to pension plans. What your real intent is, then, is to make sure that the pension plans you do negotiate have certain minimal standards; is that the purpose?

Mr. BIEMILLER. Yes.

Mr. ESCH. And you in no way want to set up what is negotiated for by legislation, is that right?

Mr. BIEMILLER. That is correct, yes.

Mr. Escн. Let us get into just basic philosophy for a minute. It is your contention that a pension plan should have mobility?

Mr. BIEMILLER. Right.

Mr. Escн. And it is not the employer's opportunity to encourage stability of employees through pension plans; you would reject that as a philosophy, is that correct? That is, the employer should not be allowed to encourage continuance in a given company through pension plans but rather there should be mobility? I think that is a point that we should bring out early in the hearings.

Mr. SEIDMAN. We would say that, by and large, pension plans should not be used as a force one way or another with respect to the question of mobility.

On the other hand, we do think you have to recognize the basic purpose of pension plans. The basic purpose is to provide income. for people after they retire, and therefore if people have very short service employment, and really don't retire in any sense but simply drop out of the labor force, we don't think that pension plans are a proper way of providing them with income.

Mr. ESCH. I am very much concerned about this concept because if we go the other route and suggest that the employer does not have this as a goal-maintaining his employment stability-if our legislation encourages mobility, then it seems to me we are going to be down the road of the Government insuring the financial stability of every pension plan in order to assure that each employee, as he moves from occupation to occupation, has a proper pension and retirement plan system. I am not certain that our Federal Government should have this as a responsibility.

The basic responsibility, it seems to me, in the collective bargaining system now is to assure on the part of the union that the contract, if they negotiate in regard to pension plans, is one which would offer stability for a worker within a given work environment and it is between employer and employee.

I think this is a fundamental question as we open the hearings, and I think there are two sides to it.

Mr. SEIDMAN. I don't know that we are in great disagreement with what you just said. We are in favor of employment stability. It is the worker who loses basically in situations where employment conditions are very unstable. We think that the employer can encourage such stability by providing a decent level of wages and working conditions, and such benefits as pension benefits, health and welfare benefits, and so on. Under those circumstances, we think that the employer will be encouraging the stability of his labor force, but if he does not do this, he may be faced with an unstable labor force. Mr. DENT. Will you yield for just an observation?

Mr. ESCн. Yes.

Mr. DENT. The real concern is not portability, but the phenomena of the so-called conglomerate and take-overs that are going on today.

We find out that the employer of yesterday is not the employer of tomorrow. For instance, I know of a company that took in seven or eight different nonrelated industries and closed three of them down completely.

All of the plants covered previously by seven employers had a different type of pension plan, yet they were able to work out some way of resolving the conflicting plans into a single plan, covering multiplans; that gives us something to think about, and I am glad you opened the subject.

Mr. Escн. I appreciate that, Mr. Chairman, and I am sure during the course of hearings there will be cases of where there has been acquisition of one company in the other, and also, as you indicated, probably where the company's policies internally, working-in many cases reluctantly-with the union, have worked out the portability feature so that the individual employee was not discriminated against and was not injured. That was probably done without any more legislation.

I want to go into one or two other areas if we might informally. Mr. DENT. Yes.

Mr. Escн. I am concerned about how effective we are now in analyzing and overseeing pension plans. In March 1967 the Comptroller General, in a report to Congress, was very critical about the manner in which the Welfare and Pension Plans Disclosure Act had been administered. I just want to have you react, Mr. Biemiller, to the kind of job the Labor Department has done or has not done since 1958 in doing the job of administering the Disclosure Act. I would like to hear your comment on how effective you think they have been.

Mr. SEIDMAN. We think that, by and large, the Labor Department has conscientiously discharged the responsibility which Congress has given to it; but, as the chairman pointed out in his opening remarks, the problem is that that responsibility is too limited and new types of protection are needed which go beyond simply the question of disclosure. It is for this reason that this legislation is now under consideration.

Mr. Escн. Well, Mr. Biemiller, you had testified recently before the House Appropriations Subcommittee in which Mr. Schultz had asked for an additional $2 million to enlarge the investigative staff and investigate pension and welfare plans.

