The laws of 14 states are referred to as "outmoded and ineffective" because, they did not provide for a continuing class of licensed public accountants and there are virtually no licensed public accountants remaining in those states today. Such regulatory laws restrict the use of the title "public accountant" to those persons that are licensed under the law. Thus, the only means of entering the recognized profession in these states at the present time is through the CPA examination. These 14 states are: There are 11 states and the Commonwealth of Puerto Rico that have statutes similar to the "outmoded and ineffective" states. The type of legislation is basically the same as the "outmoded and ineffective" states; the only difference is that the date of enactment is generally later than in the "outmoded and ineffective" states. These states are: The 14 states which provide for a continuing licensing procedure for public accountants are: The following is a list of those states which have enacted regulatory accountancy laws with the dates of enactment: NATIONAL RESTAURANT ASSOCIATION, Hon. JOHN H. DENT, General Subcommittee on Labor, House of Representatives, DEAR MR. CHAIRMAN: As Washington Counsel for the National Restau Association, I have the honor to submit the following statement in refer to the hearings now in progress on proposals to amend the Welfare Pension Plans Disclosure Act. The National Restaurant Association is a non-profit trade association v some 13,000 members engaged in various types of food service enterpri Through the membership of the various State restaurant associations, National Restaurant Association may be said to represent some 110,000 mi bers of the food service industry. Mr. Chairman, we fully appreciate the great role which private pens funds and other employee benefit funds have come to play in the lives of employees who are their beneficiaries, in the entire spectrum of labor-mans. ment relations and the collective bargaining incident thereto, and in t economy of our country. While we firmly believe that the truly astonishing growth of pension plan sponsored by private industry may be attributed in no small measure to the relative freedom from rigid government controls over their establishment ar operation, we do not oppose current proposals to define more precisely th fiduciary responsibilities of their administrators. We have examined the President's proposals which he sent to the Congress on March 13, 1970 and offer no objection to them. We believe that there little evidence to support any charges of widespread negligence or crimins breaches of fiduciary responsibility in the administration of these funds under the law as it now stands. However, our understanding of the ever-greater social and economic significance of employee benefit funds of all types leads us to the conclusion that all reasonable precautions should be taken to ensure their continued prudent management. It is our understanding that you have also expressed a desire for comments on other proposals that have been made to impose tighter restrictions on pension funds in the areas of vesting, funding, portability, and reinsurance. Our comments on these proposals will be general in nature since I am not an expert in actuarial matters. However, they're offered as an expression of our concern that private efforts to meet the problem of financial security will not be so circumscribed by law as to be discouraged, or even destroyed. In our view, there are great issues of public policy involved in these proposals. We do not suggest that privately sponsored and managed pension funds are perfect, or ought to be sacrosanct simply because they are private. We do suggest that since they are the product of voluntary action, it is possible to so circumscribe and encumber their establishment and their management as to make them unattractive to management and unrewarding to their employee beneficiaries. We believe that the establishment of private pension funds rests upon widely diverse considerations that are directly related to the individual needs and goals of employees and of the employer. The attractiveness of establishing a private pension fund for a particular employer and his employees will depend upon their ability to create a plan that meets these needs. It seems clear beyond cavil that without flexibility in the laws governing the funds, these widely diverse needs cannot be met and the motivation to establish a pension fund will not exist. The proposals to establish complete uniformity through mandatory vesting. funding, portability, and reinsurance all carry the one serious disadvantage that they will reduce the flexibility that is now available to both employers and employees in establishing and administering their individual funds to meet their individual situations. We view these matters as significant issues in the employer-employee relationship, issues which parties directly affected and as an integral part of the collective bargaining are better resolved by the process. This loss of flexibility and the corresponding diminution in fund establishment represents, to us, the most serious objection to these proposals. › are informed that 85 to 90 percent of the employer administered pension : already have vesting provisions. These vesting provisions are not uni, but we suggest that uniformity would not represent nearly as significant cial gain as does the existence of these funds. e issue of funding raises similar problems and would appear to be adeely controlled by present law. The Internal Revenue Service has funding dards which must be met before a plan may be considered qualified. The t fund containing the plan's assets cannot be tax exempt without meeting standards, and there are other tax advantages that make IRS qualificas a necessity for nearly all private pension plans. While the concepts of portability and reinsurance appear to offer social economic advantages, the complexities and expense inherent