0 r- Cn r-4 In
VO En r-4 r-I r-4
r w
4) :>4
Ck.
w cn m %0 tn 0
U) 4 kD CYN r- IN t-- w 0 r*_ cn
<4 0) w 0 4 ko m r- r-4 r4 %1 %0 m
En sk 4% 0% 0% ^ 0% ^ ^ Ift ^ 0%
$4 %0 r- r 0 m m %0 0 r-.. 0
cd N M M ,.D r4 N 0 In M 4 W
v-4 %0 w %0 r-. 0 en M it)
Cd ^ ft 4% 0% 4ft
E-4 C/) r4 N C14 Cn Cn r-I 4
z V) C4
1-4
z
z
Cq r-4 (YN r-4 CY) 0 N 00 %0 0 *D 00 4 %0 Ln 'kJD *0 el ON f-4 M 4 0 r4 cn
4) r- ON I,,.0 d% Ok
M %0 cn C7% 00 m 4 4 in r-. %D ON F**- OD t- OD %1 0 N* N ON N r*z r-4 9-4 9-4 C14 cn cn N 00
v-4

V-4

4j
C*4 :> 0
0
14 4 Ch ON
(U C4 C-4 in 't 4 in In %0 ta 001 Iloilo it C: 0 in 0 In 0 in 0 in 0 In :a C14 N (n en 4 -4 U) In %0 %0









14





























(n 0
.0

od 0 04
n LAO





M 0 =) 0 Snr .0t -."Nr


Z IJ tn o 0%^6 0
< < ..t .1C l o040

z v-4 r4




1- 4U-0 4r4% ). sin m -4 r- In C4 r4 o
44 >4) C 04 0 r4 CS ()h0%r-4 D r4 00 -4 ml C
0 a4 a ak A a% a A a af % %
tX V< : nONi 4000 -44c a
W z C4. neqr4%

=) p.4 >

0. 44
z 0
(n- Ot Dk 0C 0eJ% 0 O
>414 -4O t-~ en0 n4rf D ir 4 P.
si a A a% a ^ ^ a A A a a ^A a a,
0 c 4% N 0 %* fn m 0 r-4IIt o-4
0 14 4'00%'0 4t1Cl04' OD4 ODI
0 t C^^? a^ a A
Of 0 i-4.--0 Ln kDCn%I r4 f
cn % cnN -40 ca

z 14
>4 0 ('3
W Cn ()%r4 i~n C4 4 0 ~ ~ 0 4u0t.M40
0) i 00 -C DL N A -1 4 0 NUin MC( 0
0-4O .0t A~~l 0 % ^a t
M MC4t (u0 r4M 0 -4 r-C4N U,
in 4 Lbzr n D0 Drk(

0


(Y% C% %Or 4C -4 V-4
ewI n DI%-r DO I N ~ '? C) P.4 r4 4
=1 I I # I I I # I r P .5S
00 Olonlon~OAI& 0 .0
4.04-T n nD% '%t-O 00'0 0 0
o. V-4 V4












































C4 )

to FA
H z N f-0 r Cn 4 D r- %.0Ln -1W M0 r-0 c ,4% --T M -. t 7 D r -4k %0 40
z% q n- 7 qNN0W0 j0 4 tf




FI4 -f A m
E-4Z C>4 C4O r
-4&4 z


mO 0 4)'

in kO W r-4 -4I-4r4


H .-.4 '-4
i-f 4 VV flx = 0
U~ U


w. 00 LLIH4 j O L 4 n- r- 4 Cf) 0 -aj% 14-T r :
>4 -4 0C- -c N- -or oL)e Noc je n c
41 0% A V


0 104o h ^ o
f-I 4~ v-4~. M N0 0 D O 4c r.f~r4~ t*~Q) C




O-n- an a a4 a a a a a an C4'4Cr




9.4 t- In .-- -) h% )w4 4r4t





0-4~- .5 A f
P4.- N~ CnN -4%

~ 0 0

a% %t Olt ON %I c
tnU nLi% or P oc N4M f4 c









16


























0% %D m 0 P% r- 4 m 0 "4 4 w C%% V 04 an
0 -4 %0 m f*- N %0 0 %0 P-4 N 0% f- m V-4
..4 V4 P- N in ON -4 -4 M M 0-4 04 %a cn
on 0 0 4 C;
04 N fn en cm 0-4 r0
W
ed
w
0 w
ga rn
Dt
41
s-4 .0 N Ch N %0 M 0 0% N C" N
z W4 I%% %* M M 04 %D 04 v-4
0 sk 9 "4 N N C4 0-4 N
0 z o
cn fn P-4
W

cn 0 M In In In N OD %* r- '10 %0 in tn P- %0 %D OD 0% 0%
OD OD M 0 %0 P4 %I M r- en 4 f- N V4 0 ON in
"4 -A N ON %D m 0 4 0% N w w V4 In N In w 0%
o X L) a 0 -ft 0 a a a ob A ob 0 a A A a .4b
0 Ai V4 4 w w %0 -4 %a %0 4 0 w -# m "
W 0.3 m %0 m -4 -4 V-4 0 0 4 fl% 4 %0
# Cd P-4 m 0 w m w on V4 cli
0 A A
114 > (n cn N N N %;
#H 5! N :R 9-4
4 0 w 4r.

<
rX4 44 N 0 in %D r- Ln OD 0 10 N %I m w
0 U im %D in 0% 4n gn r- 00 04 %1, 0
9z .0 N %0 -1 4n 0 0 V-4 r% 0 cn MI wt
(A ft ^ tf A 4; a A
w I fu C; co en sn N co C;
1-4 0 z P4 4-4. P-4 v4 v-4 0
d-4

0 >

>4 JA4
>4 >1 0 in -2 OD fn -4 N %D
to -4 v a% %D f- %a Cp% 0 0% 0 r- co 00 cl %0 Ul
.0 44 C4 (h In %0 (n Cn v4 0 in at OD N %* 3 %D
0 ji M A a a ob A a ^ A ON a 4b
z W c V4 m %0 Ln ch %D V 4 V4
:3 g- r- -4 t 0% C4 V4 V-4 Ulf
fn 0-4 0
ob
M
21 4rp



N C4 f**
w f- In 0 4 P4
.0 47% w m 0 0% m -4 -1 V4 -4 in
I ; .; 1; r%^% C;
z IP4 C4 in





d 4 ch:S ch -t at o% ot ow 0 0
v4 04 N fn m in %D %D f% r% OD op 47% a P4 P4
I I I I # I I I I I 1 0 1 0 1 #
:3 0 V'j 0 b-I L-1 0 in .2 tn 0 IrM 0 tn 0 in 0 IM V4 C4 N m in -4 In WN 140 P% Go CID 0 0 0 0









17






r- V-4 P-4 -1 0-4 m M M no r-- N 0 %D -4
0% M 4 .4 fn -1 r- p I rn -1 1- 0) I nD N CN ON



4rr






m"r*-tn" mo m r--Jo Mtn W%0 V-4N
4 C4 Cn tn -4






V) r- a -4 to r- 00 C9 4 tn 00 m 00 L'i N -4
Cn CO r- t"- In 4 in 0 r- %0 ON (n ,I %D 11
V-4 r- cl 00 -4 C11 %D en (14 ul (71 0 00 r- tn
P4 -T 0 co tn 'T cn en 00 C,4 r:
v-4 04 %T, r- CO OD *0 04
0 c



0 :3:
04 8

p% crt
z r- C14 0 tn tn co ON 00 in (n 4 0 r0 0 cl %t %D CD Olt %0 0 4 cli 0-4 V)
C14 cn in %0 %0 Ul m
z
tn


V2
w P4 CV) 00 04 %0 (,1 CO 't ch tn r- -4 "o tn 4 eq 0 %0
r4 NI fll 00 M -a OD m CV) m fn 0 in 00 ON Ln r- 0 tn GD
z 44 41 -4 CD -T -4 0 in 00 C4 %0 0 tn 0% NJ %1 -1 %D %T %0 %0
0 F-4 -A ^ ^ . A ft ^ a ^ A ^ ^ a
?4 c :j c 0 r- -4 0 r 0 Ln m 0 P-4 %D Ln M zt 4
::) 0 r_ 04 4 V) ON C14 -4 -It tn Lei C14 T 4 (n %n
4 z %1 -4 '%D C)N 00 -4 C)I% C14 (11
A ^ A ^ ft A .
cn Cn 4 Ln V) C-4
:?t C*
0 (14
0 W 4.x ul
"4 w
10
c N u v-4 CD Cn s-4 v4 M tn N M j 0 %1 Cn %I M Co 0
a Ou w cn kn r- 0D M CT% rq Ln %0 (n %0 01. C7, rl 10 -4
0 N ND (n r- t- en %D vi
r4 00
0-4 0 z C14 rl (In 04 %.0
f-4
0-4 >4
:a
0


9A4 >* (A 44 '.4 ()% CO -4 (n CO M
: 4 Go tv) %0 in C)
%D f, kn (%j 0
04 ko ev, C4 CN C4 Ln C7% j M C,4
-P4 0 -T ; r : 0 CV) C4
0 0 :3
C)N 0 f-- cy C4 (4 cq rn m en 00 C4 410

w4


03
en



of 4 %0 4 0 w 4 t- r- C4 tv &V V% N .4
.0
M

z





0 0
00 V4 -4 M cr ON .4 .a
I I # f I I #
0"0 In Ono L'0%3 in 0 &no %no 0 %no %no" 0
"4 v-4 44 %1 in 4A %0 No r% r-. w w a.. M 0









