that a recipient may have, and the circumstances under which he may retain it, differ from State to State. In some States, automatic liens are placed on the real property of a recipient so that at his death, or that of his surviving spouse, the State may recover for assistance granted. Some States require a recipient to surrender title to his property as a condition to receiving aid.

States must also measure how far the individual's resources will go in meeting his current living costs. Policies governing the evaluation of resources relate to the use-value of property, net income from earnings and other sources, and the value of home-grown produce. Policies relating to possible contributions from relatives are widely divergent. Some States, in determining the extent of an individual's resources, include specified amounts because of the existence of legally responsible relatives able to contribute to the support of the assistance recipient whether or not such relatives actually do contribute. At the other extreme, Texas has a provision barring the assistance agency from making any inquiry of relatives concerning their ability or willingness to contribute to the support of needy individuals. In all States, when relatives do contribute the income from this source must be taken into account.

Federal financial participation.-Since October 1952 the Federal share of old-age assistance costs has been four-fifths of the first $25 of the average payment and one-half the balance up to a maximum of $55 monthly for an individual. The $55 limit applies to the sum of the money paid to the individual and any payments that may be made to persons, agencies, or organizations supplying him with medical or other remedial care.

Volume of old-age assistance.-Great variations are to be found. among the States in the number of recipients of old-age assistance in relation to the aged population. In December 1951 the recipient rate ranged from 49 per 1,000 in the District of Columbia to 674 per 1,000 in Louisiana. Assistance standards, and policies relating to the responsibility of relatives for support, the ownership of property by recipients, liens on property, and recoveries from the estates of recipients for assistance granted during their lifetimes are important factors affecting the size of the recipient load in a given State. However, in general, the States that are predominantly rural-and consequently have least protection from the old-age and survivors insurance system-have the highest recipient rates. These are for the most part States with low fiscal resources and with a relatively large amount of need. About 2.7 million persons were receiving old-age assistance at the beginning of 1952.

Average old-age assistance payments in December 1951 ranged from $70.91 in Colorado to $18.68 in Mississippi. The national average was $44.54. In 16 States the averages exceeded $50, the maximum monthly amount in which the Federal Government would share at that time. In eight States-all of which are in the South-the averages were under $30.

Expenditures for old-age assistance in the fiscal year 1951, prior to the adoption of the present matching formula, were $1.5 billion, of which the Federal Government paid $800 million.

Veterans' payments

At present there are only about 300,000 persons over 65 receiving payments under the various veterans' programs. It is not unlikely,

however, that in the future these programs will become a very significant source of income for the aged.

Virtually all surviving veterans who served in World War I will become 65 in the next 5 to 15 years. At age 65 a veteran is considered disabled for purposes of pension if he has a 10-percent disability. Since the disability does not have to be service-connected, practically all aged veterans can meet this test. The veteran will then receive the full pension of $75 a month for any year in which his income is $1,400 or less if single, and $2,700 or less if married. Government life insurance and certain other payments to veterans are not taken into account in determining this income limitation, but other sources of income, including retirement pay, are.

Non-service-connected pensions are also paid to permanently and totally disabled veterans under 65 and to the widows and children of deceased veterans. (In the case of World War II veterans there must be a service-connected disability at the time of death.) The widow's benefit is $48 per month and the child's benefit is $12 for the first child and $7.20 for each additional child. Income limitations are similar to those described above.

Except for dependent parents, a comparatively minor benefit category, the income or resources for the veteran or his survivors are not considered in determining eligibility for benefits based on serviceconnected disabilities. The amount of compensation for serviceconnected disabilities is generally determined by the degree of disability and the presence of dependents.

PART II

AN AREA OF AGREEMENT

In part I of this report we have indicated the nature of the pension problem and described existing arrangements for the income maintenance of retired persons. In part II we shall consider the area of substantial agreement on some of the major policy questions.

A first reaction to a description of the various retirement systems, public assistance programs, and veterans' programs directed to the income-maintenance needs of the aged may be that the present situation is chaotic and that it would be desirable to select one approach, one system, and do everything through it. There is an emotional appeal in the simplicity of the single principle. Our goals, however, are legitimately somewhat different in each of the various programs of income maintenance for the aged, and a diversity of approaches is necessary for meeting these goals. The weakness of American planning for the income maintenance of the aged to date is not that we have a diversity of systems but that we have not sufficiently coordinated those we have or related the whole to the underlying problem of maintaining employment opportunities for the aged. Although there is no necessary virtue in reliance on a single system of income maintenance for the aged, there is virtue in a method of planning which takes into account the whole area and which attempts to make the parts fit.

That is what we are beginning to do in this country. A constructive pattern for meeting the income needs of the aged has been emerging in the United States-a pattern which in broad outline has the support of responsible spokesmen for industry, labor, and Government, and of professional and expert opinion. The emerging pattern is this employment for those aged who can and want to work, and for those who retire a universally available system of publicly administered old-age and survivors insurance, contributory in nature and wage related, plus supplementary retirement systems which take into account the protection afforded by old-age and survivors insurance but give additional benefits. The desirability of additional saving which the individual accomplishes on his own according to his ability and inclination is taken for granted. There is also support for old-age assistance for those who, even with full coverage by retirement systems, will not have income sufficient to meet their minimum needs in old age. This pattern has not been completely realized but, in broad outline and as an objective, it now commands wide allegiance.