in their ainistration would certainly greatly reduce the flexibility we find desirable I also would reduce the benefits to beneficiaries. To us, the attractions of tability and reinsurance are superficial, when compared to the foreseeable penses inherent in their administration. We note too that the equities found portability are all in favor of the employee who changes jobs, but appear ignore the interests of those beneficiaries who do not change jobs. A major inuity in the portability concept rests in the necessity to maintain liquid sets to meet the inherent demands of portability. Such a requirement clearly ould have a serious impact on every fund's capacity for capital growth. In summary, Mr. Chairman, we support the establishment of high standards fiduciary responsibility in the administration of all employee benefit funds. We urge your recognition of the importance of flexibility in the establishment nd growth of such funds. We suggest to you that the social and economic enefits to the country to be gained from expansion and growth of such unds should not be sacrificed solely to enhance the benefits available to those ho change jobs, and at the expense of those beneficiaries who do not change obs. Yours respectfully, IRA H. NUNN, Washington Counsel. STATEMENT OF OWENS-ILLINOIS, INC. Owens-Illinois, Inc. ("Owens-Illinois") submits this written statement in lieu of appearance respecting the proposed amendments to the Welfare and Pension Plans Disclosure Act of August 28, 1958, as amended, contained in the Employee Benefits Protection Act, H.R. 16462. Owens-Illinois is one of the world's leading manufacturers of packing products and produces a substantial volume of other products. Owens-Illinois favors those provisions of the Bill which would promote a better understanding by a participant of his rights under an employee benefit plan. Meaningful disclosure along these lines is beneficial and helps to promote the advantages of private employee benefit plans. Owens-Illinois also approves of establishing general standards for fiduciaries involved with the administration of such plans. Section 11 of the Bill adds a new Section 14(b) (2) to the Act which flatly prohibits a fiduciary of an employee benefit plan from leasing or selling property of the fund to any party in interest or from leasing or purchasing on behalf of the fund property of a party in interest. Owens-Illinois disapproves of these prohibitions. There is no provision in existing law which would prohibit such transactions so long as the terms and the consideration involved are fair and reasonable and in the best interest of the fund. Furthermore, such transactions are permissible under Section 503 of the Internal Revenue Code dealing with prohibited transactions of certain exempt organizations. One of the pension trusts of Owens-Illinois has owned for over twenty years the Owens-Illinois Building in which the Company is headquartered. During this period the trust has earned an excellent rate of return on its investment. The Owens-Illinois pension trusts have also experienced favorable investment results with other properties which are leased to OwensIllinois. If Section 14 (b) (2) (A) were enacted into law in its present form prior to expiration of leases of these properties, unless exemptions were provided by the Secretary of Labor, the trusts would be precluded from entering into new leases with the Company and presumably would be faced with NATIONAL RESTAURANT ASSOCIATION, Hon. JOHN H. DENT, General Subcommittee on Labor, House of Representatives, Washington, D.C. DEAR MR. CHAIRMAN: As Washington Counsel for the National Restaurant Association, I have the honor to submit the following statement in reference to the hearings now in progress on proposals to amend the Welfare and Pension Plans Disclosure Act. The National Restaurant Association is a non-profit trade association with some 13,000 members engaged in various types of food service enterprises. Through the membership of the various State restaurant associations, the National Restaurant Association may be said to represent some 110,000 members of the food service industry. Mr. Chairman, we fully appreciate the great role which private pension funds and other employee benefit funds have come to play in the lives of the employees who are their beneficiaries, in the entire spectrum of labor-management relations and the collective bargaining incident thereto, and in the economy of our country. While we firmly believe that the truly astonishing growth of pension plans sponsored by private industry may be attributed in no small measure to their relative freedom from rigid government controls over their establishment and operation, we do not oppose current proposals to define more precisely the fiduciary responsibilities of their administrators. We have examined the President's proposals which he sent to the Congress on March 13, 1970 and offer no objection to them. We believe that there is little evidence to support any charges of widespread negligence or criminal breaches of fiduciary responsibility in the administration of these funds under the law as it now stands. However, our understanding of the ever-greater social and economic significance of employee benefit funds of all types leads us to the conclusion that all reasonable precautions should be taken to ensure their continued prudent management. It is our understanding that you have also expressed a desire for comments on other proposals that have been made to impose tighter restrictions on pension funds in the areas of vesting, funding, portability, and reinsurance. Our comments on these proposals will be general in nature since I am not an expert in actuarial matters. However, they're offered as an expression of our concern that private efforts to meet the problem of financial security will not be so circumscribed by law as to be discouraged, or even destroyed. In our view, there are great issues of public policy