76-787 0 76 4








18



Appendix IV-A
COMPARISON OF ACTUAL DEATHS TO EXPECTED DEATHS IN FISCAL YEAR 1973

Ratio of Actual
Group and Type Actual. Expected to Expected

Retiree Deaths:
Disability Male 8,608 8,383.9 102.7%
Female 1,877.3 97.7
Non-disability Male 21,487 19,481.7 110.3
Female 4,723 4,244.4 111.3

Total 36,653 33,987.3 107.8
Appendix IV-B
COMPARISON OF ACTUAL RETIREMENTS TO EXPECTED RETIREMENTS
IN FISCAL YEAR 1973

New Retirees on Immediate Annuity:
Disability Male 20,397 15,397.4 132.5
Female 7,945 5,667.9 140.2
Involuntary Male 28,006 6,523.0 429.3
Female 7,250 1,830.6 .396.0
Other Hale 64,898 44,039.6 147.4
Female 19,569 14,137.5 138.4

Total 147,883 87,596.0 168.8

*Based on rates published in the 1972 Board of Actuaries report.







19



Appendix IV-C

SUMMARY OF EXPERIENCE UNDER COST-OF-LIVING PROVISION 1965-76


Month/year of CPI Benefit Increase in
Increase Increase Increase Liability
(percent) (percent) (millions)


December 1965 4.6% 6.1% $776
January 1967 3.9 3.9 739
May 1968 3.9 3.9 890
March 1969 3.9 3.9 948
November 1969 5.0 1,410

August 1970 4.6 s.6 1,447
June 1971 3.5 4.5 1,344
July 1972 3.8 4.8 1,735
July 1973 5.1 6.1 2,827
January 1974 4.5 5.5 2,897
1
July 1974 5.3 6.3 3,578
January 1975 6.3 7.3 4,807
August 1975 4.1 5.1 3,781
March 1976 4.4 5.4 4,180

Accumulations since:

December 1965 83.2% 104.4% $31,359

November 1969 56.1% 71.7% $28,006

July 1973 33.6% 41.4% $22,070





















BOARD OF ACTUARIES, CIVIL SERVICE RETIREMENT SYSTEM, June 11,J 1976.
U.S. CIVIL SERVICE COMMISSION, Washington, D. C.
DEAR COMMISSIONERS: The Board of Actuaries appointed under section 8347(f) of Title 5, United States Code, has the honor to submit herewith its fifty-fourth annual report on the operation of the fund.
The report gives a statement of the contribution necessary to finance the fund on the method provided under Public Law 9 1-93, under the benefit and contribution provisions of the Act as amended through June 30, 1974, and on the basis of the estimated membership of the fund as of that date. The amounts, indicated are based on a projection of the results from the June 30, 1972, valuation, the last completed valuation of the System.
Respectfully submitted,
EDWIN F. BOYNTON, RUSSELL R. REAGH, DOUGLAS C. BORTON.
(21)










23



FIFTY-FOJR'M ANNAL REPORT OF THE BOARD OF ACTUARIES OF THE CIVIL SERVICE RETI IEIT SYSTEM PREP:RZD AS OF JUNE 30, 19T4


INTRODUCTION


The Civil Service Retirement System was established in 1920 to furnish pension benefits to officers and employees retiring from employment with the United States C-over-.ent. The current system provides survivor and disability benefits as well as retirement benefits, after various age and service combinations are met. Title 5, United States Code, makes provision for a Board of Actuaries of the Civil Service Retirement System and in section 83&7(f) defines the chief duties of the Board, as follows:

"(f) The Commission shall select three actuaries, to be
known as the Board of Actuaries of the Civil Service Retirement System. The Coission shall fix the pay of the members of the
Board, except members otherwise in the employ of the United
States. The Board shall report annually on the actuarial status of the System and furnish its advice and opinion on matters
referred to it by the Commission. The Board may recommend to the Comi--ssion and to Congress such changes as in the Board's
Judgment are necessary to protect the public interest and maintain the System on a sound financial basis. The Cormission
shall keep, or cause to be kept, such records as it considers
necessar-y for making periodic actuarial valuations of the Syszem.
The Board shall make actuarial valuations every 5 years, or
oftener if considered necessary by the Commission."


This report, which has been prepared as of June 30, 1974, is the

fifty-fourth anniula report of the Board of Actuaries, but does not include an actuarial valuation of the System. The last complete actuarial valuation of the System was carried out as of June 30, 1972 and the results were presented in the fifty-second annual report. The current report includes estimates to update certain fig-..res from the 1972 valuation and presents statistical data for fiscal year 1974 in the attached tables. It might be noted that the Board itself no longer carries out the valuation of the System as implied in







24


section 8347(f) quoted above. The valuation is conducted by the actuarial steff of the Commission using methods and assumptions which are approved by the Board.

