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TABLE 10.

DEPENDENCY AND INDEMNITY COMPENSATION, PARENTS ONLY-2 PARENTS, APR. 30, 1977 (ALL CASES)—Con.

In addition to the increase in the number of persons covered under social security, an increasing number of workers are covered under private retirement and pension plans. There are no projections available regarding coverage under private pension plans for the next ten years. However, it is recognized that this number is increasing and recent legislation to "reform" private pensions may further increase the proportion of people receiving private pensions and the amount of benefits which they receive.

Another factor which must be considered is the greater likelihood that wives of veterans will either be working or will have retirement benefits of their own. It should be noted, however, that these cost and case-load reducing factors could be offset by legislation to substantially increase benefit levels and income eligibility levels.

With regard to income eligibility, the following chart indicates the trend in average "countable" income of veterans.

1 After entitlement is established for children-alone cases, there is no requirement for an annual submission of income data. 2 As of April.

Under current law, by counting only 90 percent of a person's social security or other retirement annuities, the reported bill will allow a veteran with dependents to actually have an income of approximately $5,645 and still meet the countable income limitation of $5,080 and receive a pension. In addition, the veteran's spouse could have retirement income up to $1,333 without any of it being counted as the veteran's income. Therefore, it would be possible for a veteran and his spouse to have a total joint income from social security or other retirement annuities of approximately $6,978 and the veteran would still be eligible for a pension from the Veterans' Administration.

EXPLANATION OF THE BILL

Last year the Congress determined that the current pension program does not completely provide sufficient assistance to meet the needs of some eligible veterans and survivors. In addition, it determined that the current system has developed some inconsistencies, inequities, and anomalies which prevent the current pension program from operating in the most efficient and equitable manner, and subjects a few pensioners annually to a reduction in their pensions. Accordingly, Congress directed the Veterans' Administration to conduct a "comprehensive investigation, analysis, and evaluation of existing and alternative non-service-connected pension programs." The report due to be submitted no later than October 1, 1977, is to include the following:

(1) Income characteristics of veterans and survivors currently in receipt of non-service-connected pension.

(2) Actual and anticipated long-term financial characteristics of pensioners including those veterans and survivors (and their families) who may be potentially eligible for benefits under the non-serviceconnected pension program during the next 25 years.

(3) Identification and analysis of existing inequities, anomalies, and inconsistencies contained in the current non-service-connected pension program.

(4) Current and proposed income exclusions.

(5) Particular problems and needs of catastrophically disabled non-service-connected pensioners.

(6) Alternative proposals which

(a) Assure a level of income for eligible veterans at or above the national minimum standard of need;

(b) Treat similarly circumstanced pensioners alike; and

(c) Provide the greatest amount of assistance to those with the greatest amount of need.

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Pending receipt of such report, the Committee has reported this bill as an interim measure. The Committee expects to conduct a thorough review of the findings and recommendations of the Veterans' Administration. As soon as that study is available and a staff study and evaluation is completed, hearings will be scheduled to review the entire pension programs and to review several bills which have been introduced to address one facet or another of the program. At that time, structural changes may be necessary to permit an integrated and comprehensive solution.

The reported bill will assure that no pensioner will lose his or her pension solely as a result of his or her social security increase. The reported bill would provide effective January 1, 1978, a 7 percent increase in pension rates with appropriate increases in the annual income limitations for pensioners to guard against loss of their pension solely from the 5.9 percent increase in social security beginning July 1, 1977. It would also provide a 25 percent increase in widows' pension rates at age 78, in addition to the 7 percent increase for all eligible pensioners. This added differential is based solely on the increasing financial needs of the elderly, whether veteran or widow, as was determined necessary in the 94th Congress when veteran pensioners over the age 78 were awarded this 25 percent differential.

The Committee wishes to emphasize that this added benefit is based on age and not period of service, although as was the case last year with WW I veterans, the 25% "add-on" is designed to help the widows of WW I veterans.

The Consumer Price Index has risen 3 percent since the pension rates were last adjusted, January 1, 1977. In revised estimates mid May, the Veterans' Administration projected an increase at 6.7%. Social Security payments are being increased by 5.9 percent effective with the July checks. Since the proposed increases in the reported bill would become effective January 1, 1978, the 7 percent rate increase would serve to offset expected increases in the Consumer Price Index for all of calendar year 1977 and would be responsive to the real increases in income of pensioners from other federal income maintenance programs which are indexed to the Consumer Price Index.

The reported bill's increases in maximum rates of 7 percent will be spread by the formula throughout the range of payments relating to each dollar level of other income.

Since pension rate increases standing alone would not benefit the relatively few who would, in 1978, exceed current income limitations, the bill is further designed to increase the upper limits controlling pension entitlement by $235 for single veterans and widows where there is no child and by $320 for veterans having a wife or child and widows with a child or children. These amounts are the amount of increase considered adequate to prevent termination of pension for any pensioner solely because of the increase in his or her social security benefits.

The income limit provided under the current law for veterans and widows without dependents would be increased from $3,540 to $3,775. The income limit for a veteran or a widow with dependents would be increased from $4,760 to $5,080.

For easy reference, the following table sets forth the new rates of pension payable to veterans and widows and to DIC parents at $100 crements under the increased rate formula of the bill: