The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
U. S. DEPARTMENT OF LABOR
JAMES J. DAVIS, Secretary
BUREAU OF LABOR STATISTICS
ETHELBERT ST E W A R T , Commissioner
BULLETIN OF THE UNITED STATES \
BUREAU OF LABOR STATISTICS J
WORKMEN’S INSURANCE
AND
’ ' * *
llO .
COMPENSATION
yf 7 7
SERIES
PUBLIC SERVICE RETIREMENT SYSTEMS
UNITED STATES, CANADA, AND EUROPE
JANUARY, 1929
UNITED STATES
GOVERNMENT PRINTING OFFICE
W ASHINGTON : 1929
I
Acknowledgment
This bulletin, except for the sections dealing with Continental
Europe, was prepared by Mary A. Conyngton of the U. S. Bureau
of Labor Statistics. The documentary information for foreign
countries was obtained through the courtesy of the U. S. Depart
ment of State; and the text matter for Continental European coun
tries was prepared by Peter A. Speek.
ii
Contents
Page
C hapter 1.— Summary________________________________________________
1-15
State and municipal retirement systems in the United States_______
1-6
Basie classification of retirement plans_________________________
2
Cash disbursement and actuarial reserve systems_______________
2, 3
Inclusiveness of systems______________________________________
4
5, 6
Benefits______________________________________________________
Federal employees* retirement system______________________________
6, 7
Retirement system of the Territory of Hawaii______________________
7, 8
Retirement system for employees of the Dominion of Canada_______
8, 9
Public service retirement systems in European countries___________
9, 10
Tabular comparison of principal features of systems_______________ 11-15
C hapter 2.— Federal employees’ retirement act________________________ 16-24
System of contribution____________________________________________ 16-18
Analysis of act of 1926____________________________________________ 18-22
Employments covered________________________________________ 18, 19
Conditions for retirement_____________________________________ 19, 20
Annuities and refunds________________________________________ 20, 21
Source of funds_______________________________________________
22
Administration_______________________________________________
22
Statistics of operation of the act___________________________________ 22-24
C hapter 3.— State employee retirement systems_______________________ 25-55
Administration____________________________________________________
28
Conditions for retirement__________________________________________
28
Source of funds___________________________________________________ 28, 29
Retirement allowances____________________________________________ 29, 30
Refund of contributions___________________________________________
30
Provision for dependents__________________________________________
30
State systems:
Connecticut__________________________________________________ 31, 32
Administration___________________________________________
31
Source of funds__________________________________________
31
Conditions for retirement_________________________________
31
Retirement allowances___________________________________
31
Statistics of operation of the system -_____________________
32
Maine________________________________________________________ 32, 33
Massachusetts______=
__________________________________________ 33-40
Scope of system__________________________________________ 33, 34
Administration___________________________________________
34
Source of funds__________________________________________ 34, 35
Conditions for retirement_________________________________
35
Retirement allowances_____________ ______________________
36
Statistics of operation of the system ._____________________ 36-40
Finances of the system___________________________________
40
New Jersey____________________________ ______________________ 40-45
Administration___________________________________________
41
Contributions____________________________________________
41
Conditions for retirement_________________________________
41
Retirement allowances____________________________________
42
Options__________________________________________________
42
Refunds_________________________________________________
42
Provision for dependents_________________________________
42
Statistics of operation of the system ._____________________ 43, 44
Finances of the system___________________________________ 44, 45
New Y ork____________________________________________________ 45-53
Scope of system__________________________________________
46
Administration___________________________________________
47
Source of funds___________________________________________
47
Conditions for retirement_________________________________
48
Retirement allowances____________________________________48, 49
hi
C hapter 3.— State employee retirement systems— Continued.
State systems— Continued.
New York— Continued.
Page
Options__________________________________________________
49
Additional benefits_______________________________________ 49, 50
Refunds_________________________________________________
50
Provision for dependents_________________________________
50
Membership, beneficiaries, and benefit outlay of system____ 50, 51
Finances of system_________ ______________________________ 51-53
Pennsylvania_________________________________________________ 53-55
Scope of plan____________________________________________
53
Administration___________________________________________
53
Contributions from employees____________________________
54
Contributions from the State_____________________________
54
Conditions for retirement_________________________________
54
55
Retirement allowances___________________________________
Refunds_________________________________________________
55
Provision for dependents_________________________________
55
C hapter 4.— Retirement systems for municipal employees_____________ 56-75
Scope of systems__________________________________________________
56
Employee representation in management__________________________
57
Character of plans and source of funds_____________________________if>7, 58
Conditions for retirement_________________________________________ 58, 59
Conditions for disability retirement________________________________
59
Retirement allowances____________________________________________ 59, 60
Allowances for disability retirement_______________________________ 60, 61
Refunds__________________________________________________________
61
Provision for dependents__________________________________________ 61, 62
City systems:
Baltimore____________________________________________________ 62, 63
Boston_______________________________________________________ 63, 64
Chicago______________________________________________________ 64, 65
Detroit_______________________________________________________ 65, 66
Minneapolis__________________________________________________ 66, 67
New York City_______________________________________________ 67, 68
Philadelphia__________________________________________________68, 69
Pittsburgh____________________________________________________ 69, 70
San Francisco________________________________________________ 70, 71
Comparison of systems____________________________________________ 72, 73
Income and expenditures of systems_______________________________
74
Relation of beneficiaries to active force and of benefit expenditures to
pay roll of active force__________________________________________
75
C hapter 5.— State and city retirement systems for teachers____________76-117
Scope of systems__________________________________________________
77
Date of establishment and membership____________________________ 77, 78
Employee representation in management__________________________
78
Character of plans and source of funds_____________________________ 78, 79
Contributions from employees_____________________________________ 79, 80
Contributions from State and city_________________________________ 80-82
Expenses of administration________________________________________
82
Conditions for retirement_________________________________________ 82-84
Superannuation retirement allowances_____________________________ 84, 85
Disability retirement allowances___________________________________
86
Refunds__________________________________________________________ 86, 87
Provision for dependents__________________________________________
87
State systems:
California____________________________________________________ 87, 88
Connecticut__________________________________________________ 88, 89
Illinois_______________________________________________________
89
Indiana______________________________________________________
90
Maryland____________________________________________________ 90, 91
Massachusetts________________________________________________ 91, 92
Michigan_____________________________________________________ 92, 93
Minnesota____________________________________________________ 93, 94
Montana_____________________________________________________
94
New Jersey___________________________________________________ 94, 95
New York____________________________________________________ 95, 96
CONTENTS
V
C hapter 5.— State and city retirement systems for teachers— Continued.
State systems— Continued.
page
North Dakota________________________________________________
90
Ohio_________________________________________________________
97
Pennsylvania_________________________________________________ 97, 98
Rhode Island_________________________________________________ 18 9 )
Vermont____________________________________________________ 99, 10)
Virginia______________________________________________________
ICO
Wisconsin__________________________________________________ 100, 101
Comparison of systems_____________________________________ 102-105
Income and expenditures of systems___________________________
106
Relation of beneficiaries to active force and of benefit expendi
tures to pay roll of active force_____________________________
107
City systems:
108
Chicago______________________________________________________
Detroit____________________________________________________ 108, 109
Milwaukee_________________________________________________ 109, 110
Minneapolis__________________________________________________
110
New Orleans_______________________________________________ 110, 111
New York City_____________________________________________ 111,112
New York City Board of Education_________________________ 112, 113
Washington, D. C__________________________________________ 113, 114
Comparison of systems_____________________________________ 115, 116
Income and expenditures of systems__________________________
117
Relation of beneficiaries to active force and of benefit expendi
tures to pay roll of active force_____________________________
117
C hapter 6.— Retirement systems for police and firemen______________ 118-170
Police retirement systems:
Employee representation in management______________________
119
Source of funds_____________________________________________ 119, 120
Cost of administration______________________________________ 120, 121
Conditions for retirement___________________________________
121
Retirement allowances______________________________________ 122,123
Refunds______________________________________________________
123
Provision for dependents____________________________________ 123-125
Retirement systems for firemen:
Employee representation in management______________________
126
Character of schemes and sources of funds__________________ 126, 127
Cost of administration________________________________________
127
Conditions for retirement___________________________________ 127, 128
Retirement allowances______________________________________ 128, 129
Refunds______________________________________________________
130
Provision for dependents______________________________________
130
Retirement systems for police and fire departments combined:
Administration_______________________________________________
131
Source of funds______________________________________________
131
Cost of administration________________________________________
132
Conditions for retirement_____________________________________
132
Retirement allowances______________________________________ 132, 133
Refunds____ _________________________________________________
133
Provision for dependents______________________________________
133
Police retirement systems:
Baltimore__________________________________________________ 133, 134
Buffalo_____________________________________________________ 134, 135
Chicago____________________________________________________ 135-137
Cincinnati__________________________________________________ 137, 138
Cleveland__________________________________________________ 138, 139
Detroit____________________________________________________ 139, 140
Milwaukee_________________________________________________ 140, 141
Minneapolis______________________________________ _________ 141, 142
New Orleans_______________________________________________ 142, 143
New York City____________________________________________ 143, 144
Philadelphia________________________________________________ 144, 145
Pittsburgh_________________________________________________ 145, 146
San Francisco______________________________________________
146
Comparison of systems_____________________________________ 147-149
Receipts and expenditures of systems__________________________
150
Relations of beneficiaries to active force and of benefits to pay roll - _
151
VI
CONTENTS
C hapter 6.— Retirement systems for police and firemen— Continued.
Firemen’s retirement systems:
Page
Buffalo_______________________________________________________
152
Chicago______________________________________________________
153
Cincinnati__________________________________________________ 153, 154
Cleveland__________________________________________________ 154, 155
Detroit____________________________________________________ 155, 156
Milwaukee_________________________________________________ 156, 157
Minneapolis________________________________________________ 157, 158
New Orleans_______________________________________________ 158, 159
New York City_____________________________________________ 159, 160
Philadelphia________________________________________________ 160, 161
Pittsburgh_________________________________________________
161
St. Louis___________________________________________________ 161, 162
San Francisco______________________________________________
162
Firemen’s and police systems combined:
Los Angeles________________________________________________ 163, 164
Newark_________________ ____________________________________
164
Washington, D. C____________________________________________
165
Comparison of systems_____________________________________ 166-168
Receipts and expenditures of systems__________________________
169
Relation of beneficiaries to active force and of benefits to pay rolL
170
C hapter 7.— Retirement system of the Territory of Hawaii__________ 171-173
Contributions_____________________________________________________
171
Benefits of system______________________________________________ 171, 172
Scope of system_________________________________________________ 172, 173
Administration____________________________________________________
173
C hapter 8.— Retirement system for employees of the Canadian Govern
ment_____________________________________________________________ 174, 175
Contributions_____________________________________________________
174
Benefits of system _____________________________________________ 174, 175
Administration____________________________________________________
175
C hapter 9.— Public service retirement systems in European countries- 176-223
Right to pension or to insurance benefits___________________________
176
Types of systems and contributions________________________________
176
Conditions for retirement_________________________________________
177
Retirement allowances__________________________________________ 177, 178
Survivors7 allowances___________________________________________ 179, 180
Administration of pensions________________________________________
180
Austria_____________________________________ ___________________ 180-183
180
Legislation___________________________________________________
Employees covered___________________________________________
180
Retirement age and length of service__________________________
180
Retirement allowances________________________________________
181
Disability____________________________________________________
182
Survivors’ allowances_______________________________________ 182, 183
Contributions and administration_____________________________
183
Contract civil-service employees______________________________
183
Belgium________________________________________________________ 184-188
Legislation___________________________________________________
184
General provisions____________________________________________
184
Retirement pensions________________________________________ 184-186
Widows’ and orphans’ pensions_____________________________ 186-188
Czechoslovakia_________________________________________________ 188-194
Law of February 5, 1920______________________ _____________ 188-190
Law of December 22, 1920_________________________________ 190-192
Law of December 30, 1920____________________________________
192
Law of October 9, 1924_____________________________________ 192-194
Denmark_______________________________________________________ 194-196
Employees covered___________________________________________
194
Retirement age and length of service__________________________
194
Retirement pensions________________________________________ 194, 195
Disability____________________________________________________
195
Survivors’ pensions___________________________________________
195
Contributions by employees_____________________ _____________
195
Administration________________________________ ____________
196
France__________________________________________________________ 196-200
Legislation_________________________________________________ 196, 197
Employees covered___________________________________________
197
CONTENTS
VII
C hapter 9.— Public service retirement systems in European countries—
Continued.
France— Continued.
Page
Retirement age and length of service________________________ 197, 198
Retirement pensions________________________________________
198
Disability---------------------------------------------------------------------------- 198, 199
Widows and orphans' pensions______________________________
199
Contributions______________________________________________ 199, 200
Administration_____________________________________________
200
Germany. _______________________________________________________ 200-206
Legislation_________________________________________________ 200, 201
Retirement and pensions of civil officials____________________ 201-203
Insurance of civil employees________________________________ 203-206
Great Britain___________________________________________________ 206-210
General provisions of the laws______________•________________ 206, 207
Employees covered____________________________________________
207
Conditions for retirement_____________________________________
207
Retirement allowances______________________________________ 207, 208
Disability____________________________________________________
208
Retirement gratuities_________________________________________
208
Expenditures for retirement service_________________________ 209, 210
210
Administration_______________________________________________
Italy___________________________________________________________ 210-212
Employees covered___________________________________________
210
Retirement age and length of service__________________________
210
Retirement pensions__________________________________________
211
Disability____________________________________________________
211
Survivors’ pensions___________________________________________
211
Contributions_________________________________________________
212
Administration_______________________________________________
212
Netherlands____________________________________________________ 212, 213
212
Employees covered___________________________________________
Retirement age and length of service__________________________
212
Retirement pensions________________________________________ 212, 213
213
Disability________________________________ ___________________
Survivors' pensions___________________________________________
213
Contributions_________________________________________________
213
Administration_______________________________________________
213
Norway________________________________________________________ 214-216
Employees covered-------------------- -------------------------------------------214
Retirement age and length of service_________ ________________
214
Retirement pensions_________________________ ’______________214, 215
215
Disability____________________________________________________
Survivors’ pensions__________________________________ _________
215
Contributions_________________________________________________
216
Pension funds and their administration________________________
216
Sweden_________________________________________________________ 216-219
Employees covered___________________________________________
216
Retirement age and length of service__________________________
216
217
Retirement pensions__________________________________________
Disability_______________________________________ _____________
217
Survivors’ pensions_________________________________________ 217, 218
Contributions_________________________________________________
218
Pension funds and their administration______________________218, 219
Financial standing of pension funds___________________________
219
Switzerland_____________________________________________________ 219-223
General provisions of the laws______________________________ 219, 220
Employees covered___________________________________________
220
Retirement age and length of service__________________________
220
.Insurance benefits__________________________________________ 220, 221
Disability____________________________________________________
221
Relief________________________________________________________
221
Survivors’ pensions___________________________________________
222
Contributions_________________________________________________
222
Savings deposits____________________________________________ 222, 223
Insurance offices______________________________________________
223
Total contributions and payments_____________________________
223
BULLETIN OF THE
S. BUREAU OF LABOR STATISTICS
No. 477
WASHINGTON
JANUARY, 1929
PUBLIC SERVICE RETIREMENT SYSTEMS: UNITED STATES, CANADA,
AND EUROPE
CHAPTER 1—SUMMARY
N the summer of 1927 the Bureau of Labor Statistics undertook
an inquiry into retirem ent systems for public-service employees
in the United States, supplemented by a brief survey of retire
ment systems for Government employees in Hawaii, in Canada, and
i European countries. The data concerning foreign systems were
.ecured through the courtesy of the State D epartm ent from the
Governments concerned. For the United States a field survey was
carried on during the summer and early fall of 1927, information
being obtained through personal interviews with the adm inistrative
officers, through consultation of official records, and from published
reports.
I
State and Municipal Retirement Systems in the United
States
/C O N SID ER A TIO N S of time and expense forbade an exhaustive
study of the systems of the United States. Taking the country
as a whole, there are literally hundreds of these. Police and fire
m en’s pension plans are found in almost every city; retirem ent
schemes for teachers, while not quite so general, are still very com
mon; and numerous other groups of public employees have their own
pension plans. N aturally, there is much sameness in these systems;
any attem pt to make a complete survey would involve endless
duplication of detail with no compensating advantage. A study
of state-wide systems and of municipal systems in cities having a
population of 400,000 and over would, it was thought, include prac
tically all types of pension plans, and would also give some idea of
the relative advantage of the different kinds of systems.
At the time the study was undertaken six States had retirement
plans applying to all employees not included in some recognized
pension system. Twenty-one States and the District of Columbia
had plans which included—or might include—all teachers in the
public employ. Eighteen cities, according to the estimate of the
Census Bureau, had in 1927 a population of 400,000 and over. The
proposed survey would therefore include plans maintained by 46
2
CHAPTER 1.— SUMMARY
agencies, covering employees ranging from laborers to high acL
trative, executive, and professional officers, and this, it was
would be a sufficiently wide inquiry to cover all significant varia,
of the plans now in use.
A study of these plans from an actuarial standpoint would
formidable task in respect to both time and cost, so a more mod
program was adopted. I t was decided to learn for each system su<
facts as the kind of employees covered; the differences made betw
different classes; the source of funds and the division of cost betwreen
employers and employees; the conditions under which retirem ent
on pension or allowance is perm itted; what provision, if any, is made
for dependents of deceased employees; the practice in regard to
pensions for disability; the average age and years of service of those
retiring; the income and expenditures of the system for the latest
year reported upon; and such other m atters as m ight throw light
upon the advantages or disadvantages of a given plan. In practice
it was not possible to secure all these data for all systems. In fact,
in very few cases were records so kept th at reliable information could
be gained on all the points desired, so attention was concentrated
upon the most im portant items.
Basic Classification of Retirement Plans
There are two particulars in which retirem ent plans differ funda
m entally—the source of the funds by which they are m aintained
and the m ethod by which provision is made for meeting the liabilities
incurred. As to the first, plans may be contributory or noncontribu
tory; as to the second, they may be managed upon either the cash
disbursement or the actuarial reserve plan.
Under the joint contributory system each employee contributes
regularly, usually by means of a deduction from his salary or wages,
a fixed amount or a specified percentage of his compensation, while
the employing agency either makes fixed regular contributions or
undertakes to appropriate sufficient funds, as needed, to keep the
system in operation; under the noncontributory system the whole
cost is borne by one side, usually the employer. N oncontributory
plans are unusual, and do not seem to be gaining in favor. Among
the approximately 70 systems described in detail in the following
pages there are only 7 in which the employees do not contribute to
the funds of the system and only 2 in which the employing agency
makes no contribution. The M aine and Connecticut State em
ployees’systems, the Rhode Island State teachers’ system, the D etroit
system for municipal employees, and the D etroit, New York, and
San Francisco systems for firemen are noncontributory systems so
far as employees are concerned, while the M ichigan and M ontana
State retirem ent systems for teachers are the only ones in wrhich the
employing agencies do not contribute toward the m aintenance of the
plans.
Cash Disbursement and Actuarial Reserve Systems
Under the cash disbursement system benefits are paid from w hat
ever funds are on hand, w ithout much reference to the future. During
the early years of a system ’s operation the employees’ contributions
are often more than sufficient to meet all needs, but gradually the
STATE AND MUNICIPAL SYSTEMS— UNITED STATES
3
growing pension roll demands heavier and heavier annual payments,
the contributions of the employees are progressively inadequate to
the situation, and the employing agency is called upon for rapidly
increasing annual contributions.
Under the actuarial reserve system a fund is established, and the
employer, like the employee, pays into this regular contributions.
The rate of contribution is so calculated for both sides th a t the fund
receives annually an amount which, put at compound interest, will
be sufficient to pay each employee when his time for retirem ent comes
the share of the retirem ent allowance due for one year’s services, and
also to pay one year’s share of such other benefits as the system may
provide. The employing agency usually assumes responsibility for
benefits due for services given before the plan was adopted and makes
regular contributions to liquidate this accrued liability. Ordinarily
such plans provide for an actuarial review of the situation at stated
intervals, with a stipulation that, if the review shows a need for it, the
rate of contribution may be revised.
The actuarial reserve plan is a comparatively recent development
and is still far from general. There is a good deal of opposition to it
in many places, for which it is rather difficult to find a definite reason.
Probably part of the objection is due to the fact th at such systems
require careful and systematic operation, while the cash disburse
m ent s}^stems may be installed and operated for some time with little
consideration of any kind. Naturally, those which are so installed
and operated are likely to come to grief, and examples of this will be
found in the following pages. If, however, the employing agency has
undertaken to make what appropriations are needed, it may be a long
while before the increasing demands create active dissatisfaction and
lead to a recasting of the system, and meanwhile the plan m ay be held
up as an example of the success of a cash disbursement system, free
from the red tape and tiresome formality of an actuarial reserve system.
In some cases the objection is due to a belief th at the actuarial
reserve systems are less favorable to the employees than the other
form. In one city the charge was definitely brought th a t under these
systems the employee contributes too much and receives too little.
The argument ran th at contributions are based on the life expecta
tion at the age fixed for retirement, and th at this life expectation is
calculated from the m ortality tables of insurance companies, which
in turn are based upon the experience of the companies. B ut insur
ance companies deal only with selected cases; applicants are subjected
to a rigid physical examination and rejected if they fall below a pre
scribed standard. Naturally, among such a selected group the life
expectation at any given age would be greater than in a miscellaneous
group, such as the retirants of a teachers’ or municipal employees’
system, so th at contributions based upon insurance experience are
unduly high; th at is, the average retirant dies before he has received
the actuarial equivalent of the contributions to his credit. As yet
the actuarial systems are rather too new for this objection to have
been either disproved or verified; it seems, however, as if the provi
sions for reviewing the system at stated intervals with the possibility
of revising the rates of contribution, if desirable, should meet the
difficulty, provided it exists.
4
CHAPTER 1.— SUMMARY
Inclusiveness of Systems
Another point of difference is in the inclusiveness of retirement
systems. Originally such plans were formed only for a particular
group, whose risks were the same, and for whom uniform provisions
could easily be adapted. As the desirability of having retirem ent
systems became apparent, the number of such groups increased until
there might be 9 or 10 systems among the employees of one munici
pality, or as m any different teachers’ systems as there were cities in
a State. Unfortunately, even this duplication of systems did not
provide for all employees, and in the same city some groups might
be enjoying a prosperous retirem ent plan, others might have no retire
m ent pian at all, and still others be covered by an expensive and illmanaged system. In an effort to meet this situation, the inclusive
plans were formed, designed to cover all the employees of a State,
or a city, thus avoiding duplication of effort and unnecessary expense,
and insuring to all employees the protection of a strong, well-planned
and thoroughly solvent system. When such an inclusive system is
introduced, usually groups already covered by a retirem ent system
are given their choice of coming in or remaining under their own
plan, and there is a good deal of diversity in the attitude of the
groups toward such an offer. Generally, the police and firemen
cling to their own systems; in Baltimore the firemen and in Boston
both police and firemen have been brought into the general system,
but elsewhere they have remained outside. The teachers differ from
place to place, but on the whole seem to prefer their separate organi
zations. The Chicago teachers present an interesting argument in
favor of this. The municipal employees, they point out, are largely
men, and the municipal system has been planned with a view to
their needs, but the teachers are largely women. M en’s dependents
are usually younger than themselves while women’s dependents are
apt to belong to a generation older than themselves. The provision
for dependents, therefore, which is attractive to men is wholly unin
teresting to women; of w hat use is a “ child’s annuity” to an unm ar
ried woman, supporting an aged aunt or an invalid parent? If the
teachers should go into the general system, they would be helping
to support a plan which is not adapted to their peculiar needs, as their
own system is; therefore they prefer to remain under their own.
On the whole, however, where a well-planned State or municipal
system has been inaugurated, there seems to be an increasing tendency
for it to become all-inclusive. Sometimes an outside group comes in as
a whole, bringing with it the funds of its own system, as well as its
liabilities; sometimes it is arranged that those in the service at a
given time shall remain under their own system, the benefits it pro
vides being guaranteed to them, but that all newcomers shall enter
the general system. Thus, in most cities in which a municipal
system has been installed, there are a number of dying systems;
they will remain more or less in force until those who were in the
service when the municipal system came into being have passed out,
while their successors are covered by the general plan.
STATE AND MUNICIPAL SYSTEMS— UNITED STATES
5
Benefits
A retirement allowance or pension, usually based on age and
length of service, but sometimes on only one of these factors, is of
course common to all the systems. There is a good deal of diversity
as to these qualifications. Among the police and firemen, where full
physical strength and agility may be required for good service, there
are obvious reasons for setting an early age for optional retirem ent,
but the situation is different where clerical and adm inistrative groups
are concerned. Practically all the systems made retirem ent com
pulsory by 70, though some of them provided for extensions in the
case of unusually well qualified employees. An age for optional
retirement was common, ranging in the different systems from 50 or
under to 65. Among 41 systems, not including police and firemen’s
plans, 14 had only a service requirement, with no reference to age;
in 3 the age for optional retirement was set at from 50 to 58, in 16
at 60, in 5 at 62, and in 3 at 65; in several of these an earlier age was
set for women. Few of these systems kept any record of age at
retirement, but in general the officials believed th at employees
tended to hold on to their jobs as long as possible, and th at unless
physical incapacity intervened they remained in the service con
siderably beyond the age for optional retirement.
The service qualification also presents considerable variation. In
some of the actuarial reserve systems, there was neither age nor
service requirement; the amount of th€ allowance to be drawn by
the employee depended partly upon his length of service and partly
upon his age at retirem ent, and he might use his own discretion about
withdrawing, unless he should become incapacitated for service,
when retirement would become compulsory. Where a service
requirement was imposed, it varied from 10 to 40 years, 25 years
being the commonest period, and 30 the next in order.
Other benefits are allowances for disability directly due to the
performance of duty, allowances for ordinary disability, refund of
contributions in case of separation from the service before reaching
pensionable status, provision for dependents in case of the death of
an active member or pensioner, and, in a few cases, a separation allow
ance for those who, after a certain length of service, are dismissed
for some cause not involving their own fault or delinquency. Not
many systems have all these benefits, the particular ones included
depending largely upon the kind of employees covered. In police
and fire departments, for instance, death or serious injury resulting
from the performance of duty is a constant possibility, and disability
allowances and provision for dependents are of almost as much impor
tance to a man as the normal retirement allowance. These benefits,
therefore, are found in nearly all the police and fire systems, and
sometimes they are worked out very elaborately. In some cases the
employee’s contribution is calculated to cover his own risk of ordi
nary disability and part of the allowance to his widow, if he dies
from natural causes, while the employing agency provides the whole
of the special allowance for duty disability and for the widows and
children of those dying as a result of injuries received in the service.
Among teachers and clerical employees, on the other hand, the
service involves little or no risk of this character, and the systems are
6
CHAPTER 1.— SUMMARY
less likely to include such benefits. I t is unusual for teachers’ sys
tems, for instance, to make provision for dependents, and when they
do, it is apt to be confined to a choice given the retirant upon with
drawal between taking the full allowance to which he is entitled,
with the understanding th a t at his death the whole m atter is closed,
or of taking a reduced allowance which, in case of his death, is to be
continued to some beneficiary he has named.
On the whole, the tendency among the newer systems is to include
more benefits than are found in the early systems, and especially to
make some provision for dependents. The return of contributions,
commonly with interest and sometimes with compound interest, is
frequent among the newer systems. The omission of this provision
is sometimes defended on the ground th at the worker in making his
contributions is really paying for insurance. If he should be injured
or die during his service, he would receive an allowance, or his depend
ents would receive some compensation. He has this protection so
long as he remains in the service, and if he retires before the time
when he would receive a retirem ent allowance, he has no claim for
anything further. The separation allowance is not common, but
seems to have grown in favor recently. I t is intended to prevent
hardship in cases where a faithful and competent employee finds,
after he has served for years, th at a reorganization of the service has
abolished his position, or th at a reduction of the force has become
necessary and th at he is laid off in consequence, or th a t some other
cause for which he has no responsibility has left him without a position.
Federal Employees’ Retirement System
T ^H E retirem ent system applying to the employees of the Federal
Government is a compulsory contributory system, the employees
contributing a percentage of their salaries, and there being an implied
assumed responsibility by the Government for the difference between
w hat the employees pay and the actual cost of the benefits, and also
for the cost of benefits allowed to annuitants or pensioners for service
rendered prior to the inauguration of the system.
The system covers all civil-service employees and certain other
specified classes of employees of the Federal Government and regular
annual employees of the District of Columbia municipal government.
Contributions.—The employees contribute 33^2 per cent of their
basic salaries, this am ount being deducted from their salaries.
Retirement benefits.—The annuity for old-age and for disability re
tirem ent is computed by multiplying the average annual basic salary
(not to exceed $1,500) for the last 10 years of service by the num ber of
years of service (not to exceed 30) and dividing the product by 45.
The maximum allowance specified in the law is $1,000, but the actual
maximum is $999.96, as the law also specifies th a t the annuity shall
be fixed at the nearest multiple of 12.
In case of separation from the service before becoming eligible for
retirement, the employee’s contributions are returned to him, with
interest. Special provision is made for employees involuntarily sep
arated from the service under certain conditions.
Conditions of retirement.—Employees m ust have reached the age of
70 and have rendered at least 15 years’ service to be eligible to retire
m ent with an annuity, except th at letter carriers, post-office clerks,
RETIREMENT SYSTEM OP HAWAII
7
sea-post clerks, laborers, and mechanics may retire at age 65, and
railway postal clerks and employees in extrahazardous occupations
and those employed in the Tropics m ay retire at age 62. Retirem ent
is compulsory at these ages but 2-year extensions may be granted by
the head of the departm ent; after August 20, 1930, only two such
extensions may be granted. For a disability retirem ent annuity, the
employee m ust have had 15 or more years of service and be totally
disabled for useful or efficient service by reason of disease or injury.
For retirem ent benefits on being involuntarily separated from the
service employees m ust be 45 years of age or over and have had at
least 15 years7 service, and the separation m ust not be by reason of
misconduct or delinquency.
There is no provision in the law for dependents of employees.
Administration.—The administration of the retirem ent system is in
the Commissioner of Pensions under the direction of the Secretary of
the Interior.
Retirement System of the Territory of Hawaii
'T ’H E retirem ent system of the Territory of Hawaii, established
January 1, 1926, is a joint contributory system, established
upon an actuarial basis. I t applies to all the employees, including
teachers, of the Territorial government, and is open to county and
city employees also, membership being compulsory for all except
those in the service when the act establishing the system was passed,
with whom it was optional.
Contributions.—The employees contribute a percentage of their
salaries, determined by sex, occupational group, and age at en
trance. For general employees, the rates for men range from 4.06 to
7.15 per cent and those for women from 4.58 to 8.06 per cent, while for
teachers the rates for men range from 3.76 to 6.23 per cent and those
for women from 4.50 to 7.73 per cent.
The governm ent’s contribution, calculated as a percentage of the
aggregate pay roll, consists of a normal contribution to cover its
share of the cost of benefits earned by th at year’s service and a de
ficiency contribution to meet the accrued liability, the contributions
fixed for the first two years of operation being 3.05 and 2.91 per cent,
respectively, of the pay roll.
Retirement benefits.—The normal service-retirement allowance is
one-seventieth of the average annual salary for the last 10 years of
service multiplied by the number of years of service. For those em
ployed after January 1, 1926, the employee’s contributions, it is ex
pected, will pay half of this and the Territory pays the other h alf; for
those in the service before th at date the government pays the whole
cost of the years of prior service.
The ordinary disability benefit is nine-tenths of what the service
allowance would be for the same period of service, the minimum
being 25 per cent of the average final salary, unless the retirant en
tered the service after age 40* when it is nine-tenths of what he
would have received had he remained in the service till age 60.
The accidental or duty disability benefit consists of an annuity
bought by retiran t’s accumulated contributions and an allowance
from the government equal to two-thirds of his average final salary.
8
CHAPTER 1.— SUMMARY
In case of death from ordinary causes the decedent’s contributions
are returned with interest and the Government pays the beneficiaries
a lump sum equal to 50 per cent of the decedent’s last year’s salary.
If death is from an accident occurring in the discharge of duty the
widow, children under 18, or dependent parents receive a pension of
50 per cent of the decedent’s average final salary in addition to return
of decedents’ contributions.
If an employee leaves the service for any cause other than death or
retirem ent his contributions are returned with interest. If he should
be dropped from the service without his fault, after 20 years’ service,
he is entitled to a discontinued-service allowance, payable at age 60,
equal to a service-retirement allowance based on years of service ren
dered and salary at the time of being dropped. Several options are
offered at time of retirement, allowing a smaller personal allowance
and certain benefits to designated beneficiaries.
Conditions for retirement.—Service retirem ent is perm itted at the
age of 60 and is compulsory at 70. An ordinary disability benefit is
granted after a minimum of 10 years’ service. There is no age or
service requirement for the accidental or duty disability benefit and
the accidental-death benefit, but for the ordinary death benefit one
or more years of service is required.
Administration.—The retirem ent system is administered by a board
of trustees, consisting of the treasurer and the auditor of the T erri
tory of Hawaii, ex officio, a member elected by the membership of
the system, and two citizens of Hawaii, not employees, one of whom
shall be a responsible officer of a bank in the Territory or shall have
had similar experience.
Retirement System for Employees of the Dominion of
Canada
T ^H E present Canadian retirem ent system for civil-service employees
A is a contributory one. I t applies to all perm anent civil-service
employees with annual salaries of $600 or over, whose duties prevent
them from engaging in any other substantially gainful occupation.
Contributions.—Employees pay 5 per cent of their salaries for the
first 35 years of service, no further contributions being required, the
Government contributing whatever additional sums may be necessary
to m aintain the system.
Retirement benefits.—The superannuation allowance is one-fiftieth
of the average salary of the last 10 years multiplied by the years of
service (not exceeding 35). The retiring allowance granted on occur
rence of disability or abolition of office is equal to the superannua
tion allowance the employee would be entitled to if he had attained
age 65. On voluntary withdrawal or dismissal, without retira n t’s
fault, contributions are returned without interest. Provision is
made for widows’, children’s, and dependents’ allowances.
If 10 years’ service has not been rendered, a gratuity not exceeding
one m onth’s pay for each j^ear of service is granted on occurrence of
disability or on abolition of office, and a gratuity not exceeding the
amount of contributions without interest is paid when employee is
required to retire on marriage; a gratu ity is also granted to the
dependents of a deceased contributor.
RETIREMENT SYSTEMS IN EUROPEAN COUNTRIES
9
Conditions for retirement.—Superannuation retirem ent is optional
at age 65 and compulsory at 70, but extensions up to 75 m ay be
granted. Ten years’ service is required for superannuation and dis
ability retirem ent allowances, but gratuities are given in certain
instances where 10 years’ service has not been rendered.
Administration.—The system is administered by the D epartm ent of
Finance.
Public Service Retirement Systems in European Countries
HP H E present study of foreign public service retirem ent systems
covers Austria, Belgium, Czechoslovakia, Denmark, France,
Germany, Great Britain, Italy, Netherlands, Norway, Sweden, and
Switzerland. Of these 12 systems those of Belgium, G reat Britain,
and Germany, for officials, provide pensions for which the Govern
m ent pays tlie entire cost. In the other countries mentioned the
system is in the nature of social insurance, even though often called
a pension system, the employees paying a part, usually 50 per cent,
or ail of the cost.
Employees covered.—In most of these countries the systems cover
not only employees in Government offices but also those in Govern
ment establishments and corporations. The Netherlands system
also covers provincial and municipal employees, and in Norway such
employees may be brought under the system by special decree.
Contributions.—In the following countries the employees contribute
a percentage of their salaries and the Government pays the remainder
of the cost: Austria (2.8 and 8.2 per cent, according to length of
service), Czechoslovakia (not more than 5 per cent), Denm ark (3
per cent), Italy (6 p$r cent), Norway (10 per cent), and Sweden (3
to 6 per cent). In France the employees contribute 6 per cent of
their salaries and the Government 9 per cent, while in Switzerland
the employees pay 5 per cent and the Government pays 7 per cent
and in addition the employees contribute 4 and the Government 5
m onthly paym ents of any salary increase. In the Netherlands the
em pk^ees contribute 3 per cent of their basic salaries and the Govern
m ent 10 per cent to the employees’ pension fund, and the employees
and the Government each contribute 53^ per cent of such salaries to
the widows’ and orphans’ pension fund. Employees in Germany
other than officials contribute from 1 to 10 marks per m onth, varying
wdth salary.
Conditions for retirement.—M ost of these countries fix both an age
and a service requirem ent for retirement. The most common age
set is 65 years—Belgium, Czechoslovakia, Germany, Italy, N ether
lands, and Norway (for females) fixing this age. Austria, France,
and Great B ritain set the age at 60, and Sweden at 67, while only
two—Denm ark and Switzerland—have as high an age limit as 70 for
all employees, Norway having th a t age requirem ent only for male
employees. There is no age requirem ent in Italy after 40 years’
service and in Switzerland after 50 years’ service for males and 35
years’ service for females.
In Austria, Czechoslovakia, Germany, for male employees, G reat
Britain, Netherlands, and Sweden 10 years of service is required for
retirem ent; in Denm ark, 2 to 30 years; in Germany, for female
3306°— 29------ 2
10
CHAPTER 1.— SUMMARY
employees, 5 years; in Norway, 10 to 30 years; in Italy, 20 years;
and in Belgium and France, 30 years. Frequently longer service is
required for maximum benefits.
In case of disability there is no service requirement, except th a t in
France 15 years’ service is required ^"here the disability was caused
outside the service, and in the Netherlands 7 years’ service is
required when the disability is not serious, permanent, or total.
Retirement allowances.—The service allowances paid vary with
length of service, salary, or amount of contributions. In the follow
ing countries a proportion of the last annual salary or income from
service is paid: Austria, 78.3 per cent (maximum); Denm ark, twotenths to forty-sixtieths; Germany, for officials, 35 to 80 per cent;
and Switzerland, 15 to 70 per cent. In other countries the propor
tion is of the average salary or income from service for a certain
number of years multiplied by the years of service, the average
salary taken being for the last three years in G reat Britain (men,
one-eightieth plus lump sum; women, one-sixtieth), Italy (onefortieth of first 4,000 lire and one-sixtieth of the remainder) and
the N etherlands (1.75 per cent; maximum, 70 per cent of basic salary),
and for the last five years in Belgium (one-sixtieth). Norway pays
from 54 to 66 per cent of the highest annual salary, and the other
countries pay specified amounts.
The disability allowance is equal either to the full service allowance
(as in Austria, Belgium, Czechoslovakia, Denmark, Germany, for
employees, Norway, Sweden, and Switzerland), or to a part of the
salary (as in Great Britain,full salary or £300 (maximum)); Netherlands,
30 to 70 per cent; Germany, for officials, 35 per cent (maximum);
France, one-third to three-fourths, or full service pension; and in
Italy, one-fortieth for each year of service).
Provisions for survivors.—In all of these countries provision is made
for the widow and children of a deceased employee. In Belgium they
are provided for by special funds, established and regulated by law.
In G reat Britain a gratuity may be granted the widow and orphans
on the death of an employee in the discharge of duty. In other
countries a certain percentage of the deceased employee’s pension is
allowed his dependents, generally 50 per cent for the widow and
from 10 to 100 per cent for the orphans, as a rule varying with the
num ber of orphans. In Denmark, however, the orphans are granted
a specified sum, and in Sweden the amount paid the orphans is
determined by the pension board, the total of the widow’s and
orphans’ pensions not to exceed the pension of the deceased.
Administration.—The retirement systems of these countries is
either by a special board under a Government department, usually
the treasury or the department of social welfare (in Austria, Belgium,
Czechoslovakia, Denmark, France, Great Britain, Italy, Norway,
and Sweden), or by an independent State or national insurance office
(in Germany), or under a Federal council (in the Netherlands and
Switzerland).
Tabular Comparison of Principal Features
T^ABLE 1 brings together, in convenient form for comparison, the
principal features of the retirement systems of the United States
(Federal and State), Canada, and various European countries.
COMPARISON OF PUBLIC SERVICE RETIREMENT SYSTEMS
11
T a b l e 1 .— Comparison of public service retirement systems in various countries
Country or State and
principal laws
United States (Act of 1926,
44 Stat. L., p. 904.)
Type of system
By whom ad
ministered
of
Contributory.. Commissioner
Pensions under di
rection of Secre
tary of Interior.
C onnecticut (Public Acts, Noncontribu- S ta te board of
finance and con
1919, ch. 210; 1921, ch. 74;
tory.
trol.
1923, chs. 119, 217).
Governor and coun
M aine (Laws of 1919, ch. 38; ___ do..........
1923, ch. 199; 1925, ch. 118).
cil.
M assachusetts (Acts of Contributory. Board of 3: State
treasurer, an em
1911, ch. 532; various amend
ployee member
ments, now consolidated
elected by his fel
with original act in Gen.
lows, and a third
Laws, ch. 32).
elected by these
two.
New Jersey (Public Laws,
.do............. Board of 5: State
treasurer ex officio;
1921, ch. 109; amended 1923,
2 appointed by
1924).
governor; 2 em
ployee members
elected by their
fellows.
New York (Laws of 1920, ch. ___ do.............. State comptroller-..
741; 1922, ch. 591; amend
ments each year since 1920,
including 1927).
Pennsylvania (Acts of 1923,
..d o ............. Board of 5: State sec
retary and treas
No. 331 (P. L. 858); amend
urer ex officio; 1
ed, Acts of 1927, No. 55).
member appoint
ed by governor;
and 2 employees
elected by their
fellows.
Austria (Constitution; acts ___ do............. Ministry of Finance.
of 1914, 1921, and 1924).
Belgium (Acts of 1844, 1849,
1886, 1920, and 1926).
Canada (act of 1924, amend
ed, 1927).
Czechoslovakia (Acts of 1920
and 1924).
Denm ark (Law of June 27,
1927).
France (Acts of 1924 and
1926).
Noncontri bu_dotory.
Contributory. Department of Fi
nance.
. _.,do............. Ministry of Social
Welfare.
___ do............. Treasury D epart
ment.
___ d o............ Ministry of Finance.
Germany (Acts of 1873,1881,
1886, 1888, 1907, and 1923).
Noncontribu National Insurance
tory for offi
Office.
cials; con
tributory for
employees.
Noncontribu Commissioners of
tory.
the Treasury.
Great Britain (Superannua
tion Acts, 1834 to 1919, and
acts of 1920 and 1924).
Italy (Law of Feb. 21, 1895).
Employees covered
Employees in classified civil serv
ice; certain employees working
in District of Columbia; super
intendents of national cemeteries;
citizen employees of Panama
Canal; certain unclassified em
ployees; regular annual employ
ees of District of Columbia; and
others to whom act may be ex
tended by Executive order.
All regular State employees.
All employees of State institutions
or departments.
Permanent and regular employees
not covered by some other rec
ognized pension system. Judges
and some others excepted.
All in classified civil service unless
covered by some other recog
nized pension system.
All State employees except teach
ers. Employees of cities, towns,
and counties admitted.
All State employees except judges
and those covered by school em
ployees’ pension system.
Officials and employees in Govern
ment offices, establishments, and
corporations.
Government employees.
Civil service employees with an
nual salaries of $600 or over.
Employees in Government offices,
establishments, and corporations.
All Government employees.
Permanent employees in Govern
ment offices and industrial estab
lishments.
Government officials, employees,
and laborers.
Civil service employees and Crown
appointees.
Contributory. Ministry of Finance. All employees in Government of
fices and establishments.
Netherlands (Law of July 1, ___ do__........... Pension Council___ All employees in offices and estab
1922).
lishments of State, Provinces, and
municipalities.
Norway (Law of July 28,1921) ___ do.............. Pension board under All employees in State offices and
Ministry of Public
establishments, and provincial
Welfare.
and municipal employees brought
under system by special decree.
Sweden (Law of Oct. 11, ___ do............. Ministry of Finance- Government officials and employ
1907).
ees provided for in regular State
budget.
Switzerland (Acts of 1919 ___ do............. Federal Council___ Government officials, employees,
and 1920).
and laborers.
12
T
able
CHAPTER 1.— SUMMARY
1 .— Comparison of public service retirement systems in various countriesContinued
Country or State
Conditions for retirement
United States___ Age 70 years after 15 years’ service (letter carriers, post-office clerks, sea-post clerks,
laborers, and mechanics, age 65 years after 15 years’ service; railway postal clerks,
employees in specially hazardous or physically strenuous occupations or in occupa
tions exposing to extreme heat or cold, and employees 15 years or more in service in
Tropics, age 62 years after 15 years’ service)—compulsory, with exceptions. Dis
ability: 15 years’ service; medical certification.
Connecticut__
30 years’ service or age 70 years after 20 years’service; larger pension for 40 years’ service.
M aine________
25 consecutive years’ service with good record.
M assachusetts.
Age 60 years, after 15 years’ continuous service, or after 35 years’ service regardless of
age. Compulsory at 70 years. Ordinary disability: 15 years’ service. Duty dis
ability: No age or service requirements. Medical certification for all disability.
New Jersey____
Optional at 60 years; compulsory at 70, except by special exemption. Ordinary disa
bility: 10 consecutive years’ service; medi'cal certification. Duty disability: No
requirements beyond medical certification.
New York.........
Optional at 60 years; compulsory with exceptions up to 1936, at 70. Ordinary disa
bility: 15 years’ service; medical certification. Duty disability: No service require
ment; medical certification. Discontinued service retirement. (See text.)
Pennsylvania..
Optional at 60 years after 25 years’ service. No set age for compulsory retirement.
Disability: 5 years’ service; medical certification.
A u stria.............
Age 60 years after 10 years* service, for annuity; 3 to 10 years’ service, for lump sum.
Disability: No service requirement.
Belgium ..........
Age 65 years after 30 years’ service. Disability: A-ccident, no service requirement;
other, 10 years’ service. Special provisions for magistrature and school services.
Canada_______
Age 65 years, after 10 years’ service; compulsory at 70, with exceptions. Disability:
10 years’ service for yearly allowance; 1 year’s service for gratuity.
Czechoslovakia
Age 65 years after 10 years’ service; minimum, 5 years’ service. Disability: Accident,
no service requirement; other, 10 years’ service; minimum, 5 years’ service.
D enm ark_____
Age 70 years after 2 to 30 years’ service. Disability: No service requirement.
F ran ce..............
Age 60 years after 30 years’ service, or 55 years after 25 years’ service, including 15
years’ field service. Disability: No service requirement, except when disability
is incurred outside service when it is 15 years.
G erm any..........
Officials: Age 65 years. Employees: Age 05 years after 10 years’ service for males, 5
years’ service for females. Disability: Officials and employees, no service require
ment.
Great Britain. _ Age 60 years after 10 years’ service. Disability: Accident, no service requirement;
other, 10 years’ service for pension; no service requirement for gratuity.
Italy_________
Age 65 years after 20 years’ service; no age limit after 40 years’ service. Disability:
No service requirement.
Netherlands__
Age 65 years after 10 years’ service;, deferred right to pension at age 65 after 15 years’
service if discharged dishonorably or if retirement voluntary; or in certain cases, by
royal decree, 55 years after 10 years’ service when honorably discharged. Disa
bility: Accident or sickness in service 7 j^ears’ service; no service requirement
when disability serious, permanent, or total.
Norway_______
Age 70 years for males and 65 for females (age varies in State mines, State prisons,
post, telegraph and telephone service, marine service, etc.) after frora 10 to 30 years’
service. Disability: No service requirement.
Sw eden_______
Age 67 years after 10 years’ service. Disability: No service requirement.
Switzerland___
Age 70 years or 50 years’ service for males, 35 years’ service for females. Disability:
No service requirement.
COMPARISON OF PUBLIC SERVICE RETIREMENT SYSTEMS
T
able
1 .—
Co?nparison of public service retirement systems in various countries—
Continued
Country or State
United States.
Connecticut _
M aine________
M assachusetts.
New Jersey-
New York.
P en nsylvan ia...
Austria.
Belgium .
Canada_______
Czechoslovakia.
Denm ark.
France___
G erm any..
Great Britain__
Italy.
Netherlands
Norway........
Sweden.........
Switzerland.
13
Retirement allowances
Service and disability benefits: Average annual basic salary (not to exceed $1,500)
during last 10 years’ service multiplied by years of service (not to exceed 30) and
product divided by 45. Maximum, $1,000.
One-half average annual salary for last 5 years; if employee has served 40 years, threefourths of such salary.
Not to exceed one-half of average salary for last 5 years’ service.
Service allowance: Annuity purchased by members’ contributions plus pension of
same amount from State: minimum, $300 a year; maximum one-half of final compen
sation. Ordinary disability: Same as for service retirement. Duty disability: One
half of salary at time of injury.
Service allowance: For each year of service one-seventieth of final compensation.
Ordinary disability: Annuity bought by members’ contributions plus pension from
State of not over one-fifth of final compensation. Duty disability: Annuity bought
by members’ contributions plus pension from State of two-thirds of final compen
sation.
Service allowance: For each year of service one-seventieth of final compensation.
Ordinary disability: Nine-tenths of one-seventieth of final compensation, multiplied
by years of service. Duty disability: Annuity bought by employees' contributions
plus pension from State of three-fourths of final compensation. Discontinued ser
vice: Allowance for service retirement plus extra pension if employee is 50 or over.
Service allowance: For each year of service one-eightieth or one-fiftieth of final com
pensation according to rate of contribution chosen. Disability: Annuity and pen
sion to equal for each year of service one-ninetieth of final salary; minimum 30 per
cent of final salary; maximum, eight-ninths of allowance receivable had member
served till age 60.
Service and disability benefits: Annuities—Maximum, 78.3 per cent of last annual
income from service after 40 years’ service (35 years’ service for employees with
university education). Lump sum for less than 10 years’ service—Maximum,
twice 78.3 per cent of last annual income from service.
Service and disability pensions: One-sixtieth of average salary for last five years or,
in field service, one-fiftieth of such salary for each year of service. Accident pension:
One-fourth of last annual salary plus one-sixtieth of such salary for each year of
service over 5 years. Maximum pension in any case, three-fourths of salary used
as basis for calculation. Special provisions for magistrature and school services.
Service and disability pensions: One-fiftieth of average salary of last 10 years multiplied
by years of service (not exceeding 35). Gratuity for disability if less than 10 years’
service.
Service and disability benefits: From 180 to 900 crowns annually for salary classes 1 to
6; 900 crowns plus 1M to 15 crowns for each month of contributions for classes 7 to 16.
In addition one-eighth of contributions paid after 10 years’ contributions. Pro
portionate amounts for 5 to 10 years’ service. Sick benefits: 1.4 to 24 crowns per
day, varying with salary.
Service and disability pensions: From two-tenths to forty-sixtieths of annual income
from service; maximum, 8,000 crowns.
Service pensions: From one-half to three-fourths of average income from service dur
ing last three years; maximum 18,000 francs per annum. Disability pension: For
disability incurred in service, one-third to three-fourths of last salary, minimum,
1,500 francs, or longevity pension; for disability incurred outside service after 15
years’ service one-sixtieth of average salary in case of office service or one-fiftieth in
case of field service.
Service pensions: Officials—From 35 to 80 per cent of last annual income from service
varying with years of service. Employees—From 516 to 2,280 marks per annum
varying with salary, years contributing, and whether married and having children
or not. Disability: Officials—Not to exceed 35 per cent of income from service.
Employees—Same as service pensions.
Service and disability (after 10 years’ service) pensions: Men—One-eightieth of final
(average of last 3 years) income from service multiplied by years of service plus
lump sum equal to one-thirtieth of final income from service for each completed year
of service or one and one-half times the income, whichever is smaller. Women—
One-sixtieth of final income from service multiplied by years of service. Lump-sum
gratuity for disability if less than 10 years’ service or in case of accident in service.
Service pension: One-fortieth of first 4,000 lire and one-sixtieth of remainder of average
income from service of last three years for each year of service; maximum, ninetenths of such income from service; minimum, 900 lire per annum; for 40 years’ ser
vice, four--fifths of such income from service. Disability pension: One-fortieth of
average income from service of last three years for each year of service; maximum,
nine-tenths of such income from service; minimum one-third of last annual salary
for less than 20 years’ service or one-half of such salary for 20 years’ service or over;
in any case, 900 lire per annum.
Service pension: 1.75 per cent of average income from service for last three years for
each year of service; maximum, 70 per cent of such average income or 4,000 florins.
Disability pension: From 30 to 70 per cent of average income from service for last
three years.
Service and disability pensions: From 54 to 66 per cent of highest annual salary.
Service and disability pensions: Maximum,from 7,296 to 8,796 crowns per annum for
officials; and for other employees, males from 1,320 to 6,996 crowns and females from
1,236 to 6,684 crowns per annum, according to salary.
Service and disability benefits: From 15 to 70 per cent of last annual salary, varying
with years of service..
14
T
able
CHAPTER 1.— SUMMARY
1 . — Comparison of public service retirement systems in various countriesContinued
Country or State
United S ta tes..
C onnecticut__
M aine________
M assachusetts.
New Jersey___
New York____
P ennsylvania..
Austria_______
B elgium ............
Canada..
Czechoslovakia.
Denm ark..........
F ra n ce.............
G erm any.........
Great B ritain..
Italy...................
Netherlands.
Norway..
Sweden..
Switzerland.
Provision for survivors
None.
None.
None.
For dependents of member killed in service, pension of one-half of salary employee
received at time of accident. For others, options at time of retirement.
Options at time of retirement. For death incurred in line of duty, pension to widow
or minor children.
Options at time of retirement; ordinary death benefit; accident death benefit.
Options at time of retirement; no other provision.
Widow: Half of benefits of deceased husband. Orphans: One-fifth of widow’s annuity
for each child up to 21 years; if no widow, undivided orphans’ annuity of one-half
of widow’s annuity.
No provision under retirement system, but special funds, established and regulated
by law, are maintained by deductions from salaries of members. Provision varies
from fund to fund; in Department of Finance it is: Widow—From 20 per cent of
average salary of deceased for last 5 years to 50 per cent of last annual salary; maxi
mum, 10,000 francs. Orphans—For each child up to 18 years, from 2 to 10 per cent
of average salary of deceased; if no widow, three-fifths of widow’s pension for 1,
four-fifths for 2, and entire amount for 3, plus 2 per cent of average salary per orphan
in excess of 3—maximum, 10 per cent.
Widow: One-half of deceased’s allowance until remarriage. Orphans: For one, 10
per cent of employee’s allowance (not more than $300); maximum for all children,
25 per cent. If no widow, 20 per cent of employee’s allowance (not more than $600);
maximum for all children, 50 per cent.
Widow: Half of benefits of deceased husband. Orphans: For each child under 17
years, one-fifth of benefits of deceased; if no widow, two-fifths of such benefits, total
not to exceed benefits of deceased.
Widow: From one-fifth to one-third of annual income from service of deceased hus
band. Orphans: One, 180 crowns, two, 330 crowns, and three, 450 crowns, and each
child in excess of three, 100 crowns per annum.
Widow: Half of pension of deceased husband. Orphans: For each child under 21
years, 10 per cent of pension of deceased; total widows’ and orphans’ pensions not
to exceed deceased’s pension; if no widow, 10 per cent of pension plus proportionate
share of widow’s pension.
Widow: Officials—40 per cent of pension of deceased husband. Employees—60 per
cent of basic retirement benefits of deceased. Orphans: Officials—For each child
under 18 years of age, one-fifth of widow’s pension; if no widow, one-third of such
pension; widows’ and orphans’ pensions, separately or together, not to exceed
deceased’s pension. Employees—For each child under 15 years, 50 per cent of basic
retirement benefits of deceased.
On death incurred in discharge of duty widow and orphans may be granted a gratuity
not exceeding one year’s salary of deceased, or annual allowance not exceeding salary
of deceased or £300, whichever is smaller.
Widow: 50 per cent of deceased husband’s pension. Widow and children: 1 child,
60 per cent of deceased employee’s pension; 2 children, 65 per cent; 3 children, 70
per cent; 4 or more children, 75 per cent; minimum, 600 lire per year. Whole orphans:
Not more than 2 orphans, one-third of deceased employee’s pension; 3 orphans, 40
per cent; 4 orphans, 50 per cent; 5 or more orphans, 60 per cent; minimum, 500 lire
per annum.
Widow: 50 per cent of first 2,000 florins and 40 per cent of remainder of deceased hus
band’s average income from service for last 3 years. Orphans: 10 per cent of pen
sion base of deceased for each child under legal age. If no widow, 20 per cent of
pension base of deceased for each child under legal age. Maximum pension base
for calculation of widow’s and orphans’ pensions, 3,000 florins.
Widow: One-half of deceased husband’s pension. Orphans: For one, 40 per cent of
widow’s pension; for two, 60 per cent; for three, 75 per cent; for four, 90 per cent;
and for five or more, 100 per cent. If no widow, same percentages of father’s pension.
Widow: One-fourth of deceased husband’s pension. Orphans: For children under
21 years, amount decided by pension board. Aggregate pension for widow and
orphans may not exceed pension of deceased. If no widow, cost of living, schooling,
and training paid by survivors’ pension fund.
Widow: From 25 to 100 per cent (normally 50 per cent) of pension of deceased husband.
Orphans: For each child under 18 years, 10 per cent of annual salary of deceased,
total for all children not to exceed 30 per cent of such salary. If no widow, each
child, 20 per cent of such salary.
COMPARISON OF PUBLIC SERVICE RETIREMENT SYSTEMS
T able
15
1 .— Comparison of public service retirement systems in various countries—
Continued
Country or State
United States__
Contributions
By employees: Three and a half per cent of basic salaries. By Government: Remain
der necessary and contributions to cover prior service; cost of administration.
State appropriates biennially amount needed.
State appropriates amount needed.
By employees: 5 per cent of salary up to $1,560; by those employed prior to June,
1918, choice of 3 or 5 per cent. By State: Monthly contributions to meet cost of
pensions for prior and subsequent service, and amounts needed for disability and
accident death benefits. State makes up any deficiency.
By employees: Percentage of salary, determined by sex, age at entrance, and kind o
New Jersey.
work. By State: (1) Normal contribution equal to sum of members’ contribu
tions; (2) contribution to cover prior service; (3) contribution for death benefits
and cost of administration.
By employees: Percentage of salary, determined by sex, age at entrance, and kind
New York.
of work. By State: (1) Normal contribution; (2) deficiency contribution; (3)
cost of administration. (1) and (2) are percentages of active pay roll, determined
annually.
By employees: Percentage of salary, based on age at entrance, choice between two
Pennsylvania..
rates. By State: (1) Amount equal to sum of members’ contributions; ('2) contri
bution to cover prior service; (3) cost of administration.
Calculated on actuarial or mathematical basis—50 per cent by employees and 50 per
Austria..............
cent by Government. Employees contribute 3.2 per cent of salary for full pension
payable before 40 years’service and 2.8 per cent for pension payable after 40 years’
service.
Government bears entire cost, appropriating annually the necessary sums.
Belgium ............
By employees: 5 per cent of salary: no contributions after 35 years’ service. By
C anada______
Government: Remainder needed to maintain system.
Czechoslovakia... Calculated on actuarial or mathematical basis—-50 per cent by employees and 50 per
cent by the Government. Law stipulates that employee’s contribution shall not
exceed 5 per cent of average daily wage.
By employees: 3 per cent of income from service. By Government: Remainder
D enm ark........
necessary.
By employees: 6 per cent of income from service. By Government: 9 per cent
France.............
of salary (appropriating annually necessary sums).
G erm any____
Officials: Government bears entire cost; benefits to their widows and orphans paid
partly by Government and partly by officials, who contribute 3 per cent of salary.
Employees: 50 per cent by employees and 50 per cent by Government. Employees
contribute from 1 to 10 marks per month, varying with salary.
Government bears entire cost, appropriating annually therefor.
Great Britain.
By employees: 6 per cent of income from service. By Government: Remainder
Italy------------of cost of operation, provided for each year in budget.
Netherlands
10 per cent of average of total basic salaries is contributed by State, provincial, and
municipal governments to employees’ pension fund and 5X
A per cent of average ef
total basic salaries to survivors’ fund. Three per cent of basic salary levied upon
employees for employees’ pension lund and
per cent of basic salary for surviv
ors’ pension fund.
By employees: 10 per cent of salary. Government guarantees payment of pensions
Norway___
and contributes remainder of cost each year.
Sweden.......
By employees: From 3 to 6 per cent of basic salary. By Government: Remainder o
cost of operation of system—approximately two-thirds.
Switzerland
By employees: 5 per cent of annual salary and 4 monthly payments of any increase in
salary. By Government: 7 per cent of annual salary of insured plus sum equal
to 5 monthly payments of any increase in employees’ salary; cost of adminis
tration; and any deficit.
C onnecticut___
M aine_________
M assachusetts..
CHAPTER 2.—FEDERAL EMPLOYEES’
RETIREMENT ACT
H E first law creating a retirem ent system of general application
to Federal employees was approved on M ay 22,1920. (41 U. S.
Stat. L., p. 614.) This law was amended in 1922 by four sep
arate enactments of the Sixty-seventh Congress. (42 U. S. Stat. L.,
pp. 364,470,651,1047.) After six years’ experience Congress reenacted
the law with several m aterial changes (44 U. S. Stat. L., p. 904), the
m ost im portant of which provided for more liberal coverage; an increase
in the percentage contributed by the Federal employees—from 23^ to
par cent of their basic annual salaries; credit for every year’s and
every m onth’s service up to 30 years instead of dividing the credit for
services into three-year periods; an increase in the maximum annuity
from $720 to $1,000; and the compilation of more complete and more
valuable records.
T
System of Contribution
jD EFO R E analyzing the provisions of the law it might be advisable
to have in mind the general nature of the law. The retirem ent
act of 1920 provided for the creation of an old-age insurance system
for its employees in the service after the passage of the act, and for an
old-age pension system as regards service rendered prior to the act.
Under the old-age insurance system an employees’ retirem ent and
disability fund was set up. In 1920 proper statistics were not avail
able to show the cost of the system, and until sufficient time had
elapsed to enable actuaries to give a fair estimate of the cost an
arbitrary rate of 2.5 per cent was fixed by Congress as the amount
to be deducted as premiums from the salaries of all persons covered
by the act. At the time Congress passed the act of 1920 it was
believed th at the law would cost the Government at least as much
as it would the employees and th at the cost to the Government would
be immediate. The Government impliedly assumed responsibility for
the difference between the 2.5 per cent and the actual cost of the
system, but no appropriation was passed or percentage of contribu
tion fixed. In 1926 Congress reduced the basis of liability of the
Government to the fund from, roughly, three-eighths to one-eighth
of the cost by increasing the amount of contributions or premiums
deducted from salaries—from 2.5 per cent to 3.5 per cent. Again
there was an implied assumed responsibility on the p art of the Gov
ernm ent for the difference between this 3.5 per cent and the actual
cost. W hether the Government will follow this tendency to increase
the share of the employees and eventually to relieve itself of all liability
by placing the fund on a self-supporting basis or whether it will
contribute something as its share for the benefit it receives under the
act is for the future action of Congress to decide.
In 1920 there were m any old employees immediately eligible for
retirement. Under the terms of the act m any were retired and were
16
SYSTEM OF CONTRIBUTION
17
entitled to benefits, for which the Government assumed full responsi
bility. As they had contributed nothing to the fund, everything due
them was in the nature of a pension. They are solely pensioners of
the Government, and for their pensions the Government alone must
pay the entire cost. Present employees or their fund assume no
responsibility and can not be held to be liable in any way for any
payments of any nature made to these pensioners.
In 1920 many employees who had been for years in the service of
the Government were covered by the act, and thereafter a premium
of 2.5 per cent was deducted from their salary as their contribution to
the fund. As they did not enter the service after the act of 1920 they
are not solely under the insurance fund. As they did not immediately
retire they are not solely pensioners. To the extent that they ren
dered service and contributed to the fund after the act of 1920 the
fund is liable for their annuity, but to the extent that they rendered
service prior to the act of 1920 the Government alone is liable.
When the act of 1920 became effective it was assumed th at Con
gress would appropriate its contribution to meet the pension pay
ments. Congress, however, failed to do this, and, in the absence of
an appropriation, those administering the act, in order to make pay
ments to annuitants who were immediately retired, took p art of the
money which had been deducted from the salaries of employees and
deposited in the fund, and paid it to persons who were retired under
the act. This was done under the authority of the provision directing
payments under the law to be made out of the fund. The amounts
taken from the fund are in the nature of forced loans, “ forced”
because the employees who contributed premiums to create the fund
had nothing whatever to say concerning the taking of their deposits,
and “ loans” because it m ust be assumed th at Congress will repay
them.
Under the present law the Government is liable (1) to the fund for
the difference between 3.5 per cent of the salaries and the actual cost,
(2) to annuitants or pensioners to the extent of benefits allowed for
service rendered prior to the act of 1920, and (3) to the fund for the
forced loans.
The fact that the Government made no appropriations to meet
its* liabilities complicated the situation. On June 30, 1927, the persons
administering the act had taken $40,035,989.95 from the fund, which
was the total amount paid to all retired employees as of that date,
On these forced loans the Government owed the fund $4,796,549.97
interest. But as these superannuated employees had contributed
$2,178,123.36 in assessments to the fund, the Government owed the
fund $42,654,416.59 as of June 30, 1927, for annuities already paid.
The actuaries and those administering the act realized the danger
involved in the Government’s policy of postponing indefinitely the
payment of these obligations and making further forced loans. In
creating a plan of Government contribution to the fund, the actuaries
have provided for the continuance of the system of loans, but it is
planned th at the Government will annually make appropriations
liquidating its debt to the fund by a system of amortization or p art
payments which will completely pay off the debt and at the end of
a 30-year period have a sufficient sum. deposited to balance the
accrued obligation for all service credited prior to the act of 1920.
18
CHAPTER 2.— FEDERAL EMPLOYEES’ RETIREMENT ACT
The actuaries estimate the value of all future payments to present
annuitants and to persons now in active service who will in the future
go on the retired roll as $851,668,166, made up as follows:
Funds on hand____________________________________ $68, 336, 761
Future contributions of employees__________________ 342, 772, 972
Appropriations required of Government____________ 440, 558, 433
Total_______________________________________ 851, 668, 166
The $440,558,433 required from the Government may be divided
into two parts—$47,535,058, which represents the present value of
the future contributions, and $393,023,375, which represents the
amount which m ust be placed in the fund to offset the lack of con
tributions in the past as of June 30, 1927. This last amount is known
as the “ accrued liability.”
The actuaries believed th at this accrued liability was too large to
be covered by a single payment. They calculated th at 1.97 per cent
of the pay roll annually would liquidate this liability in 30 years if
the pay roll increased by approximately 3 per cent per year. An
annual contribution by the Government equal to 0.48 per cent of the
pay roll, plus the 3.5 per cent contributed by the employees would
equal 3.98 per cent, the normal cost of the plan. The actuaries
recommended a contribution by the Government of 2.5 per cent
instead of 2.45 per cent (1.97 per cent plus 0.48 per cent), as the time
of liquidation depended upon the level of the pay roll. Explaining
this the actuaries say: “As the employees are paying an arbitrary
contribution of 3^4 per cent of their salaries, the Government might
very properly contribute a round sum equivalent to 2J^ per cent of
salaries instead of 2.45 per cent, and in this manner it would actually
begin the liquidation of the accrued liability even if the pay roll did
not increase. If the pay roll does not increase, contributions at this
percentage may be expected to liquidate the accrued liability in 71
years; if the pay roll increases by 1 per cent each year, the percentage
will liquidate the accrued liability in approximately 42 years; if it
increases by 2 per cent each year, 33 years will be required for the
liquidation of the accrued liability; while if the pay roll increases by
3 per cent each year, the period required to liquidate the accrued
liability would be only about 28 years.” 1
On the basis of 2.5 per cent the Budget Bureau recommended an
appropriation for the fiscal year ending June 30, 1929, of $19,950,000.2
This item was included in the Interior D epartm ent’s appropriation
act for the year 1928-29 as passed (70th Cong., 1st sess., 45 Stat. 227).
This was the first appropriation to be made in the liquidation of the
Federal Government’s “ accrued liability.”
Analysis of Act of 1926
Employments Covered
'T 'H E employees within the scope of the act include:
1.
All employees in the classified civil service of the United
States.
2.
Certain specified employees working in the District of Columbia
not otherwise covered, and superintendents of national cemeteries.
1 United States Department of the Interior. Bureau of Pensions. Seventh annual report of the board of
actuaries as of June 30, 1927. Washington, 1927. (H. Doc. No. 131, 70th Cong., 1st sess., p. 7.)
2Budget for the fiscal year ending June 30, 1929, p. 645.
ANALYSIS OF ACT OF 1926
19
3. All employees of the Panama Canal on the Isthmus of Panama
who are citizens of the United States.
4. Certain unclassified employees in cities and establishments in
which appointments are made under specified conditions.
5. All regular annual employees of the municipal government of
the D istrict of Columbia appointed by the commissioners or other
competent authority.
6. All employees to whom the Federal employees’ retirement act
of May 22, 1920, and amendments shall have been extended by
Executive order.
7. Postmasters of the first, second, and third class who have been
promoted, appointed, or transferred from the classified civil service.
Employees whose employment is interm ittent or of uncertain
duration and who fall within groups 2, 3, and 4 do not come under
the act and any employee or group of employees so employed and
within one of the other groups may be excluded by the President
from coverage by the act.
Several classes of employees are specifically excluded from the
act. They are: (a) Certain employees of the lighthouse service;
(6) members of the police and fire departm ents and school officers
and teachers of the D istrict of Columbia; (c) postmasters except those
described in group 7 above; (d) employees excluded by Executive
order from the benefits of the Federal employees’ retirem ent aet of
M ay 20, 1920. Groups (a) and (6) are covered by special retirem ent
systems. Employees in the foreign service of the United States are
also provided for by a special retirement system. (43 U. S. Stat. L.
p. 144.)
Any employee or group of employees in the civil service not covered
may be brought under the act by Executive order upon recom
mendation of the Civil Service Commission.
Conditions for Retirement
All employees covered by the act who have attained the age of 70
years and rendered at least 15 years’ service are eligible for retirement
and an annuity as described below; except th at after 15 years’
service, letter carriers, post office clerks, sea post clerks, laborers,
and mechanics are eligible for retirem ent and the annuity upon
attaining 65 years; and after 15 years’ service, railway postal clerks,
those employees whose occupations are hazardous or require great
physical effort or which necessitate exposure to extreme heat or
cold, and employees 15 years or more in service in the Tropics are
eligible upon attaining the age of 62 years.
The classification of employees for the purpose of assignment to
the various age groups is determined jointly 1 y the Civil Service
Commission and the heads of the departm ent, branch, or independent
office of the Government concerned. The term “ m echanics” is
defined to include certain employees of the Government Printing
Office and special provision is made for certain mechanics transferred
or reduced to minor positions.
The act provides th a t all employees covered by the act shall, on
arriving at retirem ent age and having rendered 15 years’ service, be
autom atically separated from the service and all salary shall cease,
but if the head of the departm ent, branch, or office certifies to the
Civil Service Commission th at by reason of the efficiency and willing
ness of the employee to remain in the civil service the continuance of
20
CHAPTER 2.— FEDERAL EMPLOYEES’ RETIREMENT ACT
such employee therein would be advantageous to the public service,
such employee m ay be retained in the service for two years, receiving
additional extensions for two-year periods thereafter; after August
20, 1930, however, no employee may be continued in the civil service
more than four years beyond the age of retirement. No person
receiving the old-age annuity m ay be employed again in any position
covered by the act.
Any employee covered by the act who has had 15 or more years’ serv
ice and who, before becoming eligible for old-age retirem ent, becomes
totally disabled for useful and efficient service by reason of disease or
injury not due to vicious habits, intemperance, or willful misconduct
on his part shall, upon his request or the request or order of the head
of the departm ent or branch office concerned, be retired and allowed
the annuity described below. The application for retirem ent m ust
be made prior to or within six months after separation from the
service. Medical examination and report by a medical officer of the
U nited States or physicians or surgeons designated by the Com
missioner of Pensions, showing disability, is required. At least one
annual medical examination is required in each case (unless it is
clearly evident th a t it is unnecessary) until the employee reaches the
regular retirem ent age. No person shall be entitled to both the
payments under this act and those under the United States employees’
compensation act for the same period of time, but the employee m ay
elect to receive the greater benefit conferred by either act for any
part of the time.
Employees 45 years of age or over who, after at least 15 years’
service and before becoming eligible for old-age retirement, become
involuntarily separated from the service, but not by reason of mis
conduct or delinquency, are entitled to certain allowances described
below. B ut these allowances cease if such employees be reemployed
in #the Government service.
Annuities and Refunds
The annuity allowed an employee for old-age retirem ent under the
act is computed by multiplying the average annual basic salary (not
to exceed $1,500) received by such employee during the 10 years of
allowable service immediately preceding the date of retirem ent by
the number of years of service (not to exceed 30) and dividing the
product by 45. The law provides th a t the maximum allowance per
year shall be $1,000, but it also provides th at the annuity shall be
fixed at the nearest multiple of 12, making the actual maximum
$999.96.
An employee retired under the act because of disability shall be
entitled to an annuity computed on the same basis as th a t for old-age
retirement, but if before reaching retirem ent age such employee is
found, after examination, to be restored to an earning capacity which
would permit him to be appointed to some appropriate position
fairly comparable in compensation to the position occupied at the
time of retirement, payments cease 90 days after such examination.
An employee 55 years of age or over who is involuntarily separated
from the service after at least 15 years’ service and before becoming
eligible for old-age retirem ent m ay elect to be paid either (a) the total
am ount deducted from his basic salary with interest or (6) an im
mediate life annuity, beginning at the date of separation from the
ANALYSIS OF ACT OF 1926
21
service, having a value equal to the present worth of the annuity
which would have been allowed him at the age at which he would
otherwise have become eligible for retirement, or (c) a deferred annuity
beginning at the age at which he would otherwise become eligible for
retirement, of the amount which would have been allowed him at th at
age. An employee between 45 and 55 years of age who is involuntarily
separated from the service after at least 15 years’ service and before
becoming eligible for retirement, shall be entitled to a deferred
annuity, but upon reaching 55 years of age he may elect to receive
an immediate life annuity based on its present worth at the time.
