Multiemployer Pension Plans Under Collective Bargaining

Transcription

1 Multiemployer Pension Plans Under Collective Bargaining Spring 1960 Prevalence Benefit provisions Administrative procedures Functions of the administrator Individual w orker s pension rights Financial m an agem e n t Bulletin No in cooperation with U.S. DEPARTMENT OF LABOR Arthur J. Goldberg, Secreta ry BUREAU OF LABOR STANDARDS Arthur W. Motley, Director Digitized for FRASER BUREAU OF LABOR STATISTICS Ewan Clague, Commissioner

2 Multiemployer Pension Plans Under Collective Bargaining Spring 1960 P re v a le n ce B e n e fit p r o v is io n s A d m in istra tiv e p ro ce d u re s Function s of the a d m in is tra to r In d iv id u a l w o r k e r s p e n sio n righ ts F in a n c ia l m a n a g e m e n t Bulletin No June 1962 in cooperation with U.S. DEPARTMENT OF LABOR Arthur J. Goldberg, Secretary BUREAU OF LABOR STANDARDS Arthur W. Motley, Director BUREAU OF LABOR STATISTICS Ewan Clague, Commissioner For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington 25, D.C. - Price Digitized for FRASER cents

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4 Preface The W elfare and P en sion Plans D isclo su re A ct, effectiv e January 1, 1959, w hich is adm in istered by the U. S. D epartm ent of L a b or, brought into the custody of the Bureau o f L abor Standards a vast co lle ctio n of b a s ic docum ents and rep orts dealing with w elfa re and pension plans in e ffect throughout the United States. In coopera tion with the Bureau o f L abor Standards, the Bureau of L abor Statistics undertook this com p reh en sive study of the c h a ra cte ris tics, types o f ben efits, and adm inistrative featu res o f m u ltiem p loyer pension plans under c o lle ctiv e bargain ing. It is b elieved that this study accounts fo r all o r virtu ally all such plans coverin g m o re than 25 w ork ers, in effect in the spring of I960. The in form ation and docum ents required to be filed with the D epartm ent w ere stipulated in the D isclo su re A ct and in the D ep a rtm e n ts fo rm s, w hich w ere m ade available to plan adm in istrators. This study m akes use o f these subm issio n s, p a rticu la rly the docum ents, but it is not based exclu siv ely on the in form ation subm itted to the Departm ent under the D isclo su re A ct; other r e sou rces o f the Bureau of L abor Statistics w ere a lso used. Since this is the fir s t study of its type based on the D isclo su re A ct file, a w ord on the ch oice of su bject and the scop e of the study seem s a p p ropriate. T h ere was no intention on the part of either B ureau, of singling out m u ltiem p loyer pen sion plans fo r sp ecia l treatm ent, although both Bureaus shared a keen in terest in the operation of these join tly adm in istered p ro g ra m s. A s origin a lly planned this study was to be follow ed by a study of the finances o f m u ltiem p loyer pen sion plans, and by sim ila r analyses o f single em ployer pension plans and of single and m u ltiem p loyer w elfare plans, until eventually the great potential o f the entire file would be explored. Although this s e rie s of studies is not p resen tly in p r o g r e s s, it is hoped that it can be reinstituted at som e tim e in the future. The Bureau of L abor S ta tistics, w hich takes resp on sib ility fo r the con tents of this bulletin, is grateful fo r the a ssista n ce and coop era tion tendered by the Bureau of L abor Standards, and, in p a rticu la r, the staff o f its D ivision o f W elfare and P en sion R eports. Sum m ary a rticle s o f this study appeared in the O ctober 1961 and the F ebru ary and A p ril 1962 issu es of the M onthly L abor R eview. A few m in or d iffe re n ce s in the data reported, due to later rev is io n s, w ill be found in this fin al bulletin. This study was undertaken in the Bureau o f L abor S ta tistics, D ivision of W ages and Industrial R elations, under the gen eral d ire ctio n o f Joseph W. B loch. The bulletin was p rep a red by W alter W. K olodru betz, who a lso planned and su p erv ised the analysis of the reportin g fo r m s and plan docum ents and the c o m putation of the data. H arry E. D avis, M au rice L. Cunningham, and Stanley S. Sacks w ere resp on sib le fo r the plan analysis. The entire p r o je ct was under the d irect su p ervision of Donald M. Landay. in

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6 Contents Ffetge P re fa ce Chapter I. Introduction Scope and m e t h o d Chapter II. P rev a len ce and m a jo r ch a ra cte ris tics Size of p la n s Industry and union represen tation G eographic area W orker m obility T ra n sfera b ility o f pension rights R e c ip r o c it y iii Contributions based on earnings o r p a y roll Other contribution b a s e s Chapter III. B enefit p r o v i s i o n s P articip ation requirem ents N orm al retirem en t p rov ision s N orm al retirem en t age B enefit form u las P ast s e r v ice benefit form u las S ocia l secu rity in te g r a tio n ---- M inim um benefit F orm of paym ents Optional fo rm s of benefit p a y m e n t Amount of n orm al retirem en t benefit E arly and d isability retirem en t, and vesting E arly retirem en t p rov ision s D isability retirem en t p rov ision s Vesting p rov ision s Death b e n e fit s Chapter IV. A dm inistrative p r o c e d u r e s C om position of the board T erm of board m e m b e r s Size o f b o a r d s O ffice rs o f the board S election o f o ffic e r s T erm of chairm an ~ A ffiliation of chairm an P roced u res of the board R egular m eetings S p ecial m eetings Quorum L ack of quorum. Voting D ead lock s and a rbitration

7 Contents Continued Chapter V. Functions o f th e.ad m in istrator and p rotection of individual w ork er1s pension rig h ts A dm in istrative p roced u res Maintaining re co rd s R eceivin g applications P ro ce s s in g cla im s 65 D eterm ining elig ib ility Appeals Final d ecision on appeals S e rv ice -cre d itin g provision s Am endm ent of the pension plan R estriction s on reem ploym ent after retirem en t R e stricted e m p lo y m e n t 73 M axim um earnings tests G eographic lim its 76 P en alties N otification 79 P re ce d e n ce to a ssets in case of term ination of the p la n 81 P rotection of pension cred its in ca se of withdrawal of an individual em p loyer P a g e Chapter VI. Financial m a n a g em en t S election of m edium of fu n d in g S election of c a r r ie r or corp ora te trustee R eceip t of contributions C ollection of em p loyer contributions Inspection of em p loyer r e c o r d s Investm ent p olicy A uthorization of expenses and benefits P arty making p a y m e n t Bonding re q u ire m e n ts T ables: 1. M u ltiem p loyer pension plans under c o lle c tiv e bargaining by date of establishm ent M u ltiem p loyer pension plans under c o lle c tiv e bargaining by num ber of w ork ers c o v e r e d M u ltiem p loyer pension plans under c o lle c tiv e bargaining by industry group N ational and international unions participating in m ultiem ployer pension plans M u ltiem p loyer pension plans under c o lle c tiv e bargaining by region and State Type o f ad m in istra tor in m u ltiem p loyer pension plans under co lle ctiv e bargaining M u ltiem p loyer pension plans under c o lle c tiv e bargaining by industry group and m edium of funding M inimum age and s e rv ice requirem ents fo r participation in m ultiem ployer pension plans under colle ctiv e b a rg a in in g 103

8 Contents Continued P a g e Table s Continued 9. N orm al retirem en t age in m u ltiem p loyer pension plans under colle ctiv e bargaining by industry group N orm al retirem en t age in m ulti em ployer pension plans under colle ctiv e bargaining by m edium of funding Types of ben efit form u las in m u ltiem p loyer pension plans under co lle ctiv e bargaining by industry g r o u p Types of ben efit form u las in m ultiem p loyer pension plans under co lle ctiv e bargaining by m edium of fu n d in g F orm of paym ent of retirem en t benefit in m u ltiem p loyer p en sion plans under c o lle c tiv e bargaining 14. F orm of paym ent of retirem en t benefits in m u ltiem p loyer p en sion plans under c o lle c tiv e bargaining by m edium of funding Optional annuity fo r m s in m ulti em p loy er pen sion plans under co lle ctiv e bargaining by industry group Optional annuity fo rm s in m ulti em ployer pension plans under colle ctiv e bargaining by m edium of funding N orm al retirem en t m onthly ben efits, excluding s o cia l secu rity benefits, for w ork ers earning $4, 800 per year fo r 30 yea rs of future cred ited se rv ice by industry group, in m u ltiem p loyer pension plans under colle ctiv e bargaining N orm al retirem en t ben efits, excluding so cia l secu rity benefits, fo r w ork ers earning $4, 800 ($400 per month) p er year fo r 30 y ears of future cred ited s e r v ice by m edium of funding, in m u ltiem p loyer pension plans under colle ctiv e b a r g a in in g N orm al retirem en t ben efits, excluding socia l secu rity ben efits, fo r w ork ers earning $4, 800 p er year fo r 30 y ea rs of future cred ited s e rv ice by type of ben efit form ula, in m u ltiem p loyer pension plans under c o lle ctiv e bargaining P ro v isio n s fo r n orm al, early, disability retirem en t, and vesting in m u ltiem p loyer pension plans under co lle ctiv e bargaining by plans and w ork ers c o v e r e d Type of ben efit p rov ision s in m ultiem p loyer pension plans 22. Type of benefit p rov ision s in m u ltiem p loyer pension plans by m edium of funding P ro v isio n s fo r early and disability retirem ent, and vesting in m u ltiem p loyer pension plans under colle ctiv e bargaining by industry g r o u p P rev a len ce of level in com e option under early retirem en t p rov ision s in m u ltiem p loyer pension plans under c o lle ctiv e bargaining by industry group P rev a len ce of level in com e option under early retirem en t p rov ision s in m u ltiem p loyer pension plans under colle ctiv e bargaining by m edium of funding P ro v isio n s fo r death benefits b e fo re and after retirem en t in m u ltiem p loyer pension plans under co lle ctiv e bargaining by industry group vn

9 Contents Continued P a g e T ables Continued 27. P ro v is io n s fo r death benefits b e fo re and after retirem en t in m u ltiem p loyer pension plans under co lle ctiv e bargaining 28. D esignated o ffic e r s o f boards in m ulti em ployer pen sion plans under co lle ctiv e bargaining P ro v is io n s fo r selection of o ffic e r s in m u ltiem p loyer pension plans under c o lle ctiv e bargaining P ro v is io n s fo r sp ecia l m eetings in m u ltiem p loyer pension plans under c o lle ctiv e bargaining Voting ru les in join tly adm in istered m u ltiem p loyer pension plans under c o lle ctiv e bargaining P a rties p erform in g sp ecified functions in m u ltiem p loyer pension plans under c o lle ctiv e bargaining Charts: 1. Growth in cov era ge of m u ltiem p loyer pension plans under co lle ctiv e bargaining, M onthly n orm al retirem en t benefits (excluding s o cia l secu rity) fo r a w ork er earning $4, 800 a year with 30 y ears of future s e r v ice in m u ltiem p loyer pension plans under co lle ctiv e A ppendixes: A: S cope and m ethod of stu d y B: F orm D -l Digitized for FRASER vm

