AMERICAN PUBLIC PENSION SYSTEMS AND CIVIL 
 SERVICE RETIREMENT PLANS 
 
 BY 
 
 FREDERICK L. HOFFMAN,°*LL.D., 
 
 Statistician, The Prudential Insurance Company of America, Newark, New. Jersey. 
 
 A full discussion of American pension systems and civil service 
 retirement plans would make a most useful and interesting contri- 
 bution to insurance science. There is probably no department of the 
 government which affords a better illustration of the practical 
 value of qualified actuarial advice than the pension and retirement 
 plans of the United States. Most of the methods or plans which 
 have been adopted or followed have been in disregard of or 
 indifference to actuarial considerations and as a result the actual 
 cost has invariably been far in excess of the original estimates 
 of the probable expense. It is only within very recent years that 
 actuarial principles have occasionally been applied to the solution 
 of service retirement problems in the United States and the present 
 outlook would seem to be quite favorable for a future enlargement 
 of the actuarial function in its relation to questions of public 
 administration and finance. 
 
 1. Pensions Derned. 
 
 In the common acceptance of the term, a fension in its legal 
 aspects in the United States is defined as ‘‘a stated and certain 
 allowance granted by the government to an individual, or those 
 who represent him, for valuable services performed by him for 
 the country.” 1) This definition is practically inclusive of military 
 and naval pensions and it does not strictly apply to questions 
 
 - 1) Bouvier’s Law Dictionary, Vol If, p. 647. 
 

 
 2 Hoffman. American Pubiic Pension Systems. 
 
 of voluntary or compulsory service retirement allowances. One 
 of the earliest definitions of a pension in English law is given 
 in the ‘New Law. Dictionary’ by GILES JACoB (London, 1744), 
 in which it is held that a pension “is a yearly payment of 
 money in recompense of service”, and this principle practically 
 underlies the entire public pension system of the United States 
 from the beginning of the government to the present time. It has 
 been observed in this connection by Mr. WORTHINGTON C. FORD 
 that “If there be any principle recognized and established in this 
 country it is that pensions must be confined to those who were 
 separated by the nature of their service from the great mass of 
 the community, and who devoted themselves exclusively to military 
 duties; who laid aside the character of a citizen and became a 
 soldier; who, in abandoning the pursuits, extinguished also the 
 habits, of private life’’. 1) | 
 
 As a broad principle, it may be stated that there have been few 
 exceptions to this rule, but in 1869 a law was passed by Congress 
 providing that “Any judge of the United States, who, having 
 held his commission as such at least ten years, shall, after having 
 attained the age of seventy years, resign his office, and shall — 
 thereafter during the residue of his natural life receive the same 
 salary which was by law payable to him at the time of his 
 resignation”. 2) Aside from the military pensions granted by the 
 United States government and the pensions of judges of the 
 United States courts, a limited pension arrangement has been 
 effected for the employees of the Life Saving Service and also 
 for Army nurses performing actual services during time of war. 
 Quite a number of special acts of Congress have provided pensions 
 of variable amounts for the widows of ex-Presidents, and to other 
 individuals, including the widow of a professor in the Naval Academy, 
 and the Baron VON STEUBEN, who, for services in connection with 
 the Revolutionary War, was granted a pension of $ 2,500 during life, 
 in full discharge of all claims and demands against the United States. 
 
 2. The Beginning of Pension Legislation tn the U. S. A. 
 The earliest pension legislation of the Federal government. was 
 an act of the Continental Congress, of August 26, 1776, under 
 
 1) LALOR’s Cyclopedia of Political Science, Vol. III, p. 1023. 
 2) See Section 34 of this discussion. 
 
 
 
47 Avge 
 
 sees 
 Be 
 
 age ble 
 
 Hoffman. American Public Pension Systems. | 3 
 
 cee) 
 
 which pensions were promised to soldiers and sailors disabled’ in 
 the Revolutionary War. Additional legislation was enacted in 
 1778, promising half-pay for seven years after the end of the war 
 to all commissioned officers who should serve until its termination. 
 On account of the historic importance of the act of 1776, the 
 Same is given, in part, as follows: 1) 
 
 “Whereas, in the course of the present war, some commissioned and 
 non-commissioned officers of the army and navy, as also private soldiers, 
 marines, and seamen, may lose a limb, or be otherwise so disabled as to 
 prevent their serving in the army or navy, or getting their livelihood, and 
 may stand in need of relief: 
 
 Resolved, That every commissioned officer, non-commissioned officer, 
 and private soldier, who shall lose a limb in any engagement, or be so 
 disabled in the service of the United States of America as to render him 
 incapable afterwards of getting a livelihood, shall receive, during his life, 
 or the continuance of such disability, the one half of his monthly pay 
 from and after the time that his pay as an officer or soldier ceases; to 
 be paid by the committee as hereafter mentioned:” 
 
 3. Furst Pension Act Passed by U. S. Congress. 
 
 The first act of Congress, subsequent to the adoption of the 
 Constitution, relating to pensions, passed on September 29, 1789, 
 provided that pensions which had theretofore been paid by the 
 several states should thereafter be paid by the United States under 
 
 such regulations as the President should direct. In 1796 it was 
 
 enacted by the United States Congress that every officer and private 
 oof the militia or volunteers who was wounded or disabled while 
 in the line of his duty in actual service, was entitled to be placed 
 on the list of invalids at such rate and under such regulations as 
 “ithe President should direct, subject to the limitation, however, 
 
 . Ee that the rate of compensation was never to exceed for the highest 
 
 — J disabilities one-half the monthly pay of any commissioned officer 
 
 et the time of his being so disabled; and to non- -commissioned 
 
 4) 
 _ officers, musicians and privates the compensation was never to 
 
 vexceed five dollars per month; and for all inferior disabilities a 
 sum in proportion to the highest disability was allowed’. Subse- 
 
 4 Ch 
 
 quent to this date there has been a large amount of legislation 
 
 : relating to pensions of officers and privates in the United States 
 Army and Navy, but an act of peculiar significance was passed 
 
 1) Journals of the Continental Congress, Vol. V, p. 702. 
 
4 Hoffman. American Public Pension Systems. 
 
 in 1812, providing that ‘2 °/, of the net amount of the prize 
 money arising from captured vessels and cargoes and of the salvage 
 of vessels and cargoes recaptured by the private armed vessels of 
 the United States, was directed to be paid to the collector or chief 
 officer of the Customs, at the place at which such captured or 
 recaptured vessel might arrive in the United States; or to the 
 consul, or other public agent of the United States, residing at the 
 place, not within the United States, at which such vessels might 
 arrive. The monies paid as aforesaid, were pledged as a fund, for 
 the support and maintenance of the widows and orphans of such 
 persons as might be slain, and for the support and maintenance 
 of such persons as might be wounded and disabled, on board of 
 the private armed vessels of the United States, in any engagement 
 with the enemy’. 1) 
 
 In 1813 it was further provided, with reference to this act, that 
 the money so collected should constitute a fund for the benefit of 
 the officers, seamen or marines of the private armed vessels of the | 
 United States, and the regulations prescribed that, “A captain 
 was allowed, not exceeding twenty dollars; lieutenants and sailing- 
 masters, twelve dollars; marine officers, boatswains, gunners, car- 
 penters, masters’ mates and prize-masters, ten dollars; all other 
 officers, eight dollars, and the seamen or marines, six dollars per 
 month, for the highest rate of disability, and in proportion for 
 inferior disabilities.” 
 
 4. Growth of the Military and Naval Pension System. 
 
 By 1833 the pension roll had gradually increased to what for 
 the time were considerable proportions and a Pension Bureau was 
 established in the War Department, but the naval pensions con- 
 tinued to be dealt with until 1840 by the Navy Department. In 
 1849, when the Interior Department was created, the Pension 
 Bureau was transferred thereto and since then all matters relating 
 to military and naval pensions have been dealt with by the Com- 
 missioner of Pensions of the Department of the Interior. 
 
 The amounts annually paid out for military and naval pensions 
 in the United States by 1791 had reached $ 175,813.88, but sub- 
 sequent to that year the amount gradually declined, with some 
 
 I) SEYBERT’s Statistical Annals of the United States, p. 694. 
 
Hoffman. American Public Pension Systems. 5 
 
 regularity, to $ 69,656.06 in 1815. The effect of the second war 
 with England was to nearly treble this amount during 1816, and 
 the amounts rapidly increased until a maximum of $ 3,208,370.31 
 was attained in 1820. Thereafter the amounts decreased slowly to 
 a minimum of $ 850,573.57 in 1828, increasing rapidly thereafter 
 to $ 4,589,152.40 in 1833. For the next three decades, including 
 the second year of the Civil War, the amounts disbursed on account 
 of military and naval pensions rarely exceeded two million dollars, 
 and in fact, by 1862, the disbursements had been decreased to 
 » 852,170.47. It may be recalled that the wars in which the United 
 States had up to this time been engaged since the Revolution 
 included the misunderstanding with France, the war with Tripolt, 
 the Indian wars, the second war with England, dating from 1812 
 to 1815, the war with the Seminoles, the several Indian wars dating 
 from 1817 to 1843, the frontier disturbances on the Canadian 
 border, and the war with Mexico, 1846—1848. 1) 
 
 5. Changes in Pension Practice. 
 
 It had become the practice to grant invalid pensions to volun- 
 teers in the militia employed in suppressing Indian depredations 
 in Florida and pension allowances were made to the widows and 
 children under 16 years of age of those engaged in various Indian 
 Wars since 1790 and who remained in the service to the date of 
 their death, or who had received an honorable discharge and died. 
 Invalidity pensions were also granted to regulars and volunteers 
 disabled by injury received or disease contracted in the Mexican 
 war, but the total amounts disbursed on account of military and 
 naval pensions previous to the Civil War remained relatively an 
 unimportant item in the national budget. As early as 1818, however, 
 the principle of limiting the granting of pensions to cases of esta- 
 blished disability in actual service had been abandoned and the 
 length of service and the poverty or pecuniary dependence of the 
 pensioner were made the conditions precedent for pension grants, 
 which by the United States Supreme Court have been defined as 
 “the bounties of the government which Congress has the right to 
 give, distribute or recall at its discretion.” The effect of such a 
 liberal interpretation of pension rules and regulations is made 
 
 1) LALOR’s Cyclopedia of Political Science, Vol. III, p. 1031. 
 
6 Hoffman. American Public Pension Systems. 
 
 evident by the subsequent cost, which, in nearly all cases has far 
 exceeded the anticipated expense. 1) It would serve no present 
 purpose to enlarge upon the abuses of the American pension 
 system, which are common to pensions granted by government on 
 a non-contributory basis. As early as 1818 it was ascertained that 
 fully one-third of the pension claimants had no claim to the 
 government bounty. In 1820 more restrictive safeguards against 
 fraud were adopted and applicants were required to give a pro- 
 perty account under oath and as the result of this six thousand 
 names were stricken from the list. | 
 
 The subsequent pension history is full of similar illustrations, 
 but the actual extent of wrongful practices has never been esta- 
 blished, nor would it be an easy matter to do so. The earliest 
 reference to extensive pension frauds occurs in the Message to 
 Congress of President ANDREW JACKSON in 1834 2) and on that 
 occasion a report was made to Congress in which it was said 
 that ,, [here are supposed to be now living about 42,600 persons 
 who receive pensions or gratuities from the government under 
 different laws. Of these about 3,900 are invalid pensions, 10,500 
 come under the act of 1818, 7oo under the act of 1828, and 
 27,500 under the law of June 7, 1832.” 
 
 6. Beginnings of Civil War Pensions. 
 
 The early pension experience of the United States is extremely 
 suggestive of the difficulty inherent in all government pension 
 plans which allow more or less discretion in the gratuitous distri- 
 bution of public funds. The exigencies of war rarely fail to impose 
 a heavy pecuniary burden upon subsequent generations, but in no 
 direction has this been more the case than in the pension allow- 
 ances authorized by the United States Congress subsequent to 
 the war of 1861—18065. The earliest pension law having reference 
 
 
 
 1) That there has been no improvement in the accuracy of forecasts regarding 
 the ultimate cost of pension legislation, is made evident by a statement made by 
 the Hon. Martin Dies, M. C., of Texas, on December 9, 1911, who, quoting from 
 a speech by Mr. Payne, of New York, at one time the leader of the Republican 
 majority of Congress, and referring to a proposed pension bill pending at the time, 
 which would have materially increased the pension disbursements, said as follows: 
 “The estimate is for 451/,. million dollars. We have never had an estimate yet that 
 was not exceeded by a good many millions of dollars’. 
 
 2) Messages and Papers of the Presidents, Vol. III, p. 114. 
 
Hoffman. American Public Pension Systems. 7 
 
 to the dependent survivors of that war was enacted on July 14, 
 1862, and from that date to this a truly enormous mass of pension 
 legislation has been enacted, both in the nature of general laws 
 and private acts, with a constant tendency towards an increase 
 in the government bounty and an enlargement of the scope of 
 the pension system. Not one of the numerous acts which has been 
 passed was based upon actuarial considerations, even in so far as 
 to permit of a forecast with reasonable accuracy of the probable 
 future cost. As a result, colossal pecuniary burdens have been 
 assumed by the American people, which, while cheerfully borne, as 
 a matter of patriotic pride, and in appreciation of the inestimable 
 service rendered by the soldiers and sailors of the wars in which 
 the United States has been engaged, constitute nevertheless an 
 economic problem of the utmost national concern. From 
 $ 15,450,549 paid in military and naval pensions in 1866, the 
 disbursements by 1880 increased to $ 56,689,229, and to. 
 $ 156,906,637 in 1893. Subsequent to that year (1893) there was 
 a slight decline for a few years, until, as the result of additional 
 legislation and the new burdens resulting from the war with Spain 
 in 1898, the pension disbursements by 1909 reached $ 161,973,703. 
 During the last two years the amounts have slightly decreased 
 to $ 157,325,100 in 19it. All of the foregoing disbursements are 
 exclusive of the cost of maintenance and expense. The number 
 of pensioners increased from 126,722 in 1806 to a maximum of 
 999,440 in 1902. Subsequent to that year there has been a gradual 
 decrease in the numbers, but in 1911 the pension roll still con- 
 tained 892,098 names. 
 
 7. Total Amount Paid in War Pensions to Date. 
 
 The total amounts that have been disbursed for pensions to 
 soldiers and sailors and marines, their widows, minor children and 
 dependent relatives on account of military and naval service in 
 the several wars and in the regular service since the foundation 
 of the government to June 30, 1911, approximates four-and-a-quarter 
 billions of dollars. The details of this colossal government bounty 
 are given in the following table: 1) 
 
 1) Annual Report of the Commissioner of Pensions, Department of the Interior, 
 Washington, IQII. 
 
VY 
 
 8 Hoffman. American Public Pension Systems. 
 
 Pension Disbursements of the United States on Account of the Several 
 Wars and of the Peace Establishment, 1789—1911. 
 
 War of the; Revolition (estimate) Gnas. 2 ells een $ 70,0C00,000.00 
 War ol "1872 (Service! pension) iis see se ees > «64 By Oe. 
 Indian«wars A(SErv1Ce, sPENSiony: o<., 5. bene ate epee ae 7 11,192,205.52 
 War,with Mexico (service pension)... 2... :sgeums » 45,279,686.83 
 Civil Wale ota = cath’ fle Ue” Cues ete ce ve ge a) ce ee 1» 3,985,719,836.93 
 War with Spain and insurrection in Philippine Islands ,, 34,142,976.37 
 Regular vestablighwvent we. Jets aa asc eee ae ». t¢2 7O5eo SaaS 
 Unclassified. .:;4me .. GE: g teeeeeel aes a ee ene ea 16,488,147.99 
 
 Total disbursements for pensions 1).... $ 4,230,381,730.16 
 
 8. Excess of Actual over Estimated Cost. 
 
 It is obvious from the preceding table that the subsequent cost 
 of military engagements may exceed the original expenditures 
 incurred during the period of active military operations. While the 
 limits of the present discussion preclude adequate consideration of 
 important details, it may be stated in this connection that the 
 last Revolutionary pensioner died April 25, 1g11, and there are 
 still 279 names on the pension rolls of the War of 1812, and 
 7,621 names on account of the War with Mexico. It is also 
 extremely significant that although the war with Spain was of 
 very short duration and occurred as recently as 1898, there 
 are already 28,490 names on the pension roll resulting from that 
 war, including 23.383 invalids and 1,217 widows. 
 
 9. Average Value of Pensions Paid. 
 
 In the national pension legislation the principle has generally 
 been followed to grant small pensions to large numbers rather 
 than pensions sufficient in amount for comfortable subsistence to a 
 small number of particularly deserving men. The average annual 
 value of each pension paid during 1911 was only $ 173.56, being 
 as high as $ 228.58 for pensions granted under general laws on 
 account of service in the Civil War, and as low as § 128.47 on 
 account of pensions granted as the result of the War with Spain. 
 The average amounts, however, have tended rapidly to increase 
 
 
 
 1) This total probably does not include the entire cost of administration. In 1911 
 the total pension disbursements were $ 159,842,287, of which § 2,517,127 was on 
 account of expenses of administration, or 1.57 %%. 
 
Hoffman. American Public Pension. Systems. 9 
 
 and while during 1907 the average pension disbursement: was only 
 $ 145.60, the same had increased to § 169.82 by 1909 and to 
 $ 173-56, as previously stated, in 1gt1. It is further extremely 
 significant, in this connection, that at the close of the fiscal year 
 ending with June 30, 1911, 36,793 applications were pending for 
 pensions, including one on account of the War of 1812 and 189 
 on account of the Mexican War, 8,386 on account of the War 
 with Spain, and 25,153 on account of the Civil War. The most 
 important recent legislation 1). on the subject of pensions was 
 enacted under date of April 19, 1908, under which pensions are 
 granted at the rate of $12 per month to widows of persons who 
 served go days or more in the Army or Navy of the United 
 States during the Civil War and who were honorably discharged, 
 without regard to their pecuniary condition, if they were married 
 prior to June 27, 1890. Following this legislation 88,224 applications 
 were filed for pension allowances under this law, and up to June 
 30, 1911, the number of certificates issued thereunder had reached 
 67,801. The tendency towards still more radical pension legislation 
 is emphasized in the pensions granted by special acts during the 
 3rd Session of the 61st Congress, when 3,586 persons were provided 
 with pensions for variable amounts. Leaving out a relatively small 
 number of pensions granted for sums ranging from $ 35 to $ 60 
 a month, there were 1,116 pensions granted for $ 30a month and 
 1,636 pension for $ 24 a month. The lowest amount granted was 
 for $6 a month in four cases. The tendency of pension legislation 
 would, therefore, seem to be in the direction of providing from 
 $24 to $30 a month, and this conclusion is sustained. by bills 
 recently introduced into the present Congress, providing for an 
 increase in the case of a large number of outstanding pensions to 
 a flat rate of $ 30 a month, or a dollar a day. 2) 
 
 10. Range in Size of Pensions Paid. 
 
 The range of pensions provided under general pension laws, 
 according to the pension roll of June 30, 1911, was from a 
 minimum of $2 a month to a maximum of § 108 a month. 
 Merely by way of illustration, it may be. said that undef the 
 act of February 6, 1907, there were 177,315 pensions granted 
 
 
 
 
 
 1) That is, previous to January I, 1912. 
 2) See Section 13a. 
 
10 Hoffman. American Public Pension Systems. 
 
 for $12 a month, 110,370 pensions at $15 a month and 
 69,097 pensions at $20 a month. It requires no argument to 
 prove that an increase in the amount of pensions resulting from 
 the Civil or earlier wars of the United States to a flat rate of $ 30 
 a month would very largely increase in the pension burden, and no 
 such change should be made without a qualified actuarial check 
 upon the estimate of probable ultimate cost. 1) 
 
 11. Zhe Legal Status of War Pensions. 
 
 The foregoing outline of the American pension system hasreference 
 only to military pensions, to which the same, for reasons previously 
 pointed out, has practically been limited up to this time. Important 
 legal and other considerations affect the operation of the system 
 in actual practice, and it is necessary to state that by an Act 
 of Congress dated December 21, 1893, the payment of a pension 
 cannot be withheld or suspended without notice to the grantee of 
 not less than thirty days. It has been argued, with some force, 
 that the pension legislation of the United States is unconstitutional, 
 in that no specific provision for such legislation is contained in 
 the fundamental law of the land. The system, however, has been so 
 firmly established and so large a number of pensioners are dependent 
 upon its continuance that there is not even a remote possibility 
 that any of the general pension laws enacted by Congress will 
 ever be declared unconstitutional by the United States Supreme 
 Court. While the Court has ruled that no pensioner has a vested 
 legal right to his pension, it is nevertheless true that the pension 
 legislation heretofore enacted has practically established the doctrine 
 of perpetuity for the lifetime of the beneficiary. Granting, however, 
 all that can be said in favor of Federal legislation as an evidence of 
 liberality and considerate solicitude towards the nation’s defenders 
 in time of war, and their dependent survivors, the system is inde- 
 fensible in essential matters of detail, which violate some of the 
 most important principles of insurance and economic science. 2) 
 
 1) For a full account of the laws and regulations which govern Army and Navy 
 pensions in the United States, see “Laws of the United States Governing the Granting 
 of Army and Navy Pensions, together with the Regulations Relating Thereto”, by 
 Jas. L. DAVENPORT, Commissioner of Pensions, Washington, 1912. 
 
 2) Special Message from the President of the United States, Feb. 11, 1887, on 
 _ the Dependent Pension Bill. 
 
Hoffman. American Public Pension Systems. bi 
 
 12. Financial Consequences of Disregarding Insurance Principles. 
 
 The importance of taking into account in pension legislation 
 the elementary principles of insurance as conditioned by the law. 
 of probability is best illustrated in a statement of the reasons which 
 induced the late Mr. CLEVELAND, when President of the United 
 States, to veto the dependent pension bill passed by Congress in 
 1887. After pointing out that ‘it is sad but nevertheless true, that 
 already in the matter of procuring pensions there exists a wide-spread 
 disregard of truth and good faith, stimulated by those who as agents 
 undertake to establish claims for pensions, heedlessly entered upon 
 by the expectant beneficiary, and encouraged or at least not con- 
 demned by those unwilling to obstruct a neighbor’s plans’, he 
 directed attention to the fact that while cost in a matter of this 
 kind should not be set against a patriotic duty or the recognition 
 of a right, it requires to be considered that experience has demon- 
 strated “that all estimates concerning the probable future cost of a 
 pension list are uncertain and unreliable, and always fall far below 
 the actual realization”. In continuation, Mr. CLEVELAND said. 
 
 “The chairman of the House Committee on Pensions calculates that 
 the number of pensioners under this bill would be 33,105, and the 
 increased cost $ 4,767,120; this is upon the theory that only those who 
 are entirely unable to work would be its beneficiaries. Such was the 
 principle of the Revolutionary pension law of 1818, much more clearly 
 stated, it seems to me, than in this bill. When the law of 1818 was upon 
 its passage in Congress the number of pensioners to be benefitted thereby 
 was thought to be 374; but the number of applicants under the act was 
 22,297, and the number of pensions actually allowed 20,485, costing, it 
 is reported, for the first year, $ 1,847,900, instead of $ 40,000, the esti- 
 mated expense for that period. 
 
 A law was passed in 1853 for the benefit of the surviving widows of 
 Revolutionary soldiers who were married after January 1, 1800. It was 
 estimated that they numbered 300 at the time of the passage of the act; 
 but the number of pensions allowed was 3,742, and the amount paid for 
 such pensions, during the first year of the operation of the act, was 
 $ 180,000 instead of $ 24,000, as had been estimated’’. 
 
 13. Limitations and Defects of the American System. 
 
 In utter disregard of the evidence, statistical or otherwise, that 
 the military and naval pensions system of the American government 
 is faulty in theory and defective in practice, the new pension 
 legislation is much along the same line as the old, witha constant 
 tendency toward an increase in the pension burden, which vastly 
 
12 Hloffman. American Public Pension Systems. 
 
 exceeds the corresponding amounts disbursed by other_civilized 
 nations for the same purpose. This much, however, may be said, 
 that while the amounts expended are enormous in their magnitude, 
 it is nevertheless true that in a large number of really deserving 
 cases scant justice has been done -to those who were most entitled 
 to the grateful recognition of the nation for invaluable services 
 rendered during time of war. The chief economic defect in the 
 American system is that its benefits are distributed too widely 
 and in too small amounts to be of real benefit to individual 
 beneficiaries, while the number of those receiving adequate pensions 
 for comfortable support during invalidity or old age is comparatively 
 small. For economic and patriotic reasons, it would have been 
 much better if a smaller number of pensioners had been more 
 adequately provided for, than that the benefits should have been 
 so widely distributed among nearly a million beneficiaries, with 
 many of whom at least a moral right to and pecuniary need of 
 the nation’s bounty may be a question of serious. doubt. 
 
 13a. Proposed Pension Legislation for 1912. 
 
 The most recent bill introduced in Congress (1912) in the matter 
 of war pensions, entitled ‘An Act (H. R. 1) granting a service 
 pension to certain defined veterans of the Civil War and the 
 War with Mexico’, reads as follows: 
 
 “Be it enacted, etc., That any person who served in the military or 
 naval service of the United States during the late Civil War or the War 
 with Mexico, and who has been honorably discharged therefrom, and all 
 members of State organizations that are now pensionable under existing 
 law, shall upon making proof of such facts according to such rules and 
 regulations as the Secretary of the Interior may provide, be placed on 
 the pension roll and be entitled to receive a pension as follows: For a 
 service of go days or more in the Civil War, or 60 days or more in the 
 War with Mexico, and less than 6 months, $ 15 per month; for a service 
 of 6 months or more and less than 9 months, $ 20 per month; for a 
 service of g months or more and less than 1 year, $ 25 per month; for 
 a service of 1 year or more, $ 30 per month: Provided, That any such 
 person who served in the War with Mexico shall be paid the maximum 
 pension under this act, to wit, $ 30 per month. 
 
 Sec. 2. That any person who served in the military or naval service 
 of the United States during the Civil War and received an honorable 
 discharge and who was wounded in battle or in the line of duty, and is 
 now unfit for manual labor, through causes not due to his own vicious 
 habits, or who from disease or other causes incurred mm line of duty 
 resulting in his disability is now unable to perform manual labor, shall be 
 
Hoffman. American Public Pension Systems. 13 
 
 paid the maximum pension under this act, to wit, $ 30 per month, 
 without regard to his length of service. 
 
 Sec. 3. That no person shall receive a pension under any other law 
 at the same time or for the same period he is receiving a pension under 
 the provisions of this act. 
 
 Sec. 4. That rank in the service shall not be considered in applications 
 filed hereunder. 
 
 Sec. 5. That pensions under this act shall commence from the date 
 of filing the application in the Bureau of Pensions after this act takes effect. 
 
