TREND OF RETIREMENTS

Mr. ANDREWS. For the purpose of this discussion, have you revised last year's estimates of the amounts to be required in fiscal year 1963 and the years thereafter?

Mr. WYLIE. Yes, sir.

Mr. ANDREWS. What do you now estimate the level-off point to be?

Mr. WYLIE. Well, sir, by that I would interpret you mean that point where we reach this high peak of World War II annuitants coming on and when we will reach a normal attrition of those coming on and going off the rolls?

Mr. ANDREWs. That is right.

Mr. WYLIE. Sir, the World War II retirements will probably continue for the next 5 years. This trend of increasing numbers will continue for that period.

Mr. ANDREWs. For 5 years?

Mr. WYLIE. I would say it would be probably 1965 or 1966 before this influx of World War II retirements reaches a peak.

Mr. ANDREWS. Then at that time you can expect a decline in the number?

Mr. WYLIE. Sir, it will probably not decline in total number; because, based on the force levels that we are retaining, there will be a continued number of accessions to the retired rolls which I believe will more than compensate for the members we would lose by attrition or death.

EFFECT OF LEGISLATION FOR EQUALIZATION OF RETIRED PAY

Mr. ANDREWS. You mentioned proposed legislation to provide for equalization of retired pay.

Mr. WYLIE. That is correct, sir.

Mr. ANDREWS. Do you anticipate sending a supplemental if this is enacted and if so, in your opinion, what will the amount of it be? Mr. WYLIE. Sir, if the legislation were enacted, say, retroactively to July 1960, it would cost approximately $31 million. If it were to be enacted and effective March 1 of this year, it would cost approximately $10,400,000. In 1962 it would cost approximately $30,694,000, in 1963 it would cost approximately $30,080,000; in 1964, $29,478,000. In other words, there would be some reduction year by year because of the age group of those on the rolls prior to 1958.

Mr. ANDREWS. What is the status of that legislation at the present time?

Mr. WYLIE. Sir, I believe the status of that legislation is contingent upon the study that is being conducted in the Senate under the direction of Senator Stennis.

Mr. ANDREWs. Have any bills been introduced?

Mr. WYLIE. There is a bill in Congress at the present time.

Mr. ANDREWs. Introduced in this session?

Mr. WYLIE. It was introduced on February 15, 1961, by Mr. Kilday as H.R. 4331.

Mr. ANDREWS. Last year on page 734 of the record Mr. Sikes asked this question:

Could you estimate what the peak will be when we reach a peak? I know we are reaching out now into thin air, but have you made an estimate of the amount that we will reach before these payments begin to level off? Would it be 2 billion or more?

Mr. WYLIE. Yes, sir. It would be closer to $3 billion in my judgment.
Mr. SIKES. That would be about 1975?

Mr. WYLIE. Probably a little beyond that.

Mr. WYLIE. That is true, sir.

Mr. ANDREWS. Have you changed your opinion about the date and the amount?

Mr. WYLIE. No, sir. As I understood your question just a few moments ago, sir, we are having quite a rise in the number of retirements as a result of World War II. I estimate that the influx will level off and then continue on a level plane for the next 5 years. You are still going to have some increase in the number of retirements by virtue of the number of members we have in the Armed Forces, but it won't rise as drastically as it will in the next 5 years.

Mr. ANDREWS. Do you still think by 1975 the amount necessary to pay retirement benefits will be approximately $3 billion? Mr. WYLIE. Yes, I do.

Mr. ANDREWS. Is that taking into consideration legislation that might be enacted into law increasing those rates?

Mr. WYLIE. No, sir. That is based on the present rates.
Mr. ANDREWs. Present day rates?

Mr. WYLIE. Yes, sir. Any increase, for example, this recomputation legislation we are talking about would have some effect on it, sir. Mr. ANDREWS. The Department of Defense has been very alert to the importance and equity of pay equalization for its military personnel. Have you also considered the possibility of its application to your civil service people? If you have, how much do you estimate it would cost?.

Mr. WYLIE. Sir, that information could be furnished, I am sure, but it would have to come through our Assistant Secretary for Manpower who handles the legislation for civilian personnel.

Mr. ANDREWs. You cannot answer it?

Mr. WYLIE. No, sir, I do not know that figure and I do not know how that would apply to the Department of Defense.

Mr. ANDREWs. Can you tell us a little more about the Fleet Reserve, its basis in law and its relationship to the mobilization planning of the Navy?

Mr. WYLIE. Sir, I would like to have our Navy representative reply to that if you wish.

Mr. ANDREWS. Do you understand the question?

Mr. MITCHELL. The Fleet Reserve is composed of enlisted personnel who enter the Fleet Reserve after 20 years service and who remain on the Fleet Reserve rolls until such time as they complete a total of 30 years active and inactive service at which time they go onto the permanent retired list. They draw retainer pay during those 10 years.

RETAINER PAY

Mr. ANDREWS. What do you mean by "retainer pay"?

Mr. MITCHELL. Retainer pay is compensation paid to the member who has completed 20 or more years active service and is retained in the Fleet Reserve as a ready source of trained manpower in the event his services are required during war or a national emergency.

Mr. ANDREWs. Is that different from retirement pay?

Mr. MITCHELL. Yes, sir.

In legislation it is called retainer pay.

Mr. ANDREWS. As I understand it, if a man serves in the Navy or Marine Corps for 20 years, he can retire and become eligible for retirement benefits, based on 20 years of service,

Mr. MITCHELL. Yes, sir. This man is in a different category; he is drawing a retainer for being available to the Navy.

Mr. ANDREWs. Is that in addition to his retirement pay after 20 years' service?

Mr. MITCHELL. No, sir.

Mr. FORD. Does he attend drills? Does he participate in any way in Navy activities during his 10-year period?

Mr. MITCHELL. He may, sir. He could be voluntarily recalled to active duty, and he may be required to perform 2 months of active duty during any 4-year period.

Mr. FORD. But it is not mandatory on a weekly or monthly basis. It is purely optional with him?

Mr. MITCHELL. Yes, sir..

Mr. ANDREWS. Let me see if I understand this retirement for the Navy personnel and Marine Corps personnel. If a man serves 20 years in the Marine Corps or the Navy and retires, he is eligible for retainer pay, is he not?

Mr. WYLIE. That is correct, sir."

Mr. ANDREWS. It is based on a percentage of his pay that he got at date of retirement?

Mr. WYLIE. Yes, sir.

Mr. ANDREWS. What percentage is that?

Mr. MITCHELL. 50 percent.

Mr. ANDREWS. After retiring from the Navy, or the Marine Corps, is it mandatory that he join the Fleet Reserve?

Mr. WYLIE. No. It is not a mandatory retirement. The object of the Fleet Reserve, sir, is to provide a ready source of trained manpower in the event their services are required during war or national emergency. It is for Regular and Reserve enlisted personnel of the Navy and Marine Corps only.

Mr. ANDREWS. At 20 years the retired pay is 50 percent of his pay at time of retirement?

Mr. WYLIE. That is correct, sir.

Mr. ANDREWS. Then by having remained in the Fleet Reserve for a period of 10 years, he gets retirement pay. What percentage of his pay does he receive at the end of 30 years' service, 20 of which was in the Regular Forces and 10 years in the Fleet Reserve? Can you answer that?

Mr. MITCHELL. I cannot tell you the exact percentage, but it would not change appreciably unless he had been recalled to active duty for an extended period.