Any employee covered by this act, who is transferred to an employ
ment not under the act or who becomes separated from Govern
m ent service before becoming eligible for retirem ent, shall be refunded
the amount deducted from his salary with interest. B ut if such
employee reenters the service in any employment covered by the act,
such refund m ust be redeposited, with interest, in order to receive any
benefit under the act. In case of the death of an annuitant after
retirem ent but before he has received paym ents equal to the deduc
tions from his salary, with interest, the excess shall be paid to his legal
representatives. If an employee dies before becoming eligible for
retirem ent or establishing his claim for an annuity, the amount
deducted from his salary, with interest, shall be paid to his legal
representatives. If a former employee entitled to a refund becomes
legally incompetent the refund shall be paid to his guardian or com
mittee.
None of the moneys mentioned in this act are assignable, or subject
to execution, levy, attachm ent, garnishment, or other legal process.
The aggregate period of service which forms the basis for calcu
lating the am ount of any benefit is computed from the date of original
employment, including periods of service at different times and in one
or more departm ents, branches, or offices, and service overseas, and
in the Army, Navy, M arine Corps, or Coast Guard. B ut in the case
of an employee electing to receive a pension or retired pay on account
of m ilitary or naval service, or compensation under the war risk
compensation act, the period of his m ilitary or naval service upon
which such pension is based is not included. He may, if so entitled,
receive both a pension for his m ilitary or naval service and an annuity
under this act. Employees who transfer from an employment covered
by this act to an employment not so covered but in Government
service and who later return to an employment covered by the act
receive credit for such time in the employment not covered upon
contributing to the fund the am ount he would have contributed if he
had continued in the covered employment. Periods of separation
from the service and any leave of absence exceeding six months in
the aggregate in any calendar year shall not be included in computing
length of service.
All persons already retired under the provisions of the act of M ay
22, 1920, shall have their annuity computed and paid in accordance
with the act of 1926, but in no case is the annuity to be reduced.
The act provides th a t paym ents shall be made by check on the
first business day of each m onth following the period for which the
paym ent has accrued. The old-age retirem ent annuity commences
from the date of separation from the service and continues during the
life of the employee.
22
CHAPTER 2.— FEDERAL EMPLOYEES’ RETIREMENT ACT
Source of Funds
Funds are secured by deductions from the basic salary of all em
ployees covered by the act. From July 31, 1920, to July 1, 1926,
deductions were at the rate of 2 ^ per cent. Since th a t time, however,
employees have been required to contribute 3 ^ per cent of their
basic salaries. These amounts so deducted are deposited in the
Treasury of the United States to the credit of the “ civil-service
retirem ent and disability fund,” out of which fund annuities, refunds,
and allowances are to be paid. All employees covered are deemed
to have consented to these deductions. The Secretary of the Treas
ury is authorized to receive as a supplement to the fund any dona
tions by private individuals or organizations for the benefit of civilservice employees. The Secretary of the Treasury is directed to
invest portions of the retirem ent fund in United States bonds and in
Federal farm loan bonds and the income from such investments is
made a p art of the fund.
Administration
The administration of the act is placed in the Commissioner of
Pensions under the direction of the Secretary of the Interior. An
appeal from the final action of the Commissioner of Pensions is
allowed to the Secretary of the Interior. The Commissioner of
Pensions is required to make an annual report and to transm it to
Congress, through the Secretary of the Interior, the reports and
recommendations of the board of actuaries.
The Civil Service Commission is required to keep a record of
essential information concerning individual service and to furnish
the Commissioner of Pensions such reports therefrom as he shall
request. The commission is also required to prepare and keep tables,
records, and other information which may be used to serve as a guide
for future valuations and adjustm ents of the plan for retirement.
Three actuaries (one of whom shall be the Government actuary),
selected by the Commissioner of Pensions and known as the board of
actuaries, shall make an annual report upon the actual operations of
this act, make a valuation of the “ civil-service retirem ent and dis
ability fund ” at least every 5 years, prepare such tables as m ay be
required by the Commissioner of Pensions for the purpose of com
puting annuities under the act, and shall have authority to recommend
such changes as in their judgm ent may be deemed necessary.
The Secretary of the Interior shall submit annually to the Bureau
of the Budget, estimates of the appropriations necessary to finance
the retirem ent fund and to continue this act in full force and effect.
The Comptroller General shall establish and maintain an account
showing the annual liabilities of the Government under this act and
shall keep such other accounts as may be deemed necessary.
Statistics of Operation of the Act
'T 'H E report relating to the Bureau of Pensions for the fiscal year
ending June 30, 1927, found in the annual report of the Secre
tary of the Interior, contains some interesting statistics showing the
operation of the act. In presenting figures on the num ber of claims
for refund settled each year since the first retirem ent law became
operative in 1920, the report states th at it is believed th a t these
23
STATISTICS OF OPERATION OF ACT
figures present a fair index of turnover in the civil service as a whole
and concludes th a t employment conditions in the civil service are grad
ually becoming stabilized and th at unless some unusual condition
arises the annual turnover will soon reach a normal proportion. The
num ber of claims for refund settled during each fiscal year a re :
26,
70,
58,
45,
1921_
1922 _
1923 _
1924_
116
978
502
434
1925_
1926 _
1927_
36, 742
34, 005
31, 760
The following tables were taken from the report relating to the
Bureau of Pensions:
Receipts and disbursements, civil-service retirement, year ending June 30, 1927
Balance in the fund Juty 1, 1926_____________________________ $54, 629, 004. 93
Transfers on the books of the Treasury Department to the
credit of the “ civil-service retirement and disability fund”
[amount deducted from salaries and credited to fund]_______ 24, 355, 882. 00
Interest, profits, and miscellaneous items_____________________
2, 812, 581. 84
. 81, 797, 468. 77
Total in fund_____________________________________
9, 598, 285. 73
Disbursements on account of refunds (including $329,869.02
interest)__________________________________________________
3, 862, 288. 82
133. 27
Treasury settlement_________________________________________
13 460, 707. 82
Balance in the fund June 30, 1927____________________________ 68, 336, 760. 95
T
2 . — Number, sex, and cause for which retired of civil-service annuitants
on the roll June 30, 1927, and aggregate contributions made by them
able
Male
Female
Aggre
Total
con
num Retired Retired Retired Retired gate
dis for age for dis tribu
ber
for age for
tions
ability
ability
Class
2,595
1, 793
1,918
842
1, 017
1,880
532
17
396
621
279
226
115
543
113
17
T o ta l_________________________________ 14,119 10, 594
Average contributions...........................
......................
2,310
Mechanics
_______________________________
City and village letter carriers________ __________
Rural letter carriers______ _____________________
Post-office clerks___________ _____________ _____
Railway mail clerks___________________________
Departmental and other clerks. _ _________ _____
Classified and unclassified laborers. _____________
Tropical service and hazardous occupatioa________
3,195
2,414
2,205
1, 222
1,132
3,112
805
34
167
37
2
100
3
54
395
96
294
65
759
456
$361, 619
324, 759
268, 861
156, 663
136, 736
376, 845
73,136
6, 671
1, 705, 290
120.77
Number of civil-service annuitants receiving each classified amount, average annuity,
and annual value of retirement roll, June 30, 1927
Amount of annuity
Number of annuitants
Under $100____________________________________
10
Between $100 and $200_________________________
106
Between $200 and $300___ _____________________
409
Between $300 and $400 _________________________
831
Between $400 and $500_________________________
1, 765
Between $500 and $600_________________________
1, 560
Between $600 and $700_________________________
1, 508
Between $700 and $800_________________________
1, 528
Between $800 and $900_________________________
2, 117
Between $900 and $999.96______________________
1, 545
$999.96________________________________________
2, 740
Total______________________________________________ 14, 119
Average annual rate___________________________
$721. 39
Annual value of retirement roll_________________ $10, 185, 305. 41
N
o t e .—
The annual value of the retirement roll is reached by multiplying the number of annuitants by
the average annual rate, and it represents the amount necessary to pay such annuitants for one year.
24
T
CHAPTER 2.— FEDERAL EMPLOYEES’ RETIREMENT ACT
able
3 . — Average
salary received during last 10 years of service by annuitants on
retirement roll, June 80, 1927
Eligible for retirement at—
Average salary
Less than $300____________________
$300 to $600_______________________
$600 to $900_______________________
$900 to $1,200_____________________
$1,200 to $1,500____________________
$1,500 to $1,800____________________
$1,800 to $2,100____________________
$2,100 to $2,400____________________
$2,400 to $2,700____________________
$2,700 to $3,000____________________
$3,000 to $3,300____________________
$3,300 to $3,600____________________
$3,6C0 and o v e r ______ _____ _
Total_____ ________________
Total on
roll
Age 62
Age 65
Age 70
Aggregate
Aggregate compensa
annuities
tion
26
179
1,141
2,603
4, 981
3, 652
965
308
130
56
43
16
19
1
5
27
354
414
262
87
9
4
1
2
21
138
702
1, 966
3,679
2,748
397
106
41
20
13
4
6
5
40
434
610
948
490
306
115
80
32
29
10
13
$3,377
43,781
467,427
1, 363,028
3,819,210
3,117,814
855, 444
277, 778
117,368
52,166
39,016
14,197
16, 231
$6, 243
83,910
889,990
2, 819, 676
6,682,737
5,913, 517
1,855,125
682,165
328, 070
159,184
134, 956
54,998
83, 855
14,119
1,166
9,841
3,112
10,186, 837
19, 694, 426
Average annuity....... ....................... ................................. ................................................................... $721.39
Average annual compensation.............................................................................................................. 1, 394.88
Number of civil-service annuitants and amount of annuities paid, by fiscal years
Annui
tants at
end of year
1920-2
1921-2
1922-2
1923-2
1924-2
1925-2
1926-2
1
2
3
4
5
6
7
6,471
7, 576
9, 334
10, 548
11, 689
12, 524
14, 119
Annuities paid
during year
$2,590,568.52
4, 188, 258. 89
4, 964, 001. 92
5, 692, 443. 59
6, 235, 830. 16
6, 766, 601. 17
9, 598, 285. 73
The total annual deductions from the salaries of Federal employees
covered by the act have been sufficient, since the passage of the act,
to meet the annuities of retired employees and to allow a balance to
accumulate in the retirem ent and disability fund. As noted above, this
balance in the fund as of June 30, 1927, amounted to $68,336,760.95.
The board of actuaries in its sixth annual report, for the year ending
June 30, 1926, estimated th at 3.98 per cent of the basic annual sal
aries of employees covered by the act would be sufficient to cover the
continuing or normal cost of the s3rstem (not including the accrued
liability). As noted above, by act of Congress, deductions are made
from the salaries of employees at the rate of 3.5 per cent, regardless
of the age, salary, length of service, or physical condition of the
employee.
CHAPTER
3.—STATE EMPLOYEE RETIREMENT
SYSTEMS
~\ART from teacher-retirement systems and plans pensioning
limited groups, such as judges, or war veterans employed in the
public service, six States, Connecticut, Maine, M assachusetts,
New Jersey, New York, and Pennsylvania, have legislation providing
for the retirem ent of State employees on allowance. Such legislation
is of decidedly recent date. M assachusetts led the way in 1911, with
an act covering all persons employed “in the direct service of the Com
monwealth or in the service of the m etropolitan district commission,
whose sole or principal employment is in such service.” In 1919 Con
necticut passed an act authorizing retirem ent pensions for persons in
the State service who m et certain requirements as to age and length
of service and Maine recast her laws so as to extend to all State
employees legislation which up to th at time had applied only to those
in the prison service and to public employees who were veterans of
the Civil War. In 1920 New York, in 1921 New Jersey, and in
1923 Pennsylvania enacted laws establishing state-wide retirem ent
systems, and since th at time there has been a lull in such legislation.
While these plans differ in details, there is considerable resemblance
in their general outlines. The Maine and the Connecticut systems are
essentially at variance with the others in th a t they are noncontributory, and a num ber of differences in detail follow from this funda
m ental divergence. The others are alike in their main features,
varying only in the m anner in which these are worked out. All six
are intended to apply to all regular and perm anent State employees
not covered by some other recognized pension plan, a provision which
in all these States rules out teachers. In New York special provision
is made for bringing in employees of cities, towns, and counties, and
M assachusetts includes employees paid partly by the State and partly
by counties.
Table 4 brings together the main features of all six p lan s:
3306°— 29------ 3
25
T able 4 .—
Connecticut
Maine
Authorization. Laws of 1919, ch.
38; 1923, ch.
199; 1925, ch.
118.
Governor
council.
and
Acts of 1911, ch 532; various Laws of 1920, ch. 741; Laws of Public Laws, 1921, ch. 109;
Public Acts,
amended 1923, 1924.
1922, ch. 591; amendments
amendments, now consoli
1919, ch. 210;
each year since 1920, includ
dated with original act in
1921, ch. 74;
ing 1927.
ch. 32, General Laws.
1923, ch. 119;
1923, ch. 217.
State board of Board of 3: State treasurer, State comptroller...................... Board of 5: State treasurer,
ex officio; 2 appointed by
an employee member elected
finance and
governor; 2 employee mem
by his fellows, and a third
control.
bers elected by their fellows.
elected by these 2.
State..
Cost of admin- State..
istration
borne by.
Persons cov All employees of A ll r e g u l a r
S t a t e e mState institu
ered.
ployees.
tions or de
partments.
State..... ....................................
State..
Permanent and regular em All State employees except
teachers.
Employees of
ployees not covered by some
cities, towns, and counties
other recognized pension
admitted.
system. Judges and some
others excepted.
Conditions for 25 consecutive 30 years’ serv Age 60 years, with 15 years’ Service retirement: Optional
at 60, compulsory, with ex
continuous service, or after
ice, or 20 if
years' service
retirement.
ceptions up to 1936, at 70.
35 years' service, regardless
empl oyee
with good rec
Ordinary disability retire
of age. Compulsory retire
has reached
ord.
ment: 15 years’ service; med
ment at 70. Ordinary disa
age of 70;
ical certification. Duty dis
bility retirement: 15 years’
larger pen
ability: Injury received in
service. Disability incurred
sion for 40
service regardless of length
in performance of duty: No
years’ serv
of service; medical certifica
age or service requirements;
ice.
tion. Discontinued service
medical certification.
retirement. (See text.)
Contributions System noncon- System non- From employees: 5 per cent From employees: Percentage
of salary determined by sex,
of salary, up to $1, 560. For
contributo
tributory.
to fund.
age at entrance, and kind of
those employed prior to
ry State ap
State ap
work. From State: (1)
June, 1918, choice of either
prop riates
propriates
Normal contribution; (2)
3 or 5 per cent. From State:
amounts
bi enni al l y
deficiency contribution; (3)
Monthly contributions to
amount
needed.
meet cost of pensions for
cost of administration. (1)
needed.
and (2) are percentages of
prior and subsequent serv
ice, and amounts needed for
active pay roll, determined
annually.
disability and accident
death benefits. State makes
up any deficiency.
Pennsylvania
Acts of 1923, No. 331 (P. L.
858); amended, Acts of 1927,
No. 55.
State..
Board of 5: State secretary and
treasurer, ex officio; 1 mem
ber appointed by governor;
and 2 employees elected by
their fellows.
State.
All in classified civil service,
unless covered by some
other recognized pension
system.
All State employees except
judges and those covered by
school employees’ pension
system.
Service retirement: Optional
at 60, compulsory at 70, ex
cept by special exemption.
Ordinary disability: 10 con
secutive years’ service; med
ical certification. Disabil
ity incurred in service:
No requirements beyond
medical certification.
Service retirement: Optional
at 60, after 25 years’ service.
No set age for compulsory
retirement. Disability retire
ment 5 years’ service; medical
certification.
From employees- Percentage
of salary determined by sex,
ag8 at entrance, and kind of
work. From State: (1)
Normal contribution, equal
to sum of members’ contri
butions; (2) contribution to
cover prior service; (3) con
tribution for death benefits
and cost of administration.
From employees: Percentage
of salary based on age at
entrance, choice between
two rates. From State: (1)
Amount equal to sum of
members’ contributions; (2)
contribution to cover prior
service; (3) cost of adminis
tration.
3.-------------------------------------------------------------------------------------------------------
By whom ad
ministered.
New Jersey
New York
Massachusetts
CHAPTER
Item
to
Comparison of State employee retirement systems
Retirement al At discretion of
lowances.
governor and
council, but
not to exceed
one-half aver
age salary for
last 5 years of
service.
One-half aver
age annual
salary for
last 5 years;
if employee
has served
40
years,
t h r e e fourths.
Provision for
dependents.
In case of withdrawal, dismis
sal, or death, an employee’s
contributions are returned
with interest.
Non© ________ None_______
Service retirement: For each
year of service one-seventi
eth of final compensation.
Ordinary disability: Annui
ty bought by member’s con
tributions, plus pension from
State of not over one-fifth of
final compensation. D i s
ability due to service:
Annuity bought by mem
ber’s contributions, plus
pension from State of twothirds of final compensation.
Service retirement: For each
year of service one-eightieth
or one-fiftieth of final com
pensation, according
to
rate of contribution chosen.
Disability retirement: An
nuity and pension to equal
for each year of service oneninetieth of final salary; min
imum, 30 per cent of final
salary; maximum, eightninths of allowance receiv
able had member served till
age of 60.
On withdrawal, dismissal, or
death contributions are re
turned with interest at 4 per
cent, compounded annually.
Options at time of retirement.
Ordinary death benefit; ac
cident death benefit.
Options at time of retirement.
For death incurred in line
of duty, pension to widow
or minor children.
On withdrawal or dismissal
member may receive accum
ulated contributions with
compound interest at 4 per
cent or their actuarial equiv
alent in annuity or deferred
annuity. In case of death,
refund is made to estate.
Options at time of retirement;
no other provision.
OF
SYSTEMS
For dependents of member
killed in service, pension of
one-half of salary employee
received at time of accident.
For others, options at time
of retirement.
Service retirement: For each
year of service one seventi
eth of final compensation.
Ordinary disability: Ninetenths of one-seventieth
of final compensation, multi
plied by years of service.
Duty disability: Annuity
bought by employee’s con
tributions plus pension from
State of three-fourths of final
compensation. Discontin
ued service: Allowance as
for service retirement, plus
extra pension if employee is
50 or over.
On withdrawal, dismissal, or
death contributions are re
turned with interest at 4 per
cent, compounded annually.
COMPARISON
Refunds..........
Service allowance: Annuity
purchased by member’s con
tributions, plus pension of
same amount from State;
minimum, $300 a year; max
imum, one-half of final com
pensation. Ordinary disa
bility: Same as for service
retirement. Accident disa
bility: One-half of salary at
time of injury.
to
«<1
28
CHAPTER 3.— STATE EMPLOYEE RETIREMENT SYSTEMS
Administration
A COM PARISON of the six systems shows th a t in the m atter of employee representation they are evenly divided. In M aine and
Connecticut the m anagement of the plan is intrusted to a State
body, and in New York to a State official, the employees having no
representation whatever. The M assachusetts, New Jersey, and
Pennsylvania systems are administered by boards on which the
employees have either one or two representatives, chosen by them
selves from their own number.
Conditions for Retirement
GE.—In this respect there have been m any changes in the various
systems since they were established, but taking them as of the
present date, two make no requirements as to age, and four set 60
as the proper age for optional retirem ent, sometimes coupling with
it a service requirement. M aine has only a service requirem ent, and
in general this is true of Connecticut, though here a modification is
made in favor of those who reach 70 w ithout the service qualification.
New York and New Jersey permit retirem ent at 60 w ithout regard
to service, and M assachusetts and Pennsylvania perm it it at the
same age with a service requirement.
Maine, Connecticut, and Pennsylvania set no age at which retire
m ent is compulsory, but M assachusetts and New Jersey require it
at 70. New York at first did the same, but there was so much com
plaint against this feature th at the law was amended to set the
compulsory age at 80, with progressive modifications wiiich will
bring it down to 70 by 1936.
Service requirements.—M aine requires 25 consecutive years’ service
and Connecticut 30, or 20 if the employee has reached 70 with fewer
than 30 years’ service. M assachusetts requires 15 years’ service
for retirem ent at 60, but permits it at any age after 35 years’ service.
Pennsylvania requires a minimum of 25 years, and New York and
New Jersey make no service requirement.
Disability retirements.—Maine and Connecticut make no special
provision for disability. The other States perm it retirem ent on
allowance for disability after a certain length of service, M assachusetts
and New York fixing the term at 15 years, New Jersey at 10, and
Pennsylvania at 5. M assachusetts, New York, and New Jersey
make a further provision for duty disability, i. e., disability arising
from injury received in the direct performance of duty. For such
disability, retirem ent on allowance is perm itted w ithout any require
ments as to either age or length of service.
All four States require th at the fact of disability should be estab
lished by medical examination and certification and provide th at
the retirant m ust submit to reexamination whenever ordered.
Source of Funds
T N M aine and Connecticut the State provides the necessary funds,
appropriations being made at the regular sessions of the legis
lature, according to estimates furnished. In the other States the
RETIREMENT ALLOWANCES
29
funds are secured through contributions from the employees, con
tributions by the public authorities, interest on investments and
money in bank, occasional profits on investments and the like, the
contributions from the employees and the State being the main
sources.
Contributions from employees.—In all four States the employee’s
contribution is made in the form of a percentage of his salary or
wage, which is deducted before his salary is paid him. In M assa
chusetts, for all who entered the service after June 30, 1918, the
contribution is 5 per cent of the salary up to $1,560 a year, all salary
over th a t amount being exempt from contribution. In New York
and New Jersey the percentage is determined by the employee’s
sex, age at entrance, and kind of work, and in Pennsylvania the
employee is given a choice between two rates, based on age at en
trance, the amount of the retirem ent allowance being determined by
the rate chosen.
Contributions from State.—In M aine and Connecticut appropria
tions are made as needed for the paym ent of pensions. In the
other systems, the S tate’s contribution is usually divided into several
parts, determined by different calculations. On-e p art is needed to
provide for the paym ent of pensions for service currently rendered,
another to defray the cost of special benefits, such as the duty dis
ability allowance, and another to pay the allowances for service
rendered before the system went into effect. In addition the State,
in all these systems, pays the full cost of administration of the plan.
In theory the different amounts, except the expense of adm inistration,
are calculated either as a percentage of the active pay roll, or as a
flat sum which, if continued through a specified period, will extin
guish the claim, and the total amount thus found is appropriated
regularly. In practice, there is occasionally some irregularity about
the appropriations; the State accepts its full responsibility, bu t some
times prefers to postpone its payments or p art of them.
In addition to these two sources of income, interest upon the
accumulated contributions of employees and the State is an im portant
factor in building up the reserves. In 1926 the New Jersey fund
received a gross amount of $61,680 from this source and the New
York fund, $330,290.
Retirement Allowances
T TNDER the M aine law the governor and council have entire discre^
tion as to the amount which m ay be granted as an allowance,
except th at it m ay not be more than one-half the average annual
salary received for the last five years of service. In Connecticut the
amount is ordinarily one-half of the average annual salary for the
last five years of service, b u t if the retirant has served 40 years it
is three-fourths of this average salary.
In the other States the allowance is composed of two parts, an
annuity bought by the retiran t’s accumulated contributions and a
pension from the State, which, in the case of service retirem ent, is
equal to the annuity. For those in the service before the system was
established, the State provides both pension and annuity to cover
the years of prior service, so th a t the total allowance is the same a&
30
CHAPTER 3.— STATE EMPLOYEE RETIREMENT SYSTEMS
if they had been paying contributions from the time they entered the
public employ. In M assachusetts the minimum allowance is $300
a year, and the maximum is one-half of the average annual salar}^ for
the last five years of service. If the employee has served so long th at
his accumulated contributions would purchase an annuity amounting
to more than one-fourth of this final compensation, the State returns
the excess to him in a lump sum at the time of retirem ent. The other
States do not set a maximum, but the employee’s contributions have
been calculated to produce, for those who enter the service at a rea
sonably early age and remain until they reach the retirem ent age, a
sum which will purchase an annuity approximating one-fourth of the
final compensation, so th a t the total allowance will be around onehalf of this compensation.
The allowances for disability and duty disability retirem ent are
usually fixed as a proportion of a normal retirem ent allowance,
the employee’s contributions being used to purchase an annuity and
the State altering its pension as m ay be necessary to make the allow
ance reach the figure set. In the case of duty disability, the State
will, if necessary, make up the whole allowance, and in any case its
contribution is more liberal than in the case of ordinary disability
or service retirem ent.
Refund of Contributions
A S M aine and Connecticut do not require contributions from their
-t*- employees, the question of refunds does not arise. The other
States all return the contributions, with compound interest, upon the
death, dismissal, or withdrawal of the employee. Pennsylvania
perm its a retiring employee, if he prefers, to receive the actuarial
equivalent of his accumulated contributions in either an annuity
or a deferred annuity.
Provision for Dependents
TV jAINE and Connecticut make no provision for dependents. The
other States perm it options at the time of retirem ent by which
the retirant may, if he chooses, receive a smaller allowance for him
self with some provision for dependents after his death, the nature of
the options differing considerably in the various States.
If death occurs from ordinary causes while a member is still in
the service, M assachusetts, New Jersey, and Pennsylvania make no
provision for the dependents, except as the refund of the accumulated
contributions may be looked upon as a provision, b u t New York, if
the decedent has served for at least one year, makes an additional
lump-sum paym ent to his dependents, based upon length of service,
b u t not to exceed one-half of his last year’s salary.
If death results from some accident or exposure incurred in the
direct performance of duty, M assachusetts, New York, and New
Jersey all provide a pension of one-half of the m em ber’s final com
pensation to his widow during widowhood, or to children under a
certain age.
CONNECTICUT
31
STATE SYSTEMS
CO N N EC TIC U T
I N 1919 Connecticut passed an act to provide for retiring State
employees (Public Acts 1919, ch. 210), which became effective
on July 1 of th at year. Since then various amendments have been
passed, liberalizing the conditions for retirement. The system is
noncontributory. The original act applied to all regular State em
ployees in the service at the time the law became effective and to
those who entered thereafter. In 1923 amendments were passed
bringing under the terms of the act persons who had retired before
1917 with the qualifications as to age and service established by the
act. Under these amendments three persons were placed on the
pension roll.
Administration
T ^H E State board of finance and control, composed of 10 members,
is in charge of the system.
Source of Funds
rT 'H E State bears the whole cost of the pensions, or “ retired salaries,”
**■ as they are called in Connecticut. An appropriation for this
purpose is made in the general fund of the budget every two years,
according to an estimate of the amount needed. In case the estimate
proves too small, whatever amount is needed to make up the balance
is transferred from the deficiency fund.
Conditions for Retirement
'T 'H E conditions for retirem ent have been altered several times,
*** but by an amendment passed in 1923 length of service is made
the only qualification, except in the case of those aged 70 or over
who have not completed 30 years’ service. These m ay be retired
by the board of control after they have served for 20 years or longer
in the aggregate. For others, retirem ent is perm itted, regardless
of age, after 30 years’ service, w ith a higher allowance for those who
remain in the service for 40 years.
There is no provision for retirem ent on pension on account of
disability.
Retirement Allowances
TTN D ER the amendment of 1923 an employee who is retired after
^
30 years’ service, or who, being over 70, is retired after 20 years,
receives an annual allowance equal to one-half his average annual
salary for the last five years. One who has served for 40 years receives
an allowance equal to three-fourths of his salary at the time of retire
ment. Those who under the earlier provisions of the act were given
allowances of a different amount continue to receive the sum first
set, regardless of the changes introduced by the amendment of 1923.
32
CHAPTER 3.— STATE EMPLOYEE RETIREMENT SYSTEMS
Statistics of Operation of the System
A T T H E end of the first year of the system ’s operation there were
eight persons on the roll, and during th a t year $4,270 was paid out
for pensions. At the close of the fiscal year ending June 30, 1926,
after the system had been in existence for seven full years, there were
but 41 on the pension roll, or approximately 1.4 per cent of the active
force employed th a t year. The total amount paid out in pensions
in 1926 was $52,411, or 0.6 per cent of the pay roll of the active
force.
Since the law first went into effect 56 persons have been placed on
the pension roll. For these the average age at retirem ent was 71
years, the average length of service was 33 years, and the average
annual pension was $1,123.
In addition to these 56 persons, 11 have been pensioned under
special acts having no connection with the public service system,
their pensions amounting in 1926 to $12,420 a year.
The total amount paid out for pensions from July 1, 1919, to June
30, 1926, was $177,937. This total, however, includes the special
pensions just mentioned, and as these varied from year to year it is
not possible to say exactly what proportion of the amount was charge
able to the public service pensions.
MAINE
'T ’H E situation as to pension legislation in M aine has been a
progressive development from an act passed in 1909, which
applied only to officials and employees of the State prison service.
These, after 30 years’ service, or, if they had reached the age of 60,
after 20 years’ continuous service, m ight be retired upon the recom
m endation of the warden and with the approval of the board of
prison commissioners and the governor and council, on a pension of
one-half the salary received at the time of retirement. In 1913 an act
was passed providing a similar pension and retirem ent for veterans of
the Civil W ar in the State service if they became incapacitated for
active duty after 25 years’ continuous service. In 1919 a third act
authorized the retirem ent, after 25 years’ continuous service, of any
employee in any State institution or State departm ent, upon the
recommendation of the superintendent and board of trustees. In
this case, while no minimum was set for the pension, its maximum
was placed at one-half the average salary received for the last five
years. In 1923 an amendment to this act carefully defined the
word “ employee” so as to include clerks and other employees of the
several State departm ents and State institutions, and teachers in
the State normal schools, including such as had retired since M arch 1,
1920. In 1925 another amendment brought within the scope of the
law teachers in the M adawaska Training School, including those who
had retired since M arch 1, 1920.
The plan, as established by these acts and amendments, is non
contributory, and does not give the employee any absolute right to
retirem ent or pension. The superintendent of an institution or the
head of a departm ent m ay recommend an employee’s retirem ent,
after 25 years’ service, if he considers it best to do so. Such recom
mendations are sent to the governor and his council, who have full
MASSACHUSETTS
33
discretion as to what action they shall take, except that, if they decide
to approve the retirement, the pension granted m ust not exceed the
limit set by law. No fund is maintained, but the legislature at each
biennial session makes an appropriation to cover pension paym ents
for the next two years, estimating the amount required on the basis
of the last two years’ experience. Should a deficiency occur, the
am ount needed is transferred from one of the other State funds.
Very few retirements have been made under these provisions.
Since the first law went into effect 19 in all have been placed upon the
pension roll, of w^hom 14 were still alive at the end of 1926. E ight of
these retirants were prison employees, 4 were Civil W ar veterans,
4 were employed in the State hospital, 2 in the statehouse, and
1 was a teacher. The pensions allowed them ranged from $252 per
annum to $884, the average being $539. As of December 31, 1926,
the annual pension outlay was $8,000.
MASSACHUSETTS
P R E V IO U S to the passage of chapter 532 of the Acts of 1911,
which established the State Employees’ Annuity Fund of M assa
chusetts, the present contributory system, there was no general
retirem ent plan for the employees of the Commonwealth or the
metropolitan district. Some special groups had from time to time
been covered by noncontributory pension systems which the State
administered and of which it bore the entire cost. These earlier
systems may be summed up in a few words. The groups covered
comprised judges, court officers and messengers, veterans of the
Civil War, certain persons employed in prisons and reformatories,
the m etropolitan park police, the district police, veterans of the
Spanish W ar (veterans of the World W ar were later included with
these), and scrub women employed in the statehouse. All of the laws
under which these pensions were granted have been amended so th at
persons belonging to these groups who entered the public service
after July 1, 1921, should come under the general contributory plan,
but those already in the service at th a t time remained under the
provisions of the earlier plans.
Under the noncontributory plans persons were retired by their
departm ent head, subject to the approval of the governor and council.
Their pensions are paid from special appropriations made in accord
ance with the laws providing for the different groups. The total
am ount paid in pensions under these plans during the year ending
November 30, 1926, was $167,478.
The new system was established by the act referred to above and
became effective June 1, 1912. I t has been amended several times,
and in its present form is contained in chapter 32, General Laws of
M assachusetts.
Scope of System
TN GEN ERA L, the system covers all persons perm anently and
^ regularly employed in the direct service of the Commonwealth or
in the service of the m etropolitan district commission, whose sole or
principal employment is in such service. M embership, after a proba
tionary period, is obligatory upon all employed since the establish
m ent of the system, but those in the service before th a t date were
34
CHAPTER 3.— STATE EMPLOYEE RETIREMENT SYSTEMS
given their choice of entering or remaining outside. The law required
them*to make this choice before January 31, 1912, b ut this period
was afterwards extended, and in 1924 a special amendm ent gave those
who had failed to enter the privilege of becoming members a t any
time before reaching age 70, provided they paid into the fund a sum
equal to w hat would have been the amount of their regular contribu
tions, with accumulated interest, had they entered June 1, 1912.
Certain classes of State employees are excluded from membership,
and certain others come in under special provisions. The excluded
classes are, briefly, as follows: (1) Officers elected by popular vote;
(2) persons devoting too little time to the service to make it their
“ sole or principal e m p l o y m e n t (3) persons aged 55 or over when
employed; (4) judges; (5) certain groups of employees entitled to
pensions under the earlier schemes.
Those brought in by special provision include employees paid
partly by the State and partly by a county having a retirem ent
system; persons, regardless of age, in the employ of a departm ent
or institution formerly administered by a city, county, or corpora
tion which is taken over by the State; the nonteaching force, such as
janitors, engineers, etc., employed in training schools m aintained
and controlled by the departm ent of education in buildings owned by
the Commonwealth (if the building is not so owned, these are not
employees of the State, and consequently are not included); and
persons aged 55 or over who, previous to entering the State service,
have been members of the teachers’ retirem ent association. Officials
appointed by the governor for a fixed term of years, if under 55 at
the time of appointm ent, m ay become members of the system by
making w ritten application within one year from the date of appoint
m ent or reappointm ent.
A further special provision covered employees who were 55 or over
a t the time the system was adopted. These m ight not become mem
bers, but were entitled upon retirem ent to a nonmembers’ pension
of $200 a year.
Administration
HTHE adm inistration of the retirem ent system is vested in a
A board of three members, the State treasurer, ex officio, one
employee member elected by his fellows, and the third chosen by these
two. The State treasurer is custodian of the funds of the system and
has power to invest and reinvest, in accordance with the law, any
amounts not required for current disbursements. The board is
required to file annually with the commissioner of insurance a sworn
detailed statem ent showing the financial condition of the system on
December 31, and its financial transactions for the year ending on
th a t date. Subject to the same conditions and requirem ents the
treasurer m ust file a sworn statem ent showing the financial condition
of the system on the same date.
Source of Funds
/ CONTRIBUTIONS from members.—The employees are required to
^ make contributions of 5 per cent of their salaries up to $1,560
a year, any amounts received in excess of th a t sum being exempt
from the requirement. The original law provided th a t the contribu
tions should be not less than 1 nor more than 5 per cent of the salaries,
MASSACHUSETTS
35
but it was found difficult to establish any general plan of percentage
which would accomplish the same proportionate retirem ent allow
ance for all members, since at th a t time there were no data as to ages
a t which employees would elect to retire. I t was decided th at mem
bers should be given the choice of contributing 3 per cent or 5 per
cent of the salary, b ut later it was ruled th at all who entered the
service after June 1, 1918, m ust pay the 5 per cent rate. In 1926
an amendm ent to the law perm itted those employees who had at
some time contributed only 3 per cent of their salary or wages and
who had changed to the 5 per cent basis to make up the am ount
required to bring the accumulated contributions up to w hat they
would have been had the 5 per cent rate been chosen from the first.
As the retirem ent allowance depends on the amount of accumulated
contributions, as well as on the age at retirem ent, the importance of
this provision is evident.
Contributions from the State.—The State contributes such amounts
as are needed (a) to meet its share of the allowances for current
service; (b) to pay the full allowance for service rendered prior to
June 1, 1912; (c) to make up any deficiencies due to an inadequate
estimate of the needs of the preceding year; and id) to meet the cost
of disability retirements and benefits to dependents of employees
who die as a result of injury received in the service. The board
submits each year estimates of the amount of appropriations required
from the State to pay the allowances for the following year. I t has
been found th at about 7 per cent of the members eligible for retire
m ent leave the service without waiting for compulsory retirem ent
at 70. The State also pays the entire cost of administering the
system.
Conditions for Retirement
SU PE R A N N U A T IO N or service retirem ent is perm itted at age 60,
^
after 15 or more years’ continuous service, or, regardless of age,
after 35 years’ continuous service. Employees who, when the system
was established in 1912, had reached the age of 55 years m ight be
retired at any time after reaching 60, whatever their length of service
m ight have been. Retirem ent is compulsory at 70.
Retirem ent is perm itted after 15 years’ continuous service if an
employee becomes perm anently disabled. Medical certification is
required and reexamination may be ordered by the board at any time.
D uty disability retirem ent is perm itted, without requirem ent
as to age or length of service, for any member who is found, after
examination by one or more physicians selected by the board, to
have been perm anently incapacitated, m entally or physically, by
injuries sustained through no fault of his own while in the actual
performance of duty.
W ritten application for disability retirem ent m ust be received by
the board within two years from the date of the applicant’s last
salary payment.
Other retirements.—When members of the system are husband and
wife, if one of the two retires or is retired, the board m ay also retire
the other at the same time. When this is done, the enforced retirant
receives an allowance calculated in the usual way for the age attained,
except th at the provision for minimum allowances does not apply
in such a case.
36
CHAPTER 3.--- STATE EMPLOYEE RETIREMENT SYSTEMS
Retirement Allowances
T TPON service or superannuation retirem ent the member receives
^
an allowance consisting of an annuity bought by his accumulated
contributions, plus a pension of equal amount paid by the State. The
amount of the annuity, and consequently of the pension, depends
upon the sex and age of the retirant, and the amount of the accumu
lated contributions (which in turn depends upon the length of service).
The total allowance m ay not fall below $300 a year nor exceed onehalf of the retiran t’s final compensation; i. e., his average annual
salary for five years before retirement. If the accumulated con
tributions would purchase an annuity amounting to more than onefourth of the final compensation, the extra amount is returned to the
retirant in a lump sum. For those in the service prior to 1912, if
their accumulated contributions will not purchase an annuity equal
to one-fourth of their final compensation, the State pays whatever
pension is needed to bring the total allowance up to the maximum
perm itted, one-half of the final compensation.
The allowance for perm anent disability retirem ent is calculated in
the same way as the allowance for service retirement.
For duty disability retirement, the allowance is one-half the
salary received at the time of the accident, the State paying whatever
pension is needed to bring the total allowance up to this figure.
If the retirant is entitled, as a result of his injury, to receive com
pensation under the workmen’s compensation law, he m ust choose
between this and the retirem ent allowance, as he can not receive
both.
Options.—Instead of taking the normal retirem ent allowance,
calculated as above, a member may if he prefers take upon retirem ent
a smaller allowance with the proviso that, if he dies before having
received the full actuarial equivalent of his contributions at the time
of retirement, any difference will be paid to his estate.
Refunds.—In case of withdrawal, dismissal, or death, a m em ber’s
accumulated contributions are returned either to him or to his estate.
Provision for dependents.—If a member is killed, or dies as a direct
result of an accident incurred in the performance of duty, his widow
receives, during widowhood, the allowance to which he would have
been entitled had the result been perm anent disability instead of
death—one-half of his salary at the time the accident occurred.
If there is no widow, the same allowance is paid to a child or children
under 16, and is continued until the youngest child reaches 16.
In other cases no provision is made for dependents, except as the
choice allowed under the options at the time of retirem ent makes
some such provision.
Statistics of Operation of the System
contributory system has been in operation approximately
±5 years. I t m ust be remembered th at it exists side by side
with the old noncontributory systems which still cover quite a number
of the State employees; therefore, the num ber of State employees
and the members of the system are not identical. As mentioned
before, since 1921 no new memberships in noncontributory systems
have been allowed,
37
MASSACHUSETTS
Table 5 shows, for the years specified, the approximate num ber
of State employees, the active membership of the State system,
and the num ber of its beneficiaries:
T
able
5 . — Membership
and beneficiaries of State retirement system, 1913, 1920,
and 1926
Year ending Nov. 30—
1913...................... ............. ...........................
1920............. ................ ..................................
1926__________ ____________ _________
Number
of State
employees
Active
member
ship of
system
Number of
benefici
aries
10,593
13,654
4,020
6, 282
8,693
77
209
1352
Per cent
Per cent
benefici
benefici
aries
aries
form of
form of
State
active mem
bership
employees
1.97
2. 58
1.92
3. 33
4.05
1Includes 3 widows.
The difference between the membership of the system and the
number of State employees is not quite so great as indicated by this
table, because the latter group includes employees who have not
finished their probationary period, but who will a t its close become
members of the State system.
I t will be seen th a t the increase in beneficiaries has been gradual
and th at their ratio to the num ber of active members at the close of
the period is small. The num ber on the pay roll is, of course, con
tinually changing as the old annuitants die and the new ones are
placed on the roll.
Since the time the law became operative, June 1, 1912, to the end
of November, 1926, 532 employees had been granted retirem ent
allowances, and in addition 3 allowances had been granted to widows
on account of death of husband from accidental injuries received in
the line of duty. Of this total, 183 had died, so there were at the end of
1926, 349 former employees receiving retirem ent allowances, in addi
tion to the 3 dependents. Of the retirants on the roll then, 123 were
retired compulsorily at age 70 or over; 186 were retired upon their
request between 60 and 70 years of age; 12 were under age 60 with 35
years of service; 4 were wives retired at the time of retirem ent of hus
bands; 19 were retired for ordinary perm anent disability, and 4 for
perm anent accident disability because of injuries received in the
line of duty. One beneficiary, an employee aged over 55 when the
retirem ent law was passed, was retired under the special provisions
made for such cases. The average age of the 349 on the retired list
at the close of the fiscal year 1926 was 70.46 years, the range being
from 42 to 91 years. Twenty-eight were 80 years or over.
I t was not possible to obtain full information regarding the average
age and years of service of all who had retired since the plan became
38
CHAPTER 3.— STATE EMPLOYEE RETIREMENT SYSTEMS
effective, b ut the data for the latest four years covered are given in
Table 6:
T a b l e 6 .— Average age and years of service of retirants, 1923 to 1926
Year ending
Nov. 30—
1923.____ _______
1924_______ ____
1925
1929 ........... ..............
Superannuation
Disability
Num Average ! Average
ber of
years of
age
cases
service
Num Average Average
ber of
years of
age
cases
service
44
46
30
32
66.0
67.0
68.0
68.2
26.0
25.0
25. 0
24.2 \f
4
5
5
13
*2
55
55
57
i 54
2 62
1 Ordinary permanent disability.
Total
Num Average Average
ber of
years of
age
cases
service
21.0
20.0
21.0
124.8
2 13. 0 }
48
51
35
37
66.0
65.0
67.0
66.5
26.0
25.0
25.0
22.7
2Accident disability.
Considering first the superannuation retirants it is evident th a t
during these four years there has not been much variation in either
the average age a t retirem ent or the average length of service, but
th at the trend in the two items is in opposite directions; i. e., the
average age has increased, while the average length of service has
decreased. The average age seems distinctly high. W hen a retire
m ent system is installed, the first few years are apt to see a dispro
portionately large num ber of aged retirants, since those who have
grown too old for efficient service are placed upon the pension rolls
as soon as possible, and thereafter the average age at retirem ent tends
to be lower. The earliest data shown in this table are for the twelfth
year of operation, so th a t this particular cause would have ceased
to affect the figures, and the age a t retirem ent can only be taken to
show the tendency of the employees to remain in the service as long
as they feel able to do so.
The age of the disability retirants is also high, and the average
length of service is considerably in excess of th at required before
such retirem ent is perm itted.
Allowances and benefits.—The relation between the pay roll of the
active force and the amounts paid out in allowances and benefits
for the two years 1920 and 1926 is shown in Table 7. U nfortunately
it was not possible to obtain the pay-roll data for the year 1913, so
for th a t year the relationship has necessarily been om itted.
T a b l e 7 .— Relation between pay roll and pensions, 1920 and 1926
[The pay-roll figures are as of Nov. 30 of each year, while the benefits are for the calendar year]
Allowances for member beneficiaries
Year
Pay roll of
active force
Superannuation
retirement
Amount
1913....................
1920........... ........
................ .
$13, 428, 471
18, 618,904
1926
Total pension roll
$18, 367
66,140
133, 876
Pension
roll for de
pendents
Disability
Per cent of retirement
active
pay roll
0. 49
.72
$1, 774
8,108
$1, 843
Amount
$18,367
67,914
143, 827
Per cent of
active
pay roll
0.51
.77
39
MASSACHUSETTS
I t will be noticed th at while the amount paid out in allowances
and benefits shows a large actual increase, its relative increase has
been small, so th a t after the system had been in operation for 14
years, it formed less than 1 per cent of the pay roll of the active force.
The total average allowance paid in 1926 was $414. This item has
increased considerably since the first year of operation as shown in
Table 8, giving the average and largest retiring allowance paid during
each year since the system was installed.
T a b l e 8 . — Average
Year ending Nov. 30—
and largest retirement allowance paid in specified years
Average Largest
retire
retire
ment
ment
allowance allowance
1913............. ...... .......................
1914_________ ____________
1915............................................
1916_________ ____________
1917..___ ________ ________
1918___________ _________
1919...........................................
$291
283
285
305
305
315
328
$905
905
905
1,170
1,150
1,159
1,200
Average Largest
retire
retire
ment
ment
allowance allowance
Year ending Nov. 30—
$334
355
372
382
385
395
414
1920______________________
1921___________________
1922______________________
1923________________ _____
1924,________ _____________
1925........................ ............ ......
1926_.................................... ......
$1,200
1,363
1, 557
1, 363
1, 363
1, 771
1,961
The highest allowances, being individual m atters, naturally vary
widely from year to year, and while their am ount has increased
materially, there has been no regular progression. The average
allowances, on the other hand, show a slow but continuous increase.
W ith the exception of 1914 there is not a single year in which the
average is less than th a t paid in the preceding year, and only one
in which it is not greater.
The dependents are so few th a t their pensions do not affect the
general averages. In 1926 there were but three of these, widows, for
whom the average allowance was $614 and the highest was $750 a
year.
For the period 1923 to 1926 it was possible to obtain in considerable
detail facts as to the average final compensation of the retirants and
their average annuity, pension, and total allowance. Table 9 shows
these data:
T
able
9 . — Average
annuity, pension, and total retirement allowance, 1923 to 1926
Year ending Nov. 30-
Average
Number of salary
last
cases
5 years
Average
annuity
Average
pension
Average
retirement
allowance
Superannuation
1923.............................. ............ ...................
1924................... ................... ......................
1925______ ______ ________ _____ _____
1926________________________________
44
46
30
32
$1,415.00
1, 628.00
1,598. 00
1, 766. 00
1923
1924________ ________________________
1925_____________________ __________
1926________________________________ |
1
4
5
5
13
*2
$1, 528.00
1, 339. 00
1,445. 00
1.045.00
1.492.00
1923
1924_______ _________________________
1925............................................ ............ .
1926.....................................-_____ _______
48
51
35
37
$1, 425.00
1, 492. 00
1, 578. 00
1,680.00
$65.00
75.00
97.00
116.95
$411.00
350. 00
362. 00
443.14
$476.00
447.00
459.00
560.00
$260.00
325. 00
348. 00
267.00
605. 00
$310.00
362.00
397.00
296.00
657.00
$400.00
347.00
360.00 ,
432.00
$462.00
419.00
450.00
536.00
Disability
$50.00
37.00
49. 00
28.07
51.70
Total
i Ordinary permanent disability.
$64. 00
71.00
90.00
104.00
* Accident disability.
40
CHAPTER 3.— STATE EMPLOYEE RETIREMENT SYSTEMS
As these averages refer to the retirants of a single year, they n a t
urally differ from the averages shown in Table 8, which are based on
all the allowances current during a given year. Comparing the tables
it will be seen th a t the average allowance received by the retirants
of 1926 was $536, an increase of 84 per cent over the average allow
ance, $291, prevailing in 1913, which, being the first full year of the
system ’s operation, is not much affected by earlier retirements. D is
ability allowances, however, are included in the total for 1926, while
no such allowances were paid before 1914, so a fairer comparison is
between the average for 1913 and the average superannuation allow
ance of 1926. This shows an increase of 92 per cent.
Finances of the System
HP ABLE 10 shows the income and expenditures of the system for the
^
first year of operation, for 1920, and for 1926:
T
able
1 0 . — Receipts
Receipts
and expenditures of Massachusetts State Employees’ Annuity
Fund, 1913, 1920, and 1926
1913
1920
1926
From employees____ $108, 256 $272,481 $510,791
From State________ 24,935 75, 391 141, 443
4, 080 44, 082 132,980
All other sources____
Total
137,271
391,954
785,214
Expenditures
1920
1926
Superannuation allow
ances__________ ____ $18, 367
Disability allowances
D ependents
$66,140
1, 774
$133,876
8,108
1, 843
Total benefits........ 18, 367
Refunds_______ _____
7, 321
Cost of administration. _ 6,649
67,914
106,716
11, 749
143, 827
242, 050
12, 731
186, 379
398, 608
Total expenses........
1913
32, 337
The increase in the contributions from employees is due not only
to the increase in the membership of the system, but also to a change
in the rate of contribution required. I t will be remembered th at at
first employees were perm itted a choice between a contribution of 3
and one of 5 per cent of the amount of salary subject to contribu
tion, but th at beginning with June, 1918, the 5 per cent rate was made
obligatory on all new entrants.
In regard to expenditures, the table shows how the system has
been extended since its inception. As first established, it provided
only for superannuation retirement. In 1914 allowances for dis
ability retirants were added and in 1921 benefits to dependents of
those dying from injuries received in the performance of duty were
included.
I t will be noticed th at the cost of administration is moderate,
being in 1926 $1.46 per capita for the active membership of the sys
tem, and amounting to only 1.62 per cent of the total am ount paid
into the fund.
The total receipts of the system from the time it began operation
up to December, 1926, were $5,770,554, and the total expenditures
for the same period $2,394,595.
NEW JERSEY
HPHE State Employees’ Retirem ent System of New Jersey is an actu-*■ arial reserve system, organized under a bill signed in M arch, 1921
(Laws of 1921, ch. 109), which provides for a yearly actuarial valua
NEW JERSEY
41
tion of the funds. Contributions began in January, 1922, and pen
sions were first paid in July, 1922. Membership is compulsory upon
all new appointees within one year after their appointment, but
optional upon those in State employment when the system was
adopted. The plan covers all in the classified civil service, unless
expressly excluded by decision of the board of trustees, except those
covered by some other system authorized by law.
Administration
'T 'H E system is managed by a board of five trustees, made up of the
State treasurer, who is an ex-officio member, two appointees of
the governor, and two employee members of the system who are
elected by their fellow members.
Contributions
r'O NTRIBTJTIO NS from employees.—The employees pay m onthly
^
contributions, deducted from their salaries, sufficient to secure
upon retirem ent at age 60 an annuity amounting to one one-hundredand-fortieth of their final average compensation for each year of
service rendered. The rate of contribution differs according to sex,
age at entrance, and character of work, whether m anual or clerical.
Contributions from the State.—Under the law, the State makes
two contributions regularly, the first to cover the liability assumed
by the system on account of the service rendered by members during
the year, and the second to cover the liability of the system for
prior service, i. e., service rendered before the system was adopted.
For the first purpose the State appropriates sufficient each year to
rovide for all in the system a pension at retirem ent of one oneundred-and-fortieth of the final compensation for the current
year’s service. For the year beginning July 1, 1926, the contribu
tion for this purpose was fixed at $140,090, which was 3.01 per cent
of the total pay roll. For the second purpose, the law calls for a
series of flat payments, sufficient to defray the entire liability by
1946. For the year beginning July 1, 1926, this paym ent was set
a t $85,724.
In addition, the State bears the expense of managing the system,
appropriating for this purpose each year.
E
Conditions for Retirement
D E T IR E M E N T is optional at age 60 and compulsory at 70, except
th at an employee of 70 m ay be retained for a time at the request
of the head of his departm ent. No stated period of service is required,
but the retirem ent allowance is affected by the length of time served.
Two forms of disability retirem ent are perm itted: Ordinary dis
ability, perm itted at any age after 10 consecutive years of service,
and duty disability, due to injury received in the performance
of duty, for which no requirem ent as to age or service is made.
There are the usual requirements as to medical certification of
disability and periodic examinations.
3306°— 29------ 4
42
CHAPTER 3.— STATE EMPLOYEE RETIREMENT SYSTEMS
Retirement Allowances
S E R V IC E retirement.—A member retiring at or after 60 years of
^
age receives an allowance made up of the annuity purchased
by his contributions plus a pension of the same amount from the
S tate’s contributions, the two together amounting to one-seventieth
of his final compensation for each year of service rendered since
1922. For each year of service credited to his account before 1922
he receives the same proportion of his final compensation, the State
bearing the entire cost of this.
Disability retirement.—Upon ordinary disability retirem ent the
member is entitled to the annuity purchased by his own contributions
plus a pension of one-fifth of his final compensation; this pension,
however, m ust not exceed four-fifths of the pension to which he would
have been entitled had he remained in the service until 60 years of
age. For duty disability he receives his annuity, as above, and a
pension from the State of two-thirds of his final compensation.
Options
TTPON retirem ent members m ay elect to receive the actuarial
^
equivalent of their annuities and pensions in any of the follow
ing forms:
1. Total amount payable in m onthly installments, all paym ents
ending at death.
2. Reduced paym ents during life, with a provision th a t in case of
death before such payments have equaled the present value of the
pension and annuity at date of retirem ent, the balance shall be paid
to the m em ber’s heirs or assigns.
3. Reduced paym ents covering two lives, with a provision th at
at the death of the member the same payments or one-half of such
paym ents shall be continued throughout the life of such other per
son as the m em ber shall have designated.
4. Such other form of actuarial equivalent as m ay be certified by
the actuary and approved by the retirem ent board.
Refunds
T F A member withdraws from the system or dies before reaching
pensionable, status his accumulated contributions, with interest
compounded annually at 4 per cent, are returned to him or to his
estate.
Provision for Dependents
TN normal cases no provision is made for dependents except as the
retiring member chooses to provide for them by means of the
options given. If, however, a member dies from an accident occur
ring in the actual performance of duty, in addition to the return of his
contributions with compound interest the State gives to his widow
until her remarriage or death, or to his minor children until they reach
the age of 18, a pension of one-half of his final compensation. If he
leaves neither a widow nor a child or children under 18, the State
pays a sum equal to the amount of his final compensation to his
estate or designated beneficiary.
43
NEW JERSEY
Statistics of Operation of the System
Q N June 30, 1923, at the close of its first full year of operation, the
^
system had an active membership of 1,951, and a pension roll of 36,
of whom 31 were service retirants, 3 were cases of ordinary disability,
1 was a case of duty disability, and 1 was the widow of a member who
had been killed by an accident in the performance of his duty. The
growth of the active membership and of the pension roll since th a t
date, and the increase in the amount paid out in benefits, together with
the relation between the total payments to beneficiaries and the pay
roll of the active force, are shown in Table 11:
T a b l e 1 1 .— Relation between active force and beneficiaries, and between pay roll
of active force and outlay for benefits, of New Jersey State Employees* Retirement
System, 1924 to 1926
Member beneficiaries
Data as of June 30—
1924. .............................
1925............ .............. . . .
1926. .............................
Number on Service retirants
active force
Dependents
Disability
retirants
Per
Per
cent of
cent of
Per
Per Number active Number active
of
cent of
force
force
Number cent
active Number active
force
force
2,176
2, 527
2,883
36
52
62
1.7
2.1
2.2
5
6
6
0.2
.2
.2
Payments to member
beneficiaries
Data as of June 30—
Total benefi
ciaries
Pay roll of Service retirants
active force
4
5
7
0.2
.2
.2
45
63
75
2.1
2.5
2.6
Payments to
payments
dependents of Total
to beneficiaries
members
Disability
retirants
Per
Per
of Amount cent of
Per
Per Amount cent
pay
pay
of
cent of
Amount cent
roll
roll
pay Amount pay
roll
roll
1924
........................ . $3, 365, 382
3, 995, 202
1925 ........................ .
1926-............................... 4, 648, 655
$15, 774
21, 939
28, 216
0.5
.6
.6
$3,053
3, 308
3, 649
0.1
.1
.1
$1, 699
2,461
3,319
0.1
.1
$20, 526
27, 708
35,184
0.6
.8
.8
I t will be noticed th at the proportion of beneficiaries to the active
force has increased but slowly, and th at the service retirants are
the only ones showing any marked increase. The membership of the
system is continually fluctuating as people enter and leave the S tate’s
service. In the secretary’s annual report for 1926, the following
summary of such changes is given :
On June 30, 1926, there had been enrolled 4,286 members, of whom 1,269
had left the service and withdrawn their contributions with interest; 185 had
separated from the service, but had not withdrawn their funds, of whom 45 had
been suspended from membership on account of the lapse of two years since
separation; 89 had been placed on the retirement roll, 14 of whose allowances
had ceased on account of death, leaving 75 on the retirement roll, of whom 6
are widows or other beneficiaries of deceased members, and 1 is a minor bene
ficiary, whose allowance we are holding in trust until he reaches his majority.
44
CHAPTER 3.— STATE EMPLOYEE RETIREMENT SYSTEMS
Of the 89 who had been retired, 77 had been normal retirements
and 12 disability retirem ents. The average age of those normally
retired was 65.8 years, of those retired for disability, 50.5 years, and
of all retirants, 62.8 years. The retirem ent allowances drawn ranged
upward to $1,432.08 a year. As no maximum is set on the allowance,
its amount being determined by the number of years the retirant
has served and the amount of his final compensation, this range will
probably vary considerably as time goes on.
Finances of the System
T^HE main sources of financial support for the system are, of
course, the contributions from the employees and the State, though
as the reserves grow interest becomes an increasingly important item.
The employees are required to contribute a percentage of their salaries,
varying according to age at entrance, sex, and kind of work performed.
Table 12 shows the rates of contribution, which were fixed when
the system was inaugurated and in which no change has as yet
been made:
T a b l e 1 2 . — Rates of contribution (per cent of salary) required of members of the
New Jersey State employees’ retirement system
Laborers
Clerks
Laborers
Age at entrance
Male
15 years.............
16 years.............
17 years.,...........
18 years..............
19 years.............
20 years_______
21 years_______
22 years_______
23 years_______
24 years_______
25 years_______
26 years ............ .
27 years_______
28 years........... .
29 years_______
30 years_______
31 years..............
32 years.............
33 years..............
34 years..............
35 years_______
36 years..... ........
37 years_______
Clerks
Age at entrance
3. 53
3. 53
3. 52
3. 51
3. 52
3. 54
3. 56
3. 59.
3. 62
3. 66
3. 71
3. 76
3.81
3. 87
3. 93
.4. 00
4. 08
4.16
4.24
4. 32
4. 41
4. 50
4. 59
Female Male
3. 55
3. 56
3. 58
3. 60
3. 63
3. 66
3. 69
3. 73
3. 77
3. 82
3. 87
3. 92
3. 98
4. 04
4.11
4.19
4. 27
4. 35
4. 44
4. 53
4. 62
4. 71
4.80
4. 20
4.16
4.14
4.12
4.11
4.11
4.11
4.12
4.14
4.17
4. 21
4. 25
4. 29
4. 34
4. 39
4. 45
4.51
4. 58
4. 65
4. 72
4. 79
4. 86
4.94
Male
Female
4. 43
4. 44
4. 46
4. 48
4. 50
4.52
4.55
4. 59
4. 63
4. 67
4. 72
4. 77
4. 83
4. 89
4. 95
5. 01
5. 08
5.16
5.24
5. 32
5.40
5. 48
5. 57
38 years.
39 years.
40 years.
41 years.
42 years.
43 years.
44 years.
45 years.
46 years 47 years
48 years.
49 years.
50 years.
51 years.
52 years.
53 years.
54 years.
55 years.
56 years
57 years.
58 years
59 years.
4. 68
4. 77
4. 87
4. 97
5. 07
5.17
5. 27
5. 37
5. 47
5. 58
5. 69
5.80
5. 91
6. 04
6.17
6. 30
6.43
6. 56
6.69
6. 82
6. 95
7. 09
Female Male
4.89
4. 99
5. 09
5.19
5.29
5. 39
5. 50
5. 61
5. 72
5. 83
5. 94
6. 05
6.17
6. 30
6.43
6. 57
6.71
6. 85
6.99
7.13
7.27
7. 41
5.02
5.10
5.18
5.26
5. 34
5. 43
5. 52
5. 61
5. 70
5.80
5. 90
6.00
6.10
6. 21
6. 33
6. 46
6. 59
6. 72
6. 85
6. 98
7.11
7.24
Female
5.66
5. 75
5. 84
5. 93
6. 03
6.13
6. 23
6. 33
6. 43
6. 53
6. 64
6. 75
6. 87
7. 01
7.15
7.29
7. 43
7. 57
7. 71
7. 85
8. 00
8.15
As before mentioned, the State pays two contributions to the pen
sion and benefit funds, one to cover current service and one for
service rendered before the system was adopted, and in addition pays
the expense of maintenance. The receipts and disbursements of
45
NEW YORK
the scheme from its establishment in 1922 up to the close of the fiscal
year 1925-26 have been as follows:
T a b l e 1 3 . — Receipts and disbursements of New Jersey State Employees’ Retire
ment System, 1922 to 1926
Receipts
Year ending June 30—
Contribu Appropria
tions from tions by
employees
State
Other
sources
Total
1923 i.......... ................... ................................. ...................
1924_______ ____________________ _________ _____
1925______________ ____________________________
1926_____________________________ _________
$112, 798
163, 227
189, 981
227, 198
$31, 000
92, 575
185,372
156, 266
$2, 946
13,706
22, 519
44,144
$146,744
269, 508
397,872
427,608
Total............................... ......................................
693, 204
465, 213
83, 315
1, 241, 732
Disbursements
Year ending June 30—
Other
Retirement
allowances allowances
1923 1.......................... .................................
1924 ...........................
1925_______ ________________________
1926...... ............... ............. ................
T ota l...................... ............................
Refunds
Adminis
tration
Total
$12, 801
18, 550
24, 092
30,827
$1, 080
888
$4, 296
13, 011
25,417
41, 515
$14,979
10, 666
12, 276
12,460
$32, 076
43, 307
62, 673
84,802
86, 270
1,968
84, 239
50, 381
222, 858
1Jan. 1, 1922, to June 30, 1923.
I t will be noticed th a t while expenditures have increased m aterially
with each year covered, the difference between receipts and expend
itures has increased even more rapidly, and the assets of the system
at the end of 1926 showed a satisfactory condition.
NEW YORK
'T ’H E New York State Employees’ Retirem ent System was organized
under a law passed in 1920 as the result of an investigation
and report made by a commission on pensions appointed in 1918 to
study and report on the whole question of pension systems in the
State. The commission found th a t apart from militia pensions and
pensions m aintained by cities or other local subdivisions of the State,
there were in existence six different pension systems for State em
ployees, varying widely in their requirements and in the benefits
bestowed. There were also a number of city and county systems,
some supported wholly by the employing agency, some wholly
by the employees, and some jointly. There was no uniformity in
the conditions for securing a pension, and in the m ajority of cases
there was no particular relation between the contributions required,
when such a requirem ent was made, and the benefits received.
Also, the financial soundness of the plans was in m any cases ques
tionable.
Although the commission had not the means to make actuarial investigations
of the financial condition of these funds, it came to the conclusion that, judged
by the conditions found to exist in funds that were known to be on an insolvent
basis, the governmental plans for employees throughout the State, with the
46
CHAPTER 3.— STATE EMPLOYEE RETIREMENT SYSTEMS
exception of certain plans in New York City, could not be said to be operating
on sound bases.1
As a first step the commission proposed a plan which should include
State employees not covered by specified existing pension plans,
and which should also be open to the employees of a municipality
or county desiring to come into the plan, provided th at the employing
agency should pay the same portion of the final benefits received by
its employees th a t the State pa}rs on behalf of those whom it employs
directly. This plan was enacted into law in 1920, and the State
retirem ent system was established January 1, 1921.
Meanwhile the commission continued its work, and in sucessive
reports presented plans for bringing into the system other bodies of
employees, until finally all State employees should be covered by
either the State employees’ or the State teachers’ retirem ent system.
These recommendations were adopted and the law amended accord
ingly, until the plan was extended to all State employees— excepting,
of course, teachers, who were provided for by their own system—and
county, city, town, and village employees, provided the local author
ities were willing to assume the responsibilities of the system, and
the employees desired to enter.
The law under which the system was established was passed in
1920. (Laws of 1920, ch. 741.) The inclusion of employees of
local subdivisions was authorized by chapter 591 of the Laws of 1922.
The original act has been amended every year, up to and including
1927, and the act of 1922 was amended in 1923, 1924, and 1926.
Scope of System
TN IT S present form, the system covers State, municipal, and
A county employees of every class and kind, excepting those
covered by some other approved system. For State employees,
membership was made optional for those in the service at the time of
its adoption, and compulsory upon those entering thereafter. City,
county, town, and village employees are brought into it only by the
action of the local legislative body, i. e., the board of aldermen, the
board of supervisors, the town board, or village trustees, as the case
m ay be. W hen the local legislative body has adopted the system,
all employees paid by the municipality are eligible to membership,
and m ust become members during the first year after adoption if
they wish to secure credit for the service they have already rendered.
The law as originally enacted called for the classification of em
ployees covered into five groups: Male clerical, administrative, pro
fessional, and technical employees engaged upon duties requiring
principally m ental exertion; (2) female employees coming under the
same definition; (3) mechanics and laborers engaged upon duties
requiring principally physical exertion; (4) male employees engaged
upon duties in State institutions; (5) female employees engaged upon
duties in State institutions. I t also perm itted the establishment of
other groups who m ight have some peculiarity of m ortality or service
experience, provided no group should include less than 2,500 persons.
Under this provision, as the employees of local bodies have come into
the State system, two additional groups have been established—
policemen and firemen.
i New York. Commission on Pensions, Second report, Mar. 30, 1921. Albany, 1921, p. 5,
NEW YORK
47
Administration
'T 'H E State comptroller is the administrative head of the system,
and has power, subject to the limitations of the law, to estab
lish rules and regulations for the transaction of the business of the
system and for the custody and control of its funds. He is required
to engage the services of an actuary, and may employ such other
technical and administrative assistance as may be necessary. A
medical board is provided, the State commissioner of health being
chairman ex officio, and two other physicians being appointed by the
comptroller and holding office at his pleasure. The attorney general
of the State is the legal adviser of the system. An actuarial investi
gation of the system and a valuation of the funds is to be made every
five years, the first period beginning with 1921.
Source of Funds
/CONTRIBUTIONS from employees.—The employees make regular contributions, varying according to sex, age at entrance,
and class of work on which engaged, calculated to provide at age 60
an annuity of one one-hundred-and-fortieth of the final compensa
tion for each year of service after the coming into force of the law.
The “ final compensation” is the average of the annual paym ents for
the last five years of service.
Contributions from the State.—The State appropriates annually
for the retirem ent system a normal contribution, sufficient to meet
its obligation for benefits accruing during the current year, and a
deficiency contribution to provide for liabilities for service rendered
before the establishment of the system. The normal rate is defined
as a percentage of the compensation of the average new entrant,
which, if contributed on the basis of his compensation throughout
his entire period of active service, would be sufficient to provide at
the time of his retirem ent or death the total amount of the benefit
or the reserve on any pension payable on his account. On the basis
of the first six m onths’ experience of the system, this normal rate
was set for the year ending June 30, 1921, at 1.53 per cent of the
total pay roll of the employees covered. Since then the rate for
normal contribution has gradually risen, owing to the taking on of
additional benefits and the inclusion of new workers, especially police
and firemen, the cost of whose benefits is always higher than for
other workers, until in 1926 it was 3.08577 per cent of the pay roll.
The rate for the deficiency contribution was set at 3.04263 per
cent of the pay roll for the period ending June 30, 1921. For the
year ending June 30, 1926, it was 2.98920 per cent of the pay roll.
Both rates were higher in 1926 than they would otherwise have
been, owing to the addition of a so-called ordinary death benefit to
the payments made from the fund.
The expenses of carrying on the system are borne by the public
authorities, the cost being divided between the State and the separate
local bodies whose employees have come under the plan.
48
CHAPTER 3.— STATE EMPLOYEE RETIREMENT SYSTEMS
Conditions for Retirement
jD E T IR E M E N T at age 60 is perm itted, regardless of the length of
service rendered. Originally 70 was set as the age for com
pulsory retirement, but this was so strongly protested th at an amend
m ent was adopted under which the compulsory age was set at 80 for
the year ending June 30, 1926, and thereafter it was to decrease
annually by one year until in 1936 it should reach 70, where it should
remain. Judges, justices, elective officers, and a few others are
exempt from the compulsory retirem ent feature.
Disability retirem ent is of two kinds, ordinary and duty dis
ability. Ordinary disability retirem ent is granted to any employee
who becomes incapacitated for the discharge of his duties after 15
years’ service. D uty disability retirem ent is granted w ithout any
requirement as to length of service to an employee incapacitated as
the result of an accident sustained in the actual performance of
duty.
Retirement Allowances
TTPON superannuation or service retirement, the employee receives
an allowance made up of the annuity purchasable by his accu
m ulated contributions, and a pension of the same amount provided
by the State, the two together making a total of one-seventieth of his
final compensation for each year of service rendered since the adop
tion of the system. For those who have to their credit service ren
dered before the system was adopted, the State provides both an
nuity and pension for each year of such prior service. N ot more
than 35 years of prior service may be included in the credit given.
Upon ordinary disability retirem ent the State adds to the annuity
purchasable by the employee’s accumulated contributions whatever
is needed to make up an allowance of 90 per cent of one-seventieth
of his final compensation for each year of service rendered. The
minimum disability allowance is 25 per cent of the final compensa
tion, and the maximum is 90 per cent of the am ount to which the
employee would have been entitled had he remained in service until
60 years of age.
An employee retiring under duty disability is entitled to what
ever annuity his contributions will purchase and to an allowance from
the State amounting to three-fourths of his final compensation.
I t will be seen th a t in superannuation retirem ent the allowance is
determined by two factors—length of service and average salary for
the last five years before withdrawal; th at in ordinary disability
retirem ent a minimum is introduced which modifies these two factors;
and that in retirem ent for accident disability length of service plays
only a minor p art in fixing the final allowance. Take, for instance,
an employee retiring at 60 after 25 years of service, whose average
salary for the last five years has been $1,800; his retirem ent allow
ance will be approximately twenty-five seventieths of $1,800, or $643
a year. If he becomes physically or m entally disabled before reach
ing 60 his retirem ent allowance can not fall below one-fourth of his
average salary for the last five years, or $450; if, as in the first
example, he has served 25 years, his allowance will be nine-tenths of
twenty-five seventieths of $1,800, or $579. If at any time after
NEW YORK
49
entering the service he is disabled by an accident occurring in the
performance of his duty, his allowance from the State would be threefourths of $1,800, if th a t is the average salary he received during the
five years preceding the accident, and in addition he would have
whatever annuity his own contributions would purchase, the am ount
depending upon the length of time he had been contributing.
Options
T TPON retirement, the member has a choice between several options.
^ The standard method is that the retirement allowance shall
be paid to him in monthly installments throughout his life. Instead
of this he may elect to receive only part of the annuity, pension, or
complete allowance to which he is entitled, the balance being paid in
one of the following methods:
1. If he dies before receiving the full present value of his allowance,
as it was at the time of retirement, the difference shall be paid in a
lump sum to some selected beneficiary.
2. Upon his death, bis annuity, pension, or retirement allowance
shall be continued and paid to some selected beneficiary, as long as
the latter shall live.
3. This is like option No. 2, except that it is specified that one-half
of the annuity, pension, or allowance shall be continued to the bene
ficiary.
4. Some other form of benefit may be chosen, provided th a t the
actuary of the retirem ent board shall certify th at it is of equivalent
actuarial value to the allowance to which the employee is entitled,
and th at the comptroller shall approve it.
The beneficiary under any option must have an insurable interest
in the life of the member.
Additional Benefits
TN A D D ITIO N to the various retirem ent allowances, the system
provides death benefits and a so-called “ discontinued service
benefit.” The ordinary death benefit is payable if a member of the
system dies from ordinary causes while in service, after having been
a member for a t least one year. In such a case, one-twelfth of his
salary for his last year of service multiplied by the years of service
rendered, but not to exceed 50 per cent of such salary, is paid to his
beneficiary. Thus, if a member receiving $1,800 a year dies after
six years of service, his beneficiary receives, in addition to the refund
of his contributions, a lump paym ent of $900. Accident death
benefit is payable in the case of a member killed in the performance
of his duty. I t consists of an allowance to the widow, dependent
children, or dependent father or m other of one-half the final average
salary, continued as long as the widow rem aiis unm arried or the
children are under 18. The accident death benefit was incorporated
into the system in 1924, and the ordinary death benefit in 1926.
The discontinued service benefit is payable to any member whose
services are discontinued through no fault of his own after 20 years
of total service, provided he has been in the service of the State for
six months continuously just before his retirement, or, in the case of
legislative employees and laborers, for at least parts of the last two
50
CHAPTER 3.--- STATE EMPLOYEE RETIREMENT SYSTEMS
years. The retired employee receives a retirem ent allowance, com
posed, as in the case of a superannuation allowance, of annuity and
pension to equal one-seventieth of the final average salary for each
year of service. In addition, if he is aged 50 or over, he receives a
further pension, equal to one-half the difference between his pension
figured as above, and the pension he would receive were he aged 60.
Refunds
T F A member dies, resigns, or is dismissed from the service, except as
provided for under the discontinued service benefit, his contri
butions, with interest at 4 per cent compounded annually, are returned
to the member or to his estate.
Provision for Dependents
HPHIS m atter is fully covered by the options allowed a t retirement,
by the ordinary and accident death benefits, and the refunds of
contributions in case of death before retirement.
Membership, Beneficiaries, and Benefit Outlay of System
'T 'H E numbers covered by any pension system are apt to increase
A with time, owing to a normal growth of the working force, but
in the case of the New York State system this process has been acceler
ated by the inclusion of successive groups of workers and by the admis
sion of city, town, and county employees en bloc. Table 14 shows
the increase in the num ber of members and beneficiaries of the system
since its inauguration, together with the relation between the number
of beneficiaries and of the active force; and also the increase in the
am ount paid out in benefits and its relation to the pay roll of the active
force:
T a b l e 1 4 . — Relation between active force and beneficiaries and between pay roll
of active force and outlay for benefits of the New York State Employees’ Retirement
System, 1921 to 1926
Service
Disability
Total
beneficiaries beneficiaries beneficiaries
Num
on
Per
Data as of June 30— ber
Per
Per
active
cent Num cent
force Num cent
of Num
of
of
ber active
ber active
ber active
force
force
farce
1921 K - ............ .........
1922.............................
1923.............................
1924........................... .
1925_____ _________
1926.......................... .
4, 500
6, 217
11,679
13, 741
17, 402
19, 996
42
131
269
496
670
915
0.93
2.11
2.30
3.61
3. 85
4. 58
1
6
12 ! 0.10
25
.18
36 j .21
50 { .25
I
43
137
281
521
706
965
0.95
2.20
2.41
3. 78
4.06
4. 83
Pay roll
of active
force
$8,976, 828
11,886, 592
21,138, 331
25,102, 465
31,869, 505
37, 823, 453
Pay
Per cent
ments to benefits
bene
form of
ficiaries pay roll
$17, 766
77,192
146, 600
294, 770
385, 471
549, 664
0.20
.65
.69
1.17
1. 21
1.45
1 End of first 6 months of operation.
The active force, it will be noted, has increased by over 344 per
cent. Up to the close of 1922 only State employees were covered;
the following year not far from 4,000 city, town, and county employees
were adm itted and from th at time onward these classes have formed
something over two-fifths of the membership. The figures for 1921
51
NEW YORK
represent the situation at the close of the system ’s first six m onths
of operation. At th at time the average age of the original members,
who formed 95 per cent of the force, was 43.9 years, of new members
28 years, and of the total active force, 43.1 years.
The beneficiaries have increased a t a far more rapid rate than
the membership, which is an entirely normal development for the early
years of any system. The total given for June 30, 1926, includes 13
cases of dependents of deceased members drawing benefits under
options chosen by the members upon retirement, 3 cases of acci
dental death benefits, and 1 case of a dependent of a deceased
member who had been retired under the ordinary disability provisions.
A t th a t time the average age of superannuation retirants was 70.9
years, of disability retirants 54.6 years, and of all retirants 69 years.
So far, it will be noticed, the total benefits paid out in any one year
have not amounted to quite 13^ per cent of the pay roll of the active
force, and for the earlier years they fell much below this figure. Disa
bility retirements, including cases of accidental deaths, play only a
small p art in the general total. From the beginning of the system
up to June 30, 1926, the sums paid out on aecount of such retirem ents
form only 4.1 per cent of the total outlay for benefits.
Finances of System
'T ’H E main sources of the financial support of the system are of course
the contributions received from the employees and the appro
priations made by the State and the local adm inistrative bodies for
its support. The rates of contributions required from the employees
vary according to sex, age at entrance, and occupational group, as
shown in Table 15:
T
able
1 5 . — Rates
of contribution, based on salary, to be provided by employees
Age at entrance
Clerical and ad- Mechan
ministr ative em- ics and
laborers
ployees
Institutional
employees
Firemen
Police
men
Group 1, Group 2, Group 3 Group 4, Group 5, Group 6 Group 7
male
female
male
female
12 years_______ ____________
13 years............................. ..........
14 years______ _____________
15 years.___________________
16 years............. ...... ........... ........
17 years.________________ _
18 years..................... ................
19 years____________ _______
20 years____________ _______
21 years....................... ........... .
22 years____________________
23 years.____ _______________
24 years__________ _________
25 years___________ ____ ____
26 years------------------------------27 years____________________
28 years.................. ...................
29 years___ ______ __________
30 years____________________
31 years____________________
32 years._____ _____________
33 years _____ ____________
34 years____________________
35 years____________________
36 years................... .................
37 years___________ ________
38 years........................................
0. 0421
. 0422
.0423
. 0424
.0425
.0426
.0427
.0428
. 0429
.0430
.0431
.0433
.0435
.0437
.0439
.0441
.0444
.0448
.0453
.0458
.0463
.0468
.0474
. 0480
.0486
.0493
. 0501
0. 0475
. 0476
. 0477
. 0478
. 0479
.0480
. 0481
. 0482
. 0483
. 0484
. 0486
. 0488
. 0490
.0493
. 0496
.0499
. 0502
. 0506
„0511
0516
. 0522
0528
. 0534
. 0541
. 0548
. 0555
, 0663
0. 0306
.0310
.0314
.0318
.0322
.0327
.0332
.0337
.0342
.0347
.0352
.0358
.0364
.0370
.0376
.0382
.0388
.0396
.0404
.0412
.0420
. 0428
.0436
.0444
.0452
.0460
.0468
0. 0358
.0360
.0363
.0366
.0369
.0372
.0376
.0380
.0384
.0388
.0392
.0397
.0402
.0407
.0412
.0417
.0423
.0429
.0436
.0443
.0450
.0457
. 04<65
.0473
.0481
.0489
.0497
0. 0403
.0406
.0409
.0413
.0416
.0419
.0423
.0427
.0432
.0437
.0442
.0447
.0452
.0458
.0464
. 0470
.0477
.0484
.0492
.0500
.0508
.0516
.0524
. 0533
.0542
.0551
.0561
0.0369
.0372
.0375
.0378
.0381
.0385
.0389
.0393
.0397
.0401
.0406
.0411
.6416
.0421
.0427
.0433
.0439
.0445
.0451
0.0366
.0370
.0374
.0378
.0382
.0386
.0390
.0394
.0399
.0404
.0409
.0414
.0420
.0426
.0432
.0438
.0444
.0450
. 0466
52
T
CHAPTER 3.— STATE EMPLOYEE RETIREMENT SYSTEMS
able
1 5 .— Rates of contribution, based on salary, to be provided by employees—
Continued
Age at entrance
Clerical and ad Mechan
ministrative em ics and
laborers
ployees
Institutional
employees
Firemen
Police
men
Group 1, Group 2, Group 3 Group 4, Group 5, Group 6 Group 7
female
male
female
male
39 years......................................40 years------------------------ -----41 years------------------------------42 years-----------------------------43 years____________________
44 years........................................
45 years------------------------------46 years ____________________
47 years----------------------------- 48 years.___________________
49 years....................... ...... ........ .
50 years__________ _________
51 years____________ _____
52 years------------------------------53 years---------------- ------- -----54 years_____________ _____
55 years_____________ ______
56 years......................................
57 years____________________
58 years______ _______ ______
59 years.......................................
0.0509
.0517
.0525
.0533
.0542
.0551
.0561
.0571
.0581
.0591
.0602
.0613
.0624
.0635
.0647
.0659
.0672
.0685
.0698
.0711
. 0724
0.0572
.0582
.0592
.0602
.0612
.0622
.0633
.0644
.0655
.0666
.0678
.0691
.0704
.0717
.0730
.0743
.0757
.0771
.0785
.0799
.0813
0. 0478
.0488
.0498
.0508
.0518
. 0528
. 0539
. 0550
.0561
.0572
.0584
.0596
.0608
.0620
.0632
.0644
.0656
.0688
.0680
. 0693
. 0707
0.0506
.0515
.0524
.0533
.0542
.0551
.0561
.0571
.0581
.0591
.0602
.0613
.0624
.0635
.0647
.0659
.0672
.0685
.0698
.0711
.0724
0.0571
.0581
.0591
.0601
.0611
.0622
.0633
.0644
. 0655
.0666
.0678
.0691
.0704
.0717
.0730
.0743
.0757
.0771
.0785
.0799
.0813
0.0458
.0465
.0472
.0479
.0486
.0493
.0500
. 0507
.0514
.0522
.0530
.0538
.0546
.0554
. 0562
.0571
.0580
.0589
. 0598
.0607
.0616
0.0462
.0470
.0477
.0484
.0491
.0498
.0505
.0512
.0519
.0527
.0535
.0543
.0551
.0559
. 0567
.0575
.0583
.0591
.0599
.0608
.0617
The rates thus established for the employees have not been changed
since the system was established, but the rates of contribution for the
State and local bodies have changed considerably, as mentioned above,
as new bodies of employees have been taken in and new benefits added
to the plan. The actual contributions made have varied even more
widely, for the am ounts appropriated each year do not always corre
spond to the rates set, and the situation is further complicated by the
fact th at as employees under another system transfer to the State
plan both the assets and liabilities of the old system are taken over
bodily. The annual cash receipts and disbursements of the scheme
have been as follows:
T a b l e 1 6 . — Receipts and disbursements of New York State Employees’ Retire
ment System, 1921 to 1926
Receipts
Year ending
June 30—
Contri Appropri
butions ations by Other
from em public
sources
ployees
bodies
1921 i .............. .
1922-.............. .
192 3
192 4
$235, 720 $50,000
$1,270
589,351
360,485
28, 653
739,154
13, 907
69, 582
1, 279,907 863, 427
161,921
1, 660, 986 2,058,992 1, 265,434
1926........ ............ 1, 923, 764 1, 527,149 608, 606
Total_____
Disbursements
Total
$286, 990
978, 489
822, 643
2, 305, 256
4,985, 412
4,059, 519
Allow
ances,
other
pensions, Refunds All
purposes
and
benefits
Total
$2,402
29, 244
72,420
108, 512
174, 538
258,109
$91,038
917,014
450, 815
1, 901,183
3,997, 670
2, 974, 906
$104, 579
1,039, 506
647, 223
2, 267, 378
4,575, 211
3,818, 877
6, 428, 882 4, 873, 960' 2,135, 46 6 13,438,308 1,474,923 645, 225
10,332,626
12,452/. 7 4
$11,139
93, 248
123,988
257,683
403,003
585, 862
i Six months orily.
The expenditure for all other purposes includes investments, so
th at the difference between income and outgo is no indication of the
PENNSYLVANIA
53
fund’s real state. This is shown to some extent by the accum ulated
cash and securities at the end of each fiscal year, the figures for these
being as follows:
1921
1922
1923
$280, 91919
1, 137, 46319
1, 749, 50119
24
25
26
$3, 626, 548
6, 985, 029
9, 838, 764
The cost of administering the system is covered by special appro
priations, and up to the close of 1923 no figures relating to this m atter
were included in the annual tables of income and outgo. For the three
succeeding years these items are included under the heading “ All
other purposes” in the above table. In 1925 the cost of adm inistra
tion was $46,329, and in 1926 it was $84,378.
The accumulated cash and securities on hand at the end of 1926
amounted, it will be noticed, to nearly $10,000,000. A t the close of
1925, in accordance with the terms of the law, an investigation was
made into the service and m ortality experience of the members of
the system, with a view to discovering whether the tables on which
the rates of contribution and benefit had been based needed modifica
tion. The conclusion reached was th a t the system was working
satisfactorily, and th a t there was no necessity for any change.
While the experience under some of the rates has been unfavorable to the sys
tem, other rates have proved favorable, so that the experience as a whole has been
good. In view of the fact that only one experience investigation has been macLe
since the system was established, it does not seem necessary to change individual
rates until the need for a change has been confirmed by the results of another
check on the experience, or the appearance of a deficit in the valuation balance
sheet.3
PENNSYLVANIA
Pennsylvania State Employees’ Retirem ent System was estab
lished under an act signed June 27, 1923, and contributions and
retirements began in 1924.
Scope of Plan
'T 'H E plan covers all holding a State office or employed by the year
or the m onth, excepting judges and those who are covered by
the State school employees' plan. Membership is compulso'ry, after
12 m onths’ service, upon all entering the State service after December
31, 1924. Those in service when the plan was adopted were given
the option of joining or remaining outside. The time during which
they m ight exercise this option has been extended to December 31,
1928, but those who did not decide to enter within a year after the plan
went into operation m ust, if they come in later, make up the contribu
tions they would have paid during the interval.
Administration
T ^H E system is administered by a board of five consisting of the
secretary of the State, the State treasurer, one member appointed
by the governor, and two members belonging to the system and
elected by their fellows.
2 New York. Comptroller’s Office. Fifth report on the operation of the State employees’ retirement
system, as of June 30, 1925. Albany, 1926, p. 67.
54
CHAPTER 3.— STATE EMPLOYEE RETIREMENT SYSTEMS
Contributions From the Employees
fT 'H E employee has the right to choose between two rates of contri
bution, the first of which is calculated to produce upon retire
m ent at age 60 an annuity of one one-hundred-and-sixtieth of the
average salary for the last five years multiplied by the years of service,
while the second gives a similar annuity of one one-hundredth. M ost
employees choose the higher rate. The rates are based upon the
employee’s age on entering the system and are as follows:
T a b l e 1 7 . — Per cent of salary deducted as contribution to fund under Pennsylvania
State Employees’ Retirement System
Age at entrance
Per cent of sal
ary deducted
under—
Age at entrance
Eat© 1 Rate 2
20 .
21
22
23
24
25
26
27
28.
29.
30
31
32
33
2.68
2.74
2. 81
2.88
2.95
3.02
3.10
3.17
3.25
3.32
3.40
3. 48
3. 57
3. 65
4.28
4.39
4. 50
4. 61
4.72
4.84
4.95
5.07
5.20
5.32
5.44
5. 57
5. 70
5.84
Per cent of sal
ary deducted
under—
Age at entrance
Rate 1 Rate 2
34
35
36.
37.
38.
39.
40
41.
42
43
44.
45
46.
47.
3.73
3.82
3.91
4. 00
4.09
4.18
4. 27
4.37
4.45
4. 56
4.66
4. 77
4. 87
4. 97
5.97
6.11
6. 25
6.39
6. 54
6 . 68
6. 84
6. 99
7.15
7.30
7. 46
7. 63
7. 79
7. 96
Per cent of sal
ary deducted
under—
Rate 1 Rate 2
48.
49.
50.
51.
52.
53.
54.
55
56.
57.
58.
59.
5.08
5.19
5.30
5. 41
5. 52
5. 64
5. 76
5.87
5. 99
6.12
6.24
6.36
8.13
8. 30
8.49
9.02
9. 21
9.40
9. 59
9. 79
9. 98
10.18
An employee who has contributed for 10 years may, upon reaching
the age of 60, cease making contributions if he chooses, but in th a t
case his retiring allowance will be proportionately smaller.
Contributions From the State
'T 'H E State contributes for each employee a sum equal to his own
A contributions, so th a t each year a sum is p ut away entitling him
to a retiring allowance made up of his own annuity plus the S tate’s
pension, amounting on retirem ent to either one-eightieth or onefiftieth of his final average compensation, multiplied by the number
of years served since entering the system. For those who were in
the service before the retirem ent system went into effect the State
makes a further contribution to provide both annuity and pension
for the years served prior to 1924.
The State also bears the full cost of administering the system.
Conditions for Retirement
"D E T IR E M E N T for service is perm itted at age 60, after 25 years’
service. No age has been set for compulsory retirement.
R etirem ent for disability is perm itted, after five years’ service, for
physical or m ental incapacity rendering the employee unfit for the
discharge of his duty. Medical certification of the incapacity is
required.
PENNSYLVANIA
55
Retirement Allowances
I^O R service retirement, the allowance consists of annuity plus
pension to equal, for each year of service, either one-eightieth
or one-fiftieth of the final compensation. Since most of the employees
choose the higher rate, those with 25 years’ service to their credit
retire with an allowance of at least one-half their final average com
pensation. For instance, an employee retiring under such circum
stances whose salary for the last five years has been $1,500 per year
would receive an annual allowance of $750 if he had chosen the
higher rate, and of $468.75 if he had taken the lower. There is no
minimum or maximum to this allowance, except as it is determined
by the salary received. If the employee serves for more than 25
years and continues to pay contributions while in the service his
allowance will be proportionately greater.
The disability allowance for those retiring as disabled before reach
ing age 60 is one-ninetieth of the final compensation for each year of
service in the State. The minimum is 30 per cent of the final salary
and the maximum is eight-ninths of the allowance the employee
would have received had retirem ent not occurred until the super
annuation age of 60 had been reached.
Options: Instead of taking his straight allowance the retiring
employee may elect to receive a smaller annuity, pension, or allow
ance, with the proviso th at—
1. If the recipient dies before receiving w hat was, at the date of
retirem ent, the present value of the whole allowance, the balance
shall be paid to a beneficiary having an insurable interest in his life,
formally designated at the time of retirem ent; or
2. The annuity, pension, or retirem ent allowance shall be paid to
such a designated beneficiary throughout his or her life; or
3. One-half of the annuity, pension, or allowance shall be con
tinued to such a beneficiary throughout his or her life; or
4. “ Some other benefit or benefits shall be paid to either the con
tributor or such other person or persons as he or she shall nominate,
provided such other benefit or benefits shall, together with such
lesser members’ annuity, or lesser State annuity, or lesser retirem ent
allowance, be certified by the actuary of the retirem ent board to be
of equivalent actuarial value, and shall be approved by the retirem ent
board.”
Refunds
TF AN employee is discharged, or resigns before reaching pension^ able status he is entitled to a return of all the contributions he
has made, with compound interest at 4 per cent. If he prefers, he
may take instead either an annuity, or a deferred annuity, not to
exceed in value the actuarial value of his contributions.
Provision for Dependents
'T 'H IS m atter is covered by the options given on retirement. If
the retiring employee fails to take one of them the State assumes
no responsibility for any dependents he may have.
CHAPTER 4.—RETIREMENT SYSTEMS FOR
MUNICIPAL EMPLOYEES
A generalization it is probably safe to say th a t there is not a
city in the U nited States which does not have a retirem ent
system for at least some of its employees. Retirem ent
systems for firemen and the police are practically universal, retire
m ent systems for teachers are common, and in m any cities it will be
found th at there are several other schemes, each covering a special
group of employees. W ithin recent years, however, various cities
have concluded th a t it is fairer and more effective to provide for the
retirem ent of all city employees, and have established retirem ent
systems of varying degrees of inclusiveness. Among the cities having
a population of 400,000 or over there are nine with inclusive systems.
These, with the date at which the comprehensive system went into
effect, are as follows: Baltimore, 1926; Boston, 1923; Chicago, 1922;
D etroit, 1923; Minneapolis, 1922; New York City, 1920; Philadel
phia, 1915; Pittsburgh, 1915; San Francisco, 1922.
Ordinarily these systems are organized under State laws applying
to all cities of a given class, in addition to which there m ay or m ay
not be a city ordinance authorizing the establishment of a system
under the terms of the law.
Scope of Systems
A COMMON m ethod when introducing a municipal retirem ent
^
system is to m ake it apply to all employees not covered by some
existing pension scheme. The police and firemen almost universally
have schemes of their own, which they often prefer to m aintain, so
th a t it is rather unusual to find them included in a general scheme.
Teachers also frequently have their own established plans. In some
cities it is optional with such employees to come into the general
system or to remain under their own, so th at there is considerable
variation in the inclusiveness of the municipal systems. The Boston
plan includes both police and firemen, and the Baltimore plan covers
firemen, but elsewhere these two groups are outside of the general
system. In Boston, Baltimore, and San Francisco the teachers have
elected to come under the city plan, but in the other cities they either
have their own retirem ent scheme or are included in a State system.
The tendency is to make the municipal system as inclusive as pos
sible, with the idea of substituting one efficient and well-managed
plan for a num ber of small schemes covering limited groups and offer
ing widely varying benefits to the different classes of city employees.
Ordinarily employees in the service at the time a system is adopted
are given their choice of entering or remaining outside, but for those
entering the service thereafter membership is compulsory.
56
CHARACTER OF PLANS AND SOURCE OF FUNDS
57
Employee Representation in Management
C IX of the plans are administered by boards on which the employees
^
are represented, the other members usually being city officials
who hold the position ex officio. In the Boston plan one of the three
f'oard members is chosen by the other two from among the employees
covered by the system. In Baltimore, Minneapolis, and Pittsburgh,
two, and in Chicago, three of the five board members are employees
elected by their fellows. In San Francisco, where the board consists
of seven members, three are elected by the employees from their own
number.
In the other three cities the employees have no direct representa
tion; the system being administered in D etroit by the city comptroller
and the civil service commission, in New York City by the board of
estimate and apportionment, and in Philadelphia by a board of five,
of whom three are city officials and two are elected by the city councils
from their membership.
Character of Plans and Source of Funds
f ) F T H E nine cities, D etroit, Philadelphia, and Pittsburgh have
cash disbursement and the others actuarial reserve schemes.
Detroit stands alone in having a noncontributory system. In the
o:her eight cities, the employees are required to make specified contribu
tions, which are deducted from their salaries or wages. In Pittsburgh
the contribution is 2.5 per cent of the salary, with a maximum of $72
a year, in Philadelphia 4 per cent, with a yearly maximum of
$48, and in Boston 4 per cent without any maximum. Elsewhere the
contribution is calculated on a savings-bank basis to insure a certain
annuity after specified conditions as to age and length of service have
been fulfilled, and therefore varies with the age at entrance and, in
some cases, with sex and kind of work done, the clerical group, for
instance, having a lower rate of contribution than employees in more
hazardous occupations. Minneapolis exempts from contribution all
employees, mostly laborers, who do not earn as much as $750 a year,
classing these as noncontributing members, and making special
provisions for their retirem ent allowances, period of service, and the
like. Chicago has rather a complicated contribution plan. Any
amount over $3,000 a year is exempt, but on salary up to th a t amount
the employee contributes 3.25 per cent for his own annuity, 1 per cent
for his widow’s annuity (female employees do not make this contribu
tion), and one-tenth of 1 per cent for expenses of administration.
In addition he contributes annually one-half of 1 per cent of two
m onths' salary to provide his share of the allowance for ordinary
disability.
The cities having cash disbursement systems appropriate such
amounts as are required to maintain pension payments. As D etroit
bears the whole cost of the allowances, appropriations have been
made annually since the plan was started. Philadelphia did not con
sider any appropriation until 1924, when it devoted $50,000 to the
purpose, and Pittsburgh made its first appropriation in 1925, to cover
3306°—29----- 5
58
CHAPTER 4.--- MUNICIPAL RETIREMENT SYSTEMS
a deficit in the 1924 operations. The cities having actuarial reserve
systems make annual appropriations to cover their share of the
liability for current service, and also to meet the accrued liability for
service before the plan went into effect. In general, the city bears
the cost of extra benefits, such as special allowances for disability
incurred in the performance of duty, and special provision for the
widowrs and children of employees killed in the service.
In the actuarial reserve systems, interest on the accumulating
contributions of the employees and the city forms an im portant part
of the revenue. In the New York City system, for instance, the
interest on the fund for the year 1926 was $1,136,080, while from the
establishment of the fund up to the end of 1926 it was $3,354,600.
In Minneapolis, which has comparatively a small system covering
1,739 members as against the 31,000 to 32,000 of New York, interest
for 1926 amounted to $26,745, or very nearly one-fifth as much as
the city’s contribution.
Conditions for Retirement
of the systems recognize at least three kinds of retirem ent on
miowance: For service or superannuation, for ordinary dis
ability, and for duty disability. For service retirem ent the two fac
tors of age and length of service are frequently linked together. One
purpose of a retirem ent system is to relieve the employing agency
of employees too old to give the best service, so there is a tendency
in the newer systems to fix an age at which retirem ent is compulsory.
The following statem ent shows the conditions for service or super
annuation retirem ent in the systems considered:
Conditions for superannuation or service retirement
Baltimore: Optional at 60 years of age, compulsory at 70; no service require
ment.
Boston: Optional at 60 years of age, compulsory at 70; no service requirement.
Chicago: No age requirement; at least 10 years’ service required. The allow
ance may not be drawn, however, until the retirant has reached age 55,
Detroit: No age requirement; 25 years’ service required, unless employee
reaches 70 first, when 15 suffice.
Minneapolis: Optional for women at 60, and for men at 62; compulsory for
women at 70, and for men at 72; no service requirement.
New York City: Optional for clerks at 60; mechanics, 59; laborers, 58. Com
pulsory for all at 70, with possible extensions for 2-year periods; no service
requirement.
Philadelphia: Optional at 60; no compulsory age; 20 years’ service required.
Pittsburgh: Optional at 60; no compulsory age; 20 years’ service required.
Retirement may be permitted with less, in which case contributions must be
continued to close of 20-year period.
San Francisco: Optional at 62 (at 60, after 30 years’ service) and compulsory
at 70; 10 years’ service required.
I t will be noticed th a t of the three cash disbursement systems one
ignores age altogether, and the other two, w^hile setting a fairly early
optional age, do not make retirem ent compulsory at any time. All
three, however, have a definite service requirem ent—20 years in
two cases, 25 in the third. Of the actuarial reserve systems, on the
other hand, four make no service requirement, and the other two
call for only 10 years’ service. In an actuarial reserve system,
RETIREMENT ALLOWANCES
59
of course, it is of no importance from a financial standpoint how
early an employee retires. Each year the contributions he makes
and the contributions the city makes on his behalf are credited to
his account, the interest they draw is also credited to the same
account, and it is of no possible importance, financially, to anyone
but himself whether he withdraws early and takes the small allow
ance his account would then purchase, or remains late and secures
a larger allowance. B ut from the standpoint of the work to be done,
it is im portant both th at employees should not be leaving in the
prime of life after they have served their full apprenticeship, and th at
they should not remain after they have become less efficient through
age, so five of these six cities set an age below which employees may
not retire on allowance and another beyond which they may not
remain in the service a t all. In general, 60 seems to be the accepted
age for voluntary and 70 for compulsory retirement.
Conditions for Disability Retirement
/^ R D IN A M L Y two kinds of disability retirem ent on allowance
are perm itted—retirem ent for ordinary disability which arises
in the normal course of life and is not due to the sufferer’s fault or
wrong living, and retirem ent for duty or accident disability, arising
from some condition or accident to which the employee was exposed
in the actual performance of his duty. Medical examination and
certification are required before retirem ent is perm itted for either of
these causes, and in many cases periodic reexaminations are required
as long as the disability allowance is drawn.
The D etroit system makes no provision for disability retirem ent of
any kind, and the Philadelphia and San Francisco systems provide
simply for disability retirement, making no distinction between the
two kinds. The other six cities permit retirem ent on allowance for
duty disability without regard to age or length of service, the only
essential being th a t the disability results from the direct performance
of duty.
For ordinary disability retirem ent all the cities except Chicago
have a service requirement, ranging from 5 years in Baltimore to
20 in Philadelphia. In 1923 Philadelphia reduced this period to 15
years in the case of employees totally incapacitated for any kind of
work. New York, Minneapolis, Pittsburgh, and San Francisco
require 10 years’ service. Chicago safeguards its lack of a service
requirement by providing th at for ordinary disability the allowance
will be paid only for a period not longer than one-fourth the length of
service, and not, in any case, exceeding five years.
Retirement Allowances
TN T H E cash disbursement systems the allowance for service or
superannuation retirem ent is very simply calculated. In D etroit
it is one-half the annual salary received at the time of retirement,
with a maximum of $900 a year, and in Philadelphia and P itts
burgh, one-half the average annual salary received during the last
five years' service, with a maximum of $1,200 a year. Under the
60
CHAPTER 4.— MUNICIPAL RETIREMENT SYSTEMS
actuarial reserve systems the allowance consists of two parts—an
annuity purchased by the retiran t’s accumulated contributions, and
another, called a pension, purchased by the city’s accumulated con
tributions to his credit. The contributions have been so calculated
th at for each year of service the allowance will be a specified fraction—
the service fraction—of the average annual compensation received
during either the last 5 or the last 10 years’ service. The service
fraction may vary with the class to which the worker belongs. In
the New York system, for instance, the service fraction for clerical
workers is one-seventieth; for mechanics, one sixty-eighth; and for
laborers, one sixty-sixth of the average final compensation. As a
result the retirants from these groups receive an allowance of approxi
mately one-half their average final compensation after terms of
service of 35, 34, and 33 years, respectively. Under all the actuarial!
reserve systems the city pays the whole allowance for years of service
rendered before the system was adopted.
The custom varies as to setting minimum and maximum limits..
Minneapolis sets a maximum of $500 a year for noncontributing
members—i. e., those who have earned less than $750 a year and!
have consequently been freed from the obligation to contribute to the
retirement fund— but has no limits on allowances for contributing
members. Baltimore and New York City have no limits, but Boston
and San Francisco both provide th at allowances may not be less thani
$480 a year—in San Francisco this provision is confined to those
already in the service when the system was adopted, who are forced'
to retire on account of reaching the age of 70—and Chicago has a.
minimum for those in service before the present system was adopted!,
of $600. Boston provides th at no retirant with credit for prior servicemay draw an allowance of more than one-half his average annual!
salary for the last five years, and Chicago sets a maximum of $1,800,,
beyond which no allowance may go. With these exceptions the
amount of the allowance is determined by the amount of the accumu
lated contributions to the retirant’s credit, including the double con
tribution made by the city for his years of prior service, and by his
age at retirement, the latter factor determining the amount of the
annuity which the contributions will purchase.
Allowances for Disability Retirement
HTHERE is the same difference between the two kinds of systems
concerning disability allowances as in regard to the allowances
for service retirement, the cash disbursement systems paying a fixed
amount, usually half of the last salary received, while under the
actuarial reserve systems the allowance is made up of annuity and
pension in varying proportions, the pension being enlarged to meet
the needs of the situation. Table 18 shows the allowance for ordi
nary and for duty disability retirement under each of the city plans:
61
PROVISION FOR DEPENDENTS
T
able
1 8 . — Disability
City
retirement allowances in nine municipal employees’ retire
ment systems
Ordinary disability 1
Annuity, plus pension sufficient to bring
allowance up to nine-tenths of what
superannuation allowance would be;
minimum, one-fourth of average final
compensation.
Boston___
Annuity, plus pension of nine-tenths of
what it would have been had retirant
remained in service at same salary up
to age 60.
One-half salary received at time of retire
Chicago...........
ment, to be paid for period not longer
than one-fourth retirant’s length of serv
ice, but in no case for over 5 years.
Detroit_____
No allowance_______________________
Minneapolis.
Annuity, plus pension to bring allowance
up to what contributions to retirant’s
credit would purchase if kept at com
pound interest until earliest date at
which service retirement would be per
missible.
New York City_.
Annuity, plus pension to bring allowance
up to nine-tenths of service allowance
at same date, with minimum, if retirant
entered service under 40, of one-fourth
of average final compensation.
Philadelphia......... One-half of average final compensation,
with maximum of $1,200 a year.
Pittsburgh______ ___ do____ _________________________
San Francisco___ 1.25 per cent of average final compensa
tion multiplied by number of years of
service.
Baltimore. _
Duty disability 1
Annuity, plus pension of two-thirds of
retirant’s average final compensation.
Annuity, plus pension sufficient to bring
allowance up to three-fourths of salary
during last year of service.
Three-fourths of salary at time disability
was incurred, with $10 per month for
each child under 18, total not to exceed
90 per cent of full salary.
No allowance.
Annuity, plus pension to bring allowance
up to what it would be if employee’s
and city’s contributions were contin
ued up to earliest date at which service
retirement would be permissible.
Annuity, plus pension of three-fourths of
average final compensation.
One-half of average final compensation,
with maximum of $1,200 a year.
Do.
1.25 per cent of average final compensa
tion multiplied by number of years of
service.
1“ Average final compensation ” means the average salary, in Baltimore and San Francisco for the last
10, and in New York, Philadelphia, and Pittsburgh the last 5, years of service.
Refunds
A LL of the systems considered make some provision for returning
the employee’s contributions in case he dies or leaves the service
before retiring on allowance. Philadelphia and Pittsburgh return the
contributions, w ithout interest, to the employee or to his estate.
The other cities return them with interest, usually 4 per cent, com
pounded annually. In the systems in which the employee is required
to make specific contributions for expenses of administration or other
nonannuity purposes, it is usually provided th at only contributions
intended to apply to the purchase of an annuity are to be returned.
Provision for Dependents
Y ^ /IT H the exception of Chicago, all the cities having actuarial
*
reserve systems so arrange th at on retirement an employee
may either receive his straight allowance or may take one of several
options under which he will receive a smaller allowance, but on his
death it will be continued to a beneficiary he has named or some other
benefit of similar actuarial value will be paid. If an employee on
retirement does not choose to take one of these options, the city does
not assume any responsibility for his dependents in case of his death.
Chicago does not offer options, since under its system allowances are
provided for the widows and in some cases for the minor children of
employees. The cash disbursement systems do not make any pro
vision for the dependents of a retired employee.
Upon the death of an employee before retirement, all the cities
return to his heirs his contributions, usually with interest. If the
62
CHAPTER 4.— MUNICIPAL RETIREMENT SYSTEMS
death was due to normal causes, New York City and San Francisco
pay to the dependents a lump-sum benefit equal to the decedent’s
salary for the last six months of his life, while Baltimore pays 50 per
cent of his average final compensation. If death was due to accident
or injury incurred in the performance of duty, Boston, Baltimore, and
New York City pay to the widow, the children under 18, or to depend
ent parents a pension of one-half the decedent’s annual salary or
one-half of his average final compensation, according to the city,
while San Francisco pays, in addition to the ordinary death benefit,
whatever am ount is due to the heirs under the State compensation
law. Chicago, under the same circumstances, increases the pension
paid by the city to the widow so as to bring her total allowance up to
60 per cent of the employee’s salary at the time of death. M inne
apolis pays a death benefit of $150 to the heirs of a noncontributing
member who dies before retirement, while D etroit, Philadelphia, and
Pittsburgh make no provision for dependents.
CITY SYSTEMS
BALTIMORE
'T'YP E of system.-—The Employees’ Retirem ent System of the City
** of Baltimore is a contributory sj^stem.
Contributions.—The city makes two contributions, one to cover
benefits earned during the current year and one to liquidate the
accrued liability for service prior to 1928; it also pays the cost of
administering the system. On the basis of the experience from Ja n
uary 1 to June 30, 1926, the rate for the first or normal contribution
was set at 4.10 per cent of the active pay roll, and for the accrued
liability contribution at 3.64 per cent. This would make a contri
bution for the year 1927 of $924,540, exclusive of cost of adm inistra
tion.
Employees contribute a percentage of their salary, based on sex,
age at entrance, and character of work, calculated to purchase, on
retirement, an annuity of one one-hundred-and-fortieth of the aver
age final compensation for each year of service after the adoption of
the system. For the year ending December 31, 1926, the employees’
contributions amounted to $406,150.
Retirement allowances.—The superannuation allowance consists of
an annuity bought by the retiran t’s accumulated contributions, plus
a pension of equal amount from the city, the two together being equal
to one-seventieth of the average final compensation for each year of
service after the adoption of the system. For those in service before
the system was adopted, the city pays the full allowance for each
year of such prior service.
For ordinary disability retirem ent the allowance consists of an
nuity plus pension to equal nine-tenths of one-seventieth of the aver
age final compensation for each year of service, with a minimum
allowance of 25 per cent of the average final compensation.
For duty disability retirement, the allowance consists of the an
nuity plus a pension of two-thirds of the average final compensation.
The ordinary death benefit consists of a lump-sum payment equal
to one-half of the average final compensation.
The accidental-death benefit, paid in case of death resulting from
an accident incurred in the performance of duty, consists of a pension
BOSTON
63
of one-half the average final compensation, paid to the widow during
widowhood, or to minor children until they reach the age of 18, or to
a dependent parent or parents. In addition, the decedent’s accumu
lated contributions with interest are returned to the estate.
Number of employees covered.—As of June 30, 1926, the number of
employees under this system was 7,311.
Conditions for retirement.—Retirem ent is optional at age 60 and
compulsory at 70. There is no service requirement, but the am ount of
the allowance is affected by the length of service.
Ordinary disability retirement is perm itted after five years’ service.
For duty disability retirement, there is neither age nor service
requirement, the only condition being th at the disability results from
injuries received in the actual performance of duty.
Medical examination and certification are required in all cases of
disability retirement.
Administration.—The system is administered by a board of five
consisting of the city comptroller, ex officio, two members appointed
by the mayor, and two city employees elected by the entire member
ship of the system.
Average age of retirants.—The average age of the 28 employees who
retired during the six m onths ending June 30, 1926, was 71.1 years.
Statistics.—The system is too newly inaugurated for much to be
available in the way of summary data. The city made an initial
contribution of $1,000,000 and a balance of nearly $59,000 was taken
over when the teachers’ retirem ent system was merged with the city
employees’ system. As of June 30, 1926, the system was paying
retirement allowances of an annual value of $75,749, of which amount
$61,382 went to those pensioned under the former retirem ent system
for teachers.
BOSTON
'JTYPE of system.—The Boston Retirem ent System is a contrib*
utory system.
Contributions.—The city makes one contribution to cover the cost
of benefits earned during the current year, and a second to meet the
accrued liability for prior service; this second contribution is calcu
lated to liquidate the entire accrued liability within 30 years from the
adoption of the system. The city also bears the cost of administration.
For the year ending December 31, 1926, the city’s contributions to the
system amounted to $1,583,000, and the cost of adm inistration was
$18,406.
Employees contribute 4 per cent of their salaries or wages. For the
year ending December 31, 1926, their contributions amounted to
$708,386.
Retirement allowances.—The allowance for superannuation retire
m ent consists of an annuity purchased by the employee’s accumu
lated contributions, and a pension of equal amount from the city.
The city provides the full allowance for years of service prior to the
adoption of the system. The minimum, if an employee has served
for 15 years, is $480 a year; the maximum is one-half of the average
annual salary for the last five years.
For ordinary disability retirem ent the allowance consists of the
annuity bought by the retirant s accumulated contributions, plus a
pension of 90 per cent of the pension which would have been received
64
CHAPTER 4.— MUNICIPAL RETIREMENT SYSTEMS
had the member remained in service till age 60, without change in
compensation.
For duty disability the allowance consists of the retirant’s an
nuity, plus a pension sufficient to bring the allowance up to threefourths of the compensation received during the last year of service.
The accidental-death benefit, payable in case of death resulting
from the performance of duty, consists of a pension equal to one-half
the compensation received during the decedent’s last year of service,
paid to his widow during widowhood, or to dependent children until
they reach age 18 or to dependent parents.
Number oj employees covered.—As of December 31, 1926, the number
of employees under this system was 18,926.
Retirement allowances.—Retirement is optional at age 60 and com
pulsory at 70. There is no service requirement, but the amount of
the allowance is affected by length of service.
Ordinary disability retirem ent is perm itted after 15 years’ service.
For duty disability retirem ent there is no age or service require
ment, the only condition being th at the disability results from injuries
received in the discharge of duty.
Medical examination and certification are required in all cases ol
disability retirement.
Administration.—The system is administered by a board of three—
the city treasurer, ex officio, one appointed by the mayor, and one
selected by these two from those eligible to membership in the system
Statistics.—The total receipts of the system from January 31, 1923,
when contributions first became payable, to December 31, 1926,
were $7,480,582; total disbursements for the same period, $1,511,697
CHICAGO
of system.—The Municipal Employees’ Annuity and Benefit
r und of Chicago is a contributory system.
Contributions.—The city contributes for each employee as follows:
For employee’s pension, an amount equal to 5.75 per cent of his
salary up to $3,000, all over th at am ount being om itted from the
calculation; for widow’s pension, 1. 75 per cent; for cost of adm inistra
tion and for ordinary disability benefit, the same amount as the
employee. In addition, the city bears the whole cost of the duty
disability allowance, the compensation annuity, and the child’s an
nuity. The am ount needed is raised by a special tax levy, which must
not exceed nine-tenths of a mill on the dollar of assessed valuation.
(Beginning July I, 1927, this levy may not exceed 0.45 of a mill,
the reduction having been made on account of a change in the method
of assessing valuation.) For the year ending December 31, 1926, the
city’s contributions amounted to $1,800,004.
The employees contribute a percentage of their salary up to
$3,000, all over th at amount being exempt. The contribution is
thus allotted: For own annuity, 3. 25 per cent; for widow’s annuity,
1 per cent; for cost of administration, one-tenth of 1 per cent; and
for ordinary disability allowance, one-half of 1 per cent of two
monthly salary paym ents a year. Woman employees do not make
the contribution for widow’s annuity. For the year ending December
31, 1926, the employees’ contributions amounted to $868,798
DETROIT
65
Retirement allowances.— For superannuation retirement, the allow
ance consists of an annuity bought by the employee’s contributions,
plus a pension bought by the city’s contributions to his credit. If
the employee has served 20 or more years, the whole amount to his
credit is used in purchasing this allowance; if he has served less, the
city’s pension is reduced proportionately. For those entering the
service after the system was established, there is no minimum allow
ance, but a maximum of $1,800 a year is set for all employees. For
those in service before the system was adopted, who have served 20
years and are 55 or over, there is a minimum of $600 a year.
For ordinary disability retirement, an allowance of one-half the
employee’s salary will be paid for a period not longer than onefourth his length of service, and not in any case over five years.
For duty disability, the allowance consists of the annuity bought
by the retirant’s contributions, plus a pension sufficient to bring the
total up to three-fourths of the salary received at the time the injury
was incurred; in addition, $10 a month is allowed for each child under
18, but the total of this “ child’s an n u ity ” m ust not exceed 15 per
cent of the salary received at the time the injury was incurred.
Upon the death of a contributor or pensioner, his widow receives
the annuity purchasable by the accumulated contributions for this
purpose made by her husband and the city.
If the death is due to injuries received in the performance of duty,
the city increases its share of the annuity to bring the total up to 60
per cent of the salary the husband received at the time of his death,
and gives an additional allowance of $10 a month for each child
under 18.
Number oj employees covered.—As of December 31, 1926, the num
ber of employees covered by this system was approximately 13,000.
Conditions for retirement.—There is no age set for superannuation
retirement, but an employee m ust have served at least 10 years in
order to draw a retirem ent allowance. If he retires earlier, having
fulfilled the service requirement, he may not draw the allowance until
he reaches age 55.
Ordinary disability retirem ent is perm itted without regard to age
or length of service, the only requirements being medical examination
and certification.
For duty disability retirem ent, the requirements are the same as
for ordinary disability, plus proof th at the disability was incurred
in the performance of duty.
Administration.—The system is managed by a board of five,
consisting of the city comptroller and the city treasurer, ex officio,
and three municipal employees, elected by their fellows.
Statistics.—For the year ending December 31, 1926, the total
receipts of the system from all sources amounted to $3,772,057; the
total expenditures were $925,369.
DETROIT
'T'YP E oj system.—The Retired Employees’ Pension Fund of Detroit
*
is a noncontributory system.
Contributions.—The city makes annual appropriations from its
ordinary funds raised by taxes, appropriating whatever amount
is needed. For the year ending June 30, 1926, the appropriation was
$55,030; for the year ending June 30, 1927, it was $65,932.
66
CHAPTER 4.— MUNICIPAL RETIREMENT SYSTEMS
The employees make no contribution.
Retirement allowances.—For superannuation retirem ent the allow
ance consists of one-half the salary at the time of retirement, with a
maximum of $900 a year.
No allowance is granted for disability retirement.
Number oj employees covered.—The number of employees under the
system, as of June 30, 1926, was 11,802.
Conditions for retirement.—There is no age requirement for super
annuation. Twenty-five years’ service is required, but if an employee
is 70 or over, he may retire with only 15 years’ service.
Neither ordinary nor duty disability retirem ent on allowance is
permitted.
Administration.—The system is administered by the civil service
commission and the city comptroller.
Statistics.—The plan was authorized from April, 1923, but no
appropriations were made and no pensions paid until 1925, when the
pensions were made effective as of 1924, arrearages being paid.
The total receipts of the system from the date of its establishment to
June 30, 1927, were $141,099; total disbursements for the same
period, $141,099.
MINNEAPOLIS
rTJY P E of system.—The Municipal Pension and Retirem ent Board
* Annuity and Benefit Fund of Minneapolis is a contributory
system, except for employees receiving less than $750 a year who
do not contribute.
Contributions.—The city makes a normal contribution to cover
the cost of benefits earned during current year, and another to cover
accrued liability. It pays expenses of administration, and bears the
whole cost of pensions for noncontributing members. The amount
needed is raised each year by a special tax levy. For the year ending
December 31, 1926, the city’s contribution was $134,801.
Employees receiving over $750 a year contribute a percentage of
salary ranging from 3 to 8, based on age at entrance. Those receiving
less than $750 make no contribution. For the year ending December
31, 1926, the emplo 3^ees’ contributions amounted to $108,763.
Retirement allovjances.—The superannuation allowance consists of
an annuity bought by the retiran t’s accumulated contributions, plus
a pension bought by the city’s accumulated contributions to his
credit. For those in the service before the system was adopted, the
city provides the whole allowance for the years of prior service.
For contributing members, there is no maximum or minimum upon
the allowance; for noncontributing members, the maximum is $500,
the amount of the pension depending upon length of service.
For ordinary disability, the allowance consists of the pension and
annuity which would be purchasable if the accumulated contribu
tions to the retiran t’s credit were carried at compound interest until
the employee had reached the retiring age.
For duty disability, the allowance consists of the pension and annuity
which w^ould be purchasable if both parties continued their contri
butions until the employee had reached the retiring age.
Number of employees covered.—The number of contributing mem bers
under this system, as of December 31, 1926, was 1,739.
NEW YORK CITY
67
Conditions for retirement.—Retirem ent is optional for women at
age 60 and for men at 62, and compulsory for women at 70 and for
men at 72. Noncontributing members m ust serve till they reach 70.
There are no service requirements for contributing members, but
for noncontributing members there are requirements as to service
varying according to circumstances.
For ordinary disability retirement, 10 years of service and of contri
bution to the system are required.
For duty disability retirement there is no requirement either of age
or service.
Medical examination and certification are required in all cases of
disability retirement.
Administration.—The system is administered by a board of five,
consisting of the mayor, the city comptroller and chairman of the
ways and means committee of the city council, ex officio, and two
representatives elected by the employees.
Average age of retirants.—For the year ending June 30, 1926, the
average age of all retirants was 69.21 years.
Statistics.—The total receipts of the system from its establishment
up to December 31, 1926, were $1,019,105; total disbursements for
the same period were $386,584.
NEW YORK CITY
'T 'Y P E of system.—The New York City Employees’ Retirement
System is a contributory system.
Contributions.—The city makes two contributions, calculated on an
actuarial basis, one to cover the cost of pensions for current service
and to pay death benefits and the “ compassionate allowance,”
and one to defray accrued liability for prior service. I t also bears the
cost of administering the system. For the year ending December
31,1926, the city’s contributions to the system amounted to $4,202,567.
The employees contribute a percentage of their salary, varying
according to sex, age at entrance, and kind of work performed, cal
culated to provide a fund sufficient, if they continue in the service
to the minimum age for retirem ent, to purchase an annuity of approx
imately one-fourth of their average final compensation. The rates of
contribution range from 3.84 per cent of the salary for men entering
the clerical group at age 20 to 8.3 per cent for women entering the
laboring group at age 57. For the year ending December 31, 1926,
the employee’s contributions amounted to $3,525,777.
Retirement allowances.—The superannuation allowance consists of
an annuity bought by the retiran t’s accumulated contributions, plus
a pension from the city of approximately the same amount, the total
being equal to a fraction of the retiran t’s average final compensation,
multiplied by the number of years he has served. This service frac
tion is, for members of the clerical group, one-seventieth, for mechan
ics, one sixty-eighth, and for laborers, one sixty-sixth of the average
final compensation. For those in the service when the system was
adopted, the city provides the whole allowance for the years of
prior service.
For ordinary disability retirement, the allowance is nine-tenths of
what the service allowance would be, with a minimum, if the retirant
entered the service under age 40, of 25 per cent of the average final
68
CHAPTER 4.--- MUNICIPAL RETIREMENT SYSTEMS
compensation. The city increases its pension, if necessary, to bring
the allowance up to this minimum.
For duty disability retirem ent, the allowance consists of an annuity
bought by the retira n t’s accumulated contributions, plus a pension
from the city of three-fourths of his average final compensation.
If a member is dropped from the service without fault on his part,
he is entitled, in addition to the return of his contributions, to a
payment equal in value to a pension, deferred to age 60, of one onehundred-and-fortieth of his average final compensation, multiplied
by his years of service. This is known as the “ compassionate allow
ance.”
In case of the death from ordinary causes of a member in active
service, a cash sum, equal to his compensation for the last six months,
is paid to his estate or to any beneficiary he may have designated.
If the death of an active member results from an accident sustained
in the performance of duty, a pension of one-half of his average final
compensation is payable to his widow during widowhood, or to his
minor children until they reach age 18, or to his dependent parent or
parents.
Options are offered at the time of retirement, perm itting provision
for dependents at the cost of a smaller allowance to the retirant during
his lifetime.
Number oj employees covered.—As of December 31, 1926, the number
of employees covered by the system was 31,421.
Conditions for retirement.—Retirem ent is optional for the different
classes of workers at the following ages: Clerical group (including
technical and adm inistrative employees), 60; mechanics, 59; laborers,
58. I t is compulsory at 70 for all classes, although extensions may be
granted in individual cases. There is no service requirement, but the
amount of the allowance is affected by this factor.
For ordinary disability, arising from causes other than the actual
performance of duty, retirement on allowance is perm itted after 10
years’ service.
For duty disability retirem ent is perm itted at any time.
Medical examination and certification are required in all cases of
disability retirement.
Administration.—The system is administered by the city board of
estimate and appropriation.
Statistics.—From the coming into operation of the system on
October 1, 1920, to December 31, 1926, the total receipts of the system
were $38,605,703, and the total disbursements, $6,871,076.
PHILADELPHIA
'TTYPE oj system.—The Municipal Pension Fund of the City and
* County of Philadelphia is a contributory system.
Contributions.—The city undertakes to make such contributions
as are needed to m aintain the payment of pensions, and also bears
the cost of administration, but has not committed itself to any system
atic method of building up a reserve fund. In 1924, the city appropri
ated $50,000 for the support of the system, and in 1925 a like amount.
This amount m ay be increased as necessity arises.
Employees contribute 4 per cent of their salaries or wages, with a
maximum contribution of $4 a month. If an employee retires on
PITTSBURGH
69
allowance before having contributed for 20 years, he m ust contribute
4 per cent of his allowance annually till the 20-}^ear period is made
up. In 1926 the employees’ contributions amounted to $312,782.
Retirement allowances.—The retirem ent allowance is 50 per cent
of the retiran t’s average annual salary for the last five years, with a
maximum of $1,200 a 37ear.
Conditions for retirement.—Superannuation retirement is optional
from age 60 onward, after 20 years’ service.
Disability retirem ent is perm itted after 20 years’ service, regardless
of age. If the disability totally incapacitates the employee for work
of any kind, retirem ent on allowance m ay be perm itted after 15
years’ service.
Administration.—The system is administered by a board of five,
consisting of the mayor, the city comptroller, and the city treasurer,
ex officio, and one member each of the select and common councils,
chosen annually by the said councils.
Average age of entrants.—The average age at retirem ent is estimated
at from 62 to 63, with a minimum of 25 years’ service, on the average.
Statistics.—From the establishment of the system to December
31, 1926, the employees had contributed $2,277,770, while the net
amount paid out in pensions was $1,786,744.
PITTSBURGH
rT1Y P E of system.—The Pension Fund of the City of Pittsburgh is a
* contributory system.
Contributions.—The city appropriates annually whatever amount
is considered necessary. For the year ending December 31, 1926, the
appropriation was $44,000.
Employees contribute 2.5 per cent of their salaries, all salary over
$2,400 a year being exempt from contribution. If an employee is
retired with less than 20 years’ service, he m ust contribute 2.5 per
cent of his allowance until the 20-year period has been completed.
For the year ending December 31, 1926, the employees’ contributions
amounted to $94,022.
Retirement allowances.—The superannuation retirement allowance
is one-half the average annual compensation for the last five years of
service, with a maximum of $1,200 a year.
The disability retirem ent allowance is the same as the superannua
tion.
Number of employees covered.—The number of employees under
this system as of December 31, 1926, was approximately 2,400.
Conditions for retirement.—Retirem ent is optional at 60, after 20
years’ service. There is no compulsory age.
Ordinary disability retirem ent is perm itted after 10 years’ service.
D uty disability retirem ent is perm itted without regard to age or
length of service.
Medical examination and certification are necessary in all cases of
disability.
Administration.—The system is administered by a board of five,
consisting of the mayor, the city comptroller, and the president of the
city council, ex officio, with two municipal employees chosen by their
fellows.
70
CHAPTER 4.— MUNICIPAL RETIREMENT SYSTEMS
Average age oj retirants.—The average age at retirem ent is 66.4 years,
with an average of 24.6 years of service.
Statistics.—The total receipts of the system from October 1, 1915,
to December 31, 1926, were $876,787; the total disbursements for
the same period were $817,604.
SAN FRANCISCO
rT Y P E oj system.—The City Employees’ Retirem ent System of San
* Francisco is a contributory system.
Contributions.—The city makes each year a contribution covering
its share of the benefits earned by th at year’s service, and another to
cover the accrued liability. I t also pays the cost of administering
the system. For the year ending June 30, 1926, its contributions
amounted to $688,142.
Employees contribute a percentage of their salary based on sex
and age at entrance. The present range is from 2.87 per cent for
men entering at 20 to 6.37 per cent for those entering at over 60.
For the year ending June 30, 1926, their contributions amounted to
$510,884.
Retirement allowances.—The superannuation allowance consists of
an annuity bought with the retirant’s accumulated contributions
and a pension bought with the city’s accumulated contributions to his
credit. If retirem ent takes place at age 62, the annuity and pension
combined amount to, for men, 1 ^ per cent and for women 1.172 per
cent of their average final compensation multiplied by each year of
service rendered since the adoption of the system. For those in
service before the adoption of the system, the city provides the full
allowance for each year of such prior service. In general, there is
neither minimum nor maximum set, but for those in the service
before the system was adopted who are forced to resign on account of
reaching age 70, a minimum of $480 a year is fixed.
For disability retirem ent the allowance is 1.25 per cent of the
average compensation for the last 10 years of service, multiplied by
the total number of years of service.
For duty disability retirement, the allowance is the same, b ut the
city pays in addition whatever benefits the State compensation law
provides under the circumstances.
In case of the death of a member from ordinary causes, there is a
death benefit of an amount equal to the compensation earnable dur
ing the last six months.
In case of death resulting from the performance of duty, the
dependents receive in addition to the above benefit whatever the
State compensation law calls for under the circumstances.
Upon retirement, a member is given options enabling him to make
provision for his dependents, if he wishes to do so, at the cost of a
smaller allowance during his life.
Number oj employees covered.—As of June 30, 1926, the number of
employees under the system was 6,775.
Conditions jor retirement.—Retirem ent is optional at age 62 (60 if
retirant has served 30 years) and compulsory at 70. There is a serv
ice requirement of 10 years.
SAN FRANCISCO
71
Disability retirem ent is perm itted after 10 years, the requirement
being the same for ordinary and for duty disability. Medical exami
nation and certification are required in both cases.
Administration.—The system is administered by a board of seven,
made up of the chairman of the finance committee and the city
auditor, ex officio; three elected from the active membership of the
retirement system; a resident official of a life insurance company
and an officer of a bank, both appointed by the mayor.
Statistics.—From the establishment of the system, April, 1922, up
to June 30, 1926, the total receipts were $3,761,699, and the total
disbursements were $769,381.
T
Name of system and authorization
Municipal pension and retirement
board annuity and benefit fund of
Minneapolis (Sess. Laws 1919,
ch. 522).
Annual contributions
to cover its share of
benefits earned by
current service and
to meet accrued lia
bility; cost of admin
istration and extra
benefits.
Superannuation: Optional at
age 60; and compulsory at 70.
No service requirement.
Ordinary disability: 5 years’
service.
Duty disability:
No age or service require
ment. Medical certifica
tion for all disability retire
ments.
An annual amount
sufficient to meet
its liability for cur
rent service, and to
defray part of ac
crued liability; cost
of administration.
Superannuation: Optional at Superannuation: Annuity plus pension Accidental- d ea th
benefit; options.
minimum, after 15 years’ service, $480
age 60 and compulsory at 70;
maximum, one-half average annual sal
no service requirement. Or
ary of last 5 years. Ordinary disability:
dinary disability: After 15
Annuity, plus pension equal to 90 per
years’ service. Duty disabil
cent of pension payable if retirant had
ity: No age or service re
served till 60. Duty disability: Annuity
quirement. Medical certifica
plus pension equal to three-fourths of
tion in all cases of disability.
compensation during year preceding
injurySuperannuation: No age re Superannuation: Annuity plus pension, Provision for de
pendents; special
amount depending on length of service,
quirement, but at least 10
salary, and age at retirement; maximum, ‘ provision if em
years’ service. Ordinary
ployee killed in
$1,800. Ordinary disability; 50 per cent
and duty disability: No
of final salary, ptaid for not more than 5
performance of
age or service requirement.
years. Duty disability: 75 per cent of
duty.
Medical certification.
final salary, for life; also allowance for
minor children up to 15 per cent of sal
ary.
Percentage of sal Percentage of employ
ee’s salary to cover
ary up to $3,000
city’s share of or
(all over that
dinary benefits, and
amount being
also entire cost of
exempt) toward
duty disability al
own annuity,
lowance, and other
widow’s annui
extra benefits.
ty, ordinary dis
ab ility allow
ance and cost of
administration.
No contribution.. Amount needed to
carry the system.
From 3 to 8 per
cent of salaries,
according to age
at entrance; em
ployees receiv-
Other benefits
Conditions for retirement
Contribution to cover
its share of benefits
earned by current
service and to meet
accrued liability;
Superannuation: Twenty-five
years’ service, or 15 if em
ployee has reached age 70.
No disability retirement.
Superannuation: Optional at
age 60 for women and 62 for
men, compulsory at 70 for
women, 72 for men. Non
contributing members must
Superannuation: Annuity and pension to
equal, for each year of service, oneseventieth of average final compensa
tion; full allowance for prior service.
Ordinary disability: Nine-tenths of re
tirement allowance; minimum, 25 per
cent of average final compensation.
Duty disability: Annuity plus pension
of two-thirds of average final compensa
tion.
Ordinary death
b e n e fit; a c c i
d en ta l -d e a th
benefit; options.
Superannuation: One-half annual salary at
time of retirement; maximum, $900.
None.
Superannuation: Annuity bought by retirant’s contributions plus pension
bought by city’s contributions on his be
half. Supplemental pension for those
in service before plan was adopted. For
For contributing
members, op
tions; for non
c o n trib u to rs,
death benefit
SYSTEMS
Retired employees’ pension fund of
Detroit (City Charter, Tit. IX, Ch.
V).
Percentage of sal
ary (based on
sex, age at en
trance, and kind
of work) calcu
lated to p u r
chase annnity of
one o n e-h u n d red -an d -for
tieth of aver
age final com
pensation
for
each
year of
service.
4 per cent of salary
or wages.
Retirement allowances
City’s contribution
RETIREMENT
Municipal employees’ annuity and
benefit fund of Chicago (111.
Laws of 1921, p. 205).
Employees’
contribution
of municipal public service retirement systems
4.— MUNICIPAL
Boston retirement system (Mass.
Acts of 1922, ch. 521; 1923, ch. 381;
1925, ch. 18; and 1926, ch. 390).
1 9 . — Comparison
CHAPTER
Employees’ retirement system of the
City of Baltimore (Acts of 1924, ch.
411; city ordinance No. 553 of 1925).
able
ing less than
$750 a year do
not contribute.
3306
cost of administra
tion and entire cost
of pensions for noncontributing mem
bers.
° —
-
29
New York City employees’ retire
ment system (Laws of 1920, ch. 427;
Greater New York Charter, Ch.
XXVI).
Annual amount need
ed to maintain sys
tem.
City employees’ retirement system,
San Francisco (City Charter, Art.
XVII; charter amendment No. 37
(adopted, 1924); city ordinance
5561, new series).
Percentage of sal
ary based on sex
and age at en
trance; for those
entering under
60, not to exceed
5 per cent.
C o st of b e n e fits
for current service;
accru ed liability;
cost of administra
tion.
None.
Superannuation and ordinary and duty None.
disability: One-half average final compen
sation; maximum, $1,200.
Superannuation: Annuity plus pension, to
equal, for each year of service, for men
1Si per cent and for women 1.172 per cent
of average final compensation. Full al
lowance for prior service, with minimum
of $480; no maximum. Disability: For
each year of service 1.25 per cent of aver
age final compensation.
SYSTEMS
2.5 per cent of sal
ary or wages up
to $2,400 a year.
superannuation and disability: One-half
of average annual pay for last 5 years;
maximum, $1,200.
OF
Pension fund of the city of Pitts
burgh (P. L. 596; Laws of 1925, No.
404).
Superannuation: Optional at
age 60, after 20 years’ service.
No compulsory age. Total
disability: Fifteen years’
service. Medical certifica
tion.
Superannuation: Optional at
age 60, after 20 years’ service.
No compulsory age. Ordi
nary disability: Ten years’
service. Duty disability:
No age or service require
ment. Medical certification
and periodic examinations
in both cases.
Superannuation: Optional at
age 62, after 10 years’ service
(at 60 if retirant has 30 years’
service); compulsory at 70.
Disability: Ten years’ serv
ice. Medical certification
and periodic examinations.
Ordinary death
benefit; d u ty
death benefit;
com passionate
allowance; op
tions.
COMPARISON
Municipal pension fund of city and
county of Philadelphia (P. L. 566
of 1915; amended, P. L. 689 of 1917).
Percentage of sal Cost of pensions for
ary (based on
current service, ac
sex, age at en
crued liability, cost
trance, and char
of extra benefits, and
acter of work)
expense of adminis
calculated to
tration.
produce sum
which will pur
chase at retire
ment an annui
ty of one-fourth
of final average
compensation;
ranges from 3.84
to 8.3 per cent
of salary.
4 per cent of salary A p p rop riation of
or wages; maxi
whatever is deemed
mum, $48 a year.
necessary for main
tenance of system.
serve till 70 and meet cer
noncontributing me
r, pension not
tain service requirements;
to exceed $500 a year. Ordinary disa
no service requirement for
bility: Allowance purchasable if present
others. Ordinary disability:
accumulated contributions were kept at
Ten years’ service. Duty
compound interest till retirant reached
disability: No age or service
retiring age. Duty disability: Allow
requirement. Medical cer
ance purchasable if both parties con
tification and periodic ex
tinued their contributions till employee
amination.
reached retiring age.
Superannuation: Optional at Superannuation: Annuity plus pension,
age 60 for clerical group, 59
to equal for each year of service a fraction
for mechanics, and 58 for
of average final compensation—for clerks,
laborers; compulsory for all
one-seventieth, for mechanics one sixtyat 70, with possible exten
eighth, and for laborers one sixty-sixth.
sions. No service require
Ordinary disability: Nine-tenths of
ment. Ordinary disability:
superannuation allowance; minimum,
Ten years’ service. Duty
one-fourth of average final compensation.
disability: No age or service
Duty disability: Annuity, plus pension
requirement. Medical certi
of three-fourths of average final compen
fication in both cases.
sation.
Death benefit; op
tions.
GO
T
able
2 0 . — Income
Expenditures for benefits
Receipts from—
Total
receipt s
Employees
Dec. 31,1926
____do______
$406.150
708, 386
$1,000,000
1, 583, 000
$86,157
198, 826
$1,492, 307
2, 490, 212
___ do______
June 30,1926
868, 798
1, 800,004
55, 030
1,103, 255
3, 772,057
55, 030
Dec. 31,1926
Total
Cost of
Refunds admin
istra
tion
Other
items
Total
expendi
tures
898
$39, 472
$95, 370
537, 455
$8, 078
56, 708
$18,406
$103, 448
612, 569
647, 610
55, 030
167, 643
815, 253
55, 030
67, 538
42, 578
925, 369
55, 030
12, 511
$55,
108, 763
134, 801
26, 932
270, 496
96, 696
1, 500
98,196
17, 462
___ do______ 3, 525, 777
4, 202, 567
1,151, 432
8, 879, 776
649, 920
498, 398
1,148, 318
659, 906
__do______
....... do............
312, 782
94,022
50, 000
44,000
5, 895
143, 917
120, 758
306,119
120, 758
82, 543
23, 227
5, 749
June 30,1926
510,884
688,142
110, 631
1,309, 657
126, 407
197,145
41, 043
14,063
70, 738
129, 304
$9, 891
1,818,115
2, 605
254, 856
149, 734
RETIREMENT
SYSTEMS
All other
sources
Public
sources
Retire
Other
ment
allow benefits
ances
4.— MUNICIPAL
Employees’ retirement system of the city of
___ ________________
Baltimore
Boston retirement system. _______________
Municipal employees’ annuity and benefit
fund, of Chicago_______________________
Retired employees’ pension fund of Detroit__
Municipal pension and retirement board annu
ity and benefit fund, Minneapolis________
New York City employees’ retirement sys
tem___ ________ __________ ___ ________
Municipal pension fund, city and county of
Philadelphia
Pension fund ofthe city of Pittsburgh__ . . .
City employees’ retirement system, San Fran
cisco.............. .............................. ......................
Year
ending—
CHAPTER
Name of system
<1
and expenditures of municipal public service retirement systems
T a b l e 2 1 . — Relation of beneficiaries to active force and of benefit expenditures to pay roll of active force— M'cxmb&oal public service retirement
systems
Name of system
on
Year ending — Number
active force
1Approximate number.
1,739
31,421
i 2,400
6,775
$11,485, 536
36,185, 205
165
709
1,467
73
$95,370
537,455
815, 253
55,030
2.25
3. 75
8.3
1.49
.62
.28
244
966
534
182
279
98,196
1,148, 318
306,119
120, 758
197,145
.14
3. 07
19,932,162
4.12
OF
SYSTEMS
7,311
18,926
113, 000
11, 802
Per cent
Per cent
beneficiaries benefits form
form of
of active
active force
pay roll
Number of
beneficiaries
COMPARISON
Employees’ retirement system of the city of Baltimore ..............................
June 30,1926
Boston retirement system___ _ . ________________ ______
Dec. 31,1926
Municipal employees’ annuity and benefit fund of Chicago________
Retired employees’ pension fund, of Detroit____________________
June 30,1926
Municipal pension and retirement board annuity and benefit fund, Minne
apolis. _____________ ___________ ___ .
Dec. 31,1926
New York City employees’ retirement system ___________________
Municipal pension fund of the city and county of Philadelphia.................
____do _____
Pension fund of the city of Pittsburgh____________ ______ _______
d o - __
City employees’ retirement system, San Francisco...............................
June 30,1926
Amount
spent in
benefits
Pay roll of
active force
CHAPTER
5.—STATE AND CITY RETIREMENT
SYSTEMS FOR TEACHERS
N T H E summer of 1927, when the inquiry as to retirem ent sys
tems was undertaken by the Bureau of Labor Statistics, 21
state-wide teacher-retirement systems were in effect, and in
addition seven cities having a population of 400,000 and over had
retirem ent systems for their teachers, independent of those of the
States. Of the State systems, those of Arizona, Maine, and Nevada
do not lend themselves readily to tabulation, so a brief summ ary of
their principal features will be given, after which the systems of the
remaining States and the seven cities will be discussed in detail.
The Arizona law, passed in 1912, provides for a noncontributory
system under which a teacher is perm itted to retire after 25 years of
service, on an allowance of $600 a year. The adm inistration of the
system is intrusted to the State board of education, and the pensions
are to be paid from the school fund of the State.
The Nevada law, passed in 1915, provides for an annual contribu
tion of $9 (later raised to $12) from the teacher, and permits retire
m ent after 30 years of service, 15 of which m ust have been in the
State, on an annual allowance of $500. In 1919, this amount was
raised to $600. Retirem ent for disability is perm itted after 15 years
of service, with a proportionately smaller allowance. The system is
administered by the State board of education, and the money for the
S tate’s part of the allowance is raised by an ad valorem tax of 3 mills
on the $100. The secretary of the system states th at on June 21,
1927, there were 24 teachers on the pension roll, 11 being on service
and 13 on disability retirem ent, writh average allowances of $584 for
service and $389 for disability retirements. The average age of those
on service retirem ent was 55.5 and their average period of service
was 30.5 years. For those on disability retirem ent the corresponding
figures were 53 and 20.6 years. The amount paid out in allowances
during 1926 was $10,846.
The situation in Maine is rather involved. In 1913 a noncontribu
tory system w^as established under which teachers might retire at 60
on pensions ranging from $200 to $300 a year, according to their
length of service. In 1923 this system was abolished, except th at
pensions were confirmed to all to whom they had been granted under
its terms, and a new scheme was established under which members
contribute 5 per cent of their salaries, wThile the State is to give
annually an amount equal to the combined contributions of the mem
bers. Retirem ent is perm itted at 60, after 30 years of service, on an
allowance bought by the combined contributions of the teacher and
the State. Membership in the system is optional, and so far only
seven teachers have elected to come under its terms. Pensions
granted under the old system are still being paid, but none of the
members of the new scheme have as yet qualified for retirem ent.
I
76
77
DATE OF ESTABLISHMENT AND MEMBERSHIP
Scope of Systems
1Y/F0ST of the systems, whether of State or city, limit membership
to teachers, usually including superintendents and similar
officials under this title. New Jersey and Pennsylvania include other
employees of the school system—janitors, engineers, and the like.
In New York City the teachers7 system covers only the teaching
force, but the board of education has established a special system,
included in this study, for all its permanent, nonteaching employees
except superintendents, who come under the teachers’ system.
Date of Establishment and Membership
'T 'H E following table shows the date of establishment and the approximate membership of the systems included:
T
able
2 2 . — Date
of establishment and approximate membership of State and city
retirement systems for teachers
State or city
State systems:
California____
Connecticut__
Illinois_______
Indiana______
Maryland____
Massachusetts..
Michigan_____
Minnesota........
Montana_____
New Jersey___
New York____
North Dakota..
Ohio_________
Pennsylvania—.
Year
Member
ship
established 1
1913
1917
1915
1915 (1921)
1927
1914
1917
1915
1915
1903 (1919)
1921
1913
1920
1921
36,108
9, 749
38, 888
12, 341
20, 019
24, 471
16, 866
5, 600
19, 830
39, 648
8, 226
42, 972
58, 409
State or city
State systems—Continued.
Rhode Island_______
Vermont___________
Virginia____________
Wisconsin__________
City systems:
Chicago......... ........... .
Detroit______ ____
Milwaukee___ _____
Minneapolis________
New Orleans________
New York__________
New York Board of
Education________
Washington, D. C___
Year
Member
established 1 ship
1908
1919
1908
1911 (1921)
18,054
1896 (1907)
1895 (1923)
1909 (1921)
1909 (1924)
1910 (1918)
1894 (1917)
11,927
6, 300
2, 054
2, 344
1,619
25,995
1921
1920
2, 507
2, 761
3,599
1 Figures in parentheses indicate year of change in system.
Some of the earlier systems were established with rather loosely
planned provisions, which were gradually found to be unwise or
unworkable, and the systems were modified accordingly. Sometimes
a complete reorganization took place and a practically new system
was installed; in these cases the year of the change is given in paren
theses in the above table. M aryland made a complete change while
this study was in progress, substituting, for a partial plan of earlier
date, an actuarial reserve plan which became effective in 1927. In
other instances an unsatisfactory system was modified, feature by
feature, so th at the plan now in operation may bear but slight resem
blance to the original, yet no date can be given at which its character
was radically changed.
The figures as to membership are, for the most part, as of 1926.
They are not comparable, owing to differences in the time of enu
meration and in practice as to including those who have not formally
withdrawn, but who may not be active members at a given time.
The membership may fluctuate materially as between June and
December, for instance, and a comparison as to size between two
systems using different dates for their enumeration might be mis
leading in the extreme. The figures are given merely as conveying an
78
CHAPTER 5.— TEACHERS’ RETIREMENT SYSTEMS
approximate idea of the size of the different groups, and can not be
safely used for other purposes.
Employee Representation in Management
T ^H E employees very generally share in the management, and sometimes theirs is the dom inant voice. In five systems they have
no representation on the adm inistrative body. In three of these—
the State systems of California, Rhode Island, and Virginia—the
system is administered by the State board of education; in Washing
ton, D. C., it is in the hands of the Commissioners of the D istrict of
Columbia, and the system of the Board of Education of New York
City is managed by the board itself. W ith these exceptions the
employees have, or may have, representation on all the boards of
management.
The boards usually consist of certain specified officials of the State or
city, holding their position ex officio, and of other members who, ac
cording to the particular system, are either appointed by some
specified authority or elected by the teachers. In six of the States
those who are not ex officio members are appointed by the governor.
In three of these—Indiana, M ontana, and Wisconsin—the governor
has free choice as to whom he will appoint, except th at the Indiana
system provides th at not more than two of his appointees m ay be
members of the teaching force. Illinois, Michigan, and N orth
D akota, on the other hand, specifically provide th at some or all of the
governor’s appointees m ust be teachers, either in active service or
retired on pension. In Michigan, moreover, at least one m ust be a
woman teacher in the public schools. The Wisconsin system really
provides for greater representation of the teachers than is apparent
from the above statem ent, since it calls for three boards of first in
stance, one each for the public schools, the normal schools, and the
university, the members of all of which are elected by their fellows.
These act upon all claims for retirem ent from their respective de
partm ents, but a right of appeal lies from them to the upper board,
composed of two ex officio members and five appointees of the
governor, which also handles the funds and investments.
The systems of the remaining nine States all provide th a t one or
more members of the administering body m ust be elected by the
teachers from among their own number.
In two of the city systems, as mentioned above, the employees are
not represented by elective or appointive members of the administer
ing body. In the other six systems the teachers elect representatives
and in three of them—Chicago, Minneapolis, and New Orleans—
their representatives form a m ajority of the board. In New York
City and D etroit the teachers elect 3 of the 7 members, and in M il
waukee 4 of the 9. In Milwaukee it is specified th a t two of the
teachers’ representatives m ust be women.
Character of Plans and Source of Funds
"D H O D E ISLAND has a noncontributory system under which the
State bears the whole expense, and Michigan and M ontana
have wholly contributory systems under which the teachers con
tribute all, the State paying in nothing to the fund. W ith these
CONTRIBUTIONS FROM EMPLOYEES
79
exceptions, all the systems, both State and city, call for a division
of the cost between employer and employee, the proportion borne
by each and the methods of determining contributions varying widely*
All the funds m ay be increased by interest on deposits, profits on
investments, gifts, legacies, and the like, but the contributions from
the members of the systems and the employing agencies are the
chief reliance.
Contributions from Employees
TN TWO States the teachers contribute a flat sum yearly, California
requiring $12 per teacher and M ontana assessing each teacher
$1 for each m onth of the school year, as the school year varies in
length in different parts of the State, the contributions vary accord
ingly, but it is provided th at a teacher m ust have paid in at least
$300 (raised, in 1927, to $600) in order to be eligible for a superan
nuation allowance. Three States modify this plan by requiring a
graded flat sum. Illinois calls for $5 annually from those who have
taught 10 years or less, $10 a year from those who have taught from
10 to 15 years, and $30 a year from those who have taught over 15
years. After 25 years of teaching contributions m ay cease. M in
nesota calls for $5 annually for the first 5 years, $10 for the next
5, $20 for the next 10, and $30 for the next 5, making a total of
$425 for 25 years of teaching, after which contributions m ay cease.
Those with salaries over $1,500 a year may be required to contribute
on a percentage basis, but the annual contribution m ust not fall
below what the flat sum for the corresponding year would be. Indiana
introduces a further modification of the idea by requiring a flat con
tribution, based on age at entrance, designed to produce at age 60,
after 40 years’ service, an annuity of $300. The range of contri
butions is from $35.77 for those entering the service at age 20 to
$18.04 for those entering at age 40.
Four States require the teachers to contribute a flat percentage of
their salaries. In Wisconsin the rate is 5 per cent, but teachers under
25 years of age are not called upon to contribute. New York and
Ohio fix the rate at 4 per cent. Ohio exempts from contribution all
salary over $2,000, but places an additional assessment of $1 per
annum on all teachers to meet the expenses of administration. Virginia
requires a contribution of only 1 per cent of the salary, but provides
that if, at the time of retirement, the teacher’s contributions have
not reached 30 per cent of the average annual salary for the last five
years of teaching, a deduction shall be made from the first year’s
pension to bring the credits up to th at amount.
The systems of three other States call for a flat percentage, but set
limits upon the amounts to be collected. Connecticut, Massachu
setts, and Vermont all require 5 per cent of the salary, and all fix
the maximum contribution at $100 a year, but Connecticut sets a
minimum of $25, Massachusetts of $35, and Vermont of $16 a year.
Two States, Michigan and North Dakota, provide for a graded
percentage. Michigan changed its rate in 1927 and now requires 1
per cent of the salary, not to exceed $10 per annum, for the first
five years; 2 per cent, not to exceed $20, for the next 10 years; and 3
per cent, not to exceed $30, for the next 15 years. The teacher must
have contributed at least 100 per cent of the first year’s retirement
80
CHAPTER 5.— TEACHERS’ RETIREMENT SYSTEMS
allowance. N orth D akota requires a contribution of 1 per cent of
the salary, not to exceed $10 annually, for the first 10 years, and
then 2 per cent, but not to exceed $40 a year for 15 years, after
which contributions may cease.
In three States the contribution is a percentage of the salaTry, based
on sex and age at entrance, which will produce, after normal require
ments as to age and length of service have been fulfilled, a sum suf
ficient to purchase a specified annuity. In these States the percentage
ranges, according to age at entrance, as follows:
Men
Maryland_____________ per cent___4. 28 to 6. 28
New Jersey____________per cent___3. 60 to 6. 11
Pennsylvania__________ per cent___3. 33 to 5. 30
Women
4. 08 to 7. 75
3. 91 to 7. 42
3. 69 to 6. 59
The city systems show much the same kind of arrangements.
Chicago and Milwaukee teachers pay graded flat sums. Chicago
requires monthly payments of $1 for the first 4 years of teaching,
of $1.50 for the second 4, $2.50 for the third 4, and thereafter $5
a m onth for as long as the teacher continues in service. In M il
waukee the contribution is $4 per m onth for the first 10 years of
service, $6 per m onth for the next 5 years, and $8 a m onth there
after. Both cities count 10 months to a school year.
Detroit, Minneapolis, and New Orleans require a contribution of
a flat percentage of the salary. D etroit places the rate at 3 per cent,
but exempts salary above $1,500; Minneapolis calls for 5 per cent,
but does not require contributions from those under 25; and New
Orleans sets the amount at 2 per cent.
New York, Washington, and the system of the New York Board
of Education all require a percentage of the salary, based on age at
entrance and calculated to produce, at the normal age for retirement,
a sum sufficient to purchase a specified annuity.
Contributions from State and City
A S M E N T IO N E D before, Michigan and M ontana make no contri^ butions to the retirem ent systems. Rhode Island and Virginia
appropriate annually from their general funds the amounts needed for
paym ent of current pensions. Four States contribute annually
either the proceeds of a special tax or an arbitrarily determined
amount. Of these California gives 5 per cent of the inheritance tax,
Illinois and M innesota the proceeds of a special tax levied for the pur
pose, and N orth D akota gives 10 cents annually for each child in the
State aged 6 and under 21 years.
The remaining 10 States make regular contributions sufficient to
provide a definite share of the retirem ent allowance earned by cur
rent service and to liquidate gradually the accrued liability. This
contribution is frequently calculated as a percentage of the teachers’
salary roll for the year. Wisconsin, included in this group, raises
the necessary amount by a special tax, while the others appropriate
what is needed from the general revenues.
Of the eight city systems, four (those of Minneapolis, New York,
Washington, and the New York Board of Education) make appropria
tions calculated to provide a definite part of the retirement allowance
for each employee, covering both current and accrued liability. The
CONTRIBUTIONS FROM STATE AND CITY
81
other four have no uniform principle of contributions. Chicago gives
$2 for each $1 contributed by the teachers. The amount is raised
by a special tax levy, and if at any time it should prove insufficient
the board of education is to appropriate from the general education
fund whatever amount is needed to make up the deficiency. So far,
this has not been found necessary. D etroit contributes the interest
on the daily balances of the teachers’ salary fund and tuition fees from
nonresident pupils, Milwaukee gives 40 per cent of the surtax on net
incomes in excess of $3,000, and New Orleans makes an appropriation
equal to 3 per cent of the teachers’ salary roll, but not to be less than
$30,000 a year.
The systems, it will be seen, fall into two groups. In the first,
the contributions made by the employing agency and by the employees
are carefully calculated to build up a fund which will be increased each
year by an amount sufficient to cover the liability incurred th a t year
and to meet a definite portion of the accrued liability. Usually these
contributions are invested at compound interest, and their earnings
are an im portant factor in building up the reserves. In the other
group, contributions have been fixed without sufficiently careful
calculations as to w hat the future demands on the fund will be, and
the schemes are, from an actuarial point of view, unsound. In a
system like th a t of Rhode Island, the question of soundness hardly
enters, since the State bears the whole expense. Some of the other
systems of this group have large balances on hand, and the claim is
made th at their condition is entirely satisfactory. Thus, the report
of the Chicago teachers’ system shows th at for the year ending
August 31, 1926, the excess of total income over total disbursement
was $745,731, and th a t the total reserve fund was $4,324,025. To
any suggestion th a t this reserve is startlingiy smaller than the future
liabilities already incurred, the reply is made th at under the law, if
the funds should at any time prove insufficient the board of educa
tion m ust appropriate from the general education fund whatever is
needed, and th a t therefore it is absurd to speak of the danger of
insolvency.
On the other hand, some of these systems are already in distress
and others are trying to recast their schemes so as to avoid future
difficulties. In M ontana, for instance, the expenditures of the fund
in 1926 exceeded its income by $18,573, and it was calculated th at
in about four years more the reserves would be entirely exhausted.
In 1927 accordingly, the law was so amended th at no teacher might
receive a pension without having contributed at least $600 to the fund,
and th a t the total amount paid out in pensions in any year m ight not
exceed the fund’s income for th at year. If necessary, pensions m ust
be reduced below their nominal figure to bring outlay down to income.
The M innesota system guarded against danger of bankruptcy by
inserting a proviso th at “ The board of trustees m ay ratably reduce
the annuities provided in this act whenever, in the judgm ent of the
board, the condition of the fund shall require such reduction.” So
far, the trustees have never felt th at the condition of the fund justified
paying the full allowances called for, and only a percentage has been
paid.
T he Minneapolis plan shows a curious variation. When the sys
tem was under consideration it was estimated th at to provide the
82
CHAPTER 5 .— TEACHERS 1 RETIREMENT SYSTEMS
contribution called for from the city a tax levy of approximately
13/3 mills would be required. As adopted, however, the plan limited
the tax to 1 mill, until a higher rate should be authorized after 1927,
and included a proviso that, until such a higher rate should be
authorized, the city’s contribution to the credit of the individual
teachers should be reduced pro rata as much as might be necessary
to bring its total contribution within the amount raised by the lower
tax.
Expenses of Administration
TN SIX States the expenses of administering the system are paid
out of the general fund, in seven the State makes a specific ap
propriation for the purpose, and in two they are carried as part of the
general expenses of the departm ent of education. In Ohio a special
fund for the purpose is raised by an assessment of $1 a year on each
teacher. Vermont m aintains a special fund, made up of gifts and
receipts from any other source than the contributions of teachers and
State; and interest thereon, and from this pays cost of adm inistra
tion and meets any unforeseen expenses th at may arise. Wisconsin
provides th at the costs are to be paid out of the interest earned by
the fund.
In four of the cities, Chicago, D etroit, Minneapolis, and Milwaukee,
expenses are m et from the funds of the system. In New York the
city defrays the cost, apart from its other contribution. The New
York Board of Education carries the system as part of its normal
expenses, and in New Orleans and Washington the departm ent of
education bears the cost.
Conditions for Retirement
Superannuation or Service Retirement
SU PE R A N N U A T IO N retirem ent may be based on age, on service,
^
or on a combination of the two. Of the 18 States considered,
5 (California, M innesota, North D akota, Rhode Island, and Wiscon
sin) have no age requirements of any kind. The others set the follow
ing ages:
T a b le
2 3 . — Age
for optional and compulsory retirement set by State teachers’
retirement systems
State
Connecticut
Illinois
___________
Indiana
_
___________
Maryland
________
Massachusetts
_.
Michigan.
_ ____ ______
Montana
___________
New Jersey
__ . ______
New York________________
Age for
optional
retire
ment
Age for
compul
sory re
tirement
60
50
60
60
60
60
70
70
70
55
62
60
70
70
State
Ohio_______ _________ __
Pennsylvania____________
Vermont:
Women__ ___________
Men_ ............................
Virginia:
Women..............................
Men__________________
Age for Age for
optional compul
retire
sory re
ment
tirement
60
62
60
65
50
58
70
70
CONDITIONS FOR RETIREMENT
83
Michigan had no age provisions up to 1927, when it amended its
law to make 60 the age for optional retirement. Connecticut and New
York, modify their age provision to perm it retirem ent, regardless
of age, after 35 years’ service, and Ohio after 36.
Five States (M aryland, M assachusetts, New Jersey, Ohio, and
Wisconsin) make no service requirements for employees in general,
but M assachusetts and Wisconsin enforce one against those employed
before the system was adopted who wish to claim credit for prior
service. The other States make the following service requirem ents:
California— 30 years, of which 15, including the last 10, must have been in
the State.
Connecticut— 15 years in State. If retirement is claimed under 60 by virtue
of 35 years’ service, 20 must have been in State.
Illinois— 25 years, of which 15 must have been in State, outside of Chicago
and Peoria.
Indiana— 40 years; on partial allowance, after 25. One-fourth of service
may have been outside State.
Michigan— 30 years, of which 15 must have been in State; on partial allowance,
after 25 years’ service.
Minnesota— 20 years, of which 15 must have been in State.
Montana— 25 years (raised to 30 in 1927), of which 15 must have been in State.
New York— 25 years. Retirement permitted after 35 years, regardless of age.
North Dakota— 25 years, of which 18 must have been in State.
Pennsylvania— 10 years.
Rhode Island— 35 years, of which 25 must have been in State.
Vermont— 30 years, of which 20 must have been in State.
Virginia— 30 years, all within the State.
It will be seen th at one State requires only 10 years of service,
one demands 15, one sets it at 20, four at 25, four at 30, and one
each at 35 and 40 years.
Of the eight city systems, Chicago, D etroit, and Minneapolis have
no age requirem ent; Milwaukee, New Orleans, and New York permit
retirement, with a service qualification, at 65; W ashington at 62,
with a service requirem ent; and the New York Board of Education
at 60, regardless of service. Milwaukee and the New York Board of
Education perm it retirement, regardless of age, after 35 years of
service. New York City and W ashington set 70 as the age for com
pulsory retirem ent (Washington permits extensions after this age),
while the other systems do not provide for compulsory retirem ent.
The service requirements of the city systems are as follows:
Chicago— 25 years, of which 15 must have been in Chicago; increased allowance
for service over 25 up to 35 years.
Detroit— 30 years, of which the last 20 must have been in Detroit.
Milwaukee— 25 years, of which 15 must have been in Milwaukee; retirement
at any age after 35 years’ service, of which 20 must have been in the city.
New Orleans— 40 years; retirement on smaller allowance after 30 }^ears.
New York— 35 years, of which 20 must have been in New York City.
Washington— Must serve in District for 10 years preceding retirement, and for
the whole period since reaching age 52. Credit for not to exceed 10 years given
for service outside District.
Minneapolis has no service requirements, and neither has the sys
tem of the New York Board of Education, though the latter, which
places the optional retirem ent age at 60, permits retirem ent at any
age after 35 years of service.
84
CHAPTER 5.— TEACHERS’ RETIREMENT SYSTEMS
Conditions for Disability Retirement
Ordinary disability such as to unfit the sufferer for performing satis
factorily the duties of his position is looked upon in all the systems as a
cause for retirem ent on allowance, though various restrictions are put
0:1 such retirem ent. Medical certification of the fact and character
of the disability is almost universally required, and often periodic
reexaminations are enforced. In some cases it is provided th a t the
disability m ust be perm anent, and in others th a t when it occurs
after the age for optional retirement, superannuation and not dis
ability retirem ent m ust be taken. None of the systems take age
into consideration in this m atter, but all have a service requirement.
In this respect the qualifications are as follows: M aryland and
Wisconsin, 5 years; Vermont, 6; Connecticut, Indiana, New Jersey,
Ohio, and Pennsylvania, 10; California, Illinois, Michigan, M inne
sota, M ontana, and N orth Dakota, 15; and M assachusetts, Rhode
Island, and Virginia, 20 years. New York requires 20 years’ service
for present teachers and 15 for new-entrants.
Among the city systems, Minneapolis and New Orleans permit
retirem ent on allowance for disability after five years’ service, but
Minneapolis specifies th at the disability m ust be complete and per
manent. D etroit, New York, and Washington require 10 years’
service, W ashington coupling this with a proviso th at the retirant
must be 45 or over; if he is under th at age, he m ust have served 15
years. Chicago requires 12 years, and Milwaukee 25. The New
York Board of Education system, which permits ordinary disability
retirem ent after 10 years’ service, provides also for duty disability
retirement, perm itting retirem ent on allowance, regardless of length
of service, if the disability is due to accident or injury incurred in the
performance of duty.
Superannuation Retirement Allowances
IN T H E manner of determining the superannuation or service
* allowance, the systems fall into two groups. In the first the
amount of the allowance is determined arbitrarily and is usually
given either as a fiat sum or as a percentage of the average final
salary, a maximum and minimum being set in m any cases. In
some of these systems it is provided th at the retirant m ust have
paid contributions for a certain length of time or m ust have paid a
specified sum into the fund in order to draw the full allowance, but
there is no definite relation between the amount of his contribution
and the amount of the allowance. In the second group the allowance
consists of an annuity bought by the retiran t’s accumulated contri
butions, plus a pension bought by the employing agency’s accumu
lated contributions to his credit, so th at the relation between con
tributions and allowance is direct and immediate.
Eight of the State systems belong to the first group. Of these,
California pays an allowance of $500 and M ontana of $600 a year.
(In M ontana, beginning in 1927, allowances had to be cut below this
figure to bring the outlay within the limits of the system ’s income.)
Illinois allows, for each year of service, an annual paym ent of $16,
with a maximum of $400 a year, while N orth D akota gives 2 per cent
of the average final salary, with a minimum of $350 and a maximum
of $750. The M innesota system contemplates an allowance of $350
SUPERANNUATION RETIREMENT ALLOWANCES
85
a year to those retiring after 20 years of service, with a progressive
increase for longer service, up to a maximum of $500 after 25 years.
The allowances in practice, however, have had to be scaled down
from this, owing to the insufficiency of the S tate’s contribution to
meet the share of this allowance assigned to it. Michigan, Rhode
Island, and Virginia allow one-half of the average final salary, but
Michigan provides for a minimum of $300 and a maximum of $500,
Rhode Island a minimum of $500 and a maximum of $700, and
Virginia, setting no minimum, puts a maximum of $400 a year for
those whose salaries have been below $1,000 and of $500 for those
whose salaries have exceeded th at amount.
The 10 States of the second group vary as to the part of the allow
ance provided by the employer and as to the limitations upon the
total amount to be received. Roughly, the allowance is determined
by the amount of the annual contributions, the length of service,
and the age at retirement, but some variable factors are often intro
duced. If the retirant was in the service before the retirem ent sys
tem was adopted, the employing agency usually either increases the
allowance up to what it would have been had the system been in
effect for the whole period of employment, or provides a part of what
this extra amount would have been.
Several States place a limit upon the amount to be paid. Con
necticut has a minimum of $350 and a maximum of $1,000, Indiana
a minimum of $131 and a maximum of $700, New York a minimum
of $400 after 25 years’ service, and Ohio a minimum of $300 after
36 years’ service. M assachusetts fixes as a maximum the equivalent
of an annuity of $1,000, purchased at age 60, but provides th at if
by reason of long service a retiran t’s accumulated contributions reach
a sum which would purchase more than one-half of this, the excess is
to be returned to him on retirement, while the State discontinues its
contributions to his credit when they reach a sum sufficient to pur
chase the other half.
The city systems are evenly divided between these two methods
of determining the retirem ent allowance. Of those in the first group,
Chicago pays an allowance of $800 after 25 years of service, with an
increase of $20 annually for each year over th at period, up to a
maximum allowance of $1,000. In D etroit the allowance is $1,200.
In Milwaukee it is $600 after 25 years of service, with an increase of
$20 per annum for each additional year of service up to a maximum
allowance of $900. In New Orleans it is one-half the average final
salary after 40 years of service, and for an earlier retirem ent onefortieth of this amount for each year of service rendered; the mini
mum is $300 and the maximum is $600.
In the systems of New York, Minneapolis, Washington, and the
New York Board of Education, no limits in either direction are
placed upon the amount of the allowance, which consists of an
annuity bought by the retiran t’s accumulated contributions and a
pension bought by the employing agency’s accumulated contributions
to his credit. Minneapolis, however, provides th at the pension may
not be drawn until the retirant reaches the age of 50. The city’s
contributions in Minneapolis have not been sufficient to provide the
am ount of pension contemplated in the system adopted in 1923, and
the pensions paid have been prorated accordingly.
86
CHAPTER 5.— TEACHERS' RETIREMENT SYSTEMS
Disability Retirement Allowances
are usually closely related to the service allowances. In
jLimiois, N orth D akota, and Virginia they are calculated in
exactly the same manner. In California, Michigan, M innesota,
M ontana, and Rhode Island they are such a proportion of the super
annuation allowance as the retiran t’s years of service are of the num
ber required to qualify for the superannuation allowance. In Con
necticut, Indiana, M aryland, M assachusetts, New Jersey, New York,
Ohio, Pennsylvania, Vermont, and Wisconsin the retirant receives
the annuity purchasable by his accumulated contributions as in the
case of the superannuation allowance, but the pension granted by
the State is increased, if necessary, to bring the total allowance up
to some specified minimum or to some fraction of what the retirant
would have received had he qualified for the superannuation
allowance.
The city systems show the same relation between the two forms
of allowance. In Chicago, Milwaukee, D etroit, and New Orleans
the disability allowance is such a fraction of the superannuation
allowance as the retiran t’s years of service form of the num ber re
quired for service retirement. In Minneapolis and in W ashington
the allowance consists of annuity and pension, calculated as for super
annuation retirement. Under the New York system the retirant
receives, in addition to the annuity bought by his own contributions,
a pension of one-fifth of his average final salary, with an allowance
for prior service; the total, however, m ust not exceed one-half of
his average final salary. Under the New York Board of Education
system the retirant receives his annuity and a pension sufficient to
bring the allowance up to nine-tenths of what would be the service
retirem ent allowance for the years of service rendered. In case of
duty disability, the retirant receives a pension of three-fourths of the
average annual salary for the last five years, plus the benefit of his
own contributions, which are either used to purchase an annuity or
returned to him in a lump sum, at his option.
Refunds
R H O D E ISLAND has a noncontributory system, the question
of refunds does not arise there. California, M ontana, and
Virginia make no refunds under any circumstances. In the other
States refunds of part or all of the employee’s contributions are
usually made in case of withdrawal or dismissal, or of death before
reaching pensionable status; Illinois and Indiana, however, do not
make any refund in case of such a death, though they do for dismissal
or withdrawal. Illinois, Michigan, M innesota, and N orth D akota
refund one-half of the amount contributed, and Connecticut, M ary
land, M assachusetts, New Jersey, New York, Ohio, and Pennsyl
vania return the whole amount with interest, usually compounded.
Indiana returns the whole amount on separation after 10 years’
service, and makes a partial refund for a shorter period of service.
Vermont provides th a t if the teacher has served as long as six years
he shall receive the amount of the S tate’s contributions on his behalf
as well as his own, and Wisconsin makes the same paym ent of the
CALIFORNIA
87
total amount to the teacher’s credit in case of death before reaching
pensionable status, though in case of dismissal or withdrawal the
S tate’s contributions are retained, the retirant receiving the total
amount of his own contributions.
Turning to the city systems, Chicago returns contributions, with
out interest, on dismissal or withdrawal, but in case of death no
refund is made to the estate. New Orleans returns one-half the
contributions, without interest, in case of death or withdrawal; in
case of dismissal the total contributions, without interest, are re
turned. The other systems all provide th at in case of the separation
of the employee from the service, whether by death, resignation, or
dismissal, the full amount of the contributions is to be returned.
Detroit varies this by providing th at the full amount, with simple
interest, of the contributions paid in between 1923 and 1927 is to be
returned, but only one-half, without interest, of contributions paid
in after September, 1927. Milwaukee specifies th at the refund is to
be without interest, but the two New York systems, and Minneapolis
and Washington allow interest on the contributions returned.
Provision for Dependents
1YTINE of the State systems—Connecticut, M aryland, M assachusetts,
New Jersey, New York, Ohio, Pennsylvania, Vermont, and Wiscon
sin— provide th at at the time of retirem ent the employee may choose
one of several options, either taking a straight allowance to be con
tinued through his life, or choosing a smaller allowance, part or all
of which is to be continued after his death to some selected bene
ficiary, or receiving some other actuarial equivalent of the total
amount credited to him. In case of the death of a contributor before
reaching pensionable status, M aryland and Wisconsin give death
benefits. The other 9 systems make no provision for dependents.
Among the city systems, New York, Minneapolis, and the New
York Board of Education provide options at the time of retirement.
Under the Minneapolis system if a member dies in service the amount
of the city’s deposits to his credit, with interest, is paid as a death
benefit. New York gives six m onths’ salary as a death benefit if
the decedent had qualified for retirement, and the Board of Educa
tion system gives the same amount if a member dies in the service
from ordinary causes. If, however, the death was due to injury
received in the service, a pension of one-half the average annual
salary for the last five years is given to the widow, dependent children,
or dependent parent. The other systems make no provision for
dependents of either contributors or pensioners, though in Milwaukee
and in Washington if a pensioner dies before he has drawn benefits
to the amount of his own contributions to the fund the difference
will be returned to his heirs.
STATE SYSTEMS
CALIFORNIA
IT Y P E oj system.—The California Public School Teachers’ Rctire*
m ent Salary Plan provides for a contributory system.
Contributions.—The State contributes 5 per cent of the inheritance
tax. The legislature may, if necessary, make special appropriations
88
CHAPTER 5.— TEACHERS' RETIREMENT SYSTEMS
in addition, but this has not yet been done. All previous county and
city annuity funds are incorporated in the perm anent State fund, but
only the income from them is to be expended. For the year ending
June 30, 1926, the S tate’s contribution amounted to $321,157.
Employees contribute $12 a year in semiannual payments. For
the year ending June 30, 1926, the employees’ contributions amounted
to $406,527.
Retirement allowances.—The allowance for superannuation retire
ment is $500 a year.
The allowance for disability retirement is such part of $500 a year
as the retirant’s years of service form of 30, with a minimum of $250.
Number of employees covered.—As of June 30, 1926, the number of
emplo 3^ees covered by the system was 36,108.
Conditions for retirement.—There is no age qualification for retire
ment. For superannuation retirement, the employee m ust have
served 30 years, of which 15, including the last 10, m ust have been in
California.
For disability retirement, the employee m ust have served 15 years
in State, of which the last 10 must have been unbroken by service out
side the State.
The retirant m ust have contributed $12 for each year for which
credit is claimed, up to 30. If, owing to service outside the State,
this has not been done, the unpaid amount may be deducted from his
allowance at the rate of $40 a quarter.
Administration.—The plan is administered by the State board of
education.
Statistics.—The total receipts of the system from the time it became
effective, August 10, 1913, to June 30, 1926, were $6,261,504; disburse
ments for the same period were $3,782,747.
CONNECTICUT
1TYPE oj system.—The Connecticut Teachers’ Retirem ent System is
*
a contributory system.
Contributions.—The State contributes every two years the amount
which the retirem ent board estimates is needed. For the year ending
December 31, 1926, its contribution amounted to $108,531.
Employees contribute 5 per cent of their salaries, with a minimum
of $25 and a maximum of $100 a year. For the year ending December
31, 1926, their contributions amounted to $557,372.
Retirement allowances.—The allowance for superannuation retire
m ent consists of an annuity bought by the teacher’s accumulated con
tributions, plus a pension of equal amount from the State, with an
additional allowance for prior service in the case of those employed
before the system went into effect. The minimum allowance is $350
and the maximum $1,000 a year.
For disability retirement the allowance consists of an annuity
bought by the retiran t’s accumulated contributions, plus a pension
from the State of one-thirtieth of what the pension would have been
had the retirant served till 60, multiplied by the years of service. No
minimum or maximum set.
The retirant is given a choice between taking the straight allow
ance or a smaller allowance to be continued in case of his death to a
designated beneficiary.
ILLINOIS
89
Number of employees covered.—As of July 1, 1926, the number of
employees covered by the system was 9,749.
Conditions for retirement.—Retirem ent is optional at 60, after 15
years’ service within the State, and at any age after 35 years’ service,
of which 20 m ust have been within the State. Compulsory at 70.
Disability retirem ent is perm itted after 10 years’ service in the
State, upon medical examination and certification.
Administration.—The plan is administered by a board of five, con
sisting of the State insurance commissioner, bank commissioner and
commissioner of education, with two members elected by the teachers.
Average age of retirants.—The average age at retirem ent is 65.28
years; average years of service, 38.45.
Statistics.—The total receipts of the system from all sources from
the time it became effective (September 1, 1917) to December 31,
1926, were $4,989,675; total expenditure for the same period, includ
ing refunds and cost of administration, $1,230,582.
ILLINOIS
J^ Y P E of system.—The Illinois State Teachers’ Pension and Retire*
m ent Fund is a contributory system.
Contributions.—The State contributes the proceeds of a tax levy
of two-fifteenths of a mill (increased to one-fifth of a mill January 1,
1928) on the dollar of assessed valuation. For the year ending June
30, 1926, the State contributed $302,777.
The employees make an annual paym ent of $5 during the first 10
years of teaching, $10 during the next 5 years, and $30 during the
next 10 years, after which contributions cease. For the year ending
June 30, 1926, the employees’ contributions amounted to $267,452.
Retirement allowances.—The superannuation allowance is $16 for
each year of service up to 25, both minimum and maximum being
$400.
The disability retirem ent allowance is $16 for each year of service,
with a minimum of $240 and a maximum of $400.
Number of employees covered.—For the year ending June 30, 1926,
the number of employees covered by the system was 38,888.
Conditions for retirement.—Superannuation retirement is optional
from age 50 onward, after 25 years’ service, 15 of which m ust have
been in Illinois, outside of Chicago and Peoria. Disability retirem ent
is perm itted, on medical examination and certification, after 15 .years’
service, of which 9 m ust have been in Illinois.
Administration.—The system is administered by a board of five,
consisting of the superintendent of public instruction and the State
treasurer, ex officio, and three members of the system, active or
retired, appointed by the governor.
Average age of retirants.—The average age at retirem ent for
superannuation retirants is 57.22 years and for disability retirants
53.64 years.
Statistics.—The total receipts from the time the system began opera
tion in 1915 to June 30, 1926, were $5,459,798, The total disburse
m ents for the same period were $4,010, 326.
3306°— 29------ 7
90
CHAPTER 5.— TEACHERS’ RETIREMENT SYSTEMS
INDIANA
rT'Y P E of system.—The Indiana State Teachers’ R etirem ent Fund is
*
a contributory sj^stem.
Contributions.—The State contributes an amount, determined by
actuarial investigation, sufficient to meet four-sevenths of the retire
m ent allowances and the extra payments for disability retirem ent.
I t also bears the cost of administration. The am ount is raised by a
special tax levy. For the year ending September 30, 1926, the S tate’s
contributions amounted to $754,563.
The employee’s contribution is based on age at entrance, ranging
from $18.04 to $35.77 a year. For the year ending September 30,
1926, the contributions from the employees amounted to $434,484.
Retirement alloivances.—For superannuation retirem ent the allow
ance consists of an annuity bought by the retiran t’s accumulated
contributions, plus a pension bought by the State, with a minimum
of $131 and a maximum of $700 a year. If prior service is claimed,
the retirant m ust have paid in the full amount, with interest, which
would have accumulated had he been paying contributions for the
period claimed. In th at case, the State pays the pension for the period
covered.
For disability retirement, the allowance consists of an annuity
bought by the retiran t’s accumulated contributions, plus a pension
from the State, calculated as for superannuation retirem ent, except
th at if necessary the S tate’s pension will be increased to bring the
allowance up to a minimum of $500 a year; the maximum is fiveeighths of the final salary.
Number of employees covered.—As of September 30, 1926, the num
ber of employees covered by the system was 12,341.
Conditions for retirement.—Retirem ent is optional from age 60
onward, with no compulsory age. There is a normal service require
m ent of 40 years, 30 of which m ust have been in Indiana. Retire
m ent is perm itted after 25 years’ service, but with a proportionately
smaller allowance.
Retirem ent for disability is perm itted, on medical examination and
certification, after 10 years’ teaching, three-fourths of which m ust
have been in the State.
Administration.—The plan is administered by a board of five,
appointed by the governor, of whom not more than two may be
teachers.
Average age of retirants.—The average age for superannuation re
tirants is 61 years and for disability retirants 51 years; average years
of service for superannuation retirants, 36; for disability retirants,
24.5.
Statistics.—The total receipts from the establishment of the system
in 1922 to September 30, 1926, were $4,462,285; total disbursements
for the same period, $1,187,196.
MARYLAND
'JTYPE of system.—The Teachers’ Retirem ent System of M aryland
* is a contributory system.
Contributions.—The State makes annually a contribution to m eet its
liability for current services and another to m eet the accrued liability;
MASSACHUSETTS
91
It also pays the cost of administering the system. For the year 192728 the normal contribution is fixed at 2.89 per cent of the pay roll
of the members of the system and the accrued liability contribution
at 3.56 per cent. The amount contributed for cost of operation m ust
not exceed three-tenths of 1 per cent of the pay roll of active members.
Employees contribute a percentage of salary, based on sex and age
at entrance, calculated to produce a sum sufficient to purchase at
retirem ent an annuity of one one-hundred-and-fortieth of the average
final compensation for each year of service rendered after the adoption
of the system. The range of contributions was calculated at, for
men, from 4.28 to 6.28 per cent, and for women from 4.08 to 7.75 per
cent.
Retirement allowances.—The superannuation allowance consists of
an annuity bought by the retirant’s accumulated contributions plus
a pension from the State of approximately the same amount, the two
forming one-seventieth of the average final compensation for each
year of service rendered after the adoption of the system. For those
in the service earlier the State provides the full allowance for the
years of prior service.
The disability allowance consists of an annuity bought by the
retiran t’s accumulated contributions plus a pension from the State
sufficient to bring the allowance up to nine-tenths of one-seventieth
of the retiran t’s average final compensation multiplied by his years
of service. If the retirant entered the service before reaching 40
the minimum disability allowance is 25 per cent of his average final
compensation.
Upon the death of a member in service in addition to the return of
his accumulated contributions the State pays a death benefit equal
to one-half of his average final compensation.
Instead of taking the straight allowance upon superannuation
retirement the retirant may choose among several options.
Conditions for retirement.—Retirem ent is perm itted at age 60 and
compulsory at 70; there is no service requirement.
Disability retirem ent is perm itted after 5 years’ service, upon
medical examination and certification.
Administration.—The plan is administered by a board of five,
consisting of the State superintendent of education, the State comp
troller, and the State treasurer, ex officio, and two members of the
system, elected by their fellows.
MASSACHUSETTS
'T'YP E of system.—The Massachusetts Teachers’ Retirement
System is a contributory system.
Contributions.—The State appropriates annually the amount needed
to meet its share of the benefits provided by the system and to pay
the cost of administration. For the year ending December 31, 1926,
the State’s total appropriation for the system amounted to $528,460,
of which $419,677 was for benefits, $108,783 for reimbursement of
cities and towns, and $10,779 for cost of administration.
Employees contribute 5 per cent of their salaries with a minimum
of $35 and a maximum of $100 a year. This contribution is not
required after 30 annual assessments have been paid, but it may be
continued if an employee wishes to secure a larger allowance. For
92
CHAPTER 5.— TEACHERS’ RETIREMENT SYSTEMS
the year ending December 31, 1926, the employees' contributions
amounted to $1,464,500.
Retirement allowances.—The superannuation allowance consists of
an annuity bought by the retiran t’s accumulated contributions, and
a pension, normally of equal amount, from the State. For those in
the service at the time the system was adopted who retire after 15 or
more years’ service, the pension is increased to what it would have
been had the retirem ent taken place at age 60 with 30 years’ service,
an extra amount being given for any service actually rendered in
excess of 30 years. The maximum allowance is $1,000 if retirem ent
takes place at age 60, $1,200 at 65, and approximately $1,500 at 70;
any excess of accumulated contributions over what is required to
purchase an annuity of one-half of these amounts at the respective
ages is returned to the contributor.
For disability retirem ent the allowance consists of an annuity
bought by the retiran t’s accumulated contributions and a pension of
not less than one-thirtieth of $250 for each year of service rendered.
Options are given at the time of retirement, perm itting the retiran t
to make, if he chooses, some provision for his dependents.
Number of employees covered.—As of June 30, 1926, the number of
employees under this system was 20,019.
Conditions for retirement.—Superannuation retirem ent is optional
at age 60 and compulsory at 70. For those who entered the service
after the adoption of the system there is no service requirement, but
those who entered earlier and who claim credit for prior service m ust
have had at least 15 years’ service in M assachusetts, the last five of
which m ust have been continuous.
Disability retirem ent is perm itted, upon medical examination and
certification, after 20 years’ service in the State, the last five of which
m ust be consecutive.
Administration.—The plan is administered by a board of three— the
State commissioner of education, ex officio, one teacher member
elected by his fellows, and a third, chosen by these two.
Average age of retirants.—The average age of service retirants is
65.22 years, for disability retirants, 54.28 years, and for the two
classes combined, 64.38 }7ears. The average length of service for
service retirants is 37.89 years, for disability retirants, 29.48 years,
and for all combined, 37.25 years.
Statistics.—The total receipts of the system from the time it became
effective, September 1, 1914, to December 31, 1926, were $14,630,274;
total disbursements for the same period, $4,920,158.
MICHIGAN
of system.—The Michigan Teachers’ Retirement Fund is a
uuiitributory system, so far as teachers are concerned.
Contributions.—The State makes no contribution of any kind.
The employees contribute a percentage of their salaries, based on
length of service. These rates were changed by the 1927 legislature,
and at present are as follows: For the first 5 years’ service, 1 per cent,
with a maximum of $10 a year; for the next 10 years, 2 per cent, with
a maximum of $20 a year; and for the next 15 years, 3 per cent, with
a maximum of $30 a year. For the year ending September 30, 1926,
the employees’ contributions amounted to $205,341.
MINNESOTA
93
Retirement allowances.—For superannuation retirement, the allow
ance consists of one-half the average annual salary for the last five
years’ service, with a minimum of $300 and a maximum of $500 a
year. For retirem ent with 25 b ut less than 30 years’ service, onethirtieth of the normal superannuation allowance is given for each
year of service.
For disability retirem ent, the allowance is one-thirtieth of the aver
age annual salary for the last five years’ of teaching for each year of
service rendered.
Number of employees covered.—As of September 30, 1926, the num
ber of employees under this system was 24,471.
Conditions for retirement.—Retirem ent was perm itted at any age
up to 1927, when 60 was set as the age for optional retirement. There
is no age for compulsory retirement. There is a service requirem ent
of 30 years, of which 15, including the last five, m ust have been in the
State.
Disability retirem ent is perm itted, on medical examination and
certification, after 15 years’ service in the State.
Administration.—The plan is administered by a board of six, con
sisting of the superintendent of public instruction, who holds the
position ex officio, and five members appointed by the governor, of
whom one m ust be a woman teacher in the public schools.
Statistics.—The total receipts of the system from January 1, 1917,
to September 30,1927, were $1,728,393; total disbursements, $882,741.
MINNESOTA
THFP2? of system.—The M innesota Teachers’ Insurance and Retire*
ment Fund is a contributory system.
Contributions.—The State contributes the proceeds of a tax of onetwentieth of a mill on all taxable property. For the year ending
June 30, 1926, the State contribution amounted to $70,060.
The employees contribute an am ount varying with the length of
service. For the first 5 years’ teaching they contribute annually $5;
for the second five, $10 a year; for the next 10 years, $20 a year; and
for the next five, $30 a year. If the salary exceeds $1,500 a year, a
percentage basis may be adopted, with a maximum of $20 for the
first 10 years, and $40 for the succeeding 15, but with the proviso th at
the percentage paym ent shall never am ount to less than the flat
rate paym ent provided for th at year of service. For the year ending
June 30, 1926, the employees’ contributions amounted to $126,469.
Retirement allowances.—For superannuation the allowance consists
of $350 a year after 20 years’ service, with increments of $30 for each
additional year of service, up to a maximum of $500 a year.
For disability retirem ent, the allowance is one-twentieth of $350
for each year of service rendered.
Number of employees covered.—As of June 30, 1926, the num ber of
employees under this system was 16,866.
Conditions for retirement.—Superannuation retirem ent is perm itted
at any age, after 20 years’ service, 15 of which m ust have been in the
State.
Disability retirem ent is perm itted on medical examination and cer
tification after 15 years’ service, of which 10 m ust have been in the
State.
94
CHAPTER 5.— TEACHERS’ RETIREMENT SYSTEMS
Administration.—The plan is administered by a board of five—the
State superintendent of education, State auditor, and attorney gen
eral, ex officio, and two teachers, elected by their fellows.
Statistics.—From September 1, 1915, to June 30, 1926, the total
receipts of the fund from all sources amounted to $2,355,519, and the
total disbursements to $1,086,573.
MONTANA
'TTYPE of system.—The M ontana Teachers* R etirem ent Salary
*
Fund is a contributory system, so far as the employees are
concerned.
Contributions.—The State makes no contribution of any sort.
The employees are required to contribute $1 a m onth for each
m onth of the school year, the annual amount thus differing with the
length of the school term. For the year ending June 30, 1926, the
employees’ contributions amounted to $41,041.
Retirement allowances.—The superannuation allowance is $600 a
year for those who have fulfilled the service requirements and paid
$300 into the fund. (This required amount was raised, in 1927, to
$600.)
For disability retirem ent the allowance consists of such a fraction
of $600 a year as the num ber of the retirant’s years of service is of 30.
Number of employees covered.—As of June 30, 1926, the num ber of
employees under this system was 5,600.
Conditions for retirement.—Retirem ent is optional at age 55; there
is no compulsory age. For superannuation retirem ent there is a
service requirement of 25 years (raised to 30 in 1927), of which 15
m ust have been in the State.
Retirem ent for disability is perm itted after 15 years’ service in
the State.
Administration.—The plan is administered by a board of five—
the governor, State superintendent of schools, and State treasurer,
ex officio, and two others appointed by the governor.
Average age of retirants.—The average age of service retirants is
55 years, and of disability retirants 49.6 years. The average length
of service for service retirants is 28.5, and for disability retirants 16.5
years.
NEW JERSEY
of system.—The State Teachers’ Pension and Annuity Fund
ui New Jersey is a contributory system.
Contributions.—The State makes three contributions annually:
A normal contribution, to m eet its liability for current service; a
deficiency contribution to meet its accrued liability; and a contribu
tion to cover the cost of administration. For 1927 the normal
contribution was set at 2.73 per cent of the active pay roll, and the
deficiency contribution at 4.29 per cent. For the year ending June
30, 1926, the S tate’s normal and deficiency contributions amounted
to $2,008,309, and the cost of administration was $37,522.
Employees contribute a percentage of their salaries, based on sex
and age at entrance, calculated to produce at retirem ent at age 62
a fund sufficient to buy an annuity of one one-hundred-and-fortieth
of the average final compensation for each year of service rendered
NEW YORK
95
after the adoption of the system. For the year ending June 30, 1926,
the employees’ contributions amounted to $1,572,759.
Retirement allowances.—The superannuation allowance consists of
an annuity bought with the retirant’s accumulated contributions,
plus a pension of equal amount, the two forming, for each year of
service rendered after the adoption of the system, one-seventieth of
the average final compensation. For years of service before the
system was adopted, the State pays the full allowance. For one
who has taught 20 years or more, the minimum allowance is $400;
there is no maximum.
For disability retirement, the allowance consists of annuity, as
above, and pension to make for each year of service one-seventieth
of the average final compensation, with a minimum of $300 a year and a
maximum of nine-tenths of the amount the employee would have
received had he remained in the service until age 62.
Upon retirem ent several options are offered, through which the
employee may, if he chooses, make some provision for his dependents.
Number of employees covered.—As of June 30, 1926, the num ber of
employees under this system was 19,830.
Conditions for retirement.—Retirem ent is optional at age 62 and
compulsory at 70. There is no service requirement, but present
employees are perm itted to retire, regardless of age, after 35 years'
service.
Disability retirem ent is perm itted, upon medical examination and
certification, after 10 years7 service in the State.
Administration.—The plan is administered by a board of seven—
the State commissioner of education and the State treasurer, ex
officio; one member appointed by the governor; three members of
the system elected by their fellows; and one, not a teacher nor a
State official, elected by the other six.
Statistics.—From the establishment of the system up to June 30,
1926, the total receipts of the system were $16,631,490, and the total
disbursements were $6,043,865,
NEW YORK
'~TYPE of system.—The New York State Teachers7 Retirem ent
^
Fund is a contributory system.
Contributions.—The State makes a normal contribution to cover
liability for current services, and a deficiency contribution to meet
the accrued liability. The tw~o together are calculated at 5.2 per
cent of the total salary roll of teachers. For the year ending July
31, 1926, the contribution was $3,131,496.
The employees contribute annually 4 per cent of their salaries.
For the year ending July 31, 1926, their contributions amounted to
$1,693,334.
Retirement allowances.—The superannuation allowance consists of
an annuity bought by the retirant7s accumulated contributions,
and a pension from the State of one-fourth of the average final
salary. If the retirant was in service at the time the system was
adopted, the State gives an additional pension of one one-hundredand-fortieth of the average final salary for each year of prior service.
The minimum allowance for retirants with 25 years7 service is $400.
96
CHAPTER 5.— TEACHERS, RETIREMENT SYSTEMS
The disability retirem ent allowance consists of the retirant’s
annuity, as above, and a pension from the State of one-fifth of his
average final salary. If the retirant was in service when the system
was adopted, the State gives the same additional pension as in the
case of superannuation retirement.
On retirement, options are offered, allowing the retirant to make
some provision for his dependents if he chooses.
Number of employees covered.—As of July 31, 1926, the num ber of
employees under the system was 39,648.
Conditions for retirement.—Retirem ent is optional at age 60 after
25 years’ service in the State, and m ay be demanded at 70. I t is
perm itted regardless of age after 35 years’ service.
Disability retirem ent is perm itted, upon medical examination and
certification, after 15 years’ service in the State, or, in the case of
those in the service when the system was adopted, after 20 years’
service, of which 10 m ust have been in the State.
Administration.—The system is administered by a board of seven—
State comptroller, ex officio, two appointed by the commissioner of
education, one elected by the regents of the university, and three
members of the system elected by their fellows.
Average age of retirants.—The average age of superannuation
retirants during the year ending July 31, 1916, was, for men, 65,
and for women, 64 years; of disability retirants, men, 54, and women,
50 years.
Statistics.—The total receipts of the system from August 1, 1921,
to July 31, 1926, were $19,565,904; total disbursements, $5,301,805.
NORTH DAKOTA
rTTYPE of system.—The N orth D akota Teachers’ Retirem ent
*
System is a contributory system.
Contributions.—The State contributes annually 10 cents for each
child in the State between the ages of 6 and 21. For the year ending
June 30, 1926, the amount thus contributed was $21,343.
Employees contribute 1 per cent of salary, with a maximum of
$20 a year for first 10 years of teaching; then 2 per cent, with a
maximum of $40 a year, for the next 15. Contributions m ay cease
at the end of 25 years. For the year ending June 30, 1926, the em
ployees’ contributions amounted to $83,254.
Retirement allowances.—The superannuation allowance is 2 per cent
of the average salary for the last five years of teaching, multiplied
by the num ber of years the retirant has served, with a minimum of
$350 and a maximum of $750 a year.
The allowance for disability retirem ent is calculated in the same
m anner as the superannuation allowance, and has the same limits.
Number of employees covered.—As of June 30, 1926, the num ber of
employees under the system was 8,226.
Conditions for retirement.—Superannuation retirem ent is perm itted
at any age after 25 years’ service, of which 18 m ust have been in
N orth D akota.
Disability retirem ent is perm itted after 15 years’ service.
Administration.—The system is administered by a board of five—
the State superintendent of public instruction and the State treasurer,
ex officio, and three members of the system, appointed by the governor.
PENNSYLVANIA
97
OHIO
rT1Y P E of system.—The Ohio State Teachers’ Retirem ent System is
*
a contributory system.
Contributions.—The State makes annually a normal contribution to
meet its liability for current service and a deficiency contribution to
meet the accrued liability. For the year ending August 31, 1926, the
S tate’s contributions amounted to $2,416,559.
The employees contribute 4 per cent of their salary up to $2,000
a year, all over th at amount being exempt. In addition, each pays
$1 a year for costs of administration. For the year ending August 31,
1926, the employees’ contributions amounted to $2,429,110.
Retirement allowances.—The superannuation allowance consists of
an annuity bought by the retiran t’s accumulated contributions, plus
a pension from the State of equal amount. The State gives also an
additional pension to cover years of service rendered before the system
was adopted. There is a minimum of $300 a year for those who have
served 36 years.
For disability retirem ent, the allowance consists of the retira n t’s
annuity, plus a pension from the State sufficient to bring the total
allowance up to 1.2 per cent of the average final compensation (sal
ary over $2,000 a year not being taken into account) for each year of
service rendered. The minimum is 30 per cent of the average final
compensation, salary over $2,000 a year being omitted from the cal
culation.
Upon retirem ent, options are offered by which a retirant may make
some provision for his dependents if he chooses.
Number of employees covered.—As of August 31, 1926, the num ber of
employees under this system was 42,972.
Conditions for retirement.—Retirem ent is optional at age 60, except
for new entrants with less than 5 years’ service, and compulsory at
70. Optional at any age after 36 years of service. There is no service
requirement, but allowance is affected by the length of service.
Retirement for disability is perm itted, on medical examination and
certification, after 10 years’ service.
Administration.—The plan is administered by a board of five—the
State auditor, State director of education, and attorney general, ex
officio, and two teacher members of the system, elected by their
fellows.
Average age of retirants.—The average age at retirem ent of the
superannuation retirants was 63.57 years, and their average length of
service was 36.723 years; for disability retirants, the corresponding
figures were 50.31 and 23.686.
Statistics.—The total receipts from September 1, 1920, when the
plan became effective, to August 31, 1926, were $34,639,722; total
disbursements for the same period, $6,666,071.
PENNSYLVANIA
1T Y P E of system.—The State School Employees’ Retirem ent Fund
*
of Pennsylvania is a contributory system.
Contributions.—The State makes annually a normal contribution to
meet the liability for current service and a deficiency contribution to
98
CHAPTER 5.— TEACHERS’ RETIREMENT SYSTEMS
defray the accrued liability. From July, 1925, this second contribu
tion has been fixed at 2 per cent of the active pay roll, at which rate it
is expected the whole accrued liability will be paid off within 30 years
from the adoption of the system. The State also contributes the cost
of administration. For the year ending June 30, 1925, the State con
tributions for benefit purposes amounted to $7,774,770, and for cost
of administration, $40,000.
Employees contribute a percentage of their salaries, based on sex
and age at entrance, calculated to produce a fund sufficient upon their
retirem ent at 62 to purchase an annuity of one one-hundred-andsixtieth of the average final salary for each year of service. Salary in ex
cess of $2,000 a year is exempt from contribution. For the year ending
June 30, 1925, the employees’ contributions amounted to $2,717,508.
Retirement allowances.—The superannuation allowance consists of
an annuity bought by the retiran t’s accumulated contributions, plus
a pension from the State of the same amount, the two together equal
ing one-eightieth of the average final salary for each year of service
rendered after the adoption of the system. For those in the service
when the plan was adopted, the State gives an additional pension,
calculated in the same manner, covering the years of prior service.
For disability retirem ent, the allowance consists of the re tira n t’s
annuity, plus a pension from the State sufficient to bring the allow
ance up to one-ninetieth of the average final compensation for each
year of service rendered, with a minimum of 30 per cent of the average
final compensation.
Upon retirement, options are offered, enabling the retirant to make
some provision for his dependents in exchange for a smaller allowance.
Number oj employees covered.—As of June 30, 1925, the num ber of
employees under this system was 58,409.
Conditions for retirement.—Retirem ent is optional at age 62 and com
pulsory at 70, with a minimum service requirement of 10 years.
Disability retirem ent is perm itted, upon medical examination and
certification, after 10 years’ service.
Administration.—The plan is administered by a board of seven—
State superintendent of public instruction and the State treasurer, ex
officio; one appointed by the governor; three elected by members of the
system, and one chosen by the other six.
Average age of retirants.—For those retired during the year ending
June 30, 1925, the average age at retirem ent was 67, and the average
length of service 38 years; for the disability retirants, the average
age at retirem ent was 49, and the average length of service 25 years.
Statistics.—From July 1, 1921, when the system became operative,
to June 30, 1925, the total receipts were $33,973,869, and the total
disbursements were $5,455,016.
RHODE ISLAND
IT Y P E of system.—The Rhode Island State Teachers’ Pension System
*
is a noncontributory system.
Contributions.—The State appropriates annually whatever amount
is needed to pay current pensions. For the year ending June 30, 1926,
the appropriation was $87,500.
The employees make no contribution*
VERMONT
99
Retirement allowances.—The superannuation allowance is one-half
the average annual salary for the last five years of teaching, with a
minimum of $500 and a maximum of $700.
The disability allowance is such fraction of the superannuation
allowance as the number of the retiran t’s years of service forms of 35.
Number of employees covered.—As of June 30, 1926, the num ber of
employees under the system was 3,599.
Conditions for retirement.—Retirem ent is perm itted, regardless of
age, after 35 years’ service, of which 25, including the last 15, m ust
have been in Rhode Island.
Retirement for disability is perm itted after 20 years’ service in the
State.
Administration.—The plan is administered by the State board of
education.
Statistics.—The total receipts of the system from its establishment
up to November 30, 1926, were $892,927; total disbursements for the
same period, $878,538.
VERMONT
'JTYPE of system.—The Vermont Teachers’ Retirem ent System is a
*
contributory system.
Contributions.—The State appropriates annually for the benefit of
the system an am ount equal to th at contributed by the teachers, up
to $20,000. As the membership of the system grows, it is intended
th at this maximum shall be increased.
Employees contribute a part of their salaries, not to exceed 5 per
cent, with a minimum of $16 and a maximum of $100 a year. After
30 years’ service, contributions are not required, but a member may
continue to make them if he wishes to secure a larger allowance. For
the year ending June 30, 1926, the employees’ contributions amounted
to $22,105.
Retirement allowances.—The superannuation allowance consists of
an annuity bought by the retiran t’s accumulated contributions, plus
a pension of equal amount from the State. For those in the service
before the system w^as adopted, the administering board may make an
additional allowance, in its discretion. The total, however, may not
exceed one-half of the average annual salary received during the whole
period of service.
The allowance for disability retirem ent consists of annuity and
pension, as above, with such additional allowance as the board may
consider just. There is the same maximum as for the superannuation
allowance.
Upon retirement, the employee has the choice of an option, making
some provision for his dependents, if he prefers this to the straight
allowance.
Number of employees covered.—Membership in the system is volun
tary. As of June 30, 1927, the membership was approximately 425.
Conditions for retirement.—Retirem ent is optional at age 65 for men
and 60 for women, after 30 years’ service, of which 20 m ust have been
in the State. There is no compulsory age.
Disability retirem ent is perm itted on medical examination and cer«
tification after six years’ service in the State.
100
CHAPTER 5.--- TEACHERS’ RETIREMENT SYSTEMS
Administration.—The plan is managed by a board of five— the
State commissioner of education, State commissioner of insurance and
banking, and the State treasurer, ex officio, and two members of the
system elected by their fellows.
Average age oj retirants.—The average age at retirement for men is
70, and for women 65, the average length of service being 40 years in
both cases.
Statistics.—The total receipts of the system up to June 30, 1927,
were $408,385; total disbursements, $39,253.
VIRGINIA
’T ’Y P E oj system.—The Virginia Public School Teachers’ Retirement
*
Fund is a contributory system.
Contributions.—The State appropriates annually such an amount
as is necessary to pay its share of the current allowances. For some
time past the appropriation has been $10,000 a year.
Employees contribute 1 per cent of their salary. If, at the time
of retirem ent, their contributions have not reached 30 per cent of the
average annual salary received during the last five years, a deduction
is made from the first year’s pension, sufficient to bring the contribu
tions up to this amount. For the year ending June 30, 1926, the
employees’ contributions amounted to $125,648.
Retirement allowances.—The superannuation allowance
one-half
of the average annual salary received during the last five years.
There is no minimum, but there is a maximum of $400 if the salary
was below, and of $500 if it was over, $1,000.
The disability allowance is the same as the superannuation allow
ance.
Number oj employees covered.—The num ber of employees under
this system, as of June 30, 1926, was 17,055.
Conditions jor retirement.—Retirement is optional at age 58 for men
and 50 for women, after 30 years’ service in the State. There is no
compulsory age for retirement.
Retirem ent for disability is perm itted, upon proof of disability,
after 20 years’ service.
Administration.—The plan is administered by the State board of
education.
Average age oj retirants.—The average age of superannuation retir
ants for men is 60, and for women 55, the average duration of service
for both being 33 years.
For disability retirants, the average age is 45 for men and 42 for
women.
Statistics.—The total receipts of the system from June 30, 1918, to
June 30, 1926, were $1,031,529; the total disbursements for the
same period were $834,676.
WISCONSIN
'T 'Y P E oj system.—The Wisconsin Teachers’ Insurance and Retire*
ment System is a contributory system.
Contributions.—The State contributes annually to meet its liability
for benefits for current service and its accrued liability, raising the
WISCONSIN
101
necessary funds by a surtax on net incomes in excess of $3,000. For
the year ending June 30, 1926, the S tate’s contribution was $1,402,612.
Employees aged 25 and over contribute 5 per cent of salary; those
under 25 do not contribute. For the year ending June 30, 1926, the
employees’ contributions amounted to $800,917.
Retirement allowances.—The superannuation allowance consists of
an annuity bought by the retiran t’s accumulated contributions, plus
a pension bought by the S tate’s accumulated contributions to his
Credit. R etirants under 50 years may not draw the S tate’s pension
until they reach th at age. For those in service before the system was
adopted who retire at the age of 50 or over with at least 25 years’
service to their credit, the State makes an extra allowance in respect
of prior service.
The disability allowance is calculated in the same way as the
superannuation allowance, except th a t the S tate’s pension may be
drawn without regard to the retira n t’s age. In case of total dis
ability, incurred before the employee has reached 50, the State, after
a waiting period of 60 days, pays an extra allowance of $25 a month
while disability lasts.
Options are given at time of retirement.
In case of the death of a contributor before reaching pensionable
status, the full amount of his own and the S tate’s accumulated con
tributions to his credit are returned to his estate or beneficiary.
Number oj employees covered.—The num ber of employees under
this system, as of June 30, 1926, was 18,054.
Conditions for retirement.—Superannuation retirem ent is perm itted
without regard to age or length of service, except in the case of those
claiming credit for prior service, who m ust have served at least 25
years in
Disability retirem ent is perm itted, upon medical examination and
certification, after 5 consecutive years’ service.
Administration.—The public schools, the normal schools and the
university have each an administrative board of their own, and over
these is an annuity board of seven, consisting of the State superin
tendent of public instruction and the commissioner of insurance,, ex
officio, and five others appointed by the governor.
Average age oj retirants.—The average age at retirem ent is 54.35
years, with an average of 29.19 years’ service.
Statistics.—From 1911 to June 30, 1926, the total receipts of the
system were $11,902,954, and the total disbursements, $2,637,939.
T a b le
2 4 .— Comparison of State teachers’ retirement systems
O
to
Name of system
Contribution from
State
$12 a year in semi- 5 per cent of inheri
tance tax; extra ap
annual p a y
pro p r i a t i o ns, if
ments.
needed.
Illinois State teachers’ pension and
retirement fund (Laws of 1915,
p. 649; 1919, p. 746).
Indiana State teachers’ retirement
fund (Acts of 1915, ch. 182; 1921,
ch. 256).
Percentage of sal
ary,
ranging
from 4.28 to 7.75,
based on sex and
age at entrance.
Retirement allowances
Superannuation: No age re
quirement; 30 years’ service,
of which 15, including the
last 10, must have been in
California. Disability: 15
years’ service in State.
Superannuation: Optional at
age 60, after 15 years' service
in State, and at any age
after 35 years’ service, of
which 20 was in State; com
pulsory at 70. Disability:
10 years’ service in State.
Superannuation: $500 a year. Disability:
Such part of $500 a year as the number
of years of teaching forms of 30 years;
minimum, $250.
None.
Superannuation: Annuity bought by re
tirant’s accumulated contributions, plus
pension of equal amount from State.
Minimum, $350; maximum, $1,000 a
year. Allowance for prior service. Dis
ability: Annuity bought by retirant’s
accumulated contributions plus pension
from State of one-thirtieth of what pen
sion would have been at age 60 multi
plied by years of service.
Superannuation and disability: $16 for
each year of service rendered. For super
annuation, minimum and maximum
alike are $400 a year; for disability, mini
mum, $240; maximum, $400.
Options.
Proceeds of tax levy
of one-fifth of a mill
on dollar of assessed
valuation in State.
Superannuation: Optional at
age 50; no compulsory age;
25 years’ service, of which
15 must have been in State.
Disability: 15 years’service,
of which 9 must have been
in State.
Contributions
must be made up to $400.
Amount sufficient to
pay four-sevenths of
cost of retirement
allowances, and ex
tra benefits; cost of
administration.
Superannuation: Optional at
age 60; no compulsory age;
40 years’ service, of which
30 must have been in State;
permitted after 25 years,
with smaller allowance.
Disability: 10 years’ service,
of which three-fourths must
have been in State.
Superannuation: Optional at
age 60, compulsory at 70; no
service requirement, but
allowance is affected by
length of service. Disabil
ity: 5 years’ service.
Two contributions,
calculated as per
centages of active
pay roll: (a) To
co v e r l i a b i l i t y
for benefits earned
by current service,
and (b) to meet ac
crued liability; cost
of administration.
Superannuation: Annuity bought by re
tirant’s contributions, plus pension,
amount depending on length of service
and age; minimum, $131; maximum,
$700. Disability: Minimum, $500 a
year; maximum, five-eighths of final
salary.
Superannuation: Annuity bought by re
tirant’s contributions, plus pension of
equal amount, the two making oneseventieth of average final compensation
for each year of service. Allowance for
prior service. Disability: Annuity plus
pension necessary to make nine-tenths of
what superannuation allowance would
be; minimum, 25 per cent of average
final compensation.
None.
Do.
Opt i ons ; d e a t h
benefit of one-half
of average final
coiupensation.
SYSTEMS
Teachers’ retirement system of
Maryland (Laws of 1927, ch. 344).
Annual payments
of $5 for first 10
years of teach
ing, $10 for next
5, and $30 for
next 10. Con
tributions cease
after 25 years’
service. Must
amount to $400.
From $18.04 to
$35.77 a year,
according to age
at entrance.
Conditions for retirement 1
5.— TEACHERS’ RETIREMENT
Connecticut teachers’ retirement sys 5 per cent of salary; Biennial appropria
tion of amount esti
minimum $25
tem (Pub. Acts 1917, ch. 411).
mated as necessary.
and maximum
$100 a year.
Other benefits
CHAPTER
California public school teachers’ re
tirement salary plan (Stats. 1913,
ch. 694).
Contribution from
employees
appropria
Massachusetts teachers’ retirement 5 per cent of sal Annual
system (Gen. Laws, ch. 32; Acts of
ary; minimum
tions to cover cur
rent and accrued
$35 and maxi
1923, ch. 381; 1926, ch. 212).
mum $100 a year;
liabilities, and to
not
required
pay costs of admin
istration.
after 30 years’
contributions.
Minnesota teachers’ insurance and
retirement fund (Laws of 1915, ch.
199).
* All the systems require medical
Do.
Options.
Do.
SYSTEMS
New York State teachers’ retirement
fund (Laws of 1920, ch. 503, art.
43-b, secs. 110G-1109q; amended,
1923 and 1927).
Do.
STATE
State teachers’ pension and annuity
fund of New Jersey (Acts of 1919,
ch. 80).
Superannuation: No age re
quirement until 1927, when
60 was set for optional re
tirement; 30 years’ service,
of which 15, including last
5, must have been in State.
Disability: 15 years’ service
in State.
Superannuation: No age re Superannuation: $350 a year after 20 years’
From $5 to $30 a Proceeds of a State
tax of one-twentieth
quirement; 20 years’ serv
year, according
service, with increments of $30 for each
of a mill on all tax
ice, of which 15 must have
to length of serv
additional year, up to maximum of $500.
able property.
been in State. Disability:
ice; not required
Disability: Fraction of above, propor
after 25 years’
15 years’ service, of which 10
tioned to length of service.
service.
must have been in State.
$1 a month for No contribution.
Superannuation: Optional at Superannuation: $600 a year for those who
each month of
have paid in $300 (raised to $600 in 1927);
age 55; no compulsory age; 25
years’ service (raised to 30
school year.
in practice, allowance is determined by
years in 1927), of which 15
condition of fund. Disability: Such
proportion of full pension as retirant’s
must have been in State.
service is of 30 years.
Disability: 15 years’ service
in State.
Percentage of sal Appropriations to Superannuation: Optional at Superannuation: Annuity bought by re
cover benefits earned
age 62; compulsory at 70; no
ary, based on sex
tirant’s contributions, plus pension of
by current service,
and age at en
service requirement. Pres
equal amount, the two forming oneaccrued l i ab i l i t y ,
ent employees may retire at
seventieth of average final compensation
trance.
and cost of adminis
any age after 35 years’
for each year of service. Allowance for
tration.
prior service. Disability: One-seventi
service. Disability: 10 years’
eth of average final compensation for
service in State.
each year of service; minimum, $300 a
year.
4 per cent of salary. Annual amount equal Superannuation: Optional at Superannuation: Annuity bought by re
tirant’s contributions plus pension of
to 5.2 per cent of
age 60, after 25 years’ service
one-fourth of final compensation; mini
teachers’ salary roll.
in State, or at any age after
mum, after 25 years’ service, $400.
35 3’,ears’ service; may be de
Allowance for prior service. Disability:
manded at 70. Disability:
Annuity as above; pension of one-fifth
For present teachers, 20
of average final salary, but not over
years’ service, of which the
four-fifths of pension receivable had
last 10 must have been in
State; for others, 15 years
retirant remained in service to age 70.
in State.
examination and certification as conditions for disability retirement.
OF
Montana teachers’ retirement salary
fund (Laws of 1915, ch. 95).
From under $5 to No contribution..
$20 a year, ac
cording to length
of service; maximums increased
in 1927 to $10,
$20, and $30.
Superannuation: For future entrants and Options.
present employees with less than 15
years’ service, annuity bought by retir
ant’s contributions and pension of equal
amount; maximum, $1,500. For present
employees with 15 years’ service, addi
tional pension if needed to make mini
mum of $400. Disability: Annuity and
pension based on service; minimum pen
sion, one-thirtieth of $250 for each year of
service.
Superannuation: One-half of average final None.
compensation; minimum, $300; maxi
mum, $500; partial pension for 25 years’
service. Disability: Fraction of super
annuation allowance, proportioned to
length of service.
COMPARISON
Michigan teachers’ retirement fund
(Pub. Acts 1915, act 174; 1927, act
135).
Superannuation: Optional at
age 60 and compulsory at
70. Fifteen years’ service
in State required of em
ployees entering before
system was adopted; for
others, no service require
ment. Disability: 20 years’
service in State.
T a b le
2 4 .— Comparison of State teachers’ retirement systems— C ontinued
Contribution from
State
Conditions for retirement
Retirement allowances
1 or 2 per cent of
salary, accord
ing to length of
s ervi ce, with
maximums of
$20 and $40 a
year; contribu
tions cease after
25 years.
Ohio State teachers’ retirement sys 4 per cent of salary
up to $2,000. In
tem (Laws of 1919, secs. 7896-1 to
addition, $1 a
7869-63).
year for cost of
administration.
Ten cents annually for
each child in State
between ages of 6
and 21.
Superannuation: No age re
quirement.
Requires 25
years’ service, of which 18
must have been in the
State. Disability: 15 years'
service.
Superannuation and disability: 2 per cent
of average final compensation, multi
plied by years of service; minimum,
$350; maximum, $750.
None.
Percentage of teachers’ Superannuation: Optional at
age 60, except for new en
salary roll, varying
trants with less than 5 years’
with actuarial state
service, and at any age after
of fund, to cover
36 years’ service; compul
pensions for current
sory at 70. Disability: 10
service, and accrued
years’ service.
liability.
Options.
Pennsylvania State school employees’ Percentage of sal
ary, based on
retirement fund (Laws of 1917,
sex and age at
No. 343).
entrance;
all
s a l a r y above
$2,000 exempt.
Regular contribution
to cover liability for
current service, and
accrued l i a b i l i t y ;
cost of administra
tion.
Superannuation: Optional at
age 62; compulsory at 70; 10
years’ service. Disability:
10 years’ service.
Superannuation: Annuity bought by re
tirant’s accumulated contributions plus
pension of equal amount; minimum,
after 36 years’ service, $300. Full allow
ance for prior service. Disability: An
nuity plus pension to bring allowance to
1.2 per cent of average final compensa
tion for each year of service; minimum,
30 per cent of average final compensation.
Superannuation: Annuity bought by re
tirant’s contributions plus pension of
same amount, together equaling oneeigatieth of average final compensation
for each year of service. Allowance for
prior service. Disability: Annuity plus
pension sufficient to bring allowance to
one-ninetieth of average final compensa
tion for each year of service; minimum,
30 per cent of average final compensation.
Superannuation: One-half of average sal
ary of last 5 years; minimum, $500; maxi
mum, $700. Disability: Such propor
tion of superannuation pension as years
of service are of 35.
Superannuation: No age re
quirement; 35 years’ serv
ice, of which 25, including
the last 15, must have been
in State.
Disability: 20
years’ service in State.
Superannuation: Optional at Superannuation: Annuity bought by re
tirants’ accumulated contributions and
age 65 for men, and 60 for
pension of equal amount from State.
women; no compulsory age;
Maximum, one-half average salary dur
30 years’ service, of which 20,
ing service. Disability: Annuity plus
including the last 5, must
pension, as above, with such additional
have been in State. Dis
pension from State as the retirement
ability: 6 years’ service in
board may consider just; same maxi
State,
mum as above.
Name of system
Contribution from
employees
Annual appropriation
of amount needed to
pay current pen
sions.
Vermont teachers’ retirement system
(Acts of 1919, ch. 57).
Percentage of sal
ary (at present
5); minimum,
$18, and maxi
mum, $100 a
year.
Annual amount equal
to total contribu
tion of teachers, up
to $20,000.
None.
Options.
SYSTEMS
No contribution..
5.— TEACHERS’ RETIREMENT
Rhode Island State teachers’pension
system (Laws of 1907, ch. 1468; 1909,
ch. 401; 1914, ch. 1090; 1921, ch.
2054; 1926, ch. 776).
Do.
CHAPTER
North Dakota teache"-’ retirement
system, 1913 (Laws of 1913, cii. 251;
1919, ch. 161).
Other benefits
3306'
Virginia public school teachers’ re
tirement fund (Code of 1919, ch. 36,
secs. 787-805).
1 per cent of salary. Annual appropriation
Wisconsin teachers’ insurance and
retirement system (Stats. 1923,
secs. 42.20-42.57, 20.251, and 20.30).
5 per cent of salary; Proceeds of a surtax
teachers under
on net incomes in ex
25 do not con
cess of $3,000. to cov
er liability for cur
tribute.
rent service, and
accrued liability.
to
CO
Superannuation: Optional at
age 58 for men, and 50 for
women; no compulsory age;
30 years’ service in State.
Disability: 20 years’service.
Superannuation: No age set,
but State’s part of allowance
will not be paid until claim
ant is 50; no service require
ment except for those claim
ing prior service allowance.
Disability: 5 consecutive
years of service.
Superannuation and disability: One-half of
average salary for last 5 years; no mini
mum set; maximum, $400 if salary was
below, and $500 if it w~as over $1,000.
None.
Superannuation: Annuity bought by re
tirant’s accumulated contributions plus
pension bought by State’s accumulated
contributions to his credit, State’s part
not to be paid until retirant reaches 50.
Disability: Same as for superannuation,
except that 50-year limit for State’s pen
sion does not apply. For retirants in
service before system was adopted with
25 years’ service and having reached age
of 50, the State makes an extra allowance
in respect of prior service.
Op t i o n s ;
benefit.
death
COMPARISON
OF
STATE
SYSTEMS
of amount needed;
at present, contribu
tion is $10,000.
O
Cr?
T a b le
2 5 . — Income and expenditures of State teachers’ retirement systems
Expenditures for benefits
Income from—
All other
sources
Total in
come
$406. 527
557, 372
$321,157
108, 531
$91,
154,
$818,
820,
30,1926
30,1926
31,1926
30,1926
267, 452
434, 484
1, 464, 500
205, 341
302, 777
754, 563
419, 677
58,
157,
386,
629,
1, 346,
2, 270,
244,
June 30,1926
___ do_____
126, 469
41,041
70, 060
62,
7,
----- do-------July 31,1926
June 30,1926
Aug. 31,1926
1, 572, 759
1, 693, 334
83, 254
2,429,110
428,
2,008, 309
475,
3,131,496
21,343
27,
2, 416, 559 1, 389,
June 30,1926
Dec. 31,1926
June
Sept.
Dec.
Sept.
June 30,1925 2,717, 508
June 30,1926
22,105
___ do__........
125, 648
___ do...........
7, 774, 770
87, 500
800, 917
1,402, 612
_do.
1Including disability allowances.
20,000
10,000
922, 720
Other
bene
fits
Total
Re
funds
Cost of
Total
admin expendi
istra
tures
tion
$457, 095
$18, 020
95, 592 $167, 637 8, 827
$475,115
272, 056
12, 641
13,157
10, 779
16, 359
581, 534
312, 025
861,104
215, 770
2,200
5,337
120,405
67,414
566, 705
242,450
449, 781
181, 844
2,188
56,418
400, 544
17, 567
259,
48,
98, 577
65, 214
16, 491
4,009,
5, 300,
131,
6, 235,
910, 918
1, 202, 619
43, 680
772, 704
309, 067
356, 314
7, 836
722, 646
37, 522
74, 558
1, 831
51, 741
1, 257, 507
1,633, 491
53, 347
1,547, 091
421,113
87, 516
3, 051
129, 665
609, 811
40,000
1,070,924
87, 516
9, 771
129, 665
252, 202
195, 255
11,414,1
87,,
54,'
146,:
$217,014 $25,361
175,091
347, 584
$75
’6,753'
I 73, 529
3, 051
2, 608, 472 1216, 832
35, 370
a Included in superannuation allowances.
6,199
521."
488, 524
SYSTEMS
Public
sources
Disa
bility
allow
ances
5.— TEACHERS’ RETIREMENT
California public school teachers’ retirement sal
ary plan___________________________ ____
Connecticut teachers' retirement system_______
Illinois State teachers’ pension and retirement
fund_____________________________________
Indiana State teachers’ retirement fund________
Massachusetts teachers’ retirement system ........ .
Michigan teachers’ retirement fund___________
Minnesota teachers’ insurance and retirement
fund------------ ---------------------------- -------------Montana teachers’ retirement salary fund______
New Jersey State teachers’ pension and annuity
fund----------- -------------------------------------------New York State teachers’ retirement fund_____
North Dakota teachers’ retirement system_____
Ohio State teachers’ retirement system________
Pennsylvania State school employees’ retirement
system__________________ ______ _________
Rhode Island teachers’ pensions-------------- ------Vermont teachers’ retirement system__________
Virginia public school teachers’ retirement fund..
Wisconsin teachers’ insurance and retirement
system,.............. ............................ -............. ........
Employ
ees
Super
annua
tion al
low
ance
CHAPTER
Y ear ending-
Name of system
T a b l e 26 . — Relation
of beneficiaries to active force and of benefit expenditures to pay roll of active force— State teachers’ retirement systems
Name of system
$16, 315, 757
33, 600, 364
31, 943, 893
36, 771, 514
61, 271, 438
59,682,674*
61,155, 692
4, 984, 540
13,035, 894
16, 018, 540
1,061
186
1,486
496
852
619
589
130
1,062
1, 996
79
1,829
1,206
180
758
565
Amount
spent in
benefits
$457,095
95, 592
566, 705
242, 450
449, 781
181, 844
98, 577
65, 214
910, 918
1, 202, 619
43, 680
772, 704
421,113
87, 516
129, 665
252, 202
Per cent ben Per cent ben
eficiaries
efits form of
active pay
form of ac
roll
tive force
2.9
1.9
3.8
4.0
4. 25
2. 53
3. 49
2. 32
5. 36
5. 03
.96
4. 26
2. 06
5. 00
4. 44
3.13
0. 59
1.34
.57
2. 48
1.96
1.29
.69
1. 76
.99
1. 57
STATE
SYSTEMS
36,108
9, 749
38, 888
12, 341
20,019
24, 471
16, 866
5, 600
19, 830
39, 648
8, 226
42, 972
58, 409
3, 599
17, 055
18, 054
Total num
ber of bene
ficiaries
OF
1 Including 460 taken over from city systems.
June 30,1926.
