SUMMARY OF MAJOR FINDINGS

This report outlines some of the more significant disclosures produced by the comprehensive P-1 questionnaire study. Certain findings illuminate the necessity for remedial legislation, particularly in cases where a number of plans have lagged noticeably behind the majority of private pension or profit-sharing plans in maintaining minimum standards of protection for the rights of the participant. In addition to those findings, the study has generated data which suggest areas where improvements might be made more appropriately through administrative relief in the form of rulemaking by government agencies presently responsible for administering laws relating to private pensions, or by changes in plan organization and administration initiated by private pension plan administrators themselves. Some major findings of the study are the following:

1. Approximately one-third of the pension plans studied had both a minimum age and service requirement for participation in a pension plan. An additional 25 percent had a minimum service requirement only, and approximately 35 percent of the plans had no age or service requirements for eligibility to participate.

2. The most common normal retirement age was 65 (occurring in almost 90 percent of the plans). In over half of these plans, a service requirement also existed, in a few cases as much as 30 years. In the case of over one-fourth of all participants, attainment of age 65 and at least 15 years of service was required for a normal retirement benefit. 3. About 13 percent of the plans studied did not provide for any vesting at all. For those plans which had vesting provisions expressed as a combination of age and service, the combinations most frequently encountered were in the range of from 40 to 44 years of age with from 15 to 19 years of service. However, more stringent vesting formulas were also encountered; 8 percent of the plans had both an age and & service vesting qualification which required at least age 50 and 20 years of service for a vesting right. In the plans where only a service requirement was established for vesting, over one-fourth of these plans required more than 15 years of service to qualify. Among pension plans containing vesting provisions, over 55 percent had only a service requirement.

4. Over 30 percent of private pension plans were utilizing a deferred graded form of vesting, by which a certain percentage of a participant's accrued retirement benefit is vested initially, and the percentage Increases periodically as the employee completes additional service. Profit-sharing plans utilize this type of vesting more frequently (over three fourths of all such plans).

5. Information regarding the assets and liabilities of pension plans was reported inconsistently and incompletely by a sizable number of pension plans. However, of those plans which did report appropriately, Over 45 percent had a ratio of assets (valued at market) to total abilities of over 75 percent, and three-fourths of the plans had a ratio

of market assets (valued at market) to vested liabilities of over 75 percent. While this finding established that a majority of pension funds are generally well-funded, the responses also revealed a significant minority of plans which were substantially underfunded. Over 10 percent of the plans reporting disclosed a ratio of assets (valued at market) to vested liabilities of 50 percent or less.

6. Only 40 percent of private pension plans had formal restrictions pertaining to investment of pension plan assets, and less than one-half of all plans required annual audits by an independent licensed or certified public accountant.

7. Over 35 percent of the pension plans studied, covering a similar number of participants, did not provide an opportunity for participants to request a hearing on claims; less than 30 percent of all plans provided for a written denial of such claims; and only 30 percent of all plans provided for review procedures with respect to denial of claims.

3.

A. Date employer contributions to the Plan commenced (or reserves created)

B. Date initial benefit payments under the Plan were made (other than refund of employ contributions)

4. Funding:

A. Self-administered

(1) Trust

(2) Other (specify)

B. Insured (specify)

C. Combination (specify)

...

6. Total number of current Plan participants (treat the term "participant" as having the same meaning as in the Welfare and Pension Plans Disclosure Act, i.e., "any employee or former employee of an employer or any member of an employee organization who is or may become eligible to receive a benefit of any type from an employee pension benefit plan, or whose beneficiaries may be eligible to receive any such benefit." However, specifically include any preparticipant who has not qualified for membership in the plan but with respect to whose service payments were made into the pension plan or fund. Also include any person whose service has been temporarily interrupted, eg., persons on military leave, but who may still be eligible to receive benefits if their service is resumed. This procedure should be followed with respect to all subsequent questions involving the term "participant.")