It is my understanding at that time you indicated that you could not support the $2 million additional funds to investigate under the powers given by the Department of Labor, and is that right or would you want to clarify that?

Mr. BIEMILLER. In the first place, that appropriation was not for the pension and welfare plan investigations, but rather for the whole Landrum-Griffin operation. It is our feeling that at the present time there is sufficient staff. If legislation of the type that is thought of in these bills should become important, I think we might then be in a mood to agree they will need a larger staff, but they do not under present conditions.

Mr. Escн. You believe that the Department of Labor has adequate staff and are doing an effective job as of now?

Mr. BIEMILLER. I do.

to pension plans. What your real intent is, then, is to make sure that the pension plans you do negotiate have certain minimal standards; is that the purpose?

Mr. BIEMILLER. Yes.

Mr. EscH. And you in no way want to set up what is negotiated for by legislation, is that right?

Mr. BIEMILLER. That is correct, yes.

Mr. EscH. Let us get into just basic philosophy for a minute. It is your contention that a pension plan should have mobility?

Mr. BIEMILLER. Right.

Mr. Escн. And it is not the employer's opportunity to encourage stability of employees through pension plans; you would reject that as a philosophy, is that correct? That is, the employer should not be allowed to encourage continuance in a given company through pension plans but rather there should be mobility? I think that is a point that we should bring out early in the hearings.

Mr. SEIDMAN. We would say that, by and large, pension plans should not be used as a force one way or another with respect to the question of mobility.

On the other hand, we do think you have to recognize the basic purpose of pension plans. The basic purpose is to provide income for people after they retire, and therefore if people have very short service employment, and really don't retire in any sense but simply drop out of the labor force, we don't think that pension plans are a proper way of providing them with income.

Mr. EscH. I am very much concerned about this concept because if we go the other route and suggest that the employer does not have this as a goal maintaining his employment stability-if our legislation encourages mobility, then it seems to me we are going to be down the road of the Government insuring the financial stability of every pension plan in order to assure that each employee, as he moves from occupation to occupation, has a proper pension and retirement plan system. I am not certain that our Federal Government should have this as a responsibility.

The basic responsibility, it seems to me, in the collective bargaining system now is to assure on the part of the union that the contract, if they negotiate in regard to pension plans, is one which would offer stability for a worker within a given work environment and it is between employer and employee.

I think this is a fundamental question as we open the hearings, and I think there are two sides to it.

Mr. SEIDMAN. I don't know that we are in great disagreement with what you just said. We are in favor of employment stability. It is the worker who loses basically in situations where employment conditions are very unstable. We think that the employer can encourage such stability by providing a decent level of wages and working conditions, and such benefits as pension benefits, health and welfare benefits, and so on. Under those circumstances, we think that the employer will be encouraging the stability of his labor force, but if he does not do this, he may be faced with an unstable labor force. Mr. DENT. Will you yield for just an observation?

Mr. Escн. Yes.

Mr. DENT. The real concern is not portability, but the phenomena of the so-called conglomerate and take-overs that are going on today.

We find out that the employer of yesterday is not the employer of tomorrow. For instance, I know of a company that took in seven or eight different nonrelated industries and closed three of them down completely.

All of the plants covered previously by seven employers had a different type of pension plan, yet they were able to work out some way of resolving the conflicting plans into a single plan, covering multiplans; that gives us something to think about, and I am glad you opened the subject.

Mr. Escн. I appreciate that, Mr. Chairman, and I am sure during the course of hearings there will be cases of where there has been acquisition of one company in the other, and also, as you indicated, probably where the company's policies internally, working-in many cases reluctantly-with the union, have worked out the portability feature so that the individual employee was not discriminated against and was not injured. That was probably done without any more legislation.

I want to go into one or two other areas if we might informally. Mr. DENT. Yes.

Mr. ESCH. I am concerned about how effective we are now in analyzing and overseeing pension plans. In March 1967 the Comptroller General, in a report to Congress, was very critical about the manner in which the Welfare and Pension Plans Disclosure Act had been administered. I just want to have you react, Mr. Biemiller, to the kind of job the Labor Department has done or has not done since 1958 in doing the job of administering the Disclosure Act. I would like to hear your comment on how effective you think they have been.

