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are the individuals who, following termination of the plan and presumably termination of the business, would not be reemployable and therefore, I would prefer to provide as much of the asset for their benefit as possible. On the other hand, the younger employees, presumably, would be reemployable and would acqiure pension rights with their successor employers. Thus my concern is not necessarily one with equity, but instead with the practical workings of the employment market and the bias of employers in hiring superannuated employees.

Senator TAFT. He goes back into reemployment and starts in as a fresh man, in effect?

Mr. SAVITZ. We are talking about age. Senator, I said age 40, you see. I think that a person who seeks reemployment at age 40 would have potentially 25 years of employment. Therefore, during that period, he could reinstate a large portion of his previously forfeited benefit. On the other hand, it would indeed be difficult for a person who has but 15 years of remaining service to reinstate fully his forfeited benefit.

I think if we have only so many dollars being apportioned, it would be best in my opinion to allocate those dollars for older individuals than younger.

Senator TAFT. Thank you.

Mr. GORDON. Mr. Savitz, just to follow up on one question that Senator Taft initiated earlier, would you agree with me that there are at present no standards for regulation or licensing of actuaries, either by Federal or State laws or by any governmental body?

Mr. SAVITZ. No; not entirely. Some states have regulations which, in effect, define what the term actuary means and who may practice as an actuary.

Mr. GORDON. What states?

Mr. SAVITZ. Wisconsin and Illinois, I believe-Senator Taft might bear me out. Frankly, I do not have information as to which other states have similar regulations.

Mr. GORDON. Not very many of them?


Mr. GORDON. Is there any way you can see that an appropriate funding standard or funding regulation of pension plans, either as proposed in S. 3598 or any other bill that is pending containing such requirements, could be implemented without some type of Federal standards applicable to actuaries?

Mr. SAVITZ. Yes; I can see how that would not be necessary. This is because the bill itself requires the submission of ample actuarial data as a condition of registration. I further presume that this data will be analyzed to determine the reasonableness of the assumptions and/ or methods.

I think that if you were to analyze your findings-and I feel more qualified to comment on smaller plans than larger plans-but if you analyze your findings, I think that you will find that the abuses with which you are principally concerned are not frequently found among smaller employers.

Mr. GORDON. We have evidence before the subcommittee of people going out and hanging shingles and calling themselves actuaries, and

they are not actuaries at all. Are you suggesting on the basis of this so-called actuarial report to the Secretary of Labor, that somehow the Secretary of Labor is going to be able to discern, by looking at the actuarial assumptions that they have furnished, that these are authentic and relevant assumptions? Anybody could get a handbook of the Transactions of the Society of Actuaries and copy out turnover tables and interest rate assumptions and just send them on in.

Mr. SAVITZ. I think my principal concern is that the Federal Government would be establishing actuarial standards; as undoubtedly you are aware, there are organizations presently in existence which do administer examinations to determine the competence of their membership and one such organization is the American Society of Pension Actuaries, which as earlier indicated, administers a series of five separate examinations, each of which is designed to test the competence of the individual in each of the various areas likely to be encountered by a pension actuary in his client dealings.

Also a concern, and one which Mr. Lippman expressed earlier, is that there are individuals today functioning as actuaries who, by reason of their experience and demonstrated competence, can be considered as qualified actuaries. These individuals however, could be disenfranchised were they unable to meet the requirements prescribed by the Federal Government, assuming that the Government were to prescribe such conditions or delegate such authority to another body. Despite my concern, such standards were to be established by the Government or delegated to another body, I am of the posture that a "grandfather" provision should be considered to preclude such poten

tial disenfranchisement.

However, on the other hand, I might feel entirely different were the bill to specifically itemize standards for actuarial accreditation. Presently, of course, this is not the case, in that the bill treats this matter in a rather broad and nebulous manner.

Mr. GORDON. Well, do you have any specific suggestions and recommendations in that regard?

Mr. SAVITZ. I would like to submit those.

Mr. GORDON. Thank you.

(At the time this publication went to press, the information referred to had not been submitted.)

(The prepared statement of Mr. Savitz follows:)





To The




Mr. Chairman, my name is Samuel J. Savitz. I am President of the

American Society of Pension Actuaries (ASPA) and the remarks which
I intend to make are contributed on behalf of ASPA.

ASPA is a non-profit organization and its membership consists of

more than 600 persons who, principally, if not exclusively, are

engaged in the design and administration of pension and profit

sharing programs.

ASPA regularly conducts examinations and the present structure calls

for a series of five separate examinations, covering such diverse

areas as law, taxation, administration, planning and actuarial tech

niques related to retirement plans.

I should like to start by indicating that I am here largely in support

of S. 3598, and that my purpose is to contribute toward the structure

of an ultimate bill that would better serve the objectives of its dis

tinguished sponsors, and the testimony which I shall deliver is offered

out of personal experience, as well as recommendations submitted to me

by members of ASPA.

It is my firm conviction that it is in the interest of all -- that is

to say the industry, the membership, and the clients that I represent,

and the citizenry that you represent


for this ultimate legislation

to be structured in an intelligent form that gives ample recognition

to, not only the solution to present problems and inequities, but to

those problems and inequities that might result from the proposed

[blocks in formation]

A. Section 104 of Title I, Part B extends coverage to practically all

entities (excepting those specifically exempted) that sponsor plans

covering mor、 than 25 participants. If the term participant were not

so broadly defined, the number used in establishing coverage would,

perhaps, be reasonable but, in that the definition includes all employ

ees that may have acquired a vested interest (even though no longer em

ployed), it is conceivable that application of the bill would extend

far beyond intent. Therefore, it is my suggestion that, within the

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