Mr. BENSON. Total and permanent disability benefits? Not to my knowledge.

Senator MYERS. You were a member of that social-security committee; were you not? I am referring to the social-security committee of the Life Insurance Association of America.

Mr. BENSON. I don't belong to the Life Insurance Association of America. That is a company organization.

Senator MYERS. There is such an organization, and it has a socialsecurity committee?

Mr. BENSON. That is right.

Senator MYERS. So, of course, I would think its views would be somewhat similar to yours. It has the same objectives as your association. Do you know whether that association, in 1945, recommended total and permanent disability insurance?

Mr. BENSON. As I say, not to the best of my knowledge. I think there was some discussion about its being limited to those between the ages of 55 and 65, in order to take care of the incidence of disability in some occupations where disability or, shall we say, termination of economic effectiveness, came early.

Senator MYERS. Well, not only between 55 and 65. It merely recommended that those benefits would cease, of course, if the individual receiving the benefits should recover before age 65.

Mr. BENSON. That is right.

Senator MYERS. If not, they would continue. So, at least one seg-1 ment of the insurance industry did recommend, back in 1945, total and permanent disability benefits under social security.

Mr. BENSON. Senator, may I go ahead with my recommendations, here?

Senator MYERS. Surely.

Mr. BENSON. The point I would like to emphasize here, as I said, is that if the committee can develop the fact that these people can do the thing they think they can, then it seems to me it should not be a part of the Social Security Act, because whatever number of disabled people we have, and nobody seems to know how many there are, it seems to me it is as important to rehabilitate those who are not under social security as those who are.

Senator MYERS. But what happens to them before rehabilitation? Mr. BENSON. It seems to me we have this kind of a problem, Senator: Would you agree with me that that would reduce the area to whatever extent it can be accomplished?

Senator MYERS. Oh, I think the plan is fine. You mean the rehabilitation plan?

Mr. BENSON. Yes.

Senator MYERS. Oh, of course.

Mr. BENSON. Now, then, I feel this way: If social security can be expanded, if the coverage can be expanded, broadly enough, and we can get a basic minimum benefit that will reasonably meet the minimum requirements, then, it seems to me, that should relieve the States of the assistance problem very materially. And by spending less money than they are spending now, they should be able to come in and do the interim job.

Of course, Senator, I think what you are going to point out to me is that they do not have the facilities to rehabilitate all those people; which is true, incidentally.

Senator MYERS. Getting back to the original question, does the National Association of Life Underwriters have a social security committee?

Mr. BENSON. Yes, sir.

Senator MYERS. And you are a member of that committee?

Mr. BENSON. Yes, sir.

Senator MYERS. And was it not that association, jointly with the Life Convention, the National Life Insurance Association of America, that issued a joint statement advocating total and permanent disability under social security?

Mr. BENSON. The only difference, Senator, is that that was not an official statement presented to Members of Congress.

Senator MYERS. Of course not; but I just wondered why your association has changed its mind since 1940. That is all.

Mr. BENSON. I don't know that we have changed our minds. Because when three associations issue a statement which is designed to be helpful to those persons who are considering social security, you see, after all it does not mean that everybody is in complete agreement on everything that is made in the State.

Senator MYERS. Of course, everybody was not. But the Association of Life Underwriters in 1945 issued a statement. And I will quote from it, and then I do not need to pursue it further, because it is getting late. But the three associations, including the National Association of Life Underwriters, of whose social security committee you are a member, issued a statement:

The onset of premature old age creates a need for benefits to bridge the gap between the time earnings cease and the normal retirement age of 65. Such benefits could be made available by reducing the eligibility age by as much as, say, 10 years, upon submission of proof of total and presumably permanent disability, subject to discontinuance of benefits if recovery before age 65 should take place. Such a program of permanent and total disability benefits after age 55 is recommended.

Now, I am only wondering what happened in the meantime to make your association change its mind.

Mr. BENSON. Well, I can answer that question very forthrightly. I will go back to my text. We believe that introducing total and permanent disability benefits would create broad administrative problems and solve very few. Now, we have done a lot of studying since 1945. Senator MYERS. But then your association has changed its mind. It has changed its policies.

Mr. BENSON. Yes, I would say so.

Senator MYERS. That is all I wanted to ask.

The CHAIRMAN. All right, Mr. Benson. Have you anything else? We must bring your testimony to a close.

Senator MILLIKIN. Mr. Chairman, I would like to ask Mr. Benson, Who should take up this load? Who should have the responsibility of taking up this load of permanent and total disability?