July 1, 1926—
June 30, 1926Sept. 30, 1926.
June 30, 1926.
Sept. 30, 1926.
June 30, 1926.
do. _
..d o _____
July 31, 1926.
June 30, 1926.
Aug. 31, 1926.
June 30, 1925.
June 30, 1926.
___ do______
do..
Pay roll of
active force
COMPARISON
California public school teachers’ retirement salary plan__________ ____
Connecticut teachers’ retirement system__________________ ______ _____
Illinois State teachers’ pension and retirement fund—
Indiana State teachers’ retirement fund________ __ _________ __
Massachusetts teachers’ retirement system_____ ______________________
Michigan teachers’ retirement fund... _____ __________________________
Minnesota teachers’ insurance and retirement fund._ ___ _
Montana teachers’ retirement salary fund. ____________________
New Jersey State teachers’ pension and annuity fund________ ______ ____
New York State teachers’ retirement fund_____________ _______ ______
North Dakota teachers’ retirement system________ ______________
Ohio State teachers’ retirement system__ _______ ___________ _______
Pennsylvania State school employees’ retirement system.... ........ ...................
Rhode Island teachers’ pensions__________________ _______ __________
Virginia public school teachers’ retirement fund..................................... ..........
Wisconsin teachers’ insurance and retirement system................... ..................
Number on
Year ending — active
force
O
108
CHAPTER 5.— TEACHERS’ RETIREMENT SYSTEMS
CITY SYSTEMS
CHICAGO
'T ’Y P E oj system.—The Chicago Public* School Teachers’ Pension
and Retiren ent System is a contributory system.
C o n tribu tion sT h e city pays into the fund annually an amount
equal to $2 for every dollar deducted from the teachers’ salaries, raising
the amount by a tax of three-tenths of a mill on each dollar of assessed,
valuation of Chicago property. Should this tax not reach the am ount
required, the board of education is to add an appropriation from the
educational fund sufficient to bring the contribution up to the requisite
figure. For the year ending August 31, 1926, the city’s contribution
amounted to $772,865.
The employees contribute $1 a m onth for the first four years of
service, $1.50 a m onth for the second four, $2.50 a m onth for the third
four, and thereafter $5 a m onth, the school year containing 10 months.
For the year ending August 31, 1926, the employees’ contributions
amounted to $445,120.
Retirement allowances.—The superannuation allowance, after 25
years’ service, is $800 a year with $20 extra for each year of service
over 25, up to 10. The maximum is $1,000 a year.
| The disability allowance is such proportion of $800 a year as the
retirant’s contributions form of $850, with a minimum of $300 a
year.
Number oj employees covered.—As of October 31, 1926, the number of
employees under this system was 11,927.
Conditions jor retirement.—There is no minimum age requirement.
In 1926 a law was passed making retirem ent compulsory at age 75,
with progressive decreases in the age until in 1930 retirem ent should
be compulsory at 70. There is a service requirement of 25 years, 15
of which m ust have been in Chicago.
Disability retirement is perm itted for perm anent disability, after
12 years’ service, the last three-fifths of which m ust have been in
Chicago.
Administration.—The sj^stem is administered by a board of nine—
three members of the board of education, and six teachers elected by
their fellows.
DETROIT
T Y P E oj system.—The D etroit Public School Teachers’ R etirem ent
* Fund is a contributory system.
Contributions.—The city gives the tuition paid by nonresident
pupils, deductions from teachers’ salaries on account of absence from
duty, and the interest on the daily balances of the teachers’ salary
fund. For the year ending August 31, 1926, the city’s contribution
amounted to $121,624.
Up to September 1, 1926, the employees contributed 2 per cent of
their salaries, but at th at date the rate of contribution was increased
to 3 per cent. All salary over $1,500 a year is exempt from contribu
tion. For the year ending August 31, 1926, the employees’ contribu
tions amounted to $175,329.
MILWAUKEE
109
Retirement allowances.—The superannuation allowance is $1,200
a year. For disability retirement, the allowance is such part of
$1,200 as the retirant’s years of service are of 30; minimum, $400.
Number of employees covered—As of August 31, 1926, the number
of employees covered by the system was 5,569.
Conditions for retirement.—There is no age set for retirement.
There is a service requirement of 30 years, of which the last 20 m ust
have been in D etroit. Disability retirem ent is perm itted after 10
years’ service in D etroit, on medical certificate.
Administration.—The system is administered by a board of seven—
three members of the board of education, the superintendent of
schools, and three resident teachers, elected by their fellows.
Average age of retirants.—D ata are not obtainable concerning all
retirants, but for those placed on the pension roll in 1926, numbering
38, the average age at retirem ent was 58/66 years, and the average
length of service 36.29 years.
Statistics.—The present system succeeds an earlier one, concerning
which full data could not be obtained. From 1911, however, to
August 31, 1923, the total receipts of the earlier system were $1,127,657, and the total disbursements were $464,030; from September 1,
1923, when the present system was established, to August 31, 1926,
the total receipts were $1,066,959, and the total disbursements were
$582,392.
MILWAUKEE
'T 'Y P E of system.—The Milwaukee Public School Teachers’ Annuity
* and Retirem ent Fund is a contributory system.
Contributions.—The city contributes annually 40 per cent of the
proceeds of a surtax on net incomes, computed at one-sixth the rate
for taxable incomes in excess of $3,000. For the year ending August
31, 1926, its contribution amounted to $240,221.
Employees contribute $4 a m onth for the first 10 years’ service, $6
a m onth for the next 5, and thereafter $8 a m onth, the school year
containing 10 months. Contributions are not required after 40 years’
service. For the year ending August 31, 1926, the employees’ con
tributions amounted to $70,673.
Retirement allowances.—The superannuation allowance is $600 a
year for those retiring after 25 years’ service, with $20 additional for
each year of service over 25, up to 15; maximum, $900 a year.
Disability retirem ent allowance is calculated in the same way as
the superannuation allowance, and has the same minimum and maxi
mum.
Number of employees covered.—As of June 30, 1926, the number of
employees under this system was 2,054.
Conditions for retirement.—Retirem ent is optional at age 65, after
25 years’ service, of which 15 m ust have been in Milwaukee, and at
any age after 35 years’ service, of which 20 m ust have been in M il
waukee. No compulsory age.
Disability retirem ent is perm itted, on medical certification, after
25 years’ service, of which 15 m ust have been in Milwaukee.
Administration.—The s3^stem is administered by a board of nine—
the president and four members of the board of school directors, and
four teachers, two men and two women, elected by their fellows.
110
CHAPTER 5.— TEACHERS’ RETIREMENT SYSTEMS
Average age of retirants.—Average age at retirem ent, 59.25 years;
average years of service, 36.08.
Statistics.—Total receipts from September 1, 1909, to August 31,
1926, amounted to $1,987,097; total disbursements for same period,
$449,962.
MINNEAPOLIS
'T'YP E of system.—The Minneapolis Teachers’ R etirem ent Fund
Association is a contributory system.
Contributions.—The city contributes annually the proceeds of a
tax of one mill on the dollar. For the year ending December 31, 1926,
its contribution amounted to $296,783. (The plan contemplates a
contribution from the city of the proceeds of a tax of Vy§ mills on the
dollar, but as yet only the smaller contribution has been made.)
Employees aged 25 and over contribute 5 per cent of their salaries.
No contribution is required from those under 25. For the year ending
December 31, 1926, their contributions amounted to $261,536.
Retirement allowances.—The superannuation allowance consists of
an annuity bought by the retiran t’s accumulated contributions, plus
a pension bought by the city’s accumulated contributions on his behalf;
the latter is not to be drawn before reaching age 50. City provides al
lowance for prior service.
The disability allowance is the same as the superannuation allow
ance except th at the pension from the city is available at once, regard
less of age.
Upon the death of a member in service, the total am ount of his
contributions and of the city’s accumulated contributions on his
behalf is paid to his dependents or estate.
Options are offered upon retirement.
Number of employees covered.—As of December 31, 1926, the number
of employees covered by the system was 2,344.
Conditions for retirement.—There is no age set for retirem ent, but
the city’s part of the superannuation allowance m ay not be drawn
before the retirant reaches 50. There is no service requirement, but
the am ount of the allowance is affected by this factor.
Disability retirem ent is perm itted upon medical certification after
5 consecutive years’ service. The retirant m ust submit to periodic
examinations.
Administration.—The plan is administered by a board of nine—
four city officials, and five teachers elected by their fellows.
Average age of retirants.—The average age of retirants in 1926 was
53 years, and their average length of service 29 years
Statistics.—The present system, which was inaugurated at the begin
ning of 1924, had received up to December 31, 1926, a total of $2,100,945, and had disbursed $437,747. The earlier system which it super
seded, which was inaugurated in 1909, had received up to December
31, 1923, a total of $1,246,696, and had disbursed $843,448.
NEW ORLEANS
'T 'Y P E of system.—The New Orleans Teachers’ Retirement Fund
* is a contributory system.
Contributions.—The city appropriates annually for the system an
am ount equal to 3 per cent of the teachers’ salaries. For the year end
ing August 31, 1926, the am ount thus appropriated was $80,936.
NEW YORK CITY
111
Employees contribute 2 per cent of their salary. The employees’
contribution for the year ending August 31, 1926, amounted to
$53,678.
Retirement allowances.—The superannuation retirem ent allowance
after 40 years’ service is one-half of average salary for last 5 years.
For service of less than 40 years, it is one-fortieth of the normal
allowance multiplied by the years of service. The minimum is $300
and the maximum is $600. For disability retirement, for each year
of service one-fortieth of normal retirem ent allowance.
Number of employees covered.—The number of employees under
this system, as of August 31, 1926, was 1,619.
Conditions for retirement.—Retirement is optional up to age 65;
thereafter the teacher may be retired at discretion of board. The
service requirement is 30 years as a minimum and 40 years as a normal
requirement. For disability retirement, five years of service and
medical certification are necessary.
Administration.—The system is administered by a board of nine—
the superintendent of public schools, three of the school directors
elected by the board of school directors, and five teachers, elected by
their fellows.
Average age of retirants.—The average age for superannuation
retirants is 62, with 41.1 years’ service; average age for disability
retirants, 46.7 years, with 18.3 years’ service.
NEW YORK CITY
'T'YPE of system.—The Teachers’ Retirement System of the City of
*
New York is a contributory system.
Contributions.—The city makes three appropriations for the fund:
A flat contribution of $1,000,000 to m eet accrued liabilities; a contri
bution calculated on an actuarial basis to meet its share of the benefits
for current service; and an appropriation to cover the cost of admin
istration. For the year ending December 31, 1925, the city’s contri
butions amounted to $4,324,399.
The employees contribute a percentage of salary based on age at
entrance. For the year ending December 31, 1925, the employees’
contributions amounted to $3,077,570.
Retirement allowances.—The superannuation allowance consists of
an annuity bought by the retirant’s accumulated contributions, plus
a pension from the city, amounting together to one-seventieth of the
average final salary for each year of service after the establishment
of the system. For those in service earlier, the city pays the whole
allowance for each year of such prior service.
The disability allowance consists of the annuity bought by the
retirant’s accumulated contributions, plus a pension from the city of
20 per cent of the average final compensation; if the retirant is eligible
for service retirement, the pension shall be 25 per cent of the average
final compensation.
In case of the death of a teacher in active service who has qualified
for service retirement, a death benefit of one-half of the last year’s
salary is paid to his estate or beneficiary.
Options are offered at the time*of retirement.
Number of employees covered.—As of December 31,1925, the number
of employees under the system was 25,995.
112
CHAPTER 5.— TEACHERS’ RETIREMENT SYSTEMS
Conditions for retirement.—Retirem ent is optional at age 65 and com
pulsory at 70. There is a service requirement of 35 years; in the
case of new entrants, 20 years of this m ust have been in New York
City.
Disability retirem ent is perm itted after 10 years’ service, upon
medical certification. Periodic examinations are required.
Administration.—The system is administered by a board of seven—
the president of the board of education and the comptroller of New
York, ex officio; two appointed by the mayor; and three teachers,
elected by their fellows.
NEW YORK CITY BOARD OF EDUCATION
'T'YP E of system.—The New York City Board of Education Retire
m ent System is a contributory system.
Contributions.—The city contributes annually for each employee
an amount equal to his own contribution, and for those in the service
before the system was established a further sum to cover accrued
liability. The city also bears the cost of the extra benefits. The
costs of administration are carried as part of the normal expenses of
the board of education. For the year ending June 30, 1926, the city’s
contributions amounted to $331,216.
The employees contribute a percentage of salary based on sex, age
at entrance, and the kind of retirem ent desired, whether age or service.
The contribution is calculated on an actuarial basis to produce at
retirem ent an annuity of one one-hundred-and-fortieth of the average
salary for the last five years, multiplied by the num ber of years of
service. For the year ending June 30, 1926, their contributions
amounted to $311,295.
Retirement allowances.—For age and service retirem ent, the allow
ance consists of an annuity bought by the retiran t’s accumulated
contributions, plus a pension of equal amount bought by the city’s
accumulated contributions to his credit, the two together making oneseventieth of the average annual salary for the last five years, m ulti
plied by the number of years of service. For years of service prior to
1921, when the system was established, the city provides the whole
allowance.
For ordinary disability retirem ent the allowance consists of an
annuity bought by the retiran t’s contributions, plus a pension from
the city sufficient to bring the allowance up to 90 per cent of the
normal allowance for the retiran t’s years of service.
For duty disability retirem ent, the city provides a pension of threefourths of the average annual salary for the last five years, and either
returns the retirant’s accumulated contributions, or, at his option,
uses them to purchase an annuity for his benefit.
Upon the death from ordinary causes of a member in service, a
death benefit of an amount equal to his earnings for the last six
months is paid to his estate or designated beneficiary.
If a member dies as the result of injuries received in the performance
of duty, his contributions are returned to his estate, and his widow
receives a pension during widowhood of one-half his average annual
salary for the last five years’ service. If there is no widow the pension
m§y go to children under 18, or, if there are no such children, to a
dependent parent.
WASHINGTON D. C.
113
Options are offered upon retirement.
Number of employees covered.—As of June 30, 1926, the number of
employees covered by the system was 2,507.
Conditions for retirement.—Age retirement is optional from 60
onward. Service retirement is optional at any age after completing
35 years’ service.
Ordinary disability retirem ent is perm itted after 10 years’ service
upon medical examination and certification.
D uty disability retirem ent is perm itted without regard to age or
length of service, upon medical examination and certification.
Administration.—The system is administered by the board of
education.
Statistics.—For the year ending June 30, 1926, the total receipts of
the system were $723,452, and the total expenditures, $207,622.
WASHINGTON, D. C.
1TYPE of system.—The Teachers’ Retirem ent Fund of Washington,
*
D. C., is a contributory system.
Contributions.—The D istrict pays into the fund annually a percent
age of the pay roll of all participants in the fund, calculated on an
actuarial basis to cover liability for current service, and to liquidate
within 30 years from July 1, 1926, the accrued liability for prior
service. For the year ending June 30, 1926, the D istrict’s contribu
tion was $61,000; for the year ending June 30, 1927, it was $91,965.
The teachers contribute a percentage of their salaries calculated on
an actuarial basis to provide a specified annuity upon retirement.
The percentage m ust not exceed 8, and salary over $2,000 is exempt
from contribution. For the year ending June 30, 1926, the teachers’
contributions amounted to $263,920, and for the year ending June 30,
1927, to $284,287.
Retirement allowances.—The superannuation allowance consists of
an annuity made up of two parts: (1) A sum equal to 1 per cent of
the average annual salary for the last 10 years multiplied by the num
ber of years of service; and (2) a sum equal to $15 for each year of
service prior to 1926. Service exceeding 40 years is not to be used in
either calculation.
The allowance for disability retirement is calculated in the same
m anner as for superannuation.
Options are offered upon retirement.
Number of employees covered.—As of June 30, 1926, the num ber of
employees covered was 2,761; as of the same date of 1927 it was
2,852.' #
Conditions for retirement.—Retirem ent is optional at age 62, and
compulsory at 70. The retirant m ust have served in the D istrict for
at least 10 years, and for the whole of the period between attaining
age 52 and retirement. Credit will be given for service outside the
District for not more than 10 years, but the teacher claiming it m ust
make up his contributions to the sum they would have reached had
this service been given in the District,
Disability retirement is perm itted on medical examination and cer
tification, if the teacher is aged 45 or over, after 10 years’ continuous
service in the District, or, if he is under 45, after 15 years’ continuous
service in the District.
114
CHAPTER 5.— TEACHERS’ RETIREMENT SYSTEMS
Administration.—The plan is administered by the Commissioners of
the District.
Average age oj retirants.—The average age at retirem ent for sup
erannuation retirants is 67, with 43 years’ service; for disability
retirants, 57, with 29 years’ service.
Statistics.—The total receipts of the system from July 1, 1920, to
June 30, 1926, amounted to $1,876,533, and up to June 30, 1927, to
$2,314,921; for the same periods the total disbursements were
$387,072 and $528,523.
N o t e .— The Washington system was reorganized in 1920 along the general
lines of the present system. Later a Federal statute was passed, effective July
1, 1926, making some changes in regard to contributions, calculation of allow
ances, and conditions for retirement. The outline given above is for the system
as modified by the changes of 1926. Statistical data are given for two years, to
show conditions before and after the changes.
T able
Name of system
Contributions from
employees
2 7 . — Comparison of city teachers1 retirement systems
Contributions from
city
Conditions for retirem ent1
Chicago public school teachers’ pen
sion and retirement system
(Laws of 1921, p. 821; 1925, p. 571).
Do.
Superannuation and disability: After 25
years’ service, $600 a year, with $20 addi
tional for each year of service over 25, up
to 15; maximum, $900.
Do.
Superannuation: Annuity bought with re O p tio n s; death
tirant’s accumulated contributions plus
benefit.
pension bought with city’s accumulated
contributions on his behalf; latter not
available under age 50. Allowance for
prior service. Disability: Same as super
annuation, except that city’s pension is
available at once, regardless of age.
Superannuation: After 40 years’ service None.
one-half of average salary for last 5 years;
under 40 years’ service, one-fortieth of
normal allowance for each year of service;
minimum, $300; maximum, $600. Dis
ability: For each year of service, one-for
tieth of normal retirement allowance.
SYSTEMS
Superannuation: Optional up
to age 65, after which com
pulsory retirement may be
demanded if advisable; 30
y e a r s ’ s e r v ic e as mini
mum, 40 as normal require
ment. Disability: 5 years'
service.
1 All the systems require medical examination and certification as conditions for disability retirement.
Superannuation: $1,200 a year. Disability:
Such proportion of $1,200 a year as re
tirant’s years of service are of 30; mini
mum, $400.
CITY
2 per cent of salary. Amount equal to 3 per
cent of teachers’ sal
ary roll; minimum,
$30,000 a year.
None.
OF
New Orleans teachers’ retirement
fund (Act No. 116 of 1910; No. 263
Of .1914; and No. 17 of 1918).
Superannuation: After 25 years’ service,
$800 a year, with $20 extra for each year
of service over 25, up to 10; maximum,
$1,000. Disability: Such proportion of
$800 a year as retirant’s contributions
form of $850; minimum, $300 a year.
Other benefits
COMPARISON
C on trib u tion s, Appropriation of $2for Superannuation: No age re
g r a d e d by
each $1 from teach
quirement; 25 years’ service,
length of service,
ers; if Insufficient,
of which 15 must have
ranging from $10
amount needed is
been in Chicago. Perma
to $50 a year and
to be transferred
nent disability: 12 years’
totaling $850 in
from general educa
service, three-fifths of which
25 years.
tion fund.
must have been in Chicago.
Detroit public school teachers’ re 3 per cent of sal Interest on daily bal Superannuation: No age re
tirement fund (Pub. Acts of 1923,
ary (2 per cent
ances of teachers’
quirement; 30 years’ service,
No. 152).
prior to Septem
salary roll, and tui
of which the last 20 must
ber, 1926) b u t
tion fees paid by
have been in Detroit. Dis
s a la r y over
nonresident pupils,
ability: 10 years’ service in
$1,500 a year ex
etc.
Detroit.
empt.
Milwaukee public school teachers’ C on trib u tion s, 40 per cent of proceeds Superannuation: Optional at
annuity and retirement fund
graded by length
of a surtax on net in
age 65, after 25 years’ service,
(Laws of 1909, ch. 510; 1911, ch. 189;
of service, rang
comes.
and at any age after 35
1921, ch. 591; 1925, ch. 243).
ing from $4 to $8
years’ service, of which 15
a month; not re
and 20, respectively, must
quired after 40
have been in Milwaukee.
years’ service.
Disability: 25 years’ service,
15 in Milwaukee.
Minneapolis teachers’ retirement 5 per cent of sal Amount raised by a Superannuation: No age re
fund association (Gen. Laws 1909,
ary. Those un
tax levy of 1 mill on
quirement, but city’s share
ch. 343; 1923, ch. 310).
der 25 do not
the dollar.
of allowance not to be paid
contribute.
till age 50 is reached; no
service requirement. Dis
ability: 5 consecutive years'
service.
Retirement allowances
Qi
T able
2 7 .— Comparison of ciiy teachers’ retirement systems— Continued
Contributions from
city
Teachers’ retirement system of the
city of New York (Laws of 1917,
ch. 303; rbarter of Greater New
York, sec. 1092).
Percentage of sal
ary, based on
age at entrance.
Regular appropria
tions, calculated on
actuarial basis, to
cover current and
accrued liability;
. and cost of admin
istration.
New York City board of education
retirement system (Laws of 1921,
ch. 713).
Percentage of sal
ary, based on sex,
age at entrance,
and kind of re
tirement (age or
service) desired.
Annual contribution
for each employee of
an amount equal to
his own contribu
tion; also contribu
tion to cover accrued
liability and cost of
extra benefits.
Teachers’ retirement fund of Wash Percentage of sal
ary, not to ex
ington, D. C. (41 U. S. Stat. L.
ceed 8, calcu
p .387; 44 U. S. Stat. L. pt. 2, p. 727).
lated on actua
rial basis, but all
salary
over
$2,000 a year ex
empt.
District contributes a
percentage of teach
ers’ salary roll to
cover its share of
benefits earned by
current service, and
its accrued liability.
Conditions for retirement
Retirement allowances
Superannuation: Annuity bought by re
tirant’s accumulated contributions plus
pension bought by city’s accumulated
contributions, amounting to one-seven
tieth of average final salary for each
year of service. Allowance for prior
service. Disability: Annuity bought
by retirant’s accumulated contributions
plus pension of 20 or 25 per cent,
according to circumstances, of average
final compensation.
Ago retirement: Optional at Age or service retirement: Annuity bought
by retirant’s contributions plus pension
age 60. Service retire
bought by city’s contributions to his
ment: On completion of
credit, the two amounting to one-seven
35 years’ service. Ordinary
tieth of average annual salary for last 5
disability: 10 years’ service.
years multiplied by years of service.
Duty disability: No service
Allowance for prior service. Ordinary
requirement.
disability: Annuity as above with pen
sion to bring allowance up to 90 per cent
of normal allowance for years of service.
Duty disability: Annuity as above (or
retirant may have his contributions
returned) plus pension of three-fourths
of average annual salary for last 5 years.
Superannuation: Optional at Superannuation and disability: Annuity
consisting of two parts: (1) An amount
age 62; compulsory at 70; 10
equal to 1 per cent of the average salary
years’ service in District
for last 10 years multiplied by years of
and since reaching age 52.
service; (2) an amount equal to $15
Disability: 10 years’ service,
multiplied by years of service prior to
if retirant is 45 or over, and
.1926. Service in excess of 40 years not
15 years, if under that age.
used in calculating allowances.
Superannuation: Optional at
age 65; compulsory at 70; 35
years’ service, of which, in
case of future entrant, 20
must have been in New
York City. Disability: 10
years’ service.
Other benefits
D e a t h benefit;
options.
Provision for de
pendents; death
benefits; options.
Options.
5.----------------------------------------------------------------------------------------------------
Contributions from
employees
CHAPTER
Name of system
T a b l e 2 8 . — Income
and expenditures of city teachers' retirement systems
Income from—
Name of system
Year ending—
$772, 865
121, 624
70, 673
261, 536
53,678
3, 077, 570
311.295
263', 920
284, 287
240,221
296, 783
80, 936
4, 324, 399
331.216
61, 000
91, 965
$194,785 $1, 412, 770
69,440
366,393
64, 637
69,637
36, 950
1,185, 005
80, 941
52, 456
62,137
375,531
627,956
171,564
8. 586, 974
723, 452
377, 376
438,389
$647,495
123,728
41, 042
1, 712, 010
100, 734
64, 778
109, 214
Total
$647, 495
256, 509
$8,793
729, 483
75, 922
69,495
132, 521
41, 042
2, 441, 493
176, 656
64, 778
109, 214
Re
funds
Cost of
admin
istra
tion
$5, 583
8,165
$13, 961
1, 221
$667, 039
265, 895
9, 292
13, 885
11,186
6,105
1, 093
235, 501 ___
30, 966
31, 737
32, 238
82, 655
157, 592
48, 240
2, 676, 994
207. 622
9G, 515
141, 452
Total
expendi
tures
Relation of beneficiaries to active force and of benefit expenditures to pay roll of active force— City teachers’ retirement systems
CITY
Per cent
Per cent
beneficiaries benefits
form
form of
of
pay roll
active force
SYSTEMS
T able 2 9 .
o U j ±.o2i i
$445,120
175, 329
All other
sources
OF
i J llU G
Public
sources
COMPARISON
Chicago public school teachers’ pension and retirement
system_______________________________________ Aug. 31,1926
Detroit public school teachers’ retirement fund, 1895. ___ do_____
Milwaukee public school teachers’ annuity and retire
ment fund____________________________________ ___ do_____
Minneapolis teachers’ retirement "fund association____ Dec, 31,1926
New Orleans teachers’ retirement fund
Aug. 31,1926
Teachers’ retirement system of the city of New York
Dec. 31,1925
New York City Board of Education retirement systen June 30,1926
Teachers’ retirement fund of Washington, D. C_......... ;fJune 30,1926
Em
ployees
Expenditure for benefits
Super
annuation
Total in and dis
Other
come
ability
benefits
allow
ances
Name of system
Chicago public school teachers’ pension and retirement svstem
Detroit public school teachers’ retirement fund, 1895___
Milwaukee public school teachers’ annuity and retirement fund
Minneapolis teachers’ retirement fund association
New Orleans teachers’ retirement fund
Teachers’ retirement system of the citv of New York
New York City board of education retirement system
Teachers’ retirement fund of Washington, D. C_.
1Year ending August 31.
|
Number on
j Year ending— active
force
_________ Oct. 31,1926
--------------! Aug. 31,1926
................... ; June 30,1926
__________ Dec. 31,1925
/June 30.1926
------ ------- (June 30,1927
11, 927
5, 569
2, 054
2, 344
1,619
25, 995
2, 507
2, 761
2,852
Pay roll of
active force
Total num
ber of bene
ficiaries
$32, 281,174
13, 396, 922
4, 621, 816
4, 554, 714
2, 541, 722
973
242
89
293
101
2, 041
126
5, 854, 690
648
6, 027, 865
5, 703,
108
Amount
spent in
benefits
i $647, 495
256, 509
i 69, 495
132, 521
41, 042
2,441,493
176, 656
64, 778
109, 214
8.16
4. 35
4. 33
12. 5
6. 24
7. 85
5. 02
3. 04
3. 79
2.0
1.91
1.5
2.9
1. 62
3.0
1.13
1. 81
CHAPTER 6.—RETIREMENT SYSTEMS FOR POLICE
AND FIREMEN
E T IR E M E N T systems covering the police and firemen are
usually the earliest established in a community, and often
they m ay be found even where no other systems have been
adopted. The present investigation, as mentioned in earlier dis
cussions, covered cities having a population of 400,000 and upwards.
Of these, there were 17 having retirem ent systems for the police, the
firemen, or the police and firemen combined. (Boston is om itted, as
there both police and firemen are included in the general plan for the
retirem ent of municipal employees.) Thirteen cities have separate
systems for the police, 13 (not quite identical) have separate systems
for the firemen, and 3 have combined the systems covering the two
departm ents.
POLICE R E TIR EM EN T SYSTEMS
R
f \ F T H E cities studied, St. Louis is the only one which does not
^
have some plan for perm itting its police to retire on allowance,
but in Los Angeles, Newark, and Washington, D. C., the systems for
police and firemen have been combined. This chapter, therefore, deals
with 13 systems for the police, 13 for firemen, and 3 for the police
and firemen combined, which will be treated separately.
The m ajority of the police retirem ent systems date well back into
the last century. Probably the oldest is th a t of New York City,
which was established in 1857. Practically all of the earlier schemes
have been m aterially changed from their first forms, and it seems
unnecessary to attem pt to fix the precise date of origin. The
membership of the systems, by cities, is as follows:
Baltim ore__
Buffalo. _
Chicago _ _
CincinnatiCleveland
Detroit
Milwaukee
________
________
________
________
________
________
________
1,864
1, 144
6, 080
525
1, 421
2, 762
938
Minneapolis. _ _______ ______
499
New Orleans
__ __ ______
877
New York City
______ 15, 950
Philadelphia. _
______ 5, 600
Pittsburgh___
__ __ ______
904
San F ra n c is c o .______ ______ 1, 186
The numbers here given are not comparable, since there are
differences as to the classes of employees included in the schemes,
and occasionally local circumstances affect the num ber of the force.
These figures are give a merely as conveying in a general way some
idea of the num ber covered.
The custom differs as to the inclusiveness of the systems, some
limiting membership to the uniformed force and detectives, while
others take in all employees of the departm ent. In general, if a
city m aintains an inclusive municipal employee system, the civilian
members of the departm ent, such as clerks, janitors, and the like, are
covered by this, and only the so-called “ fighting” force comes under
the terms of the police retirem ent system. W here women police are
employed, they are counted as part of the uniformed force, and some
of the systems specifically include police m atrons and assistant
matrons.
118
POLICE RETIREMENT SYSTEMS
119
Employee Representation in Management
IN T H E m atter of giving employees a voice in the management,
the systems are almost evenly divided, seven having employee
representatives on the board of control, while six intrust the admin
istration either to a single official or to a board composed of city offi
cials. In the latter group, the Baltimore and the New York systems
are managed by the commissioner of police, the New Orleans system
by the commissioner of public finance and the secretary of the board
of police commissioners, the San Francisco system by the board of
police commissioners, the Buffalo system by a board composed of the
mayor and four councilmen, and the D etroit system by a board of
city officials in which the police commissioner is included. In the
remaining systems the adm inistrative boards contain, in addition to
ex-officio members, a certain number of employee representatives
elected by their fellows, and in several cases, these form a m ajority
of the board. In Milwaukee, for instance, there are three employee
representatives in a board of five, in Minneapolis five in a board of
eight, and in Cincinnati six in a board of seven.
Source of Funds
A LL of the systems included in this study are contributory, but they
vary considerably in the proportionate amounts contributed by
the force and by the employing agencies. In many of the systems,
in addition to the contributions from employer and employees there
are receipts from unclassified sources which m aterially increase the
annual income.
Contributions from employees.—Under four of the systems the em
ployees contribute a flat sum monthly, the amount being $1 in Cin
cinnati, $2 in San Francisco, in Cleveland a payment ranging from
50 cents to $1.25 according to the rank of the contributor, and in
Philadelphia an amount equal to one day’s pay, disregarding all
salary in excess of $3,000 a year. In the other nine cities the em
ployees pay a percentage of their salaries, ranging from 1 per cent in
D etroit and Minneapolis to 4.625 per cent in Milwaukee and 4.75
per cent of the salary up to $2,600 a year in Chicago. In the last
two cities the proportion of the percentage for each of several distinct
purposes has been carefully allotted. In Chicago, for instance, a
member pays 3.5 per cent of his salary toward the allowance he
expects to draw upon retirement, 1 per cent for the widow’s annuity,
one-eighth of 1 per cent to provide for ordinary disability retirement,
and the same amount toward the expenses of administration. In
Milwaukee the division is the same, except th at the employee pays
3 per cent toward his own retirem ent allowance, and one-half of 1
per cent for ordinary disability retirement. In the other cities the
employee pays simply the prescribed percentage and its exact assign
m ent is not specified. In Minneapolis, in addition to the percentage
contribution, the members who have completed their probationary
period pay 50 cents quarterly toward expenses of administration.
Contributions from employers.— With few exceptions, the cities
make a practice of turning over to the police retirem ent fund various
miscellaneous moneys, which in the aggregate make a considerable
addition to its resources. The sources of the amounts thus turned
120
CHAPTER 6.— RETIREMENT OF POLICE AND FIREMEN
over vary from city to city. A rather typical list includes all fines and
costs imposed by station-house magistrates, fines imposed upon the
police for disciplinary purposes, all or a part of any rewards and
donations to officers for special services or extraordinary valor, fees
for permits for public entertainments, special permits to dancing
schools and physicians, fees for licenses issued to private detectives,
unclaimed money, and the proceeds of sale of unclaimed property
left beyond a certain length of time in the hands of the police, pro
ceeds of the sale of unfit, condemned, and unserviceable property
belonging to the departm ent, and other unclassified receipts. Some
cities include the fees for dog licenses, and others the fees for permits
for boxing contests.
In general, all cities, whether or not they make these miscellaneous
contributions, make a direct appropriation for the support of the
system. Baltimore, Buffalo, New York, and Philadelphia provide
that the city shall make appropriations as needed to m aintain the
system, New Orleans devotes to this purpose 2 per cent of the amount
appropriated for the support of the police departm ent, and Chicago,
Cincinnati, Cleveland, Detroit, Milwaukee, and Minneapolis provide
for raising, by a special tax, the amounts needed to pay the city’s
share of the system ’s benefits. Pittsburgh provides th at a certain
percentage of the am ount raised by general taxation may be used
for this purpose, while San Francisco makes no direct appropriation
but uses the money derived from certain fines and licenses for this
purpose. In some cases the city simply undertakes to supply what
is necessary to m aintain the paym ent of allowances, while in others
its share of responsibility for benefits promised under the system is
carefully defined. In Chicago, for instance, the city contributes for
each member of the force an amount equal to 10.5 per cent of his
salary, of which 2 per cent is for the widow’s pension and 8.5 per cent
for his own future pension. The city also bears the entire cost of the
extra benefits provided by the system, and makes up any deficiency
in the cost of administration, if the amounts contributed bv the
employees for this purpose are not sufficient.
Other sources of income.—In some cities a custom still prevails
under which the police raise funds for retirem ent and benefit purposes
by staging an annual ball game, or a dance or other entertainm ent for
which admission is charged. Sometimes they hold a carnival, or
receive the proceeds of a benefit performance, or sell advertising space
in a yearbook, or resort to other money-making devices. Often very
considerable sums are raised by such means, but the practice is
looked upon with less favor than in the earlier days, and there is a
general tendency to give it up and support the retirem ent system by
definite contributions from employer and employees.
Interest on deposits and occasional profits on good investments are
also sources of income, and most systems provide th at gifts, donations,
and legacies for the benefit of the fund may be accepted.
Cost of Administration
nPH R E E cities (Chicago, Milwaukee, and Minneapolis) require con
tributions from the employees toward the expenses of manage
ment. In Chicago and Milwaukee each employee contributes oneeighth of 1 per cent of his salary monthly and in Minneapolis after a
POLICE RETIREMENT SYSTEMS
121
six m onths’ probationary period each emplo 3^ee is assessed 50 cents
quarterly for this purpose. In other cities the costs are frequently
merged with the general expenses of the department. Sometimes a
particular item of expense, such as the salary paid for doing the
secretarial work, or cost of printing or postage is paid from the
fund, the departm ent meeting the remaining expenses, and sometimes
the city carries the whole m atter as part of the routine cost of the
department.
Conditions for Retirement
C E R V IC E or superannuation retirement.—Age as a condition for
^ retirement plays rather an unim portant part in these systems.
In seven cities (Baltimore, Buffalo, Cincinnati, Cleveland, Detroit,
New Orleans, and Pittsburgh) there is no age requirement and no
age fixed for compulsory retirement, though it is sometimes provided
th at after a given age a man may be compulsorily retired if his con
dition renders this advisable. New York expects retirem ent after 25
years’ service unless an extension is secured, but at 55 retirement is
optional if 20 years’ service has been given, and at 60 regardless of
length of service. Of the other cities, Minneapolis and Philadelphia
permit retirem ent from 50 onward, but couple this with a service
requirement of 20 years. Chicago and Milwaukee have rather com
plicated age requirements. Those in service when the system was
adopted may retire from 50 onward, if they have completed 20 years
of service, and will receive the full allowance. Those who entered
after the adoption of the system may retire under the same conditions,
but will not receive as large an allowance as if they remain until 57;
at th at age their allowance is fixed and is not increased by service
given thereafter. San Francisco makes no provision for optional
retirement but enforces retirem ent at 65.
Baltimore alone among these cities has no service requirement,
basing retirement upon disability rather than upon age or service.
The disability may be due to the infirmities of age, but in th a t case
it is the disabilities, not the number of years the retirant has lived or
served, which condition the retirement. Of the other cities, seven
(Buffalo, Chicago, Minneapolis, New Orleans, Philadelphia, P itts
burgh, and San Francisco) require 20 years’ service, though Chicago
does not insist on this qualification unless the retirant is under 57.
Cincinnati, Cleveland, Detroit, and New York require 25 years’ serv
ice, New York modifying this requirement as mentioned above, while
Milwaukee calls for 15 years’ service if the retirant is 57 or over,
and 20 if he is under th at age.
Disability retirement.—In all the cities disability due to injuries or
illness incurred in the direct performance of duty is recognized as a
cause for retirem ent on allowance, regardless of age or length of serv
ice rendered. All but three (Minneapolis, New Orleans, and P itts
burgh) recognize disability arising from ordinary causes as ground
for retirem ent on allowance, though several require service qualifica
tions in addition. Cincinnati sets this service requirem ent at 5
years, New York and Philadelphia at 10, Cleveland at 15, and
Baltimore at 16. All the systems require medical examination and
certification before retirement for disability is perm itted, and in the
case of ordinary disability it is frequently specified th a t the disability
must not be due to the employee’s own fault or misconduct.
3306°— 29------ 9
122
CHAPTER
6.— RETIREMENT
OF POLICE AND FIREMEN
Retirement Allowances
IV/fOST of the systems provide the same allowance for service and for
duty-disability retirement, and the commonest amount fixed is
one-half the salary drawn at the time of retirement. Two cities,
Cleveland and Pittsburgh, grade the allowance according to the rank
held by the retirant, the monthly payments ranging in Cleveland
from $87.66 to $125, and in Pittsburgh from $50 to $75. In Chicago
and Milwaukee the allowance consists of an annuity bought by the
retirant’s accumulated contributions and a pension bought by the
city’s contributions on his behalf, the maximum in Chicago being 75
per cent of the salary received at the time of withdrawal (salary over
$2,600 a year being om itted from the calculation) and in Milwaukee
75 per cent of the highest salary received during the period of service.
In Chicago, if the retirant was in the service before the adoption of
the present system, has reached the age of 50, and has given 20 years
of service, he is entitled to retire on an allowance of one-half his sal
ary, whether or not the accumulations to his credit will purchase
such an annuity, the city making up any deficiency. In Milwaukee
the city provides an allowance for prior service for those on the force
when the system was adopted.
Of the other nine cities, seven fix the allowance at one-half the salary
drawn at the time of retirement, Philadelphia puts it at one-half the
average salary for the last 10 years, and San Francisco a t one-half the
salary of the rank held 3 years prior to retirement. D etroit intro
duces an interesting variant by fixing the pension a t one-half the
salary of the rank held by the retirant at the time of withdrawal;
if, later on, the salary attached to th a t rank is changed, the allowance
changes accordingly. Minneapolis puts the allowance at one-half
the salary, but fixes $75 a month as the maximum to be paid. Since
the adoption of the system, salaries have been raised, and now the
salary of the lowest rank is $150 a month, therefore, $75 a m onth is
at once the minimum and the maximum payable under this system.
Disability retirement allowances.—In 10 of the cities the allowance
for duty disability is normally the same as for service retirement,
though in some of these a certain latitude is perm itted, the proviso
reading th at the amount is not to exceed one-half the salary at time
of retirement. Of the three remaining cities, Chicago provides for
duty disability an allowance of three-fourths of the recipient’s salary,
with an additional allowance for each child under 18, the whole not
to exceed the salary drawn at the time of injury. Milwaukee gives
55 per cent of the salary with $10 a month for each child under 18,
the whole not to exceed 75 per cent of the salary, and Pittsburgh
provides th at the retirant shall receive for 52 weeks one-half of the
salary at the time of injury, and then, if permanently injured, he is
entitled to a lump sum of $1,200 from another fund.
As mentioned before, the Minneapolis, New Orleans, and P itts
burgh systems do not perm it retirem ent on allowance in case of
ordinary disability. Of the 10 cities which perm it such retirement,
four give the same allowance as for duty disability and 6 either
perm it or enforce a different pension. Thus, in Buffalo the council
is to set the allowance, but may not give more than one-half the
salary at the time of retirement. In New York, if the retiran t has
POLICE RETIREMENT SYSTEMS
123
served 10 but less than 20 years, the pension is to be not less than
one-fourth nor more than one-half the salary, but if he has served
20 or more years, it is one-half the salary. Chicago and Milwaukee
give one-half the salary, with the usual deductions for annuity pur
poses, and both cities provide th at this allowance may not be paid
for a period longer than one-fourth the retiran t’s term of service,
and not in any case for over five years. Philadelphia allows for each
year of service one-twentieth of the normal retirem ent allowance,
and Cincinnati gives $36 for each year of service, with a maximum
of $900 a year.
Dismissal allowances.—Only two systems, those of Cincinnati and
Cleveland, include these allowances. Both provide th at if a man is
dismissed after 15 years’ continuous service, except for certain
specified faults or misconduct, he is entitled to an allowance which
in Cincinnati is not to exceed $600 a year, and in Cleveland is to be
one-half the allowance for service retirem ent for his rank.
Refunds
/^ N L Y four of these systems provide for a return of contributions
^
in case of the death or separation from the service of a member
before reaching pensionable status. In Chicago if a member with
draws or is dismissed before reaching pensionable status, he receives
a refund, with interest, of his contributions for annuity purposes,
but not of w hat he has paid in for ordinary disability retirem ent (this
being looked upon as in the nature of insurance) nor of his contribu
tions toward expenses of maintenance. If a member is unmarried
or a widower, upon reaching age 57 or at the time of his retirement,
if th a t takes place before 57, he is entitled to a refund, with interest,
of his contributions for the widow’s annuity. Upon the death of a
member his heirs are entitled to a refund, without interest, of his
contributions for annuity purposes, provided they have not been
paid out to the policeman himself or to his dependents in the form of
annuity. Milwaukee has a somewhat similar system. Upon with
drawal or dismissal before reaching pensionable status, the officer is
entitled to a refund of the entire amount contributed for his own and
his widow’s annuity with interest. A similar refund is made to his
heirs or estate in case of death. In Pittsburgh a refund of contribu
tions without interest is made in case of the withdrawal, dismissal,
or death of a member, and in San Francisco, while no refund is made
in case of withdrawal or dismissal, a refund of contributions, without
interest, is made, in case of death from natural causes after 10 years
of service, to the widow, minor children or dependent m other of
the deceased.
Provision for Dependents
A LL the systems considered recognize a responsibility toward the
^
immediate dependents of a man killed in the performance of
duty or dying as a result of injuries so received, and 9 of the 13 also
make some provision for dependents in case of death from normal
causes. There is a good deal of variety in the kind and degree of
provision made. In some of the older systems a flat pension was
fixed for the widow or for the dependent children under a certain
age; sometimes the amount was revised as the cost of living rose, but
124
CHAPTER
6.--- RETIREMENT
OF POLICE AND FIREMEN
this was not invariably done, and so it happens that in some cases
the widow’s pension, w^hich was doubtless entirely satisfactory when
the system was adopted, is now a scant provision for any normal needs.
In the systems which have been reorganized in recent years, the
provision for dependents sometimes receives as careful and detailed
attention as the arrangements for the benefit of the member himself.
Chicago and Milwaukee are good examples of this, annuities for the
widows and provision for minor children of the members being basic
features of the schemes.
The Chicago plan provides th at if a member dies from ordinary
causes, his widow is entitled to an allowance purchased by the
accumulated contributions made for this purpose by the member and
the city, the maximum allowance being 60 per cent of the member’s
salary. A prior-service allowance is provided by the city alone for
the widows of members in service before the system was adopted.
In case a member is killed in the performance of duty, his widow is
entitled to wrh at is called the compensation annuity, amounting to
three-fourths of the decedent’s salary, which is paid to her until her
husband, had he lived, w^ould have reached age 57, wrhen it ceases
and she receives only the ordinary widow’s allowance, described
above. This ordinary allowance continues during life, not being
affected by her remarriage. W hether the m an’s death was due to
normal causes or to injuries received in the service, an allowance of
$10 is made for each child under 18, until it reaches th a t age. If the
mother as well as the father is dead, the allowance for the children
is increased to $25 a month. The compensation annuity and the
children’s allowances combined m ust not exceed the full salary re
ceived by the deceased, any excess being taken from the children’s
allowances.
The Milwaukee system is in the main similar to that of Chicago in
this matter, though under its terms the combined allowances of the
widow and children may not exceed 75 per cent of the deceased mem
ber’s salary. Also in Milwaukee the extra allowance made to the
widow of a man killed in the performance of duty is whatever amount
is needed to bring her annuity up to the amount which she would have
received had her husband attained age 57 or, having reached that
age, had completed 15 years of service before his death. This extra
amount is stopped in case of her remarriage, but the normal annuity
continues throughout her life. The allowance for each child under
18 is, as in Chicago, $10 a month, but if the mother as well as the
father is dead this is increased only to $15 a month instead of to the
$25 provided under the Chicago plan.
Few of the other cities make such elaborate provisions. Baltimore,
Detroit, Philadelphia, and San Francisco provide for dependents
only in case death is due to the performance of duty. In th a t case
Baltimore allowrs the police commissioner in his discretion to give the
widow during widowhood the pension the man wTould have received
if retired; D etroit gives the w^idow a pension of $100 a m onth until
remarriage, w^ith an allowance of $20 a m onth for each child under
16; Philadelphia gives a pension of $20 a m onth with $6 a month
for each child under 14; and San Francisco gives one-half the dece
dent’s salary to the widow during widowhood. In case no widow
RETIREMENT SYSTEMS FOR FIREMEN
125
survives the decedent the allowance may be paid to dependent
children or, if there are none, to a dependent parent or parents.
In the other cities provision is made for dependents, whether or
not death is incurred in the performance of duty, though occasion
ally it is provided th at an officer m ust have served for a specified
period or else the dependents are not entitled to the allowance. In
Pittsburgh a flat payment of $1,200 is made. New York provides
th at in case of a duty death the allowance is to be not less than
$600 a year, nor more than one-half the decedent’s salary, and th a t
in addition there shall be a lump-sum paym ent equal to the annual
salary the decedent was receiving at the time of his death. In the
case of a death from ordinary causes the dependents are entitled to
a pension of $300 a year. In New Orleans the widow of an officer
killed in the discharge of duty or dying from ordinary causes after
20 years of service is entitled to $150 a year, and in the other cities
the allowances range from $300 to $1,200 a year, or, in some cases, to
one-half the salary the officer was receiving at the time of his death.
In these cities the widow’s pension continues only during widow
hood. Allowances for each child under a given age are common,
the age limit varying from 14 to 18, and the amount of the allow
ance from $6 to $25 a m onth, D etroit alone exceeding this last figure
with a proviso th at if the widow dies or remarries, the person re
sponsible for the care of the children shall receive $40 a m onth for
each child under 16.
R ETIR EM EN T SYSTEMS FOR FIREM EN
N BA LTIM O RE and in Boston the firemen are included in the
general scheme covering city employees, and in three cities they
and the police are merged in a common system. Elsewhere they are
covered by plans of their own, often dating back to a period very
near the organization of the service as a city departm ent. W ith the
exception of the San Francisco system, all of these retirem ent plans
were formed in the last century, the oldest being th a t of New York
City, which commenced paying benefits in 1871. A number, how
ever, have been so changed within recent years th at they are prac
tically new systems. Minneapolis, for instance, introduced impor
ta n t changes in 1921, Milwaukee and Pittsburgh in 1924, and De
troit in 1925. Chicago made various changes in its system in 1917,
and since 1925 has had several plans under consideration for reorgan
izing it, or for including it with the general municipal retirem ent plan.
The systems covered, with their approximate membership in 1926,
are as follows:
I
Buffalo_____
Chicago____
Cincinnati.
Cleveland___
Detroit_____
Milwaukee...
Minneapolis.
946
2, 341
624
1, 061
1, 698
723
513
New Orleans__________________
628
New York City_______________ 6, 078
Philadelphia__________________ 2, 100
Pittsburgh____________________
931
St. Louis______________________
940
San Francisco_________________
967
These systems commonly cover only the uniformed force, but in a
few cases it is specifically stated th a t all members of the departm ent
are to be included, while in others certain groups of the nonuniformed
members are covered. The D etroit system, for instance, applies to
126
CHAPTER
6.— RETIREMENT
OF POLICE AND FIREMEN
the uniformed and civilian groups alike, while the Chicago plan
covers the fire-fighting force, the fire-alarm operators, and the line
men connected with the department.
Employee Representation in Management
TN BUFFALO the system is managed by a board of 5, consisting of
A the m ayor and 4 councilmen, in D etroit by a board of 5 all of whom
are ex officio members, in New York the commissioner of the depart
m ent is trustee of the fund with full power to administer and control
it, and in San Francisco the board of fire commissioners has the
trusteeship of the fund. In the nine remaining cities the members
of the force are represented on the adm inistrative body, and not
infrequently form a m ajority there. In New Orleans, for instance,
the board consists of the president and secretary of the board of fire
commissioners and the chief engineer of the departm ent, ex officio,
and 6 members of the uniformed force elected by their fellows; the
Minneapolis board of 8 includes 6 active members of the force elected
by their fellows, and in Milwaukee the board of 5 consists of the city
treasurer, 1 member appointed by the mayor, and 3 elected by the
firemen from their own number.
Character of Schemes and Sources of Funds
'T 'H R E E of the systems, those of D etroit, New York City, and San
A Francisco, are noncontributory, the cities bearing the whole
expense, but elsewhere the employees and the cities join in supporting
the plans. In regard to contributions from employees the con
tributory systems are evenly divided, five fixing the contribution at
a flat sum monthly, and five requiring a percentage of the salary.
In the first group the Cincinnati system calls for a contribution of
50 cents a m onth from each member, in Cleveland the paym ent
ranges from 50 cents to $1.25, according to the rank of the member,
in M inneapolis it is fixed at $1.50 a month, with an initiation fee of
$10, in St. Louis it is $2 per month with an initiation fee of $5, while
in Philadelphia members in active service contribute one day’s pay
and pensioners one-half of a day’s pay, based on their salary at the
time of retirement. In the second group the firemen of New Orleans
pay 1 per cent of their salaries for pension purposes, those of Chicago
and Pittsburgh 2.5 per cent, and thos3 of Buffalo 4 per cent. Under
the Chicago system a fireman who retires before reaching 50 m ust
contribute an amount equal to 2.5 per cent of his final salary yearly
until he reaches th at age. Milwaukee has a carefully worked out
system under which mambers pay 3 per cent of their salaries for their
own annuities, 1 per cent for widows’ annuities, one-half of 1 per cent
for ordinary disability benefits, and one-eighth of 1 per cent toward
adm inistrative expenses. In Minneapolis, New Orleans, and P itts
burgh, members are liable to assessments of from $1 to $2 upon the
death of a fellow member.
As in the case of the police retirem ent systems, it is common for
the cities to use for the benefit of the firemen’s fund a number of
miscellaneous receipts. New Orleans, for instance, turns over to
the fund all fines imposed upon the force and fines imposed upon
others for violations of the fire regulations, 1 per cent of all license
RETIREMENT SYSTEMS FOR FIREMEN
127
fees, paym ents for special details, rewards for special services, and
proceeds from the sale of surplus and condemned property of the
departm ent.
Another source of income is often the tax on business done in the
State by outside fire-insurance companies. It is not unusual for a
State to levy a tax on such business and to turn over to the cities
in which it is done all or part of the tax on the business done in that
city, often specifying that a certain percentage of it is to go to the
fire department’s pension fund.
The city also very generally makes a direct contribution of what
ever amount is needed to m aintain paym ent of pensions and benefits,
either appropriating it each year from the general revenues or levy
ing a tax especially for the purpose. Of the cities covered, Milwaukee
alone has a carefully worked out system of contributions designed
to cover each year the liabilities incurred th at year. For each man
on the pay roll it contributes annually 9 per cent of his salary for
his pension, 2.5 per cent for the widow’s allowance, and one-half of
1 per cent for ordinary disability benefits. In addition, it contrib
utes yearly one-eighth of 1 per cent of the aggregate pay roll toward
expenses of adm inistration and makes a deficiency contribution to
meet extra benefits and the prior-service liability. Its contribution
is raised by a tax levy of not to exceed five-tenths of a mill on the
dollar.
In several cities the fire departm ent still m aintains the custom of
having an annual carnival, getting up an annual handbook with
charges for advertising, or in some similar manner raising money
either for the retirem ent fund or for the benefit association which
is sometimes m aintained in close connection with the retirem ent
system.
Cost of Administration
TN M ILW A U K EE the city and the members of the force make
regular contributions to defray the cost of administration, but
elsewhere either such expenses are paid out of the general funds of
the system or there is a rather vague division of costs between the
system and the city, the former perhaps paying for clerk hire, post
age, printing, and the like, while the latter carries such expenses as
rent, heat, and light w ithout making any distinction between what
might justly be debited to the system and w hat is strictly charge
able to the departm ent. In a few cases the whole cost of the system
is carried as part of the departm ent’s expenses.
Conditions for Retirement
C E R VICE or superannuation retirement.—As a condition for retirement on allowance, age is rather an unimportant matter in the
firemen’s systems, only five cities imposing an age qualification, and
several of these modifying it by other circumstances. Philadelphia
puts the age for optional retirement at 45, with a service requirement
of 20 years. Chicago puts it at 50, but permits retirement earlier if
the claimant has served for 20 years; in such a case, however, con
tributions to the fund must be continued until the retirant reaches 50.
Minneapolis sets 50 as the normal age for optional retirement, but
permits it earlier if 20 years of service have been given; in that case,
^
128
CHAPTER 6.— RETIREMENT OF POLICE AND FIREMEN
however, the allowance does not begin until the retirant has reached
50. San Francisco makes retirem ent optional at 55 after 20 years of
service, but permits it at any age after 25 years’ service. Milwaukee
varies its age requirement according to length of service and to the
allowance to be paid. Retirem ent is optional at 57 if the retirant has
served 15 years, or as soon after 57 as 15 years of service have been
completed. I t is also perm itted at 50, after 20 years’ service, or,
with a reduced allowance, at 50 after 10 years’ service. The remain
ing eight cities have no age requirements.
I t is not customary to set an age for compulsory retirement, the
arrangements for disability retirement taking the place of such a pro
vision. The San Francisco system specifies th at a member may be
compulsorily retired at 60 or over, if infirm or incapable, but in the
other systems this is taken for granted.
A service requirement is universal. Milwaukee sets it at 15 years,
though, as mentioned above, it sometimes permits retirem ent after
10 years, reducing the allowance when this privilege is claimed
Eight cities (Buffalo, Chicago, Minneapolis, New Orleans, New York,
Philadelphia, Pittsburgh, and St. Louis) fix it at 20 years. San
Francisco requires either 20 or 25 years, according to age, and Cin
cinnati, Cleveland, and D etroit call for 25 years.
Disability retirement.—All these systems provide for retirem ent on
allowance in case of disability incurred in the performance of duty,
without imposing any conditions as to age or length of service. This
is the only form of disability retirement on allowance perm itted in
Detroit, Philadelphia,, St. Louis, and San Francisco, but the other
systems give pensions in case of ordinary disability, providing it is
not due to the m an’s own fault or misconduct. Cincinnati requires
th at such a retirant m ust have served not less than 5 years, and New
York makes a difference in the amount of pension granted if the
service is of less than 10 years’ duration, but with these exceptions
there are no age or service limitations. Medical certification of
disability, based upon examination, is generally required, and under
some systems periodic reexaminations must be taken so long as disa
bility pensions are paid.
Retirement Allowances
cities (Buffalo, Chicago, Cincinnati, Cleveland, Detroit, New
Orleans, New York, Philadelphia, and San Francisco) give as
the normal retirement allowance half or “ not less than half” the
salary drawn at the time of retirement, five of them modifying this
provision somewhat. Chicago places on it a minimum of $600 and a
maximum of $3,000 a year; Cincinnati puts a minimum of $75 and a
maximum of $100 a month; Cleveland has the same maximum, but
makes the minimum $87.66 a month; Detroit specifies that the allow
ance is to be half the salary attached to the rank held at the time of
retirement, and that if this salary is changed at any time the pension
is to undergo a corresponding change; and Philadelphia sets the
allowance at one-half of the average annual salary for the last four
years of service.
The four remaining cities use different plans. Under the Mil
waukee system the allowance consists of an annuity bought by the
RETIREMENT SYSTEMS FOR FIREMEN
129
retirant’s accumulated contributions, plus a pension bought by the
city’s accumulated contributions to his credit, the two together not to
exceed 75 per cent of the highest salary received during the period of
service. For those in the service before the present system was
adopted, the city provides a prior service allowance. Minneapolis
gives $600 a year to those retiring after 20 years’ service, and increases
this by progressive additions for each 5-year period in excess of the
required 20. Pittsburgh grades its allowances into six classes, ac
cording to the rank held by the retirant, the annual amounts running
from $600 to $900. St. Louis gives $600 a year.
Disability allowances.—Only two of these cities, Milwaukee and
Minneapolis, make any distinction between the service allowance
and the duty disability allowance. Cincinnati and New7 York,
while making no difference between these allowances, pay a smaller
allowance to those retiring on account of ordinary disability with
only a limited term of service. The nine remaining cities pay the
same allowance, whatever the cause of the retirement.
In cases of ordinary disability, Cincinnati pays no allowance unless
the retirant has served at least five years. For those meeting this
condition, the allowance is $3 per month for each year of service
up to 25, at which point it reaches the minimum for service and for
duty disability, and there it stops. In actual practice, since service
retirem ent is permissible after 25 years of service, the retirant would
probably claim that, rather than the disability allowance.
Under the Milwaukee system the allowance for duty disability is
55 per cent of the salary drawn at the time the disability was incurred,
with an additional allowance of $10 a month for each child under
18 years old, the total amount not to exceed 75 per cent of the highest
salary drawn during the period of service. For ordinary disability
the allowance is 50 per cent of the salary, from which 4 per cent is
deducted for annuity purposes; this allowance may not be paid
for over five years.
Minneapolis grades the allowance according to the degree of in
capacity. For those who are totally disabled the allowance is $900
a year; those who are permanently incapacitated for work as firemen
but are able to do light manual labor or office work receive $480,
and those who are disqualified for firemen’s service but able to do
ordinary manual labor receive $180 yearly.
In New York the allowance is the same for service retirement, for
duty disability, and for ordinary disability after 10 years of service;
for ordinary disability with less than 10 years of service, the allow
ance is not to exceed one-third of the final salary.
Dismissal allowances.—The Cincinnati and Cleveland systems pro
vide th at if a member is dismissed after a stated period of service,
unless it be for certain faults specified in the regulation, he is entitled
to a dismissal pension. In Cincinnati it is given for dismissal after
15 years of service and amounts to $2 a month for each year of service
rendered, up to 25. In Cleveland the service period is 12 years, and
the amount of the allowance is fixed at three-eighths of the salary
130
CHAPTER 6.— RETIREMENT OF POLICE AND FIREMEN
Refunds
two of the ten contributory systems, those of Milwaukee
and Pittsburgh, provide for a refund of contributions in case
of separation from the service before reaching pensionable status.
Milwaukee provides th at in case of withdrawal or dismissal the
accumulated contributions for annuity purposes shall be returned
with compound interest. In case of death, if the decedent leaves
dependents no refund is made, since the plan embodies provisions
for their care, but if there are none, a refund is made to the heirs
or the estate. If a fireman in service at age 57 is unmarried or a
widower he may receive a refund, with compound interest, of his
contributions for the widow’s annuity, but if he marries thereafter
his widow will not be entitled to any allowance. Under the P itts
burgh plan there is no refund in case of death, but if a m em ber
withdraws or is dismissed, his contributions are returned to him
without interest.
Provision for Dependents
V \/IT H O U T exception these systems make provision for widows
and dependent children of members, and quite frequently
it is provided th at if there are no dependents of these categories, a
pension will be paid to a dependent father or mother of the deceased.
Under the Milwaukee system the funds for the care of dependen s
are financed as carefully as those for the firemen themselves, tie
employees and the city together contributing for the widows’ allow
ances, and the city alone contributing for the children’s allowances.
Under this system in case of death from ordinary causes the widow’s
allowance is the annuity purchasable by the accumulated contributions
for this purpose. If death occurs in the line of duty the widow
receives an extra allowance sufficient to brin^ the annuity up to
what it would have been had her husband lived and continued his
contributions up to the age of 57, or to such time thereafter as he
would have completed 15 years of service. For each child under 18
there is an allowance of $10 a month, or $15 if the mother is not
living. In the case of a duty death, the combined allowances of
mother and children may reach a maximum of 75 per cent of the
decedent’s highest salary, but in case of a death from ordinary causes
they may not exceed 50 per cent of the final salary. The ordinary
widow’s allowance is continued throughout her life, but the extra
allowance given in case of a duty death is discontinued if she remarries.
The plans of the other cities present certain variations. Pittsburgh
has no pensions for dependents, but pays a death benefit of $1,100.
D etroit and New Orleans do not pension dependents unless the
death was due to injuries received in the service, but New Orleans
in any case pays a death benefit of $1,000. The other systems all
provide pensions for the widow, whether or not the death was due
to the performance of duty, but in several cities the pension is larger
in case of a duty death. They also either give a monthly allowance
for the benefit of each child under a stated age, or provide th a t the
pension shall go to the children if there is no mother living, or be con
tinued to them if the mother dies before they have reached the age limit.
In all these systems the widow’s pension is limited to the duration of
her widowhood.
RETIREMENT SYSTEMS FOR POLICE AND FIREMEN
131
R E TIR EM EN T SYSTEMS FOR POLICE AND FIR E DEPART
MENTS, COMBINED
T N EACH case these systems were formed by combining existing
* systems covering the separate departm ents, and none of the plans
has been in operation long in its present form. The oldest is the
W ashington system, established in 1916. Newark combined its two
systems in 1920 and Los Angeles in 1923. In Los Angeles, however,
the system was radically changed in 1926, the new plan commencing
to operate in January, 1927. The Los Angeles scheme covers only
the uniformed forces of the two departm ents, including the police
women, the Newark plan takes in also the clerical and adm inistrative
officers, and in Washington the system, in its present form, includes
the uniformed members of the fire departm ent, the m etropolitan police
force, the street railway crossing officers, the W hite House police, and
the United States park police.
Administration
Los Angeles system is managed by a citizens’ board of 5,
appointed by the mayor, and the "Newark system by a board of
5 consisting of the m ayor and the chief financial adviser of the city,
ex officio, 1 policeman and 1 fireman, each elected by his fellows, and
1 nonoffice-holding citizen, elected by the 4 other members. In
W ashington the system is managed by a board of three, consisting of
the corporation counsel of the D istrict, and one member each from the
police and the fire departm ent, designated by the D istrict commis
sioners, who are authorized to chang3 the personnel of the board from
time to time, and are further empowered to make, modify, and amend
the regulations and rules of procedure for the board.
Source of Funds
\ LL three systems are contributory. In Los Angeles the members,
^
since January 1, 1927, have contributed 4 per cent of the salary,
in Newark they contribute 2 per cent of the salary, except those who
were 35 years of age or over on entering the service, for whom the
contribution is 4 per cent, and in W ashington the contribution is 2 ^
per cent of salary, raised in 1924 from 1 per cent.
In Los Angeles the city makes an annual contribution of several
different sums. It appropriates first a percentage of the pay rolls of
the two departm ents sufficient to cover the liability incurred for th a t
year’s services; second, a deficiency contribution of $635,000, which
is to be continued for 36 years to liquidate the accrued liability; and,
third, it pays into the fund all fines and deductions from the salaries
of members of the two forces, all proceeds from the sale of unclaimed
property, interest, and rewards and donations. The amount of the
two appropriations is raised by taxation. In Newark the city con
tributes annually a sum equal to 4 per cent of the combined pay rolls
of the two departm ents, and also turns into the fund all fines imposed
on members, all deductions from their salaries for absences or lost
time, and half of all rewards. If at any time the pension fund should
prove inadequate to the demands upon it, the city is to include in any
tax levy a sum sufficient to meet its requirements for the time being.
Under the Washington system no specific contribution is required
132
CHAPTER 6.— RETIREMENT OF POLICE AND FIREMEN
from the D istrict, but if at any time the fund is insufficient to meet
the expenditures authorized, the D istrict commissioners are to direct
th a t such amounts, appropriated from the general revenues of the
D istrict, are to be paid into it as may be necessary. Also, the fund
is to receive all fines imposed for disciplinary purposes upon the mem
bers of the two forces, all rewards, donations, and the net proceeds
of the sale of unclaimed property in custody of the clerk of the police
force.
Cost of Administration
TN LOS ANGELES the city meets the cost of adm inistration, in
* Newark it is paid from the'fund, and in W ashington it is carried
as p art of the general expenses of the departments.
Conditions for Retirement
SE R V IC E or superannuation retirement.—Los Angeles has no age
^ qualification for retirem ent, Newark permits it at 50 and requires
it at 65, and W ashington sets 60 as the age at which it m ay be per
m itted. Los Angeles requires 35 years of service as a qualification
for the full retirem ent allowance, but permits retirem ent with a
smaller allowance after 25 years of service. For those in service
before the adoption of the present system, 30 and 20 years of service
are required. Newark sets 20 years of service as a minimum, while
W ashington has no service requirement.
Disability retirement.—All three systems permit retirem ent on
allowance for duty disabilit}^ without regard to age or length of
service. Medical certification, based on examination, is requisite,
and reexamination may be required from time to time. The Los
Angeles and the Newark systems make no provision for ordinary disa
bility, but the W ashington plan permits retirem ent on allowance in
case of perm anent disability arising from ordinary causes if the
member has reached age 55 and has given 25 years of service.
Retirement Allowances
f OS AN GELES gives those who retire after 35 years of service a
^
pension of two-thirds of the average salary received for the
last three years before retirement. If the service was for 25 years or
longer, but under 35, the pension is one-half of the average salary
for the last three years, with an addition of 1% per cent of such
salary for each year over 25. For those who were in the service
before the present plan was adopted, these allowances are paid for
service of 30 and 20 years, respectively. The maximum pension
for those entering the service after this plan was adopted is $1,800;
there is no minimum, except as determined by the amount of the
salary. For disability retirem ent, the board may fix the pension
in its discretion according to the degree of disability, except th a t it
may not be less than 10 nor more than 90 per cent of the salary
received at the time of retirement.
In Newark the allowance for service and for duty disability retire
m ent is the same—one-half of the salary received at the time of
retirement. In 1926 the lowest salary paid was raised to $2,500, so
BALTIMORE
133
th at thereafter the minimum pension would be $1,250 a year; no
maximum is set.
In W ashington the allowance, whether for service or disability
retirement, is one-half the salary attached to the retira n t’s rank; if
the salary is increased thereafter, the pension is to be increased
proportionately,
Refunds
JVTO R E FU N D of contributions is provided for in any of these
systems.
Provision for Dependents
TTN DER the Los Angeles system the widow of a pensioner, or of
^
an active member eligible for retirem ent, or of a member dying
from injuries or illness due to the discharge of duty, receives during
widowhood a pension equal to one-half the decedent’s average annual
salary for the last three years of service, with an additional allowance
for children under 18 until they m arry or reach th at age. Except
in the case of a duty death, the widow m ust have been married to
the decedent for at least a year before his death in order to receive
the pension; if the decedent is a pensioner, she m ust have been married
to him for at least a year before he left the service. If there is no
widow, the pension will be paid to a child or children under 18, or
to dependent parents.
In Newark, the widow of a retired or active member, provided
she was married to the decedent before he reached the age of 50,
receives a pension of $1,000 a year during widowhood. If there is
no widow, a pension of $25 per m onth m ay be paid to children under
16, or to dependent parents.
In Washington the widow of a pensioner or member in active service
is given a pension during widowhood of $60 a month, with an allow
ance of $10 a m onth for each child under 16.
POLICE RETIREMENT SYSTEMS
BALTIMORE
'TTYPE of system—The police pension plan of Baltimore, M d., is a
*
contributory system.
Contributions.—The city contributes fines and costs imposed by
station-house magistrates, disciplinary fines imposed upon the police,
fees for permits for public entertainm ents and dancing schools, fees
for licenses for private detectives and for physicians’ “ Blue Cross”
permits, percentage of receipts from telephone pay stations, interest
on deposits, deductions from rewards and donations to officers,
unclaimed money, proceeds from sale of unclaimed property and of
unfit, condemned, or unserviceable property, and interest on deposits
and stock belonging to the fund. For the year ending December
31, 1926, the total receipts from these sources were $138,566.
If the fund at any time proves insufficient to meet authorized pen
sion claims, the city is to appropriate for its benefit whatever amount
may be needed. Under an act of 1924, the city is no longer obliged
134
CHAPTER 6.— RETIREMENT SYSTEMS FOR POLICE
to pay into the fund the miscellaneous amounts listed above, but
may instead make a direct appropriation of whatever amount is
needed. Up to the close of 1926, however, it had not taken advan
tage of this authorization, but had continued along the original lines.
The employees contribute 2 per cent of their salaries. For the
year ending December 31, 1926, their contributions amounted to
$64,690.
Retirement allowances.—The retirement allowance is one-half the
salary received at the time of retirement, with no minimum or maxi
mum except as determined by the amount of the salary. If a con
tributor’s or pensioner’s death is due to injuries received in the actual
performance of duty, his widow or his minor children may be granted
a pension, the m atter being left to the discretion of the police com
missioner.
Number oj employees covered.—As of December 31, 1926, the em
ployees covered by the plan numbered 1,864.
Conditions jor retirement.—Retirem ent on pension is perm itted only
for incapacity to perform the duties of the position, whether th at
incapacity is due to age or other causes. If the incapacity results
from injuries received in the performance of duty, retirem ent on
pension is perm itted regardless of length of service, but if it is due
to other causes, retirem ent on pension is perm itted only after 16
years’ service. If a man is retired for ordinary incapacity before he
has served 16 years, the commissioner, if he thinks best, may grant
him a lump-sum benefit, not to exceed the amount of one year’s
salary.
Administration.—The management of the system is in the hands
of the police commissioner.
Average age oj retirants.—No data are available as to average age
at retirement. For those retiring in 1926, the average length of
service was 23 years.
Statistics.—For the year ending December 31, 1926, the total
receipts of the system were $203,256, and the total amount spent for
benefits was $233,167, of which $8,727 was for allowance to widows
of members killed in service.
BUFFALO
rT1YPE oj system.—The police pension fund of the city of Buffalo,
*
N. Y., is a contributory system.
Contributions.—The city contributes money from various sources,
such as fines, donations, gifts, lost time, moneys realized from the
sale of condemned and unclaimed property, dog-license fees, and
interest. For the year ending December 31, 1926, the total income
from such sources amounted to $52,028. I t also makes a direct
appropriation, when needed, of an amount sufficient to m aintain the
pensions for the current year. No direct appropriation was necessary
for the year 1925-26, but for the year 1924-25 an appropriation of
$76,158 was made.
Employees contribute 4 per cent of their salaries, which amounted
to $88,141 for the year ending December 31, 1926.
Retirement allowances.—For service retirem ent and for retirem ent
on account of duty disability the allowance is not less than one-half
the salary or compensation at the time of retirement.
CHICAGO
135
For ordinary disability retirement, the amount of the allowance
may be fixed by the council, but can not exceed one-half the salary
or compensation received at the time of retirement.
On the death of a member in active service, or one retired for super
annuation or duty disability, his widow, until she remarries, is entitled
to a pension of not less than $25 per month, and for each child under
the age of 18 years, of $10 per month. If the widow dies, the pension
she was receiving is paid to such children. The combined amount
paid to a widow and children is not to exceed one-half the salary
received by the member.
If there be no widow nor minor children of such member, then
a dependent parent is entitled to receive an allowance of $25 per
month during the period necessary for support.
If the death of a member occurs on account of ordinary disability,
the council may grant to his widow, until she remarries, a pension
not to exceed $25 per month.
The widow of a member who is killed in the discharge of his duties,
or who dies within one year after being injured while in the line of
duty, receives for one year a pension equal to his salary, and there
after, until she remarries, $50 per month.
Number of employees covered.—The approximate number of em
ployees under this system December 31, 1926, was 1,144.
Conditions for retirement.—There is no age requirement for retire
ment. For service retirement, 20 years’ service is required. Dis
ability retirement, both ordinary and duty, is perm itted regardless
of length of service.
Administration.—The system is managed by a board of five mem
bers, consisting of the mayor and four councilmen.
Average age of retirants.—For the 19 retirants placed on the roll
during the 18 months ending December 31, 1926, the average age
was 57 years, and the average years of service, 29.
Statistics.—The total income of this fund from July 1, 1918, to
December 31, 1926, amounted to $1,451,149, and the disbursements
for the same period to $1,215,174.
CHICAGO
of system.—The police annuity and benefit fund of Chicago
is a contributory system.
Contributions.—The city contributes annually for each member of
the system an amount equal to 8.5 per cent of his salary to provide
for his retirement allowance and ordinary disability benefit, and 2
per cent to provide for his widow’s pension; in addition, it bears the
whole cost of the extra benefits, i. e., duty disability benefits, compen
sation annuity, and child’s annuity. The city also makes up w hat
ever part of the cost of administration is not covered by the employees’
contribution for th at purpose. To pay these amounts the city is
authorized to levy a special tax not to exceed 1.6 mills on the dollar.
For the year ending December 31, 1926, its contribution to the fund
amounted to $2,911,841.
The employees contribute annually 4.75 per cent of their salary up
to $2,600 a year, all salary over th at amount being exempt. This
contribution is allotted as follows: Employee’s own retirem ent annu
ity, 3.5 per cent of salary; widow’s annuity, 1 per cent; ordinary
136
CHAPTER 0.— RETIREMENT SYSTEMS FOR POLICE
disability benefit, one-eighth of 1 per cent; cost of administration,
one-eighth of 1 per cent. For the year ending December 31, 1926,
the employees' contributions amounted to $599,958.
N o t e .— A present employee, i.e., one in the service when the plan was adopted,
ceases at age 57 to pay the portion of his contribution to cover a widow’s annuity
and the ordinary disability benefit, thereafter contributing only for his own
annuity and the cost of administration. A member who entered after the
system was adopted ceases altogether to pay into the fund on reaching the age
of 57 and the city likewise ceases its contribution to his credit. His annuity is
fixed at that age and can not be increased no matter how long he remains in the
service. A policeman who is not married on reaching the age of 57 is entitled
to a refund, with interest, of the amount of his contributions for the widow’s
annuity; if he retires before reaching 57, he is entitled to the same refund.
Retirement allowa7ices.—For superannuation retirement, the allow
ance consists of an annuity bought by the retiran t’s accumulated
contributions, plus a pension bought by the city's accumulated con
tributions to his credit, the total not to exceed $1,950 per annum.
An employee who was in the service before this system was adopted
is entitled, after he has reached 50 years of age and given 20 years'
service, to an allowance of one-half his salary at the time of retire
ment, without regard to the amount of his contributions.
For ordinary disability retirement, the allowance consists of onehalf his salary at the time of retirement, from which the usual deduc
tions for pension purposes are made; this allowance may not be
continued for more than five years, its continuance within this limit
being determined by the retirant’s length of service.
For duty disability, the allowance is three-fourths of the salary
received at the time of the injur}^, with an extra benefit of $10 a
month for each of the retiran t’s children under 18 years of age, the
whole amount received not to exceed the full salary at the time of
the injury. If the retirant lives to reach the age of 57, the duty
disability benefit is discontinued and he is given the superannuation
allowance he would have received had he continued in service to
th at age.
In case of death from ordinary causes, the widow’s annuity con
sists of an annuity purchased by the combined contributions to her
husband’s credit for these purposes, with a maximum of 60 per cent
of the salary he was receiving at the time of his death. For a widow
whose husband was in the service when this system was adopted,
the minimum annuity is $30 for each year of her husband’s service
up to 20.
The compensation annuity which is paid to the widow of a man
who died from injuries received in the performance of duty consists
of three-fourths of the salary the man was receiving at the time he
was injured, which is continued until her husband, had he lived,
would have reached the age of 57, when it is discontinued, and she
receives thereafter the annuity to which she would have been entitled
had the man continued in the service and died at th at age.
Child’s annuity: An allowance of $10 a month is paid for the
benefit of each child under 18 of a deceased policeman, continued
until the child reaches 18. If the mother also is dead, the allowance
is $25 instead of $10 a month. The compensation annuity and chil
dren’s allowances combined must not exceed salary of deceased.
Number of employees covered.—The num ber of employees under the
system as of December 31, 1926, was 6,080.
CINCINNATI
137
Conditions jor retirement.—Retirem ent is optional at or after the
age of 57. There is no compulsory age. For those entering the
service after this system was established, there is no service require
ment, but the amount of the allowance depends in part on the length
of service. Those in the service before this system was adopted
may retire at 50 years of age. after they have completed 20 years’
service.
There are no age or service requirements for either ordinary or
duty disability retirement.
Administration.—The system is administered by a board of seven
members—the city treasurer, three appointed by the mayor, one
pensioner, and two policemen elected by their fellows.
Statistics.—For the year ending 1926, the lpst for which these
figures could be secured, the total receipts of the system from all
sources amounted to $3,758,447. The total amount paid in benefits
for the same year was $2,056,160, of which $1,187,277 was paid to
beneficiaries of the system prevailing before the present plan went
into effect.
CINCINNATI
'T'YPE oj system.—The police relief and pension fund of the city of
*
Cincinnati, Ohio, is a contributory system.
Contributions.—The city turns over to this fund rewards paid to
members of the departm ent, donations, proceeds from sale of un
claimed property, and interest, and also makes a direct appropriation
of whatever amount is needed, being authorized to levy, for this
purpose, a tax not to exceed three-tenths of a mill on each dollar on
all real and personal property. The city’s direct appropriation for
the year ending December 31, 1926, amounted to $200,387, ana the
amount turned over from miscellaneous sources was $19,212.
Employee members pa}7 dues of $1 per month. For the year end
ing December 31, 1926, their contributions amounted to $6,744.
Retirement allowances.—For service retirement the allowance is
one-half the salary at the time of retiring, with a minimum of $75
and a maximum of $100 per month.
If a member is discharged, except through fault of his own, after
15 consecutive years’ service, he is entitled to a pension of $2 per
month for each consecutive year of service, not to exceed $50 per
month.
For ordinary disability, after five consecutive years’ service the
pension is $3 per m onth for each consecutive year of service, not to
exceed $75 per month.
For disability incurred while in the performance of duty the allow
ance is the same as for service retirement.
If a member is killed or dies from the effects of an injury received
while in active service, and his death occurs within eight months
from the date of the accident, his widow, until she remarries, is en
titled to a pension equal to one-half of the pay of deceased member,
not to exceed $100 nor less than $75 per month.
Should any member die after having passed the period of proba
tion or after retirement, his widow, until she remarries, receives $50
per month, provided the marriage took place before the member’s
3306°— 29------ 10
138
CHAPTER 6.— RETIREMENT SYSTEMS FOR POLICE
retirement, and each child, until reaching the age of 16 years, receives
SI5 per month. If there be no widow, a pension may be paid to a
dependent parent or parents.
Number of employees covered.—The num ber of employees under the
system as of December 31, 1926, was 525.
Conditions for retirement.—There is no age requirement, but 25
consecutive years’ service is required for service retirem ent and
5 consecutive years’ service for ordinary disability retirement. D uty
disability retirem ent is perm itted regardless of length of service,
Administration.—The system is managed by a board of seven mem
bers—the director of personnel, ex officio, and six members elected
by the force.
Average age of retirants.—D ata as to the average age of disability
retirants were not available, but for service retirants the ages at time
of retiri] g anged from 60 to 65 years.
Statistics.—For 24 years ending December 31, 1926, the total re
ceipts of this fund from all sources amounted to approximately
$2,469,633, and the total disbursements for the same period to
$2,426,200.
CLEVELAND
rT'YPE of system.—The police relief fund of the city of Cleveland,
*
Ohio, is a contributory system.
Contributions.—The city turns over to this fund donations, rewards,
fees, proceeds of gifts and emoluments for extraordinary services,
moneys realized from the sale of unclaimed property, and interest,
and also makes a direct appropriation of whatever amount is needed,
being authorized to levy for this purpose a tax not to exceed threetenths of a mill on each dollar of all real and personal property.
The city’s appropriation for the year ending December 31, 1926,
amounted to $202,055, and the amount turned over from miscellaneous
sources was $11,169.
Employees are classified into 10 groups, according to rank, and
contribute m onthly dues ranging from 50 cents for patrolmen to
$1.25 for the chief. Their contributions for the year ending December
31, 1926, amounted to $8,771.
Retirement allowances.—For service retirement the allowances range
from $87.66 to $125 per m onth, according to rank classification.
For ordinary disability retirement, after 15 consecutive years’
service, and for duty disability retirement without regard to length
of service, the allowance is the same as for service retirement.
If a member is discharged, except through fault of his own, after
15 continuous years’ service, he is entitled to one-half of the allowance
for service retirement, and in case of the death of such member the
allowance is paid to the widow until she remarries, or to minor children
under the age of 16 years.
If a member is killed, or dies from injury received while in the per
formance of duty, or from any disease contracted while a member of
the police departm ent, or from any cause, after 15 consecutive years’
service, or while retired, his widow, while unmarried, is entitled to a
pension of $35 a m onth, and each child, until reaching the age of
16 years, to $10 per month.
Number of employees covered.—The approximate number of em
ployees under this system December 31, 1926, was 1,421.
DETROIT
139
Conditions for retirement.—There is no age requirement, but 25 con
secutive years’ service is required for service retirement. For duty
disability retirem ent is perm itted regardless of length of service.
For ordinary disability retirem ent 15 years’ service is required.
Administration.—The system is administered by the board of police
commissioners and five members of the force, elected by their fellows.
Statistics.—For the period of 15 years ending December 31, 1926,
the total income of this fund from all sources amounted to approxi
m ately $2,309,050, and the total disbursements for the same period
were $2,304,486.
DETROIT
'Type oj system.—The police pension and retirement fund of Detroit,
*
Mich., is a contributory system.
Contributions.—The city contributes annually, by tax levy, such
money as is required to make the pension payments over and above
the money received for licensing dogs, sale of dogs, release fees on
dogs, sale of unclaimed property, gambling money confiscated, special
officer’s fees, storage of abandoned or stolen cars, and donations to
the pension fund. For the year ending June 30, 1926, the city’s con
tribution to the fund from tax levy amounted to $152,756.
The employees contribute 1 per cent of their yearly salary and the
retired members contribute 1 per cent of their pension. For the year
ending June 30, 1926, the employees’ contributions amounted to
$62,252.
Retirement allowances.—The retirem ent allowance for superannua
tion and disability alike is one-half the salary in the rank in which
retirant was serving at the time of his retirement. The minimum
and maximum are fixed by the salary. There is also a provision which
states th a t in the event of a change in the salary of the policemen of
the city of D etroit, the pensions granted shall be made to conform to
the new salary.
If a member dies from the effect of injury received while in the
service, his widow is paid a pension of $100 per month until remarriage,
and each child under 16 years of age receives $20 per m onth. If there
is no widow or if the widow dies or remarries, each child receives $40
per month. If there is neither a widow nor children, a dependent
mother, or if no mother a dependent sister, is granted $100 per m onth
until marriage or remarriage.
Number oj employees covered.—The num ber of employees under the
system in 1926 was 2,762.
Conditions jo r retirement.—Retirement is optional after 25 years’
service regardless of age. Disability retirement is granted without
any limitation as to age or years of service, but the police surgeon
must certify that the member is permanently incapacitated, physi
cally or mentally, and reexamination may be required at any time.
Administration.—The system is managed by a committee of five
members—mayor, police commissioner, president of the common
council, city clerk, and city comptroller.
Statistics.—The system was established in 1923. The total receipts
and disbursements from July 1, 1923, to June 30, 1926, were the
same—$908,857. The contributions of the city vary according to
the amount needed each year to cover the pen&ions.
140
CHAPTER 6.----RETIREMENT SYSTEMS FOR POLICE
MILWAUKEE
'T ’Y P E oj system.—The policemen’s annuity and benefit fund of
*
Milwaukee is a contributory system.
Contributions.—The city contributes annually for each member of
the system an amount equal to 9 per cent of his salary for his retire
ment allowance, 2.5 per cent for his widow’s pension, and one-half
of 1 per cent for ordinary disability. It also gives one-eighth of 1
per cent of the aggregate annual salaries for administrative costs,
makes a deficiency contribution to cover the allowances for prior
service, and pays the whole cost of the duty disability benefits,
child’s annuity, and extra provision for dependents in case of duty
deaths. The tax levy for the fund m ust not exceed five-tenths of a
mill on the dollar. For the year ending December 31, 1926, the
city’s contribution amounted to $300,000.
The employees contribute annually 3 per cent of their salaries for
their own annuity, 1 per cent for widow’s annuity, one-half of 1
per cent for ordinary disability, and one-eighth of 1 per cent for
adm inistrative costs. This last amount may be varied as circum
stances demand. For the year ending December 31, 1926, the em
ployees’ contributions amounted to $88,931.
Retirement allowances.—The superannuation allowance is made up of
the annuity purchasable by the retirant’s accumulated contributions
plus a pension purchased by the city’s accumulated contributions to
his credit. For those in the service when the system was adopted
there is an additional allowance covering this prior service. The
maximum allowance is 75 per cent of the highest salary received
during £he retiran t’s service.
For ordinary disability, the allowance is one-half the salary at
the time of retirement, minus a 4 per cent deduction for annuity
purposes. I t may be paid for a period up to one-fourth of the
retiran t’s service, but not to exceed five years.
The duty-disability allowance is 55 per cent of the salary at the
time of injury, with $10 a m onth extra for each child under 18, the
whole not to exceed 75 per cent of salary.
If a disability retirant lives to the age of 57, the ordinary or duty
disability benefits are discontinued, and the retirant receives the
superannuation allowance he would have received had he served to
th a t age.
The widow’s allowance is made up of the annuity and pension
purchasable by the accumulated contributions to her husband’s
credit for th at purpose. If the decedent was in the service before
1922, the widow receives also a prior-service annuity. If death was
due to injuries received in the discharge of duty, the widow receives
an extra allowance, known as a compensation and supplemental
annuity, which ceases in case of remarriage, while the ordinary
widow’s allowance is not affected by th at fact.
Child annuity is paid to each child under 18 years of age to the
amount of $10 a m onth ($15 if the mother is not living). If tha
father’s death was due to injuries received in the service, the com
bined allowances of the widow and children may amount to 75 per
cent of his final salary, but if death was due to normal causes, they may
not exceed 50 per cent of his salary.
MINNEAPOLIS
141
Number oj employees covered.—The number of employees under
this system in 1926 was 938.
Conditions for retirement.—Retirement on full allowance is perm itted
at age 57, if the employee has completed 15 years’ service, or as soon
thereafter as he has completed it; it is also permitted from age 50
onward after 20 years’ service. Retirem ent on partial allowance is
perm itted from age 50 onward after 10 years’ service.
There are no age or service requirements for either duty or ordinary
disability retirement.
Administration.—The system is managed by a board of five mem
bers—the city treasurer, an appointee of the mayor, and three mem
bers of the police force elected by their fellows.
Average age oj retirants.—The average age at retirement is 51.45
years, and the average length of service is 25 years.
Statistics.—The total receipts for the year ending December 31,
1926, were $456,656, and the total disbursements $179,208. The
total receipts from the beginning of the old plan in 1899 to December
31, 1926, were $2,785,313, and the total disbursements for the same
period $1,216,387.
N o te .—A future entrant ceases to pay into the fund altogether
at age 57, or so soon thereafter as he has completed 15 years’ service
if he had not done so at th at age, and the city likewise ceases its con
tributions to his credit. His annuity is “ fixed” at that age and can
not be increased by further service no m atter how long he remains on
the force. A present employee ceases to pay contributions when the
amount standing to his credit is equal to what it would have been at
age 57 had he been contributing from the beginning of his service.
A policeman who is unmarried on reaching age 57 is entitled when
he retires to a refund, with interest, of the amount contributed for the
widow’s annuity.
MINNEAPOLIS
'T Y P E of system.—The Minneapolis Police Relief Association is a
1
contributory system.
Contributions.—The city contributes annually an amount equal to
two-tenths of 1 mill, and not to exceed two-fifths of 1 mill, upon each
dollar of all taxable property. Rewards received by police officers for
services in making arrests, all unclaimed moneys or property in the
hands of the police, if unclaimed for six months, and all gifts are also
contributed. For the year ending December 31, 1926, the city’s
contribution to the fund amounted to $107,703.
The employees contribute 1 per cent of their m onthly salary and
dues of 50 cents per quarter after six m onths’ probationary service.
For the year ending December 31, 1926, the employees’ contribution
amounted to $11,761.
Retirement allowances.—The retirem ent allowance for superannua
tion is one-half of the compensation allowed the member at the time
of his retirement. If a member retires before he has served one year
in the grade in which he is serving when he retires, he receives compen
sation as though he retired in the next lowrer grade. The maximum
allowance is $900 a year, and as the lowest salary paid is $1,800, the
minimum allowance is also $900.
142
CHAPTER 6.— RETIREMENT SYSTEMS FOR POLICE
The allowance for duty-dis ability retirem ent is the same as for
service retirement.
The widow of a member who dies in the service or of a pensioner
receives a pension of $40 per month, and children under 16 years
of age receive $10 per month. However, the pension to the widow
and children together m ust not exceed $75 per m onth and the widow’s
pension ceases upon remarriage.
Number of employees covered.—The num ber of employees under the
system as of the year ending December 31, 1926, was 499.
Conditions for retirement.—Retirem ent is optional from age 50
onward after 20 years’ service. There are no age or service require
ments for disability retirement, but retirement on allowance is
perm itted only if disability, either physical or mental, results from
an injury received in the performance of his duty.
Administration.—The system is administered by a board of eight
members—the mayor, the city treasurer, the chief of police, and
five members of the force elected by their fellows.
Average age of retirants.—No data are available on the age at re
tirement, but it is estimated th at the average age of those retired
was about 60 years at the time of retirement.
Statistics.—The total receipts for 1926 were $119,937 and total dis
bursements, $96,814. The total receipts from the inauguration of the
plan January 1, 1924, up to December 31, 1926, were $256,764 and
the total disbursements for the same period, $230,280.
N o te .—The city did not appropriate sufficient money to carry out
the full provisions of the law for the first two years after this system
became effective, and because of the resultant shortage of money the
service pensions were prorated for the years 1924 and 1925, and the
disability pensions for the years 1924 to 1926, inclusive, to $780
per year.
NEW ORLEANS
T Y P E of system.—The police pension system of New Orleans is a
*
contributory system.
Contributions.—The city pays into the fund annually 2 per cent of
the amount appropriated for the maintenance of the police depart
ment, and in addition turns over to it money from various miscella
neous sources, such as fees, rewards, etc., paid to the police for special
service, except when permission is given to the officers concerned to
retain these; money remaining unclaimed for one year with the prop
erty clerk of the criminal district courts; money from the sale of
unclaimed goods or property or from the sale of outworn or unneeded
equipment of the departm ent; all unexpended balances to the credit
of the departm ent at the close of each year’s business, and all pro
ceeds of suits for penalties. For 1926 the amount received from all
sources other than the contributions of employees was $69,462.
Employees contribute 2 per cent of their salaries. For 1926 their
contributions amounted to $25,195.
Retirement allowances.—The retirem ent allowance m ay not exceed
one-half of the salary received at the time of retirement. In practice,
it is always fixed at one-half with no maximum or minimum except as
determined by the amount of the salary. The allowance is the same
for service and for disability retirement.
NEW YORK CITY
143
A pension of $150 a year is granted to dependents of officers killed
in service or dying after 20 years’ service.
Number of employees covered.—Num ber of employees covered was 877
Conditions for retirement.—There is no age qualification for retirement. Service retirement is perm itted after 20 years' continuous
service. Disability retirement is perm itted, regardless of length of
service, for perm anent disability resulting from injuries received in
the performance of duty.
Administration.—The system is managed by the secretary of the
board of police commissioners and the commissioner of public finance.
Average age of retirants.—No definite information as to age at
retirement is obtainable, but officials state th at in general the men
retire “ around 58.”
Statistics.—For 1926 the total receipts of the system were $94,657
and the total expenditures were $61,086.
NEW YORK CITY
rT Y P E of system.—The police pension plan of the City of New York
*
is a contributory system.
Contributions.—The city pays into the fund a number of mis
cellaneous sums, such as the proceeds from the sale of lost, stolen,
or abandoned property left beyond a prescribed period with the prop
erty clerk, the fees received for pistol, masked ball, and boiler permits,
and any unexpended balances of appropriations for the salaries of the
force. I t also assigns to the fund all disciplinary fines imposed upon
the police, deductions from their salary for absences from duty for
which full pay is not allowed, a percentage of rewards, and so on.
In addition it appropriates each year for the benefit of the system
whatever amount is needed to make up the pension paym ents for
the year, this amount being included in the annual budget to be raised
by tax levy. For the year ending December 31, 1926, the city's
direct appropriation for the fund was $2,700,000 and the amount
turned over from miscellaneous sources, including interest on deposits,
was $636,753.
The employees contribute 2 per cent of their salaries. For the
year ending December 31, 1926, their contributions am ounted to
$681,956.
Retirement allowances.—The superannuation allowance is one-half
the salary received at the time of retirement, with no minimum or
maximum except as determined by the amount of the salary. For
duty disability the allowance is not less than one-fourth nor more
than one-half of the salary at the time the injury is received. For
ordinary disability, the allowance varies with the length of service,
ranging from not less than one-quarter nor more than one-half of the
salary at the time of retirement, in case of disability after 10 but
under 20 years* service, to one-half the salary after 20 years' service.
If a member dies from natural causes, his widow and minor children
are entitled to a pension of $300 a year, the widow until remarriage
and the children until reaching 18 years of age. If death is incurred
in the performance of duty, the widow, minor children, or dependent
parents are entitled to a pension of not less than $600 nor more than
one-half of the deceased member's salary, and in addition a cash
paym ent equal to the decedent's salary for one year.
144
CHAPTER 6.— RETIREMENT SYSTEMS FOR POLICE
Number of employees covered.—As of December 31, 1926, the num
ber of employees covered by the plan was 15,950.
Conditions for retirement.—Superannuation depends on service
rather than on age, retirem ent being expected after 25 years’ service,
unless an extension is secured. Retirem ent is optional at 55 after
20 years’ service, and at 60 regardless of length of service. For
ordinary disability retirem ent a minimum of 10 years’ service is
required. D uty disability retirem ent is permitted at any time,
regardless of length of service.
Administration.—The system is managed by the police com
missioner.
Average age oj retirants.—For the year ending December 31, 1926,
the average age of the superannuation or service retirants was 54.87
years, and of disability retirants 47 years.
Statistics.—The police pension plan of New York dates back to
1857, when legislation was passed authorizing the establishment of
a fund for the benefit of officers injured in the discharge of duty, or
for their dependents in case they died of their injuries. The plan
has undergone m any changes, and full data are not obtainable as to
total receipts and expenditures. From January 1, 1916, to Decem
ber 31, 1926, however, the total amount paid in pensions was $36,725,291; for the year ending December 31, 1926, the total amount was
$4,303,157. Pensions to dependents are included in both these
totals.
For the year ending December 31, 1926, there wrere 6,061 pensioners,
of whom 3,568 were retired members of the force and 2,493 were
dependents of deceased members.
PHILADELPHIA
T P F P E of system.—The police pension plan of Philadelphia is a
*
contributory system.
Contributions.—The city undertakes to contribute annually w hat
ever amount may be necessary to maintain the system, making a
direct appropriation for this purpose. I t also turns over to the fund
what is known as “ detail money,” i. e., payments for the service of
police detailed to special duty, such as guarding buildings under the
course of construction and the like. For the year ending December
31, 1926, the c ity ’s direct contribution to the fund was $100,000.
The employees contribute one d a y ’s pay each m onth, but salary
in excess of $3,000 a year is omitted when calculating their contri
bution. For the year ending December 31, 1926, the employees’
contributions amounted to $304,475.
Retirement allowances.—For service retirement the allowance is
one-half the average salary received during the last 10 years’ service,
with a maximum of $1,500 per annum. For ordinary disability
retirem ent the allowance is one-fortieth of the average salary for
the last 10 years, multiplied by the number of years of service. F or
disability due to injury received in the line of duty, the allowance
is the same as for service retirem ent.
If an officer is killed in the performance of duty, a pension is payable
to his widow, children under 14, or dependent parents. The widow’s
PITTSBURGH
145
pension is $20 a month during widowhood, with an allowance of $6
a month for each child under 14. For dependent parents the pension
is $12 a month.
Number oj employees covered.—For the year ending December
31, 1926, the number of employees covered was 5,600.
Conditions for retirement.—Retirem ent on pension is perm itted
from age 50 onward after 20 years' service. Ordinary disability
retirement is perm itted after 10 years' service regardless of age,
and for disability due to injury received in the performance of duty
retirement is perm itted without regard to age or length of service.
Administration.—The system is managed by representatives of the
city council and of the police, the latter being chosen from their
own number by a group elected by the members of the force.
Average age oj retirants.—From the beginning of 1897 to December
31, 1926, the average age of retirants was 57.1 years, the range being
from 52.2 in 1925 to 61.3 years in 1897; for 1926 it was 56.1 years.
For those retiring in 1926 the average length of service was 24 years.
Statistics.—Complete data as to receipts are not obtainable, but
from the inauguration of the system in 1892 to the close of 1926 the
amount spent in pensions was $7,929,903. For the year 1926 the
amount spent in pensions was $522,627.
N o t e . —Up to the early part of the present decade, the police
raised money for their pension fund by ball games and entertainm ents
of various kinds for which they sold tickets. By such methods they
accumulated a large reserve fund, so th at interest formed quite an
im portant item in their revenue. A few years ago the city stopped
these wavs of raising funds, undertaking to appropriate for the fund
any amount th at might be necessary to keep up the payment of
pensions. Since then the c ity ’s annual appropriations for the fund
have not been sufficient to pay current pensions, and the reserves
are being used up to meet the deficit.
PITTSBURGH
'T'YP E oj system.—The Police Pension Fund Association of the City
*
of Pittsburgh is a contributory system.
Contributions.—The city allows fines and assessments levied on
police for violation of rules of the departm ent to be credited to this
fund, and also gives a certain amount, not to exceed 1*^ per cent, of
the city taxes. For the year ending January 31, 1927, the sum
credited to the fund from the city taxes was $181,141.
Employee members contribute 2 per cent of their salaries. For
the year ending January 31, 1927, employees' contributions amounted
to $49,311.
Retirement allowances.—Superannuation allowances range from
$600 to $900 a year, according to the retirant’s rank.
For duty disability retirem ent the allowance is one-half salary for
52 weeks, and then, if permanently injured, a lump sum of $1,200 is
paid from another fund.
N ote .—A disability and death benefit fund is m aintained apart
from the pension system, for which members of the force are assessed
$1 a m onth and from which the lump-sum paym ent of $1,200 is made
in case of perm anent disability. In case of the death of any active
146
CHAPTER 6.— RETIREMENT SYSTEMS FOR POLICE
or pensioned member of the force, a death benefit of $1,200 is paid
his dependents from this second fund.
Number oj employees covered.—The approximate number of employ
ees under the system December 31, 1926, was 904.
Conditions for retirement.—There is no age requirement, but 20
years’ service is required for ordinary retirement. Disability retire
m ent is perm itted regardless of length of service, if the disability is
incurred in the actual performance of duty.
Administration.—The system is managed by a board consisting of
3 city officials, ex officio, and 11 men elected by the members of the
force.
Average age oj retirants.—The average age of retirants as of Ja n
uary 1, 1927, was 54 years.
Statistics.—Complete data are not obtainable, but for the year
ending January 1, 1927, the total receipts of the pension general fund
were $310,685, and the amount paid out in pensions was $130,470
SAN FRANCISCO
oj system.—The police relief and pension fund of San
Francisco is a contributory system.
Contributions.—The city turns over to the fund all money derived
from dog licenses, police fines, sales of unclaimed property, a p art of
the license fees paid by pawnbrokers, billiard-hall keepers, second
hand dealers and junk dealers, all fines for carrying concealed weapons,
25 per cent of fines for violation of city ordinances, all special detail
money, and rewards given to members of the force. For the year
ending June 30, 1926, the receipts from these sources amounted to
$182,823.
The employees contribute $2 a month. For the year ending June
30, 1926, their contributions amounted to $28,518.
Retirement allowances.—The retirem ent allowance is one-half of the
salary attached to the rank held three years prior to retirement, with
no maximum or minimum, except as determined by the amount of
salary. The allowance is the same for superannuation and for duty
disability retirement.
If a policeman dies from injuries received in the service, the death
occurring within three years after the injury, a pension of one-half
his salary is paid his widow, children under 16, or dependent parents.
Number oj employees covered.—As of June 30, 1926, the num ber of
employees covered was 1,186.
Conditions for retirement.—There is no optional retirement, but
retirement is compulsory at age 65. To receive a pension the retirant
m ust have served at least 20 years, or m ust have been disabled by
injuries received in the performance of duty, in which case no age or
service qualifications are required.
Administration.—The system is managed by the board of police
commissioners.
Statistics.—For the year ending June 30, 1926, the total receipts
of the system were $211,341, and the total expenditures $214,975.
T a b le
3 0 .—
C om parison of police pension system s
City’s contribution
Conditions for retirement1
Retirement allowances
Other benefits
Police pension plan of Baltimore,
Md. (Maryland Laws of 1900, chs.
263, 266; 1924, ch. 411, sec. 2).
2 per cent of sal
aries.
Certain miscellaneous
moneys and a direct
appropriation when
fund requires it.
One-half salary at time of retirement; no
maximum or minimum except as deter
mined by the amount of salary.
Certain provisions
for widows and
minor children of
men killed in per
formance of duty.
Police pension fund of the city of
Buffalo, N. Y. (Local law No. 8).
4 per cent of sal
aries.
Certain miscellaneous
moneys and a direct
appropriation when
needed.
Police annuity and benefit fund of
Chicago. (Illinois Laws of 1921, p.
262; Laws of 1925, p. 208).
4.75 per cent of
salary up to
$2,600, all over
that amount be
ing exempt.
For each member, an
amount equal to 8.5
per cent of his salary
for his retirement
and ordinary dis
ability benefit, and
2 per cent for widdow’s pension; city
also bears whole
cost of extra benefits
and makes up any
deficiency in cost of
administration
of fund.
Permitted only for incapacity
to perform duties of position,
whether due to age or other
causes. If incapacity • re
sults from duty injuries, re
tirement permitted regard
less of length of service; if
due to other causes, only
after 16 years’ service.
Superannuation: No age re
quirement, 20 years’ serv
ice. Duty and ordinary
disability: No age or serv
ice requirement.
Superannuation: Optional at
or after age 57; no compul
sory age. No service re
quirement for those entering
service since system was es
tablished, but amount of
a l l o w a n c e depends on
length of service. Those in
service before system was
adopted may retire at 50
after 20 years’ service. Or
dinary and duty disability:
No age or service require
ment.
l All the systems require medical examination and certification as conditions for disability retirement.
Superannuation and duty disability: One- Provisions for wid
half salary at time of retirement. Ordi
ows and children
nary disability: Amount fixed by coun
under 18, and in
cil, but not to exceed one-half salary at
some cases for de
time of retirement.
pendent parents.
Superannuation: Annuity bought by re Provisions for wid
tirant’s contributions, plus pension
ows and children
bought by city’s contributions to his
under 18.
credit; maximum, $1,950 per annum.
For employee in service before system
was adopted, after reaching age 50 and
giving 20 years’ service, one-half salary
at time of retirement, regardless of
amount of contributions. Ordinary
disability: One-half salary at time of re
tirement, from which usual deductions
for pension purposes are made, allow
ance not to be continued more than 5
years. Duty disability: Three-fourths
of salary at time of injury, plus allow
ance for children under 18. If retirant
lives to reach 57, this allowance is dis
continued and he is given superannua
tion allowance he would have received
had he continued in service to that age.
OF SYSTEMS FOR POLICE
Employees’ con
tribution
COMPABISON
Name of system and authorization
T a b le
Name of system and authorization
Employees’ con
tribution
3 0 . — C om parison of police pension system s — Continued
City’s contribution
Other benefits
Superannuation and duty disability: Onehalf salary at time of retirement; mini
mum, $900; maximum, $1,200 per year.
Ordinary disability: After 5 years’ serv
ice, $36 for each year of service, maxi
mum, $900 per year. If discharged after
15 years’ service, except for specified
faults, not to exceed $600 a year.
Superannuation and disability: From
$1,052 to $1,500 per year, according to
rank. If discharged, except through his
own fault, after 15 years’ service, onehalf of allowance for superannuation.
Provisions for wid
ows, c hi l dren
under 16, or de
pendent parents.
Dues $1 per month. Certain mi s cel l a
neous moneys and
a direct appropria
tion when needed.
Superannuation: No age re
quirement; 25 years’ serv
ice. Ordinary disability: 5
years’ service. Duty disa
bility: No age or service re
quirement.
Police relief fund of the city of Cleve
land, Ohio (City Ordinance, 37945;
Gen. Code, 1910, secs. 4616-4631).
M o n t h l y dues
range from 50
cents to $1.25,
accordi ng to
rank of member.
Police pension and retirement fund
of Detroit (City Charter, 1925, ch.
21, secs. 19-26).
Certain miscellaneous
moneys, and an
annual appropria
tion sufficient to
maintain pension
payments.
4.625 per cent of 12 per cent of salary of
each member, and
salaries.
Rate
also 0.125 per cent
may vary slight
of aggregate salaries
ly with cost of
administration.
of whole force for
cost of administra
tion. In addition,
an annual defici
ency contribution to
meet accrued lia
bility and pays
whole cost of duty
disability benefits,
child’s annuity, and
compensation and
supplemental annu
ity.
Superannuation: No age re
quirement; 25 years’ serv
ice. Ordinary disability: 15
years’ service. Duty disa
bility: No age or service re
quirement.
Superannuation: No age re
quirement; 25 years’ service.
Disability: No age or service
requirement.
Policemen’s annuity and benefit
fund of Milwaukee (Wis. Laws of
1921, ch. 589; City Ordinance, F
20714).
1 per cent of sal
ary; r e t i r e d
members, 1 per
cent of pension.
_do_.
Superannuation: Optional at
age of 57, with 15 years’
service, or at 50, with 20
years’ service; also at 50,
with 10 years’ service, but
smaller allowance given.
Ordinary and duty disabili
ty: No age or service require
ment.
Superannuation and disability: One-half
of salary attached to rank held at time of
retirement. If salary scale is changed,
pensions undergo a corresponding
change.
Superannuation: Annuity bought by re
tirant’s contributions, plus pension
bought by city’s contributions on his
behalf; maximum, 75 per cent of highest
salary received by retirant. City bears
whole cost of allowance for years of
of service before system was estab
lished. Ordinary disability: One-half
salary at time of retirement, minus 4 per
cent for annuity purposes, to be paid for
not more than 5 years. Duty disability:
55 per cent of salary at time of injury,
with extra allowance for child or children
under 18, total not to exceed 75 per cent
of salary.
Provisions for wid
ows and children
under 16.
Pensions for de
pendents of man
killed in service
or dying from
injuries received
in service.
Provisions for wid
ows and children
under 18; special
benefits if dece
dents’ death due
to service.
SYSTEMS FOR POLICE
Police relief and pension fund of the
city of Cincinnati, Ohio (Gen. Code
1910, secs. 4616-4631).
6.— RETIREMENT
Retirement allowances
CHAPTER
Conditions for retirement
Minneapolis police relief associa
tion (Minn. Gen. Stats, of 1923,
secs. 1432,1442; amended by Minn.
Laws of 1925, ch. 197; City Council
Proceedings, Dec. 14, 1923, vol. 49,
p. 712).
per cent of
monthly salary
and dues of 50
cents per quarter af ter 6
months’ proba
tionary service.
P r o v i s i o n s for
widows and chil
dren under 16.
Superannuation and disability: Not to
exceed one-half salary at time of retire
ment.
Provisions for de
p e n d e n t s in
some eases.
Superannuation: One-half salary at time
of retirement. Ordinary disability:
Varies with length of service, ranging
from “ not less than one-quarter nor
more than one-half” of salary at time of
retirement after 10 but under 20 years’
service, to one-half salary after 20
years’ service. Duty disability: Not
less than one-fourth nor more than onehalf salary at time of retirement.
Superannuation and duty disability: Onehalf average salary for last 10 years;
maximum $1,500 per year. Ordinary
disability: One-fortieth of average salary
for last 10 years, multiplied by years of
service.
Pr o v i s i o n s for
widows, a n d
children under
18, and, in some
cases, dependent
parent.
Pr o vi s i on s for
widows, children
under 14, or de
pendent parents
if death occurs in
line of duty.
Superannuation: From $50 to $75 pei Disability a n d
death
benefit
month. Duty disability: One-half salary
fund is main
for 52 weeks; then, if permanently in
tained; dues $1
jured, a lump sum of $1,200 is paid from
per month.
another fund.
Superannuation and duty disability: One- P r o v i s i o n for
widows
and
half salary attached to rank held three
children under
years prior to retirement.
16 and depen
dent parents if
death due to
service.
OF SYSTEMS FOR POLICE
Superannuation and disability: One-half
salary at time of retirement; minimun
and maximum, $900.
COMPARISON
Certain miscellaneous Superannuation: Optional at
moneys, and an an
age 50 after 20 years’ serv
nual amount equal
ice. Disability: No age or
to two-tenths, and
service requirement, but
not to exceed twoallowance paid only for duty
disability.
fifths of one mill,
upon each dollar ©f
all taxable property.
Police pension system of New Or 2 p e r c e n t of Certain miscellaneous Superannuation: No age re
leans (La. Laws of 1904, act 32,
salaries.
quirement; permitted after
moneys, and an
sec. 11; 1910, act 10; 1912, act 253;
nually 2 per cent of
20 years’ continuous service.
1920, act 97).
amount appropri
Duty disability: No age or
service requirement.
ated for mainte
nance of police de
partment.
Police pension fund of the city of 2 p e r c e n t of Certain miscellaneous Superannuation: No age re
New York (Greater New York
salaries.
quirement; compulsory after
moneys, and a direct
Charter, secs. 351-357, 366).
25 years’ service, unless ex
appropriation for
tension
secured. Optional,
amount needed.
at 55, after 20 years’ service,
and at 60, regardless of length
of service. Ordinary dis
ability: 10 years’ service.
Duty disability: No age or
service requirement.
Police pension plan of Philadelphia One day’s pay Certain miscellaneous Superannuation: Optional at
each month, but
(Brown’s Philadelphia Digest,
moneys, and annual
age 50, after 20 years’ service.
salary in excess
appropriation
of
secs. 7-11, p. 47).
Ordinary disability: 10
of $3,000 per
years’ service regardless of
amount needed.
year is omitted
age. Duty disability: No
when calculat
age or service requirement.
ing contribution.
Police pension fund association of 2 p e r c e n t of Certain miscellaneous Superannuation: No age re
city of Pittsburgh, Pa. (Pitts
salary.
moneys, also direct
quirement; 20 years’ service.
burgh Digest, pp. 50, 51, secs. 163appropriation not
Duty disability: No age or
169).
to exceed 1.5 per
service requirement.
per cent of city taxes.
Police relief and pension fund of San $2 per month....... Ceitain miscellaneous Superannuation: Compulsory
Francisco (Charter of San Fran
at age 65; 20 years’ service.
moneys.
cisco, Art. VIII, ch. 10).
Duty disability: No age or
service requirement.
1
CD
T
able
3 1 . — Receipts
and expenditures of police pension systems
Ox
O
Police pension plan of Baltimore........................
Police pension fund of Buffalo______________
Police annuity and benefit fund of Chicago.......
Police relief and pension fund of Cincinnati___
Police relief fund of Cleveland, Ohio_________
Police pension and retirement fund of Detroit..
Policemen’s annuity and benefit fund of Mil
waukee________________________________
Police relief association of Minneapolis_______
Police pension system of New Orleans..... ..........
Police pension fund of the City of New York...
Police pension plan of Philadelphia__________
Police relief and pension fund of San Francisco.
Dec. 31,1926
....... do_____
___ do_____
___ do______
___ do_____
June 30,1926
$64,690
88,141
599,958
6,744
8,771
62,252
Dec. 31,1926
___ do_____
___ do_____
___ do______
___ do______
June 30,1926
All other
sources
Total
receipts
Retire
ment al Other
lowances benefits
$127,610
52,028
2,911,841
200,387
202,055
152, 756
$10,956
$203,256
140,169
3, 758,447
226, 343
221, 995
340, 752
$224,440
>8, 727 $233,167
173, 533
173, 533
1, 241,834 814, 326 2, 056,160
295,166
270, 379 24, 7S7
218,836
278, 746
340, 752
88, 931
300,000
11, 761
107, 703
24, 940
25,195
681, 956 2, 700, 000
304, 475
100 , 000
28, 518
182, 823
67, 725
473
44, 522
636, 753
30, 930
456, 656
119, 937
94, 657
4,018, 709
435,405
211, 341
52, 819
3, 533,104
246, 648
19,212
11,169
125, 744
7,863
770,053
Total
benefits
170,816
95,998
60, 682
4, 303,157
522, 627
214,975
Cost of Other
Re
funds adminis
tration items
$339
1,257
180
Total
expendi
tures
$233,507
173, 826
879
251
296,045
219, 087
340, 752
2,135
816
224
179,208
96,814
61, 086
4,305,156
536,072
214, 975
11, 992
1,199
1,453
SYSTEMS FOR POLICE
Public
sources
Employ
ees
6.— RETIREMENT
Year ending—
CHAPTER
Name of system
Expenditures for—
Expenditures for benefits
Receipts from—
T
able
3 2 . — Relation
of beneficiaries to active force and of benefits to pay roll— Police pension systems
Name of system
Total num
ber of bene
ficiaries
1,864
1,144
6,080
525
1,421
2, 762
938
499
877
15, 950
5,600
904
1,186
$3, 377, 738
1, 969,825
13, 323, 654
1,015, 661
3,076,315
6, 657, 744
1,934, 685
1,086, 726
1, 063,199
34, 583,087
9, 521,863
257
259
2,933
412
376
304
222
173
127
6,061
869
$233,167
173, 533
2, 056,160
295,166
218,836
340, 752
170,816
95, 998
60,682
4, 303,157
522, 627
3,096, 632
160
214, 975
Dec.
31,1926
do
June 30,1926
Dec. 31,1926
do
June 30,1926
i Retired members number 203 and form 38.7 per cent of the aetive force; the others are dependents.
Amount
spent in
benefits
Per cent
beneficiaries
form of
active force
13. 78
22. 64
48.24
i 78. 48
26.46
11.01
23. 67
34. 67
14. 48
38.0
15.5
13.0
Per cent
benefits
form of
pay roll
ft
Q
O, V
£. oft
©
15.4
29.1
7.1
5.1
8.1
88
5.7
12. 44
5. 49
6.94
OF SYSTEMS FOR POLICE
Pay roll of
active force
COMPARISON
Police pension plan of Baltimore.............................. .
Police pension fund, city of Buffalo......................................
Police annuity and benefit fund of Chicago ....................................................
Police relief and pension fund of Cincinnati-................... ............ ...... .............
Police relief fund of Cleveland __.............. ........................ ... __
Police pension and retirement fund of Detroit ___ __________ _
Policemen’s annuity and benefit fund of Milwaukee....... ..........................
Police relief association of Minneapolis___ _____________ _________ _____
Police pension system of New Orleans.............. ................ ...............
Police pension fund of the Citv of New York ............................................
Police pension plan of Philadelphia________________________________
Police Pension Fund Association of the City of Pittsburgh. ....................... _
Police relief and pension fund of San Francisco................................................
on
Year ending— Number
active force
152
CHAPTER 6 .---- RETIR EM EN T SYSTEMS FOR FIR EM EN
FIREMEN’S RETIREMENT SYSTEMS
BUFFALO
rT'YPE oj system.—The Firem en’s Relief and Pension Fund of
Buffalo, N. Y., is a contributory system.
Contributions.—The city contributes various moneys, such as a
certain per cent of all rewards, salary forfeitures for lost time, money
realized from the sale of condemned property, fees for licenses for
keeping certain explosive materials, 2 per cent of foreign fire insurance
premiums, and interest. For the year ending December 31, 1926, the
total amount from such sources was $47,370. The city also makes a
direct appropriation when needed of an am ount sufficient to m aintain
the pensions for the current year. No direct appropriation
was needed for the year 1926, but for the year 1925 $75,000 was
appropriated.
Employees contribute 4 per cent of their salaries. For the year
ending December 31, 1926, their contributions amounted to $75,863.
Retirement allowances.—For service and for duty disability retire
ment, the allowance is not less than one-half the salary or compensa
tion at the time of retirement.
For ordinary disability retirement, the amount of the allowance
may be fixed by the council, but may not exceed one-half the com
pensation received at time of retirement.
On the death of a member in active service or a pensioner, his widow
is entitled to a pension of not less than $25 a m onth during widow
hood, with $10 a month for each child under 18 years of age, the whole
not to exceed one-half the final salary received by the decedent.
The allowance for the children is not paid if the decedent was a pen
sioner retired for ordinary disability. If the deceased left no widow
or children, a pension of $25 a month may be paid to a dependent
parent during the period necessary for support.
The widow of a member who is killed in the discharge of duty, or
who dies within one year from injuries so received, is entitled to a
pension equal to her husband’s salary for one year, and thereafter to
$50 a m onth during widowhood.
Number oj employees covered.—As of December 31, 1926, the approx
imate num ber of employees under this system was 946.
Conditions jor retirement.—There is no age condition for retirem ent.
For normal retirem ent 20 years’ service is required. Disability
retirem ent, both ordinary and duty, is perm itted regardless of length
of service.
Administration.—The system is administered by a board composed
of the mayor and four councilmen.
Average age oj retirants.—For the 29 retirants placed on the roll
during 18 m onths ending December 31, 1926, the average age was
55 years and the average length of service was 27 years.
Statistics.—The total receipts of the fund from July 1, 1918, to
December 31, 1926, were $1,132,650, and the total disbursements for
the same period, $1,129,527.
CINCINNATI
153
CHICAGO
rT 'YPE oj system.—The Firemen's Pension Fund of Chicago is a
*
contributory system.
Contributions.—The city contributes the proceeds of a tax levy of
one-third of a mill on the dollar of assessed valuation, and also turns
over to the fund various miscellaneous sums, such as the fines imposed
on firemen for disciplinary purposes. For the year ending December
31, 1926, its contribution amounted to $628,049. (By an amendment
passed in 1927, the tax levy is reduced from one-third to one-sixth of
a mill.)
The employees contribute 2.5 per cent of their salaries. Those who
retire before reaching age 50 must continue their contributions to
that age in order to m aintain eligibility for the pension at th at age.
For the year ending December 31, 1926, the employees contributed
$132,896.
Retirement allowances.—The retirement allowance is one-half of the
salary received at the time of retirement, with a minimum of $600
and a maximum of $3,000 a year.
In case of the death of a member or pensioner, his widow receives
$45 a month during widowhood, with an allowance of $10 a month
for each child under 18. If there is no widow, an allowance of $15
a m onth is made in respect of each child under 18 years of age. If
there are neither widow nor children, a pension of $25 a month may
be allowed to dependent parents.
Number oj employees covered.—For the year ending December 31,
1926, the number of employees covered was 2,341.
Conditions jor retirement.—Retirem ent is optional from age 50 on
ward after 20 years' service. A man may retire before 50 if he has
served 20 years, but he m ust continueJiis contributions up to th a t age
in order to get the pension. Retirem ent on pension for disability is
perm itted without regard to age or length of service. No age is set
for compulsory retirement, but the board has the right to retire a
firemen compulsorily whenever it finds th at he is physically or men
tally incapable of performing his duties.
Administration.—The system is administered by a board of eight
members—city treasurer, city clerk, city comptroller, chief of the fire
departm ent, three members elected by the active force of the depart
ment, and one elected by the pensioners.
Average age oj retirants.—The average age at retirem ent is esti
m ated as 55 years, with an average of 28 years’ service.
Statistics.—The present system, which was established in 1917, suc
ceeded an earlier system which dated back to 1887. From the
beginning of the present system to December 31, 1926, the total
receipts were $5,352,841, and the total disbursements $5,053,722.
The total receipts of the earlier system were $5,424,533, and its total
expenditures $4,801,436.
CINCINNATI
’T 'Y P E oj system.—The firemen's pension fund of the city of Cin^
cinnati, Ohio, is a contributory system.
Contributions.—The city turns over to this fund fines imposed
upon members, donations, and interest, and also makes a direct
3306°—29------11
154
CHAPTER 6 .— R ETIR EM EN T SYSTEMS FOR FIREM EN
appropriation of whatever amount is needed, being authorized to
levy, for this purpose, a tax of not to exceed three-tenths of a mill on
each dollar on all real and personal property. The city’s direct
appropriation for the year ending November 30, 1926, amounted to
$170,293, and the amount turned over from miscellaneous sources
was $18,550.
Employees pay 50 cents per month dues. Their contributions
for the year ending November 30, 1926, amounted to $3,722.
Retirement allowances.—For service retirement, the allowance is
one-half of the full pay at the time of retirement, with a minimum of
$900 and a maximum of $1,200 per annum.
If a member is discharged, except through fault of his own, after
15 years’ service, he is entitled to receive a pension of $2 per m onth
for each year of service, not to exceed $50 per m onth..
For ordinary disability retirement, after not less than 5 years’
service, the pension is $3 per m onth for each year of service up to
25 years. For duty disability, the allowance is the same as for service
retirement.
In case of the death of a retired member, his widow receives a
pension of $50 per m onth until remarriage, and for each child under
16 years of age there is a pension of $15 per month. If the deceased
had no wife, the pension may be paid to his dependent parent or
parents.
If a member is killed or dies from the effects of an injury while in
active service and his death occurs within one year from the date
of accident, the widow, until she remarries, receives a pension equal
to one-half the full pay the member was drawing at the time of death,
not to exceed $100 per month.
Number oj employees covered.—The number of employees under
this system November 30, 1926, was 624.
Conditions for retirement.—There is no age requirement, but 25
years’ service is required for service retirement, and 5 years’ service
for ordinary disability retirement. For duty disability, retirem ent
is perm itted regardless of length of service.
Administration.—The system is managed by a board of six mem
bers—the director of public safety and five members of the fire de
partm ent.
Average age oj retirants.—D ata as to average age of all retirants
were not available, but for service retirants the ages at time of re
tiring range from 55 to 65 years.
Statistics.—For 24 years ending November 30, 1926, the total
receipts to this fund from all sources amounted to approximately
$2,430,521, and the total disbursements for the same period to
$2,266,999'
CLEVELAND
'T'YP E oj system.—The firemen’s pension fund of the city of Cleve* land, Ohio, is a contributory system.
Contributions.—The city turns over to this fund rewards for service,
court fees, donations, and interest, and also makes a direct appro
priation of whatever amount is needed, being authorized to levy for
this purpose a tax of not to exceed three-tenths of a mill on each dollar
on all real and personal property. The city’s direct appropriation
DETROIT
155
for the year ending December 31, 1926, was $195,000, and the amount
turned over from miscellaneous sources was $15,156.
Employees are classified under nine groups, according to rank,
and contribute m onthly dues ranging from 50 cents for firemen to
$1.25 for the chief. Their contributions for the year ending Decem
ber 31, 1926, amounted to $7,020.
Retirement allowances.—For service retirement, the allowance is
one-half salary at time of retirement, with a maximum of $100 per
month, except for the present chief, first chief, and second chief.
On account of their long service they will be perm itted to retire on
full salary.
For disability retirement, the allowance is the same as for service
retirement.
If a member is discharged, except through fault of his own, after
12 consecutive years’ service, he is entitled to a pension of sixsixteenths of his salary at time of dismissal.
On the death of a member of the force, or a pensioner, the widow,
until she remarries, receives a pension of $35 per month and each child,
until reaching the age of 16 years, receives $10 per month.
Number oj employees covered.—The approximate num ber of em
ployees under this system December 31, 1926, was 1,061.
Conditions for retirement.—There is no age requirement, but 25
consecutive years’ service is required for service retirem ent, and
perm anent disability retirem ent is granted regardless of length of
service.
Administration.—The system is administered by a board of six
members—the director of public safety and five members of the fire
departm ent.
Statistics.—For the period of 15 years ending December 31, 1926,
the total income to this fund from all sources amounted to approxi
mately $2,337,365, and the total disbursements for the same period
were $2,334,669.
DETROIT
T Y P E oj system.—The firemen’s pension and retirement fund of
*
Detroit, Mich., is a noncontributory system.
Contributions.—City contributes annually whatever amount is
needed to m aintain pension payments, raising it by special tax levy.
For the year ending June 30, 1926, the city’s contribution was
$258,064.
Employees do not contribute.
Retirement allowances.—For superannuation and duty disability
alike, the retirement allowance is one-half the salary attached to
the rank held at time of retirement. If after retirem ent this salary
is changed, the allowance is changed to correspond. There is no
allowance for retirem ent on account of ordinary disability.
If a member dies from injuries received in the service, his widow is
paid a pension of $100 a m onth until remarriage, with an allowance
of $20 per m onth for each child under 16 years of age. If there is
no widow, or if the widow dies or remarries, the allowance for each
child under 16 is $40 a month. If there are neither widow nor chil
dren, a dependent mother, or if there is no m other a dependent sister,
is given a pension of $100 a month until marriage or remarriage.
156
CHAPTER 6 .— R ETIR EM EN T SYSTEMS FOR FIR EM EN
Number of employees covered.—The num ber of employees under the
system in 1926 was 1,698.
Conditions for retirement.—Retirem ent is optional after 25 years’
service, regardless of age. Retirem ent upon allowance is perm itted
without regard to age or length of service for employees totally dis
abled in the discharge of duty. Ordinary disability is not a cause
for retirem ent on allowance.
Administration.—The system is managed by a committee of five
city officials, who hold their positions ex officio.
Statistics.—The reorganized system was adopted in 1925. The
total receipts and disbursements for the year ending June 30, 1926,
were the same—$258,064. The contributions of the city vary ac
cording to the amount needed each year to cover the pensions.
MILWAUKEE
of system.—The firemen’s annuity and benefit fund of MilwauKee is a contributory system.
Contributions.—The city contributes annually for each member an
amount equal to 12 per cent of his salary, 9 per cent of the salary being
for the m an’s own retirem ent allowance, 2.5 per cent for his widow’s
allowance, and 0.5 per cent for ordinary disability. I t also gives an
amount equal to one-eighth of 1 per cent of the aggregate salary roll
for expenses of administration, and makes a deficiency contribution
to cover prior service liability and the cost of extra benefits, such as
the allowance for duty disability, the child’s annuity, and extra
allowances in case of duty deaths. Its contribution is raised by a
tax levy of not to exceed five-tenths of a mill on the dollar. For the
year ending December 31, 1926, its contribution to the fund amounted
to $150,000.
Employees contribute annually 3 per cent of salary for their own
retirem ent allowance, 1 per cent for widow’s annuity, one-half of 1
per cent for ordinary disability, and one-eighth of 1 per cent for costs
of administration. The last amount may vary slightly from year to
year as circumstances demand. For the year ending December 31,
1926, the employees’ contributions amounted to $67,753.
Retirement allowances.—The service or superannuation allowance
consists of an annuity purchased by the retirant’s accumulated con
tributions and a pension purchased by the city’s contributions to his
credit. For those in service before the present system was adopted,
the city provides an extra allowance covering prior service. The
maximum allowance is 75 per cent of the highest salary received while
in the service.
For ordinary disability retirement the allowance is one-half the
salary received at the time of retirement, minus a deduction of 4 per
cent for annuity purposes. This allowance is paid for a period not
exceeding one-fourth of the period of service, and in any case for not
more than five years.
For duty disability, the allowance is 55 per cent of the salary re
ceived at the time of injury, with an extra allowance of $10 a m onth
for each child under 18 years, the whole not to exceed 75 per cent of
the salary. If a disability retirant lives to reach 57 years of age, the
disability allowance is discontinued, and he receives the superannua
tion allowance payable if his service had continued to th a t age.
M INNEAPOLIS
157
In case of the death from ordinary causes of a fireman, his widow’s
annuity consists of the annuity purchasable by the accumulated con
tributions of her husband and the city for this purpose, with an extra
allowance for prior service if her husband was in the service before
the adoption of the present system. If the husband’s death was
received in the performance of duty, the widow receives an additional
am ount sufficient to bring the allowance up to what she would have
received had her husband continued in the service until reaching
age 57. This additional amount is forfeited upon remarriage, but
the normal widow’s allowance continues through life. For each child
under 18 $10 per m onth is paid or $15 if mother is not living. Th#
maximum for widow’s and children’s annuities combined is 75 per cent
of the highest salary received by her husband during his term of service.
Number of employees covered.—In 1926 the number of employees
under the system was 723.
Conditions for retirement.—Retirem ent is optional at age 57, if the
employee has completed 15 years of service, or as soon thereafter as
he has completed such period of service. If 20 years’ service has been
given, it is optional at age 50. I t is also perm itted at 50 after 10 years’
service, but in th at case only a part of the city’s contribution toward
the allowance will be granted.
Ordinary and duty disability retirem ent are perm itted without
regard to age or length of service.
Administration.—The system is managed by a board of five mem
bers—one appointed by the mayor, three firemen elected by their
fellows, and either the city treasurer or a member of the finance
committee of the common council.
Statistics.—The total receipts for the year ending December 31,
1926, were $258,989, and the total disbursements $174,939. The
total receipts from the beginning of the old plan in 1899 to December
31, 1926, were $2,086,729, and the total disbursements for the same
period were $1,550,639.
N o te .—A future entrant ceases to pay into the fund altogether at
the age of 57, or as soon thereafter as he has completed 15 years’
service, and the city at the same time ceases its contributions to his
credit. His allowance is “ fixed ” at th at age, and can not be increased
no m atter how long he remains in the service. A present employee
ceases to pay when the amount standing to his credit is equal to what
it would have been at age 57 had he been contributing from the
beginning of his service.
A fireman who is unmarried on reaching age 57 is entitled on
retirem ent to a refund, with interest, of his contributions for widow’s
annuity.
MINNEAPOLIS
'T'YP E of system.—The Minneapolis Fire D epartm ent Relief Associa** tion is a contributory system.
Contributions.—The city contributes annually an amount raised
by a tax levy of one-tenth of a mill on the dollar. The State contrib
utes 2 per cent of the premiums on foreign insurance written in the
city of Minneapolis. For the year ending December 31, 1926, the
city and State together contributed $101,881.
158
CH A PTER .— R ETIR EM EN T SYSTEMS FOR FIREM EN
Employees contribute $1.50 per m onth, with an initiation fee of $10
upon entrance. In addition there may be special assessments of $2
per active member if death benefits bring the general fund below
$5,000. For the year ending December 31, 1926, the employees'
contributions amounted to $9,270.
Retirement allowances.—The superannuation allowance is $600 a
year after 20 years' service, increased by $2.80 a month for each year
of service over 20 up to 25; by not exceeding $3.20 a month for each
year over 25 up to 30; by $3.60 a m onth for each year over 30 up to
35; and by $4 a m onth for each year over 35.
The disability allowances are divided into three classes: For those
so disabled by illness or injury as to be no longer able to be active
firemen, or to do manual labor or office work, $900 a year. For those
perm anently disabled for service as fire fighters, but able to do light
manual labor or office work, $480 a year. For those unable to be
active firemen, but able to do manual labor, $180 a year.
The widow of an active member or of a pensioner receives a pension
of $480 a year, with an extra allowance of $15 a m onth for each child
under 16 years of age. The total allowance, however, m ust not exceed
$75 a month, and the widow’s pension ceases upon remarriage.
If a pensioner leaves a child under 16, upon reaching th at age it
receives $1,000, less the amounts paid on its behalf, as stated above.
If an active member dies leaving no widow or child under 16, the
sum of $1,000 will be paid to a child, parent, brother, or sister who is
his beneficiary.
Upon the death of an active member or a pensioner a funeral ben
efit of $200 is paid.
Number of employees covered.—In 1926 the number of employees
under the system was 513.
Conditions for retirement.—Retirem ent is optional after 20 years,
service, but the service pension will not be paid until the retirant has
reached age 50, after which it is paid as though he had retired at th at
age. Those retiring before 50, however, are not entitled to any of the
system ’s benefits except the pension and the funeral benefit.
Retirem ent on account of either duty or ordinary disability is per
m itted without regard to age or length of service.
Administration.—The system is managed by a board of eight mem
bers—two city officials, and six active members of the departm ent
elected by their fellows.
Average age of retirants.—No data on the age at retirem ent are
available, but officials estimate th at 60 years is the average age for
service retirement.
Statistics.—The total receipts for the year ending December 31,
1926, were $131,192, and total disbursements $133,633. The total
receipts for the period January 1, 1897, to December 31, 1926, were
$2,006,573, and total disbursements for the same period $1,678,421.
NEW ORLEANS
rT Y P E of system.—The firemen’s pension and relief fund of New
*
Orleans is a contributory system.
Contributions.—The city devotes to the fund all fines imposed on
the force and fines imposed on others for violations of fire ordinances;
1 per cent of all license fees, payments for special details, rewards for
NEW YORK CITY
159
special services, proceeds of sale of surplus and condemned property
of the departm ent, and 1 per cent of the tax on foreign insurance com
panies. During the year ending December 31, 1926, the amount
received from the city was $32,583.
Employees contribute 1 per cent of their salaries for pension pur
poses, and 75 cents a month for relief purposes; in addition, they are
assessed $2 upon the death of a member of the departm ent. For the
year ending December 31, 1926, the contributions from employees
amounted to $25,629.
Retirement allowances.—The pension for both superannuation and
disability retirem ent is one-half of the salary received at the time of
retirement.
If a member is killed in the performance of duty, or dies within six
months from injuries so received, his widow receives a pension of $15
a month during widowhood, with $6 a m onth extra for each child
under 14 years of age, the whole not to exceed one-half the salary
received by the decedent at the time of his death. If there is neither
widow nor child under 14, the pension may be paid to a dependent
mother.
Upon the death of a member, whether in active service or retired,
$1,000 is paid to his beneficiaries.
Number oj employees covered.—In 1926 the number of employees
covered by the system was 628.
Conditions jor retirement.—Retirem ent is perm itted after 20 years’
service, without regard to age. I t is also perm itted at any time if the
member is permanently incapacitated, either mentally or physically,
for the discharge of his duties.
Administration.—The system is managed by a board of nine mem
bers—three ex-officio members and six elected from the uniformed
force by their fellows.
Statistics.—For the year ending December 31, 1926, the total re
ceipts of the system were $83,545, and the total expenditures $70,629.
NEW YORK CITY
rT1Y P E oj system.—The New York City fire departm ent relief fund is
* a noncontributory system.
Contributions.—The city turns over to the fund various miscellane
ous receipts, including all fines and deductions from salary imposed on
members of the departm ent, part of the proceeds of suits for penalties
for violations of the fire regulations, proceeds of sales of condemned
property of the departm ent, and 45 per cent of the tax upon foreign
insurance companies and their agents. When necessary it also makes
a direct appropriation of any amount needed to m aintain paym ent
of current pensions. For the year ending December 31, 1926, the
city’s contributions amounted to $2,854,150.
Employees do not contribute.
Retirement allowances.—For service or superannuation retirement,
the pension is one-half the salary received at the time of retirem ent.
For retirem ent on account of duty disability, or of ordinary disability
after 10 years’ service, the pension is the same—one-half the salary.
For retirem ent on account of ordinary disability with less than 10
years’ service, the pension is not to exceed one-third of the salary
at time of retirement.
160
CHA PTER.— R ETIR EM EN T SYSTEMS FOR FIREM EN
Upon the death of a member killed in the performance of duty or
dying as a result of injuries so received, a pension of one-half of his
salary, with a minimum of $600 and a maximum of $1,000 a year,
is paid to his widow during widowhood, or to his children under 18
years of age, or to dependent parents. If the death is due to ordinary
causes, the pension to dependents is not to exceed $300 a year.
Number of employees covered.—As of December 31, 1925, the num
ber of employees covered was 6,078.
Conditions for retirement.—Retirem ent is based on service or dis
ability, regardless of age. After 20 years’ service a member may be
retired upon his own application, or compulsorily upon proof of dis
ability. A member may be retired at any time for complete and
perm anent disability, but the amount of his pension varies according
to whether the disability was incurred in the line of duty or other
wise, and in the latter case according to length of service. If dis
ability is not complete, the member is retained as p art of the force,
subject to the performance of duties within his power at a salary not
exceeding one-third of the salary drawn at the time he was relieved
from ordinary duties, or less, as the fire commissioner may determine.
Administration.—The fire commissioner is trustee of the fund, with
full power to administer and control it.
PHILADELPHIA
'T'FPZ? of system.—The firemen’s pension fund of Philadelphia is a
*
contributory system.
Contributions.—The city contributes regularly 2 per cent of the tax
paid by foreign fire insurance companies, and has undertaken to make
direct appropriations when needed. For the two years ending
January 7, 1926, the system received from the city $366,278.
Active members of the force contribute one d ay ’s pay per m onth;
pensioners contribute one-half of one day’s pay, based on salary
received at time of retirement. For the year ending January 7, 1926,
the contributions from the active force and pensioners combined
amounted to $122,136.
Retirement allowances.—The retirem ent allowance, being the same
for superannuation and for disability retirement, is one-half of the
average annual salary received for the last four years’ service.
A m em ber’s widow receives a pension of $20 a m onth, with $6 a
m onth extra for each child under 16 years of age; the combined allow
ances of the widow and children, however, m ust not exceed 50 per
cent of the salary the man received at the time of his death.
Number of employees covered.—For the year ending January 7,
1926, the num ber of employees covered was 2,100.
Conditions for retirement.—Retirem ent may be allowed from age
45 onward after 20 years’ service. The application for retirem ent
m ust be approved by the board, which may, in its discretion, refuse
approval. Disability retirem ent is perm itted only for perm anent
disability resulting from injuries received in the line of duty, and for
this there is neither age nor service requirement.
Administration.—The system is administered by a board of 15
members, elected by the active members of the force; in addition,
the city council has representation ex officio on this board.
Average age of retirants.—No records are kept of age at retirem ent,
but officials state th at it ranges from 50 to 60; while retirem ent is
theoretically possible at 45, in practice none retire earlier than 50.
ST. LOUIS
161
Statistics.—For the year ending January 6, 1926, the total receipts
of the system were $566,127, and the total expenditures were $193,370.
PITTSBURGH
'T 'Y P E OF SYSTE M .—The firemen’s pension fund of Pittsburgh,
*
Pa., is a contributory system.
Contributions.—The city turns over to the fund all fines imposed
upon members of the departm ent, donations, and interest, and also
makes a direct appropriation each year, according to the needs of the
fund. For the year ending December 31, 1926, the direct appropria
tion amounted to $141,000, and the amount turned over from other
sources to $4,049.
Employees contribute 2.5 per cent of their salaries, and are assessed
$1 on the death of a member. For the year ending December 31,
1926, their contributions amounted to $53,275.
Retirement allowances.—Pensions vary from $600 to $900 per annum,
according to the rank held at retirement. The pensions are the same
for service and for perm anent disability retirement. If a member
retired on pension enters Federal, State, or municipal service, his
pension is discontinued during the period of such service.
A death benefit of $1,100 is paid to the beneficiary of a deceased
member.
Number oj employees covered.—The approximate number of
employees under this system as of December 31, 1926, was 931.
Conditions jor retirement.—There is no age qualification for retire
ment. Service or superannuation retirem ent is perm itted after 20
years’ service, and retirem ent on account of perm anent disability
incurred in the performance of duty is perm itted without regard to
age or length of service.
Administration.—The system is administered by a board of nine
members—six city officials who hold the position ex officio, and three
members of the departm ent elected by their fellows.
Statistics.—The total income of the fund from December, 1924,
to December 31, 1926, was $409,344, and the total disbursements for
the same period were $364,545.
ST. LOUIS
'T Y P E oj system.—The firemen’s pension fund of St. Louis, Mo., is a
*
contributory system.
Contributions.—The city contributes annually part of the tax on
fire insurance agencies; part of license fees and of gasoline tax; also
fines imposed on firemen by the departm ent for disciplinary purposes;
and all rewards in moneys, fees, and gifts th at may be paid or given
for or on account of extraordinary services by the fire departm ent,
or any member thereof, except when perm itted by the order of the
board to be retained by said member. For the year ending Decem
ber 31, 1926, these contributions amounted to $107,681.
The employees contribute dues of $2 per m onth and also an initia
tion fee of $5 when becoming a member. For the year ending
December 31, 1926, the employees’ contribution amounted to
$23,319.
Retirement allowances.—The allowance for superannuation and for
disability retirem ent is the same—$600 per year.
162
CHAPTER 6 .— R ETIR EM EN T SYSTEMS FOR FIREM EN
The widow of a member or pensioner is granted $30 per month,
until remarriage, with an extra allowance of $7.50 per m onth for
each child under 16 years of age. If there is no widow, $30 per
m onth is granted to a dependent parent, and if no widow or children,
$7.50 per m onth to a dependent brother or sister under 16 years.
A funeral benefit of $75 is paid at the death of each fireman.
Number of employees covered.—The number of employees under
the system m 1926 was 940.
Conditions for retirement.—Retirem ent is optional, regardless of
age, after having given 20 or more years’ service, the last two of
which m ust have been continuous.
Disability retirem ent is granted regardless of age or service, but
an examination bv a medical officer must show th at the member has
become, physically or mentally, perm anently disabled by reason of
his service as a fireman.
Administration.—The system is managed by a board of 10 mem
bers—five ex-officio members, four active members of the depart
ment, elected by their fellows, and one retired and pensioned member.
Average age of retirants.—D ata on age at retirem ent are unavailable.
However, for the 8 members retired in the year 1926, the average
age for the service retirants was 48.33 and for disability retirants
60; and the average years of service for the former were 22.67, and
for disability retirants 32.83.
Statistics.—This system was established in 1894. The total receipts
of the system for the year 1926 were $142,706 and the total disburse
ments $119,153. The total receipts for the period from January 1,
1895, to December 31, 1926, were $2,154,308 and the total disburse
ments for the same period $2,088,038.
SAN FRANCISCO
HTYPE of system.—The firemen’s relief fund of San Francisco is
*
a noncontributory system.
Contributions.—The city raises whatever amount is needed by a
special tax levy. In 1925 the tax rate for this purpose was 4.7 cents
per $100, and in 1926 it was 5.04 cents. The am ount raised was
$326,171 in 1925 and $349,902 in 1926.
The employees make no contribution.
Retirement allowances.—The pension is one-half of the salary
received at the time of retirement. On the death of a pensioner, or
of a member of the force, his widow is entitled to this pension during
widowhood. If there are children but no widow, the pension is paid
to them until the youngest reaches 16 years of age.
Number oj employees covered.—As of June 30, 1926, the num ber of
employees covered wTas 967.
Conditions for retirement.—Retirem ent is optional at age 55 after
20 years’ service, and at any age after 25 years’ service. I t may be
compulsory from age 60 onward, in the discretion of the commis
sioners. Disability retirem ent is perm itted only if the disability has
been incurred in the line of dut}^, in which case no age or service
requirements are imposed.
Administration.—The system is administered by the board of fire
commissioners, acting as a board of trustees for the fund.
Statistics.—For the }^ear ending June 30, 1926, the total receipts of
the system were $349,902, and the total expenditures were $376,355.
LOS ANGELES
163
FIREMEN'S AND POLICE SYSTEM S COMBINED
LOS ANGELES
T 'Y P E oj system.—The fire and police pension system of Los Angeles
^ is a contributory system.
Contributions.—The city makes two annual contributions based on
actuarial calculations, the first to meet the cost of benefits for current
service and the second to defray the accrued liability. For the year
1927 the first consisted of an amount equal to 17.1 per cent of the
fire departm ent pay roll and 14.5 per cent of the police departm ent
pay roll, totaling $1,100,000. The second is an annual paym ent of
$635,000, to be continued through 36 years. The city also turns over
to the fund fines and the proceeds of sales of unclaimed property and
other miscellaneous sums, amounting to approximately $7,000 a year.
Beginning January 1, 1927, employees contribute 4 per cent of
their salaries, which is calculated to produce approximately $140,000
a year.
Retirement allowances.—For service retirement, after 35 years’
service, the allowance is two-thirds of the average salary for the
three years preceding retirem ent; for retirement after 25 years'
service, it is one-half of such salary, with an additional allowance
for each year over 25 but under 35 of 1% per cent of such salary. For
those in the service before 1927 the same allowances are given for
service periods of 30 and 20 years, respectively. For those entering
the service after this system was adopted the maximum allowance is
$1,800 per annum.
For disability retirem ent the allowance is fixed by the board, but
it may not be less than 10 nor more than 90 per cent of the salary
received at the time the disability was incurred.
The widow of a pensioner or an active member eligible for retire
ment or of an active member whose death was due to the perform
ance of duty is entitled to a pension during widowhood of one-half
the average annual salary the decedent received during the last three
years of service, with an additional allowance for each child under 18
years of age. To receive this pension the widow m ust have been
married to the decedent for at least a year before his withdrawal from
service, except in the case of a duty death, when no restriction is
imposed.
If the decedent leaves neither widow nor minor child an allowance
may be made to a dependent parent or parents.
Number oj employees covered..—For the year ending June 30, 1926,
the police force numbered 2,439 and the fire force 1,540.
Conditions jor retirement.—There is no age qualification for retire
ment. The normal service requirement is 35 years, but a member
may retire or be retired on a smaller allowance after 25 years’ service.
For present members these periods are reduced to 30 and 20 years.
Disability retirement is perm itted without regard to length of
service if the disability arises from the performance of duty.
Administration.—The system is managed by a board of five mem
bers, appointed by the mayor.
Average age oj retirants.—The average age of service retirants is 53
years, of disability retirants, 39.3 years, and of both classes combined,
44.3 years.
164
CHAPTER
6.— F IR E M E N ’S
AND POLICE SYSTEMS
N o te .—The police and fire departm ents of Los Angeles originally
had separate pension systems, but in 1922 charter amendments were
adopted combining the two systems under one board of commission
ers. The combined system was organized in March, 1923. In 1926
the charter was again amanded, and the provisions as to contribu
tions, retirement, and allowances were m aterially modified. The
outline given above is of the system as changed by the 1926 am end
ments.
NEWARK
rT'YPE of system.—The police and fire pension fund, Newark, N. J.,
*
is a contributory system.
Contributions.—The city contributes annually an amount equal to
4 per cent of the total salaries paid members of the two departm ents,
and turns over to the fund in addition all fines and deductions from
salary which may be imposed upon the members, as well as gifts or
rewards paid to either force. Under the law, the city is also author
ized to make up any deficiency in the fund which may occur at any
time, but, so far it has not been called upon to do this. For the
year ending December 31, 1926, the city’s contribution was $186,648.
The normal contribution from employees is 2 per cent of salary,
but if a member is 35 years or over on entering the force, he pays
4 per cent of his salary. For the year ending December 31, 1926,
the employees’ contributions amounted to $98,424.
Retirement allowances.—For both service and duty disability
retirement, the allowance is one-half of the salary received at the
time of retirement, with no maximum or minimum except as deter
mined by the salary. In 1926 the minimum salary, previously
$2,000, was raised to $2,500, so th at thereafter the minimum retire
m ent allowance would be $1,250.
Widows of pensioners or of members in active service receive a
pension of $1,000 a year, provided the marriage took place before
the deceased reached age 50. If there are children under 16 years of
age but no widow, a pension is paid to them, and if there is neither
widow nor child under 16, a pension may be given to dependent
parents.
Number of employees covered.—As of December 31, 1926, the number
of employees covered was 2,200.