10 Multiemployer Pension Plans Under Collective Bargaining, Spring I960 Chapter L Introduction P rivate pension plans have been grow ing at a rapid pace during the past two d eca d es. T heir cov era g e rose from about 4 m illio n w o rk e rs in 1940 to 11.2 m illio n in 1950, and to m illion w ork ers (including 1.6 m illion re tire d w ork ers) in 1959* 1 C o lle ctiv e ly bargained plans accounted fo r about half of I960 total c o v e r a g e.12 The developm ent and growth of join tly adm in istered, co lle ctiv e ly b a r gained plans co v e rin g w ork ers em ployed by a num ber of em p loyers in an industry or area has contributed to this expansion. Since these m u ltiem p loyer plans are rela tively young only a few existed p rio r to 1947 their co v e ra g e has risen rapidly fro m about a m illion w ork ers in 1950 to 3. 3 m illion in 1959, when they cov e re d about a sixth o f all w ork ers cov e re d by private pension plans and about a third o f those under negotiated p rogra m s. T hese plans now include m ost w o rk ers in se v e ra l industries ch a ra cte rized by m ulti em p loyer co lle ctiv e bargaining. H ow ever, sin ce a la rge fra ction of the w ork ers under sm a ll agreem ents (those cov erin g few er than 1, 000 w ork ers each) do not yet have pension plan protection, room fo r further expansion rem ain s. The co v e ra g e of a m u ltiem p loyer pension plan under colle ctiv e b a r gaining tends to p a ra llel the cov era g e of the m u ltiem p loyer c o lle ctiv e bargaining agreem ent. T ypica lly, a plan is establish ed by a union persuading a group of em p loyers with w hich it has a single agreem ent, or som etim es a num ber of em p loyers under separate con tra cts, to m ake sp e cifie d paym ents to a p ooled cen tral fund. F rom this pooled cen tral fund, benefits are provided fo r the elig ib le w o rk ers of all contributing em p lo y e rs. These plans m ost com m on ly are found in in dustries such as con stru ction, food, apparel, m ining, m otor and w ater tra n sp orta tion, and s e r v ice and trade, w hich are ch a ra cte rized by season al and irreg u la r em ploym ent, sm a ll establishm ents, and such frequent jo b changes that few w o rk ers rem ain with a single em p loyer long enough to qualify fo r pen sion s. Thus, m u ltiem p loyer plans often provid e pension cov era g e fo r m any w ork ers who would not, and perhaps cou ld not, be co v e re d by a sin gle e m p loy er plan. Although 71 national and international unions participate in m u ltiem p loyer pension plans, alm ost 2 out of 3 w ork ers co v e re d by these plans are rep resen ted by 1 of 6 unions: T eam sters, A m algam ated Clothing W ork ers, International Ladies* G arm ent W ork ers, C arpen ters, E le c tr ic a l W ork ers (IBEW ), and United M ine W o rk e rs. On the other hand, m any other la rg e unions, such as the S teelw ork e rs, Auto W ork ers, and Rubber W ork ers, ra re ly participate in m u ltiem p loyer pension plans, ch iefly because they have few m u ltiem p loyer a greem en ts. A ll six of the unions with la rge m u ltiem p loyer plan cov era g e have one o r m o re large national o r region a l plans, such as the United Mine W ork ers R etirem en t Fund, which co v e rs num erous em p loy ers throughout broad geographic a reas, o r throughout an industry. 1 A lfred M. Skolnik, "T ren d s in E m p loy ee-b en efit P lan s: P art II" S ocial Security B u lletin, May 1961, p D orothy R. K ittner, "H ealth, Insurance, and P en sion Plan C overage in Union C on tracts, " M onthly L abor R eview, M arch 1962, pp Data in this a rticle exclu de r e tir e d w o rk e rs who are included in all the data in this re p o rt.

11 2 The benefit p rov ision s and adm inistrative featu res of m u ltiem p loyer plans d iffer sharply, in som e r e sp e cts, fro m single em ployer plans. T h ese d ifferen ces stem, in part, fro m the ch a ra cte ris tics of the industries in w hich they operate, in part fro m d ifferen ces in the co lle ctiv e bargaining relation sh ip betw een the p a rties, and in part from the d ifferen ce betw een a single em p loyer and a group o f em p loyers who m ay, in th em selves, co m p rise the labor m arket, or a la rge part of it. To cite one exam ple of a fundam ental d iffe re n ce : The resp on sib ility of the individual em ployer in a m u ltiem p loyer plan is usually lim ited to the co n tribution of a sp e cifie d amount of m oney on behalf of his em p loyees, w hile in a single em ployer plan the em p loyer is usually obligated to p rovide sp ecified types and le v e ls of b en efits. No m onetary obligations are sp e cifie d in the agreem ent; rather they are im plied by the ben efits. In m u ltiem p loyer agreem en ts, on the other hand, the m onetary obligations are typically sp ecified, and the determ ination o f benefits is usually left to the d iscre tio n of a join t em p loy er-u n ion board, and is often su bject to change at the d is c r e tio n of this boa rd. Although the approaches to d evisin g benefits d iffer, the b a sic benefits of m ulti em ployer plans are sim ila r in type to those in single em p loyer plans. H ow ever, som e types of benefits such as vestin g, are found m o re often in single em p loyer plans than in m u ltiem p loyer plans, but this d ifferen ce is offse t by the inherent portability of cred ited s e r v ic e am ong participating em p loyers in m u ltiem p loyer plans. C o lle ctiv e ly bargained single em p loyer and m u ltiem p loyer plans also d iffer sign ifican tly in their adm inistrative featu res. M ultiem p loyer plans are join tly m anaged by the union and the em p loyer group w hile, with som e exception s, single em ployer plans are m anaged e x clu siv e ly by the em p loy er. This d ifferen ce partly r e fle cts the legal requirem ent, contained in the L abor M anagem ent R elations A ct, 1947, that both parties be equally rep resen ted in the m anagem ent of unionsp on sored em ployer-*financed w elfare and pension funds. The adm inistration of m u ltiem p loyer plans involves such nonfinancial functions as p ro ce ssin g a p p lica tions, p rocessin g cla im s, and awarding ben efits, as w ell as such fin an cial fu n c tions as receiv in g contributions, m aking investm ents, and paying ben efits. A l though, as in single em ployer plans, som e or all of these functions m ay be delegated to other p arties, gen erally the nonfinancial functions are handled d ire ctly by the join t union-m anagem ent b oard. H ow ev er, in about 1 out of 6 plans, in vestm ents are determ ined and benefits are paid by an insurance com pany. In another fifth of the plans, investm ents are m ade through a corp ora te tru stee. In the rem a in d er, investm ents are m ade and ben efits a re paid d ir e c tly by the board. Scope and Method A m u ltiem p loyer pension plan under co lle ctiv e bargaining, as the term is u sed in this study, is a pension plan negotiated by a union co v e rin g the e m ployees of two o r m o re fin an cially unrelated e m p loy ers. Plans established and m aintained outside o f a co lle ctiv e bargaining relationship (such as u n ion -sp on sored plans) which are w holly financed by the m em b ers and to w hich em p loyers are not a party, are exclu ded. The ch ief sou rces of in form ation fo r this study w ere the rep orts and docum ents file d with the U. S. D epartm ent of L a b orfs Bureau of L abor Standards pursuant to the W elfare and P en sion Plans D isclo su re A ct (P ublic Law ) by plans coverin g over 25 w o rk e rs. The form s filed by ov er 25,000 plans showed that they provided pension benefits or a com bin ation o f w e lfa re and pension b e n e fits. H ow ever, no inform ation was available on the fo rm s d irectly distinguishing m u ltiem p loyer plans fro m single em p loyer plans. It was assum ed that few m u ltiem p loyer pension plans under c o lle ctiv e bargaining are adm in istered so le ly by

12 3 em p loyers o r an em ployers* a ssocia tion, and n early 20,000 such plans w ere r e m oved fro m con sid eration. The d escrip tion s and supporting docum ents of the r e m aining 5,6 0 0 pension plans adm in istered join tly o r by an em ployee organization w ere exam ined to determ ine w hether they w ere, in fact, m u ltiem p loyer pension plans under c o lle ctiv e bargaining. A com p a rison o f the resulting lis t of plans with other so u rce s rev ealed som e o m ission s w hich w ere fille d in by using the Bureau of L abor Standards1 union index re fe re n ce file. M ultiem ployer pension plans not under co lle ctiv e bargaining have been excluded fro m the study because of their unim portance in relation to the w hole pension field at the presen t tim e. F urther details o f scop e and m ethod of study are found in appendix A. This bulletin d e s crib e s the m a jor ch a ra cte ris tics o f co lle ctiv e ly b a r gained m u ltiem p loyer pension plans in the spring o f I960, including their size, their p revalen ce by industry and union, and their fin an cial and general adm in istrative featu res. Of the 798 plans cov erin g 3. 3 m illion active and retired w ork ers studied, 62 plans (7.8 p ercen t), cov erin g 152,500 w o rk e rs, w ere in the p r o ce s s of form ulating and establishing their p rov isio n s. F o r these plans, v e ry little inform ation other than the m a jo r ch a ra cte ris tics w ere available at the tim e of the study. Thus, the analysis of pension benefit p rov ision s including norm al, early, and d isability pensions, vesting, death ben efits, and optional benefit p rov ision s was lim ited to 7 36 fully developed plans cov erin g 3.2 m illion w o rk e rs. The c o m position, selection, and p roced u res of the boards o f adm inistration of the 7 36 plans are exam ined in detail. T hese details include the num ber, selection, and tenure of board m em b ers and o ffic e r s ; quorum and voting ru le s; and p roced u res fo r the selection of im partial u m p ires. In addition, plan p rovision s determ ining w o r k e rs1 pension rights, such as s e r v ice creditin g p ro v isio n s, the right of the board to reduce the benefits of retired w o rk e rs, re strictio n s on am endm ents of the plan, and re strictio n s on reem ploym en t after retirem en t are analyzed. Som e nonfinaneial adm inistrative details (m aintaining of r e c o r d s, determ ining eligib ility, and appeals p roced u res) and certain fin an cial p ra ctices (inspection o f em ployer re co rd s, co lle ctio n of em p loyer con tributions, and bonding of o ffice r s and e m p loy ees) are exam ined in the concluding ch a p ters. It m ust be em ph asized that this study, b eca u se it deals with the p r o vision s of plan docum ents, is a study of fo rm a l ru les and p roced u res, not o f actual p ra ctice.

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14 Chapter II. Prevalence and Major Characteristics Seven hundred and n in ety-eigh t m u ltiem p loyer pension plans under c o l lective bargaining, coverin g 3. 3 m illion w ork ers, active and retired, w ere in effect in the spring of I960. These plans accounted fo r alm ost a sixth of the estim ated num ber of w ork ers, active and retired, cov e re d by all private pension plans, and about a third of the estim ated num ber of w o rk e rs under all c o l l e c tively bargained plans. It is estim ated that the 3. 3 m illion w ork ers under all m ultiem p loyer pension plans rep resen ted roughly th ree-fifth s of the estim ated c o v erage of all m u ltiem p loyer colle ctiv e bargaining agreem ents (excluding ra ilro a d s). M ultiem ployer pension plans are, on the w hole, rela tively young. Only 8 o f the 7 36 plans in effect in the spring o f I960 fo r w hich the date of e sta b lish m ent is known w ere estab lish ed p r io r to January 1, 1946 the effectiv e date of se v e ra l adm inistrative requirem ents of the T aft-h artley A ct 3 (chart 1 and table 1). Seven p ercen t of the plans, coverin g over a fourth of the w ork ers, w ere established b efore A spurt in the developm ent of plans o ccu rred after 1954; about 60 p ercen t o f the plans w ere le ss than 6 y ea rs old in the sp rin g of I960. Size o f Plans The 798 plans studied ranged in covera ge fro m 26 to approxim ately 250, 000 active and retired w o rk e rs. Although m u ltiem p loyer plans are gen erally thought of as large sca le undertakings, 54 plans cov e re d few er than 100 w ork ers each, and 230 plans had from 100 to 499 w ork ers (table 2). Plans with few er than 5, 000 w ork ers com p rised alm ost nine-tenths of the plans and nearly a fourth of the w ork ers. On the other hand, the 6 la rgest plans, each with ov er 100,000 w orkers, cov ered alm ost a third of all w ork ers under m ultiem p loyer plans. These six plans w ere as follow s: United Mine W orkers of A m erica W elfare and R e tir e m ent Fund; C entral States, Southeast and Southwest A rea s P en sion Fund (T e a m ste rs); The Am algam ated Insurance F u n d-p en sion Fund (Clothing W ork ers); A m a l gamated Cotton G arm ent and A llied Industries R etirem ent Fund (Clothing W ork ers); W estern C on feren ce of T eam sters P ension Fund; and International B rotherhood of E le ctrica l W orkers Pension B enefit T rust Fund. Slightly m ore than a third of the w ork ers w ere attached to 46 plans with cov era ges ranging from 10, 000 to 100,000 w ork ers. Industry and Union R epresen tation M ore than th ree-fifth s of the plans (499), with 2 m illion w ork ers, w ere in nonm anufacturing industries, and ov er on e-th ird of the plans (286), with about 1. 3 m illion w ork ers, w ere in m anufacturing (table 3). Thirteen plans involved both m anufacturing and nonm anufacturing estab lish m en ts. The d isp ersion of m ultiem p ioyer plans by industry follow s the pattern of m u ltiem p loyer colle ctiv e bargaining relation sh ip s. 4 M ajor groupings of cov e re d w ork ers w ere found in food and apparel among m anufacturing industries, and in m ining, construction, m otor transportation, and trade among nonm anufacturing in du stries. N early th ree-fou rth s of all plans, coverin g fiv e -s ix th s of the w ork ers, w ere in these in d u stries. Although only 1 out of 10 plans was in the apparel in d u stries, these plans included alm ost 1 out of 4 o f the w ork ers cov ered by all 3 Pension plans established p rio r to this date are exem pt from the re q u ire m ents o f Subsection 302 (c) (5) (B) the L abor M anagem ent R elations A ct, See "C h a ra cte ristics of M ajor Union C ontracts, " Monthly L abor R eview, July 1956, pp

15 6 Chart 1. Growth in Coverage of Multiemployer Pension Plans Under Collective Bargaining, Number of Workers Covered2 (Cumulative) (In thousands) Date of Establishment 1 Data exclude $2 plant covering 119,200 workers for whichi information was not available. * Workers covered based on 1959 coverage of active and retired workers.