 Sec. 6. That no pension attorney, claim agent, or other person shall 
 be entitled to receive any compensation for services rendered in presenting 
 any Claim to the Bureau of Pensions, or securing any pension, under this act. 
 
 The estimated additional cost resulting from this bill on the 
 basis of the pension returns as of June 30, Ig10, Is given in 
 tabular form below: 1) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 ee ees fs erp rol tet 
 Service. OD patie per Month.| per Month.| Pensioner. | Pensioner. pen Neat. 
 go days 22,253 | $ 12.00 | $ 15.00 | $ 3.00] $ 36.00] & 801,108.00 
 6 months Se 02400y 12500. a 20,00 1%. ,00.| » *96.00 | » -5,340,708.00 
 I year 200,279 | » 12.00 | » 30.00 | » 18.00 | » 216.00 | » 43,260,264.00 
 go days SiGe 2 tA BOO Poel 5.00: |. do T2000) 3°. 12.00 7» 9,828.00 
 6 months 2047 Ae duIAL OO) 1) 20°.00'| 99 600°!» 72.00 | » 147,384.00 
 I year WG 7O weal ds O09}. 640-0024)». EO. 00% | > 192.00} >» — 1,415,040,00 
 6 months 20,356 | » 15.00 | » 20.00] » 5.00] » 60.00 | » -1,221,360.00 
 I year 73,280 | » 15.00 | » 30.00 | » 15.00 | » 180.00 | » 13,190,400.00 
 6 months SOO LE Stl 7,00 Vue 20.00%! 9) 0 2.005 |. 30.00. | > 201,636.00 
 year 20,105. |.» .17,00°| > 30.00 ]-> 13.00.} 2156.00 | » 3,145,740.00 
 I year 47,349 | » 20.00 | » 30.00 | » 10.00 | » 120.00 | » 5,681,880.00 
 I year 17,451 | » 24.00 | 30,00715)) 0,00 |) 5.72.00 [sow 1-250,472, 00 
 otal; os $ 75,671,880.00 
 
 It is further estimated that if the bill referred to became a law, 
 the per capita increase of the pension burden would be from $ 1.77 
 at the present time to $2.25. For the purpose of emphasizing 
 the disproportionate amount paid in war pensions in the United 
 States, the Hon. DAvipD E. FINLEY, of South Carolina, on 
 December 11, 1911, made the following statement in the House 
 of Representatives: 
 
 1) Congressional Record, 621d Congress, 2nd Session, p. 146. 
 
14 Hoffman. American Public Pension Systems. 
 
 “The United States pays out annually more for pensions than any 
 other three countries in the world, as may be shown by the following — 
 figures taken from the official yearbooks of France, Germany, and England: 
 
 Pensions paid in 1910: 
 
 
 
 Daye H BATUCO NS, pt ces sme genee: fe Fe Wee ees - $ 31,960,607 
 Bye eriiany ae. ee ees eee ae oli wae eae » 40,805,814 
 By England’ (cease ee te eee eee cre > 29,397,268 
 aaa lotenh eter A $ 102,163,689 
 
 Paid by United States in tg10, as given 
 by the Commissioner of Pensions..... $ 162,631,729 
 
 The bill, as proposed, passed the House by a large majority, 
 but it has not passed the Senate, and in any event, it would 
 probably have been vetoed by the President. The bill, however, 
 has the intrinsic merit that it clearly recognizes the principle of 
 length of active service as the paramount consideration in the 
 granting of pensions with or without an age qualification. 
 
 14. Payment of Pensions to Soldiers of the Confederacy. 
 
 In addition to the Federal pension system, which provides for 
 invalid or dependent survivors of the various wars in which the 
 nation has been engaged, the Southern States constituting the old 
 Confederacy, have established State pension systems along very 
 similar lines, although the average amounts provided out of State 
 revenues have necessarily been much less. While it must be 
 admitted that the Confederate pension system reflects most credi- 
 tably the devotion and gratitude of the Southern people towards 
 those who fought in behalf of the Southern cause, it is equally 
 true that by disregarding the bitter lessons of past experience and 
 some of the elementary principles of insurance, the Southern 
 States made economic errors almost identical to those committed 
 by the nation at large. 1) Approximately 100,000 Confederate 
 pensions have been granted to date by the several Southern States, 
 involving annual expenditures of more than $5,000,000. In Georgia, 
 for illustration, in 1906, there were 15,297 Confederate pensioners, 
 to whom was paid the sum of $907,747, or an average pension 
 of $59.34. Of the pensioners only 2,833 were disabled soldiers, 
 2,551 were widows, because of the death of the husband being 
 
 1) Industrial Insurance in the United States, by Chas. R. HENDERSON, p. 281 
 et seq., Chicago, 1909. 
 
Hoffman. American Public Pension Systems. 15 
 
 of service origin, 7,734 were indigent soldiers and 2,210 were 
 indigent widows of soldiers. In the State of Georgia, and probably 
 to a similar extent in other Southern. States, the Confederate 
 pension system has been subject to serious abuses, much the same 
 as those common to the Federal pension system, and, for illustra- 
 tion, in 1902 the Georgia Commissioner of Pensions said in his 
 report, ‘“The pension rolls under existing laws are being burdened 
 with men who never saw the enemy and in many instances, 
 deserters. To allow such is a disgrace to the soldier and the 
 State and it is fastening upon the State a class of unworthy 
 beneficiaries’. As an illustration of the extremes to which advocates 
 of liberal and indiscriminate pension legislation will go, it may be 
 stated that it is only a few years since that Senator Butler of 
 North Carolina, by an amendment to the pension appropriation 
 bill of the year proposed to extend to Confederate soldiers all 
 the privileges of the pensions then enjoyed by Federal soldiers or 
 their surviving dependents. As a contribution to the literature of 
 the subject, I cannot do better than quote the following extract 
 from the amendment referred to, which reads: 
 
 “That from and after the passage of this bill every pension law now on 
 the statute books shall apply to every invalid soldier, widow, minor children, 
 dependent relative, the army nurses, and all other pensioners who may 
 be able to prove their claim under the present pension laws, without 
 regard to whether said soldier was enlisted in the Federal or Confederate 
 service of the late civil war of 1861—’65”. 
 
 Had this amendment been adopted, an additional amount of 
 over one hundred million dollars would have been added to the 
 pension budget, but it is hardly necessary to state that the suggested 
 amendment, for patriotic and other reasons, failed to become a 
 law. It may also be said that the proposed amendment did not 
 reflect the consensus of qualified public opinion in the Southern States, 
 where patriotic pride in the valor of the Southern Confederacy 
 has not yielded to sordid pecuniary considerations, nor is it to 
 be expected that it ever will. 
 
 15. Proposed State Pensions for Civil War Veterans. 
 Efforts have been made in the Northern States to provide from 
 
 State revenues additional pensions for the survivors and their 
 dependents of the Civil War but heretofore such attempts, with 
 
16 Hoffman. American Public Pension Systems. 
 
 few exceptions, have fortunately been unsuccessful. Efforts have 
 also been made and bills to that effect have been introduced into 
 the United States Congress, to provide pensions for surviving 
 slaves, liberated in 1863, as the result of the war between the 
 States, but, fortunately, this attempt at an enlargement of the 
 scope of the national pension legislation has also been unsuccessful. 
 
 16. Proposed Pension Plan of the United States 
 Sanitary Commission. 
 
 Before I proceed with the discussion of other pension systems, 
 I may briefly refer to two important reports made during the 
 time of the Civil War, in anticipation of subsequent pension 
 legislation. As early as 1863 the United States Sanitary Commission 
 had a report prepared by Mr. STEPHEN H: PERKINS on the Pension 
 Systems and Invalid Hospitals of France, Prussia, Russia, Austria 
 and Italy, with some suggestions upon the best means of providing 
 in a similar manner for the invalid and disabled soldiers of the Civil 
 War. This report was followed by an outline of a_ system 
 for the economical relief of disabled soldiers and on certain 
 proposed amendments to the pension laws, by JOHN ORDRONAUX, 
 published in 1864. These reports contain some very interesting 
 suggestions, particularly with regard to a scale of disabilities by 
 which invalid pensions should be classified. Among the specific 
 recommendations, however, which may here be restated, is the 
 first, which provided that ‘All non-commissioned officers and 
 privates, serving in the Army for twenty-five years, should be 
 entitled to the full pension of their rank, just as if they had been 
 honorably discharged from the service at any time on account of 
 wounds or disease contracted in the line of their duty”. The 
 pension was to be granted additional to any bounty given for 
 enlistment and land grants bestowed at the expiration of the first 
 term of service. Another proposition was that ‘Whenever. a 
 specially meritorious action has been performed by a soldier or 
 non-commissioned officer, a full pension shall be granted to him 
 in addition to his regular pay’’. 
 
 With regard to officers, it was provided that “Officers remaining 
 _in the service twenty-five years should be allowed to retire on a 
 pension equal to one-third of their original pay, and for each 
 additional five years of service up to thirty-five, one-sixth more 
 
Hoffman. American Public Pension Systems. 17 
 
 shall be added, so as to enable it to reach, but never exceed, one-half 
 of their original pay”. Finally, it was provided that, “Pensioners 
 shall cease to draw their pensions whenever they obtain a life 
 office in the public service with pay equivalent to the pensions”. 
 
 17. Homes for Disabled and Invalid Soldiers. 
 
 None of these recommendations was carried into effect, but 
 soldiers’ homes were established, partly on the basis of other 
 suggestions, however, and these in course of time have been 
 increased in number, until quite a proportion of the really invalid 
 and dependent soldiers and sailors of the Civil War are adequately 
 taken care of in this manner. A United States Military Asylum, 
 or Soldiers’ Home, had been established at Washington as early 
 as 1851, but the new institutions were modeled along somewhat 
 different lines, which in course of time have been materially 
 modified, particularly with regard to public entertainment, hospital 
 care, etc. Inmates of these institutions may draw their pensions and 
 dispose of them as they see fit, since the provision for their care and 
 comfort is entirely adequate and additional to the pension and has no 
 reference thereto. Serious abuses have resulted from this system, 
 which also has become one of very considerable expense. In 1911 
 there were 33,301 veterans cared for in national homes for disabled 
 volunteer soldiers and sailors, maintained at a cost of $ 3,841,786. In 
 addition thereto 21,312 veterans were cared for in 31 institutions, 
 maintained at the expense of 27 different states. During 1911 these 
 institutions however, received $ 1,221,635 from the Federal govern- 
 ment for the assistance and support of Federal veterans and 
 pensioners. A Soldiers’ Home is also maintained in the District of 
 Columbia by means of deductions from the pay of the soldiers of the 
 regular Army, and during 1g11 there were 1,379 soldiers cared for 
 at an expense for maintenance of $ 460,334. This expense, of course, 
 requires to be taken into account in any consideration of the total 
 pension burden borne by the people of the United States at the 
 present time, on account of the various wars in which the nation 
 
 has been engaged. 
 
 17a. Service Retirements in the United States Army and Navy. 
 
 Limitations of space preclude a full discussion of the system of 
 retirement allowances in the Army and Navy and United States 
 
18 Hoffman. American Public Pension Systems. 
 
 Marine corps. In brief, it may be stated that the laws for retirement 
 in the military service provide that‘‘ If an officer has had 30 years 
 service and applies for retirement, or if he has reached the age 
 of 62, he may be placed on the retired list. If an officer has 
 oeen on the Army register for 4o°years and applies for retirement, 
 or if he has reached the age of 64, he shall be retired from 
 active service. An officer may also be retired on account of dis- 
 ability contracted in the line of duty. A similar rule governs the 
 retirement of enlisted men of the Army who have served as such 
 for 30 years. The retirement allowance of officers and enlisted 
 men is 75 °/) of the pay of the rank held at the time of retirement. 
 In addition thereto enlisted men have an allowance of $9.30 
 a month for commutation of clothing and rations and $6.25 
 a month in lieu of quarters, fuel, and light. The Army laws and 
 regulations govern retirements in the Marine corps. The rules for 
 retirement in the Navy are more involved and are governed partly 
 by the exigencies of the service. The pro-rata allowance is three- 
 fourths, or the same as in the Army. In this connection, however, 
 it may be stated that the regulations of the Navy provide that 
 “Whenever any officer, seaman, or marine, entitled to a pension, 
 is admitted to the Naval Home, Philadelphia, or to a naval 
 hospital, his pension, while he remains there, shall be deducted 
 from his account and paid to the Secretary of the Navy for the 
 benefit of the fund from which such home, or hospital, respectively, 
 is maintained”. On December 1, 1910, the number of retired 
 United States Army officers was 1,009 and the number of retired 
 enlisted men of the Army 3,096. In November, 1910, the number 
 of officers on the retired list of the Navy was 861, and there 
 were also 55 officers on the retired list of the Marine corps, the 
 total number of retired enlisted men of the Navy being 294. 
 