Conditions for retirement.—Retirem ent is optional at age 50, after
20 years’ service and compulsory at 65. For disability incurred in
the performance of duty, retirem ent on allowance is perm itted without
regard to age or length of service.
Administration.—The system is managed by a board of five mem
bers, composed of two city officials, one policeman and one fireman
elected by their fellows, and one nonoffice-holding citizen elected by
these four.
Average age of retirants.—No precise data are available, but the
officials estimate that men remain in the service up to 65, unless
compelled to retire earlier through disability.
Statistics.—Up to 1920 the police and firemen of Newark had
separate pension plans, but in th at year they combined and formed
the present system, which took over both the funds and the pen
sioners of the earlier systems. The total amount paid in pensions in
1926 was $320,191. The total receipts of the system for 1926 were
$297,752; total expenditures, $323,074.
CHAPTER 6.— F IR E M E N ’S AND POLICE SYSTEMS
165
WASHINGTON, D. C.
'T Y P E oj system.—The policemen’s and firemen’s relief fund of
* W ashington, D. C., is a contributory system.
Contributions.—The D istrict contributes money from various
sources, such as fines, rewards, gifts and emoluments received by the
members for extraordinary services, donations, and net proceeds
from the sale of unclaimed property. For the year ending June 30,
1926, the income from these sources amounted to $6,149. Also,
when the amount in the fund is insufficient to defray expenditures,
the amount needed to meet the deficiency is transferred from the
general revenue of the D istrict of Columbia. For the year ending
June 30, 1926, this amount was $376,705.
Employees contribute 2.5 per cent of their salaries. For the year
ending June 30, 1926, their contributions amounted to $140,186.
Retirement allowances.—The retirem ent allowance, for service and
disability alike, is 50 per cent of the annual salary received at the
time of retirement. If the basic salary of the rank to which a retirant
belonged is increased after his retirement, he is entitled to a corre
sponding increase in his pension.
Upon the death of a member his wridow is entitled, during widow
hood, to a pension not to exceed $60 a m onth, with an allowance of
$10 a m onth for each child under 16 years of age. The pension is
not allowed if the marriage took place after the member had retired.
Number oj employees covered.—As of June 30, 1926, the approximate
num ber of employees under this system was 2,286.
Conditions j or retirement.—Service retirem ent is perm itted at age 60.
Retirem ent on account of duty disability m ay take place without
regard to age or length of service. Retirem ent for ordinary disability
is perm itted if a member has reached age 55 and served for 25 years
or more.
Administration.—The system is administered by a board of three
members, consisting of the corporation counsel and one member
each from the police and fire departm ents, designated by the D istrict
Commissioners.
Statistics.—For the 10-year period ending June 30, 1926, the total
receipts of the fund were $2,808,890, and the total disbursements
were $2, 770, 937.
T
able
3 3 .—
Comparison of firemen’s and of police and firemen’s pension systems
OS
cn>
Name of system
Employees’ con
tributions
C ity’s contributions
Firemen’s pension fund of Chicago,
(111. Rev. Stats. 1917, ch. 24, secs.
417-419K, pp. 461-466).
Firemen’s pension fund of Cincin
nati (Ohio Gen. Code 1910, secs.
4600-4615).
4 per cent of salary. Various miscellaneous
sums and 2 per cent
of foreign fire insur
ance premiums, and
in addition direct
appropriation
of
amount needed to
maintain pension
payments.
2.5 per cent of sal Various miscellaneous
sums and direct apary.
propriation raised
by tax levy.
Service and duty disability: Minimum,
one-half salary at time of retirement; no
maximum set. Ordinary disability:
Maximum, one-half salary at time of re
tirement; no minimum set.
Provision for de
pendents.
Service: Optional after 20
years’ service, but member
retiring under age 50 must
continue contributions to
that age in order to draw
pension. Disability: No age
or service requirement.
Service: No age requirement;
optional after 25 years’ serv
ice. Ordinary disability:
Five years’ service. Duty
disability: No age or service
requirement.
Service and disability: One-half salary re
ceived at time of retirement—minimum
$600, and maximum $3,000 a year.
Do.
50 cents a m onth.. Various miscellaneous
sums, and proceeds
of a tax, not to ex
ceed three-tenths of
a mill on the dollar.
Service and duty disability: One-half sal
ary at time of retirement—minimum
$900, and maximum $1,200 a year. Or
dinary disability: $36 multiplied by
number of years of service up*to 25. If
discharged without fault of his own after
15 years’ service: Annual pension of $24
for each year of service—maximum, $600
a year.
Service and disability: One-half salary at
time of retirement—maximum, $1,200 a
year. If discharged except for fault on
his part after 12 consecutive years’ serv
ice, pension of six-sixteenths of salary at
time of dismissal.
Do.
Firemen’s pension fund of Cleveland, From 50 cents to
$1.25 a month
Ohio (Gen. Code 1910, secs. 4600according to po
4615).
sition held.
Various miscellaneous
sums, and appropri
ate amount needed
to maintain pension
payments, raising
this by tax levy not
to exceed threetenths of a mill on
the dollar.
Service: No age requirement;
optional after 25 years. Per
manent disability: No age
or service requirement.
Do.
SYSTEMS
Service: No age requirement;
optional after 20 years’ serv
ice. Ordinary and duty
disability: No age or service
requirement.
F irem en’s pension system s
Firemen’s relief and pension fund of
Buffalo (Local laws of Buffalo, No.
7; City Charter, secs. 275-275J,
277-283).
POLICE
Other benefits
6.— FIREMEN’S AND
Retirement allowances
CHAPTER
Conditions for retirem ent1
Firemen’s pension and retirement
fund of Detroit, Mich. (City
Charter (1925), ch. 15, secs. 14-19).
No contributions.
Widow’s annuity,
widow’s compen
sation and sup
plemental annu
ity, and child’s
annuity.
Provision for de
pendents and fu
neral benefit of
$200.
Death b e n e f i t s ;
pension for de
pendents if death
due to service.
SYSTEMS
Provision for de
pendents.
OF
Provision for de
pendents.
COMPARISON
Appropriates annual Service: No age requirement; Service and duty disability: One-half of
ly amount required
25 years’ service. Duty dis
salary attached to rank held at time of
to meet pension
ability: No age or service re
retirement. If this salary is changed
payments raising
quirement.
later, allowance is changed to correspond.
amount by special
tax levy.
Firemen’s annuity and benefit fund 4.625 per cent of Annually for each Service: Optional at age 50 Service: Annuity bought by retirants’ con
of Milwaukee. (Wis. Laws of
salary.
member 12 per cent
after 20 years’ service, and at
tributions, plus pension bought by city’s
1923, ch. 423; City Ord., F 25191).
of his salary; also
57 after 15 years’ service, also
contributions on his behalf. Maximum,
one-eighth of 1 per
permitted at 50, after 10
75 per cent of highest salary while in
cent of total salaries
years’ service, but with re
service. City provides full allowance
for costs of adminis
duced allowance. Ordinary
for years of prior service. Duty disa
tration. Contribu
and duty disability: No age
bility: Annuity, as above, with pension
tion to cover ac
or service requirement.
to bring it up to 55 per cent of salary
crued liability and
when injury was received; extra allow
extra benefits, rais
ance for children under 18, Ordinary
ing amount by spe
disability: One-half of salary at time of
cial tax levy.
disability, not for over 5 years.
Minneapolis fire department relief $1.50 per month, Proceeds of tax of one- Service: Optional after 20 Service: Proportioned to length of service,
association (Gen. Stats. 19 23, secs.
with initiation
tenth of a mill on
years’ service, but allowance
with a minimum of $600 per annum for
3748, 3752; amended, Laws of 1925,
fee of $10. Oc
the dollar, and 2 per
may not be drawn until re
20 years’ service and progressive rates of
ch. 204, 205).
casional assess
cent tax on foreign
tirant reaches age 50. Disa
increase for each 5 years over that. Dis
ments of $2 per
insurance premiums.
bility: No age or service re
ability: Graded according to degree of
m em ber for
quirement.
disability, ranging from $180 to $900 a
death benefits.
year.
Firemen’s pension and relief fund of 1 per cent of sal Various miscellaneous Service: Optional after 20 Service and disability: One-half salary re
New Orleans (La. Acts, 1902, No.
ary, plus 75
sums and 1 per cent
years’ service regardless of
ceived at time of retirement.
43; 1904, No. 17; 1912, No. 152; 1914,
cents a month,
of tax on foreign in
age. Disability: No age or
No. 27; and 1926, No. 321).
and $2 upon
surance companies.
service requirement.
death of mem
ber.
New York fire department relief fund No contributions.. Various miscellaneous Service: No age requirement; Service, duty disability, and ordinary disa
(Greater New York Charter, secs.
funds and direct apoptional after 20 years’ serv
bility after 10 years’ service: One-half of
789-791, 809).
p r o p r i a t i o n of
ice. Disability: No age or
salary at time of retirement. Ordinary
amount needed to
service requirement.
disability retirement with less than 10
maintain pension
years’ service: Not to exceed one-third
payments.
of salary at time of retirement.
Firemen’s pension fund of Phila Active force con 2 per cent of tax on Service: Optional from age Service and duty disability: One-half of
delphia. (Brown’s Philadelphia
tribute
one
foreign fire insurance
45 onward after 20 years’
average annual salary for last 4 years’
Digest, sec. 7-11, p. 47.)
day’s pay per
companies, and di
service. Duty disability:
service. Ordinary disability: No pen
month; pension
rect appropriations
No age or service require
sion.
ers o n e - h a 1f
as needed.
ment.
day’s pay.
1All the systems require medical examination and certification as conditions for disability retirement.
Do.
o>
T
aele
3 3 . — Comparison of firemens’ and of police and firemens’ pension systems— Continued
05
00
Name of system
Firemen’s relief fund of San Fran
cisco. (City Charter, Art. IX, Ch.
VII.)
Conditions for retirement
Retirement allowances
2.5 per cent of sal Various miscellaneous Service: Optional after 20 Service and duty disability: From $600 to
$900 a year, according to rank of retirant.
years’ service without re
sums and direct
aries, plus assess
gard to age. Duty disa
appropriations
as
ment of $1 011
bility: No age or service re
death of mem
needed.
quirement.
ber.
$2 per month, and Certain taxes and vari Service: No age requirement; Service and duty disability: $600 a year.
Ordinary disability: No allowance.
optional after 20 years' serv
ous miscellaneous
initiation fee of
ice, the last two continuous,
sums.
$5.
Duty disability: No age or
service requirement.
No contributions. Appropriates amount Service: Optional at age 55, Service and duty disability: One-half of
salary received at time of retirement.
after 20 years’ service, and
necessary, raising it
at any age after 25 years ’ serv
by special tax levy.
ice. Duty disability: No
age or service requirement.
Other benefits
Death benefit.
Provision for dependents.
Do.
Police and firem en ’s pension systeins
A percentage of pay
rolls of the two de
partments, and an
annual flat sum to
liquidate accrued
liability; also mis
cellaneous
sums,
fines, etc.
Service: No age requirement;
35 years’ service, but per
mitted after 25 years with
smaller allowance. Duty
disability: No age or service
requirement.
Police and fire pension fund of New
ark, N. J. (New Jersey Laws, 1920,
ch. 160.)
2 per cent of salary. Various miscellaneous
sums and annual
If employee is 35
appropriation equal
or over on en
to 4 per cent of com
trance, 4 per
bined
pay rolls of
cent.
the two depart
ments.
2.5 per cent of sal Various miscellaneous
ary.
funds, and direct
contribution from
general revenue of
District as needed.
Superannuation: Optional at
age 50, after 20 years’ service,
and compulsory at 65. Duty
disability: No age or service
requirement.
Policemen’s and firemen’s relief
fund of Washington, D. C. (U. S.
Stats, at Large, vol. 39, p. 718; vol.
43, p. 176.)
Service: Optional from age 60
on. Duty disability: No
age or service requirement.
Ordinary disabilit3r: Age 55,
after 25 years ’ service.
Service: From one-half to two-thirds of
average salary for last three years accord
ing to length of service (from 25 to 35
years, except that for those in service be
fore system was adopted, it is from 20 to
30 years). Duty disability: Fixed by
board, with minimum of 10 per cent and
maximum of of 90 per cent of salary at
time of retirement.
Superannuation and duty disability: Onehalf of annual salary received at time of
retirement.
Do.
Service and disability: One-half of salary
received at time of retirement. If the
salary is increased after retirement, the
pension is increased to correspond.
Do.
Do.
SYSTEMS
4 per cent of sal
ary since Jan
uary 1, 1927.
POLICE
Fire and police pension system of Los
Angeles. (Los Angeles Charter,
secs. 180-189.)
6.— FIREMEN’S AND
Firemen’s pension fund of St. Louis.
(Mo. Rev. Stats. 1919, ch. 72, Art.
XXVII; City Ords. 30561-63.)
City’s contributions
CHAPTER
Firemen's pension fund, of Pitts
burgh, Pa. (City Ord. No. 490,
1924.)
Employees’
contributions
,9082
T
able
3 4 . — Receipts and expenditures of firemen's and of police and firemen's pension systems
Receipts from-
Name of system
Year ending—
Employees
Public
sources
All other
sources
Expenditures for benefits
Total
receipts
Retire
Other
ment
allowances benefits
Total
Expenditures for—
Cost of
Re
admin Other
funds istration
items
Total
expendi
tures
Firem en’s pension system s
Dec. 31,1928
___ do._____
Nov. 30,1926
Dec. 31,1926
$75,863
132, 896
3, 722
7,020
$628, 049
170, 293
195, 000
$47,370
9, 951
18, 550
15,156
258,064
258, 064
June 30, 1926
$168, 213
852, 259
236,627
208, 765 I
$123, 233
770, 896
192, 565
217,176
$217, 059 $41, 005
258, 989
131,192
150, 000
101, 881
41,-236
20,041
_do_.
.do..
Jan. 7,1926
Dec. 31,1926
___ do______
June 30,1926
25, 629
122,136
53, 275
23, 319
32, 583
2, 854,150
366, 278
141. 000
107, 681
349,902
25, 333
849,148
77, 713
27, 863
11, 706
Fire and police pension system of Los Angeles. ___ do______
Police and fire pension fund of Newark, N. J. Dec. 31,1926
Policemen and firemen’s relief fund of Wash
ington, D. C................................................... June 30,1926
i8, 424
186, 648
12, 680
1,233, 213
297, 752
376, 705
6,149
523, 040
171, 985
131, 909
83, 545
44,110
3, 703, 298 2, 288, 554
566,127
222,138
163, 894
142, 706
117,450
349,902
25, 717
494, 391
221,831
177, 707
64, 935
142, 484
24, 208
1,125
116
258,064 |
69. 827
2, 782, 945
191,716
188,102
118, 575
376, 355
$168, 277
855, 523
237, 293
208, 881
258, 064
$930
2, 024
1, 724
785
17
1, 705 66,509
1, 604
50
660
578
174,939
133, 633
70, 629
2, 851,159
193, 370
188,848
119,153
376,355
Police and firem en's pen sion system s
286, 766
320,191
523, 753
2,882
286, 766
323, 074
SYSTEMS
67,753
9,270
666
OF
Dec. 31,1926
___ do______
3, 264
COMPARISON
bo Firemen’s relief and pension fund of Buffalo,
N. Y _________________________________
Firemen’s pension fund of Chicago, 111_____
Firemen’s pension fund of Cincinnati, Ohio..
Firemen’s pension fund of Cleveland, Ohio...
Firemen’s pension and retirement fund,
Detroit_________ ____ __________ ____
Firemen's annuity and benefit fund of Mil
waukee, Wis__________________________
Minneapolis fire department relief association.
Firemen’s pension and relief fund of New
Orleans______________________________
New York fire department relief fu n d ..........
Firemen’s pension fund of Philadelphia____
Firemen’s pension fund of Pittsburgh, Pa___
Firemen’s pension fund of St. Louis, Mo___
Firemen’s relief fund of San Francisco..........
523, 753
O
CO
T able
3 5 . — Relation
of beneficiaries to active force and of benefits to pay roll— Firemen’s , and police and firemen’s pension systems
Name of system
Amount
spent in
benefits
Per cent
benefits
form of
pay roll
946
2, 341
624
1,061
1,698
723
513
628
6,078
2,100
931
940
967
$1, 977, 553
5,463,140
1,193,155
2, 286, 919
3,880,110
1, 500, 769
1,081,462
985,189
15, 316,180
$168, 213
852, 259
236, 627
208, 765
258, 064
171, 985
131,909
69, 827
2, 503, 382
191, 716
188,102
118, 575
376, 355
32. 66
57. 11
57. 05
32. 23
13. 49
39. 83
47.17
18.31
50.13
16. 67
26. 00
32. 77
30.3
8.5
15.6
19.8
9.1
6.7
11. 46
12. 20
7.1
16.3
1, 933, 060
1, 813, 854
2,376, 642
309
1, 337
356
342
229
2S8
242
115
3,047
350
242
308
293
3,979
2, 200
2,286
7,902, 496
4, 601, 930
351
365
286 766
320, 191
8. 72
16. 59
3.6
6. 95
Firemen's pension systems
Firemen’s relief and nension fund of Buffalo, N. Y _____________________________
Firemen’s pension fund of Chicago
_ _ __ _____________________________
Firemen’s pension fund of Cincinnati-- ________________ ______________________
Firemen’s pension fund of Cleveland
-- ____ ______________
Firemen’s pension and retirement fund of Detroit, JVik li
______
Firemen’s annuitv and benefit fund of Milwaukee, Wis____
__
_________
Minneapolis fire department relief association
- ___________
Firemen’s pension and relief fund of New Orleans
___- _____________
New York fire department relief fund
__ _____ _________________
Firemen’s pension fund of Philadelphia
______________
Firemen’s pension fund of Pittsburgh.. _
_____________________ __________
Firemen’s pension fund, St. Louis, Mo
_
_
_ __________________ ______
Firemen’s relief fund, San Francisco __ ____ ___ _______________________________
Dec. 31,1926
___ do______
Nov. 30,1926
Dec. 31,1926
June 30,1926
Dec. 31,1926
___do_______
__ do___ ___
Dec. 31,19251
Jan. 7,1926
Dec. 31,1926
__ do___
June 30,1926
9.7
6.5
15.8
Police and firemen's pension systems
Fire and police pension system of Los Angeles
_
Police and fire pension fund of Newark
Policemen and firemen’s relief fund of Washington D C
SYSTEMS
POLICE
i Data for 1926 not available.
_
_________________ ___ do_____
_____________________ Dec. 31,1926
June 30,1926
6.— FIREMEN’S AND
Number
of benefi
ciaries
CHAPTER
Per cent
beneficiaries
form of
active force
Number of Pay roll of
Year ending— active
force active force
CHAPTER 7.—RETIREMENT SYSTEM OF THE
TERRITORY OF HAWAII
H IS system, which was established by act 55 of the Laws of 1925,
and came into force January 1, 1926, applies to all the employ
ees, including teachers, of the Territorial Government, and,
by an amendment passed in 1927, is now open to county and city
employees also. Membership was optional for those in service when
the act was passed, but compulsory upon those who should enter
thereafter. I t is a joint contributory system, established upon an
actuarial basis.
T
Contributions
r P H E employees contribute a percentage of their salaries, determined
by sex, occupational group, and age a t entrance. Members are
divided into two groups, general employees and teachers, and for each
the rates are so calculated th at for those who enter after the system
was adopted the contributions will build up a fund sufficient, by the
time the member has reached 60, to provide one-half of the service
retirem ent allowance. For general employees the rates for men range
from 4.06 per cent for those entering the service a t age 20 but under
21 to 7.15 per cent for those entering at 59 and over; for women the
corresponding rates are 4.58 per cent and 8.06 per cent. For teachers
the range is from 3.76 per cent to 6.23 per cent for men, and from 4.50
to 7.73 per cent for women.
The Government’s contribution, calculated as a percentage of the
aggregate pay roll, consists of two parts, a normal contribution to
cover its share of the cost of benefits earned by th at year’s service
and a deficiency contribution to meet the accrued liability. For the
first two years of operation, the normal contribution was fixed at 3.05
and the deficiency contribution a t 2.91 per cent of the pay roll.
Benefits of System
'T 'H E benefits provided by the system are service retirem ent allowance; ordinary disability and accidental-disability benefits;
ordinary and accidental-death benefits; withdrawal benefit; and
options a t the time of retirement, by which a member may, if he
chooses, make some provision for dependents in case of his death
by taking a smaller benefit himself.
Service retirem ent is perm itted at the age of 60, and is compulsory
at 70. The normal retirem ent allowance is one-seventieth of the
average annual compensation received for the last 10 years of service,
multiplied by the number of years of service. For those employed
after January 1, 1926, it is expected th at their accumulated contribu
tions will provide one-half of this, and the Government contributions
to their credit will provide the other half. For those in the service at
th at time, the Government will bear the whole cost of the allowance
for the years of prior service.
171
172
CHAPTER 7.— R ETIR EM EN T SYSTEM OF HAW AII
The ordinary disability benefit, which is granted after a minimum of
10 years’ service, consists of whatever annuity is purchasable by the
retiran t’s accumulated contributions, plus a pension from the Govern
m ent sufficient to bring the allowance up to nine-tenths of what the
employee would be entitled to after the same period of service if he
were retired upon a service allowance. The minimum allowance is
25 per cent of the average final compensation unless the retirant
entered the service after age 40, in which case he receives nine-tenths
of what he would have received a t age 60 had he remained in service
to th at age.
Accidental or duty disability benefit, given in case of disability
resulting from an accident incurred in the discharge of duty, consists
of whatever annuity the retiran t’s accumulated contributions will
purchase, plus an allowance from the Government equal to two-thirds
of the average final compensation.
If death occurs from ordinary causes, after one or more years of
service, in addition to the return of the decedent’s contributions the
Government pays the beneficiaries a lump sum equal to 50 per cent
of the compensation received during the year immediately preceding
death. If death results from an accident incurred in the discharge of
duty, the widow, children under 18, or dependent parents are entitled,
in th a t order, to a pension equal to one-half the average final compen
sation of the decedent, in addition to the return of the accumulated
contributions.
The withdrawal benefit, claimable when an employee leaves the
service for any cause other than death or retirement, consists of the
return of the retiran t’s contributions, with interest at 4 per cent,
compounded annually.
If an employee is dropped from the service without fault or delin
quency after 20 years of creditable service, he is entitled to a discon
tinued service retirem ent allowance. This consists of a service retire
m ent allowance, payable at age 60, figured on the basis of service
rendered and compensation received prior to the discontinuance of
service.
Several options are offered at the time of retirement, whatever the
cause of retirement. The general idea is th at if the retirant chooses
to accept a smaller allowance himself, certain benefits will be con
tinued to his designated beneficiaries.
Scope of System
V y H E N this plan was adopted, it was provided th at the teachers’
* * pension system then in existence was to be taken into this,
and the teachers’ accounts credited with contributions paid under
their former retirem ent plan. Also, all pensions in force June 30,
1925, granted on account of service in the Territory of Hawaii were
to be continued under the provisions of this act. Consequently the
system began operations with a pension list already in force. As of
June 30, 1927, retirem ent allowances amounting to $83,627 per an
num were being paid in respect of 101 former employees, of whom
26 had been retired under the act of 1925 and 75 under earlier pension
acts. At th at time the system included 2,682 members, whose annual
salaries aggregated $4,790,712. The members’ contributions for the
year amounted to $221,119, contributions from the Territory to the
ADMINISTRATION
173
amount of $194,674 were paid in, and interest amounting to $14,781
was received.
Administration
The retirem ent system is administered by a board of trustees, con
sisting of the treasurer and the auditor of the Territory of Hawaii,
ex officio, a member elected by the membership of the system, and
two citizens of Hawaii, not employees, one of whom shall be a
responsible officer of a bank in the Territory or shall have had similar
experience.
CHAPTER 8.—RETIREMENT SYSTEM FOR EM
PLOYEES OF THE CANADIAN GOVERNMENT
H E present Canadian system was established by an act passed
in 1924 and modified by amendments passed in 1927. I t
applies to all perm anent employees of the civil service who
receive as much as $600 per annum, and whose duties require so much
of their time as to prevent them from engaging in any other substan
tially gainful service or occupation. Membership was made optional
for those in the service on July 19, 1924, and compulsory for those
entering thereafter. Those who had enrolled under earlier schemes
were given the option of transferring to this plan, credit being given
for contributions already made.
Contributions
T ^H E system is contributory, the employees paying in 5 per cent of
-*■ their salaries up to 35 years of service, after which time no further
contributions are required. The Government supplies whatever
am ount in addition m ay be needed to m aintain the system.
Benefits of System
benefits of the system are summarized as follows:
The superannuation age is 65. Retirem ent is compulsory at 70
except for cases of peculiar efficiency and fitness for position in which
annual extensions up to age 75 may be granted.
The allowances are as follows:
After 10 years’ service—
(a) Superannuation allowance.—On attaining superannuation age,
one-fiftieth of the average salary for the last 10 years for each year
of service but not exceeding 35 years. The maximum allowance is
therefore 70 per cent of such average salary.
(b) Retiring allowance.—On occurrence of disability or on abolition
of office, allowance equal to superannuation allowance to which he
would have been entitled if he had attained the age of 65.
(c) Withdrawal allowance.—On voluntary withdrawal or dismissal
(for causes other than misconduct), return of contributions without
interest.
(d) Widow’s allowance.—On death of contributor before super
annuation or retirement, one-half the allowance to which he would
have been entitled. On death of employee after superannuation or
retirem ent, a continuance of one-half his allowance. In both cases
the widow’s allowance ceases on remarriage.
(e) Children’s allowance.—If the mother is alive, allowance to each
child under 18 years in addition to widow’s allowance, 10 per cent of
employee’s allowance, with maximum for any one child of $300, and
maximum for all children of 25 per cent of employee’s allowance.
174
ADMINISTRATION
175
If the mother is dead, allowance to each child under 18 years may
be increased to 20 per cent of employee’s allowance, with maximum
for any one child of $600, and maximum for all children of 50 per cent
of employee’s allowance.
(/) Dependent’s allowance.—If contributor dies in the civil service
and leaves no widow and no child under 18 years of age, an amount
may be granted to the dependents not exceeding the amount of the
contributions made by the contributor without interest. “ D e
pendent” is defined to mean father, mother, brother, sister, or child
of a contributor who is at the date of death of the contributor depend
ent upon the contributor for support.
Before 10 years’ service has been rendered—
(g) On occurrence of disability or on abolition of office, a gratuity
not exceeding one m onth’s pay for each year of service.
(h) On being required to retire on marriage, a gratuity not exceed
ing the amount of contributions without interest.
(i) On the death of the contributor in the service, a gratuity to
the widow or children under 18 years of age not exceeding one
m onth's pay for each year of service. If a contributor leaves no
widow or child under 18 years of age, a gratuity may be granted to
dependents not exceeding the amount of contributions without
interest.
Administration
system is administered by the D epartm ent of Finance.
CHAPTER 9.—PUBLIC-SERVICE RETIREMENT
SYSTEMS IN EUROPEAN COUNTRIES
HE following is a summary of the most important points in the
public-service retirement systems in Austria, Belgium, Czecho
slovakia, Denmark, France, Germany, Great Britain, Italy,
Netherlands, Norway, Sweden, and Switzerland.
T
Right to Pension or to Insurance Benefits
'T'HE right of civil-service employees to service, disability, and survivors’ pensions, or to corresponding insurance benefits is recog
nized by all the above-named countries
Types of Systems and Contributions
R E T IR E M E N T systems in these countries are of two types: (a)
^
A system in which the employees do not contribute and the
pensions are paid and expenses borne entirely by the public treasury
might be held to be a true pension system. Such systems are in
operation in Belgium and Great Britain, and in Germany for officials
(Beamte) only. (&) A system in which the employees contribute
either the entire cost or only a percentage, usually 50 per cent, is of
the nature of social insurance, though it is often called, even in law,
a pension system. Such insurance systems for civil-service employees
are in operation in all of the above countries except Belgium and
G reat Britain. In France 6 per cent of the salary is contributed by
employees and 9 per cent by the Government. In Italy the em
ployees pay 6 per cent of their salary and the Government contributes
each year the rest of the cost of operation. In Germany—for em
ployees (.Angestellte)—50 per cent of the necessary contributions
is made by the employees and 50 per cent by the Government; the
same proportions of the contributions are paid by the employees and
the Government in Austria and in Czechoslovakia. In Denm ark 3
per cent of the salary is contributed by employees and the remainder
of the cost of operation of the system is contributed by the Govern
ment. In Sweden from 3 to 6 per cent of the salary is contributed
by employees, the rest, approximately two-thirds of the cost of the
operation of the system, being contributed by the Government. In
the Netherlands the employees contribute 3 per cent of their basic
salaries to the employees’ pension fund and 5x/i per cent to the widows
and orphans’ pension fund, and the State, provincial, and municipal
governments contribute 10 and 5 x/i per cent, respectively, of the
average of the total basic incomes of their respective employees. In
Norway 10 per cent of the salary is contributed by employees and
the remainder of the cost by the Government, In Switzerland 5 per
cent of the salary and four monthly paym ents of any salary increase are
paid by the employees, and 7 per cent of the salary, five m onthly pay
ments of any salary increase, cost of administration and any deficit
is paid by the Government.
176
RETIR EM EN T ALLOWANCES
177
Conditions for Retirement
T ^H E conditions as to age and length of service for retirem ent beneA fits are as follows: (a) The retirem ent age varies from country
to country. I t is 60 years in Austria, France, and G reat Britain,
65 years in Belgium, Czechoslovakia, Germany, Italy (after 20 years’
service), and the Netherlands, 67 years in Sweden, and 70 years in
Denm ark, Norway, and Switzerland.
The retirem ent age, however, varies in the same country, in
certain cases. For instance, in France it is 60 years after 30 years’
service, or 55 years after 25 years’ service, including 15 years’ field
service. In Denm ark an employee is compelled to retire at 70 years
of age, but at 65 years of age he acquires a pension right. In the
Netherlands in certain cases, by royal decree, an employee who is
honorably discharged at the age of 55 years, when he has rendered
10 years’ service, is allowed a pension. The retirem ent age for male
employees in Norway is 70 years and for female employees 65 years,
but for certain occupations requiring nervous strain and exposure to
elements the retirem ent age is lower—68 }^ears in State mines, etc.,
65 years in the State prison, post, telegraph and telephone services;
60 years for female emplo}rees in prison service and State medical
establishments; 55 years for female telegraph and telephone operators;
and 52 years in the State marine service. In Italy, after 40 years’
service, there is no age limit.
(6)
The required length of service for pension or insurance benefits
varies still more from country to country. I t is 10 years in Austria,
Czechoslovakia, Germany (5 years for female employees), Great
Britain, the Netherlands, and Sweden; 30 years in France (or 25
3^ears, including 15 years’ field service) and Belgium; from 2 to 30
years in Denm ark (full or maximum pension for 30 years’ service;
for shorter periods of service the pension is proportionally decreased);
from 10 to 30 years in Norway (the size of pension varies propor
tionally to the years of service); 40 years’ service, or 20 years’ service
at the age of 65, in Italy.
(c) In case of disability caused by accident or sickness in service
or otherwise, usually the length of service is not considered, with
the exception of the following countries: In France, 15 years’ service
is required when disability is caused outside of service; in the N ether
lands, 7 years when disability is not serious, permanent, or total.
Retirement Allowances
allowances vary according to the size of the salary or income
irom service, to the length of service rendered, or to the amount
of contributions made. In Austria the full allowance is 78.3 per cent
or approximately three-fourths of the salary, while in Belgium it is
one-sixtieth of the average annual salary of the last five years and in
field service one-fiftieth of such salary multiplied by the number
of years of service rendered, with a maximum of three-fourths of
basic salary per annum. In Czechoslovakia the regular allowance,
after 120 rnonthl}7 contributions, amounts to from 180 to 900 crowns
per annum for salary classes 1 to 6; 900 crowns plus from l j ^ to 15
crowns for each m onthly contribution for salary classes 7 to 16; in
178
CHAPTER 9.----R ETIR EM EN T SYSTEMS IN EURO PE
addition one-eighth of the contributions paid after the required 120
m onths’ contribution. The pension allowance for male employees
in Great Britain is one-eightieth of the average of the salary of the
last three years multiplied by the num ber of years of service, plus a
lump sum equal to one-thirtieth of such salary multiplied by the
number of years of service, or one and one-half times the salary, which
ever is smaller, and for female employees it is one-sixtieth of such
salary multiplied by the num ber of years of service, which is equal to
one-half of the salary per annum after 30 years’ service. In France,
the allowance is from one-half to three-fourths of the average salary
during last three years. In Germany the pension to officials is from
thirty-five to eighty one-hundredths of the last annual income from
service, and insurance benefits to employees are from 516 to 2,280
marks per annum. The pension in Italy is one-fortieth of the first
4,000 lire and one-sixtieth of the remainder of the average income
from service of the last three years for each year of service—maxi
mum nine-tenths of such income from service and minimum 900 lire
—and for 40 years’ service the pension is four-fifths of such income
from service. In Switzerland the allowance is from 15 to 70 per cent
of the last annual salary, and in Denm ark from two-tenths to fortysixtieths of the annual income from service—maximum, 8,000 crowns.
Sweden provides maximum pensions to chiefs and other officials of
from 7,296 to 8,796 crowns per annum, and to other employees,
males from 1,320 to 6,996, and females from 1,236 to 6,684 crowns
per annum, varying with salary. In the Netherlands for each year
of service the allowance is 1.75 per cent of the average income from
service for the last three years, with a maximum of 70 per cent of such
such average income. In Norway for the lower salaries, from 1,000
to 6,000 crowns per annum, the pension amounts to 66 per cent of the
highest annual salary, for salaries of 6,100 crowns the pension
amounts to 65.7 per cent of such salary, and for salaries over 6,100
crowns this amount is gradually decreased by 0.3 for each salary
base to 54 per cent for the salary of 10,000 crowns or over.
Usually the disability allowance, when disability is perm anent
and caused by accident or sickness in service, is equal either to the
full-service pension or to the salary. In Great Britain (for accidental
injury) it is equal to the salary, with a maximum of £300 per annum;
in France it is from one-third to three-fourths of the salary, with a
minimum of 1,500 francs per annum, or the full service pension ; and
in Austria, Belgium, Czechoslovakia, Denmark, Germany (employ
ees), Norway, Sweden, and Switzerland, it is equal to the full service
pension. In Italy, the disability allowance is one-fortieth of the
average income from service of the last three years for each year of
service, with a maximum of nine-tenths of such income from service
and a minimum of one-third of the last annual salary for less than
20 years’ service or one-half of such salary for 20 years’ service or
more, in any case 900 lire per annum; in the Netherlands it varies
from 30 to 70 per cent of the average income from service for the
last three years; and in Germany (for officials) it may not exceed
thirty-five one-hundredths of the income from service.
CHAPTER 9.— RETIREMENT SYSTEMS IN EUROPE
179
Survivors’ Allowances
HPHE allowances paid to widows and orphans in the various systems
are as follows: (a) Widow: In Great Britain widows and
orphans, where the employee died from injury in discharge of duty,
may be granted an allowance not to exceed the salary of the deceased.
In Italy the widow and children are entitled to a pension equal to
the following proportion of deceased employees’ pension: Widow,
50 per cent; widow with children—one child, 60 per cent; two children,
65 per cent; three children, 70 per cent; four or more children, 75
per cent, with a minimum of 600 lire per annum. In Austria, Czecho
slovakia, France, Norway, and Switzerland, the widow is awarded
one-half of the deceased husband’s pension; in Belgium, from 20 to 50
per cent of the deceased husband’s salary (paid from special funds); in
Germany, in the case of officials, 40 per cent, and of employees 60 per
cent of the deceased husband’s pension; in Denmark, from one-fifth
to one-third of the deceased husband’s income from service; in the
Netherlands, 50 per cent of the first 2,000 florins and 40 per cent of
the remainder of the basic income from service of deceased husband;
and in Sweden, one-fourth of the deceased husband’s pension.
(b) Widow’s children: The children’s allowance in France is 10
per cent of the pension of the deceased for each child under 21; in
Austria, one-fifth of the widow’s pension for each child under 21; in
Belgium, from 2 to 10 per cent of the average salary of the deceased
for each child under 18; in Czechoslovakia, one-fifth of the pension
of the deceased for each child under 17; in Germany, for officials,
one-fifth of the widow’s pension for each child under 18, and for
employees 50 per cent of basic retirem ent benefits of deceased for each
child under 15; in Switzerland, 10 per cent of the annual salary of the
deceased for each child under 18; in Denmark, for one child, 180
crowns; for two children, 330 crowns; for three children, 450 crowns;
and. for each child in excess of three, 100 crowns per annum; in
the Netherlands, 10 per cent of the pension base of the deceased
(maximum base for calculation, 3,000 florins) for each child under
legal age; and in Norway, for one child 40 per cent, for two children
60 per cent, for three children 75 per cent, for four children 90 per
cent, and for five or more children 100 per cent of the widow’s
pension. For provision for children in Great B ritain and Italy, see
under “ W^idow.”
(c) Whole orphans: Great B ritain (see “ W idow” ); for whole
orphans the allowance in France is 10 per cent of the pension of the
deceased for each child under 21 plus proportionate share of widow’s
pension; in Austria, an undivided orphans’ pension of half of widow’s
pension; and in Belgium three-fifths of widow’s pension for one
orphan, four-fifths for two orphans, entire widow’s pension for three
orphans, plus 2 per cent of average salary for each child over three
under 18, maximum 10 per cent. Czechoslovakia pays two-fifths of
benefits of deceased for each child under 17, maximum, total benefits;
Germany, for officials, one-third of widow’s pension for each child
under 18 and for employees 50 per cent of the basic retirem ent bene
fits of the deceased for each orphan under 15; Switzerland, 20 per
cent of the annual salary of the deceased for each child under 18;
Sweden, living expenses, schooling, and training of orphans under
21 (paid by the survivors’ pension fund); and Italy, where there are
180
CHAPTER 9.— RETIREMENT SYSTEMS IN EUROPE
not more than two orphans, one-third of deceased employee’s pension;
where three orphans, 40 per cent; four orphans, 50 percen t; and five
or more orphans, 60 per cent, subject to a minimum of 500 lire per
year. In the Netherlands this allowance is 20 per cent of the basic
income from service of the deceased (maximum basic income for cal
culation, 3,000 florins) for each orphan under legal age; and in N or
way it is double the amount of pension given to widow’s children.
Administration of Pensions
/^IV IL -S E R V IC E pensions are administered by a special councilor
^
board, or office, under either the treasury departm ent, as in
Austria, Belgium, Denmark, France, G reat Britain, Italy, and Sweden
or under the departm ent of public or social welfare, as in Czecho
slovakia and Norway, or by an independent State or national insur
ance office, as in Germany, or under a Federal council as in N ether
lands and Switzerland.
AUSTRIA 1
Legislation
'T 'H E main laws on which the present Austrian civil-service retire1 m ent and pension system is based are the Austrian C onstitu
tion; the law of January 25, 1914; the pension law of December 17,
1921; and the salary law of July 18, 1924. There are other laws 2
affecting retirement and pensions, but they are rather of a supple
m entary nature, concern certain details, or contain tem porary
measures in connection with war-time emergencies and the rise of
the cost of living.
Employees Covered
T ^H E officials and employees in Government offices and establishA ments, including State corporations, have the right to pension,
with the exception of contract civil employees. “ Contract employees ”
are employees engaged for a specific task.
Retirement Age and Length of Service
A CIVIL-SERV ICE employee may be compelled to retire when he
^
has passed the age of 60 and has acquired the right to full pension.
Judges retire on December 31 following their sixty-first birthday.
As a rule a pension claim arises only after 10 years’ service. For
a shorter term of service than 10 years a lump sum is usually paid.
i The data on which this section is based are from Reichsgesetzblatt, Jan. 27,1914, and July 31,1917; Staatsgesetzblatt, Nov. 30, 1918, Dec. 18 and 30, 1919, and June 5 and Oct. 13, 1920; Bundesgesetzblatt, Dec. 29,
1921, July 29 and Oct. 22,1922, May 16 and July 24,1924, Dec. IS and 31,1926, and Apr. 14,1927; unpublished
material furnished to the Department of Labor through the Department of State.
t These laws, which are still in force either in whole or in part, are the following: Imperial decree of Dec.
9,1866 (granting pensions to civil-service employees); law of May 21,1868 (relating to civil-service employees
in the judiciary); law of May 14, 1896; imperial decree of June 9, 1915, and administrative resolution of
Dec. 10,1915; decree of Ministry of Finance of June 20, 1917; executive order of State Finance Office of Nov.
28, 1918; law of Oct. 20, 1919 (relating to the military police); law of Oct. 30, 1919 (relating to guards in the
Finance Bureau); law of Oct. 30, 1919 (relating to the police); law of Oct. 1, 1920 (concerning civil-service
employees in the post and telegraph service); law of Oct. 1, 1920 (known as the accident survivor law);
law of July 14, 1921; decree of Apr. 27, 1922; law of July 24, 1922; resolution of Sept. 28, 1922; resolution of
Feb. 14,1923; law of Mar. 21, 1925; law of Apr. 3, 1925; executive order of Ministry of Commerce and Trans
portation of Apr. 7, 1925, No. 11470 (referring to the postal service); law of May 26, 1926; decree of Dec.
7, 1926 (referring to mail carriers on a commission basis and to their survivors); law of Dec. 10, 1926; law
of Apr. 1, 1927; decree of Apr. 12, 1927 (referring to postal employees and their survivors); decree of Min
istry of Social Welfare of May 4, 1927.
AUSTRIA
181
Retirement Allowances
CIV IL-SER V ICE employee, upon retirement from service, is
paid either a pension or a lump sum. He draws his pension from
the 1st of the m onth following his retirement, of which he is formally
notified, and until th at date he continues to receive his salary in full.
The annual pension is calculated on 78.3 per cent of the salary or
income from service (that income which is recognized by the proper
authority as the basis for calculation). This 78.3 per cent of the
income is called the “ pension calculation basis” (Ruhegenussbemessungsgrundlage), and the maximum pension may not exceed
this amount.
After 10 years' service the pension is 40 per cent of the pension
calculation basis, and increases by 2 per cent for each additional year
of service, so th a t the maximum pension is reached after 40 years’
service. The pension increase to a civil-service employee who has
completed a university course is 2.4 per cent of the pension calculation
basis for each year after 10 years’ service, so th at he can obtain the
maximum pension after 35 years’ service.
For a shorter term of service than 10 years a lump sum is usually
paid, which for a term of from 3 to 5 years’ service amounts to the
equivalent of the pension calculation basis, and for a term of 5 to 10
years’ service is equal to twice the pension calculation basis.
Pension 'privileges.—The special per cent of 2.4 of the pension cal
culation basis for each year of service after 10 years is also granted to
civil-service employees in executive positions in the post, telegraph,
and telephone service and in supervisory positions in Federal prisons
and jails.
For civil-service employees in the customs service and for police
officers three years’ service is counted as four. For m ilitary police
officers one full year of service is counted as 16 months.
Lum psum payment.—A lump sum will be granted a civil service
employee at his request, provided he renounces for himself and his
family all claims which may have arisen from his service. The lump
sum amounts to the total salary for two years calculated at the rate
of his last annual salary; th a t is, the salary or income which serves as
the basis for calculation of pension.
Loss of right to pension.—The right to a pension expires on the loss
of Austrian citizenship or when a civil-service employee is sentenced
for a crime, or declares his intention to leave the service and renounces
his claim to the pension, or when a disciplinary court decrees the
forfeiture of the pension.
Appeal.—If a civil-service employee is dissatisfied with the disposi
tion of his pension claim, he may appeal to the adm inistrative authori
ties, and if not satisfied with their decision he may, within six months,
carry his case to the constitutional court for redress.
A
182
CHAPTER 9.— RETIREMENT SYSTEMS IN EUROPE
Disability
A CIV IL-SER V ICE employee who is disabled for service is entitled
to retire either perm anently or temporarily, according to whether
the disability is perm anent or temporary. An employee who is
permanently disabled m ay be compelled to retire. Under legal
regulations an employee is pensioned when he has been absent from
his work more than one year on account of sickness.
The cause, degree, and probable duration of the disability m ust
be ascertained by an officially appointed physician, but no examination
is required when the employee has passed his sixtieth birthday.
In doubtful cases the proper authorities may reexamine the case.
A judge may be compelled to retire perm anently or temporarily
on the ground of bodily or mental defects, ascertained by a disciplinary
court.
The disability pension is calculated in the same way as the service
pension.
War-time privileges.— If a civil-service employee is retired because
of perm anent disability half a year is added to the period of his civil
service for every calendar year of the war during which he was at least
six months in active civil service, provided he is not entitled to other
war pension privileges under paragraph 2 of the law of November 28,
1918. One year is added to his civil-service time for each calendar
year in which a civil-service employee had at least three m onths of
active m ilitary service, and in case he took p art in fighting, was
wounded by the enemy, or became disabled through war service (by
disease), the counting of the calendar year as a “ war y e a r” is his
right without regard to the duration of his m ilitary service.
Survivors’ Allowances
rN CASE of the death of a civil-service employee his surviving
* family is entitled to a death benefit either in the form of a lump
sum amounting to three times his last m onthly salary, or of a pension.
“ Fam ily,” as used in the pension law, includes the widow, unless a
divorce can be proved in which the wife was the guilty party, and the
legitimate children or children who have been legitimated by a subse
quent marriage. The children of a civil-service employee are entitled
to the death benefit only if there is no widow with a valid claim.
Widow’s pension.—If a civil-service employee at the time of his
death had not acquired the right to a pension, his widow is entitled to
a lump-sum paym ent amounting to one-fourth of the last annual
salary which serves as the pension calculation basis; otherwise she
is entitled to a widow’s pension, equal to 50 per cent of the pension
which her deceased husband was receiving or would have been entitled
to at the time of his death.
The widow of a civil-service employee who had passed his sixty-fifth
year of age before the marriage took place is entitled to a widow’s
pension only if such employee had had at least 15 years’ service and
if the marriage had lasted at least two years, or, in the case of the
marriage of a retired employee, three years. In the latter case the
difference in age between the married couple may not exceed 25 years.
However, the condition as to the duration of a marriage contracted
by a civil-service employee after he was of 65 years of age is not insisted
183
AUSTRIA
upon if a child has been born in wedlock or has been legitimated by the
marriage, or if proof can be furnished th at the widow, at the time of
the death of her deceased husband, was pregnant.
The widow loses her right to a pension when she marries again.
If a widow has not claimed the lump sum which may be paid n stead of
a pension, the widow’s pension is suspended as long as the second
marriage lasts.
Orphans’ pension.—Besides the widow’s pension a widow is granted
for each of her children for their education an amount equal to onefifth of the widow’s pension. The total of the pensions of the widow
and the orphans of a civil-service employee who died during service
may not exceed the pension calculation basis. The total pension of
f/ie widow of a retired employee may not exceed the sum of his
pension.
The orphan’s pension is paid until the child reaches 21 years of
age, or has been otherwise provided for; if by reason of physical or
mental defect the child is unable to earn a livelihood, the pension may
be granted for a longer time, i. e., for the lifetime of the child. Should
a child, because of studies or extended special training, not be able
to earn its living at the age of 21 years, the pension may be continued
until its twenty-fourth year.
The children, if no widow files a claim, are entitled, in case the
civil-service employee at the time of his death was not entitled to a
pension, to a lump sum, amounting to one-fourth of the last annual
salary which serves as the basis of pension calculation; otherwise
they are entitled to an undivided orphans’ pension amounting to
half the customary widow’s pension.
If the total sum of the orphans’ pension to which the widow would
have had a claim exceeds the amount of the widow’s pension, the
excess is to be allotted as a supplement to the widow’s pension, for
the orphans’ pension may not exceed th at of the widow. Whenever
a child starts earning its own living, this supplement is reduced by
the sum representing the portion for one child.
i.i
1A
VV
WW
VW
1VU1U
M
U
/U
A
U
t
-A
-J
L
-L
V
J V
VU
U
il J
^
/\
J
X
X
U
X
V/lX \_/L
Contributions and Administration
contributions are calculated on an actuarial or m athem atical
uasis—50 per cent by the Government and 50 per cent by the
employees. A civil-service employee pays pension contributions
equal to 3.2 per cent of his salary for the duration of his service if he
is entitled to a full pension before the fortieth year of service, and
amounting to 2.8 per cent in the case of a pension payable after 40
years of service. The M inistry of Finance administers the retire
m ent and pension system.
Contract Civil-Service Employees
the ordinance of January 16, 1925, a contract civil-service
employee in full-time employment, when prevented by illness
from performing his service and this is not due to carelessness or
design, has a claim to full pay for a month, or, if he has served more
than two years, for two months. In exceptional cases the salary
may also be paid for a third month.
184
CHAPTER 9.— RETIREMENT SYSTEMS IN EUROPE
BELGIUM 8
Legislation
-SERV ICE retirem ent and pensions in Belgium are governed
tind regulated by numerous laws. The most im portant is,
perhaps, the law of July 21, 1844, covering the system of civil-service
pensions. This law was successively amended and modified by the
laws of February 17, 1849, January 10, 1886, June 3, 1920, and July
29, 1926. There have also been enacted special laws relating to
pensions of judges (law of July 25, 1867), high-school teachers (law
of July 30, 1879), grammar-school teachers and processors, and
teachers in public or elementary schools (laws of 1876, 1884, 1901,
and 1912), and the clergy (law of April 24, 1900.)
General Provisions
July 1, 1924, all pensions are composed of a fixed sum and
a uuangeable sum. The latter varies according to the fluctuations
of the value of the franc in relation to the cost of living. This com
bination has given satisfactory results to all concerned so far, except
th a t it has somewhat complicated the adm inistrative work. W hether
it will be retained or will be abandoned or modified, owing to the
stabilization of the franc, remains to be seen.
In examining the existing laws governing civil-service retirem ent
and pensions in Belgium, a decided line m ust be drawn between
pensions to civil-service employees themselves and pensions to their
widows and orphans.
Retirement Pensions
pensions to civil-service employees are gratuitous, being
charged to the public treasury. There is no special pension
fund to m aintain these pensions, the necessary sums for their pay
m ent being included yearly in the budget of the public debt.
The pensions paid are, as a general rule, proportioned to the
salaries and the length of service. The paym ent of more than one
pension to a civil-service employee or the paym ent of a pension and a
salary to him is authorized only under certain conditions.
The regulations as to retirem ent and the paym ent of pensions of
civil-service employees in the various adm inistrative departm ents may
be summed up as follows:
Magistrature
Age and length of service.—Retirem ent is required at the age of
70 years in the jurisdiction of lower courts, and from 70 to 75 years
in the jurisdiction of higher courts. For 30 years of civil service, of
which at least 15 years have been in the m agistrature, an annual pen
sion is paid equal to the average salary of the last three years.
In case a civil-service employee has reached the retirem ent age
and has been in civil service less than 30 years hie annual pension is
3 The data on which this section is based are from Les Codes et les lois speciales les plus usuelles en vigueur
en Belgique, Brussels, 1925; Axters, Henry, Commentarie de la loi organique, Brussels, 1898, XIV, pp.
427-460~des pensions; and unpublished material furnished to the Department of Labor through the
Department of State.
BELGIUM
185
one-thirtieth less per year than the average salary of the last three
years.
Disability pensions.—When a civil-service employee who has been
in the service five years or over is disabled from any cause other than
accident in the service, he is entitled to an annual pension of one-sixth
of the average salary of the last five years, and in addition one thirtyfifth of the same average salary for each year .of service over five
years.
Accident pension.—In case of a perm anently disabling accident
occurring in the service the employee is entitled to an annual pension
equal to one-fourth of the last year’s salary, and in addition one thirtyfifth of the last year’s salary for each year of service over five years
Maximum pension.—The maximum pension in each of the above
cases in the m agistrature is a sum equal to the salary or income
which served as the basis for settlement.
High-School Instruction Service
Age, length of service, disability, and pension.—When a civil-service
employee has been 30 years in the service, or when he has reached
the age of 70 years and has been in the service 10 years, or when he
has served 20 years and has been perm anently incapacitated in the
service by a cause other than accident, he is entitled to an annual
pension equal to the average salary of the last five years of service.
When he has reached the age of 60 years and is disabled in service by
a cause other than accident, he is entitled to an annual pension am ount
ing to one-sixth of the average salary of the last five years of service
and in addition to one thirty-fifth of the same average salary for each
year of service over five years.
Accident pension.—In case a civil-service employee has suffered an
accident in service, perm anently disabling him, he is entitled to an
annual pension equal to one-fourth of the last salary and, in addi
tion, one thirty-fifth of the last salary for each year of service over five.
This is increased to one-third of the last salary when he has shown
extraordinary courage and devotion.
Maximum pension.—The maximum pension in each of the above
cases in the high-school instruction service is equal to the salary or
income which served as the basis for settlement.
Normal-School and Intermediate Instruction Service
Age, length oj service, disability, and pension.—When a civil-service
employee has reached the age of 55 years and has served 30 years,
or the age of 60 years and has served 15 years, or when he is perm a
nently disabled in the service by a cause other than accident, he is
entitled to an annual pension amounting, per year of service, to
one fifty-fifth of the most favorable average salary of five consecutive
years during his service. The maximum pension is two-thirds of the
most favorable average salary of five consecutive years during his
service.
Accident pension.—In case of a perm anently disabling accident the
employee is entitled to an annual pension amounting to one-fourth
of the last annual salary, and in addition one fifty-fifth of the last
annual salary for each year of service over five years.
3306°— 29------ 13
186
CHAPTER 9.— RETIREMENT SYSTEMS IN EUROPE
Maximum pension.—The maximum pension in each of the above
eases in the normal and interm ediate instruction service is equal to
two-thirds of the salary or income which served as the basis for
settlem ent.
Public or Elementary School Instruction Service
Age, length oj service, disability, and pension.—When a civil-service
employee has reached the age of 50 years and has been in service
30 years, or the age of 60 years and has been in service 15 years, or
when he has been in service 10 years and is perm anently disabled in
the service by a cause other than accident, he is entitled to an annual
pension amounting, for each year of service, to one-fiftieth of the
average salary of the last five years of service.
Accident pension.—When a civil-service employee has suffered an
accident in service which perm anently disables him he is entitled to
an annual pension equal to one-fourth of the last salary, and in addi
tion one-fiftieth of the same salary for each year of service over five
years.
Maximum pension.—The maximum pension in each of the above
cases in the public or elementary school instruction service is equal
to two-thirds of the salary or income which served as the basis for
settlement.
All Other Civil-Service Employees
Age, length oj service, disability, and pension.—When a civil-service
employee has reached the age of 65 years and has been in the service
30 years, or when he has been in the service 10 years and is perm a
nently disabled in the service by a cause other than accident, he is
entitled, in case of office service, to an annual pension amounting, for
each year of service, to one-sixtieth of the average salary of the last
five j^ears, or in case of field service to one-fiftieth of the average
salary of the last five years.
Accident pension.—An employee who in the course of his employ
m ent has suffered a perm anently disabling accident is entitled to an
annual pension amounting to one-fourth of the last annual salary, and
in addition one-sixtieth of the same salary for each year of service
over five years.
Maximum pension.—The maximum pension in each of the above
cases is equal to three-fourths of the salary or income which served
as the basis for settlem ent.
Widows’ and Orphans’ Pensions
'T ’H E pensions to widows and orphans are paid from special funds
A established and regulated by law. These funds are maintained
by means of deductions from the salary of their members, and, at
least in principle, the funds can not be subsidized by the public
treasury. However, it became necessary to break this rule in 1920
after a general revision and owing to the depreciation of the franc.
The funds for widows and orphans are placed under the control of a
board of governors composed of civil-service employees appointed
by the Government. The funds m ust be converted into State securi
ties or treasury bonds.
BELGIUM
187
The law simply outlines the organization of the funds, and so each
fund has its own by-laws, which differ greatly in respect to deductions
and the conditions as to paym ent of pensions.
The most im portant points in the by-laws of the various funds for
widows and orphans of civil-service employees in the Departm ents of
Finance, Justice, and Colonies are as follows:
Department of Finance
Amount of deductions.—For all affiliated employees in the depart
m ent: (a) Five per cent of the salary; (b) salary of the first m onth;
(c) first two months of all increases; (d) 5 per cent on all pensions of
widows and orphans. In addition, for m arried employees: (a) One
and one-half per cent of the salary from the time of entering the
departm ent; (b) 1 per cent of the salary in case of disproportion in age
of the married couple; (c) 5 per cent on pensions of married employees.
Conditions for approval of pensions.—Five years’ service and three
years’ married life in cases of widow’s pension and five years’ service
only in cases of orphans’ pensions are required for approval of pension.
Widow’s pension.—For 10 years’ service or less, 20 per cent of
average salary of last 5 years and 1 per cent for each year of service
over 10 years, this 1 per cent not to exceed 140 francs per year. The
maximum annual pension is 10,000 francs, or one-half of the last
annual salary.
Orphans’ pensions.—The pension paid to whole orphans up to 18
years of age is a sum equal to three-fifths of the widow’s pension in
case of one orphan, to four-fifths in case of two orphans, and to the
widow’s pension in case of three orphans; and in addition, 2 per cent
of the average salary per orphan in excess of three, with maximum
of 10 per cent. Where the mother is living the orphans’ pension
is, for each child, 2 per cent of the average salary, with maximum of
10 per cent.
Department of Justice
Amount of deductions.—For all affiliated employees in the depart
m ent: {a) Five per cent of the salary; (b) salary of the first m onth; (c)
first three months of all increases; (d) 5 per cent on all pensions of
widows and orphans. In addition, for married employees: (a) Two
and one-half per cent of the annual salary during 10 years and 1 per
cent of salary thereafter; (b) 5 per cent on pensions of m arried em
ployees.
Condition for approval of pensions.—Five years' service and three
years’ married life in cases of widow’s pension and five years’ service
only in cases of orphans’ pensions are required for approval of pension.
Widow’s pension.—The basis for the calculation of widow’s pen
sion is 263^ per cent of total deductions from husband’s salary, with
maximum of 10,000 francs, and in case of disproportion in age, 1 per
cent less for each year of difference in age.
Orphans’ pension.—The pension for orphans up to 18 years of age
is equal to three-fifths of the widow’s pension in case of one orphan;
to four-fifths in case of two orphans; to the widow’s pension in case of
three orphans; and to 10 per cent of the widow’s pension for each
child in excess of three. Where the m other is living, the pension to
each child amounts to 10 per cent of the m other’s pension.
188
CHAPTER 9.— RETIREMENT SYSTEMS IN EUROPE
Department of Colonies
Amount of deductions.—For all affiliated employees in the depart
ment: (a) Five per cent of salaries; (h) salary of first m onth; (c) first
three months of all increases; (d) five per cent on all pensions of
widows and orphans. In addition, for married employees: (a) One
per cent of salary; (6) 10 per cent on pensions of married employees
less than 65 years of age; (c) 3 per cent on pensions of married em
ployees over 65 years of age.
Widows and orphans’ pensions.—Pensions to widows and orphans
are calculated on actuarial or insurance bases.
CZECHOSLOVAKIA 4
/CZECHOSLOVAKIA is a new State composed of certain Provinces
^
which formerly belonged to Austria, Hungary, and Germany.
The new State inherited from these countries their civil-service
retirement, pension, and insurance systems, which have been coordi
nated and amended to include certain new features. The successive
laws and amendments have each included new groups of employees
under the insurance system until practically all employees in private
and Government service who are not otherwise entitled to pensions
or compensation in some form are under compulsory insurance.
As a result of the numerous law^s and amendments, the present-day
Czechoslovakian pension and insurance system has become quite
complicated. According to information obtained from the Czecho
slovakian Legation in W ashington, a new system is now under
consideration.
Law of February 5, 1920
CZECH O SLO V A K IA became an independent Republic on October
^
28, 1918. On February 5, 1920, a law (No. 89) was passed,
effective July 1, 1920, which amended the old imperial pension law
of December 16, 1906.
The law of February 5, 1920, made insurance compulsory for all
employees in the Czechoslovakian Republic between the ages of 16
and 55 years, including brain workers and employees in supervisory
positions, clerical workers in offices, commercial houses, warehousetransportation enterprises, and law and notary offices, but excluding
unskilled and day laborers and those employees of the Government
and of religious organizations recognized by the Government who
were already insured.
Employees liable to compulsory insurance were grouped into 16
salary classes, the first class including those with an annual salary
up to 900 crowns, and the sixteenth or highest class those with an
annual salary of 9,000 crowns and over.
The law declares th a t the objects of the insurance are to provide:
(a) Disability benefits; (&) old-age benefits; (c) educational allowances
(for bringing up children) in addition to disability and old-age pension;
(d) widow’s pensions; (e) educational allowances for orphans; (/)
funeral allowances; and (g) lump-sum paym ents to widow, orphans,
or needy parents.
4 The data on which this section is based are from Sbirka zakonfi a nafizeni, statu (3eskoslovenskeho, pt.
XVIH, Feb. 24, 1920, pt. CXLIV, 0ec.x31, 1920, pt. 112, Oct. 30, 1924, pt. 24, Nov. 15, 1924, and pt. 93,
Nov. 1, 1925; Finan6i Zakon Republika Ceskoslovensk6 (Statni Rozposnet-budget) 1924-1927.
CZECHOSLOVAKIA
189
To be entitled to full benefits the insured employee m ust have
contributed to the fund for 120 m onths (called “ waiting tim e” or
“ te rm ” ). If disability or old age or death occurs after 60 but before
120 m onthly paym ents have been made, the benefits are payable in
reduced amounts proportioned to the number of payments made.
In case of a disabling accident, the employee is entitled to full benefits
regardless of the number of his m onthly contributions.
Disability and old-age benefits.—The benefit consists of two parts,
“ regular” and “ additional.”
The size of the “ regular” benefit is determined by the salary class
of the insured employee, the income of the last 24 contribution
months being used as the basis of calculation. The regular dis
ability benefit per year is as follows: Class 1, 180 crowns; class 2,
270 crowns; class 3, 360 crowns; class 4, 540 crowns; class 5, 720
crowns; class 6, 900 crowns.
If the wage class is higher than the sixth the benefit is computed
by adding to the benefit in class 6 the following specified am ount for
each m onth the insured employee has paid his contribution: Class 7,
l }/2 crowns; class 8, 3 crowns; class 9, 43^ crowns; class 10, 6 crowns;
class 11, i y 2 crowns; class 12, 9 crowns; class 13, 1 0 ^ crowns; class
14, 12 crowns; class 15, 1 3 ^ crowns; class 16, 15 crowns. The regular
disability benefit, however, may not be less than one-fourth of the
total contributions of the insured employee for the entire waiting
time (120 months) or up to the date of injury.
The “ additional” disability benefit begins after the completion
of the waiting time (120 months) and amounts annually to one-eighth
of the contribution paid after the required 120 m onths’ contribution.
After 60 m onths’ contribution the insured employee is entitled to
an annual benefit equal to two-thirds of the “ regular” benefit, and
for every additional contributing year one-fifteenth of the regular
disability allowance is added, but the reduced disability pension
payable after 60 contributing months m ust not be less than one-sixth
of the amount of the contributions paid to date.
The disability benefit may be increased as much as 50 per cent if
the insured employee is so disabled th a t he requires care by persons
outside his family.
The old-age benefit is a life pension, payable from the day the
insured becomes 65 years of age.
The disability or old-age benefit of a person whose child or children
would be entitled to an educational allowance in case of his death
may be increased to allow for his care of such children. For each
child this addition amounts to one-sixth of the regular disability
benefit. If the person receives a reduced benefit the additional
allowance shall be only one-sixth of this amount for each child. B ut
the total of such additional allowances may not be more than 50
per cent of the regular or partial disability allowance received.
Survivors’ benefits.—A widow’s pension is payable from the day
of the death of her husband until she remarries or dies.
Every child under 18 years of a deceased insured father or mother
who received or was entitled to a disability or old-age benefit at
the time of his or her death is entitled to an educational benefit.
Illegitimate children are also entitled to this benefit if the paternity
of the deceased insured was legally established before his death.
Educational allowances are payable from the day of the death of
190
CHAPTER 9.— RETIREMENT SYSTEMS IN EUROPE
the parent until the child is 18 years of age or until the child dies,
marries, or finds other means of support. In exceptional cases this
allowance may be continued beyond the time when the child reaches
18 years.
If the insured dies before the completion of 60 contributing months
but not as the result of an industrial accident, and if all other condi
tions necessary for a widow’s pension or educational allowance are
met, the widow may claim a final settlem ent. If there is no widow
or if she is not entitled to make such a claim the orphan children
may claim it in equal parts If there are neither widow nor orphan
children entitled to such a settlem ent claim to it may be made by
the needy mother of the deceased, provided she was dependent on
him for support. If there is no mother a needy father previously
dependent on the deceased may claim it.
As a final settlem ent the widow or children get twice the regular
annual disability allowance of the deceased, while the father or
mother receive only the amount of the annual disability allowance
to which the deceased was entitled, according to the wage class and
after the completion of 120 contributing months.
Funeral benefits.—The survivors of an employee who under this
law was entitled to disability or old-age or widow’s or educational
allowances and who had completed 60 contributing months, if they
have given him burial, are entitled to funeral benefits equal to onefourth of the benefit which the deceased received or to which he was
entitled.
Time oj payment oj benefits.—All benefits, including educational
allowances, are payable m onthly and in advance
Law of December 22, 1920
rp H E law of December 22, 1920, amends the workmen’s insurance
■ law of M arch 30, 1888, as amended M ay 15, 1919. It provides
for medical aid, m aternity pensions, and funeral allowances, but
does not apply to those Government employees who are entitled to
at least a year’s salary in case of illness.
Sick benefits.— If illness continues beyond three days and the
patient is incapable of work he receives the following daily sickness
benefit from the day sickness began.
Crowns
Wage
Wage
Wage
Wage
Wage
Wage
Wage
class
class
class
class
class
class
class
1_______________
2_______________
3_______________
4_______________
5_______________
6_______________
7_______________
1. 4
2. 7
4. 0
6. 0
8. 0
10. 0
12. 0
Crowns
Wage
Wage
Wage
Wage
Wage
Wage
class
class
class
class
class
class
8
9
10
11
12
13
_____________
14. 0
20 . 0
22 . 0
Sick benefits are paid at the end of each week until the patient
recovers, but not longer than one year.
Maternity benefits.—M aternity benefits are paid in the above
amounts for six weeks preceding and six weeks following childbirth,
provided the mother does not engage in remunerative labor during
that period. A mother who nurses her baby receives, in addition
to the sick benefit, one-half of th at amount for 12 weeks following
childbirth. This period may be extended to 26 weeks.
CZECHOSLOVAKIA
191
Funeral benefit.— If the sick person dies within six m onths after
his claim to sick benefit expires his survivors may receive as a funeral
allowance an amount equal to 30 times the average daily wage
of the insured, but not less than 150 crowns.
Benefits to members oj family oj insured.—The sick benefits enumer
ated above are also available to the members of the family of the
insured, including husband, wife, and legitimate, illegitimate, and step
children until the completion of their sixteenth year of age, parents,
brothers, sisters, grandparents, father-in-law, and mother-in-law, who
constitute the household of the insured and who are not subject to
compulsory insurance. B ut f uneral benefits may not exceed 60 crowns
for a child up to 2 years of age, 180 crowns for a child over 2 and
under 14 years of age, and 300 crowns for a person 14 years of age or
older. Insured employees having a taxable annual income exceeding
20,000 crowns are not entitled to sickness insurance benefits for
members of their household.
A m aternity benefit of up to one-half* of the regular sick benefit may
be paid for six weeks before and six weeks after childbirth to mothers
in the family of the insured.
The allowance to a member of the family of the insured may run
up to one-fourth of the regular sick benefit and m ay be extended up
to 26 weeks.
Persons and prospective mothers who are being cared for at home
may, with their consent, be supplied nursing care. Prospective
mothers, with their consent, may be sent for confinement to insti
tutions caring for such cases, in which event the expenses shall be
charged against the sick benefit but may not consume more than
one-half of it.
Wage and contribution classes.—The wage and contribution classes
of the employees insured for sickness are as follows:
Daily wage m crown
Wage
Wage
Wage
Wage
Wage
Wage
Wage
Wage
Wage
WTage
Wage
Wage
Wage
class
class
class
class
class
class
class
class
class
class
class
class
class
1______________________________________________up to I
2 ______________________________ over 3 and up to 5
3 ______________________________ over 5 and up to 73^
4 ______________________________ over 7^2 and up to 103^
5_______________________________over 10H and up to 133^2
6 ______________________________ over 1 3 ^ and up to 163^
7 _______________________________over 1 6 ^ and up to 193^
8 _______________________________over 193^ and up to 22J^
9 ______________________________ over 223^ and up to 253^2
10_____________________________ over 253^ and up to 283^
11_____________________________ over 283^ and up to 313^
12_____________________________ over 313^2 and up to 3 4 ^
13_____________________________ over 3 4 ^ ________________
Monthly
contribu
tions in
crowns
2
4
6
9
12
15
18
21
24
27
30
33
36
By a special ruling sick benefits may be increased beyond those
specified above as follows: The daily sick benefit in class 1 may be
raised to 2% crowns and in the other classes to 90 per cent of the
lowest wages in each class, and the funeral allowance may be raised
to 45 times the daily average wage.
The sick benefit may be increased 10 per cent of the regular benefit ,
if the sickness continues beyond 13 weeks, 20 per cent if sickness
continues beyond 26 weeks, and 30 per cent if sickness continues
beyond 39 weeks.
192
CHAPTER 9.— RETIREMENT SYSTEMS IN EUROPE
For employees whose daily wage is over 37 crowns a special wage
class may be created with average daily wage of over 39 and up to
42 crowns, and with a daily sick benefit of over 26 and up to 28
crowns.
Law of December 30, 1920
HPHE law of December 30, 1920, amends the previous laws in the
following respects: If the insured dies after the completion of
the waiting time (120 months) the final settlem ent made to his sur
viving m other or father is calculated on the basis of the income of the
deceased during his last 24 contributing months. However, the
amount may not be less than one-fourth of the contributions paid dur
ing the last 120 contributing months.
Law of October 9, 1924
HTHE law of October 9, 1924, relates to insurance of the employees
*
in private and Government service in case of sickness, disability,
and death. Those employees who are already insured or have a right
to pension or compensation are excluded.
Disability and old-age benefits.—The insured person receives 500
crowns a year plus one-fifth of the amount he contributed to the
disability and old-age fund. At the age of 65 years the disability
benefit becomes an old-age benefit if the insured is no longer able to
perform his usual service because of age, even though he is not dis
abled.
Sickness benefits.—The sickness benefits are as follows: Free med
ical attention, nursing care, medicine, etc., are given from the begin
ning of illness, but not to continue longer than one year. Medical
attention is also given to the members of the family of the insured
during his illness. From the fourth day of illness the following daily
benefit, to continue only for one year, is provided:
Daily benefit:
Class 1__________
Class 2 _________
Class 3 ________
Class 4__________
Class 5 ________
C rowns
.................
_________
2. 7
5. 3
__________
8. 0
_________
_________
10. 6
13. 3
Daily benefit:
Class 6
Class 7
Class 8
Class 9
Class 10
20 . 0
22 . 0
24. 0
Funeral benefits.—Funeral benefits are as follows: If the insured
dies within six months after the expiration of his claim to sick benefits
his family receives as a funeral benefit 30 times the amount of his
average daily wage, but not less than 150 crowns.
For funeral expenses of immediate members of the family of the
insured the following benefit is paid: 60 crowns for each child
under 2 years of age; 180 crowns for each child from 2 to 14 years of
age; 250 crowns for each person over 14 years of age.
Maternity benefits.—M aternity benefits are as follows: Free service
of midwife, and, if necessary, of physician; sickness benefits for six
weeks preceding and six weeks following childbirth. To mothers
who nurse their children, an additional benefit for 12 weeks following
childbirth in an amount equal to one-half of the sick benefit is pro
vided.
Survivors7benefits.—A widow is entitled to one-half of her husband’s
former disability or old-age benefits, provided her physical condition
193
CZECHOSLOVAKIA
renders her incapable of earning more than one-third of the wage she
m ight otherwise earn.
A half-orphan under 17 years of age is entitled to one-fifth of the
disability or old-age benefit received by the deceased insured parent,
while a whole orphan under 17 years of age is entitled to two-fifths of
such benefit. The total orphans’ benefits in a single family, however,
m ay not exceed the amount of the disability or old-age benefits to
which the deceased insured was entitled.
Dependent grandchildren are considered as children.
Contributions by employees.—The employees are divided into the
following wage classes:
Daily wage in crowns
Class
Class
Class
Class
Class
Class
Class
Class
Class
Class
Basic daily
wage in
crowns for
calculation
of contributions
1___________________________________________________ up to 6
2________________________________________ from 6 up to 10
3 _________________ ______________ ._______ from 10
up to 14
up to 18
4 ________________________________________ from 14
5________________________________________ from 18 up to 22
6________________________________________ from 22
up to 253^2
7________________________________________ from 25^2 up to 28^
8________________________________________ from 28J/£ up to 313^
9________________________________________ from 31J^ up to 3 4 3
10_______________________________________ from 343^___________
4
8
12
16
20
24
27
30
3
36
The actual size of the contribution in each class is calculated on an
actuarial or m athem atical basis. The law specifies only th a t the
employee’s contribution is not to exceed 5 per cent of his average
daily wage. The contribution is paid half by the employees and
half by their employers (Government and private).
The sickness-insurance wage and contribution classes are grouped
into the following classes for disability and old-age insurance:
Employees'
weekly con
tributions
in crowns
Class
Class
Class
Class
A
B
C
D
(classes 1 -3 )___________________________________ _____ 4.
(classes 4 and 5)_______________________________ _____ 5.
(classes 6 and 7)_______________________________ _____ 7.
(classes 8 -1 0 )_______________________________________ 8.
3
7
1
8
Government contributions.—The Government contribution to the
disability and old-age insurance fund is as follows: (a) 500 crowns
a year for each employee insured; (6) 250 crowns a year for each
widow or widower receiving benefits; (c) 100 crowns a year for each
half orphan receiving benefits; and (d) 200 crowns a year for each
whole orphan receiving benefits. The total Government contribu
tion for orphans in a single family is not to exceed 500 crowns per
annum. The Government does not, however, contribute anything to
the fund for the benefit of employees whose income the previous year,
exclusive of any insurance benefits, was large enough to be subject to
an income tax.
