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It further requires that insurance be obtained for any unfunded vested liabilities through a Private Pension Plan Termination Insurance Program. These features add a great measure of security to employees' benefits without disrupting the operation of existing plans. This seems to preclude any need for stating the order of priorities for distribution of assets upon plan termination, which the bill includes.

The Disclosure requirements of S. 3598 are well-intended and serve to create effective control of the Bill's provisions. They are a bit cumbersome and probably could be reduced if, as I suggested, the new Office of Pension and Welfare Plan Administration is not established.

The requirement involving disclosure of the plan's provisions to employees is sound and in fact is already an integral part of most plans' administrative procedures.

The Fiduciary Standards of this Bill are certainly in the interests of pension participants. While most fiduciaries now operate well within these standards, it is wise to require that all of them do so. Again, this meets one of the basic objectives of pension reform

more secure.

to make benefits

I have criticized some portions of this Bill and praised others

and with good reason in both instances. But, there is a very important

objective which the Bill does not meet. S. 3598 provides absolutely no additional incentive for individual savings toward retirement. This is an important factor which can have a definite impact on whether pension reform is a positive measure or is negative. Although, perhaps, not within the scope of this Bill, individuals must be encouraged to save for retirement, otherwise they rely too heavily on public and employerprovided retirement income.

The most effective means of encouragement is to give tax

deductions for individual savings for retirement. This is not entirely

a tax loss to the federal government, but merely a tax deferal. Retirement income from individual tax deductible savings would be taxable when

received as retirement income, thus placing it on an equal basis (taxwise) as employer contributions to pension plans. Presently, private plans can require up to 6% employee contributions, plus they can allow an additional 10% voluntary contribution by the employee. It is my suggestion, therefore, that employee contributions to private plans be deductible up

to 16% of the employee's gross pay.

In summary, I should like to present an outline of provisions that should be included in pension reform:


Eligibility for coverage should be expanded to include

all permanent employees (even older employees)

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with an allowance that a plan could require 10 years participation for a full benefit. A permanent employee

would be one who has 3 years service and is 25 years


Minimum vesting standards should be weighted for age
and service and should increase gradually. When

a participant's age plus his years of participation
(after the effective date of legislation) total 50, he
would be 10% vested in his benefit accrued for all his

years of service. Vesting would increase by 10%
for each additional year of participation.

The excess of vested liabilities over assets should be

insured as provided in S. 3598.

The Disclosure reauirements of S. 3598 would be
applicable except they might be reduced to reflect that

no new department or regulating agency would be
established. They are completely appropriate

as concerns disclosure of a plan's provisions to


The Fiduciary Standards of S. 3598 would apply, as


Either as a part of this Bill or within the framework

of the Internal Revenue Code employee contributions

to private plans would be deductible up to 16% of pay.

Last, but not least, several items would not be included because

they appear to be unnecessary. These are:

a new department to regulate and enforce the Bill

portability of vested benefits

minimum funding standards


With regard to any and all of these provisions, it is very significant

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none of the features is redundant and each is essential,

and, finally, each serves to meet the objectives

initially set forth while encouraging the growth of
private plans.

Gentlemen, I thank you for this opportunity to present my views.

I hope they are helpful.

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