 18. Pension Plans for Civil Service Employees. 
 
 It was only natural that under the conditions briefly outlined 
 in the foregoing discussion, a demand should arise for the pen- 
 sioning of employees in the Civil Service, or otherwise in the 
 employ of the Federal government. Since the number of govern- 
 ment employees is on the increase and particularly the proportion 
 of employees of ages sixty and over, when their usefulness has 
 become more or less impaired, the demand for civil pensions rests 
 
 # 
 
Hoffman. American Public Pension Systems. 19 
 
 in part upon sound considerations of an efficient and economical 
 public administration. Obviously, the retention of old and worn-out 
 employees for humane or other reasons on the pay roll of the 
 Government is equivalent to the grant of a pension, unless full 
 service is rendered for the compensation paid. That this is 
 not the case is a matter of everyday experience and numerous 
 investigations into the subject have conclusively shown that the 
 efficiency of the service as a whole is materially impaired by 
 retaining on the pay roll of the Government superannuated and 
 more or less physically or mentally disqualified employees. Recog- 
 nizing the evil referred to, recommendations have been made from 
 time to time by Cabinet officers and heads of departments, sug- 
 gesting the establishment of a retirement system for superannuated 
 civil service employees, and numerous bills have been introduced 
 into the United States Congress for this purpose. 1) It was early 
 recognized, however, that the people of the United States would 
 not readily submit to the establishment of a straight, or non- 
 contributory, pension system, even in the case of superannuated 
 employees, or at least, say, such as had attained the age of seventy 
 or over. Dividing the consideration of the subject into the class 
 of employees within the superannuated period and those still 
 outside of that period, it becomes clear that no system adopted 
 could be applied equally to the two groups. It has been pointed 
 out in the discussions upon the subject that the opportunity on 
 the part of the superannuated class, say sixty-five and over, for 
 making adequate provision for their old age had passed and that 
 whatever plan was adopted required to make provision for this 
 class as a matter of charity, justice and economy. For the other 
 class, that is, those say under sixty-five, it is admitted that a 
 
 1) In his message to Congress on the financial condition of the Treasury, on 
 December 21, 1911, President Tarr referred to the proposed civil retirement and 
 contributory pension system} as follows: 
 
 “T have already advocated, in my last annual message, the adoption of a civil 
 service retirement system, with a contributory feature to it so as to reduce to a 
 minimum the cost to the Government of the pensions to be paid. After considerable 
 reflection, I am very much opposed to a pension system that involves no.contribution 
 from the employees. I think the experience of other governments justifies this view ; 
 but the crying necessity for some such contributory system ; with possibly a preliminary 
 governmental outlay, in order to cover the initial cost and to set the system going 
 at once while the contributions -are accumulating, is manifest on every side. Nothing 
 
 will so much promote the economy and efficiency of the Goverment as such a system”. 
 
\ 
 
 BO. ei Hoffman. American Public Pension Systems. 
 
 contributory system alone would ‘tend to solve the problem of 
 adequate support in old age and retirement for the good of the 
 service. In the earlier discussions insurance and actuarial principles 
 were disregarded, but within the last few years the problem has 
 been placed on a sound foundation as the result of a most pains- 
 taking and thoroughly qualified inquiry into the whole subject by 
 Mr. HERBERT D. BROWN, whose report on the “Savings and 
 Annuity Plan Proposed for Retirement of Superannuated Civil 
 Service Employees’ was published as a Senate Document in 
 1911. 1) The report was called for by a number of pending bills 
 providing for such retirement, and it is not going too far to say 
 that the argument and facts advanced by Mr. BROWN constitute 
 one of the most conclusive illustrations of the practical utility of 
 actuarial principles applied to the public pension problem in the 
 United States. 
 
 19. Proposed Retirement Plan for Superannuated and 
 Disabled Civil Service Employees. 
 
 A brief outline of the plan at present under consideration by 
 the Congress of the United States, but subject to more or less 
 modification in matters of detail, is as follows: 
 
 Part I of the plan proposes that each employee in the classified civil 
 service shall, on reaching the age of retirement, receive an annuity equal 
 to 13 per cent of his salary for each year of his service, or, as it may 
 be differently stated, an annuity equal to 13 per cent of the total compen- 
 sation received by him during his entire service. The theoretical basis 
 of this provison is the assumption that three-quarters pay, or 75 percent 
 of his average salary, is a reasonable annuity for a person who has given 
 his entire working life — that is about 50 years — to the service. Dividing 
 75 per cent by 50 years of service, 14 per cent for each year of service 
 is obtained as a basis for computing annuities for any period of service. 
 The annuity is created by the employee himself, who is required to set 
 aside during each month of his continuance in the service a sum sufficient 
 with compound interest, at 33} per cent, to create that annuity at the age 
 of retirement. These deductions from salary represent no fixed percentage 
 of salary, but vary with the age of entrance into the service, ranging in 
 the case. of employees to be retired at the age of 70 from 4.3 per cent 
 for the individual who enters the service at the age of 20 to 11.2 percent 
 for the individual who enters at the age of 69. The amount deducted 
 remains constant throughout the years of service, except in case of promo- 
 tion or demotion, when it is increased or decreased accordingly on the . 
 basis of the employee’s attained age. Each employee thus sets aside the 
 amount of money necessary to create his own annuity only, without regard 
 
 1) Senate Document 745, 61st Congress, 3rd Session, Washington, January 
 10, 1911, 
 
Hoffman. American Public Pension Systems. 21 
 
 to the deposits of others, so that each one shall receive full return on the 
 money which he thus accumulates. The funds necessary for the payment of 
 the annuities are therefore furnished by the employees themselves, without 
 expense to the government, except that involved in the administration of the 
 fund. The scheme is virtually a compulsory savings arrangement with the 
 requirement that the savings in each case be sufficient for the purchase of an 
 annuity at the age of retirement equal to 11/. per cent of the aggregate salary”. 
 
 It is further provided that, 
 
 “On reaching the age of retirement, the employee may take his savings 
 in one of three ways: in an annuity payable quarterly throughout life ; 
 in a smaller annuity payable quarterly throughout life, with the provision 
 that in the case of the death of the annuitant before he has received in 
 annuities the amount of his savings, plus the interest credited thereon, 
 the balance shall be paid to his legal heirs; or in one sum. The age of 
 retirement varies, the service being divided for this purpose into three 
 groups, the first group consisting of railway postal clerks who may retire 
 at age 60, the second group consisting of letter carriers to be retired at 
 age 65, and the third group comprising all the remaining branches of 
 the service and to be retired at age 70”. 
 
 20. Essentials of the Contributory System. 
 
 The recommendation of the government guarantee of 3} 9/p 
 interest on the savings of the employees, is considered a minimum 
 requirement, for it is held by the author of the report that ‘‘The 
 Government could well afford to guarantee at least 4 %/) and 
 probably 5 %%’’, as provided for in at least one of the bills which 
 have been introduced into Congress for the purpose of establishing 
 a retirement: plan for superannuated civil service employees. With 
 regard to Part II of the plan, which has reference to the employees 
 now in the classified civil service, it is provided that on attaining 
 tamace. 70 they shall receive: an annuity equal to 14 % of the 
 salary received for each year of service prior to the passage of the 
 bill, but from that time on the employees shall provide their own 
 annuities, as arranged for in Part I of the plan. In explanation 
 of this plan, it is said that, among other reasons, considerations 
 of justice and humanity dictate that provision be made for those 
 already superannuated in the service and those so near super- 
 annuation as to lack time to accumulate, through their own savings, 
 a sum sufficient to give them an annuity on retirement; and 
 furthermore, that the lack of some such provision for compensation 
 for past services would delay the full benefit to the government 
 under the plan proposed for a period of about 40 years, or until 
 the majority of those now in the service had passed away. 
 
iy 
 
 2a Hoffman. American Public Pension Systems. 
 
 The estimated amount of the total maximum sum required for 
 putting into effect the gratuity provision of the plan provided for 
 was $ 66,985,778, or about $ 725,000 in the first year, increasing 
 gradually and reaching a maximum of $ 1,746,561 about 30 years 
 after the passage of the bill. This calculation, however, has sub- 
 sequently been materially modified on account of the inclusion of 
 a large number of additional employees, who, it is held, ought to 
 be brought within the scope of the law and on the new basis the 
 total maximum sum required to pay gratuitous annuities for past 
 services, would be §$ 130,581,273, or about $ 1,120,000 the first 
 year, increasing gradually and reaching the maximum of $ 3,495,000 
 about 28 years after the passage of the bill and then dropping 
 off gradually to nothing by the time all the present employees had 
 died. These estimates are considered extremely conservative, 
 since no allowance is made for the savings of annuities for past 
 services that will arise from resignations before the age of 
 retirement, which, it is held, may be safely estimated to equal 
 the mortality, and furthermore, because they are based on present 
 salaries instead of average salaries and finally, because they make 
 no allowance for the retention of employees in the service past 
 the age of retirement. 
 
 21. Actuarial Considerations of Retirement Plan. 
 
 In defense of the plan four fundamental principles are advanced 
 by the author of the report, briefly stated as follows: 
 
 1. The funds necessary for the payment of annuities on services 
 rendered after the adoption of the plan should be supplied by the 
 employees themselves, without expense to the Government other than 
 possibly the payment by the Government of a reasonable rate of interest 
 on the money held by it and the payment of salaries to the clerical force 
 required to keep the accounts and distribute the funds. 
 
 2. Each employee should set aside the amount necessary to create 
 his own annuity, w¢/hout regard to the deposits of others, so that each 
 employee may receive full return on the money set aside by him. It is 
 important that the amount set aside should be sufficient to buy an adequate 
 annuity, else the condition of the superannuated employee will be little 
 improved, and the aid of the Government ultimately be solicited. 
 
 3. The annuities to be paid employees on retirement should be 
 graduated according to length of service and amount of salary and in 
 such manner that the monthly deposits required from employees for the 
 creation of such annuities shall be in no case excessive. 
 
 4. The fund necessary for the payment of annuities on services 
 rendered prior to the adoption of the plan should be paid by the Govern- 
 ment rather than by any form of tax upon the younger employees”. 
 
Hoffman. American Public Pension Systems. 23 
 22. LEstimated Cost of Proposed Retirement System. 
 
 This statement of principles is followed by a discussion of non- 
 contributory civil service pensions, which are stated to be unpopular in 
 practice and unsound in theory, as well as extremely expensive. 
 The discussion of this phase of the pension problem is most 
 timely, and some of the most valuable conclusions are drawn from the 
 civil service pension plans of England, New South Wales, and other 
 countries. A statement is supplied to show that the total cost of 
 gratuitous civil service pensions conferring the same benefits as provided 
 for in the proposed plan at present under consideration, if payable 
 entirely out of the public treasury would amount to $ 232,773,000 
 during the next 35 years, as contrasted with the cost to the 
 Government of the bill proposed for the same period, of $ 73,136,165. 
 Referring to the long-established practise of granting military and 
 naval pensions without regard to insurance or actuarial considerations, 
 it is well said that, 
 
 “Instead, however, of the practice regarding the pensioning of officers 
 of the Army and Navy being taken as a model for the civil service, it 
 may even be questioned whether the pensioning of Army and Navy 
 officers might not be wisely remodeled on the basis here proposed for 
 the civil service, with the addition of a provision for special recognition 
 in the matter of retiring allowances in the case of those officers who 
 actually go into battle.” 
 
 23. fallacies of Non-Contributory and Flat Rate 
 Assessment Plans, 
 
 Without further enlarging upon the conclusion that straight or 
 non-contributory civil pensions would be demoralizing to the civil 
 service in much the same manner as the present system of military 
 pensions has been demoralizing to the public service at large, the 
 report includes an extended discussion of the difference between 
 Government service and private business, followed by a careful 
 consideration of the technical details of alternative pensions and 
 retirement plans, which, of course, cannot be discussed in detail on 
 this occasion. As emphasizing, however, the inequitable nature of 
 uniform annuities regardless of length of service, it is pointed out that, 
 
 “Suppose it is desired to retire all employees receiving $ 1,200 salary 
 on three-quaters pay, or $900 a year. The value of a life annuity of 
 
 $900 a year, beginning at age 70, first payment in three months after 
 reaching that age, may be stated as $6,835.50 ‘Toaccumulate $ 6,835.50 
 
24 Hoffman. American Public Pension Systems. 
 
 during a service of 50 years requires a monthly deduction from a monthly 
 salary of $100 of but $4.27, if the deductions are improved by 3'/s per 
 cent compound interest. That is all the man beginning at age 20 would 
 have to set aside each month. But, on the other hand, to accumulate 
 $ 6,835.50 during the last ten years of service of a man who entered the 
 service at age 60, or who was already 60 years of age when the plan 
 was put into operation, would require a deduction from a salary of $ 100 
 a month of $47.65, or 47.65 per cent — an impossible deduction under 
 any circumstances. To make this plan practicable it is therefore necessary 
 to decide upon a per cent to be deducted from all salaries which shall 
 
 e sufficiently large to accumulate not merely annuities for those entering 
 the service at an early age, but-also to provide the amounts that the older 
 men lack to retire themselves on the same annuity’. 
 
 24. Important Advantages of the Contributory Plan of 
 Service Retirement. 
 
 The argument in favor of the bills proposed for the retirement 
 of superannuated civil service employees is summed’ up in the 
 statement that such a plan “is self-sustaining, making no demand 
 on the Government beyond the guaranty of a reasonable rate of 
 interest on the money held by the Government and the expense 
 of administering the plan. It will improve the service by putting 
 into the hands of administrative officers power to remove the 
 incompetent and superannuated. It will benefit the employee by 
 stimulating his independence and self-respect while he is in office 
 and by retiring him on a competence when he reaches old age. 
 And it is as simple in its operation as a straight pension itself”. 
 