16 plans. The con stru ction industry, which had 1 out of 3 plans, cov e re d only lou t of 5 w ork ers. The food and trade industries a lso had sm a ller than average plans, so that with 11.0 and 11.9 p ercen t of the plans they only covered 6.9 and 9. 3 p e r cent of the w ork ers, resp ectiv ely. Owing to very large national and regional plans in the coa l m ining and m otor transportation in dustries, the p rop ortion of w ork ers cov ered was substantially g reater than the prop ortion of plans in these industries. The only other industries with a significant num ber of m ultiem p loyer plans and w ork ers covered, relative to total industry em ploym ent, w ere w ater transportation, printing and publishing, and m otion p ictu res and recreation. No m ultiem p loyer plans w ere found in industries such as petroleu m, com m unications, and pu b lic u tilities, w here m ulti em p loy er bargaining is uncom m on, but the in ciden ce of single em ployer pension plans is high. S im ila rly, among m etalw orking in dustries, w here at least 3. 9 m illion w ork ers w ere cov ered by pension plans under co lle ctiv e bargaining, only 57,000 w ere covered by m u ltiem p loyer pension plans. M em bers of 71 national and international unions w ere cov ered by the 798 m u ltiem p loyer plans (table 4). The T eam sters had the la rgest num ber of individual plans (121), about 15 p ercen t o f the total with alm ost 20 p ercen t of the w ork er cov era ge. Their plans w ere concentrated p rim a rily in m otor tra n s portation, food m anufacturing, and w holesale and retail trade in dustries. The International Ladies* Garm ent W orkers and the Am algam ated Clothing W orkers, which accounted fo r virtually all plan covera ge in the apparel in dustries, had 62 plans com p risin g ov er 20 p ercen t of the w ork ers. These three unions, plus the C arpenters, E le ctrica l W orkers IBEW (with plans p rim a rily in the co n struction industry), and United Mine W orkers (excluding D istrict 50), had about a third of the plans coverin g alm ost tw o-th irds of all w ork ers. These 6 unions each participated in plans with a covera ge of m o re than 100,000 w ork ers, and with the exception o f the C arpen ters, each of the unions had at lea st 1 plan c o v ering m ore than 50,000 w ork ers. The unions ord in a rily associa ted with the con stru ction industry had a high degree of participation in m ultiem p loyer plans. In addition to the C a r pen ters, and E le ctrica l W orkers (IBEW), they included the A sb estos W orkers, B rick la y ers, Hod C a rrie rs, P ain ters, P la s te r e r s, P lu m bers and P ip efitters, and Sheet M etal W ork ers. A ll o r m ost o f the plans in which these unions p a r ticipated (with the exception of the C arpenters and the E le ctrica l W orkers) had few er than 5, 000 w ork ers p er plan. In the m aritim e industry, w here a high degree of unionization is also found, the L ongshorem en (on both co a sts), the M aritim e, the M arine E ngineers, and the M asters, M ates and P ilots unions also had a high degree of participation in m ultiem ployer pension plans. S everal unions in food m anufacturing the B rew ery W orkers and the two B akery W orkers unions (both the A F L -C IO affiliate and the independent union) and in trade the R etail C lerks, H otel & Restaurant E m p loyees, the Meat C utters, and the R etail, W holesale and Departm ent Store Union com m only negotiated m u ltiem p loyer plans. Twenty unions had only a single plan; in som e ca s e s, this plan covered as many w ork ers as the union had m em b ers, including the M achine P rin ters (In d.), the N ew spaper and M ail D e liv e re rs (In d.), and the A m erica n Radio A s sociation. N early the entire m em bersh ip o f som e unions, such as the In ternational L a d ies1 Garm ent W ork ers, Am algam ated Clothing W ork ers, and United Mine W orkers (Ind. ) excluding D istrict 50, M aritim e, and M arine E ngineers, belonged to m ultiem p loyer plans. 5 Between 20 and 75 p ercen t of the m em bers 5 F or I960 m em bersh ip data, see D irecto ry of National and International L abor Unions in the United States, 1961, BLS Bull (1962). Digitized for FRASER 0

17 8 of severa l large unions T eam sters (In d.), both Bakery unions, Longshorem en*s A ssocia tion, C arpenters, E le ctrica l W orkers (IBEW ), P lu m bers and P ip e fitte rs, and R etail C lerks w ere co v e re d by such pen sion plans. Som e o f the m a jor unions in the country, p a rticu la rly the Auto W ork ers, S teelw ork ers, M achinists, and E le ctrica l W orkers (IUE), had few or no m em b ers in m u ltiem p loyer plans. M ost o f the m em b ers of these unions are cov ered by single em ployer co lle ctiv e bargaining agreem ents and pension plans. 6 Although usually only 1 union participated in a plan, in 26 plans, coverin g ov er 110, 000 w ork ers, 2 or m o re international or national unions w ere involved. An exam ple of such a plan is the Building T rades P en sion Fund of W estern. Pennsylvania, in which the B rick la y e rs, L ath ers, and P la s te re rs all participate. G eographic A rea In alm ost 90 p ercen t of the plans (699), cov erin g 50 p ercen t of the w o r k e r s, all participating em p loyers w ere located within a single State (table 5). T hese intrastate plans operated in 33 States and the D istrict of Colum bia. They w ere concentrated m ainly in the M iddle Atlantic and East North Central region s, p a rticu la rly in New Y ork, New J e rse y, P ennsylvania, Illin ois, M ichigan, and Ohio. States outside these region s with substantial w ork er cov era ge included C aliforn ia and M issou ri. In m ost ca ses, these intrastate plans w ere re stricte d to em ployers in a particu lar loca lity. The 99 interstate plans included 56 plans with m em b ers in 2 or m ore States within a region (intraregional) and 43 with m em b ers in m o re than 1 region (in terregion a l). The 43 in terregion al plans cov ered m ore than 45 percen t of all w ork ers in m u ltiem p loyer plans. Som e w ere national in scop e (e. g., IBEW P en sion B enefit T rust Fund); others cov ered large num bers of w ork ers in m o re lim ited geographic areas (e. g., W estern C on feren ce of T eam sters P ension Fund, and som e plans o f the International Ladies* G arm ent W ork ers and the A m a lg a m ated Clothing W ork ers). With the exception of the m ining industry, the h eaviest concentration o f plans in each of the industries studied was in the M iddle A tlantic region. The East North Central region had a substantial num ber of plans and w ork ers covered in the food, printing, m etalw orkin g, con stru ction, and m otor tran sp ortation in d u stries. The New England region had a large num ber of con stru ction plans, while the P a c ific region had a large num ber of w ork ers in both constru ction and trade. In the South Atlantic region, a significant num ber o f plans w ere in w ater transportation. M ost of the intrastate plans cov ered from 1, 000 to 10, 000 w ork ers; in the Southern and Mountain States, few plans had ov er 5, 000 w ork ers. A m a jority of the in terregion al plans cov ered over 5, 000 w ork ers. 6 See D igest of One-H undred Selected P en sion Plans Under C ollective B a r gaining, Spring 1961, BLS Bull. 1307(1962). S ince the analysis fo r the m ultiem ployer study was com pleted, the B oilerm a k ers, Operating E n gin eers, and M achinists unions have introduced national plans fo r participating lo ca ls. The benefits in these plans depend upon the instituted contribution rates which vary from em ployer to em ployer.

18 9 W orker M obility T ran sferability of P en sion R ights. One of the distinguishing ch a ra c te r is tic s ^or~ntinhemptbyef^eniion^piins~ts that the w ork er rem ains covered and builds up s e rv ice cred its as long as he is em ployed by any one o f the em ployer m em b ers. Single em ployer plans, on the other hand, do not p erm it continuance of pension cov era ge after a w ork er leaves the co m p a n y.7 The protection a f ford ed by m u ltiem p loyer plans, h ow ev er, depends on the scop e of plan c o v erage by occupation, industry, o r geographic area. N early half of the w ork ers in the spring of I960 belonged to lo ca l plans coverin g a single craft, o ccu p a tional group, or industry, about a fourth to region al plans (m ostly coverin g an industry), and about a fourth to industryw ide national plans. The m ost lim ited type o f m u ltiem p loyer plan, and also the m ost p re v a lent, cov ered a p articu lar cra ft or occupational group in a s p e cific industry in a m etropolitan area. T ypically, m u ltiem p loyer plans in the con stru ction, dairy, and printing and publishing industries w ere of this kind. F o r exam ple, in the con stru ction industry in New Y ork City, separate m ulti em ployer pension plans have been establish ed by the P a in te rs, C arp en ters, Sheet M etal W ork ers, etc. O ccupational m obility is furthered by m u ltiem p loyer pension plans such as those in the retail, apparel, and s e rv ice in du stries, which cov ered w ork ers with a wide variety o f occupations and sk ills in an industry in a sp ecified m e tr o politan area. The plan coverin g drug stores in New Y ork City, fo r exam ple, included a variety of occupational grou ps, although lim ited to w ork ers represen ted by a single union (L o ca l 1199, R etail Drug E m ployees Union). A ls o, a plan m ay include m o r e than one union within its scop e in an industry in a lim ited g e o graphic area. F o r exam ple, 10 unions participated in the plan coverin g hotels in New Y ork City. A few plans included w ork ers in m o re than one industry and occupation in a labor m arket area. F or instance, the N orthw est Ohio A rea Industries UAW R etirem ent Incom e P lan negotiated by the United A utom obile W ork ers, cov ered about 2,000 w ork ers em ployed by about 40 com panies in a num ber of differen t in du stries. In som e occupations and in dustries, m u ltiem p loyer pension program s co v e r an entire region o r even the entire country. In the lon gsh ore industry on the W est Coast, fo r exam ple, a pension fund was established under a coastw ise agreem ent between the P a c ific M aritim e A ssocia tion and the International L on g sh orem en ^ and W arehousem en^ Union (In d.). The v ery nature of the water transportation industry virtually com p els developm ent of such plans. S im ilar region al plans w ere negotiated in the trucking and con stru ction industries, but an even broader approach was found in the W estern C on feren ce of T eam sters P en sion Fund. Not only can the w ork er m ove from em ployer to em ployer in the trucking industry in an 11-State a rea, but he can a lso m ov e to contributing e m p loy ers in other industries in the area. Nationwide m obility in certain industries was perm itted by a few large plans, coverin g about a m illion w ork ers. The UMWA W elfare and R etirem ent Fund cov erin g v irtu ally all w ork ers under agreem en t in the bitum inous co a l in dustry is probably the best known exam ple of this type of plan. Other national plans w ere form ed by the E le c tr ic a l W orkers (IBEW ), both Bakery W orkers unions, the A m algam ated Clothing W ork ers, F urniture W ork ers, and the Uph olsterers* union. 7 The w orker m ay be p rotected by a vesting p ro v isio n a n d /or tra n sfe ra bility to bran ch es, plants, and su bsid ia ries of m ultiplant fir m s. See P ension Plans Under C ollective Bargaining: P a rt I. Vesting P rov is io n s and R equirem ents fo r E arly R etirem ent; P art II. Involuntary R etirem ent P ro v is io n s, Late 1958, BLS Bull (1959).

19 10 R e cip ro city. The num ber and range of jo b s to which a w ork er m ight tra n sfer without lo ss o f cred ited s e rv ice w ere further broadened by 66 plans with r e cip ro city agreem ents with other m ulti em ployer plans. Under these agreem en ts, Plans Workers1 Reciprocity provision Number Percent Number (thousands) Percent All formulated plans , No provision, or information not available , Reciprocity arrangements in effect with: Plans in same union Plans in other unions Reciprocity arrangements may be made with: Plans in same union Plans in other unions Worker coverage includes both active and retired workers in Excludes 62 plans in the process of formulating plan provisions. See p. 3. NOTE: Because of rounding, sums of individual items may not equal totals. which co v e r a fourth of the m em b ers of form ulated m u ltiem p loyer plans, s e rv ice under one plan is used to determ in e, in part, the benefits provid ed by another plan. A ll but five plans w ere lim ited to tra n sfers among plans of the sam e union. O ver half of the 66 plans w ere negotiated by the ILGWU, and they allow ed virtu ally unlim ited tra n sfers of cred its among them. An additional 37 plans, coverin g about a tenth o f the w o rk e rs, gave pow er to the adm in istrator to w ork out re c ip r o c a l arrangem ents with plans of their own union and, in 11 o f these ca s e s, other unions as w ell. None of the plans with few er than 100 m em b ers contained r e cip rocity p rov ision s of any kind, although sm all plans presu m ably have the greatest need fo r such arrangem ents. W hile a num ber of plans in all other size ca teg ories Without With Total reciprocity reciprocity Size of plan Plans Workers 1 (thousands) Plans Workers 1 (thousands) Plans Workers (thousands) All formulated plans , , , to 99 workers ^ to 499 workers ^ to 4,999 workers ,000 to 24,999 workers ,000 workers and over 22 1, Worker coverage includes both active and retired workers in Excludes 62 plans in the process of establishing plan provisions. See p. 3. NOTE: Because of rounding, s m s of individual itams may not equal totals.