Appendix I is a summary description of the major provisions of the Civil Service Retirement System.


COVERAGE AS OF JUNE 30, 19T4


The active membership of the Civil Service Retirement System as of June 30, 19T4 was estimated by the Civil Service Commission to consist of

2,671,300 employees with an annual payroll of $34.3 billion. The number of covered employees has increased by 1.5% since June 30, 1973, and the total covered payroll has increased by 8.2%. The increase in payroll is primary due to general salary increases during fiscal year 197T4. A distribution by age group and sex of the number of active employees and their compensation is shown in Appendix !II-A.

Annuitant data is shown in Appendices III-B through III-E following the text of the report. As of June 30, 19T4 there were 938,654 retired employees receiving benefits totaling $414.9 million per month. In addition, there were 367,527 survivors of employees and annuitants receiving benefits

of $62.5 million per month. The total annualized annuity for these reciDients is $5.73 billion, which represents an increase of 29.9% over the total in 1973. The increase is primarily attributable to two cost-of-living a.uity increases of 6.1% and 5.5% during fiscal year 1974, an overall increase in number of recipients of 9.5%, and an increase in average pension at retireme-t. By law, arnuity increases are triggered each time the Consumer Price Index increases by 3% or more.







25



ACTUAL TO EXPECTED EXPERIENCE


Appendix IV contains a comparison of actual mortality and retirement experience to that expected using rates from the 1972 valuation. Actual deaths were about equal to those expected by the assumptions. The number of actual retirements was about 10.6% more than expected. However, disability and volun. tary retirements were very close to expected, and most of. the retirements in excess of those expected are in the involuntary retirement category, where the number of retirements was about double the expected.


ACTUARIAL COSTS


The entry age-normal cost rate was determined by the 1972 valuation of the System to be 13.64% of payroll. This rate is the level percentage of salaries of new employees that is required to be paid into the fund during their working careers in order to provide the benefits payable on their account (employee pensions plus sux-rivor benefits), based on the valuation assu=ptions adopted by the Board for the 1972 valuation. The rate determined as of the June 30, 1972 valuation of 13.64% was adjusted to 13.66% as of June 30, 19T4 to reflect liberalizations in the System during fiscal 19T4.

The nor-mal cost has historically been compared with the combined agency and employee contribution rate, currently 14.00%, as a measure of adequacy, although there is no statutory basis for so doing. The imputed 1974 normal cost of 13.66%, computed on static assumptions, is slightly below the 14.00% combined contribution rate now being assessed employees and the agencies. The Board, in its 1972 Report, showed the results of two alternate

dynamic valuations which illustrated the cost of the inflationary components of the System. The nor-"al cost on the dynamic basis would range from 21.56%







26



to 28.74% of payroll, depending on the assumptions used. The Board believes that it is no longer appropriate to set the contribution rate at one-half of the normal cost. Instead, the employee contribution should be set at a fixed level with the balance of the normal cost to be paid by agencies.

The unfunded liability of the System, as defined in the law (which does not reflect potential future increases due to inflation), was estimated to be $81,375 million as of June 30, 1973, based on a projection of the 1972

figure. It is estimated that the unfunded liability has increased to $90,43L million as of June 30, 19T4. The following table shows the =aJor components of the increases:


1. Unfunded liability as of June 30, 1973 $81,375 million

2. Interest on unfunded liability and

benefits due to military service

in excess of amounts paid for these

items 2,888

3. Liability for cost-of-living increases 6,,487

4. Other items -316

5. Estimated unfunded liability as of

June 30, 1974 90,434


The above estimates of the normal cost rate and unfunded liabilityare based on the static assumptions contemplated in the law. The Board's 1972 report included figures on alternate dynamic assumptions. The Board continues to believe that some reco~iition should be given to funding for future cost-of-living anuity increases and salary increases. During fiscal year 19Th alone the unfunded liability was increased by approximately $6.5 billion as a result of two cost-of-living increases.







27



Appendix _V-C sets forth a summary of previous percentage increases in System benefits for retired employees due to the operation of the cost-ofliving adjustment, together with the liability created thereby. The Appendix indicates that from December, 1965 to March, 1976 there have been cumulative increases of 104.4% in Civil Service pensions, with total liabilities of $31,359 billion being added due to such increases. More than $22 billion of this has been added since 1972, reflecting the rapid inflation in the last few years.


MT0D OF F"OTACING SYSTEM


Each employee contributes 7 percent of compensation and each employ. ing agency matches the contributions of its employees to the Civil Service Retirement Fund. In addition, Section 8348(f) of the Act provides that the Government make direct appropriations to liquidate, in level annual installments over 30 years, any increase in unfunded liability resulting from any statute enacted after October 20, 1969 which authorizes new or liberalized benefits, extension of coverage to new groups of employees or increases in salaries on which 'benefits are based. The Act also provides that the Secretary of the Treasu_- sha"l transfer to the fund the following percentages of the amounts eauizalent to interest on the unfunded liability and annuity disbursements on account of military service: 10 percent at the end of fiscal year 19T1, 20 mertent at the end of fiscal year 1972, etc., until 100 percent is reached for fiscal years after 1979. The unfunded liability is defined for this pu-pose as that portion of the liabilities not met by present assets and the present value of future employees' and matching employing agencies' contributions, together with the present value of future 30 year payments under Section 8348(f).






CIO



The Fund balance as of June 30, 19T3 stands at $34.3 billion. A breakdown of the investments of the Fund on a cash basis is given in Appendix II.

12T5 Contribution Levels

Both the employee and agency contributions will: be Too of the total covered payroll during 19T5. The payment required on the statutory unfunded

-liability in fiscal year 19T5 would be 50/*# of the interest on the estimated unfunded liability- as of June 30, 19T4. The unfunded liability as developed in the June 30, 19T2 valuation -was $T5,485 million. Projecting from this figure the Civil Service Commission estimated the June 30, 19T4 unfunded liability to be $90,434 million. The Civil Service Commission also estimates that military service credit payments of $409 million will be made during fiscal year 19T5* of'which 50% would be paid.

The totall government payments scheduled under Section 8348(f) on

June 30, 19T4 were $1,091,055,000. During fiscal year 19T5 there were additional salax-y increases and benefit liberalizations or certain groups which required annual payments of $4o4,326,000. Therefore, total annual payments under 8348(f') were scheduled to be $1,495,381,000 as of June 30, 19T5.

The table below indicates the total government payment which would be made during fiscal year 19T5 if the $34.3 billion payroll and all the factors were to rerpin at their June 30, 1974 level (Cols. (2) and (4)). The table also shows what the total payment would be if 100% of the interest on the unfunded liability and military credit payments were to be made during fiscal year 19T5 (Cols. (1) and (3)).






29


1975 Contribution Levels

Contribution Percentage of Payroll Amount (in millions)
Total Paid Total Paid
TiT --(T2) T3) TT
y Employing Agencies 7.00% 7.00% $2,4l01 $2,Ol1

Accruing Interest on

Unfunded Liability
(50% payable) 13.18 6.59 4,522 2,261

Military Service Credit

(50% payable) 1.19 .60 409 205
Payment under Section
8348(f) 4.36 4.36 1,495 1,495

Total 25.73% 18.55% $8,827 $6,362







30



Appendix I
General Provisions of the Civil Service Retirement System
(Except for item J, description is of provisions for the typical employee.
'Certain special provisions are briefly summarized in item J)

A. General

1. Service Employee must have at least five years of civilian service for any retirement benefit or eighteen months for an employee survivor benefit. Military service not used for Social Security entitlement is credited for eligibility and benefit computation. Unused sick leave is credited only for benefit computation.

2. Salary base Benefits based on average salary for the highest three consecutive years. J

3. Employee Contributions Employees contribute 7% of covered salary.

If employees did not contribute for, or had received a refund for, prior covered service, benefits are reduced unless contributions are-made for this service.

If not eligible for immediate benefit, employee may receive lump sum payment but torteits right to deterred benefit. If not entitled to deferred benefit, lump sum includes interest. After all benefits have been paid to annuitant and/or survivors, beneficiaries are paid the difference between total contributions and total benefits, if any.

B. Voluntary Retirement

1. Conditions Age 55 with 30 years of se.Fvice; age 60 with 20 years; or age 62 with 5 years.

2. Benefit Percentage of salary base is total of 1-1/2% for each
of first five years of service plus 1-3/4% for each of next five years plus-2% for each year thereafter. Maximum percentage is 80% plus percentage due to unused sick leave.

C. Mandatory Retirement

1. Conditions Age 70 with 15 years of service.

2. Benefit Same as voluntary benefit.







31



D.' Involuntary Retirement

1. Conditions Age 50 with 20 years of service, or any age with 25 years.

2- Benefit-- Voluntary benefit reduced by 1/6 of 1% for each 'Lull
month under age 55 at retirement.

E. Disability

1. Conditions Any age with 5 years of service.

2. Benefit Voluntary benefit but no less than the smaller of
(a) and (b):
(a) 40% of salary base
(b) Benefit projected to age 60.

F. Deferred annuity

1. Conditions Any age with 5 years of service, unless forfeited by payment or refund.

2. Benefit Accrued benefit at termination payable at age 62.

G. Survivors of deceased employees

1. Condition 18 months service.

2. Spouse's benefit 557'of disability benefit 'paid till death of spouse or remarriage before age 60.

Children's benefit
(a) Amount (as adjusted for COL increases)
W If survived by widow(er), each child receives smallest o!
(a) 60% of average salary divided by number of children
(b) $3,279 divided by number of children or
(c) $1,093
(ii) If surviving child(ren). but no widow(er), each child receives smallest of: ., Ja) 75% of average salary divided by number of child rn
(b) $3,934 divided by number of children, or
(c) $1,311
(iii) Flat amounts are increased in line with all CPI adjustments since ll/l/69.







32



H. Survivors of deceased annuitants

1. Conditions Spouse receives annuity if annuitant had elected to receive reduced annuity. Reduction is 2-1/2% of designated amount up to $3,600 plus 10% over $3,600 a year. Eligible children receive annuity in any event after death of annuitant.

2. Spouse's benefit 55% of unreduced designated annuity paid till death of spouse or remarriage before age 60.

3. Children's benefit Same as children of deceased employee.'

4. Insurable interest Unmarried annuitant in good health mai
designate an individual with an insurable interest to receive a benefit of 55% of the reduced amount. Reduction of 10% to 40% is based on difference in age.

1. Cost-of-Liming Adjustments

Employee and survivor annuities are adjusted upward effective the first day of the third month after.a rise in the monthly consumer
price index published by the Bureau of Labor Statistics of at
least 3 percent for 3 consecutive months. The percentage increase
is 1 percent plus the highest percentage rise noted in the 3 months,
rounded to the nearest 1/10 of 1 Dercent.

J. Special Groups

1. Members-of Congress
(a) Conditions voluntary retirement at age 60 with 10 years of service or age 62 with 5 years. Involuntary at age 55 with 30 years of service; 50 with 20 years- any age with 25 years; age 50 and have served in nine Congresses.

(b) Benefit 2-1/2% of average salary for each year of
service. Benefit reduced if under age 60 at retirement.. Reduction is 1% per year (calculated by months) for first 5 years before age 60, plus 2% per year prior to age 55.

(c) Contributions 8% of covered salary.








33



2. Congressional Employees
(a) Conditions same as regular conditions.
(b) Benefit 2-1/2% of average salary for each year- of service.
(c) Contributions 7-1/2% of covered salary.

3. Hazardous duty employees
(a) Conditions Regular conditions or age 50 with 20 years of hazardous duty service.
(b) Benefit 2-1/2% of average salary for each year of first
20 years of service plus 2% of salary for service over 20 years.


*Incorporating changes made effective 7/12/74.







34



Appendix II

INVESTMENTS OF THE FUND ON JUNE 30 1974

Table I below shows the distribution by Interest rate for special issues and by interest rate group for marketable issues.


RAT OF INVESTMENT (AT PAR)
TYPE OF SECURITY INTEROF AmountPecn
(NTRnS Thousands) Pecn

Special Issues: 3-3/4%. $ 868,368 2.53%
3-7/8 11067s324 3.11
4-1/8 2*532,823 7.38
5-5/8 19628,319 4.74
5-3/4 3,980,233 11.59
6-1/8 53,828,489 16.98
6-1/2 2,909,257 8.47
6-5/8 3,951,273 11.51
7-5/8 8,331,420 24.27

Total 6.245 $31,097,506 90.58%


Marketable Issues: 3 to 3-1/2% $ 3559474 1.04%
4 to 4-1/4 533,219 1.55
5 to 5-7/8 1749300 .51
6 to 6-1/2 1,363,750 3.97
7 to 7-3/4 612,214 1.78
8 to 8-1/2 194,660 .57

Total 5.883 $3,233,617 9.42%


Grand Total 6.211 $34,331,123 100.00%



On June 30, 1974, the fund held $34,331,123,000 (par value) of public debt obligations of the United States. Of this total $31,097,506,000 or 90.58% were in special non-marketable securities mostly issued on a sevenyear maturity basis; the remaining $3,233,617,000 was invested in public marketable issues. On June 30, 1973, investments on the coupon basis were $3,036,203,000, while investments on the market yield basis were $27,829,576,0000. Since June 30,,1973 the average yield on all issues has improved ftom 5.817% to 6.211%.