Mr. SEIDMAN. We think that, by and large, the Labor Department has conscientiously discharged the responsibility which Congress has given to it; but, as the chairman pointed out in his opening remarks, the problem is that that responsibility is too limited and new types of protection are needed which go beyond simply the question of disclosure. It is for this reason that this legislation is now under consideration.

Mr. Escн. Well, Mr. Biemiller, you had testified recently before the House Appropriations Subcommittee in which Mr. Schultz had asked for an additional $2 million to enlarge the investigative staff and investigate pension and welfare plans.

It is my understanding at that time you indicated that you could not support the $2 million additional funds to investigate under the powers given by the Department of Labor, and is that right or would you want to clarify that?

Mr. BIEMILLER. In the first place, that appropriation was not for the pension and welfare plan investigations, but rather for the whole Landrum-Griffin operation. It is our feeling that at the present time there is sufficient staff. If legislation of the type that is thought of in these bills should become important, I think we might then be in a mood to agree they will need a larger staff, but they do not under present conditions.

Mr. Escн. You believe that the Department of Labor has adequate staff and are doing an effective job as of now?

Mr. BIEMILLER. I do.

Mr. EscH. Mr. Chairman, I would like to place at this point in the record the Comptroller General's report of 1967 regarding the manner in which Welfare and Pension Plan Disclosure Acts have been administered.

Mr. DENT. Without objection, it is so ordered.

(The report follows:)

REPORT-GENERAL ACCOUNTING OFFICE

In March 1967, the Comptroller General sent to Congress a report on the administration of the Welfare and Pension Plans Disclosure Act and the Labor-Management Reporting and Disclosure Act of 1959. The report was critical of the manner in which the Department of Labor has administered these Acts. The audit was based on departmental procedures followed in fiscal years 1965 and 1966.

The report called for specific improvements in five areas. The Comptroller General indicated a need for the Labor Department to:

Develop and maintain up-to-date lists of entities required to report under the two disclosure laws.

Update mailing lists so that reporting entities will receive the forms necessary for reporting the information required.

Follow up on reports known to be delinquent.

Promptly incorporate into disclosure files changes in plan descriptions.
Make a more effective verfication of reported data.

In addition, the report indicated a need for improvement in the Department's monitoring of bonding requirements.

COMPTROLLER GENERAL OF THE UNITED STATES,

Washington, D.C., March 14, 1967.

To the President of the Senate and the
Speaker of the House of Representatives.

This report presents the results of our review of Department of Labor activities associated with the reporting and bonding requirements of the Welfare and Pension Plans Disclosure Act and the Labor-Management Reporting and Disclosure Act of 1959. These two acts provide for the reporting and disclosure of certain financial and other information about welfare plans, pension plans, and labor organizations. A primary objective of the laws is to protect the interests of participants in the plans and of members of labor organizations through the public disclosure of financial and other information.

We are reporting our findings to inform the Congress of the need for improved administration and enforcement by the Department of Labor of the reporting and bonding provisions of the cited laws and the need for legislative authority to establish certain reporting and verification requirements regarding compliance wth the bonding provisions.

On the basis of our review, we believe that the Department has not developed a satisfactory means of assuring itself that substantially all welfare and pension plan administrators are forwarding the information required to be made available to the public for inspection and has not taken adequate action to obtain reports known to be delinquent. Also, we believe that the Department has not given adequate attention to updating its mailing lists so that reporting entities will receive the forms necessary for reporting the information required under both acts.

In addition to noting the Department's problems in obtaining complete information promptly from those who are required to report under the two acts, we noted that a backlog in the work of identifying and filing changes and amendments to welfare and pension plan descriptions at departmental headquarters in Washington had resulted in the information available for public disclosure being incomplete or not un to date in many instances. We believe that this backlog emphasizes a need for appropriate written procedures, more effective control records, and improved automatic data processing services.

In its enforcement of the reporting provisions of the two acts, the Department has adopted a policy of verifying and evaluating a sample of the reported data. We found, however, that known deficiencies in certain annual financial reports had not been resolved.