Evening Star Newspaper, September 27, 1936, Page 48

PENSION PROGRAM CALLED HUGE “IF" Many Changes Forecast in Handling Vast “Old-Age Benefit” Fund. The far-reaching eflects of the new social security program, now @ leading topic in the national political fleld, are discussed here in the eighth of a series of articles based on a first-hand survey of the operation of the system in several States as well as of the centrg) administration in Washington. BY BLAIR MOODY. Just what is this scheme called *old-age benefits,” set up under the social security act, through which Uncle Sam, with one sweep of his powerful arm, expects to banish fu- ture indigency among this Nation’s old folks? ‘What is the truth behind the grow- ing roar of dispute over the proposal to levy a tax on employers and em- ployes that would for this purpase alone amount to nearly $2,000,000,000 annually within 15 years, place on the books in Washington a mythical re- serve fund larger than the national debt, remake the currency system of the country and eventually, if it ‘worked, pay a monthly annuity to an estimated 22,500,000 contributing citi- gens? It is first, as these figures indicate, the largest and most ambitious an- nuity program ever undertaken in eny country, publicly or privately. It not only puts the Government in business, but into the largest busi- ness in the world. It compels work- SOCIETY. ers to save for the future, whether they want to or not. It gets com- pletely away from the idea that funds distributed by the Government should be on a basis of need. In fact, it is the exact antithesis of relief, in that it seeks, by s supposedly self- supporting structure, to eliminate so far as possible the need for paying doles to the aged. Many Undergo Many Changes. It is a system that may be changed many times and promises to be one of the Nation's leading economic and political issues for many years. But now that the die is cast—now that the principle has been written on the statute books and the pay-roll tax starts running at 2 per cent next January 1 and a few benefits will be paid shortly thereafter—it is a pret- ty safe bet that the program, in some form, has come to stay. To abolish it after once it had started would mean to strike out a “vested interest” that had been bought and paid for by millions of workers. No one short of a Houdini or Thurston, and certainly no poli- tician who must go to the people for re-election, could make a rabbit like this one disappear, no matter how large the magical hat. Beginning January 1, next, 1 per cent will be deducted from the wages of every worker in the country except those engaged in agriculture, domestic service and a few other exempted oc- cupations. This 1 per cent will be matched by an equal tax paid by the employer. . The total of 2 per cent will jump by 1 per cent every three years until, in 1949, the employers and employes will be contributing a total of 6 per cent of wages-to pay for this compulsory insurance policy. Will Be “Purchased” Policy. It will be a policy “purchased” at a lower rate than the worker would have to pay a private company, partly be- cause his employer contributes part of the “premium,” and partly because the cost of selling is eliminated. It is like a private policy in that THE SUNDAY ST. the amount of monthly benefit the worker recelves when he retires is directly dependent on how much he has “invested,” which, in turn, de- pends on his wages during the con- tributing period. vate policy in that, when he reaches 65, he must quit his job to collect what security officlals so frequently stress is “his as a matter of right.” ‘The monthly benefit paid the worker when he retires varies from & mini- mum of $10 to & maximum of $85 a month, It depeads on how much his ‘yages are and how long he works between January 1 and his 65th birth- day; in other words, his total salary during that period. ‘The worker with a monthly salary of $50 will get $17.50 a month an- nuity if he works 10 years; $22.50 if he works 20 years, $27.50 on 30 years and $32.50 on 40 years. Return on $100 Monthly Wage. The $100-a-month man will get $22.50 -for 10 years’ work, $32.50 for 20 years, $42.50 for 30 years and $51.25 for 40 years. A $150-a-month salary will be entitled to $27.50, $42,50, $53.75 and $61.25 for the same periods. The $200-a-month man will get $32.50, $51.25, $61.25 and $71.25. For $250-&- month (the maximum) the annuity will be $37.50, $56.25, $68.75 and $81.25. It is strictly a Federal program. The States are not involved. The taxes are collected federally, the money handled by the Government