Because this broad area of agreement is frequently obscured by differences on some particular aspects of the pension problem, this section discusses the principles underlying this emerging pattern of pension planning-principles which we believe are supported by most informed opinion in the United States.1

1 This does not mean, of course, that there is unanimity. It is possible to find individuals who disagree, some with one principle, others with another. Such disagreement will be pointed out. The recommendations of business and labor committees and the published material of a host of experts, however, support the conclusion of a broad area of substantial agreement.

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I. The first principle of a constructive approach to the income maintenance needs of the aged is that there should be opportunity for productive employment for those who are able to and want to work. II. There is widespread agreement that underlying anything the individual may do for himself or any arrangements made through collective bargaining or by an employer there should be a universally available public program directed to income maintenance for the aged.

III. There is widespread agreement that the means-test method is a less satisfactory way of providing income for retired persons than a non-means-test program, and that the basic public program should, therefore, not include a test of need. There is also recognition, however, that assistance to the aged will continue to be required to meet needs not otherwise met.

IV. There is considerable agreement in this country on the desirability of relating retirement pay to previous earnings and on the desirability of having the fundamental public program contributory.

V. There is widespread acceptance of the idea that private pension plans are desirable as supplements to the public program.

I. The first principle of a constructive approach to the income maintenance needs of the aged is that there should be opportunity for productive employment for those who are able to and want to work.

We have already discussed in part I the reasons for agreement on this principle among a large part of business and labor.2 Employment for those of retirement age who are able and want to work will reduce the cost of pensions and in periods of relatively full employment will increase the total product of the economy. There is major disagreement, however, concerning the application of this principle, most of the disagreement centering around the question of whether retirement from a particular organization should be compulsory at a fixed age or whether compulsory retirement should be based on a determination of fitness for the job.

The argument against compulsory retirement at a fixed age, usually 65, rests on the rather obvious fact that people do not all become “old“ at the same age. Other things being equal, a company would gain the most in efficiency if it could retire some workers at 55 and retain others until 75 or more. On the other hand, there are real problems connected with a flexible retirement age based on a determination of fitness for the job. The objections are both psychological and administrative. With a fixed retirement age, workers can anticipate retirement from their organization and plan suitable activities or employment somewhere else. Most important, all are treated alike according to an objective test-age. There is concern about the psychological effects of an indefinite retirement age on those who, with the abandonment of a fixed retirement age, each year must meet a test of fitness, and are finally retired after a specific determination of unfitness. There is concern, too, about the invidious comparisons with those of like age who are allowed to stay on and about the possibility of favoritism and charges of favoritism.

2 It is interesting to note, however, that the Townsend movement argues today, as it did in the thirties, for adopting the Townsend plan in order to get older workers out of the labor market to make Jobs for the young.

In order to increase employment opportunities for those past 65 it is not necessary to abandon completely the idea of a fixed retirement age. One possible line of development in the near future would be for the major companies that have not done so to raise the compulsory age somewhat above 65-to, say, 68 or 70-but to keep the voluntary age at which one can receive full pension at 65. Between the voluntary and compulsory age there would be room for experimentation with criteria of fitness and the exercise of individual choice.

Some recent collective-bargaining agreements contain provisions introducing greater flexibility with regard to retirement age. The Ford contract, for example, provides for compulsory retirement at 68 but voluntary retirement at 65. A contract in the rug industry provides that a full pension is payable at the age of 65 and in a reduced amount at the age of 60; between the ages of 60 and 68 retirement is entirely at the option of the employee; between 68 and 72 it is by agreement between management and the union; from 72 on, the option is with the employer. Government, too, has room for experimentation. In general, the age for compulsory retirement under the Federal Civil Service Retirement System is 70, but an unreduced annuity is payable at 62 after 5 years of service and at 60 after 30 years of service.

Many companies, of course, do not have a policy of compulsory retirement at a fixed age. Such a policy is generally limited to firms which provide pensions, and even among the pension firms the practice is by no means universal.

Retirement at a fixed age from one's regular job is not necessarily a bar to all employment. In maintaining employment opportunities for workers of retirement age much experimentation and research needs to be conducted on reassignment of older workers to lighter jobs and to part-time work. As the population continues to age it may prove desirable to organize industry so that the economy can take advantage of the contributions of those no longer able to continue in their former jobs, but still ready and able to do something else.

For many persons the best solution of the problem of employment. in old age will involve not only a shift in jobs but in employers. For executives, particularly, organizations may wish to adhere to quite rigid policies of compulsory retirement at a fixed age. Determination of continued fitness for executive jobs is extremely difficult and involves such imponderables as the retention of the qualities making for aggressive leadership. Equally important is the fact that the policy-making executive has so many connections in the plant management that individualized decisions regarding retirement easily take on the appearance of favoritism. Moreover, if a company is to retain its best men, it is important to provide promotional opportunities for the younger executives.

Yet the retired executive may want work in another organization and be able to perform it adequately. We need to make a place for the employment of such persons and for all older workers who need to shift to a different type of work. At present it is difficult for older persons to get new jobs. Employers generally prefer younger workers of equal skill or ability whenever there is a choice. This is a reasonable preference based on the fact that the younger person is more likely to become a long-service employee. Moreover, in part, employer preference for younger workers is based on employer expe