Total contributions and expenditures.—Contributions of civil offi
cials, employees, and laborers to the pension and insurance funds
from 1924 to 1926 were as follows: 1924, 71,145,000 crowns; 1925,
77,212,000 crowns; 1926, 59,800,000 crowns. State expenditures
for pensions to and insurance of civil officials, employees and laborers
194
CHAPTER 9.— RETIREMENT SYSTEMS IN EUROPE
during the same period were: 1924, 459,810,360 crowns; 1925, 469,179,000 crowns; 1926, 404,555,230 crowns.
Administration.—The pension and insurance funds are under the
control of the M inistry of Social Welfare.
DENMARK 5
'T 'H E present public-service retirem ent and pension system in Denm ark is based upon law No. 126, enacted on June 27, 1927. The
second chapter of the law contains general provisions relating to civilservice retirem ent and pensions, while the other chapters relate to
details and measures of a tem porary nature, such as cost-of-living and
locality allowances.
Employees Covered
tp V E R Y Government employee is entitled to a pension for himself
^
and for his surviving widow and children. Perm anent employees
in the service of Parliam ent (Rigsdag) or of those Government institu
tions whose receipts and expenditures are fixed by law also have the
right to a pension, as do the ministers at the head of the Government
departm ents, after they have served one year.
Retirement Age and Length of Service
R E T IR E M E N T is obligatory at the end of the m onth in which an
*
employee reaches the age of 70 years, but an employee is en
titled to retire with a pension when he has reached 65 years of age.
T hirty years' service entitles the employee to the maximum pension.
Retirement Pensions
'T 'H E PEN SIO N is calculated on the basis of length of service
(called “ pension age” ) and the income from service of the
employee. The income from service taken as the basis for calcula
tion of the pension includes the basic salary, with any increases, and
payments in kind, such as the use of land, free dwelling, and fuel,
allotted as a p art of salary. For each specified number of years of
service the proportion of the income from service given as a pension
is as follows:
Over
Over
Over
Over
Over
Over
Over
Over
Over
Over
Over
Over
Over
Over
2 and up to 4 years, two-tenths.
4 and up to 7 years, three-tenths.
7 and up to 10 years, four-tenths.
10 and up to 15 years, five-tenths.
15 and up to 17 years, thirty-one sixtieths.
17 and up to 19 years, thirty-two sixtieths.
19 and up to 21 years, thirty-three sixtieths
21 and up to 23 years, thirty-four sixtieths.
23 and up to 25 years, thirty-five sixtieths.
25 and up to 27 years, thirty-six sixtieths.
27 and up to 28 years, thirty-seven sixtieths.
28 and up to 29 years, thirty-eight sixtieths
29 and up to 30 years, thirty-nine sixtieths
30 years, forty-sixtieths
6 Lov (Nr. 126—1927) om Statens Tjenestemaend, Christiansborg, den 2?. Juni 1927, Copenhagen, 1927;
unpublished material furnished to the Department of Labor through the Department of State.
DENMARK
195
No pension may exceed 8,000 crowns annually.
An employee whose position is abolished after he has served 30
years is entitled, when no other suitable position is offered him with
at least the same income from service, to continued pay for five 3Tears.
Paym ent of the pension ceases: (a) When the pensioner is again
engaged in a position entitling him to pension; (6) when it is proved
th at the disability caused by accident or sickness has been removed
but the employee refuses to accept perm anent reinstatem ent in a
suitable position with the same or a higher salary; (c) when a pen
sioner, without official permission, has entered the service of a foreign
Government; (<d) when he establishes his residence abroad without
the knowledge of his official chief; (e) when for three years he has not
claimed his pension, without later being able to prove legal hindrances;
( / ) when he is found guilty of a dishonorable act.
Disability
[ F AN employee during the performance of his duties is so injured
as to necessitate his perm anent retirem ent from service, he is
entitled, regardless of his age or length of service, to a pension of twothirds of the income from service last received by him.
Survivors’ Pensions
JJI/IDOW’S pension.—The widow of a deceased employee is entitled to a pension of one-fifth of the income from service of
her deceased husband if he, at his death, was not entitled to pension
or had not had five years’ service; or one-third of such income if he
had over five years’ service, or had died in the execution of his duty
or as a result of injury in service, or had been pensioned for the same
reason.
The widow’s pension ceases: (a) When the widow contracts a new
marriage; (h) when she, without official permission, enters the service
of a foreign Government; and (c) when she is found guilty of a dis
honorable act.
Orphans' pensions.—For her children (including stepchildren and
adopted children for the support of whom her deceased husband was
responsible) the widow is entitled to the following pension additions:
For one child, 180 crowns annually; for two children, 330 crowns
annually; for three children, 450 crowns annually; for each child in
excess of three, an additional 100 crowns annually.
Contributions by Employees
p 'A C H employee contributes 3 per cent of his salary or income
from service, which is deducted upon each paym ent of salary.
In case an employee resigns or is dismissed without a pension, his
contributions are refunded without interest.
196
CHAPTER 9.— RETIREMENT SYSTEMS IN EUROPE
Administration
D E N SIO N S are paid by the Treasury D epartm ent unless existing or
future regulations direct otherwise.
As the civil-service retirem ent and pension system in Denmark,
above outlined, has been only recently put into effect, no report has
been made on its operation and no statistics connected with it are
available.
FR A N C E *
Legislation
D E C E N T legislation.—Retirem ent and pensions of civil servants
* * in France are governed by the law of April 14, 1924. Pro
visions of the law were amplified by (1) an adm inistrative ruling of
September 2, 1924, (2) a general instruction of the M inistry of Fi
nance of October 12, 1924, and (3) a decree of September 19, 1926,
based upon article 30 of the law of August 3, 1926. The ruling and
instruction merely interpret certain provisions in detail and con
tain regulations for the execution of the law of April 14, 1924, while
article 30 of the law of August 3,1926, interpreted by the decree, pro
vides for “ a supplem entary and tem porary compensation to civilservice employees, soldiers, agents, and workers of the S ta te ” ; th at
is, to all those persons who are retired by the State, and who receive
pensions based upon length of service, a supplementary compen
sation calculated on the basis of a diminishing ratio, from 20 to 5
per cent, of the pension, as follows: 20 per cent, up to 1,000 francs;
15 per cent, from 1,001 to 3,000 francs; 10 per cent, from 3,001 to
5,000 francs; and 5 per cent, from 5,001 to 10,000 francs.
Previous legislation.—Before the eighteenth century there were no
retirem ent or pension laws. M aterial assistance was given to aged
or disabled public employees only by the grace of the monarch and
even then in rare cases. Assistance to widows and orphans was
provided by a regulation issued in 1788. The only public employees
for whom assistance was given in cases of dire need were those engaged
in postal service, K ing’s domain, and revenue collection.
The first act providing pensions to public employees was issued
on August 22, 1790. This act, though it legalized the principle of
civil-service pensions, did not recognize the right of public employees
to pension. This right was definitely established by the acts of
June 9 and November 9, 1853, which also provided assistance to
widows and children.
The acts of 1853 were amended and modified a number of times
under the pressure of constantly changing conditions. B ut the
underlying principle—the right of public employees and their widows
and children to pension—has stood the test up to our day. The
decree of December 30, 1913, relates merely to procedure and practice.
8Journal Officiel, Apr. 15, Sept. 10, and Oct. 21, 1924, and Aug. 3 and 4, and Oct. 14 1926; France, Ministere des Finances, project des loi portant fixation du budget g§n6ral de l’exercice 1924-1927; Rapport,
Commission des Pensions civiles et militaires, Chambre des Deputes, session 1913, No. 2644; Rapport
de la Commission des Finances, charg6 d’examiner de project de loi portant reforme du regime des pen
sions civiles, Chambre des Deput6s, session 1922, No. 4225; Les Pensions civiles de l’6tat, Commentaire
par Charles Rabany, Paris, 1916; Recueil periodique et critique de jurisprudence, 1925, 4e partie, Pensions
civiles et militaire, Dallez; Repertoire general alphabetique du droit frangais, par Herman Fuzier, Paris,
1902, vol. 30, pp. 379-518; unpublished material collected and complied by the Legislative Reference Division,
Library of Congress, and unpublished material furnished to the Department of Labor through the Depart
ment of State
FRANCE
197
However, the development of the field of civil service, the appear
ance of new classes of employees, and new hazards in their work made
it necessary to reform the existing civil-service retirement and pension
system. The World W ar caused the reform to be postponed until
August 5, 1919, when a special parliam entary commission was
formed for the purpose of making a study of the existing pension
conditions and of working out recommendations as to the required
reform. A num ber of the recommendations of this commission
were embodied in the temporary acts of M arch 25, 1920, and July 8,
1921, and the reports of the commission served as a basis for a new
retirem ent and pension bill prepared by the Government, introduced
to the Parliament, and enacted as a law on April 14, 1924.
Provisions of the earlier acts relating to retirem ent and pensions
were in part left in force independently, in part expressly repealed,
and in part embodied in the new law, which now covers the entire
field of civil-service retirem ent and pensions, with the exception of
certain earlier enactments left in force.
No regulative provisions have as yet been issued regarding the
operation of the retirem ent funds provided by article 85 of the law
of April 14, 1924. The operation of the pension fund is postponed
until January 1, 1928, by the terms of the same article of the law.
Employees Covered
'T 'H E provisions of the law in force apply to civil-service employees
A on the perm anent staff of the State administration and of the
Government industrial establishments, and to their widows and
children.
Retirement Age and Length of Service
CIVIL-SERVICE employee has the right to retire when he is
60 years of age and has had 30 years of office service, or, when he
has been 15 years in field service, he can retire at the age of 55 years
after 25 years of service. The age limit is not required when the
health of an employee becomes such th at he is not able to continue
his service. In case of service outside Europe, additional credit of
one-third of its actual length is given (one-fourth in the case of serv
ice in north Africa).
An employee retires either at his own request or he is p ut on the
retired list officially by the proper authority. The proceedings m ust
be started six m onths in advance.
Civil-service employees detached from the perm anent staff, and
assigned to and paid, wholly or in part, by a D epartm ent, commune,
colony, public or private establishment, or foreign government
retain their right to pensions. They m ust continue contribution
on the basis of the salary corresponding to the class and grade of the
service from which they were detached, their pension being computed
on the basis of the average rem uneration th at they would have
received during the last three years if they were paid by the State.
When a civil-service employee, except in case of disability, leaves
the service, for any reason, earlier than the retirem ent age, his con
tribution is refunded in the following m anner : His contribution, with
interest, at the time of his leaving the service is transferred to his
A
198
CHAPTER 9.— RETIREMENT SYSTEMS IN EUROPE
credit in the national insurance fund against death to form a deferred
capital insurance, the time of paym ent of which is fixed at not less
than five years from the date of his resignation.
W oman civil-service employees, when married or mothers of fam
ilies and having served at least 15 years, have the right to a retire
m ent pension calculated for each year of service on the basis of onesixtieth of the average salary in case of office service or one-fiftieth in
case of field service. In determining the time of retirem ent of such
employees, an allowance of one year for each child born to them is
added to the age and the length of service.
Retirement Pensions
T ^H E pensions are calculated on the basis of average salary, wages,
and various allowances received by the employee during the
last three years of service.
The minimum pension for length of service is, as a rule, one-half of
the average salary. I t is increased to three-fourths, but not more than
4,000 francs, when the average salary is not above 8,000 francs per
annum. The minimum is increased for service over and above the
required length of service to one-sixtieth of the average salary for a
year of service in office, and to one-fiftieth of the average salary for a
year of service in the field. The pension is further increased by 10
per cent when the employee has three children under the age of 16
years. For each additional child an increase of 5 per cent is provided.
The maximum pension m ay not exceed three-fourths of the average
salary, or 18,000 francs per annum.
Disability
V \/H E N a civil-service employee is disabled through an act of cour* * age in the public interest or through risking his life in saving
one or more persons, or through a fight or attack during his employ
ment, he may, in exceptional cases, be retired regardless of age and
length of service. The pension in such cases is three-fourths of the
last salary received.
A civil-service employee disabled by sickness, wounds, or serious
infirmity has the right to retire at his own request or may be retired
officially.
Disability must be ascertained by a commission consisting of (1)
a sworn Government physician; (2) three employees appointed by
the minister; and (3) two employees in the same service in which the
applicant is engaged, selected by their colleagues.
The applicant has the right to see the papers in the case and to have
a physician of his own choosing appear before the investigating
commission.
A civil-service employee disabled in office service has the right to
a pension of at least 1,500 francs per annum, or equal to one-third
of his last salary in service, or to a longevity pension counted, per
year of service, as one-thirtieth for office service or one twenty-fifth
for field service of the minimum pension previously quoted, together
with any allowances for m ilitary or colonial service he may be
receiving.
FRANCE
199
The pension of a colonial civil-service employee retired as a result
of wounds or infirmity contracted during service may not, on account
of the risk incurred, be less than the minimum longevity pension
based on his last salary, together wdth the allowances.
When disability is incurred outside the service, an employee who
has had 15 years’ service or more has the right to pension at the rate
of one-sixtieth of his average salary in case of office service, and onefiftieth in case of field service.
A disabled civil-service employee with less than 15 years’ service
is given a life annuity from the national old-age retirem ent fund
formed by the deposit therein of the sum contributed by him out of
his salary together with the interest credited to the depositors by the
Savings and Provident Fund of Paris. This amount, according to
the wish of the employee, is either held by the Government and a
life pension is paid to the employee, or it is returned to him instead
of life pension. Should the employee prefer pension, the Government
adds an equal amount to the sum formed out of his contributions, to
gether with the interest, and the sum total is turned over to the oldage retirem ent fund, out of which the pension or life annuity is paid
to him.
Widows’ and Orphans’ Pensions
A W IDOW of a civil-service employee has the right to a pension of
50 per cent of the longevity or disability pension which her hus
band was receiving or would have received at the time of his death.
The right of a widow to pension, in the case of disability pension,
is conditioned upon the marriage having taken place before retire
m ent or death, and in the case of age or length of service pension,
upon its having taken place not later than two years before retire
ment, except in cases when there were one or more children born of
the marriage before retirement.
Each orphan up to the age of 21 years has the right to a tem porary
pension of 10 per cent of the longevity or disability pension, but the
sum of the m other’s and the orphans’ pensions may not exceed the
pension the father received or would have received.
In case of the death of the mother, or her loss of the right to pension,
or of her not being able to receive pension, such right as she m ay
have had goes to her minor children, and the tem porary pension of
10 per cent is m aintained for each minor child under 21 years of age
within the maximum sum defined in the preceding clause.
The minor children of a deceased woman employee who was
receiving a pension or had the right to receive one are entitled to a
pension as determined above.*
In case the father is living his minor children have the right to a
tem porary pension of 10 per cent of the pension received by their
mother, or which she would have been receiving had she lived.
Contributions
r^IV IL -S E R V IC E employees contribute 6 per cent of the salary,
^
wages, and allowances received by them. The State contributes
to the civil-service pension about 9 per cent of the salary, and the
necessary sum is appropriated each year on the basis of the pensions
and allowances, perm anent and temporary, to be paid civil-service
200
CHAPTER 9.— RETIREMENT SYSTEMS IN EUROPE
employees during the fiscal year. E xtra appropriations for pensions
are authorized by special law.
The total contributions of employees from 1924 to 1927 were as
follows:
Contribution,
in francs
192
192
192
192
4
5
6
7
150,000,000
206,000,000
245,300,000
7382, 000, 000
The State appropriations for civil pensions each year from 1924 to
1926 and those estim ated for 1927 are shown in Table 36:
T
able
3 8 . — State
appropriations for civil pensions each year, 1924 to 1926, and esti
mated appropriations for 1927
Civil pensions
1924
1925
1926
1927
(estimated)
Francs
Francs
Francs
Francs
479.000
1,384,000
Law of Aug. 22, 1790, and others...................................
1, 300, 000 1,000,000
Law of Apr. 14, 1924....................................................... 183, 000,000 600,000,000 953,000,000 1, 448, 385,000
33, 000 } 1,512,700
Law of July 17, 1856 1........ .............................................
1, 534,000
1,
232,000
137.000
To judges, law of Aug. 30, 1883......................................
Increase, law of Mar. 25, 1920_______ __________ 301.000, 000
Increase, for children, law of Apr. 14, 1921-......... ......
1, 400,000
12.300.000
800,000
Family allowances, law of Apr. 14, 1924_____ _____
44.800.000
700.000 11,663,000
Pensions to widows, law of Apr. 14, 1924, sec. 27____
100,000
300.000
100,000
Pensions to widows, law of Apr. 14, 1920, sec. 68____
15.000.000
7, 380,000
7.410.000
45, 000,000 17.000.000 11,000,000
Temporary to retired minor employees......... ..........
9.582.000
Temporary, high-cost-of-living allowances.. _______ 225.000.000 15.000.000 10,000,000
10,000,000
Refund to national old-age pension fund___________
600.000
500.000
800,000
State share in the pensions to civil servants and em
ployees of Paris police department, and of the
1.033.000
administration of Algeria................. ...........................
640.000
150.000
552,000
Total....................................................................... 754, 799,000 652,764, 700 997,915,000 1, 537, 328,000
1 This law provides to ministers, marshals and admirals, and other high public servants and their widows
and children a pension up to 20,000 francs, when these officials have rendered eminent services to the nation,
and when their lack of means make such pension necessary.
Administration
HTHE retirem ent and pension system is administered by the Ministry of Finance.
GERMANY 8
Legislation
Q N M arch 31, 1873, a law was enacted which granted pensions to
^
civil officials. This law was modified by the laws of April 20,
1881, April 21, 1886, M arch 5, 1888, M ay 18, 1907, and June 18,1923.
I t should be observed th at the German system of civil-service
retirem ent and pensions makes a distinction between officials (.Beamte)
and employees (Angestellte). The distinction lies in a certain varia
tion in nature of employment.
The law of 1907 defines an “ official” as any official appointed either
directly by the Kaiser or according to the constitution of the State
or regulations issued by the Kaiser. A t present officials are appointed
7Estimated.
8 Data on which this section is based are from Reichsgesetzblatt, 1873, 1881, 1886, 1888, 1907,1923-1927; un
published material furnished the Department of Labor by the Department of State; unpublished material
collected and compiled by the legislative reference division, Library of Congress; Die Angestelltenversicherung nach dem Stande Vom. 1. Juli 1926, an official publication.
GERMANY
201
in the main either by the President or under administrative general
regulations, while employees are appointed under the regulations of
the specific departm ent, Government corporation, or establishment.
Their appointm ent m ight be considered temporary in the sense
th a t they can be discharged when the conditions of service require
their retirem ent. Officials, on the contrary, are as a rule appointed
for life.
The civil employees called “ contract employees” are engaged for
a specific task or serve a preliminary term before they can be appointed
to the position of officials.
Civil employees in the service of the Federal Government, of the
States, and of the municipalities or communes have, in contrast to
officials, no claim whatsoever at the time of their retirem ent to any
pension on account of their service. Therefore, no special funds
exist in the Government departm ents for the granting of pensions to
such retired employees.
All such employees, however, are subject to insurance in accordance
with the insurance regulations of November 20, 1911, as stated in the
proclamation of M ay 28, 1924, if their annual salaries do not exceed
a certain limit, which at the present time is 6,000 reichsmarks. If
the conditions are complied with they receive a pension from the
Government insurance office.
The employees' insurance laws have since been changed by the
following rules and ordinances: Law of August 30, 1924 (relating to
State railroad employees); ordinance of December 12, 1924; and
laws of M arch 23, 1925, July 28, 1925, June 25, 1926, April 3, 1927,
and April 8, 1927
Retirement and Pensions of Civil Officials
Retirement Age and Length of Service
A CIV IL official leaving the service at the age of 65 years has the
^
right to a pension if he applies for retirem ent. The granting
of the pension rests with the central authority (oberste Reichsbeholde)
if he was appointed by departm ental a u th o rity ; if he was appointed
by the President the la tte r’s approval is required.
The length of service is counted from the day of taking oath of office.
The time of service of an official when he is employed on half pay,
or when he is in the service of one of the German States, or when
appointed on probation as a former soldier entitled to a civil pension
in the service of a State, or of a local government, is counted. The
time spent in m ilitary service is added to the time of civil service.
Retirement Pensions
The annual pension for service of 10 years or under is thirty-five
one-hundredths of the annual salary. It increases from the tenth to
the twenty-fifth year of service by two one-hundredths for each
additional year and thereafter by one one-hundredth. A pension is
not to exceed eighty one-hundredths of the salary.
The pension is calculated on the basis of the last aggregate annual
salary received by a civil official. This includes, under certain
3306°— 29------ 14
202
CHAPTER 9.— RETIREMENT SYSTEMS IN EUROPE
circumstances, gratuities, allowances, fixed fees, and perquisites, but
does not include money for keeping up the official State and office
expenses.
A pension starts from the end of the quarter following the month
during which official notice has been given the retired civil official
of the pension and its amount, when a shorter term is not fixed in
the application or by formal consent of the official. Pensions are
payable quarterly and in advance.
Disability
A civil official of the Federal Government who has completed 10
years’ service and is not physically able to continue his service has
the right to a pension. If he is permanently disabled for service by
reason of sickness, wound, or accident incurred in the service he has
the right to a pension before he has served 10 years. If, before
completing 10 years’ service, he is disabled outside the service and
can not continue the latter, he may be granted either a tem porary or
a life pension by the Federal Council.
In case of retirem ent on account of disability incurred outside
service a pension is not to exceed thirty-five one-hundredths of the
salary
Widows’ and Orphans’ Allowances
When a deceased pensioner leaves a widow or other legitimate
heirs a lump sum is paid to them in an am ount equal to three m onthly
payments of pension.
The widow and legitimate or legitimated children of a civil official
who at the time of his death would have had the right to a pension,
and those of a retired official receiving a life pension, have the right
to widow’s and orphans’ pensions.
A widow’s pension is forty one-hundredths of the pension which
the deceased received or would have been entitled to at the time of
his death.
Each child whose m other is living and entitled to a widow’s pen
sion on the death of the official is entitled to an orphan’s pension
equal to one-fifth of the widow’s pension, and in the case of children
whose mother is dead or not entitled to a widow’s pension on the
death of the official each orphan has the right to a pension of onethird of the widow’s pension.
Widow’s and orphans’ pensions, separately or together, are not to
exceed the amount of pension which the deceased official was re
ceiving or would have been entitled to. If in the aggregate they
would reach a higher sum they are proportionally reduced.
If the widow was more than 15 years younger than her deceased
husband her pension is reduced by one-twentieth per year of dif
ference in age from the sixteenth to the twenty-fifth year. B ut
for each additional year of marriage after five years her pension is
increased by one-tenth until the full amount of the widow’s pension
is reached. A widow is not entitled to a pension if the marriage
took place less than three months before death and was for the
purpose of securing a widow’s pension.
GERMANY
203
The widow and orphans of a retired civil official are not entitled
to pension if the marriage took place after his retirement. Widows’
and orphans’ pensions are payable m onthly and in advance.
The right to a widow’s pension ceases at the end of the m onth in
which she marries or dies. In case of an orphan the right to pension
ceases at the end of the m onth during which he completes his eight
eenth year or of his death before th a t age.
Pensions Paid by Government
Pensions of civil officials are paid out of funds provided entirely
by the Government. Pensions to widows and orphans of such officials
are paid partly out of Government funds and partly out of a special
contribution by the officials of 3 per cent of their salary or pension.
Insurance of Civil Employees
IN SU R A N C E of employees in the Government service and th at of
A employees in private service are governed by the same laws, rules,
and regulations, but in this review we are concerned only with employ
ees in the service of the Federal Government, States, communes, and
Government corporations and establishments.
Employees Covered
The insurance laws apply: (a) To those employees who are subject
to compulsory insurance (Versicherungs'pjlichtige) in the services speci
fied by the law; (b) to those employees who, having left such service
after having made insurance contributions for at least four months
and who are still fit for service, of their own free will again become
subject to insurance (jreiwillig WeiterversicJiern); and (c) to those
employees who have not been insured and are not subject to compul
sory insurance, but who voluntarily become subject to insurance
(,Selbtversicherte).
If the annual salary of a civil employee is more than 6,000 marks
he is not subject to compulsory insurance. If he formerly received
an aggregate annual salary of not more than 6,000 m arks and was
therefore compulsorily insured, then, in case of an increase of his
salary to more than 6,000 marks per annum, he falls out of the group
of employees liable to compulsory insurance, but m ay of his own free
will continue or again become subject to insurance.
An insured employee receives a pension in the event of either old
age or disability, and in case of his death his survivors get a pension.
Conditions for Insurance Benefits
To become eligible for a pension an employee m ust have paid
contributions for a certain minimum period of time specified by law,
which is called the waiting time or term (Wartezeit). Its length is as
follows: (a) For pension to an insured female employee, 60 contribu
tion m onths; (b) for pension to an insured male employee, 120 con
tribution m onths; (c) for pension to survivors of employees of both
sexes, 120 contribution months.
When an employee has passed his sixty-fifth year he is entitled to
a pension.
204
CHAPTER 9.— RETIREMENT SYSTEMS IN EUROPE
Retirement Pensions
The am ount of the annual pension paid to a retired employee who
is unm arried and to one who is married and has two children, after
10, 20, and 30 years’ contribution, in the various salary classes, is
shown in Table 37:
T able
3 7 .— Amount of annual pensions paid to married and unmarried retired
employees in specified salary classes
After 10 years’ contri
bution
After 20 years’ contri
bution
After 30 years’ contri
bution
Married
Married
employee Unmarried employee
with 2
with 2
employee
children
children
Married
Unmarried employee
with 2
employee
children
Salary class
Unmarried
employee
Marks
Class A .............. ...... .................
Class B ._ ............................ .
Class C______ ____________
Class D ___________________
Class E ___________________
Class F .....................................
Class G__............................. .
Class H --------------------------- -
516
552
624
696
768
840
930
1, 020
Marks
Marks
600
732
804
876
948
1,020
1,110
1,200
552
624
768
912
1,056
1,200
1,380
1,560
Marks
600
804
948
1,092
1,236
1,380
1,560
1,740
Marks
588
696
912
1,128
1,344
1,560
1,830
2,100
Marks
600
876
1,092
1,308
1,524
1,740
2,010
2,280
Disability
An employee who is perm anently disabled receives a pension.
When an employee is disabled continuously for 26 weeks he is
entitled to a pension during the further continuation of his occupa
tional disability (sickness pension).
Survivors’ Pensions
The widow’s or widower’s pension amounts to six-tenths and the
orphan’s pension to five-tenths of the retirem ent pension exclusive
of the additional sum known as “ child support” (Kinderzuschutz).
The child support is an addition to the pension of 90 m arks per
annum for each child up to 15 years of age, or up to 21 years of age
when the child is in school or in occupational training or when the
child, as a result of bodily or mental defect, is not able to earn its
living.
“ Children” include legitimate children, legitimated children,
adopted children, illegitimate children of an insured male employee
when their paternity is legally proven, illegitimate children of an
insured female employee, and stepchildren when they are dependent
upon the insured.
The pension, together with the total amount of child support, is
not to exceed the highest salary in the class of the insured; if it
does exceed th a t am ount the child support is accordingly reduced.
The following is an example of the pension to survivors: After
the death of an employee whose pension was or would have been
in case of perm anent incapacity 1,283.8 marks, the survivors’ annual
pension for the widow and two children is as follows:
205
GERMANY
Widow’s pension (six-tenths of the pension of her deceased husband,
or 1,283.8 marks)________________________________________________
$770. 28
Orphan’s pension (five-tenths of 1,283.8 marks, or 641.9 marks) for
two children_____________________________________________________ 1, 283. 80
Total__________________________________________________ _____ 2,054.08
Medical Treatment
To prevent an insured employee from becoming perm anently
disabled as a result of sickness the National Insurance Office m ay
provide for medical treatm ent if it can be expected th a t medical
treatm ent #will restore his ability for further service. During his
medical treatm ent in a hospital or in an institution for convalescents
his dependents receive from the insurance office an allowance for
the support of the family, called “ house money ” (Hausgeld), am ount
ing daily to 23 per cent of the last m onthly contribution made by
such employee. For instance, if his last m onthly contribution was
12 marks the daily allowance for the support of his family will be
2.76 marks.
Contributions Toward Insurance
The amount of contribution toward the insurance is in propor
tion to the employee’s salary, as m ay be seen in Table 38:
T able
3 8 . — Monthly
contribution in specified salary classes of civil employees
Salary class
Annual salary
Monthly salary
Class A
_
,
............
Class B
__ __
. ___
____ ____________
Class CClass D - _________ _________
Class E
...............................
Class F
_
_____
Under 600 marks______ ___
From 600 to 1,200 marks___
From 1,200 to 2,400 marks. __
From 2,400 to 3,600 marks.__
From 3,600 to 4,800 marks. _.
From 4,800 to 6,000 marks...
Under 50 marks....... .............
From 50 to 100 marks .......
From 100 to 200 m ark s____
From 200 to 300 m ark s___
From 300 to 400 marks_____
From 400 to 500 marks_____
Monthly
contri
bution
Marks
2
4
8
12
16
20
The highest monthly salary in any group subject to compulsory
insurance is 500 marks. If an employee works only half time the con
tribution for insurance is only half the amount he would pay if he
were on full time.
Employees pay 50 per cent and the Government pays 50 per cent
of the contribution; for instance, the entire monthly contribution on a
m onthly salary of from 100 to 200 marks (class C) is 8 marks, the
insured employee paying 4 marks, and the Government 4 marks. If
the monthly salary of an employee is not more than 50 marks the
Government pays the entire contribution. The same rule applies to
apprentices.
Each employee receives an insurance card from the local insurance
office. The National Insurance Office, through the local insurance
offices, sells insurance stamps to the employers, the salary class and
the money value being designated on the stamp. The employer
affixes the proper stamps to the insurance cards of his employees on
a pay day near the end of each calendar m onth and writes the date in
ink on the stamps. Half of the value of the stamps so used is deducted
form the salary of the employee.
206
CHAPTER 9.— RETIREMENT SYSTEMS IN EUROPE
Insurance Offices
A local insurance office consists of an official appointed by the
Government, who acts as chairman, one representative of the insured
employees, and one representative of the employers.
A district or provincial insurance office consists of an official
appointed by the Government, who acts as chairman, six represen
tatives of the insured employees, and six representatives of the
employers. The office is divided into various chambers.
The National Insurance Office is composed of perm anent members
appointed by the Government, and six members elected by the
employees and six by the employers, and its decisions are final.
Appropriations for Pensions
The appropriations for civil pensions granted during the past
three years were as follows: 1925, 45,445,566 reichsmarks; 1926,
85,466,000 reichsmarks; and 1927, 87,626,000 reichsmarks (estimated).
GREAT BRITAIN 9
Legislation
present retirem ent system of G reat B ritain is a development
uf over a century’s growth, the first general superannuation act
having been passed in 1810. This established a noncontributory
system, which continued in force for 12 years, until in 1822 an act
was passed providing for deductions to be made for pension purposes
from the salaries of those receiving more than £100 a year. This
provision was repealed and reestablished, but was not definitely
accepted until 1834, when the first of the acts now effective was
passed, under which contributions were enforced against all who
entered the civil service after August 4, 1829. In 1859 another act
repealed most of the act of 1834 and established a system of uniform
noncontributory' pensions for all persons employed in the perm anent
civil service of the State. Numerous changes in detail have been
made since then, but the system is still noncontributory.
At present the civil-service retirem ent plan is operated under a
series of acts grouped together under the general title, “ Superannu
ation Acts, 1834 to 1919,” of which eight are treated as a single act
for purposes of construction, while four are not so considered. In
addition to these there are two other acts in force, the pensions
(increase) acts of 1920 and 1924, providing for larger pension pay
ments.
General Provisions
act of 1834 contained a proviso, continued in force to the
present time, th at “ nothing in this act contained shall extend
or be construed to extend to give any person an absolute right to
compensation for past services, or to any superannuation or retiring
allowance under this act.”
9 Great Britain, Civil Service, Digest of Pension Laws and Regulations, London, 1924; Great Britain,
House of Commons, Civil Estimates for the Year Ending Mar. 31, 1928, London, 1927; Report from United
States Embassy at London, dated Oct. 7, 1927; and United States Bureau of Labor Statistics, Civil Service
Retirement in Great Britain and New Zealand, by Herbert D. Brown (printed as S. Doc. No. 290, 61st
Cong., 2d sess.), Washington, 1910.
GREAT BRITAIN
207
Pensions are to be paid without any abatem ent or deduction “ in
respect of any taxes or duties whatever at present existing, except
the tax upon property or income.”
Employees Covered
T ^H E persons eligible for superannuation allowances are those who
-*■ hold office direct from the Crown, or who have entered the
civil service with a certificate from the civil-service commissioners.
This certificate will not be granted unless physical fitness has been
proved. Various exceptions to these general rules are made. Thus
provision is made for cases in which through inadvertence a certificate
has not been secured, for cases in which employees are transferred,
without certificate, to the civil service as some new service function is
taken over, and for similar situations which may arise from time to
time.
Conditions for Retirement
/'^R D IN A R IL Y , pensions are granted only to those who have
^
reached the age of 60, except in cases which are practically dis
ability retirement, although not known by th at name. Certain
prison officers, however, may retire on pension at 55, even though
they are not disabled. There is no age at which retirem ent is com
pulsory. A minimum of 10 years’ service is required.
In addition to the age and service requirements the retirant must
produce a certificate, signed by the head officer of his departm ent, or
by two head officers if there are more than one, stating th at he has
served with diligence and fidelity to the satisfaction of his head
officer or officers. Pensions are sometimes granted to those not
having such certificate but not freely.
In every case in which any superannuated allowance is granted after the
refusal of such certificate, the minute granting it shall state such refusal, and
the grounds on which the allowance is granted
Retirement Allowances
rP H E retirem ent allowance differs as between men and women. In
*
genera^ men receive upon retirem ent a pension, plus a lump
sum payment. The pension is calculated by multiplying oneeightieth of the final salary and emoluments by the num ber of years
served; if, however, the retirant has served more than 40 years, the
extra years are disregarded and the pension is fixed at one-half the
final salary and emoluments. The “ final salary” is the average
am ount of salary for the last three years of service. The lump sum
is equal to one-thirtieth of the final salary and emoluments for each
completed year of service, or to one and a half times the salary and
emoluments, whichever is the smaller. For women the annual pen
sion is one-sixtieth of th3 final salary and emoluments, multiplied by
the years of service, and there is no lump-sum payment.
Special provision is made for those who lose their positions through
reorganizations of the service.
208
CHAPTER 9.— RETIREMENT SYSTEMS IN EUROPE
A person who retires because his or her office is abolished may be granted
compensation not exceeding the pension (plus, in the case of men, the lump-sum
payment) he or she would have received if the retirement had been for ill health;
and similar provision is made for the case of a civil servant who is removed from
his office for inefficiency.
Disability
D E T IR E M E N T under age 60 is perm itted upon a medical certificate th at the employee concerned is unable from infirmities of
body or mind to discharge the duties of his position, and th at the
incapacity is likely to be permanent. The pension for an employee
retired on the ground of ill health before reaching the age of 60 is
calculated in the same way as if he had retired at or after 60 No
pension is allowed, however, unless he has served at least 10 years,
b ut an employee who has not completed the 10 years before being
obliged to retire m ay be given a gratuity amounting to one m onth’s
pay for each completed year of service, plus, in the case of a male
employee with not less than 2 years’ service, a lump sum of onethirtieth of his emoluments for each completed year of service.
Accidental injury allowances and gratuities.—W hen a person em
ployed in the civil service is injured in the discharge of his duty,
through no fault ef his own, if the injury is directly attributable to
the nature of his duty, provision is made for his care.
The Treasury may grant to him, or, if he dies from the injury, to his widow,
his mother if wholly dependent on him at the time of his death, and to his children
or to any of them, such gratuity or annual allowances as the Treasury may
consider reasonable. * * *
Provided, That a gratuity under this section shall not exceed one year’s salary
of the person injured, and an allowance under this section shall not, together
with any superannuation allowance to which he is otherwise entitled, exceed the
salary of the person injured, or £300 a year, whichever is less.
Retirement Gratuities
above provisions as to qualifications, allowances, and the like
relate to w hat is known as the established service, which broadly
speaking, includes the administrative, clerical, and m anipulative
classes of the civil service, the industrial classes not being covered,
though a certain num ber of established posts are reserved for them.
The provision for the industrial classes in general, however, is limited
to gratuities, the position being thus summarized by an official in the
service:
An unestablished employee who retires or is removed from his or her employ
ment receives a gratuity of £1 or one week’s pay, whichever is the greater, for
each completed year of service, provided that (a) the employment was a whole
time one, and (b) the service was not less than 7 years in the case of abolition of
the employment or 15 years in the case of retirement for ill health.
If an unestablished employee who has served for 15 years or more in whole-time
employment dies while in employment a gratuity may be granted to his depend
ents equal to £1 or one week’s pay, whichever is the greater, for each completed
year of service.
Marriage gratuities.—A variation of the retirem ent gratuity is the
marriage gratuity, given to women in cases in which their resigna
tion upon marriage is required by the regulations of their departm ent.
Persons thus retired, if they have served for at least six years, receive
a gratuity calculated on the basis of one m onth’s pay for each com
pleted year of service, the maximum amount being 12 months* pay.
209
GREAT BRITAIN
Expenditures for Retirement Service
HPHE following figures, taken from the civil estimates for the year
A ending M arch 31, 1928, show the am ount appropriated for retire
m ent purposes in 1926 and the estimated amount for 1927:
T able
3 9 .— Total expenditure on civil-service superannuation and allied allow
ances and gratuities, 1926 and 1927
Item
Gross estimate for allowances, etc., under sundry superannuation acts
Gross amounts included in other estimates:
House of Commons__________ ____________ _______ ________
Royal commissions, etc_____________________ ________ _____
Diplomatic and consular services..................................... ...... .........
Royal Irish Constabulary........ ........................................................
Revenue departments:
Customs and excise__________________ _________________
Inland revenue____________ _____________________ ____
Post office.,..______________ _____ _____ ______________
Fighting services (civilian staff only):
Navy______________________________________________ _
Army___ ______________________ ____________________
Air_______________ __________________________________
Consolidated fund: Judicial, etc., pensions___________________
£1,530,072
£1,644,941
16,399
13,000
1,500
1,946,060
15,650
1,500
1,933,049
862,000
189,382
2,947,200
820,850
186,750
3,349,300
868,027
240,100
23,900
181,550
963,056
247,100
21,500
183,282
Total expenditures....... ................ .................. ............................
Less total receipts........................ ............................... ............ ..........
8,819,190
1,847,757
9,366,978
1,817,856
Net expenditure...........................................................................
6,971,433
7,549,122
The total receipts, to be deducted from the gross am ount appro
priated, are in the main sums recoverable from the Governments
of the Irish Free State and of N orthern Ireland for pension expendi
tures on their behalf. For 1927 the amount recoverable from the
Irish Free State was £1,447,492 and from Northern Ireland, £364,948.
Various small receipts in behalf of the army, navy, and air forces, etc.,
amounted to £5,416, making a total of £1,817,856, and leaving the
net expenditure of the British Government for retirem ent purposes at
£7,549,122. This does not include pensions for the com batant forces,
only their civilian staff being covered by these figures.
The first item in the above table, “ Gross estimate for allowances,
e tc ./’ covers the superannuation allowances and gratuities considered
in the preceding pages. Detailed figures for these are given, as
follows :
T able
4 0 .— Total expenditure for specified civil-service superannuation and allied
allowances and gratuities, 1926 and 1927, and increase or decrease
Kind of pension or gratuity
Superannuation allowances...................... ........................ .
Compensation allowances______________ _____________
Additional allowances and gratuities to established officers
Compassionate gratuities to unestablished officers_______
Diplomatic pensions________ _______________________
Colonial governors’ pensions_________________________
County court judges, etc., supplementary pensions______
Mercantile marine fund, pensions and allowances_______
British Antarctic expedition 1910-1912 annuities_________
Marriage gratuities_________________________________
Injury grants_____ ___________________ _____ _______
Compassionate fund............................ .................................
Northern Ireland pensions and gratuities______________
Gross total........... .............................................................
Deductions.......... ........................... .................. ....................
Net total................................................... ........................
1926
1927
£1,085,000
59, 500
258,000
14.000
48, 000
13.000
£1,118, 500
63,150
301, 500
6,200
331
741
17, 000
10,800
500
17.000
1, 530, 072
90, 780
1, 439, 292
20,000
48,000
13, 500
5, 600
741
37, 000
10,800
500
25, 650
1, 644, 941
85,800
1, 559,141
Increase (+)
or de
crease (—)
+£33, 500
+3, 650
+43, 500
+6,000
+500
-600
-331
+20,000
+8, 650
+114, 869
+4,980
+119,849
210
CHAPTER 9.— RETIREMENT SYSTEMS IN EUROPE
In this table also most of the am ount to be deducted is recoverable
from the Irish Free State and the Government of Northern Ireland.
The compensation allowances are those granted to persons who have
lost their posts through reorganization of the service or abolition of
the position. The compassionate gratuities are those given to persons
who do not come under the terms of the superannuation acts, and
the injury grants are those made to persons injured in the service
— accidental disability allowances, as they would probably be termed
in the U nited States.
The amount of the allowances, as shown above, is affected to some
extent by the cost-of-living bonuses, which vary with the rise and
fall of the index number. The following explanation is given of
this factor:
This bonus, which is given in addition to ordinary remuneration on a pre-war
basis and which varies from time to time in accordance with the average increased
cost-of-living index figure, ranks as a pensionable emolument but the amount
of the pension attributable to the bonus is subject to quarterly revision in accord
ance with the fluctuations in the average cost-of-living index figure. In calcu
lating gratuities and lump-sum payments, 75 per cent of the bonus counts as
salary.
Administration
rjpH E Commissioners of the Treasury administer the pension system.
ITA LY 10
Legislation
r^IV IL -S E R V IC E retirem ent and pension legislation in Italy dates
^
back to 1864, when, on M ay 12, a law was passed regulating
civil-service retirem ent. This law was amended from time to time
until the law of February 21, 1895, on the basis of which the entire
system was consolidated. This law, in turn, has been amended by
numerous subsequent decrees and instructions, especially during the
postwar period, such as the royal decrees of October 23, 1919, Novem
ber 21, 1923, and M ay 8, 1924. The decree of M ay 14, 1925, pro
vides for reorganization of the central adm inistration of civil-service
retirem ent and pensions, while the decree of September 30, 1927,
provides for codification of all laws and decrees relating to the civilservice retirem ent and pension system.
The principal provisions of the law of February 21, 1895, and
subsequent amendments follow.
Employees Covered
employees in the offices and establishments of the State
ALL
1 covered
by the civil-service retirem ent and pension law.
are
Retirement Age and Length of Service
V y H E N a civil-service employee has rendered 40 years’ service, or
when he has reached the age of 65 years and has rendered
20 years’ service, he is entitled to retire with a pension.
10Corte dei conti del regno d’ltalia, Codice delle pensioni, Rome, 1927; Ministero delle fmanze. Disposizioni sullo stato giuridico degl’impiegati civili delPamministrazione dello stato, Rome, 1924.
ITALY
211
Retirement Pensions
rjTHE pension is calculated on the basis of the average salary and
allowances during the last three years of service. The amount
of the pension is equal to one-fortieth of the first 4,000 lire of such
income from service and one-sixtieth of the remainder for each year
of service, with a maximum of nine-tenths of such income from
service and a minimum of 900 lire per annum. An employee who has
rendered 40 years’ service is entitled to a pension amounting to fourfifths of such income from service per annum
Disability
I N CASE of perm anent disability contracted either by accident or
disease in service an employee is entitled to retire with a pension
without regard to his age or length of service. Such a pension amounts
to one-fortieth of the average income from service of the last three
years for each year of service, and in any case not less than one-third
of the last annual salary for less than 20 years’ service nor one-half
of such salary for 20 years’ service or over. The disability pension
may not exceed nine-tenths of the average income from service during
the last three years nor be less than 900 lire per annum.
Lump-sum payment.—After 10 years’ service, a lump sum is paid
to an employee who is either disabled or has lost his position w ithout
loss of the right to pension, amounting to one-twelfth of the last
annual salary for the first 4,000 lire and one-fifteenth of the remainder
of the salary per year of service.
Survivors' Pensions
Tl/'fflO W and children.—The widow and children of an employee
**
who has died after 20 years’ service have a right to a pension
equal to a certain per cent of the pension the deceased employee
either was receiving or was entitled to receive at the time of his
death, as follows: Widow, 50 per cent; widow with children—one
child, 60 per cent; two children, 65 per cent; three children, 70 per
cent; four or more children, 75 per cent. The pension of a widow
with children m ust not be less than 600 lire per ye£r. When the
widow and all or any of her children or the children of a previous
marriage of the deceased employee live apart, the pension is divided
as follows: Of the amount of the deceased husband’s pension which
would be awarded a widow with children, 40 per cent to the wTidow
and the remainder divided equally among the children.
Whole orphans.—Where there is no widow, the orphans are awarded
the following share of the deceased employee’s pension: N ot more
than two orphans, one-third; three orphans, 40 per cent; four orphans,
50 per cent; five or more orphans, 60 per cent— the entire pension
not to be less than 500 lire per year.
Children of a deceased woman employee are entitled to whole
orphans’ pension.
212
CHAPTER 9.— RETIREMENT SYSTEMS IN EUROPE
Contributions
'T 'H E contribution of each employee amounts to 6 per cent of his
income from service. The remainder needed for the operation
of the system is contributed by the Government each year in the
budget.
Administration
'T 'H E M inistry of Finance administers the civil-service retirem ent
and pension system.
NETHERLANDS 11
Legislation
r \N NO VEM BER 8, 1915, a State commission was appointed in
^ the Netherlands to investigate the general conditions of civilservice retirem ent and pensions and to work out a project for regula
tions. As a result of the commission’s report the pension law now in
force was passed on February 15, 1922, becoming a law on July 1,
1922. Subsequent amendments and decrees of June 23 and 30, 1923,
and of M ay 28, 1925, relate to details and, in the main, to the admin
istration of the law.
Employees Covered
'T 'H E law covers all employees serving in the offices and establish** ments of the State, Provinces, and municipalities, including the
entire educational staff and the staff serving waterworks, moors, or
bog lands.
Retirement Age and Length of Service
A N EM PLO Y EE who has reached the age of 65 years and has had
^
10 years’ service is entitled to a pension. In case of an employee
being retired upon his own request or dishonorably discharged after
15 years’ service, he has a deferred right to a pension at age 65 or
earlier in case of disability. In certain cases, by royal decree, if he
has reached 55 years of age, has had 10 years’ service, and is honorably
discharged, he is allowed a pension.
A minister retiring from service is entitled to a pension without
consideration of the length of his service as minister. A consular
officer is entitled to pension when he has served 35 years.
Retirement Pensions
T ^H E average of the income from service, in money and in kind
*
(expressed in money value), for the last 3 years, or for the last
10 y^ears, or for the number of years of service, whichever average is
the highest, or if an employee has served less than 3 years the average
of the shorter period, serves as the basis for the calculation of the
pension.
11 Staatsblad, No. 240, 1922, Nos. 293 and 307, 1923, and No. 216, 1925, Tekst van de Pensioenwet 1922.
Alphen, N. Samsoin, 1926; Rinnooij, H. A. J., De Pensioenwet 1922, met Toelichtingen, Alphen, N. Sanasom, 1926, and Tweede Deel Uitvoeringsbesluiten, Alphen, N. Samsom, 1927.
NETHERLANDS
213
The amount of the pension is equal to 1.75 per cent of the basic
income from service for each year of service, the maximum pension
being 70 per cent of such basic income. The pension to a minister is
equal to one-twelfth of the basic income from service. If he served
in other positions before he was appointed minister then the pension
to which he is entitled for his service in other positions is added to
his pension as minister.
The pension to a minister may not exceed 6,000 florins per annum,
and th at to other civil-service employees may not exceed 4,000 florins
per annum.
Disability
w
1H EN a civil-service employee is disabled for service by accident
or sickness in service if he has had seven years’ service he is
entitled to a disability pension. If a civil-service employee is seri
ously, permanently, or totally disabled in service so th a t a larger dis
ability pension is required, the time of service is not considered.
Disability pensions may not be less than 30 nor more than 70 per
cent of the basic income from service.
Survivors’ Pensions
TA/IDOW ’S pension.—The widow of a deceased employee, if the
**
marriage took place before the latter reached the age of 65
years, is entitled to a pension amounting to 50 per cent of the first
2,000 florins and 40 per cent of the remainder of the basic income
from service of her deceased husband the basic income used in calcu
lating such pension not to exceed 3,000 florins.
Orphans’ pensions.—The widow’s children who are under legal age
are each entitled to a pension of 10 per cent and every whole orphan
under legal age to 20 per cent of the basic income from service of the
deceased, such pension calculation base not to exceed 3,000 florins.
Foster, adopted, and legitimated children, when adoption and legit
imation took place before the civil-service employee reached the age
of 65 years, are counted as orphans.
Contributions
'T 'H E State, provincial and municipal governments contribute to the
employees’ pension fund 10 per cent and to the widows’ and
orphans’ fund 5j^> per cent of the average of the total basic incomes
from service of their respective employees, as determined on M arch 15
and September 15 each year.
Contributions to the employees’ pension fund of not more than 3
per cent and to the widows’ and orphans’ pension fund of not more
than
per cent of their basic salaries are required of the civilservice employees.
Administration
'T 'H E civil-service employees’ pension fund and the widows’ and
A orphans’ pension fund are administered by a Pension Council
(.Pensioenraad) consisting of three members, and a secretary and a
medical adviser appointed by the Queen.
214
CHAPTER 9.— RETIREMENT SYSTEMS IN EUROPE
NORWAY 12
Legislation
'T 'H E civil-service retirem ent and pension system m Norway was
reorganized on the basis of the law of July 28, 1921. Subse
quent regulations and instructions, notably those of April 28, 1922,
October 12 and December 15, 1923, November 28, 1924, and Decem
ber 19, 1927, relate principally to the adm inistration of the law.
Employees Covered
rF H E law covers all employees in the offices and establishments of
the State and those employees in the offices and establishments
of provincial and municipal governments who are brought under the
State retirem ent and pension system by royal decree; for instance
the law covers all school-teachers, though the vast m ajority of them
are under the jurisdiction of the provincial and municipal govern
ments.
Retirement Age and Length of Service
VX^HEN a male civil-service employee has reached the age of 70
years or a female employee the age of 65 years, he or she is
entitled to retire with a pension. For certain occupations requiring
nervous strain and exposure to the elements, however, the retirem ent
age varies. In the State mines, gas works, fisheries, electrical works,
shipyards, port works, ammunition plants, etc., it is 68 years; in the
State prisons (for prison guards), in the State post, telegraph and
telephone service, etc., 65 years; for female employees in the State
prisons, correction houses, State medical establishments, etc., 60
years; for female telegraph and telephone operators, 55 years; and
in the marine service, 52 years.
For the minimum pension at least 10 years, and for the maximum
pension 30 years, of service is required. If an employee who has
served 10 years retires before he has reached the age of 70 years—
for instance, at the age of 65 years—he is entitled to a deferred pen
sion; th a t is, the pension does not begin until he reaches 70 years
of age.
Retirement Pensions
np H E amount of the pension varies according to the salary received
and years of service. The highest annual salary received by
the employee serves as the basis for the calculation of his pension,
the minimum salary being 1,000 crowns and the maximum 10,000
crowns per annum.
The pension scale represents 90 salary bases for the calculation of
the pension. Beginning with the minimum of 1,000 crowns per
annum each succeeding base is 100 crowns higher than the preceding
until the maximum of 10,000 crowns per annum is reached. For the
lower bases—from 1,000 crowns up to 6,000 crowns— the pension
12 Lov om Statens Pensjonskasse, av 28. juli 1921, Oslo, 1921; Norway, ^Hovedstyret for •Statsbanene,
Circulaere nr. 241 Vedtekter for Statsbanenes Pensjonskasse, Oslo, 1923; Arsberetning for 1925 for Statens
Pensjonskasse, Oslo, 1926; Norway, Socialdepartementet, Utkast til Lov om forandringer i Lov om Statenj
Pensjonskasse av 28. juli 1921, Oslo, 1927, and Om omordning av Statskassens tilskudd til Statens Pens
ionskasse, Oslo, 1926.
215
NORWAY
for 30 years’ service is equal to 66 per cent of the basic salary; for
6,100 crowns it is 65.7 per cent; and this percentage is decreased by
0.3 for each succeeding base to the maximum of 10,000 crowns, for
which the pension is 54 per cent.
For service of less than 30 years a proportionate pension is paid;
for instance, the pensions on the minimum basic salary of 1,000 crowns
and on the maximum basic salary of 10,000 crowns for each number
of years up to 30 years of service, as calculated, are as follows:
T a b l e 4 1 . — Minimum and maximum pensions for specified years of service
Years of service
Maxi
Mini
mum
mum
annual annual
pension pension
Crowns
15 years and less. _________
16 years____ . __________
17 years.. __________________
18 years. _________ _______
19 years.................... .................
20 years......... ........... ............. .
21 years..................... ................
22 years____________ ________
330. 00
352. 80
374. 40
396.00
418. 80
440, 40
462. 00
484. 80
Years of service
Crowns
2, 700
2,880
3,060
3,210
3,420
3, 600
3,780
3, 960
Mini
Maxi
mum
mum
annual annual
pension pension
Crowns
23 years...................... ................
24 years__________ _______
25 years. __________________
26 years. ......... .............. ......
27 y e a r s . _______ __________
28 years___ _____ __________
29 years ___________________
30 years... ...................... ..........
506. 40
528.00
550. 80
572. 40
594. 00
616. 80
638. 40
660. 00
Crowns
4,140
4,320
4, 500
4,680
4, s m
5,040
5, 220
5,400
Pensions on all salary bases between the minimum and maximum
are graduated according to the years of service approximately in
the same proportion.
Disability
1 \/|U C H latitude is left by the law to the pension board in the
^
m atter of awarding disability pensions, but certain principles
are followed. In case of perm anent disability, caused by accident
or sickness in service, a pension equal to the full service pension is
awarded. If upon investigation it appears th a t perm anent disability
was due to causes other than accident and sickness in service, the
award is usually three-fourths of the full service pension.
Survivors’ Pensions
TA/IDO W’S pension.—A widow’s pension is equal to 50 per cent
of her deceased husband’s pension. If she remarries she loses
her pension rights.
Orphans’ pensions.—The pension for the widow’s children is as
follows: For one child, 40 per cent of the widow’s pension; for two
children, 60 per cent; for three children, 75 per cent; for four chil
dren, 90 per cent; and for five or more children, 100 per cent. Whole
orphans receive the same percentage of their deceased father’s pen
sion. Orphans’ pensions are paid until they reach 18 years of age.
Foster, adopted, and legitimated children, if marriage or their adop
tion and legitimation took place before the employee reached the
retirem ent age, are counted as orphans.
216
CHAPTER 9.— RETIREMENT SYSTEMS IN EUROPE
Contributions
r^IY IL -S E R V IC E employees contribute 10 per cent of their salary
^
or income from service to the pension funds. The Govern
m ent guarantees the paym ent of pensions and contributes the bal
ance of the cost each year.
Pension Funds and Their Administration
'T'HER-E are a num ber of separate State pension funds— the em-** ployees’ pension fund {Statens PensjonsTcasse), the widow’s
pension fund (EnTcelcasse)f the State railway employees’ pension fund
(Statsbanenes PensjonsTcasse), and other smaller funds—b u t all these
funds operate under the same laws and regulations and are under the
same central administration. The funds are administered by a pen
sion board under the general direction of the M inistry of Public
Welfare. The board consists of a general director (chairman), two
directors, a treasurer, a secretary, and a chief physician, all of whom
are appointed by the King.
SWEDEN 13
T ^H E law of October 11, 1907, with some subsequent modifications,
contains the principal provisions for civil-service retirem ent and
pensions in Sweden.14
Employees Covered
r F H E retirem ent and pension law applies to all State office holders
and employees provided for in the regular State budget, with the
exception of certain groups of employees whose retirem ent is governed
by special regulations and royal decrees and those civil-service
employees who are insured by the General Social Insurance Office.
Retirement Age and Length of Service
A S a rule, retirem ent is obligatory at the age of 67 years. If, on
^
reaching such age, a civil-service employee has served at least
10 years, he is entitled to an annual pension, but m ust have served
a certain number of years, generally 35, to receive a full pension. If,
for causes other than disability contracted in service, an employee
leaves the service before he has completed 10 years’ service, he is not
entitled to a pension and his contributions are not refunded.
Svensk Forfattnings-Samling, Nr. 85, 1907, and Nr. 276-279, 1925; Sweden, Statskontorets, Utdrag
ur de under Kungl. statskontorets forvaltning staende fonders och diverse medels rakenskaper for budgetaret 1926-27, Stockholm, 1927; and unpublished material furnished to the Department of Labor through
the Department of State.
n There are a number of regulations and decrees concerning retirement and pensions of certain groups of
civil-service employees; for instance, in the State postal, telegraph, railway, and water power services.
Among these regulations and decrees, perhaps the most important are: Salary regulation of June 19,1919,
somewhat modified by the law of June 4, 1920; public land service regulation of June 22,1920, modified by
law of June 12,1925; royal decree of June 9,1922, relating to pilotage and lighthouse service; salary regulation
of May 21, 1926, and royal decree of June 18,1926, relating to State and provincial medical service.
217
SWEDEN
Retirement Pensions
'T 'H E basis for the calculation of the annual pension is two-thirds of
the last annual salary, the amount being generally stated either
in the current State budget or in a special regulation or decree, but if
not so stated the whole of the last annual salary serves as the basis for
the calculation of the pension, the maximum being 6,000 crowns per
annum.
A full pension is equal to the basic salary ascertained as above
stated. If the number of years’ service is smaller than the specified
maximum but amounts to 10 or more, the pension granted is propor
tional to the years of service, so that, for example, an employee who is
entitled to a full pension after 35 years of service but has served only
27 years is entitled, when he retires, to a pension equal to twentyseven thirty-fifths of the basic salary.
The maximum amount of the annual pension granted to civilservice employees (which is the basis for calculation of the pension)
was fixed by the laws of 1907 and 1920, and by the royal decree of
June 12, 1925 (No. 277). Those of chiefs and other officials are, by
salary grades, as follows:
Grade:
Crowns
First_____________________ 7, 296
Second___________________ 7, 896
Grade:
Crown
Third____________________ 8,496
Fourth___________________ 8, 796
The maximum pensions of other civil service employees of the
various salary grades are:
Grade :
First___________
Second ________
Third___________
F o u r t h ________
Fifth___________
Sixth___________
Seventh________
Eighth_________
Ninth__________
Tenth__________
Eleventh_______
Twelfth________
Thirteenth______
Fourteenth_____
Fifteenth_______
Men
(crowns)
Women
(crowns)
1, 320
1, 404
1, 476
1, 560
1, 644
1, 716
1, 824
1, 920
2, 040
2, 160
2, 304
2, 436
2, 640
2, 844
3,036
1, 236
1, 320
1, 404
1, 476
1, 560
1, 644
1, 716
1, 824
1, 920
2, 040
2, 160
2, 304
2, 436
2, 640
2,844
Men
Grade:
(crowns)
Sixteenth_______ 3, 240
Seventeenth____ 3, 444
Eighteenth_____ 3, 684
Nineteenth_____ 3, 924
Twentieth.
924
Twenty-first____
200
Twenty-second. _
476
764
Twenty-third___
Twenty-fourth. __
076
Twenty-fifth___
400
Twenty-sixth___ 5, 724
T wenty-se venth _ 6, 036
Twenty-eighth. _ 6, 360
Twenty-ninth.. 6, 684
Thirtieth_______ 6, 996
Women
(crowns)
3, 036
3, 240
3, 444
3, 684
3, 684
3, 924
4, 200
4, 476
4, 764
5, 076
5, 400
5, 724
6, 036
6, 360
6, 684
Disability
TN CASE of retirem ent for perm anent disability caused by accident
* or sickness in the service an employee may be awarded a pension
equal to the full service pension
Survivors5Pensions
TN MANY cases the survivors of a civil-service employee are taken
care of by the General Social Insurance Office. B ut in cases
where the widow is not insured, she receives a pension amounting
to approximately one-fourth of the pension her deceased husband
3306°—29------15
218
CHAPTER 9.--- RETIREMENT SYSTEMS IN EUROPE
was receiving or to which he was entitled at his death. If the or
phans are not entitled to benefits from the General Social Insurance
Office, they receive a pension until they reach 21 years of age in
amounts varying with the circumstances and the decision of the
pension board. The orphans’ pensions and the widow’s pension to
gether m ay not exceed the pension of the deceased employee. The
cost of living, schooling, and training of whole orphans is paid by
the survivors’ pension fund until they reach the age of 21 years, or
until they are able to earn their own living.
Contributions
E^VERY civil-service employee is required to make annual contribu^
tions (pensionsavgift), varying, as a rule, between 3 and 6 per
cent of the basic salary, which is paid into the civil pensions fund.
I t is calculated th a t when the pensions service reaches the stage
where the income of the pension fund just covers its expenses, the
contributions of the employees will represent approximately one-third
of the pensions.
The annual contributions of the civil-service employees of the
various salary grades to the pensions fund are as follows:
Chiefs and other officials
Grade:
Crowns
First_______________________ 438
Second__________ ___________474
Grade:
Crowns
T h i r d ...___________________ 510
Fourth_____________________ 528
Other civil-service employees
Grade:
Crowns
First_______________________
36
Second_____________________
39
Third______________________
42
Fourth_____________________
45
Fifth_______________________
48
Sixth_______________________
51
Seventh____________________
57
Eighth_____________________
63
Ninth______________________
69
Tenth______________________
75
Eleventh___________________
84
Twelfth____________________
90
Thirteenth__________________ 102
Fourteenth_________________ 114
Fifteenth___________________ 129
Grade:
Crowns
Sixteenth___________________ 141
Seventeenth________________ 156
Eighteenth_________________ 174
Nineteenth_________________ 192
Twentieth__________________ 192
Twenty-first________________ 213
Twenty-second_____________ 234
Twenty-third_______________ 255
Twenty-fourth______________ 279
Twenty-fifth________________ 303
Twenty-sixth_______________ 330
Twenty-seventh____________ 354
Twenty-eighth______________378
Twentv-ninth_______________399
Thirtieth___________________ 420
Civil-service. employees who are insured by the General Social
Insurance Office do not receive a civil-service pension and do not con
tribute toward it, but are required to contribute to the civil-service
survivors’ pension fund such sums as are assessed by the board in
charge of this fund.
Pension Funds and Their Administration
'T 'H E R E are two pension funds, one for civil-service employees and
*
the other for their survivors (called “ fonden for familjepensionering” ). Both funds are administered by special boards under the
authority of the M inistry of Finance. The members of the pension
219
SWITZERLAND
board for employees are appointed by the King. The board for the
survivors1 fund consists of five members, of whom the chairman and
managing director are appointed by the King and three members are
appointed by 60 electors chosen by the contributors to the fund.
Financial Standing of Pension Funds
T H E financial standing of the civil-service pension funds during
the fiscal year 1926-27 was as follows:
Employees’ pension fund
Crowns
Balance on hand____________________________________________
Income:
Interest_________________________________
1, 105, 421. 44
Employees’ contributions________________
1, 698, 640. 78
Total income_________________________________________
Expenses: Pensions, and other_______________________________
Survivors’ pension fund
Balance on hand____________________________________________
Income:
Interest_________________________________
7, 359. 99
Employees’ contributions________________
127, 812. 03
Total income_________________________________________
Expenses: Pensions__________________________________________
Crowns
21, 018, 248. 55
2, 804, 062. 22
335, 292. 26
110, 265. 83
135, 172. 02
1, 172. 35
SWITZERLAND 16
Legislation
IN ST E A D of pensions the Swiss Government has a system of obligatory or compulsory insurance of civil-service employees (fonctionnaires, employes, et ouvriersfederaux), based upon the laws of Septem
ber 30, 1919, and October 6, 1920, amplified and interpreted, in cer
tain particulars, by the decisions of the Federal Council of January
18, 1921, and of M ay 8, 1923.
General Provisions
'X 'H E insurance laws provide benefits for civil-service employees in
case of old age and disability caused either by sickness or acci
dent and, in case of death, for their survivors.
Insurance begins at the time of entering the service, and leaving
the service means giving up the insurance. If a civil-service employee
leaves the service for any cause other than disability or death and
if he has not the right to a lump-sum paym ent his insurance contri
butions are returned to him without interest. The return of his
contributions or the paym ent of a lump-sum precludes all claim to
insurance benefits. Should he reenter the service, which means
15 The data on which this section is based are from Statuts de la caisse d’assurance des fonctionnaires,
employes, et ouvriers federaux du 6 octobre 1920; Arr6t6 du Conseil federal concernant 1’execution de certaines dispositions des statuts de la caisse d’assurance du 17 janvier 1921; Decisions du conseil d’adminis*
tration concernant l’admission des ouvriers et du personnel auxilaire dans la caisse d’assurance du 18 janvier
1921; Annexe au Comte d’Etat de la Confederation suisse, la caisse d’assurance des fonctionnaires, employes
et ouvriers federaux en 1921-1925.
220
CHAPTER 9.— RETIREMENT SYSTEMS IN EUROPE
again becoming subject to insurance, he m ust return his refunded
contributions or the lump-sum paym ent and his previous service time
is added to his second period of service.
A service year for officials and employees is considered as consisting
of 12 months' service, and for laborers as consisting of 330 days7
labor, except th a t for those laborers who work also on Sundays and
holidays it consists of 365 days’ labor.
The maximum yearly salary or wages considered for insurance
purposes is 15,000 francs.
Employees Covered
'T'H O SE insured are the elected or appointed civil employees. Per1 sons who have left the service for the third time and those who are
provided for from communal or other sources are not eligible for
insurance.
Civil-service employees who can not present a certificate of good
health or who are over 40 years of age when entering the service
can be insured only as savings contributors. If during their service
their health appears to be good they may be insured, and in th at
case the savings contributions they have made are converted into
insurance contributions.
Retirement Age and Length of Service
A PEN SIO N is paid to the insured employee when he, having reached
^
70 years of age or having had 50 years’(in the case of a woman
35 years’) service,16 retires, not being able to continue service, or
when after 15 years’ service he is not reelected or is discharged for no
fault of his.
Insurance Benefits
I NSURANCE
ments.
benefits consist of pensions or lump-sum
pay
The amount of pension is calculated as a percentage of the last
annual salary when a civil-service employee retires.
Annual payments in the case of a life pension are made according
to the following scale:
Years of
service
Per cent of last
annual salary
Less than 1 year______________ _15.
1 year__________________________20.
2 years_________________________25.
3 years_________________________30.
4 years_________________________35.
5 years_________________________36.
6 years_______________________ __37.
7 years__________________________38.
8 years__________________________39.
9 years_______________________ __40
10 years______________________ __41.
11 years______________________ __42.
12 years______________________ __43.
13 years______________________ __44.
14 years______________________ __45.
15 years______________________ __46.
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Years 01
service
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Per cent of last
annual salary
years______________________
47. 0
years______________________
48. 0
years.
_________________ __49. 5
years.
_________________ __51. 0
years.
_________________ __52. 5
years.
_________________ __54. 0
years.
_________________ __55. 5
years.
_________________ __57. 0
years______________________ __58. 5
years______________________ __60. 0
years______________________ __62. 0
years______________________ __64. 0
years______________________ __66. 0
years______________________ __68. 0
years______________________ 1770. 0
16 Retirement at reaching 70 years of age or after 50 years' (in the case of a woman 35 years’) service is
nrtt compulsory.
17 Maximum.
SWITZERLAND
221
Lump sum.—If after five years’ service and before the completion
of the fifteenth year the insured is not reelected or is discharged for
no fault of his, he receives a lump-sum paym ent as follows: From 5 to
8 years’ service, 125 per cent of the last annual salary; from 8 to 12
years’ service, 150 per cent; from 12 to 15 years’ service, 200 per cent.
Partial pension.—If an employee who receives a pension is reelected
or reappointed for service his pension ceases and he again comes under
the insurance system, making corresponding contributions if his
annual salary is higher than the pension he received. If his salary is
lower than the latter he receives a partial pension in order to equal
ize his income from his service with his pension.
Disability
PEN SIO N is paid to an insured employee when, after 5 years’
service in the case of a married employee or 15 years’ service in
the case of an unmarried employee, he is perm anently disabled in
service either by sickness or accident; a lump sum is paid to the
insured if he is disabled during the first five years of service.
Partial pension.—When an employee is disabled in service and as
a result is transferred, at a lower salary, to some other work which
he is still able to perform, he has the right to a partial disability pension
as compensation for his lost earning power.
Increase and decrease of pension.—A female civil-service employee
who has served at least 15 years in the first or second classes of the
telephone and telegraph service has the right to an increase of her
disability pension by 1 per cent per year of the annual salary which
serves as the basis for calculation of her pension, but the increased
pension is not to exceed 70 per cent of her annual salary at retirement.
If a retired employee receives a pension from other sources for
previous service his disability pension is decreased in the amount of
his other pension.
Lump sum.—If an unmarried employee during his first five years of
service is disabled in service he is paid a lump sum equal to a percent
age of his annual salary as follows: When disabled in the first year of
service, 50 per cent; in the second year, 75 per cent; in the third year,
100 per cent; in the fourth year, 125 per cent; and in the fifth year,
150 per cent.
A
Relief
P E L IE F is paid out of a special relief fund in particular cases of
need. For instance, if the deceased had grandparents or other
close relatives, except widow and children, dependent upon him, an
annual relief paym ent of not to exceed 20 per cent of his annual salary
is made. The relief is also given as an addition to the pension of a
disabled civil-service employee if after his retirem ent there appears
in his family an additional dependent. W hether relief is needed and
in what amount are decided in each case by the governing council.
222
CHAPTER 9.— RETIREMENT SYSTEMS IN EUROPE
Survivors’ Pensions
U 7 I D 0 IP S pension.—The widow's pension is normally 50 per cent of
V*
the pension of her deceased husband, but never less than 25 per
cent and never in excess of his pension. If the widow is 20 years
younger than her deceased husband she is entitled to only half of
the usual widow’s pension. If the marriage took place after her
deceased husband had reached 60 years of age the widow has no right
to a pension. If a widow remarries she is paid a lump sum equal to
three times her annual pension.
Orphans’ pensions.—Each legitimate child of the deceased insured
civil-service employee is entitled to 10 per cent of the annual salary of
the deceased till he reaches the age of 18 years, bu t if the child is not
capable of rem unerative employment by reason of some physical or
m ental defect he is entitled to a pension during his lifetime. A child
over 18 years of age at the time of the death of his father is not
entitled to a pension.
The aggregate sum of the pensions to all the children of the deceased
m ust not exceed 30 per cent of his annual salary. If after the death
of an insured employee no widow appears, or if she loses her right to
pension or dies the orphan’s pension is doubled.
Contributions
rT 'H E Government contributes 7 per cent of the annual salary of
the insured, a sum equivalent to five m onthly paym ents of any
increase in the salary of the insured, and expenses of the upkeep of
the insurance offices, and also makes up any deficits th at m ay occur.
The employee contributes 5 per cent of his annual salary and four
m onthly payments of any increase in his annual salary.
When an insured male civil-service employee has reached the age
of 70 years, or when he has been in the service 50 years, he is released
from making contributions; a female employee is released after 35
years’ service.
For the relief fund the Government contributed an initial amount
of 250,000 francs. The insured employees contribute 1 per cent of
their annual salary on December 31 of each year. The relief fund is
augmented by gifts, legacies, uncollected pensions, etc.
Savings Deposits
TF AN official or employee is not able at the time of entering service
1 to present a certificate of good health or is over 40 years of age
he is not eligible for insurance, but m ust make savings deposits equal
to the insurance contributions he would make if insured. The Gov
ernm ent contributions are the same as in the case of the insured
employee. The savings deposits bear interest, which is compounded
at certain intervals.
When a savings depositer leaves the service his savings deposits,
with interest, are returned to him, or, in case of his death, are paid
to his heirs, in which case the Government contributions are added
to the general relief fund.
When a savings depositor, after at least five years' service, resigns
on account of disability acquired in the service, or because he is not
223
SWITZERLAND
reelected or is discharged for no fault of his, his savings deposits
plus the Government contributions, with interest, are paid to him
or his heirs.
Insurance Offices
/^.E N E R A L control over the insurance system is vested in the
^
Federal Council. The highest executive office is the governing
council, while the actual insurance business is done by various offices
of the Federal financial departments.
The governing council consists of a president and 18 members.
The Federal Council appoints the president and 10 members, and 8
members are elected by the insured, the method of election being pre
scribed by the Federal Council. The tenure of service of the president
and the members is three years. Im portant questions are brought to
the governing council for mediation and decision. The rights, duties,
and procedure of the governing council are prescribed by the Federal
Council.
Total Contributions and Payments
T ^H E total contributions and the contributions by the Government
and by the civil-service employees to the insurance fund, the
savings deposits, and the relief fund, and the am ount paid out in
pensions and lump sums and for relief, and the deposits returned are
shown in Table 42:
T
able
4 2 . — Financial
statement of Swiss insurance system for civil-service
employees, 1921 to 1925, by years
Contributions to the insurance fund
Year
By Govern By insured
ment
Francs
1921.
................................ 12,925, 294
1922_________ _________ ___ 10, 498, 514
1923
........................ . 9, 855,054
1924 .............. ........... ................ 12,052 099
1925_________________ _____ 9,934,833
Total
Savings deposits (contributions)
By Govern By insured
ment
Francs
Francs
9,619,652 22, 544,946
7,913, 934 18,412,448
7,026,421 16,881, 475
8, 795,654 20, 847, 753
7.134. 523 17.068. 356
Francs
775, 334
599, 259
520, 689
520, 951
510, 321
Francs
560, 235
429,571
375,772
378,401
370,373
Total
Francs
1,335,569
1,028,830
896,461
899, 352
880, 694
i
Contributions to relief fund
Year
1921...........................................
1922...........................................
1923...........................................
1924...........................................
1925...........................................
By Gov
By
ernment insured
Total
Francs
Francs
Francs
250,000
3,330
3,850
180,000
159.000
159.000
146.000
139.000
430.000
162,330
162,850
146.000
139.000
Paid in
pensions
Paid in
lump
sums
Francs
Francs
7,328,127
9,836, 394
10, 933, 207
12,835,990
13,891,312
498,150
144,083
224, 406
200,145
116, 249
Paid for Deposits
relief
returned
Francs
4,040
9,357
697, 993
789,013
800,388
Francs
54, 263
245, 875
299,113
2,055, 368
552, 200
@FedFRASER