and disbursed by it. The way to calculate the.amount of your benefit is by computing your prospective total wages during the contributory period. Then take one- half of 1 per cent of the first $3,000 earned; one-twelfth per cent of the next $42,000 and one twenty-fourth per cent of all over $45,000 and add them. The result is’ your retirement income. Thus a man who earns $2,000 ag- gregate will get $10 a month; $3,000 wages, $15 a month; $4,000 wages, $15.83; $5000 wages, $16.67; $10,000 wages, $20.83; $20,000 wages, $29.17; $30,000 wages, $37.50; $40,000 wages, It s unlike a pri-| , WASHINGTON, D. $45.83; $60,000 wages, $56.25; $100,= 000 wages, $72.92; $130,000 wages, $85. To be eligible at all, the worker must earn at least $2,000 between De- cember 31 next and his 65th birt] day, and he must have earned wages on some day in each of five years be- ginning in 1937 and before he is 65. Based on Total Contribution. ‘The benefits are based on total con- tribution to the reserve. Therefore, it will be 42 years before any one can qualify for the maximum $85 & month by earning a total of $130,000, since only $3,000 of each year's salary is counted in the total. A worker now more than 22 years old who retires at 65 thus never can have the maximum. Yet the system is “weighted” in favor of the oldest worker who will retire within a comparatively few years. For example, if two workers are earning $100 a month and one re- tires in 1942, he will receive $17.42 a month; the other, retiring in 1962, will receive $37.50. The second man's pension is 114 per cent more than the first, but he has paid taxes five times as long. - ‘What happens if you reach 65 be- fore 1942, so you will not have met the requirement of working in five For Complete Satisfaction Have a Copyright 65484 Given by Katharine Lee Ogilvie Scalp, Skin Specialist 1325 Conn. Ave. Decatur 5098 Present This “Ad” C, SEPTEMBER 21, separate years, or if you die, or if you don’t retire at 65? If you pay the tax but do not qualify for an annuity, you will receive s lump-sum psyment on reaching 65 equal to 3% per cent of the total wages received between next December 31 and the retirement date. In other words, & worker now past 60 will pay 1 per cent of his wages for most of his working days and get back 3'% per cent. Payment In Case of Death. The wage earner who dies before 65 leaves his estate & lump sum equal to 315 per cent of wages earned after December 31 next. If he dies after he has retired at 65, a lump-sum pay- ment is calculated on the same basis and any annuities paid to him de- ducted. If you want to keep working after 65, you get nothing until you retire, In fact, the actuarial calculations ccn- Jlicfts 1214-1220 F STREST Once-a-Year Event! Famous Yoz, of London Toiletries 1936—PART THREE. template that the average age of re- tirement will be 67. If every one re- tires at 65, the whole system will be thrown out of kilter. Of perhaps more out of kilter. For the success of the venture is depen- dent on one huge “if.” Will the vast and cumbersome system by which it is proposed to handle the financing of the progfam, or any Other system, actually work out in practice? That's wrapped up in the hottest controversial question presented by the act—the $47,000,(00,000 reserve. It will be discussed in the next urticle of this series. (Copyright, 1936, by the North American Newspaper Alliance, Inc.) * Register Cattle Brands. Garfield County, Okla,. is registering cattle brands with the county clerk in an attempt to defeat modern-day cat- tle thieves. f "'/ eens” BOCIETY. BOYS’ GARDEN CLUB HARVESTS FINE CROP Ninety-Eight Boys Answer Call at Civitan Club-Sponsored Plots Along Benning Road. ‘The Civitan Boys’ Garden Club yes- terday gathered its harvest from gar- den plots along Benning road near the Eastern Branch, ‘There were 98 youths who answered the call for the harvest, and they left laden with quantities of corn, tomatoes, beans, beets, carrots, cab- bage and peppers, all of which they | raised on plots 30 by 50 feet, which ‘were provided by the Civitan Club of Washington. Rudolph Jose was chair- man of the Garden Committee, ‘The gardens were under the direct HAVE THAT YOUTHFUL SLANT! 5 ef)am:ly%z}' Presents This Thrilling New Underwear ‘Fabric for Young Moderns. SIZES 13 TO 17 ONLY Lustrous diagonal stripes lend a mad-cap touch to’ these jaunty styles. The supervision of W. R. Beattie, senior horticulturist of the Department ofe Agriculture. He estimates the average garden produced about $90 worth of crops during the season. 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