Mr. BENSON. We believe, Senator, that that is a State problem, because we believe that the nearer you bring the source of money to the benefits to be paid, the more you will get a much better administrative situation.

Senator MILLIKIN. And your theory is that as we increase the insurance benefits the States will have less burdens to meet as far as public assistance is concerned and therefore they will have more money to take care of this?

Mr. BENSON. It would seem to us that way.

I would like to say to Senator Myers that I think this is one of the most difficult problems that we are all coping with, and I do not know that we have the answer. I was delighted when I saw this vocational rehabilitation material. I thought, "maybe here is light on the thing. Maybe here is how we can get somewhere."

Senator MILLIKIN. I would like to ask one more question.

Why should we deduct earnings from persons entitled to insurance benefits?

Mr. BENSON. Why should we do what?

Senator MILLIKIN. Why should we deduct the earnings of a man who continues to work, who has reached the age when he is entitled to benefits under the insurance system?

Mr. BENSON. Well, I don't think we should. Did you notice my development of the different idea about the increment thing, on page 22a?

Senator MILLIKIN. That is what prompted me to say something about it.

Mr. BENSON. Well, I don't want to fall out with the chairman, Senator.

The CHAIRMAN. Well, we will have to conclude, because I do want to cover one other witness. We have been an hour and a half with you, Mr. Benson.

Mr. BENSON. Can I say one thing more, if I can say it in 1 minute? The CHAIRMAN. Yes.

Mr. BENSON. It has been proposed that the increment should be left in at a half of 1 percent. We believe that that is unwise, because this Congress is proposing additional benefits for which future workers will have to pay. It has been talked about at the rate of eighttenths of 1 percent of pay roll. It occurs to us that this Congress might act wisely to let future workers determine whether they want to improve the benefits to that extent and assume that tax load. Because there is an implied promise to pay, very definitely.

The CHAIRMAN. That is fully developed in your original statement? Mr. BENSON. Yes. Now, then, the other thing: We say we would like to encourage people to work past age 65. We think that is healthy. And we think a way to do that is to say to the man, "If you will continue to work, we will improve your benefit a little bit in succeeding years, so that you will get more money." Then he will have an incentive to continue work, which we think is a sound thing.

The CHAIRMAN. We thank you, sir. We have your prepared statement, in which you have developed your ideas fully, and, of course, we will consider it. Thank you very much for your appearance. (The prepared statement of Mr. Benson follows:)

STATEMENT OF THE NATIONAL ASSOCIATION OF LIFE UNDERWRITERS BY JUDD C. BENSON, PRESIDENT

FOREWORD

The National Association of Life Underwiters is comprised of local associations in all the States of the Union, Alaska and Hawaii. The local associations have as members 51,2241 licensed agents, general agents, and agency managers. This membership represents the sales staff of the life insurance industry.

1 Members in good standing December 31, 1949.

There are presently 80,000,000 individual owners of life insurance and annuities in the United States. These policy owners pay premiums in excess of $7,000,000,000 per year to the private life-insurance companies and have thus established and maintain more than $212,000,000,000 of life insurance in force. Each working day our members discuss with 150,000 to 200,000 individuals the question of their personal economic security and that of their families. In more than 50 percent of such interviews, the subject of social security, as it applies to the individual and his dependents, is the first to be considered. Our membership should, therefore, understand the attitudes and wishes of the American public concerning social security as well as any other organized group.

We are aware of the fact that the present Social Security Act is not fulfilling the needs for which it was designed and it is our desire to assist, if possible, in improving the act. We endorse amendments which will make the act understandable, easily integrated with private insurance plans, as well as practical to the end that it will accomplish the objectives which Congress originally intended. To those objectives we did and we do subscribe.

In our opinion, many of the provisions of H. R. 6000 are not consistent with the original and desirable objectives of the Social Security Act. These amendments we will oppose.

THE ORGANIZATION OF OUR STATEMENT

This statement will proceed as follows:

1. A general definition of our concept of a practical social-security plan.

2. Statement of eight guiding principles for measuring the desirability of proposed amendments.

3. The general concepts in H. R. 6000 which violate the eight guiding principles.

4. The provision of H. R. 6000 which we oppose.

5. The provisions of H. R. 6000 which we favor, together with additional suggestions.

6. A brief statement pertaining to the public assistance provisions of H. R. 6000.

7. Conclusions.

This statement is not presented as "expert testimony." We hope, however, that whatever the statement may lack in brilliant economic theory or "high and low" actuarial estimates, it will make up for by establishing some guideposts which will lead to constructive amendments.