involved in these proposals. We do not suggest that privately sponsored and managed pension funds are perfect, or ought to be sacrosanct simply because they are private. We do suggest that since they are the product of voluntary action, it is possible to so circumscribe and encumber their establishment and their management as to make them unattractive to management and unrewarding to their employee beneficiaries. We believe that the establishment of private pension funds rests upon widely diverse considerations that are directly related to the individual needs and goals of employees and of the employer. The attractiveness of establishing a private pension fund for a particular employer and his employees will depend upon their ability to create a plan that meets these needs. It seems clear beyond cavil that without flexibility in the laws governing the funds, these widely diverse needs cannot be met and the motivation to establish a pension fund will not exist. The proposals to establish complete uniformity through mandatory vesting, funding, portability, and reinsurance all carry the one serious disadvantage that they will reduce the flexibility that is now available to both employers and employees in establishing and administering their individual funds to meet their individual situations. We view these matters as significant issues in the employer-employee relationship, issues which are better resolved by the parties directly affected and as an integral part of the collective bargaining process. This loss of flexibility and the corresponding diminution in fund establishment represents, to us, the most serious objection to these proposals. We are informed that 85 to 90 percent of the employer administered pension plans already have vesting provisions. These vesting provisions are not uniform, but we suggest that uniformity would not represent nearly as significant a social gain as does the existence of these funds. The issue of funding raises similar problems and would appear to be adequately controlled by present law. The Internal Revenue Service has funding standards which must be met before a plan may be considered qualified. The trust fund containing the plan's assets cannot be tax exempt without meeting IRS standards, and there are other tax advantages that make IRS qualifications a necessity for nearly all private pension plans. While the concepts of portability and reinsurance appear to offer social and economic advantages, the complexities and expense inherent in their administration would certainly greatly reduce the flexibility we find desirable and also would reduce the benefits to beneficiaries. To us, the attractions of portability and reinsurance are superficial, when compared to the foreseeable expenses inherent in their administration. We note too that the equities found in portability are all in favor of the employee who changes jobs, but appear to ignore the interests of those beneficiaries who do not change jobs. A major inequity in the portability concept rests in the necessity to maintain liquid assets to meet the inherent demands of portability. Such a requirement clearly would have a serious impact on every fund's capacity for capital growth. In summary, Mr. Chairman, we support the establishment of high standards of fiduciary responsibility in the administration of all employee benefit funds. We urge your recognition of the importance of flexibility in the establishment and growth of such funds. We suggest to you that the social and economic benefits to the country to be gained from expansion and growth of such funds should not be sacrificed solely to enhance the benefits available to those who change jobs, and at the expense of those beneficiaries who do not change jobs. Yours respectfully, IRA H. NUNN, Washington Counsel. STATEMENT OF OWENS-ILLINOIS, INC. Owens-Illinois, Inc. ("Owens-Illinois") submits this written statement in lieu of appearance respecting the proposed amendments to the Welfare and Pension Plans Disclosure Act of August 28, 1958, as amended, contained in the Employee Benefits Protection Act, H.R. 16462. Owens-Illinois is one of the world's leading manufacturers of packing products and produces a substantial volume of other products. Owens-Illinois favors those provisions of the Bill which would promote a better understanding by a participant of his rights under an employee benefit plan. Meaningful disclosure along these lines is beneficial and helps to promote the advantages of private employee benefit plans. Owens-Illinois also approves of establishing general standards for fiduciaries involved with the administration of such plans. Section 11 of the Bill adds a new Section 14 (b) (2) to the Act which flatly prohibits a fiduciary of an employee benefit plan from leasing or selling property of the fund to any party in interest or from leasing or purchasing on behalf of the fund property of a party in interest. Owens-Illinois disapproves of these prohibitions. There is no provision in existing law which would prohibit such transactions so long as the terms and the consideration involved are fair and reasonable and in the best interest of the fund. Furthermore, such transactions are permissible under Section 503 of the Internal Revenue Code dealing with prohibited transactions of certain exempt organizations. One of the pension trusts of Owens-Illinois has owned for over twenty years the Owens-Illinois Building in which the Company is headquartered. During this period the trust has earned an excellent rate of return on its investment. The Owens-Illinois pension trusts have also experienced favorable investment results with other properties which are leased to OwensIllinois. If Section 14 (b) (2) (A) were enacted into law in its present form prior to expiration of leases of these properties, unless exemptions were provided by the Secretary of Labor, the trusts would be precluded from entering into new leases with the Company and presumably would be faced with |