 The fundamental provision of the bills introduced for the purpose 
 of providing for the retirement of superannuated civil service 
 employees of the United States reads as follows: 
 
 “That beginning with the first day of July next following the passage 
 of this act there shall be deducted and withheld from the monthly salary, 
 pay, or compensation of every officer or employee of the United States 
 to whom this act applies an amount, computed to the nearest tenth of a 
 dollir, that will be sufficient, with interest thereon at three-and-one-half 
 per centum per annum, compounded annually, to purchase from the 
 United States, under the provisions of this act, an annuity, payable 
 quarterly throughout life, for every such employee on arrival at the age 
 of retirement as hereinafter provided equal to one and one-half per 
 centum of his annual salary, pay, or compensation for every full year of 
 service or major fraction thereof between the date of the passage of this 
 act and the arrival of the employee at the age of retirement. The 
 deductions hereby provided for shall be based on such annuity table as 
 the Secretary of the Treasury may direct, and interest at the rate of 
 three-and-one-half per centum per annum, compounded annually, and 
 shall be varied to correspond to any change in the salary of the employee”. 
 
Hoffman. American Public Pension Systems. 25 
 
 It is made clear by this provision that the correct conception 
 of an annuity is the central idea of the plan and that all of the 
 essential. actuarial principles are properly applied and, in the cal- 
 culation of the cost of the proposed plan due consideration 1s given 
 to the principles which underlie modern insurance practice. Since 
 this has been the case for the first time in a U. S. government measure 
 of such transcending importance as a national plan for the retire- 
 ment of superannuated civil service employees, the author of the 
 report properly explains the four essential elements of the actuarial 
 theory upon which the plan is made to rest, that is, the mortality 
 tables, the interest factor, the principle of annuities, and the 
 required percentage of salary reductions. The discussion in this 
 respect is practically an elementary treatise on insurance and a 
 most convenient as well as extremely useful contribution to the 
 literature of the subject. — 
 
 25. Actuarial Aspects and Principles of Administration. 
 
 The limitations of the present discussion preclude further con- 
 sideration of other important and interesting aspects of the pension 
 or retirement problem of civil service employees, as set forth by 
 Mr. BROWN in the report referred to. It requires only to be said 
 in conclusion that he has taken into account every essential factor, 
 including disability benefits, provision for retirement, provision for 
 statistical records and cost of administration, aside from a statement 
 in full detail of the cost of the proposed plan and the more 
 important provisions for the investment of a retirement fund and 
 the probable future course of the rate of interest. As previously 
 stated, the report constitutes by far the most important contribution 
 ever made to the technical discussion of the public pension problem 
 of the United States and the author of the report is entitled to 
 the gratitude of the nation for his painstaking effort, which must 
 have involved a vast amount of labor, in which, however, it 
 is but fair to say, he had the assistance of Mr. BENEDICT D. 
 BEYNN, TF. A. S., «Hon. GEORGE E. ROBERTS, Director of the 
 Mint, and of Mr. FRANK J. F. THIEL, Secretary to the Trea- 
 surer of the United States. 
 
26 Hoffman. American Public Pension Systems. 
 
 26. Teachers’ Pension Funds and Retirement Systems. 
 
 While heretofore the problem of pensions or retirement allow- 
 ances for employees in the civil service of the Federal Government 
 has been confined to a theoretical discussion, except in so far as 
 a few and relatively unimportant exceptions have elsewhere been 
 noted, a more or less adequate provision of this kind has for 
 many years been made for certain classes of municipal employees, 
 chiefly teachers, policemen and paid firemen. These plans vary 
 widely in matters of detail, but the majority require a contribution 
 more or less insufficient in amount to provide the benefits payable 
 in the event of disability, death or old age. Wi5th regard to 
 teachers’ pensions it may be stated that, according to a recent 
 government report on the subject: 1) | 
 
 “Maryland, Rhode Island, and Virginia pension teachers out of State 
 funds. In Maryland and Rhode Island no dues are paid; pensions are 
 paid exclusively from State funds. In all the other States below the fund 
 authorized by State law is mainly provided by teachers’ dues of from 
 1 to 3 per cent of salary; the term of service is, with disability, from 
 2 to 30 years; without, from 20 to 35 years; the annuity is from a 
 minimum of $200 to six-tenths of salary at retirement. The maximum 
 is from $2c00 to $1,500- $2,000 in New York. 
 
 New York grants pensions to teachers in State institutions, and New 
 Jersey requires local authorities to retire applicants after 35 years’ service. 
 The school committee of Boston is required by law to provide a pension 
 fund and to levy a tax therefor. 
 
 Virginia has a State pension system, but the funds are derived princi- 
 pally by deducting 1 per cent from the salaries of teachers, the State 
 appropriating $5,000 a year. New Jersey also has, in addition to the 
 law mentioned above, what might be termed a State system, inasmuch as 
 a “retirement fund’’ is under the supervision of State officers, and contri- 
 butions are obligatory upon new appointees, but the State appropriates 
 only $ 3,000 a year to be used for administrative purposes. 
 
 Massachusetts allows all cities and towns, other than Boston, to pay 
 pensions from public funds, if approved at popular election; Pennsylvania 
 authorizes cities of the second and third classes to establish retirement 
 funds, and apparently to appropriate public money therefor ; and Minnesota 
 provides that in cities of over 50,000 inhabitants, funds for retirement 
 may be raised in part by taxation. In Ohio the board of education of 
 any district may establish a pension fund; participation is optional with 
 teachers, and the funds are to be derived in part from salary deductions 
 and in part from the appropriation of from 1 to 2 per cent of the gross 
 receipts of the said board from taxation. California and Utah have 
 retirement laws which are similar inasmuch as they are local and voluntary 
 in their application, and are based largely upon assessments, the only 
 
 
 
 1/ Senate Document 823, 61st Congress, 3rd Session, ‘“Teachers’ Pension Laws 
 in the United States and Europe’, printed under date of February 17, 1911. 
 
Hoffman. American Public Pension Systems. 27 
 
 provision for contribution from public funds relating to certain amounts 
 forfeited by teachers for absence, etc. In Colorado districts containing a 
 school population of over 1,000 may establish public-school teachers’ 
 retirement funds, and may levy therefor taxes not exceeding one-tenth of 
 a mill, 
 
 The teachers’ fund in Chicago, IIl., is based principally upon non-com- 
 pulsory salary deductions, but the city must contribute the interest received 
 upon deposits of school funds, not exceeding 1 per cent of the amount 
 raised by taxation. 
 
 A tax of 1 cent upon each $ 100 of valuation is required to be 
 levied in Indianapolis, Ind., for the pension fund, but salary deductions 
 are enforced also. In Milwaukee, Wis., participation in the fund is optional 
 with teachers in service in 1907, but obligatory with new appointees; 
 assessments are the principal sources of revenue, but the board of school 
 directors may contribute not over 1 per cent of the gross receipts from 
 school taxation”. 
 
 27. Municipal Pension Funds for Firemen and Policemen. 
 
 While the details of the various systems are of considerable 
 interest, they cannot be discussed on this occasion, but it may be 
 said that principally all of the plans have been established and 
 are being carried forward in disregard of insurance principles and 
 actuarial requirements. Much the same conclusions apply to pension 
 funds for certain classes of municipal employees in the United 
 States, regarding which also a recent government report has been 
 prepared under the direction of Hon. CHAS. P. NEILL, the United 
 States Commissioner of Labor. 1) This report presents an outline 
 of 219 pension funds for municipal employees, being the principal 
 systems or plans in operation in the United States for the payment 
 of annuities to superannuated and disabled teachers, firemen and 
 policemen, and others in the service of municipalities. It is pointed 
 out in the report that during the last decade there has been an 
 increased tendency on the part of municipalities to provide means 
 by which superannuated and disabled employees may be retired 
 from the service, and while various considerations enter into the 
 framing of these retirement and pension systems, they are generally 
 regarded as providing the means, more or less adequate, of reliev- 
 ing the service of inefficient old employees, without inflicting a 
 serious hardship upon them. Compensation is also provided in many 
 
 
 
 1) Senate Document 427, 61st Congress, 2nd Session, ‘Pension Funds for Muni- 
 cipal Employees and Railroad Pension Systems of the United States’’, prepared under 
 the direction of Chas. P. NEILL, Commissioner of Labor, printed under date of 
 March 14, 1906. See also 23rd Annual Report of the Commissioner of Labor, on 
 Workmen’s Insurance and Benetit Funds in the U. S., Washington, D. C., 1903. 
 
28 Hoffman. American Public Pension Systems. 
 
 instances for disabilities received in the performance of duty and 
 these provisions are incentives and rewards for long, continuous 
 service. The usual amount of the annual pension in the majority of 
 funds is one-half of the employee’s pay at the time of retirement 
 It is suggestive that almost every plan has been modified consid- 
 erably since its conception and in some cases an entirely new 
 scheme has superseded the original one. The majority of the plans 
 are, however, of such recent date that their stability from an actu- 
 arial standpoint has not been. established, and it is pointed out in 
 ‘the report that future annuitants may find their expectations not 
 always realized “unless some changes are made as to the means 
 of obtaining revenue and as to the conditions under which the 
 annuities are paid.’ As far as it is possible to judge, actuarial 
 advice has been practically disregarded in the establishment of most 
 of the existing systems, although it is evident from even a cursory 
 consideration of the subject that a due regard to actuarial principles 
 is a prerequisite of ultimate stability and success. 
 
 28. Principles and Practice of Municipal Pension Plans. 
 
 In one-third of the 167 firemen and policemen funds the entire 
 amount required for the payment of annuities is furnished by the 
 municipalities, while two-thirds are supported in part by the con- 
 tributions from the employees. In about 40 per cent of the condi- 
 tions under which pensions are paid to firemen and policemen the 
 sole requisite 1s permanent disability incurred in the performance 
 of duty. In the remaining 60 per cent a specified length of service, 
 usually about 20 years, is required, coupled in one-third of such 
 funds with the additional requirement of permanent disability, and 
 in another third with an age requirement of from 50 to 65. years. 
 In about 40 per cent of the funds the employees are represented 
 in the management. Among other details regarding the sources of 
 revenue the following statement is of interest: 
 
 “In New Jersey the state tax of 2 per cent on premiums received by 
 foreign fire insurance companies is all applied to the relief of firemen 
 throughout the State. In towns where there are pension funds those 
 funds get one-half and the local firemen’s relief society gets the remainder. 
 The relief societies provide for “exempt firemen” (members of the former 
 volunteer fire companies) and for active firemen whose cases would not 
 come under the provisions of the pension fund, and for the dependents of 
 both. In New York a like tax and in Pennsylvania one-half of a like 
 
 tax is applied to the relief of exempt and active firemen or their depen- 
 dents in the localities in which the tax is collected”. 
 
Hoffman. American Public Pension Systems. 29 
 
 29. Sources of Revenue for Municipal Pension Plans. 
 
 The sources of revenue vary for the funds of the different states 
 and it is evident from an examination of the facts in detail that 
 no really sound or solvent system has as yet been developed, but 
 that the existing plans are the result of necessity, guesswork 
 Opinion and expediency. There can be no question of doubt but 
 that an actuarial examination of the majority of the funds would 
 disclose serious deficiencies in the sums accumulated to provide 
 for future liabilities and among other pertinent illustrations of this 
 lamentable situation the following statement may be quoted from 
 a report regarding the police and firemen’s pension funds of the 
 District of Columbia under date of May 10, 1g1t, reading that 
 “You will notice that the deficit in the amount available is practi- 
 cally $14,000 and still continues. This alone shows the necessity 
 for the additional sources of revenue contemplated in the bill now 
 before the Senate’. The proposed sources of revenue are quite 
 varied and more or less uncertain in amount, and, in any event, 
 badly adapted to the needs of so important a fund for the protection 
 of the disabled and aged in an indispensable branch of the public 
 service. 
 
 30. Massachusetts Retirement Plan for Superannuated 
 State and Municipal Employees. 
 
 In recognition of the inadequacy of the existing systems of 
 pensions or annuities for public employees, a carefully considered 
 retirement system for such employees was recommended by the 
 Massachusetts Commission on Old Age Pensions, Annuities and 
 Insurance which reported in 1gto. Three bills were submitted by 
 the Commission providing for the establishment of retirement systems 
 for State, for County and for Municipal employees, respectively. 
 All three bills were passed by the Legislature. The two acts 
 providing for Municipal and County retirement systems are mercly 
 permissive and have a referendum clause requiring action by the 
 voters of the city or of the county before the system shall go into 
 operation. No city or town in this State has yet adopted the 
 Municipal Retirement Act. Two counties, Middlesex and Norfolk, 
 have accepted the County Retirement Act. The State Retirement 
 Act has no referendum, and the system went into operation Jan- 
 Dany, Tt, 19.12. 
 
30 Hoffman. American Public Pension Systems, 
 
 The system is based on the contributory principle, but subject 
 to the limitation that the rate of assessment on wages or salaries, 
 to provide a fund out of which annuities shall be paid, shall not 
 be less than one per cent and not more than five per cent. An 
 employee upon retiring under the provision of the Act receives an 
 annuity of such an amount as his accumulated contributions will 
 provide, and in addition a pension of the same amount paid from © 
 the State Treasury. The age of voluntary retirement from the 
 service is fixed at 60 years, but employees with a service record 
 of 35 continuous years are permitted to retire, or to be retired, 
 at any age. The participation in the retirement system is made 
 optional with present employees, but obligatory for all future 
 employees, that is, those entering the service after the establish- 
 ment of the retirement system, with a few exceptions, which: are 
 not of present importance. In addition to pensions or annuities 
 for subsequent service, pensions for prior service are provided, 
 that is, for employees in the service of the State or County on 
 the date when the retirement plan goes into effect. Such employees 
 under the plan “are to receive in addition to the pension which 
 they may secure through their contributions to the annuity fund, 
 an extra allowance equal to the amount of the annuity which they 
 might have earned for themselves had the scheme been in operation 
 when they entered the service and had they made contributions 
 to the fund from that time in proportion to their current wages 
 or salaries’. In this respect, therefore, the Massachusetts plan 
 conforms to the principles laid down in the proposed savings and 
 annuity plan for the retirement of superannuated civil service 
 employees of the United States. 
 
 31. JLllustrations of the Massachusetts Plan. 
 
 Provision is made in the Massachusetts plan for refunding the 
 contributions of employees who withdraw from the service without 
 becoming entitled to a pension and the administration of the system 
 is entrusted to a board of retirement, but the Insurance Department 
 of the Commonwealth is given certain powers of supervision with 
 reference to the actuarial and administrative features of the system. 
 The management expenses are estimated to amount to only 
 $ 20,000 a year. The amounts of retirement allowances, under 
 given conditions, are illustrated as follows: 
 
Hoffman. American Public Pension Systems. 31 
 
 ‘‘A person entering employment at age 25, serving 35 years, at an 
 average salary of $600, and retiring at age 60, would be entitled, on 
 the basis of a one per cent rate of contribution, to an annuity of $ 32.38. © 
 As this amount doubled by the pension would be less than the minimum, 
 $ 200, fixed in the act, such a person would receive that minimum. On 
 the basis of a five per cent rate, he would be entitled to an annuity 
 of $161.90, which, doubled by the pension, would make a total annual 
 allowance of $ 323.80”, 
 
 Of course, a one per cent contribution would be insufficient, but 
 the amounts receivable at different rates of contribution are easily 
 calculated. What the exact details will be when the fund is in 
 actual operation has not as yet been decided. As to what the 
 ultimate cost of the system will be to the State, the various estimates 
 are admitted to be more or less conjectural, since some of the 
 fundamental elements, such as the number of employees who would 
 elect to participate in the system, and the ages of such employees and 
 their probable rate of retirement and mortality rate, are not subject 
 to accurate calculation at the present time. In brief, the employee 
 is to be given his choice of two kinds of annuities on retirement: 
 
 “First, a life annuity payable monthly; second, a life annuity payable 
 monthly, with the provision that in the event of the death of the 
 annuitant before receiving payments equal to the sum of his deposits 
 accumulated, with regular interest, at the date of his retirement, the 
 difference shall be paid to his legal representatives. 7 addition Lo the 
 annuity, the employee is to receive in each case a pension of equivalent 
 
 amount paid from the public treasury. In no case is the total allowance, 
 including annuity and pension, to be less than $200 per year”. 
 
 32. Estimate of Cost of the Massachusetts Plan. 
 
 Under this system it was estimated that on’a one per cent basis 
 of contributions, the cost to the Commonwealth of Massachusetts 
 for the first year of operation under one plan would be about 
 $48,000. Since a one per cent basis is practically certain to be 
 inadequate, the actual cost of operation would be greater. The 
 details by which the estimates of cost were arrived at cannot be 
 discussed on this occasion, but since the plan has gone into actual 
 operation, the ultimate outcome of the experiment is one of interest to 
 the actuarial and insurance profession generally of the United States. 
 
 82: Massachusetts Military Aid and Pension Plan. 
 
 A brief reference requires to be made here to the State and 
 Military Aid and Burial Expenses incurred in behalf of Indigent 
 Soldiers, Sailors and Marines, their Wives, Widows and Dependent 
 
32 Hoffman. American Public Pension Systems. 
 
 Mothers, by the State of Massachusetts, during the year 1910. 
 The disbursements are in amplification of the Federal pension 
 system, for as early as 1861 a Soldiers’ Fund was established to 
 provide aid in behalf of the families of soldiers called into service 
 for the defense of the country. During’ 1909 the disbursements on 
 this account were as follows: 
 
 State and Military Aid and Burial Expenses, Massachusetts, 1909.1) 
 
 
 
 State aid to soldiers and dependents, civil war.) :7- 205.4 $ 782,094.57 
 State aid to soldiers and dependents, war with Spain...... » 6,042.00 
 Military aid to soldiers and sailors, civil war.. .......... » 28,877.29 
 Military aid to soldiers and sailors, war with Spain....... » 8,824.39 
 Burial expenses of indigent soldiers and dependents..... -  » 33,969.00 
 
 Total for,1000..-0 0... fase $ 859,807.25 
 
 The total number of Massachusetts Civil War survivors and 
 their dependents provided for in 1909 was 15,205, but of this 
 number 7,555 were soldiers’ widows, 673 were soldiers’ wives, 
 72. were widowed mothers of soldiers and 6 were army nurses. 
 The average cost to the State per person aided was $ 51.43. The 
 number of persons aided on account of the War with Spain was 
 146 and the average cost to the State on this account was §$ 41.38. 
 There were buried during the year 919 persons at the expense 
 of the fund and at a total expense of $ 33,969 and an average 
 expense per burial of $ 36.96. The following is a statement of 
 the total payments of State Aid since 1861, up to December 1, 1910: 
 
 Total Payments on Account of State Aid to Indigent Soldiers, 
 Sailors and Marines, and their Dependents by the 
 State of Massachusetts, 1861—1910. 
 
 The total payments by the Commonwealth for State and 
 military aid and burial of indigent soldiers and sailors, 
 including appropriations made by the General. Court 
 toward maintenance of the Soldiers’ Home in Massa- 
 
 
 
 chusetts, from 1861 to the close of 1909, were...... $ 34,771,680.50 
 
 State and military aid and burial of soldiers and sailors 
 on account Of T9900, spaid ein: td taane. ee ee » 859,807.25 
 special laws, 4QYOS ue) ys eee eaten. kf ere 2 RS Gees 
 soldiers’ /Horhe, 19107 205 Ga eee ee »'.' 147,000.00 
 Total to) ‘December i stoxOe, ve ras $ 355779,399-75 
 
 34. Fudicial Retirement Allowances. 
 About eight years ago the question of retiring Judgés of the 
 State of New York attracted considerable attention on account 
 of the bill providing for the retirement of Judges of the Supreme 
 
 
 
 1) On account of 1909 paid in 1910. 
 
Hoffman. American Public Pension Systems. 33 
 
 Court, which had passed the Assembly, but was defeated in the 
 Senate, The bill provided that when any Judge of the Court of 
 Appeals, or Justice of the Supreme Court, had attained to the 
 age of 70, he should be retired from office, either by expiration 
 or abridgment of his term, after having previously served as a 
 Judge or Justice in any existing court of record in the State of 
 New York continuously for more than 16 years, or who, having 
 attained the age of 65 years and retiring voluntarily after a 
 service of more than 20 years, or who, on account of permanent 
 mental or bodily disability voluntarily retired from office, or was 
 removed therefrom, after such service of more than 25 years 
 continuously, should receive thereafter one-half of the salary 
 he was receiving at the time of his retirement. It was provided, 
 however, that should a pensioner accept any paid official position, 
 his pension should be suspended during the incumbency of said 
 position. The plan was modeled after the retirement plan of the 
 Federal judiciary, established in 1869. This law is still in force, 
 and as given in Section 260 of the Judicial Act of the United 
 eiateemeteads that’ “When ‘any Judge of the United States, 
 appointed to hold his office during good behavior, resigns his 
 office, after having held a commission, or commissions, as Judge of 
 any such court, or courts, at least ten years continuously, and having 
 attained the age of 70, he shall, during the residue of his natural life, 
 receive a salary equal to that payable at the time of his retirement 
 for the office which he held at the time of his resignation”. On 
 account of this provision for judicial service retirement allowances, 
 the following sums have been disbursed during the period 1902-1911. 
 
 Amounts Disbursed on Account of Retirement Allowances 
 
 to 
 Fudges of the Federal Fudiciary of the United States, 1902—1911. 
 ree aANeevedt al QU ares, sp, 20M tas tans $ 42,912.51 
 af ot PONTO Rees ON ai niheet eee acer ores minetes 7) 40,4-79.42 
 + PREC OOAE cp wrt eae ks 0s eT ONTO SiO 
 ‘f 4. HOTS Be ee tee enna 5» 87,905.55 
 a Fete 1 KO018).. Era ee a een CR eS ea 5, 108,638.89 
 ys Pitas TORT oan ees om soe ag De ten O2-7o 
 " PMLCL OMe ad + stated ie eae vente 5, 110,850.00 
 “f MME LOU Roetes. sicctetice a: « + scoters 5» 114,519.45 
 ” PEEL LOS fee ae eA), 2 ROR 5, 108,691.05 
 Ky 2 SCO SU a es prey ore ee a », 118,050.95 
 
 
 
 pLotalas sven 9 945,912.03 
 
34 MWoffman. American Public Pension Systems. 
 
 The probable amount for the fiscal year 1912 will be about 
 137,000. 
 
 35. Suggestions for Universal Old Age Pensions. 
 
 The first suggestion for a national system of universal non- 
 contributory pensions is contained in a tract on ‘Agrarian Justice 
 being a Plan for Meliorating the Condition of Man’, by THOMAS 
 PAINE, the author of ‘The Age of Reason’, published in Paris, in 
 1797. It was proposed in this plan to create a national fund “to 
 pay to every person when arrived at the age of 21 years the sum 
 of 15 £ sterling, and also the sum of 10 £& per annum, during 
 life, to every person now living at the age of 50 years, and to all 
 others when they shall arrive at that age’, to enable them ta 
 live in old age without wretchedness and go decently out of the 
 world. In defense of this plan, which would practically have been 
 sustained out of the public revenues by means of special taxes, it 
 was argued that it was ‘‘not a charity but a right, — not bounty 
 but justice”, which would ‘benefit all without injuring any’. It 
 would serve no practical purpose to discuss in detail the numerous 
 propositions which have been made to establish a system or plan 
 of universal old age pensions on a contributory or a non-contri- 
 butory basis in the several states of the Union. Foremost in the 
 public considerations of the subject, mention, however, requires to 
 be made of a report by the Massachusetts Bureau of Statistics of 
 Labor on Old Age Pensions, in 1905, which in 1907 was followed 
 by the appointment of a ‘Commission on Old Age Pensions, 
 Annuities and Insurance”, which, in 1909, published a final report. 
 The conclusions of the Commission were adverse to the adoption 
 of any plan of universal old age pensions, but a contributory 
 retirement plan for State and municipal employees was recom- 
 mended and subsequently, as previously stated, enacted into law, 
 with a proviso that the same go into effect on January 1, 1912. 1) 
 
 36. Recent Pension Bills Introduced into Congress. 
 
 In 1909 a bill was introduced into the House of Representatives 
 by WILLIAM P. WILSON of Pennsylvania, providing for the organ- 
 ization of an Old Home Guard of the United States, for which > 
 
 1) See Sections 30--32. 
 
Hoffman, American Public Pension Systems. 35 
 
 the required qualifications were that any man or woman more than 
 65 years of age and a resident of the United States for 25 consecutive 
 years and a citizen for 15 consecutive years, and not having property 
 valued at more than $ 1,500, or an income annually of more than 
 $ 240, should receive from the Federal government a pension of $ 120 
 a year. Nothing came of this proposition, nor of a similar plan intro- 
 duced into Congress under date of February 18, 1909, by Senator 
 HANSBROUGH “authorizing the issuance of annuities for old age 
 for employees of the government and for such other persons as 
 choose to avail themselves of the provisions of this act”. This 
 would simply have provided a plan of post office annuities on a 
 voluntary basis and at the entire expense of the contributors. In 
 1910 Representative Coudrey of Missouri introduced a bill for the 
 establishment of a national non-contributory pension system, but 
 the bill did not become a law. Other bills of a similar nature 
 have been introduced from time to time, but the present sentiment 
 at least is decidedly adverse to the suggestion that the American 
 nation follow the English plan and commit itself to a system of 
 non-contributory old age pensions, with or without an income or 
 ' property qualification. 1) 
 
 37. The New Fersey Old Age Pension Commission. 
 
 On the part of the several States the subject has received further 
 consideration and under date of April 22nd, 1911, an act was 
 passed by the State of New Jersey, providing for the appointment 
 by the Governor of a commission of five persons, to be known as 
 the Commission on Old Age Insurance and Pensions. The purpose 
 of the Commission is “to act as a Bureau of information and 
 assistance for employers and employees, for associations of employers 
 and. employees, and for municipalities and counties in the state, 
 with a view to aiding and advising them regarding the establishment 
 of systems of old age insurance and pensions and annuities’’. In 
 rendering this service the Commission is expected to formulate 
 plans and superintend their establishment in codéperation with the 
 parties concerned and also to make such investigations regarding 
 the operation of the pension and insurance and annuity system as 
 
 1) See State Pensions and Annuities in Old Age, by FREDERICK L. HOFFMAN, 
 Quarterly Publications of the American Statistical Association, March, 1909. 
 
>| 
 
 36 Hoffman. American Public Pension Systems. 
 
 it may deem advisable. As yet the commission has not been 
 sufficiently long established to prove its usefulness in the direction 
 indicated by the specific provisions of the act. 
 
 38. The Carnegie Teachers’ Pension Fund. 
 
 In 1905 Mr. ANDREW CARNEGIE established a national retiring 
 allowance system for university professors, with a permanent fund 
 of ten million dollars and an approximate annual income of 
 $ 500,000. Actuarial advice was relied upon in establishing the 
 fundamental principles for the administration of the fund and upon 
 the basis of a preliminary estimate it was assumed that the fund 
 would be sufficient to provide an average allowance of § 1,500 
 a year to such retired teachers and their widows as were likely 
 to be furnished by a body of three thousand professors. It is pointed 
 out, however, in an explanatory statement that, 
 
 “The truth is, however, that the matter is only in a partial sense an 
 actuary’s problem; all these assumptions do not detract from the fact 
 that a well informed and conscientious body of trustees can, with the 
 amount of income now in their control, maintain a satisfactory system 
 of retiring allowances for perhaps five thousand teachers, distributed 
 in about one hundred and twenty institutions. To do this is mainly a 
 problem of common sense and fairness and not one of actuarial com- 
 putation”’. 
 