20 11 had such p ro v isio n s, the p rop ortion was higher among the la rg e r plans; 7 of the 22 plans coverin g 25,000 o r m o re w ork ers had r e cip ro city p ro v isio n s, as c o m pared with only 56 of the 387 plans with 500 to 5,000 w ork ers. Financing A lm ost a ll m u ltiem p loyer plans studied w ere financed en tirely by e m p loy er contributions. Plans Wo rkers \ Number Method of financing Number Percent (thousands) Percent All plans , Source of contribution Employer o n l y , Employer and worker Worker only if Worker coverage Includes both active and retired workers In 1959* NOTE: Because of rounding, sums of individual items may not equal totals. In gen eral, participating em p loyers contributed to a cen tral fund to p r o vide benefits fo r cov ered w ork ers. The individual e m p lo y e e s ob lig a tio n 8 usually was fixed fo r the term of the c o lle ctiv e bargaining agreem ent. Only ra re ly w ere the em p loyers, individually or c o lle ctiv e ly, obligated to p rov id e, as is cu stom ary in single em ployer plans, sp ecified types and levels of ben efits. T hree out of five plans, with alm ost half of the w ork ers, p rovided fo r a contribution rate based on the tim e w orked by each em ployee cov ered by the plan. (See b e lo w.) About 1 out o f 4 plans, coverin g o v er a third of the w ork e r s, requ ired the em ployer to contribute a fixed percen tage of each em p loyee1s earnings or o f the p a y roll as a w hole. A few plans established other m ethods of building up pension fund re s e r v e s. Plans Workers 1 Basis of employer contribution rate Number Percent Number (thousands) Percent All formulated plans ^ , Specified rate , Per hour worked Per week Per month Per shift Per day Percent of earnings or payroll , Other A No contribution Information not available Worker coverage includes both active and retired workers in Excludes 62 plans in the process of establishing plan provisions. See p. 3. NOTE: Because of rounding, sums of individual items may not equal totals. 8 Som e plans had differen t contribution rates fo r em p loyers cov ered by the sam e plan. See p. 127 fo r m ethod of a n a ly sis.

21 12 C ontributions B ased on T im e W ork ed. About half the plans with con trib u tions based on som e tim e unit of w ork used hours actually w orked, alm ost on e- third used the w orkw eek, while the rem aining plans used days, shifts, or months w orked. Many plans based the em p loy er's obligation on the num ber of em ployees actually on the p a y roll for^ a sp ecified num ber of hou rs, not n e ce ssa rily the full p eriod. Thus, in som e plans, the full e m p lo y e r's contribution would be payable if the w ork er was em ployed a m inim um num ber of hours usually m uch less than the fu ll-tim e p eriod. In other plans, esp ecia lly those on a w eekly b a s is, the em p lo y e r 's contribution was proportionate to the hours w orked, usually up to a s p e c i fied m axim um contribution. C lauses illu stratin g som e of these form u las fo llo w : P er week P e r w eek P er hour P e r day P e r shift P e r month... the em p loy er shall pay... the sum of $3. 50 p er week fo r each of his em ployees cov ered by the a rticle s of agreem ent... (P e r hour rate up to a m axim um rate)... the em ployer agrees to contribute 10 cents p er hour paid to any and all of his em ployees cov ered by this agreem ent but not to ex ceed $4 p er week. E ach em p loy er shall pay to the trustee fo r d e p osit in the trust fund, effective Septem ber 1, 1955, the sum of 10 cents p er hour fo r every hour w orked fo r which such e m p lo y e r 's em ployees r e ceived com pensation. Each em ployer shall pay to the tru stees fo r deposit into the fund, the sum of 25 cents p er day p er man on com pany p a y roll, em ployed su bject to a c o lle c tive bargaining agreem ent with the organization.... each em p loy er shall pay to the fund at reg u lar intervals 5Zlh cents p er sh ift's pay earned by a participan t with such em p loy er... Each em p loy er a g rees to m ake to the fund... a paym ent of $ p er month fo r each em ployee w orking or paid for 80 or m ore straigh t-tim e hours p er month. Contributions on an hourly b a sis, sp ecified in 210 plans p rim a rily in the con stru ction industry, ranged from less than 5 cents to m o re than 16 cents. The m o st frequent rate was 10 cents p e r hour. Workers1 Rate per hour Plans (thousands) All plans specifying an hourly rate Less than 5 cents and under 6 c e n t s and under 7 c e n t s and under 8 c e n t s and under 9 c e n t s and under 10 cents and under 11 c e n t s and under 12 c e n t s *4 12 and under 13 c e n t s and under 14 c e n t s and under 15 c e n t s and under 16 c e n t s cents and o v e r Information not available Worker coverage includes both active and retired workers in 1959 NOTE: Because of rounding, sums of individual items may not equal totals.

22 13 ^Daily rates sp ecified in 27 plans, m ainly in w ater transportation and w h olesale and reta il in d u stries, ranged fro m le s s than 50 cents to ov er $2. Workers 1 Hate per day plans (thousands) All plans specifying a daily r a t e Less than $ $0.50 and under $ i #6 $0.6"0 and under $ $0.70 and under $ $0.80 and under $ l 2.3 $0.90 and under $ $1.00 and under $ $2.00 and o v e r Information not available Worker coverage includes both active and retired workers in NOTE: Because of rounding, sums of individual items may not equal totals. The 28 plans specifyin g a rate per shift w ere all found in the printing industry. None o f the rates p er shift ex ceed ed 90 cents. Workers1 Rate per shift Plans (thousands) All plans specifying a shift rate Less than $ $0.50 and under $ $0.60 and under $ $0.70 and under $ $0.80 and under $ Worker coverage includes both active and retired workers in 1959* NOTE: Because of rounding, sums of individual items may not equal totals. W eekly rates, usually found in the food, printing, m otor transportation, and w holesale and retail trade in dustries, required in 130 plans, ranged from le ss than $2 to m ore than $6. Workers1 Rate per week Plans (thousands) All plans specifying a weekly r a t e Less than $ $2 and under $ $3 and under $ $4 and under $ $5 and under $ $6 and o v e r Information not available Worker coverage includes both active and retired workers in Digitized for FRASER NOTE: Because of rounding, sums of individual items may not equal totals.

23 14 M onthly rates in 39 plan s, m ainly in the w h olesale and reta il trade in du stry, ranged fro m le s s than $10 to $37, Workers1 Rate per month plans (thousands) All plans specifying a monthly rate Less than $ *5 $10 and under $ $20 and under $ $30 and under $ A Information not available Worker coverage includes both active and retired workers in 1959* NOTE: Because of rounding, sums of individual items may not equal totals. A com posite distribution of the 434 plans sp ecifyin g a contribution rate based on tim e w orked is presen ted below. A ll rates w ere con verted to an hourly b a s is, assum ing 8 hours p er day (except for the printing trades w here a h our day was assu m ed), 40 hours p er w eek, and 473 w eeks (173 h ou rs) p e r month. Under these assum ptions, contribution rates ranged from le ss than 1 cent to m ore than 16 cents an hour, and averaged 9.7 cents an h o u r.9 A fourth of the plans, coverin g 44 p ercen t of the w o rk e rs, sp ecified contributions betw een 9. 5 and 10.5 cents p e r hour. Plans Workers 2 Rate per hour (composite) ^ Number Percent Number (thousands) Percent All plans with rates based on time worked , Under 4.5 cents and under 5.5 cents and under 6.5 cents and under 7-5 cents and under 8.5 cents and under 9.5 cents and under 10.5 cents O and under 11.5 cents and under 12.5 cents and under 13.5 cents and under 14.5 cents and under 15.5 cents cents and over Information not available Average * cents per hour See assumptions in text. 2 Worker coverage includes both active and retired workers in ^ Arithmetic mean, weighted by workers covered. NOTE: Because of rounding, sums of individual items may not equal totals. 9 A rithm etic m ean weighted by num ber of w ork ers.

24 15 Contributions B ased on Earnings or P a y r o ll, A fixed p ercen tage of em p loyee earnings or p a y roll was contributed by em p loyers under 169 plans, la rgely in the apparel, con stru ction, and w holesale and retail trade in dustries. C on tribution rates ex p ressed as a p ercen tage of earnings w ere based on the earnings of each individual w ork er o r of the cov ered group as a w hole (including, in som e ca se s, the earnings of all w ork ers in the group, even those not actually co v e re d by the plan). E xam ples o f clau ses expressin g contributions as a p ercen tage of earnings o r p a y roll are:... Pursuant to the bargaining agreem en t... each e m p lo y e r... shall... contribute 3 p ercen t of the p a y roll fo r em ployees co v e re d by this agreem ent. sje s{e ijc... Each em ployer... shall contribute 2 p ercen t of the w ages of each m em b er of the union em ployed by such em ployer. Rates of contribution ranged from 1 to m o re than 6 p ercen t, with the la rgest clu ster at 3 percen t. They averaged 2. 8 percen t. Plans Workers * Percent of earnings or payroll Number Percent Number (thousands) Percent All plans basing contributions on payroll or earnings , and under 2 percent and under 3 percent and under 4 percent and under 5 percent and under 6 percent percent and over Information not available Average percent 2 Worker coverage includes both active and retired workers in Arithmetic mean, weighted by workers covered. NOTE: Because of rounding, sums of individual items may not equal totals. Other Contribution B a s e s. In five plans, em p loyer contributions w ere based on fa cto rs other than em ploym ent or earnings. F o r exam ple, em ployer contributions to the bitum inous and anthracite coal pension and w elfa re funds w ere based on production. The bitum inous agreem ent p rovid es that:... There shall be paid into said /w e lfa r e and p en sio n / fund by each signatory op era tor, $ p er ton on each ton of bitu m i nous prod u ced fo r use or sale. Instead of using en tirely differen t fa ctors to determ ine contributions, three plans used a com bination o f a p ercen ta g e of earnings and tim e w ork ed. Although m ost plans had a uniform contribution rate fo r all participating em p loyers, about 15 plans indicated p rov ision fo r se v e ra l rates which varied by area or industry or other fa cto rs. The p rov ision s w ere found in plans negotiated in the food and trucking in du stries. U sually, the contribution rate is taken into account in determ ining the amount of benefit. F o r exam ple, one plan in the trucking industry p rovided that a qualified w ork er w hose em ployer contributed $6. 50 p er w eek would re ce iv e $125 a month, upon his retirem en t at age 65, while a retired w ork er w hose em ployer contributed $5.40 would re ce iv e $100 p er month.

25 16 Type o f A dm inistration The adm inistration of a pension plan involves d a y -to -d a y functions, such as p roce ssin g application s, determ ining elig ib ility, awarding b en efits, and in terpreting the plan, as w ell as financial adm inistration, i. e., selection of m edium o f funding, adoption of funding m ethods, receivin g con tributions, investm ents, paym ent of b en efits, etc Som e or all of these adm inistrative functions m ay be delegated to an insurance com pany, bank, s e rv ice organ ization, union, em p loyer, or sa la ried adm inistrative staff. In this an alysis, h ow ever, adm inistration was c la s s ifie d on the b a sis o f origin al resp on sib ility. This resp on sib ility is usually d e s c rib e d in the tru st indenture, the pen sion plan, o r the union agreem en t. Of the 798 m u ltiem p loyer pension plans, 735 plans coverin g alm ost th reefourths of the w ork ers provid ed fo r the appointm ent of a join t union-m anagem ent board (table 6). An additional 33 plans with one-eighth of the w ork ers p rovided fo r a join t b oard plus one neutral m em b er, usually acting as im partial chairm an. Nine plans coverin g 10 p ercen t of the w ork ers provid ed fo r a trip artite board with equal represen tation o f union, m anagem ent, and neutral o r public m em b ers. E leven o f the 798 plans, accounting fo r 6 p ercen t of all w ork ers cov e re d, w ere a d m in istered by the unions alone. 11 P ro v is io n fo r the appointm ent of a neutral im partial chairm an o r trustee was found a lm ost e x clu siv ely in the apparel industry. The two la rge plans in the coal m ining industry w ere adm in istered by tripartite b oard s. Sole union o r em p loy er adm inistration was found in only 2 plans coverin g m o re than 1, 000 w ork e rs. M edium of Funding Although the ultim ate resp on sib ility fo r the adm inistration of the plan rests with the a d m in istrator, the function of providing the ben efits (m edium o f funding) m ay be delegated to another party or organization. In m o re than half o f the plans, coverin g alm ost tw o-th irds o f the w o rk e rs, these functions w ere not delegated, i. e., the paym ent of benefits was done d irectly by the adm in istrator. (See follow in g tabulation.) About 1 out o f 7 plan s, cov erin g a tenth o f the w o rk e r s, provid ed ben efits through an insurance com pany. Slightly m o re than a fifth o f the plans, coverin g about an eighth o f the w o rk e rs, funded benefits through a corp ora te tru stee (a bank o r trust com pany). F ive p ercen t of the plans had not determ in ed, at the tim e of the study, the organization through w hich benefits would be funded. In the rem aining plans (c la ssifie d as "o th e r" in the tabulation on the follow in g page), benefits w ere usually provid ed by a com bination of paym ent by the a d m in istrator, a corp ora te tru stee, and an insurance com pany. 10 A m o re detailed analysis o f the p ow ers, duties, and obligations o f the ad m in istrator is included later in this study. 11 Subsection 302(c) (5) (B) of the L abor M anagem ent R elations A ct of 1947 requ ires equal representation of em p loyers and em ployees in the adm inistration of a fund w here such fund is m aintained by em ployer paym ents. H ow ever, funds establish ed b e fo re 1946 are exem pt fro m this su bsection and the act does not apply to e m p loy er-on ly adm in istered funds, or to plans coverin g only em ployees not engaged in interstate co m m e rce.

