Mr. Chairman and Members of the Committee.

You are hearing today statements concerning a subject which is very dear to the working individuals and taxpayers of this country. The operation of our private pension system is increasingly becoming the subject of criticism by public-minded individuals. There is no doubt

that this country's private pension system must be improved and strengthened to overcome the valid criticism it has received. Reform of our private pension system must first overcome its present inadequacies, but almost as important, these inadequacies must be overcome in a manner which encourages the continued growth of private pensions.

Any pension reform legislation can and should accomplish three broad objectives:

These three objectives can be accomplished without the expense of significant additional involvement by agencies of the federal government. We can accomplish our objectives, and still assure compliance, by making only minor changes in the present reporting and enforcement procedures

already established for private pension plans.

I should like to take this opportunity to outline to you ways in which Senate Bill S. 3598 falls short of accomplishing these objectives

in some respects and is too restrictive in others.

Senate Bill S. 3598 establishes an Office of Pension and Welfare

Plan Administration. This is an additional department requiring more manpower and expense at the federal level and more reporting and administrative expense for each private plan. An additional department duplicates the effort of regulating private plans presently shared by the Department of Labor and the Internal Revenue Service.

The Welfare and Pension Plans Disclosure Act currently requires complete and annual disclosure to the Secretary of Labor of the financial operations of private pension and profit-sharing plans. If additional legislation affects these or other operating procedures of such plans, it is only proper and consistent that the Secretary of Labor be responsible in a similar manner for administration and enforcement of the additional requirements. For instance, if plans are required to insure vested liabilities which are in excess of assets, proof of such insurance should be a part of the regular report required annually by the Secretary of Labor.

The Internal Revenue Service presently determines whether plans

are designed and written in such a manner as to qualify for favorable tax treatment. Any federal pension legislation which requires specific provisions as a part of the plans themselves could easily be enforced by the LR. S. Just as some special provisions are now required in order to qualify a plan for favorable tax treatment, so, also, could additional provisions be required, such as vesting provisions or limitations on which employees can be excluded from coverage. The penalty for failure to comply with new requirements would simply be disqualification of the plan for favorable tax treatment - a significant matter for most plans.

Little or no additional cost would be involved either at the federal level or for plan administrators through an expansion of current reporting and enforcement procedures.

I believe that any pension legislation should be consistently applicable

to all private pension plans:

no exceptions should be made for union plans,

no exceptions should be made for small employer plans,

no exceptions should be made for plans for the self-employed,

no exceptions should be made for plans administered by
religious organizations

and most important of all, no exceptions should be made for plans already in existence on the effective date of the legislation.

All private plans should be treated alike if we are to have effective reform; all private plans must be treated alike if we are to avoid the

cumbersome administrative complications which could discourage the growth of private pensions; and all private plans must be treated alike if we are to avoid discriminatory loopholes in the law.

Senate Bill S. 3598 would seem to violate these principles of uniform application and of simple but effective administration. The Bill creates administrative complexities by expanding reporting requirements, by exempting certain plans, by exempting from vesting provisions the accrued benefits under existing plans, by allowing a 3-year delay in compliance with vesting or funding requirements if they are unduly burdensome, and by providing exceptions to funding the required contributions if an employer cannot meet the requirement. Adoption of this Bill, as it is now drafted, could have a discouraging affect on the adoption of plans and the strengthening of the private pension sector of our economy.

The Vesting and Funding Requirements of S. 3598 include maximum eligibility requirements that an employer can require before allowing an employee to participate. It requires participation upon the later of age 21 or 6 months service. What purpose can such strict requirements serve? An employee cannot be considered a permanent employee after meeting these requirements. To include all employees in a plan after