 It was said further with regard to this matter that the actuarial 
 advice to the trustees could be summed up in the words of the 
 Actuaries consulted, that 
 
 “The problem is only partly actuarial. No man can possibly predict 
 what will happen under any assumed method of retirement. Frame your 
 rules according to your judgment of what will best serve the interests of 
 the teachers, within the general estimates indicated. Reserve carefully the 
 power to amend your rules of retirement as circumstances may require, 
 and go forward to acquire such experience as will enable you to make 
 permanent and final rules”’. 
 
 The following two rules are Saleceasieiepeayes of the plan adopted 
 in 1909, although it is quite possible that minor changes have 
 subsequently been made: 
 
 Rule 1. Retirement on the Basis of Age. Any person sixty-five years 
 of age, who has not had less than fifteen years of service as a professor 
 and who is at the time a professor in an accepted institution, shall be 
 entitled to. an annual retiring allowance, computed as follows: 
 
 a. For an active pay of twelve hundred dollars or less, an allowance 
 of one thousand dollars, provided no retiring allowance shall exceed 
 ninety per cent of the active pay. 
 
Hoffman. American Public Pension Systems. 37 
 
 b. For an active pay greater than twelve hundred dollars the retiring 
 allowance shall equal one thousand dollars, increased by fifty dollars for 
 each one hundred dollars of active pay in excess of twelve hundred dollars. 
 
 c. No retiring allowance shall exceed four thousand dollars. 
 
 Computed by the formula: R = +-+ 400, where R = annual retiring 
 allowances, A = active pay. 
 
 Rule 2. Retirement on the Basis of Service. Any person who has hada 
 service of twenty-five years as a professor, and who is at the time a 
 professor in an accepted institution, shall be entitled to a retiring allowance 
 computed as follows: 
 
 a. For an active pay of twelve hundred dollars or less, a retiring 
 allowance of eight hundred dollars, provided that no retiring allowance 
 shall exceed eighty per cent of the active pay. 
 
 b. For an active pay greater than twelve hundred dollars, the retiring 
 allowance shall equal eight hundred dollars, increased by forty dollars for 
 each one hundred dollars in excess of twelve hundred dollars. 
 
 c. For each additional year of service above twenty-five, the retiring 
 allowance shall be increased by one per cent of the active pay. 
 
 d. No retiring allowance shall exceed four thousand dollars. 
 
 Computed by the formula: R = % (b+ 15) + 320, where R = 
 retiring allowance, A =: active pay, and 6 = number of years of service. 
 
 It is not necessary to enlarge upon the details of this rule further 
 than to say that in addition thereto the executive committee have, 
 by the authority of the trustees, granted occasional disability allow- 
 ances, usually of one or two years’ duration. 
 
 The third rule provides pensions for the widows of teachers who 
 either on the ground of age or service will be entitled to retiring 
 allowances. In actual practice the rules have thus far been found 
 to meet the exigencies of the situation, but it is quite probable 
 that the fund has been committed to larger future expenditures 
 than the original endowment is sufficient to provide. The disburse- 
 ments for 1906—19gI0 are given in the following table: 
 
 
 
 
 
 
 
 
 
 
 
 No. of Amount of Woot Amount of ee Guar 
 , Retirement : Widows 
 Year Retired Altova nces Widows Deacons Suto ae 
 
 Teachers Paid Pensioned Paid Paid 
 1906 1) 83. | $ 21,953°06 8 $ 1,249°95 | $ 23,203°0! 
 1906—7 143 » 125,228°20 16 » 10,459°06 » 135,687°26 
 1907—8 190 hew2e0.274 2.43 29 » 20,367 ° 68 » 246,642 °41 
 1908 —9 285 » 311,009°23 | 46 » 32,861 °67 » 343,870°90 
 1909-10 290 » 423,901 °49 57 » 45,932 °81 » 469,834" 30 
 1910—II | 297 — | 73 + -- 
 
 1) June to October, 
 
’ 
 
 38 Hoffman. American Public Pension Systems. 
 
 39. Moral and Economic Fustification of the Contributory System. 
 
 The experience of the fund is a most instructive contribution 
 to actuarial science and emphasizes not only the need of qualified 
 actuarial advice, but the necessity of subsequent conformity to 
 actuarial considerations. This. fact is clearly recognized by the 
 president and trustees of the Carnegie Foundation for the Advance- 
 ment of Teaching and in the Fourth Annual Report 1) there is 
 an extended discussion of ‘The Teacher’s Obligations in Life 
 Insurance’, which may profitably be consulted by anyone interested 
 in the subject. The address concludes with the following statement 
 by the President of the Fondation: 
 
 “T have ventured to revert to this topic again in connection with the 
 consideration of the rules for retiring allowances on account of the evidence 
 which has come to the Foundation during the past, showing the general 
 failure of the great mass of teachers, even in colleges, to face their 
 responsibilities in this matter. The reason for this discussion is further 
 emphasized by the fact that many teachers have the misconception that 
 the retiring allowances take the place of life insurance’. 
 
 I also quote the following very suggestive conclusion by 
 DR. PRITCHETT, from an article on ‘The Moral Influence of the 
 University Pension System’, contributed to the November, 1911, 
 issue of Popular Science Monthly : 
 
 “It is, to my thinking, a fair question whether the college pensions 
 ought not, like other pensions, to carry a contributory feature. No one 
 can be more sensible than I of the tremendous demands made upon the 
 meager salaries of the American college teacher from those social and 
 moral obligations which affect all men. The experience of the world seems 
 
 to point strongly to the conclusion that on the whole a contributory form 
 of pension is likely to be most just and least harmful”. 
 
 Ao. Conclusion. 
 
 In the foregoing discussion I have limited myself to a brief 
 account of the various pension systems or methods which have 
 been established in the United States, practically from the foundation 
 of the government to the present time. Since most of the infor- 
 mation is not readily accessible to the student of the subject, | 
 have given the preference to a statement of the facts and I have, 
 therefore, refrained from a critical discussion, on account of the 
 required limitations of space. It is evident that the American 
 
 1) The Carnegie Foundation for the Advancement of Teaching, 4th Annual Report, 
 New York, 1909, p. 61 et seq. 
 
 vy 
 
Hoffman. L’Organisation des Pensions Publiques en Amérique. 39 
 
 military and most of our state and municipal pension systems have 
 been developed with an entire disregard of actuarial and general 
 insurance considerations. As a result, an enormous liability has 
 accrued, which must needs constitute, for years to come, a serious 
 financial burden upon the people at large. The contributory principle 
 which underlies the voluntary plan of life insurance, or a provision for 
 immediate and deferred annuities, has also been generally disregarded, 
 but it is a decidedly encouraging indication of a profound change 
 in public opinion, that the proposed system of retiring superannuated 
 civil service employees and the recently established retirement 
 system for state and county employees in Massachusetts, as well 
 as a number of teachers’ retirement funds, concede the necessity, 
 as well as the justice, of the contributory principle. It is further 
 evident that the public consideration of the pension question in 
 the United States during recent years has properly taken into 
 consideration the actuarial aspects of the problem and recognized 
 the imperative necessity of qualified actuarial advice. To the extent 
 that this has been the case, a most desirable advance has been 
 secured for actuarial science in the United States, in its relation 
 to the practical solution of serious problems of government concern. 
 
 L’ORGANISATION DES PENSIONS PUBLIQUES ET LES 
 PRINCIPES POUR LA MISE EN RETRAITE DES 
 FONCTIONNAIRES DES ADMINISTRATIONS CIVILES 
 EN AMERIQUE 
 
 PAR 
 
 Fr. L. HOFFMAN, Newark, N.Y. 
 
 Un syst®éme de pensions publiques dans le sens proprement 
 dit du mot n’a pas encore été réalisé dans les Etats-Unis. Les 
 systémes de pensions militaires se réduisent en pratique au paiement 
 de rémunerations qui sont considérées comme une récompense 
 posticipée des services rendus précédemment en temps de guerre. 
 L’habitude d’accorder des pensions militaires remonte jusqu’a 
 Yorigine du Gouvernement de |’Union, mais avant la guerre civile 
 
mT 
 
 40 Hoffman. L’Organisation des Pensions Publiques én Amérique. 
 
 de 1861—1865 les sommes dépensées a cet égard n’avaient atteint 
 qu’une importance relativement limitée. Depuis la guerre civile, 
 l'état des pensions militaires a pris une étendue enorme et le 
 courant public tend toujours a l’augmenter; on se montre de plus 
 en plus disposé a améliorer d’une fa¢gon libérale la position 
 financiére des citoyens qui ont pris part dans les combats pour 
 la patrie, ainsi que des descendants des victimes de ces combats. 
 Les dépenses pour retraites qui viennent charger les budgets 
 des Etats-Unis a la suite des différentes guerres et de la pacifi- 
 cation a lintérieur, s’élévent d’aprés les évaluations faites pour 
 V’époque de 1789 a 1g11t au chiffre de 4230 millions de Dollars. 
 Les différentes lois de retraite ayant été formulées sans tenir 
 compte de principes actuariels, les estimations des dépenses ont 
 été toujours surmontées d’une maniére tout a fait inattendue. A 
 cété de l’ancien systéme des pensions militaires, on s’est habitué 
 successivement A accorder des pensions aux officiers et soldats 
 qui — sans avoir pris part dans une guerre — quittent l’armée 
 A cause de leur Ages ou de l’incapacité au service; cette habitude 
 s’applique a l’armée territoriale autant qu’A la marine, aux officiers 
 aussi bien qu’aux soldats. I] n’y a pas de statistiques consciencieuses 
 sur les dépenses encourues a ce dernier titre. 
 
 Ce sont ces mémes principes qui régissent les réglements 
 relatifs aux pensions des juges; les dits réglements ne s’appliquant 
 qu’aux membres tribunaux fédéraux, les paiements pour retraites 
 dans les années 1g02 a IgII nont été que de 945.912 dollars. Ilvasans 
 dire que ces paiements: devraient étre considérés comme quote- 
 parts différées des salaires ou des remunérations; néanmoins on 
 ne tient jamais compte de cette considération économique lors de 
 inscription des dits paiements aux budgets réguliers. 
 
 Des pensions militaires sont accordées egalement par plusieurs 
 Etats du Sud aux survivants des soldats et marins de la confédé- 
 ration. La aussi on a été desagréablement surpris par le fait 
 que les dépenses effectives ont dépassé les chiffres préliminés dans 
 une progression trés sensible. En dehors des paiements effectifs 
 pour pensions, il faut partout soutenir les dépcnses considé- 
 rables pour les soldats et marins qui se trouvent dans les asyles, 
 ainsi que pour les veuves et orphelins laissés sans subsistances. 
 Tous ces frais représentent également des dépenses pour les 
 anciens combattants dans les guerres de la nation. 
 
 Quant aux fonctionnaires des administrations c/fviles, on attend 
 
Hoffman. L’Organisation des Pensions Publiques en Amérique. 41 
 
 toujours qu’un systéme de pensions soit définitivement établi par 
 les facteurs de la législation. Jusqu’a présent, une loi pareille 
 n'a pas pu étre votée, bien que des propositions y afférentes 
 solent soumises depuis plusieurs années a la discussion publique. 
 Cest Mr. HERBERT D. BROWN a Washington D. C. qui a étudié 
 4 fond le matériel total de cette question. D’aprés les susdits 
 projets on s'est .décidé A demander, en couverture d’une partie 
 des charges de retraites, des contributions proportionnelles de la 
 part des employés, en tenant diment compte de l’Age et de la 
 durée .du service. Ce principe a soulevé une opposition acharnée 
 de la part d'une grande partie des fonctionnaires d’Etat qu 
 declarent ne pouvoir accepter que l’une au l'autre des deux alter- 
 natives suivantes: ou une augmentation considérable des salaires 
 permettant aux employés de faire face aux paiements des contri- 
 butions, ou la constitution de retraites d’aprés le simple syst¢me 
 d’assistance, c.ad. sans prélévement de contributions sur les 
 salaires. A lheure qu'il est, le Congrés de Washington est saisi 
 de cette question, mais il se peut fort bien qu’une action décisive 
 soit remise 4 quelques années. Le systéme du prélévement de 
 contributions sur les salaires rencontre l’approbation tant du Prési- 
 dent TAFT que des membres du Gouvernement qui se sont familia- 
 risés 4 l'étude de ce probléme; or, on admet bien, de la part du 
 Gouvernement aussi, la nécessité dintroduire un systéme de 
 pensions civiles, permettant de décharger le service d’un nombre 
 considérable d’employés d’un Age avancé et d’une activité reduite. 
 
 Il y a, dans les Etats-Unis, assez de Caisses de retraite pour 
 des maitres d’écoles, des sergeants et divers autres groupes de 
 fonctionnaires des Etats et des Communes; mais toutes ces Caisses 
 souffrent du fait qu’elles sont organisées avec négligence de 
 principes actuariels et des bases fondamentales de toute assurance 
 sur la vie. Il s’en suit qu’un nombre de ces caisses est déja 
 incapable de faire face A ses obligations; en conséquence il y 
 a assez de Communes qui se voient actuellement en présence de 
 difficultés sérieuses auxquelles ils ne pourront remédier a l'avenir 
 que par une évolution technique dirigée d’aprés des conseils 
 raisonnables et conservatoires. Dans les derniers temps, il y a 
 lieu de signaler un pas important dans la voie juste qui a été fait 
 par l’Etat de Massasuchetts. Dans cet Etat, on a mis en vigueur, 
 & partir du 1% janvier 1912, un systéme de retraites pour les 
 fonctionnaires de l’Etat et des Communes; ce systéme prévoit 
 
42 _Hoffman. L’Organisation des Pensions Publiques en Amérique. 
 
 comme condition essentielle le prélévement de contributions sur 
 les salaires. 
 
 De méme, le mouvement en faveur d’un systéme général de 
 pensions de vieillesse pour la population entire — d’aprés le 
 modéle de la loi anglais de 1908 — n’a pas pu se faire valoir 
 jusqu’a présent dans les Etats-Unis, bien que l’opinion publique 
 en ait été saisie avec beaucoup d’empressement. 
 
 En effet, il n’y a pas de nécessité ni économique, ni sociale pour 
 une institution pareille, étant donné que la plus grande majorité 
 de la population est sans doute capable de pourvoir par ses propres 
 forces, dans une mesure limitée, aux exigences financiéres de leur 
 vieillesse. De la part de corporations industrielles on remarque 
 de plus en plus la tendance de garantir 4 leurs employés des 
 pensions de vieillesse a l’Age de 55 ou 60 ans. Un événement 
 trés remarquable du dernier temps est le fonds de retraites pour 
 maitres d’écoles organisés par CARNEGIE; ce fonds, par des dotations 
 trés importantes a été destiné au but de garantir des retraites aux 
 professeurs des universités et des écoles moyennes en Amérique. 
 
 Bien que, lors de |’établissement des principes actuellement en 
 vigueur pour la mise en retraite, des considérations actuarielles 
 aient été observées, il faudra toutefois, pour des raisons pratiques, 
 procédér dans un prochain avenir a une réorganisation de bases 
 de retraite. I] est fort probable que dans ce fonds on adoptera 
 également le principe du prélévement de contributions, ce principe 
 ayant déja été approuvé généralement par le Président de |’Insti- 
 tution de Charité pour favoriser les intéréts des fonctionnaires de 
 instruction publique. 
 
 En considérant tout ce qui précéde, nous arrivons a la conclusion 
 suivante: Dans la discussion publique sur les problémes de retraites 
 dans les Etats-Unis, on s’est convaincu de plus en plus de l’importance 
 au cdté actuariel et de la nécessité de recourir a la collaboration 
 d’actuaires consultants diment qualifiés. Ce progrés, il va sans 
 dire, est en méme temps un progrés de la science actuarielle, 
 parce qu'il démontre clairement aux facteurs de la législation ainsi 
 qu’a l’opinion publique, dans quelle mesure cette science est 
 
 capable de contribuer 4 la solution pratique de problémes importants 
 
 de l’administration. 
 
 
 
Hoffman. Oeffentliche Pensionssysteme in Amerika. 43 
 
 OEFFENTLICHE PENSIONSSYSTEME UND GRUNDZUGE 
 FUR DIE PENSIONIERUNG VON ZIVILSTAATSBEAMTEN 
 IN AMERIKA 
 
 VON 
 
 Fr. L. HOFFMAN in Newark. 
 
 
 
 Ein System 6ffentlicher Pensionen im eigentlichen Sinne des 
 Wortes hat sich in den Vereinigten Staaten bisher noch nicht 
 durchgesetzt. Das militarische Pensionsnormal bedeutet praktisch 
 nichts anderes als die Bezahlung von Entlohnungen, als eine nach- 
 tragliche Wiirdigung der in Kriegszeiten geleisteten Dienste. Die 
 Gewahrung militarischer Pensionen reicht bis auf den Ursprung 
 der Unionsregierung zurtick, doch waren die hiefiir aufgewendeten 
 Betrage bis zu dem Biirgerkriege von 1861—1865 von relativ ge- 
 ringer Bedeutung. Seit dem Biirgerkriege hat der militadrische 
 Pensionsetat enormen Umfang erreicht und die Tendenz bewegt 
 sich auch heute noch nach der Richtung hin, dass der finanziellen 
 Notlage solcher Birger, welche an Kampfen fiir das Vaterland 
 teilgzenommen haben, bezw. ihrer Hinterbliebenen in immer liberaler 
 Weise abgeholfen werden soll. Die Pensionsausgaben, welche den 
 Vereinigten Staaten zufolge der verschiedenen Kriege und der 
 Herstellung des innern Friedens erwachsen sind, diirften sich nach 
 den vorgenommenen Schatzungen fiir den Zeitraum von 1789— 
 Igtt auf 4.230 Millionen Dollars belaufen. Die verschiedenen 
 Pensionsgesetze wurden ohne Beriicksichtigung versicherungs- 
 technischer Grundsdtze erlassen und es haben denn auch die 
 faktischen Kosten die urspriinglichen Schatzungen in ganz unver- 
 haltnismassiger Weise iiberstiegen. Zu dem System der Militar- 
 pensionen ist spdterhin die Gepflogenheit hinzugetreten, auch ausser 
 dem Falle des Krieges, bei Ausscheiden aus dem aktiven Muilitar- 
 dienste infolge Dienstunfahigkeit oder Alters Ruhegeniisse zuzuge- 
 stehen. Dies gilt fiir die Landarmee sowohl als fiir die Marine, 
 u. zw. fiir Offiziere und fiir Soldaten. Ueber die Ausgaben aus 
 diesem letzteren Titel existieren keine verlasslichen statistischen 
 Daten. Auf einem @hnlichen Prinzipe beruhen die Vorschriften 
 iiber die Pensionen der Richter, welche sich indes nur auf die 
 Mitglieder der Bundesgerichte erstrecken; auf Grund dieser Gesetze 
 
\ 
 
 44 Hoffman. Oeffentliche Pensionssysteme in Amerika. 
 
 wurden in den Jahren 1902—r1g911 Pensionen von insgesamt 
 945.912 Dollars ausgezahlt. Derartige Pensionszahlungen sind 
 natiirlich nichts anderes als aufgeschobene Bestandteile des Gehaltes 
 oder Lohnes; nichts destoweniger wird bei der Bedeckung solcher 
 Zahlungen vollig ohne Riicksicht auf versicherungstechnische Erforder- 
 nisse vorgegangen. Militarpensionen wurden auch seitens mehrerer 
 Siidstaaten an die tiberlebenden Soldaten und Matrosen der Konfé6- 
 deration gewdahrt. Auch hier haben die einschlagigen Auslagen 
 die urspriinglichen Kostenschatzungen in ausserordentlich empfind- 
 licher Weise tibertroffen. Neben den eigentlichen Pensionszahlungen 
 sind iiberall noch betrachtliche Ausgaben fiir die in Versorgungs- 
 hausern aufgenommenen Soldaten und Matrosen, weiters fiir die 
 Invaliden und fir die Hinterbliebenen erwachsen. Diese Kosten 
 sind nichts anderes als Bestandteile der Aufwendungen fir die 
 Hinterbliebenen der Kampfer aus den Kriegen der Nation. 
 
 Ein Pensionssystem fiir den Zivil-Staatsdienst, d. h. eine ge- 
 setzliche Grundlage fiir die Gewahrung von Ruhegeniissen an Zivil- 
 Staatsbeamte wurde in den Vereinigten Staaten bisher noch nicht 
 zum Gesetze erhoben, wiewohl derartige Vorschlage seit mehreren 
 Jahren zur Diskussion stehen. Der gesamte hieher gehdrige Komplex 
 von Fragen wurde von Mr. HERBERT D. BROWN in Washington D.C. 
 sorgfaltig erwogen. Nach diesem Plane wird die Einhebung von 
 pro rata Beitragen von seiten der Zivil-Staatsangestellten vorgeseken, 
 wobei auf Alter and Dienstzeit gebiihrend Riicksicht genommen 
 werden soll. Hiegegen hat sich Opposition van seiten eines grossen 
 Teiles der Staatsangestellten erhoben; diese Opposition verlangt 
 entweder eine betrachtliche Erhéhung der Gehalter, um die ge- 
 forderten Pensionsbeitrage erschwingen zu kénnen, oder sie spricht 
 sich, fiir die Gewahrung von Pensionen nach dem reinen Ver- 
 sorgungssystem ohne die Einhebung irgendwelcher Beitrage aus. 
 Die Frage liegt derzeit dem Kongresse zur Erwagung vor, allein 
 es ist sehr wohl méglich, dass eine entscheidende Aktion noch 
 durch einige Jahre hinausgeschoben wird. Das System der Gewahrung 
 von Pensionen unter Einhebung von Beitragen wird sowohl vom 
 Prasidenten TAFT als auch von seiten der mit den Verhaltnissen 
 vertrauten Mitglieder des Kabinets gebilligt, auch in den Kreisen 
 der Regierung erkennt man die Notwendigkeit der Einfiihrung 
 eines Pensionssystems durch welches der Dienst von einer be- 
 trachtlichen Anzahl alter und in ihrer Arbeitskraft mehr oder minder 
 zuriickgebliebenen Beamten entlastet werden soll. 
 
 +. 
 
Hoffman. Oeffentliche Pensionssysteme in Amerika, 45 
 
 Pensionen und Ruhegeniisse fiir Lehrer, Polizisten und andere 
 Gruppen von Staats- und Gemeinde-Angestellten wurden in den 
 Vereinigten Staaten fast tiberall in ansehnlichem Umfange aktiviert ; 
 hiebe1 hat man aber nie auf gesunde versicherungstechnischen 
 Prinzipien oder auf die bewahrten Grundsatze der Lebensversiche- 
 rung Riicksicht genommen. Die Folge ist, dass viele Pensionsfonds 
 insolvent sind und dass so manche Gemeinde jetzt vor einer 
 ernsten Frage steht, welche ftir die Zukunft in gliicklicher Weise 
 nur durch Beachtung richtiger une konservativer technischer 
 Ratschlage in befriedigender Weise gelést werden kann. Aus 
 jungster Zeit ist als ein wichtiger Schritt auf dem richtigen Wege 
 das Vorgehen des Staates Massasuchetts zu registrieren. In diesem 
 Staate wurde ein Pensionssystem fiir ausgediente Staats- und 
 Gemeinde-Angestellte erlassen, welches mit 1. Januar 1912 in 
 Kraft getreten ist. Hiebei wird die Einhebung von Beitragen als 
 eine wesentliche Grundlage des finanziellen Erfolges anerkannt. 
 
 Auch die Bestrebungen nach Einfiihrung eines allgemeinen 
 Altersrentensystems — entsprechend dem Vorbilde des englischen 
 Gesetzes von 1908 — konnten sich bisher in den Vereinigten 
 Staaten keine Geltung verschaffen, wiewohl auch dieser Gegen- 
 stand die 6ffentliche Meinung sehr lebhaft beschaftigt hat. Es 
 besteht keine wirtschaftliche oder soziale Notwendigkeit fiir die 
 Einftihrung einer derartige Institution, denn die tberwiegende 
 Mehrheit der Bevélkerung kann ohne Zweifel in einer bescheidenen 
 Weise aus eigener Kraft fiir die pekunidren Erfordernisse des 
 Alters vorsorgen. Auf seiten industrieller und anderer Korporationen, 
 einschliesslich der grossen Transportunternehmungen, besteht die 
 entschiedene Tendenz, ihren Angestellten bei Erreichung des 
 Alters von 65 oder 70 Jahren Ruhegeniisse sicherzustellen. Eine 
 sehr bemerkenswerte Erscheinung der neuesten Zeit ist auch der 
 von CARNEGIE errichtete Pensionsfond fiir Lehrpersonen, welcher 
 durch sehr hohe Zuwendungen zu dem Zwecke ausgestattet wurde 
 um eine Versorgung fiir die Mitglieder der Lehrkérper einer 
 betrachtlichen Anzahl amerikanischer Universitaten und Mittel- 
 schulen zu bieten. Wiewohl bei Festlegung der Pensionsgriind- 
 sitze in der gegenwartig geltenden Form versicherungstechnische 
 Erwagungen zu Rate gezogen wurden, diirfte sich doch praktisch 
 in der nachsten Zeit die Notwendigkeit einer Umgestaltung der 
 Pensionsgrundlagen ergeben. Es ist anzunehmen, dass hier das 
 System der Entrichtung von Beitragen durchgefiihrt werden wird, 
 
46 Hoffman. Oeffentliche Pensionssysteme in Amerika. 
 
 welches in der Tat bereits die prinzipielle Wiirdigung seitens des 
 
 Prasidenten der CARNEGIE-Stiftung fiir die cigs der Interessen 
 von Lehrpersonen erfahren hat. 
 
 Unter den geschilderten Umstanden ist es offenkundig, dass bei 
 der 6ffentlichen Diskussion tiber Pensionsfragen in den Vereinigten 
 Staaten im Laufe der letzten Jahre auch das Interesse fiir die 
 versicherungstechnische Seite des Problems wesentlich in den 
 Vordergrund getreten und die absolute Notwendigkeit qualifizierter 
 technischer Begutachtung anerkannt worden ist. Je mehr sich diese 
 Erkenntnis Bahn bricht, destomehr kommt dies zugleich auch dem 
 Fortschritte der Versicherungswissenschaft in den Vereinigten 
 Staaten zugute, denn es wird hiedurch der Oeffentlichkeit vor 
 Augen gefiihrt, wie viel die Versicherungswissenschaft auch zur 
 praktischen Lésung wichtiger Probleme der staatlichen Verwaltung 
 beizutragen vermag. 
 
 
 
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