26 17 Plans Workers ^ Medium of funding Number Percent Number (thousands) Percent All plans , Insured Self-insured: Administrator , Corporate trustee Other Information not available Worker coverage includes both active and retired workers in 1959* 2 9 plans, covering 736,000 workers, were self-insured before retirement, but a temporary annuity was purchased annually after retirement. NOTE: Because of rounding, sums of individual items may not equal totals. Insured plans w ere concentrated la rgely in con tract con stru ction, m otor transportation, and w holesale and retail trade (table 7). O ver 40 p ercen t o f the w ork ers in m otor transportation plans w ere cov e re d by insured plans. C orporate trusteed plans w ere m ost com m on in food and kindred p rod u cts, printing and publishing, con stru ction, w ater transportation, and w h olesale and retail trade. S elf-a d m in istered plans, h ow ever, w ere predom inant in m ost in du stries.

27

28 Chapter III. Benefit Provisions The planning and developm ent of benefits to be p rovided by m ulti em ployer pension plans under co lle ctiv e bargaining are usually the exclu sive resp on sib ilities of join t em ployer-u n ion board s, as authorized by the trust agreem ents. In such ca ses, after the em p loy ers1 group and the union(s) have negotiated the rate of co n tribution fo r financing ben efits, the boards determ ine the benefits to be provided. M ajor changes in plan p rov ision s are also w orked out by the boards. C lauses, sim ila r to the follow ing, giving a board pow er to form ulate plan p rov isio n s, appear in m ost m u ltiem p loyer p en sion plans. To estab lish a plan... which shall define the retirem en t b e n e fits to be provided by the em ployer contributions, the conditions of eligib ility fo r such ben efits, the term s o f paym ent, and such other item s as the tru stees shall deem it n e ce ssa ry to include. The aforesa id term s of the plan shall be determ ined by the tru stees in their sole d iscre tio n on the basis o f actu arial p rin cip le s, and shall be su bject to change by the tru stees r e tr o actively or otherw ise from tim e to tim e. In con trast, establishm ent and am endm ent of the le v e l of benefits and other term s of single em ployer plans are negotiated d ire ctly by the em ployer and the union, along with wage and other frin ge benefit issu e s, typically under the p ressu re of con tract term ination. By shifting the negotiation of benefits from the bargaining table to the ca lm er, le s s hurried atm osphere of the board room, m ulti em ployer plan tru stees are provided an opportunity to act as trustees rather than as partisa n union o r m anagem ent rep resen ta tiv es facin g the tensions of c o l lectiv e bargaining. In such circu m sta n ces, the judgm ent and cost estim ates of actuaries (or in su rers) can be m o re ca refu lly con sid ered. Although the b a sic pu rp oses of m u ltiem p loyer pension plans are sim ila r to those of single em ployer plans, significant d ifferen ces exist between them, which re fle ct, in part, d ifferen ces in labor m arkets, in du stries, and bargaining s tr u c tu r e s.12 Vesting and early retirem en t p ro v isio n s, fo r exam ple, are m ore prevalent in single em ployer plans; h ow ever, the tran sfera b ility of credited s e r v ice among participating em ployers a bu ilt-in feature of m u ltiem p loyer plans p robably accom p lish es as m uch as vesting fo r w ork ers rem aining within the scop e of the plan. Multi em ployer plans usually gear benefit amounts solely to credited s e rv ice ; single em ployer plans m ore often relate them to both earnings and s e r v ice. Paym ent of cash (lump sum or installm ents) in lieu of p e rio d ic pension benefits is m o r e often found in m ulti em p loy er than single em p loy er plans. 12 R eferen ces to negotiated single em ployer plans in this chapter are based on a se rie s of studies recen tly com pleted by the Bureau of L abor Statistics and published in the follow in g bulletins: BLS B ull. 1259, op. cit. ; P en sion P lans Under C ollective Bargaining: N orm al R etirem ent; E arly and D isability R etirem ent. F all 1959j BLS Bull (1961); and a forthcom ing BLS bulletin., P en sion Plans Under C ollective Bargaining: Benefits fo r S u rvivors, D ecem b er I960. Sum - m a ries of these bulletins have appeared in the Monthly L abor R eview. O ctober and N ovem ber I960; July and August 1959; and July 1962, re s p e ctiv e ly. Although these studies w ere based on a se le ctio n of 300 plan s, each c o v e r ing at lea st 1,000 w ork ers, it is believed that the covera ge adequately represen ts single em ployer plans (231 of the 300) under co lle ctiv e bargaining, p a rticu la rly in term s of w ork ers covered, fo r the type of com p arison s m ade in this bulletin. Digitized for FRASER 19

29 20 The expectation that the w orker w ill rece iv e so cia l secu rity old -a g e benefits at age 65 is taken into account in both single and m u ltiem p loyer plans in setting the n orm a l retirem en t age and in the retirem en t in com e p rov id ed. Unlike many single em ployer pension plans that d ire ctly reduce benefits by all o r part of a w orker*s so cia l secu rity ben efits, or use a m o re lib e ra l benefit form u la fo r earnings above than fo r those below the so cia l secu rity taxable wage base (cu rren tly $ 4,8 0 0 a y ear), m ultiem p loyer plans ra rely take s o cia l secu rity b en e fits so ex p licitly into account. P articip ation R equirem ents F o r a w ork er to participate in or to be cov ered by the plan, m ost m u ltiem ployer pension plans sim ply required that he be on the p a y ro ll of a co n tributing em ployer in a unit cov ered by the co lle ctiv e bargaining a g reem e n t.13 F or exam ple, one plan stated:... ev ery em ployee who is included within a unit co v e re d by a colle ctiv e bargaining agreem ent (which req u ires contributions to this plan by the em ployer) between an em ployer and union which are or b ecom e p arties h ereto shall autom atically be a participant. If the agreem ent p rovid es fo r a union s h o p,14 15 which is typical among m u ltiem p loyer agreem ents outside right-to-w ork States, all participating em ployees would thus be union m em b ers. Only a seventh of the plans, h ow ever, coverin g less than a tenth of the w ork ers, sp e cifica lly required union m em bersh ip fo r participation. One plan, fo r exam ple, stated that "em p loy ee m eans any d u espaying m em ber of the union. 1,15 The sam e plan appended the follow ing explanation which can be g en erally applied to all plans with such req u irem en ts: So that no m isunderstanding m ay a rise with re fe re n ce to the above definition of the term "em p loy ee" in relation to any p r o vision s of the L abor M anagem ent Relations A ct o f 1947, as am ended, it is a requirem ent under the term s o f the colle ctiv e bargaining agreem ents between participating com panies and the union, and it is and always has been the p ra ctice of the union, that the union adm it into its m em bersh ip all em ployees of the participating com panies after their 30th day of em ploym ent, without any d iscrim in ation w hatsoever, with the exception of those p erson s to whom reapplication fo r m em bersh ip m ay be denied under said act. T h erefore, since there could not be any p erson against whom discrim in ation could be e x e rcise d within the p rov ision s of said act, the definition of em ployee as herein stated is con sid ered to be the best term in ology fo r the intent and p u rp oses of co v e ra g e and adm inistration under this pen sion plan. 13 G enerally, the individual participating em ployer cannot voluntarily include additional em ployees (su p erv isors, c le ric a l, etc. ) outside the bargaining unit. H ow ever, many plans do extend plan cov era ge to o ffice r s and em ployees of the participatin g lo c a l union(s). 14 See Union Security and C heckoff P rov ision s in M ajor Union C on tracts, , BLS Bull (I960). A union shop clause req u ires all em ployees in the bargaining unit, as a condition of em ploym ent, to be or b ecom e union m em b ers within a sp ecified tim e after hiring. 15 The absence of such clau ses from m ost plans m ay stem fro m the p r o hibition against d iscrim in ation in the L abor M anagem ent R elations (T aft-h artley) A ct. The National L abor Relations B oard has held in sev era l ca ses involving ille g a l union secu rity arrangem ents that pension plan clauses restrictin g p a y m ent of benefits to union m em b ers only w ere illegal.

30 21 A ge and se rv ice participation requirem ents often found in single e m p lo y e r plans, w ere included in only 19 plans, coverin g 66,000 w ork ers, m ainly in the m etalw orking and trade in d u stries. Workers * Participation requirement Plans (thousands) All p l a n s ,229.8 No age or service requirements ,133.0 With requirements A g e... if 52.8 Service Age and service Information not available Worker coverage includes both active and retired workers in NOTE: Because of rounding, sums of individual items may not equal totals. M inim um s e rv ice requirem ents ranged fro m 1 through 5 y e a rs, with 1 year as the m ost com m on requirem ent (table 8). Age requirem ents ranged from 22 through 40 y ea rs. N orm al R etirem ent P ro v isio n s N orm al retirem en t p ro v isio n s, a feature of virtually all pension plans, sp ecify the age at which a qualified w ork er would n orm ally be expected to retire, the form u la to be used to com pute retirem en t in com e (or the amount if a uniform benefit is paid), and the conditions and duration of benefit paym ent. The norm al retirem en t age as stipulated in pension plans is not n e ce s s a rily the age of actual retirem en t; it is technically, the earliest age at which a w ork er, having otherw ise qualified fo r benefits, m ay retire of his own a cco rd and re ce iv e im m ediately the fu ll amount o f benefits to which he is entitled. M ost plans a lso require the fu lfillm ent o f a sp ecified p eriod o f credited s e rv ice with one o r m o re of the em ployers p articipatin g in the plan, as in the follow in g clau se: An em ployee shall be eligib le fo r a norm al pension if, at retirem en t (a) he has attained age 65; and (b) he has cred it fo r 25 y ears o r m ore o f se rv ice in the trade; and (c) he has actually w orked in cov ered em ploym ent fo r at lea st fou r qu arters... Digitized for FRASER N orm al R etirem ent.a gs, The norm al retirem en t age in all but 33 plans was 65, the youngest age at which full so cia l secu rity o ld -a g e benefits are p a y able; 24 had ages b elow 65 and 9 above (table 9). Although only 20 plans p e r m itted w ork ers to re tire on full benefits at age 60, they cov ered o v er 15 percen t of the w ork ers; in this group w ere sev era l la rge plans in the coa l mining and m otor transportation industries. A ll but four plans with a norm al retirem en t age other than 65 w ere wholly self-in su re d (table 10).

31 22 B enefit F orm u la s. The pension form u las in m u ltiem p loyer plans do not exhibit the wide d iv ersity found in single em ployer plans. M ost can be cla ssifie d into two b a sic types: (1) Flat or uniform benefits fo r all w ork ers who fu lfill s p e c i fied s e rv ice requ irem en ts, or (2) benefits which varied by length o f s e rv ice alone. F orm u las in which benefits varied by both earnings and s e r v ice, com m only found in single em ployer plans, w ere used by few m u ltiem p loyer plans. E xam ples of each o f these types are: U niform benefit fo r sp ecified se rv ice... m em b ers eligible under these rules fo r retirem en t benefits shall re ce iv e the sum of $50 p er month... >J«$ Benefit p rop ortion a l to length of s e rv ice... the m onthly amount of... benefit shall be equal to $ a month fo r each com pleted year (fraction a l cred it w ill be given fo r com pleted m onths) o f future s e rv ice. * * * B enefit based on earnings and s e r v ice The amount of m onthly pension fo r a cov ered em ployee eligib le fo r retirem en t shall be an amount equal to fou r-ten th s o f 1 p e r cent of average m onthly earnings of such em ployee fo r each y ea r of credited s e rv ice. A fourth o f the plans, with alm ost half of the w ork ers under m u ltiem p loyer plans, stipulated flat o r uniform benefit form u las (table 11), as contrasted with a sm all fra ction of negotiated single em p loyer plans. Flat benefits fo r sp ecified se rv ice w ere found m ainly in the apparel, m ining, and w ater transportation industrie s. The vast m a jority of plans w ere self-in su red (table 12). F orm u las in which benefits varied by length o f s e r v ice alone w ere found in ov er 60 p ercen t of the plans, with 40 p ercen t o f the w ork e rs, as com pared with about a third of single em ployer plans. This type of form u la was m ost com m on in the food, printing, m etalw orking, con stru ction, trade, m otor transportation, and se rv ice in dustries. T h ree-fou rth s of the insured plans and th ree-fifth s of the se lf-in su re d plans had this type of form u la. Only six m ultiem p loyer plans had a form u la in which a com bination of earnings and se rv ice was used to determ ine benefits, by fa r the m ost com m on form u la in single em p loy er plans. In 24 plans, benefits w ere ex p ressed as a p ercen tage of the em ployer contributions m ade fo r each w orker a form u la ra rely used in single em ployer plans. These plans w ere significant (for wide cov era ge of w ork ers) in the m otor transportation industry. In 13 of these plans, contributions w ere on a tim e w orked b a sis, hence benefits w ere in d irectly related to s e r v ice. Two plans based contributions on individual earnings, thus benefits w ere in d irectly related to both earnings and se rv ice. The basis of contributions and the underlying basis of benefits in the rem aining plans w ere not available. Since contributions are often clo s e ly related to hours w orked, benefits under all 24 plans are m o re apt to be affected by short breaks in s e rv ice than are benefits under form u las d irectly r e lated to s e r v ice, which usually cred it se rv ice annually or qu arterly.

32 23 T w enty-three plans, found m ainly in the con stru ction industry, did not contain a s p e cific benefit form u la in the pen sion plan docum ent. B enefits w ere usually determ ined by the amount accum ulated in a w o rk e r1s individual account at the tim e o f retirem en t. One o f th ese plan s, fo r exam ple, read: T ru stees shall pay such benefits as the amount cred ited to each individual em ployee*s account w ill p u rch ase fo r such em ployee at the tim e o f retirem en t. M ost o f these plan s, as shown la ter (page 2 6 ), paid only lu m p-su m cash b en efits. Since contribution rates w ere based on tim e w orked, benefits w ere gen era lly p rop ortion ate to s e r v ice. U sually these plans w ere se lf-in su re d. Although m ost m u ltiem p loyer benefit form u las w ere readily cla ssifia b le into the m a jo r types d iscu ssed above, unusual benefit o r cov era ge p rob lem s created a need fo r significant variation s. F o r exam ple, five plans negotiated by the T eam sters, each with a n orm al retirem en t age o f 60, had a b u ilt-in p a rtia l s o cia l secu rity adjustm ent. To even out total retirem en t in com e o v er the entire retirem en t p eriod, these plans provid ed fo r the paym ent o f higher benefits in the fir s t 60 months o f retirem en t, than subsequently. Under one plan, fo r exam ple, a w ork er retirin g at age 60 r e ce iv e s $65 a month m o re betw een ages 60 and 65 than after age 65, when he presu m ably would be receiv in g fu ll s o cia l secu rity ben efits. W hile these form u las w ere apparently designed to encourage retirem en t b e fo re so cia l secu rity benefits are payable, they do not p en alize those retirin g after age 60 by lim iting the ages at which the higher benefits m ay be receiv e d. The follow ing clau se is typical of these plans:... The retirem en t benefit... shall con sist of a retirem en t in com e payable fo r the rem aining life of the pen sion er in the amount of: (a) F or an em ployee fo r whom the last em ployer to m ake co n tributions to the tru st fund has contributed under a c o l lectiv e bargaining agreem ent providing fo r contributions at the rate of $2 p er week 1. $90 payable m onthly fo r a p eriod not to exceed 60 months during the life tim e o f the p en sion er; and 2. $ payable m onthly th ereafter fo r as long as the p en sion er shall su rvive. (b) F o r an em ployee fo r whom the last em p loyer to m ake co n tributions to the tru st fund has contributed under a c o l l e c tive bargaining agreem ent providing fo r contributions at the rate of $3 p er week fo r 2 y ea rs and $4 p e r w eek th ereafter 1. $135 payable m onthly fo r a p e rio d not to exceed 60 m onths during the life tim e o f the p en sion er; and 2. $70 payable m onthly th ereafter fo r as long as the p en sion er shall su rvive. The benefit form u la reprod uced above is also an illu stration of form u las basing benefits on contribution rates. This p roced u re allow s m o re flexib ility in lo ca l and individual em ployer negotiation, although the w ork ers and em p loyers both receiv e the advantages o f a p ooled pension arrangem ent. Although only 13 plans included in this study allow ed a ch o ice, within p re s crib e d lim its, of rates and b en efits, this approach m ay spread as unions seek a w id er geogra p h ic o r in du s tr ia l scop e in pen sion planning.

33 24 Som e uniform benefit plans took occupational earnings d ifferen ces into account, as in the follow in g illu stra tion :... The retirem en t fund shall pay to such m e m b e r, until the tim e of his or her death, the m onthly paym ents set forth below :... (a) The sum of $50 m onthly to m em b ers who at the tim e of their retirem en t are op e ra to rs, cu tters, or b lo ck e rs... (b) The sum of $40 m onthly to m em b ers who at the tim e of their retirem en t are season al straw o p e ra to rs, trim m e rs, s lic k e r s, or shipping cle rk s. One plan had a c o s t-o f-liv in g adjustm ent in its benefit form u la. P ast S erv ice B enefit F o rm u la s. M u ltiem ployer plans usually credited past s e rv ice (i. e., em ploym ent rendered p r io r to the effective date of the plan or p r io r to an in cre a se in plan benefits) at the sam e le v e l as future s e rv ice (i. e., subsequent em ploym ent). In con trast, negotiated single em ployer plans, except fo r those with a flat benefit fo r sp ecified s e rv ice, usually p rovid e le s s e r cred its fo r past se rv ice than fo r future se rv ice y e a r s. 16 S ocia l S ecurity Integration. Only one m ulti em ployer plan d ire ctly in tegrated plan benefits with s o cia l secu rity ben efits, as contrasted with about 1 out of 4 negotiated single em p loy er plans. M inim um B en efit. F ew m u ltiem p loyer pension plans had p rov ision s e s tablishing a m inim um benefit amount although they are frequently found in single em ployer plans. Rather, a m inim um benefit was usually established by the m inim um requ irem en ts fo r receiv in g any benefit. W here a flat benefit was p r o vided, fo r exam ple, the benefit itse lf was both a m inim um and a m axim um. W here benefits varied by s e rv ice (the m ost prevalent approach in m u ltiem p loyer plans), the m inim um benefit was the product of the m inim um y ears o f s e rv ice requ ired to qualify fo r benefits and the benefit payable fo r each year o f s e rv ice. Som e plans, h ow ever, had sp e cific m inim um benefits of a tem p ora ry nature fo r w ork ers who could not m eet the m inim um se rv ice requirem ents becau se they w ere too near the n orm a l retirem en t age when the plan began. F orm of P aym en ts. V irtually all pension plans p ro m ise that the pension w ill continue fo r the w ork er* s life tim e. Som e plan s, in addition, guarantee p a y m ents fo r a stated p eriod o f tim e to the pensioner*s b e n e ficia ry should the pen sion er die during this guarantee p eriod. Many of the 34 con tributory plans guarantee to return as benefits at least the amount of m oney contributed by the w ork er, usually with in terest. These com m on form s o f pension p ro m ise s are illu stra ted by the follow in g cla u ses: L ifetim e (stra ig h t-life) only The m onthly amount o f retirem en t ben efit... shall be p a y able in m onthly installm ents com m encing on his retirem en t date and term inating with the m onthly paym ent coinciding with or next p reced in g the date o f his death. Guarantee p e rio d (payment certa in ) If a pen sion er shall die within the 36-m onth p eriod beginning with the e ffe ctiv e date o f his pen sion, then the ben efit to which 16 See BLS Bull. 1307, op. cit.

34 25 he was entitled shall b ecom e payable to the surviving w ife. If the surviving w ife should die b e fo re the rem ain der o f the 36-m onth p eriod, or if there is no surviving w ife at the tim e of the death of the p en sion er, benefits fo r the rem ain der o f the 36-m onth p eriod shall b ecom e payable and divided equally among the s u r viving dependent child or dependent ch ild ren at the tim e of death of the pen sion er or the su rvivin g w ife as the ca se m ay be. B enefits payable under this p rovision shall cease on the death of the surviving w ife and of the last surviving dependent child or at the end of the 36- month p eriod, w hichever shall fir s t o ccu r. Guaranteed return of em p loy ee contribution with in terest (m od i fied cash refund)17 Upon death o f a pen sion er, any e x cess of the amount of his con tributions with in terest at the tim e o f retirem en t over the sum of pension paym ents receiv ed shall be paid to his designated b en eficia ry... P en sion paym ents stop upon the death of the pen sion er (paym ent fo r life, only) in 80 p ercen t of the m u ltiem p loyer plans coverin g alm ost 90 p ercen t of the w ork ers (table 13). E leven p ercen t (82) of the plans, with 9 p ercen t of the w o rk e r s, m ainly in the food and con stru ction in du stries, p ro m ise d that if the w ork er died b efore receivin g a guaranteed num ber of pension paym ents, the rem aining paym ents would be continued tp his beneficiary,* usually his w idow. Such g u a r antees w ere included in a sm a ller p rop ortion of insured than of the self-in su re d plans (table 14). Although the length of the guarantee ranged fro m 1 to 15 y e a rs, it was ra rely le ss than 3 y e a rs, and usually ran fo r either 3 (35 plans) o r 5 y ears (30 plans). Guarantee period All plans with payment-certain guarantees months months months months months months months months months Other Workers** Plans, (thpugapqg.) (2) t>p 3.0 Worker coverage includes both active and retired workers in Fewer than 50 workers. * Guarantee period varies by years of service. NOTE; Because of rounding, stuns of individual items may not equal totals. 17 The w ord "m od ified " is used h ere to distinguish this type of guarantee from one guaranteeing the return of the e m p lo y e r's contributions as w ell as the em p loyee's contributions.

35 26 F ourteen of the 30 join tly financed plans p rom ised a m odified cash r e fund, i. e., to m ake a sufficient num ber of paym ents to the w ork er and, after his death, to return to his b en eficia ry at least his contributions, with o r, in som e plans, without in terest. Two plans provid ed that if total paym ents w ere le ss than the co st o f the benefit at retirem en t the balance would be paid to a b en eficia ry (i. e., a fu ll cash refund). Six plans provided a ch oice of benefits in such a way that it was not p o s sib le to determ ine which was the b a s ic paym ent m ethod (i. e., the benefit that would be paid if the w ork er failed to m ake a ch oice). F or exam ple, one plan stated that: The participant (i. e., retiree)... m ay e x e r cis e, with the approval of the tru stees, one of the options h erein a fter set forth... (a) the tru stees can purch ase fo r the participant a paidup annuity con tract in such fo rm... as the participant m ay request, o r (b) the tru stees m ay pay him a fixed sum of m oney p er month as long as he shall liv e, and paym ent of such m onthly am ounts shall ce a se upon the exhaustion of such p a r t ic i p a n ts account, o r (c) the tru stees m ay, on their own m otion, or at the request of the participant involved... p rovid e fo r a lu m p-su m paym ent. Seventeen plans, m ost of which did not have a s p e cific benefit form u la, indicated that paym ent would be m ade in a lump sum (5 plan s), o r in in s ta llm ents o f either a sp ecified amount o r duration, o r both (12 plan s), to w ork ers retirin g at n orm al retirem en t age. T hese plans w ere usually sm all self-in su red plans in the apparel and con stru ction in dustries. This cash benefit was usually lim ited to the amount of contributions in the individual w ork er 1 s account, as illu s trated by the follow in g clau se: In the event participants retire from the industry, the fund shall pay to such participant the sum of $50 p er month until the m on eys o f such individual account have been exhausted. Optional F orm s o f B enefit P aym en t. R etirem ent benefit paym ents n orm ally cea se upon the death of the p en sion er, u n less, as p reviou sly d iscu ssed, a m inim um num ber of paym ents o r amount is guaranteed (in som e way) or if there is a death benefit p rov ision. (See page 39.) H ow ever, about 1 out o f 7 m ulti em p loyer plans, like many single em ployer plans, also provid e one or m o re optional fo rm s o f benefit paym ents under which benefits m ay be paid to a b en eficia ry after the p e n s io n e r s death (table 15). W ork ers electing an option through which benefits are continued to their b en eficia ries m ust accep t a reduced pension during their lifetim e. T hese options, like m ost ea rly retirem en t p r o vision s and so cia l secu rity adjustm ent options, are usually of the sam e actuarial value as the n orm al pensions they rep la ce, so as not to in cre a se the co st of the plan; i. e., the w ork er bears the entire cost of the option. To m in im ize a dverse selection against the plan by w ork ers in p o o r health at retirem en t, the optional fo rm m ust usually be elected w ell b e fo re retirem en t m ost often 5 y ea rs in advance unless the w ork er can show evid en ce of good health at re tire m e n t. 18 The m ost com m on type of option was the join t and su rv ivor option, under which the w orker elects to receiv e a reduced benefit fo r life with a guarantee that, if he dies while his b en eficia ry is living, paym ents at a pred eterm in ed ratio w ill continue to his b en eficia ry fo r life. This is illu strated by the follow ing clau se: 18 A m o re detailed analysis of optional benefits w ill be presen ted in a forth com in g BLS bulletin, op. cit.

36 27 Digitized for FRASER... Instead o f receivin g the norm al retirem en t benefit, the em ployee m ay e le ct a reduced retirem en t annuity to be paid as long as he liv e s, with the future p rov ision that all o r part of this reduced retirem en t annuity w ill be continued after his death during the rem aining lifetim e o f a b e n e ficia ry (known as the join t annuitant) nam ed by him.. This option was available in 101 plans, coverin g about 7 p ercen t o f the w ork e rs. The p e rio d -ce rta in option, available in 26 plans, usually in com bination with a join t and su rvivor option, allow s the pen sion er to e le ct to r e ceiv e a reduced ben efit fo r life on the condition that, if he dies b e fo re receivin g a sp e cifie d num b e r of paym ents, the balance w ill be continued to his b en eficia ry. F or example': A participant m ay, in lieu of all paym ents oth erw ise payable to him on and after his retirem en t annuity date, e le ct the life annuity-certain option providing paym ents as fo llo w s: (a) To the participant: A reduced retirem en t annuity, the fir s t m onthly paym ent th ereof being payable on the p a rticip a n t*1 s retirem en t annuity date, if he is then living, subsequent m onthly paym ents being payable on each due date th ereafter throughout his rem aining lifetim e, term inating with the last m onthly paym ent p r io r to his death. (b) To the p a rticip a n ts b e n eficia ry : The continuation of such reduced retirem en t annuity paym ents, if the participant dies b e fo re receivin g a total of 120 m onthly paym ents o f such reduced retirem en t annuity, until a total of 120 m onthly retirem en t annuity paym ents in all has been m ade to the participant and to his b en eficia ry... The cash -refu n d option o ffe red by fou r plans p rov id es that if total b en e fits re ce iv e d by the pen sion er are le ss than the cost of purchasing the benefit at retirem en t, the balance w ill be paid to his b en eficia ry. The m od ified ca sh - refund option, on the other hand, p rovid es that if total benefits re ce iv e d by the pen sion er are le s s than the w o r k e r s contribution (with or without in terest), the balance w ill be paid to a designated b en eficia ry. Only 1 plan o ffe red this option because all but 16 of the 34 con tributory plans p rovided a m od ified cash refund as the standard o r norm al fo rm o f annuity. In addition, fou r other plans, n orm ally providing som e type of guarantee, allow ed the w ork er to e le ct a straight life annuity paying a la r g e r m onthly b en efit of equal actu a ria l value. P rov is io n fo r optional form s was m ost com m on among plans in food m anufacturing, con stru ction, and trade. P o ssib ly a re fle ctio n of the g reater ex p erien ce o f insurance com panies in adm inistering options, 35 p ercen t o f the insured plans as com pared with only slightly m o re than 10 p ercen t o f se lf-in su re d plans offered optional form s o f paym ent (table 16). Am ount of N orm al R etirem ent B en efit. In o rd e r to evaluate m u ltiem p loyer plans in term s o f the amount o f retirem en t ben efit provid ed, the m onthly amount of norm al pension benefits was com puted fo r each plan, w here p o s sib le, under the follow in g assum ed con dition s: 1. The w ork er w ill re tire at age 65 (except fo r nine plans w here a higher m inim um age was sp ecified ). 2. Annual earnings o f $ 4, This earnings level was assum ed to be constant throughout the w o r k e r's ca r e e r, although som e plans would pay the sam e ben efit if his average earnings fo r certain y ea rs (e.g., the 10 im m ediately b e fo re retirem en t) or if his ca re e r average earnings w ere $ 4,8 0 0.

37 19 Under so cia l secu rity p rovision s in effect in 1961, the m axim um benefit of $127 fo r w ork ers at the assum ed earnings le v e l of $ 4,8 0 0 p er year w ill not be payable, with a few exception s, until after 35 y e a rs, although w ork ers m ay b ecom e eligib le fo r slightly less than the m axim um m uch soon er. Digitized for FRASER Future s e r v ice cred its of 30 y e a rs. Since few o f these plans have distin ctly differen t past and future s e r v ice b en efits, the amounts com puted, in gen eral, a lso apply to w ork ers retirin g at the p resen t tim e. No benefit amount could be com puted fo r 69 plans coverin g 89,500 w ork e rs either because they had no ben efit form u la o r su fficien t inform ation was not available. Monthly benefit amounts thus com puted ranged fro m $10 to $230. A fourth of the plans coverin g about the sam e p rop ortion of w ork ers provid ed b e tween $50 and $60 a month as shown in chart 2. The average ben efit paid by these plans amounted to $ influenced by a substantial num ber of w ork ers in plans paying $100 o r m o re. Plans Workers1 Monthly benefit excluding Number social security Number Percent (thousands) Percent All plans for which benefits were computed d , Under $ $30 and under $ $4-0 and under $ $50 and \inder $ $60 and under $ $70 and under $ $80 and under $ $90 and under $ $100 and under $ $110 and under $ $120 and under $ $130 and o v e r Average monthly benefit * $ Worker coverage includes both active and retired workers in In 69 plans, covering 89,500 workers, benefit amounts could not be computed. (See explanation in text.) 5 Arithmetic mean, weighted by workers covered. NOTE: Because of rounding, sums of individual items may not equal totals. If the m axim um p rim a ry s o cia l secu rity ben efit of $12719 is added to plan ben efits, total m onthly retirem en t in com e ranges from $137 to $357. The average fo r all w ork ers in cre a se s to $ ($ plus $127), representing alm ost half (48.8 p ercen t) of the assum ed p reretirem en t earnings level of $ 4, Plans providing m onthly benefit amounts w hich, when added to m axim um p rim a ry so cia l secu rity ben efits, would equal $ 200, o r at lea st half of the w orker* s p r e retirem en t in com e, w ere m ost com m on in food, m etalw orking, con stru ction, m otor transportation, trade, and m otion pictures and recreation (table 17). On the average, self-in su red plans provid ed slightly higher m onthly benefits than insured plans $ and $ , re sp e ctiv e ly (table 18). M ore than 1 out of 4 s e lf-in su re d plans (coverin g 4 out of 10 w ork ers under such plan s), as com pared with slightly le ss than 1 out of 4 insured plans (with m o re than 7 out of 10 w o rk e rs ), provid ed benefits which, when supplem ented by m axim um p rim a ry so cia l secu rity b en efits, amounted to at least half of p reretirem en t earnings.

38 29 Chart 2. Monthly Normal Retirement Benefits (Excluding Social Security) for a Worker Earning $4,800 a Year With 30 Years of Future Service In Multiemployer Pension Plans Under Collective Bargaining, Spring I960 1 Percent Percent Under $30 $40 $50 $60 $70 $80 $90 $100 $110 and under and $30 $40 $50 $60 $70 $80 $90 $100 $110 Over Normal Monthly Benefit. 1 Based on a study of 736 multiemployer pension plans under collective bargaining covering 3,229,800' workers/ active and retired, in In 69 plans covering 89,500 workers, benefit amounts could not be computed and have been excluded from the chart.

39 30 B enefits averaged a little higher in flat ben efit form u las than those in w hich the benefit form u las v a ried by s e r v ice $ and $ , resp ectiv ely (table 19). In part, this d ifferen ce is attributable to (1) paym ent of m axim um benefits under the s e rv ice plans after 20 and 25 yea rs o f s e r v ic e, and (2) inclu sion of se v e ra l large T eam sters* plans providing a flat ben efit o f $13520 a month fo r only the fir s t 5 y ears of retirem en t, but a substantially reduced b en e fit th erea fter. (See page 23. ) E arly and D isability R etirem ent, and Vesting M ulti em p loyer pension plans, as a group, p rovid e all o f the su bsid iary benefits found in single em ployer plans, but with a d ifferen t em phasis reflectin g d ifferen ces in the nature of the bargaining relationship and the labor m arket. Slightly m o re than a fourth of m u ltiem p loyer plans, coverin g tw o-fifth s o f the w o rk e rs, p rovid ed a norm al retirem en t ben efit only (table 20). Another fourth of the plans added a disability retirem en t p rov ision. The rem aining half of all m ulti em p loyer plans had differen t com binations o f early and disability r e tir e m ent and vesting. The p revalen ce of these p rov ision s am ong the 736 m u ltiem p loy er plans studied is shown below : ~ Flans...MonteEs. Number Provision Number Percent (thousands) Percent All plans , Early retirement Disability retirement , Vesting ^ Information not available * Worker coverage includes both active and retired workers in 1959* 2 Excluded are plans which provided early retirement for women only. Excluded are plans which provided lump sum disability benefits only. ^ Excluded are plans which provided lump sum termination benefits only. A s shown below, only 70 plans coverin g 195,000 w ork ers p rovid ed, in addition to norm al retirem en t, all three m a jo r benefits early retirem en t, d isa bility retirem en t, and vesting. The con stru ction industry accounted fo r 31 of these plans (table 2 1 ) and 52 w e re in s e lf-in s u r e d plans (table 22). --- Elans --- MQgker&;f>..- Major benefits provided in addition Number to normal retirement Number Percent (thousands) Percent All plans , No additional benefits , Disability retirement only Disability retirement And early retirement and vesting And early retirement And vesting Without disability retirement With early retirement and vesting With early retirement only With vesting only Information not available Worker coverage includes both active and retired workers in 1959* NOTE: Because of rounding, sums of individual items may not equal totals. 20 This amount was used in the distributions and in the com putation o f the foregoin g a vera ges. Digitized for FRASER

40 31 E arly R etirem ent P r o v is io n s. E arly retirem en t, as the term is used in pension plans, m eans retirem en t b e fo re the norm al retirem en t age sp ecified by the plan. U sually the benefit is reduced below the a ccru ed norm al benefit to com pensate fo r the lon ger p e rio d ov er w hich benefits a re expected to be paid. Although ea rly retirem en t benefits are always payable im m ediately on r e tir e m ent, under som e plans the fully qualified w ork er m ay ch oose to d efer receivin g a ben efit until he attains the n orm al retirem en t age in the plan when the fu ll, o r reduced ben efit is payable. E arly retirem en t is alm ost always at the option of the w ork er under m u ltiem p loyer plans. Age and s e rv ice requirem ents are typically stipulated in early r e tir e m ent p rovisio n s, as in the follow ing exam ple:... Any em ployee m ay re tire early on a reduced lifetim e pension provid ed he has: (i) Attained his 55th birthday; (ii) C om pleted 15 o r m o re yea rs o f s e r v ice. Its amount is calcu lated as fo llo w s: (i) The e m p lo y e e ^ n orm al pension based upon his com pleted s e r v ice is determ ined; and (ii) His early pension is then obtained by reducing the amount in (i) by Vio p ercen t fo r each full month w hich rem ains from the date of e a rly retirem en t until his 65th birthday... Slightly m o re than a third o f the m ulti em p loyer plans, coverin g alm ost a fourth of the w o rk e rs, had an early retirem en t p rov isio n applicable to all co v e re d w o rk e rs, reg a rd less o f sex, as con trasted with 90 p ercen t of the single em ployer plans coverin g 95 p ercen t of the w o rk e rs. T hese p rov ision s w ere m ost prevalent in food, printing, m etalw orking, con stru ction, m otor transportation, trade, and s e r v ice industries (table 23). An additional 38 plans, coverin g 677, 000 w o rk e rs, perm itted early r e tirem en t fo r w om en only, usually at age 62. One o f the plans stated, fo r e x am p le, that: If you are a fem a le, you m ay... requ est to retire and r e ceive a reduced pension b e fo re your 65th birthday. If your requ est is approved, your pension w ill begin when you retire the 1st day o f any month on o r a fter you attain age 62. Seventeen of these plans, accounting fo r 614,000 w o rk e rs, w ere in the apparel in d u stries, w here a large m a jority of em ployees are w om en. Industry group All plans with early retirement for women only Plans - 38 Workers- (thousands) Pood and kindred products Apparel and other finished textile products Wholesale and retail trade Services Other ^ Worker coverage includes both active and retired workers in 1959* 2 Includes 1 plan with 1,400 workers in printing, 1 plan with 1,900 workers in metalworking, 1 plan with 2,300 workers in miscellaneous manufacturing, 1 plan with 1,600 workers in construction, and 1 plan with 3,600 workers in motion pictures and recreation. Digitized for FRASER NOTE: Because of rounding, sums of individual items may not equal totals.

