Table 7 above appears in the report of a recent study by the U. S. Bureau of Labor Statistics, entitled "JOB TENURE OF AMERICAN WORKERS, JANUARY 1963" the first such study ever made by this Bureau. (1) Because of our

study, we are particularly interested in the estimate of the percentage of workers 60 to 64 years old with over 20 years of service with their current employer. The percentage findings for this age and service group can be related to the pension expectancy of participants of all single employer pension plans inasmuch as almost all such plans require a minimum age of anywhere from 60 to 65 years and at least 20 years of service with the current employer to be eligible for a regular pension.

According to Table 7, 41.3% of the male workers and 21% of the female workers in the age group 60 to 64 were with their current employer over 20 years. Applying these figures to workers in single employer pension plans, they indicate that 58.7% of the male and 79% of the female workers in the 60 to 64 age group are ineligible for a regular pension.

At our request, Miss Sophia Cooper, Chief, Division of Population and Labor Force Studies, U. S. Bureau of Labor Statistics, in October of 1964, developed some rough job tenure estimates (based on Table 7) specifically for age 65. We selected age 65 because it is a common retirement age for workers, influenced by the fact that maximum Social Security benefits begin at this age. Based on the most conservative of the computations submitted to us, we estimate that roughly 54% of the male workers and 70% of the female workers, age 65, participating in single employer pension plans are ineligible for a regular pension, as they lack 20 years of service with their current employer. While the pension data needed for an exact evaluation of the pension expectancy of participants has not as yet been compiled by any government agency, we believe the estimates presented in this study are the most valid developed todate. They are most significant when we consider that 85% of all private pension plan participants (about 21 million workers) are covered by single employer plans.

(1) Monthly Labor Review, October 1963.

With regard to the remaining 15% (about 5 million participants of multi-employer plans) there is no data available to estimate their pension expectancy. The 10 plans studied earlier in this chapter (table 5 and 6) are multi-employer plans covering workers in marginal industries with high job turnover rates and would not be representative of all multi-employer plans.

PRIVATE PENSIONS AND SOCIAL SECURITY

In concluding this chapter, two questions should be asked, in order to bring the findings of this study into sharp focus. First, how many of our people who are receiving Social Security are also the recipients of a private pension? According to NEW DIRECTIONS IN HEALTH, EDUCATION AND WELFARE (1963) a publication of the Department of Health, Education and Welfare on page 205 states "in mid1962, an estimated 1 and 3/4 million aged Americans, about 1 out of 10 people aged 65 and over, were getting private pensions".

The second question is, in the foreseeable future how many recipients of Social Security will be receiving private pensions? On page 22 of the Social Security Bulletin for March 1964, we read "even 10 or 15 years from now it is expected that no more than 25 to 30% of the aged will be drawing income from private pensions.

It could be that the mirage of private pensions is not necessarily reserved to those participating in pension plans in marginal industries.

Chapter 4

SOME CONCLUSIONS AND RECOMMENDATIONS

As a result of our examination of this limited number of pension plans, we have arrived at several conclusions.

Our first conclusion is that in industries with a high turnover rate, no one, in good conscience, under the present pension plans, can talk seriously about pensions for the workers covered. In too many cases, they will not be around to collect the pensions presently promised them. A contrast between two funds will illustrate this. The metropolitan area teamsters local referred to on pages 32 - 33 but one not included in the group of funds studied in Chapter 3 has 2300 members. Its pension fund began paying benefits in 1957. Today, it has 125 pensioners. One of the funds studied in Chapter 3 has 8000 members, approximately the same eligibility requirements and two more years of operation. In its report to the New York State Commissioner of Insurance in December, 1962, it reported only 28 pensioners. Although nearly four times as large as the teamster local and two years older, it had only about one-fifth the number of pensioners. The explanation for this must be mostly in the job turnover rates; the teamster local had a turnover rate of less than 3%, the other fund averaged about 41%

Secondly, as we have seen, our first pension plans were company organized, company paid for and company administered. In those days, it was clearly understood that the pensions, like gratuities, were at the pleasure of the company. The Inland Steel decision denied this old concept. In that decision, a pension resulting from collective bargaining was regarded as part of the wage structure. All employers who have pension plans which have been collectively bargained surely regard these compulsory contributions as a part of the wage bill and at contract time list them among the wage costs. Why then should not all concerned regard these non-voluntary contributions on the part of the em

ployers as wages which belong to the employees but which all parties to the wage contract agree to have placed in a fund for later payment? And if they are regarded as wages, why does not an employee have a claim to them when he leaves the shelter of the pension fund? It does seem that the basic question is this: are these collectively bargained contributions deferred wages? If so, why do those who have earned them not own them, less reasonable administrative charges or, at least, own the right to some future income from these deferred wages? May we not conclude we have been acting, in this matter, through force of habit?

We recommend that no trust agreement be approved or remain approved unless it incorporates uniform paragraphs which define, among other things, who are the beneficiaries of the fund, the situs of the office of the fund, vesting rights and provisions for the termination of the fund. In some of the agreements examined, we have found some of these very important items either ignored or very vaguely treated. The trust agreement we selected for close examination beginning on page 19 is an example of this. But it must in all honesty be repeated that each and every agreement studied has the approval of the Internal Revenue Service. Specifically, we recommend that all pension trusts be required to incorporate into their Trust Agreements, at least, the following:

(A) A uniform paragraph defining the beneficiaries of the fund.

(B) A uniform paragraph describing how, in the event the plan is terminated, the assets are to be divided among the participants. (The New York Times of August 16, 1964, said that in a recent four-year period 1,832 pension plans had been terminated in the United States.)

(C) A uniform paragraph defining in detail the vesting provisions of the plan.

Also, we recommend that the federal tax laws be amended to include criminal penalties for the violation of the tax exemption requirements for pension plans and, if