We want a practical system for providing benefits for retired workers and dependent beneficiaries of deceased workers which our children will be glad to pay for when we are the beneficiaries and they are called upon to pay the taxes which will provide our benefits.

SECTION I

GENERAL DEFINITION

The National Association of Life Underwriters favors a system of Federal benefits for retired workers and dependents of deceased workers which will treat all citizens equitably and fairly. We advocate basic minimum benefits which will eliminate the fear of destitution but which at the same time will impose upon those who have been lazy or improvident certain privations as a penalty for their indolence; and which finally reserves for those who, throughout their lifetimes have practiced industry and thrift, the rewards of a very sufficient and, at times, abundant way of life for themselves and their families.

SECTION II

GUIDING PRINCIPLES FOR A SOCIAL SECURITY ACT

I. The title of a congressional act which provides benefits for workers and their surviving dependents should accurately describe the system of benefits to be provided, set forth those who are to receive benefits, and should not create impressions or carry implications which are contrary to the true concepts of the act.

II. The government of a republic should strive to treat each of its citizens equitably and fairly. Therefore, it is highly important that any act which

provides Government benefits should be designed so that the benefits are equally available to all persons who are gainfully employed, wherever such benefits are administratively feasible.

III. The benefit formula of the act should be designed to provide a basic minimum level of benefits. Such a level of benefits fulfills the objects of the original Social Security Act. In all probability such benefits will not impose a pay-roll tax which future workers will be unwilling to pay in order to maintain a labor market which is not unduly competitive due to the continued efforts of millions of marginal workers who are unwillingly forced to remain in the labor market due to the inadequacy of retirement benefits.

IV. A sound system of benefits should impose upon specially designated groups, whether established by geographical, economic, or industrial boundaries, the responsibility for supplying such benefits as those groups may desire above the basic minimum level provided by the Federal Government.

V. The system of benefits should be devised in such a way that

(a) There will remain with the individual worker the responsibility for providing such benefits as he may desire for himself and his own family above the basic minimum level.

(b) The strong moral fiber which is created and maintained by reason of the characteristics of personal responsibility and thrift will in nowise be impaired. (c) There will remain with the individual ample opportunity and ability for "private savings" which will supply the flow of private capital so vital to a freeenterprise system.

VI. The rules pertaining to eligibility for benefits should be designed in such a manner that the benefit program will not impose enforced retirement on workers at a specified age and should provide some definite incentive for them to work beyond normal retirement age so long as they enjoy good health and their efforts are economically productive.

VII. A system of benefits to be administered by the Federal Government to provide retirement funds and benefits to dependents of deceased workers should avoid the introduction of new types of benefits which are foreign to these benefits. Such benefits should be particularly avoided when they will involve a new and entirely different administrative technique.

VIII. In view of the fact that payment of future benefits will represent a charge, through the medium of a pay-roll tax, upon the economy of the country at the time the benefits mature, any possible errors in establishing a wage base, a formula for providing benefits and provisions for taxing future workers should be on the conservative rather than the liberal side. Future Congresses can easily correct errors of conservatism but will find it next to impossible to correct errors providing benefits which are too liberal because of the "implied promise to pay" inherent in the act.

SECTION III

CERTAIN CONCEPTS IN H. R. 6000 VIOLATE THE EIGHT GUIDING PRINCIPLES

The greatest hazards which are created by a system of Federal benefits payable to citizens of a republic or certain classes of them lie in

1. The unavoidable and persistent demands of beneficiaries of the system for more and greater benefits; and,

2. The perfectly normal human desire of the top administrators of a Federal bureau to increase its size, scope of activity, and responsibility and thus its prestige.

Beneficiaries find it easy to "let the Government take care of all our needs." That temptation is resisted only by those of exceptionally strong moral fiber and an understanding of the economic and political consequences of too expansive and too expensive a system.

The concepts in H. R. 6000 violate the eight guiding principles, in our opinion, in the following particulars:

(a) Rather than adhering to the concept of a formula which will provide basic minimum benefits, there is a strong tendency toward an attempt to provide "adequate" benefits.

(b) Rather than attempting to keep the tax at the lowest possible rate which will provide necessary funds to pay benefits, the base for taxes and the rate are increased so as to produce a very substantial surplus in the trust fund.