35




rft- "4 0 r*- f-4 0 rl*. Ln cn
0 Ln %D f%% v-4
-r4 0 ^ ^ ^ ft
r4 r4 f-4 r4 M M W %D Cn M r4 0% 4 r4 r4 M r4 r4
Cd
co f-4



rl- %0 %0 Ln m %D m %D
$4 P% m %0 m 0 0 0 rl-- CN 0 0 0 W Ln N*4 w cn
.0 ^ ft A ^ ^
Ln 0 r4 r-- w r4 m m N r-4
r4 m r-- W-4 4 0 m 4 r-z r4 Cn M 4 M r-4 %0
A


F-4
p P- 0 m r4 m (n p.%.0 N
u a% 1-0 m rl% r%. %Q r--. Ln
414 0 co tn in tn cn m 4 0 00
V4 ^ ^ ^ 4% ^ ft ^ ^ ^ A
w %0 ON 4 W 0 M 1-0 P-4 N N 0
0 0 P- ONO 4 N N r4 N Ln
cn "4 %0 q-4 M W 0 N W v-4
*-% co ^ a
cn r-4 r4 r4
z
cn 0
:z 44 Z9 $4 -4 0 r-4 %D W f-- tn Cn
0 0 M 4 W r-- M M 4 Cn -4
w N cn cn in 4 %D N cn ^ 0% 4% 0% ^ ^ 0% 0%
r4 0 w m w 4 w m
z r4 0 r4 W 0 f--- M r4 co
f-4 r-4


r-4 C P-4
r4 M M r-4 r-4
0 10 r4 r4 r-4 r4 %0
*r4
N %D %0 r-4 r-4
(n in N %D t%% P4 tn M cn ,-a 9-4 fl- M Ln r%% tA r4 M 4 ,.t cn
rd ^ ^ ^ a 4% ^ Ift
to N N C4 M 9-4

z w
(n tn %D m m cn M
$4 (n 0 N tn S-0 r4 %D LA 4 4 0
0 CD P- %D %* N %0 M r4 cn cn r4 Ln

r4 M M Cn W M Cn 0 co
z r4 r-4 N N M v-4
r4



0
C*4 >
0 4.)
14 Ch ON 0
0 4 Ln In AD f-4
14 00 0 1 1 f i t I I I
0 0 0 tn 0 tn 0 tn 0 tn 0 tn
m cn 4 4 Ln in %0 -.0








36


















.0

z 0
0
4 .0
0.4
0
Cd 0
in
H z >4 >11 r4 0% N N 0 r- w en %0 N 3 fts NO a
&j 0% 0 r- 0 co 0 w cn a% cn 1.0 P- a% "4
C V4 r4 w %0 %0 "4 tn %0 In w N %0 P% 0%
a C;
fu !9 C: V;
tn 0 0 a N r4 %T %D f- 0-4 0 co 4 In 13
H z 4 M gn C% C4 OD 00 N f% C4 C4 :3
z cn o VC4
4 .4 : 4 %0^ V; if; 4 0; C; .; j
1-4 ii z r4 r4 r-4 %0 C:
4-4 V) 1-4 44.
0
0 $4
P% r4 r4 kn t- %* OD 00 %* 00 %D r-4 C4 N H OD D 0% 0 0 f- r % %0 %D OD r4 M 00
0-4 0 94 cd .0 11% 0 0% r4 F- w r,- in 4 0% 4
0 rl%
n 4 r4 fl% a
w A r4 en C4 r4 00 r4
1-4 Cd ir4
1-4 0
C6 R 0 > 44z in 0
z C4 1-- -4 %0 0-- 0 In f-% Cn OD
r. V4 Aj 0 (7% w N m m t- r4 w I- %D r- to
1-4 44 m Ch N r- %:r f*- m 0% 0 f*.% %0 0 In 4)
tu w 44
IOC a tz r: C; C; t^ P: 4^ C; ODO Aj
0 c N cn 0 w %D 0% m m w 4 cn V4
z m r4 m 0% P4 Go
0 4 ts 4% a A
0 %t 4 r4
r4 %0 Cvj N r4 rl%
C4
z
>4 0


w N 0 M r4 0 4 N M r4 N r4 0 N Ch
1-4 Z 0 tn m %oM 0 r4 4 P4 IkD 0
0 .0 M %0 M 0 N r4 In
U) CA V %D 0% cn N 0% m cn >*
z N %0 (A r4 w %0 r-4 r-4
r-4 in
1-4



m 4 0% 4 0% 0 0
f-- W W 0% 0 P4 r4
I I I I I 1 1 4)
00 in o in o in o in o in o in o A o
93d 4n In AD %0 t- roft Go OD 0% 0% 0 0 E4
r4 r-4









37























.0


d0


.4- 0 %0t %
.4 -or n


P4.
~' O P fv-4N t

o t

4ow%-4OP40% ~ o 04Wr- l )
0 o 4 0~ #4 C% r- 4 -4 f% N U) 4
& a a ft a ^ ^ f
14~N. r4-4C6 0~
>49


0) 0
41 CM M W 4 MM NM 0 k 4 -4'-4 W44a a A M a t a a a ar
C: co~ m 0 7 44N hr0 -%04c DL
0a cz kn m N-.- 0% a- % oC P
C4~ 4 4P%4N
*- f-4-P

>444



c4 co. r- a %an a a, a4 a, a a% a a% a aaa4


NV4.


0




@1~~ 0% OO'0% 4 M .1 O('1 40 o I I I I # I I I 1 0 1 1 fN I 'fl
In a a an a an a an a an a an0i
N N 1I n10'Dt -0 o0O -










38



























ini n- mt -e o nAr








A.) aq F a a a a a











00






aA a0a a a a4 a a a a a a a




444-~ m 4t nt h0 4i no4% 0
0 >4 ~~~4 t nm -.4 p
ccc .) 0 ff)s

94 .4C gir





ad 0r14"'0- :wt'.4t:3 0'e4~~CJ,4444'

-a a& aaA





>4 W4 00 01 6 l ;I* u *S I
44 to c~~~oS r C 7 O a)nC 4) f I- N 0 P 0 'C Wl 4 OD--









39






C:0 f.;f

a t a k **0 a *.
v4 C4 v4 ,r





V4W t 4 a'4m %mf-% -I










U~~4 ~ ~ t r "4o0# %d 4AS k-o
"4NON4r-4N 044 4
u4 VO~-4 04 U V4-4 m"



.4



-4 0 cn fn %



0


ij '4 m~ m 4 N %I %0 r8 0*4 0% C% N
P4 ##4 vMN W OO P40 "4 r' o4 t4 C) OD4

at a A ab a ^ a a a a a a a aa aa
m D p 0 M 4 -t Ow -4NC40 %DLM00"
t4 A C 0OD % NOr- %DO0 n %O
V4 0 N % O '10"n D%

H cP 4 4%D f- 0kO )l

00

v4 -. 4S0%M0%N %0 (7% 0 -4% ) D nO h LN
*6 fi ta 4 cr -4O VI c' V4 ol l00 r 0 ) V)
50 a4^W '.4;4oCo;'0



r44



41841 N VI 0)t~ 00 4n tn 4ON ND N" (h4 nr 0t
ak a. & a a a a a a A A a a a a
41 W. 4 WOD 1- "4 o-4 0 4n n (4 00 .4"
c~~l l 0 V40k -NOmf0)f
0 P4



CA m 0 M0 nc mP 4mr %mv

N



(7% o% Q 0 0 VOn A4'-IoIr n l 04V4 c
o 1 1 1 1 1 # t#U
a "3:2 Im~C~) T ~ 0 "4 04 i
en* n %0 1- 1- w)0 0% "ch 0 0 F







40



Appendix IV A

COMPARISON OF ACTUAL DEATHS TO EXPECTED DEATHS
IN FISCAL YEAR 1974


Ratio of Actual
Group and Type Actual Expected to Expected

Retiree Deaths:
Disability Male 8,566 92021.2 95.0%
Female 11893 2sO85.4 90.8
Non-Disability Male 212568 20,813.8 103.6
Female 4,825 4,660.8- 103.5

Total 36,852 36,581.2 100.7

Appendix IV B
COMPARISON OF ACTUAL RETIREMENTS TO EXPECTED RETIREMENTS
IN FISCAL YEAR 1974

New Retirees on Immediate Annuity:
Disability Male 159270 15,206,5 100.47,
Female 62093 52718.8 106.5
Involuntary Male 119752 6$120. 6 192.0
Female a$860 1,810.9 213.2
Other Male 44,503 432491.0 162.3
Female 133,257 13,283.4 99.8

Total 94r7,15-' 852631.2 110.6



Based on rates published in the 1972 Board of Actuaries report.







41



Appendix IV-C

SUMMARY OF EXPERIENCE UNDER COST-OF-LIVING PROVISION 1565-76


Month/year of CPI Benefit Increase in
Increase Increase Increase Liability
(percent) (percent) millionsn)


December 1965 4.6% 6.1% $776
January 1967 3.9 3.9 739
May 1968- 3.9 3.9 890
March 1969 i.9 3.9 948
November 1969 4.0 5.0 1,410

August 1970 4.6 5.6 1,447
June 1971 3.5 4.5 1,344
July 1972 3.8 4.8 1,735
July 1973 5.1 6.1 2s827
January 1974 4.5 5.5 2,897

July 1974 5.3 6.3 3,578
January 1975 6.3 7.3 4,807
August 1975 4.1 5.1 3,781
March 1976 4.4 5.4 4,180

Accumulations since:

December 1965 83.2% 104.4% $31,359

November.1969 56.1% 71.7% $28,006

July 1973 33.6% 41.4. $22,070

0




UNIVERSITY OF FLORIDA 3 1262 09115 0291