41 32 The m edium of funding (insured o r se lf-in su re d ) appears to have little or no effect on whether early retirem en t was provid ed, perhaps becau se its inclusion is virtually co stle ss to the plan if the benefit reduction is based on actuarial fa cto rs. Although over a third of both se lf-in su re d and insured plans p rovided fo r early retirem en t, on ly. 10 p ercen t of the w ork ers co v e re d by insured plans w ere included as com pared with nearly 30 p ercen t of those cov e re d by s e lfin su red plans. T o t a l Early retirement Medium of funding Plans Workers^ (thousands) Plans Workers 1 (thousands) All plans , Insured Self-insured , Other , ^ Worker coverage includes both active and retired workers in 1959* NOTE: Because of rounding, s ms of individual items may not equal totals. The ea rly retirem en t p rov ision s of 39 plans with about 135, 000 w ork ers contained a le v e l retirem en t, o f a so cia l secu rity, adjustm ent option w hich p r o vides a level in com e (including both private and p rim a ry so cia l secu rity ben efits) throughout the entire retirem en t p eriod, even though full s o cia l secu rity benefits do not com m en ce until age 65 (table 24). 21 P en sion ers selectin g this option r e ceiv e a m onthly ben efit la rg e r than the regular early retirem en t ben efit until full p rim a ry s o cia l secu rity benefits are payable at age 65. A fterw ards they get a sm a lle r plan ben efit than n orm a lly paid. F o r exam ple, one plan stated: An em ployee entitled to a pension after age 55 and b e fo re age 65 m ay elect a so cia l secu rity level incom e option in lieu o f the pension otherw ise payable to him. If he elects this option he w ill re ce iv e a higher m onthly amount from the fund fo r each month b e fo re the month in which he attains age 65 and a low er m onthly amount from the fund fo r life th ereafter. The gen eral pu rp ose of this option is to provid e an early retirem en t pen sion er with a m o re or le ss level in com e fo r life, taking account of his likely receip t of the p rim a ry so cia l secu rity benefit after he attains age 65. The higher amount payable b e fo re attainment of age 65 and the low er amount payable on and after attainment of age 65 shall be determ ined on the b a sis of actuarial equivalence. A fourth of the insured plans with early retirem en t provid ed this option as against 1 out of 8 se lf-in su re d plans with early retirem en t (table 25). Such p rovision s w ere m ost com m on in food, con stru ction, trade, and s e rv ice in dustries. As d iscu ssed p reviou sly, five se lf-in su re d plans in the trucking industry with a n orm al retirem en t age at 60 have a so cia l secu rity adjustm ent built into the benefit form u la (page 23). 21 Under curren t prov ision s of the S ocial S ecurity A ct, full p rim a ry in su r ance benefits are payable to qualified w ork ers retirin g at age 65 or o v er. Since August 1, 1961, m en, and sin ce 1956, w om en m ay e le ct to re ce iv e a perm anently reduced b en efit to begin betw een ages 62 and 65. Digitized for FRASER

42 22 F requently a 6-m onth waiting p eriod, during which the severity of the d isab ility m ay be determ in ed, m ust elapse b e fo r e ben efits a re payable. 23 Plans which paid disability benefits only at age 65 w ere not counted as providing disability benefits in both studies. In these plans, s e r v ice was credited o r fro zen after total and perm anent disability until age 65, and then the norm al benefit was payable. They w ere found in 17 m u ltiem p loyer pension plans c o v ering 4 1,800 w o rk e rs, p rim a rily in the apparel and se rv ice industries. Digitized for FRASER 33 C onsidering plans with low n orm al retirem en t ages o r an early r e tir e m ent p ro v isio n, m o re than 40 p ercen t of the m u ltiem p loyer plans, with 60 p e r cent of the w o rk e rs, perm itted retirem en t b e fo re age 65 (e. g., at age 62 the early retirem en t age under s o cia l secu rity), as shown below : Plans Workers 1 Provision Number Percent Number (thousands) Percent All plans , No provision for retirement before age , With provision for retirement before age , Low normal retirement age (full benefit) Early retirement provision for all workers (reduced benefit) *K Early retirement provision for women only (reduced benefit) ^ Worker coverage includes both active and retired workers in 1959* NOTE: Because of rounding, s ms of individual items may not equal totals. D isability R etirem ent P r o v is io n s. D isability retirem en t b en efits, when provided, are p a y a b le 22 to totally and perm anently disabled w o rk e rs, provided they m eet certain age a n d /o r s e r v ice requ irem en ts. In contrast to early r e tir e m ent, benefits are often the sam e as or higher than norm al retirem en t benefits. An illu strative p rov ision follow s: An em ployee shall be entitled to re tire on a disability pension if he m eets the follow ing two requ irem en ts: (a) He b e co m e s totally and perm anently disabled after he has attained age 55 but b e fo re he has attained the age of 65 y ears. (b) He has pen sion cred its fo r at lea st 15 y e a rs... T here w ill be determ ined the amount of early retirem en t pen sion to which the applicant would be entitled based on the y ears of pension cred it which the em ployee has earned up to the tim e of his disability. The d isability pension shall be $ 10 grea ter than the said ea rly retirem en t benefits e x cept that in no event shall the disability pension exceed the amount that would be payable if the em ployee had attained age 65 at the date he b eca m e disab led. D isability benefits w ere p rovided by m o re than half of the m u ltiem p loyer plans with ov er 45 percen t of the w o rk e rs, as com pared with alm ost 80 p ercen t of the single em ployer plans with alm ost 90 p ercen t o f the w ork ers. 23 The p r o vision s w ere m o st com m on in food, apparel, printing, m etalw orking among the

43 34 m anufacturing in du stries, and in con stru ction, m otor and w ater transportation, and trade among the nonm anufacturing in du stries. (See table 23. ) Disabilitypensions w ere p rovided by 55 p ercen t of the s e lf-in su re d plans coverin g alm ost half of the w ork ers under s e lf-in su red plans, as against 42 p ercen t of the insured plans with about a sixth of the cov era ge of such plans. 4 Total Disability retirement Medium of funding Plans Workers 1 (thousands) Plans Workersl (thousands) All plans , i, m. 5 Insured Self-insured , * Other ^ Worker coverage includes both active and retired workers in NOTE: Because of rounding, sums of individual items may not equal totals. T w en ty-seven plans coverin g 215, 300 w ork ers p rovid ed only fo r a cash paym ent to w ork ers fo rce d to retire because o f total and perm anent disability, as in the follow in g exam ple:... The amount of the d isa b ility b en efit shall be an amount determ ined by m ultiplying $2 by the num ber of w eeks during w hich em ployer contributions have been m ade to the trust fund on beh alf of the em ployee... but in no ca se shall the amount o f the disability benefit exceed $2, 000. The disability ben efit shall be payable 6 months after com m encem ent of total and p e r m anent disability, or 3 months after receip t of the due p r o o f of such disability by the tru stees, w hichever is later. Upon paym ent of the disability ben efit such em ployee shall be deem ed to have term inated his m em bersh ip in the plan and shall not be entitled to participate hereunder to any extent or fo r any oth er ben efit. T hese 27 plans w ere not con sid ered as containing a regu lar d isability p rov ision. Such p rov ision s w ere m ost com m on in self-in su re d plans in constru ction and m o to r tran sp ortation (including the la rg e C entral States T eam sters* plan) The developm ent of the deposit adm inistration group annuity plan has en abled plan tru stees to include d isability benefits in the la rg e r insured plans, sin ce p o s sib le adverse ex p erien ce is tra n sferred from the in su rer to the fund. Under a dep osit adm inistration plan, the insurer* s obligations and guarantees are lim ited to the benefits already purchased. To provid e disability benefits under such a plan, the fund m ay p u rch ase tem p orary annuities until the disabled w ork er reach es 65 o r is no lon ger disabled. At 65, the fund purch ases the regu lar annuity from the in su rer. 25 Six plans coverin g 4, 200 w ork ers with regu lar d isability retirem en t b en e fits a lso gave the w ork er the option to r e c e iv e such ben efit in a lump sum. Digitized for FRASER

44 Industry group Plans,, Workers 1.(thousands) All plans with cash disability benefits Pood and kindred products Apparel and other finished textile products Leather and leather products ---- Metalworking Miscellaneous manufacturing Contract construction Motor transportation Wholesale and retail trade Services u A * Worker coverage includes both active and retired workers in NOTE: Because of rounding, sums of individual items may not equal totals, Vesting P r o v is io n s. Vesting is a guarantee to the w ork er of a right o r equity in a pension plan, based on all o r part of the e m p lo y e e s contributions m ade in his behalf (in term s of a ccru ed pension ben efits) should his em ploym ent or cov era g e by the plan be term inated b e fo re he attains eligib ility fo r regular (norm al o r ea rly) retirem en t b en efits. This right is usually payable in the form o f a retirem en t ben efit at the norm al retirem en t age designated in the plan, w h erever the w ork er is then em ployed, as in the follow ing exam ple:.. an em ployee who has a ccru ed 10 y ears of cred ited s e rv ice o r m o re at the tim e he cea se s to be em ployed by an em ployer shall be entitled to re c e iv e, at age 65, a m onthly ben efit equal to a n orm al retirem en t ben efit com puted on the b a sis o f his cred ited s e r v ice at the tim e of cessa tion of em ploym ent. F ew er than 1 out of 4 m ulti em p loyer plans, coverin g nearly 1 out of 5 w o rk e rs, had a vesting p ro v isio n, as con trasted with 7 out of 10 single em p loy er plans coverin g 5 out of 6 w o rk e rs. Although not a com plete substitute fo r vestin g, the p ortability of pension cred its inherent in m u ltiem p loyer plans, as p reviou sly explained, p rovid es the sam e so rt o f p rotection as a vesting p r o v ision in a single em p loyer plan. Vesting p rov ision s w ere m ost com m on in food, printing, m etalw orking, con stru ction, m otor transportation, and trade in du stries. (See table 23. ) Slightly m o re than half of the insured plans with alm ost 3 out of 4 c o v ered w o rk e rs, as com pared with only 1 out o f 6 s e lf-in su red plans with 1 out of 7 w o rk e rs, had vesting. The custom of including the vesting of the w o rk e r's pension rights in insured plans accounts fo r this d iffe re n ce, both in m u ltiem p loyer and sin gle em p loy er plans. JE&fcal Medium of funding Plans Workers1 (thousands) Plans Workers1 (thousands) All plans , Insured ^0.4 Self-insured , Other * Worker coverage includes both active and retired workers in NOTE: Because of rounding, sums of individual items may not equal totals.

45 36 T h ree-fou rth s of the 168 plans with vesting p rov ision s p rovid ed d eferred full vesting under which the w ork er retains a right to all a ccru e d ben efits if his s e r v ice term inates after he attains a sp ecified age, o r com p letes a designated p e rio d o f s e r v ice, o r both. O ne-fifth of the plans had d e fe rre d graded vesting, under w hich the w ork er acqu ires a right to a certain p ercen tage of a ccru ed b en e fits when he m eets sp ecified requ irem en ts. This p ercen tage in cre a se s as additional requirem ents are fu lfilled, until the w ork er is fully vested. Only six plans provid ed im m ediate full vesting under w hich, in con trast to the m ethods of d e ferrin g an equity in em p loyer contributions until certain age o r s e r v ice requ ire m ents have been fu lfilled, the w ork er secu res a vested right to his entire accru ed benefits im m ediately upon being cov ered by the plan. Other types of vesting, such as d e fe rre d graded partia l, im m ediate graded partial vestin g, are m o d ifications of the m o re com m on vesting cla sse s applicable to part o f a w orker*s accru ed ben efits. B ecau se the 35 plans with d e fe rre d graded vesting included 1 la rge plan (W estern C onference o f T ea m ste rs), they cov e re d only 18 percen t few er w ork ers than the 127 plans with d eferred full vestin g, as shown below : Plans Workers 1 Type of vesting provision Number Percent Number (thousands) Percent All plans with vesting Immediate full vesting Deferred graded vesting *. 9 Deferred full vesting ^ Worker coverage includes both active and retired workers in 1959* 2 Includes 1 plan with 700 workers providing immediate graded vesting. 5 includes 6 plans with 28,300 workers providing deferred graded partial vesting. Includes 3 plans with 1,100 workers providing deferred partial vesting. NOTE: Because of rounding, sums of individual items may not equal totals. Illustrative p rov ision s o f the m o re com m on types o f vesting a re: D eferred full vesting Any em ployee who has accum ulated a total o f 15 y ears o f cred ited s e r v ice in this plan shall have his rights to p a rticipation in this plan fully vested... D e fe rre d graded vesting Any em ployee w hose em ploym ent is term inated p r io r to his early retirem en t date shall be entitled to a d e fe rre d retirem en t benefit payable at age as fo llo w s: C redited s e r v ice units, for p u rp oses of calculating this d e fe rre d allow ance shall be only those accum ulated sin ce May 1, 1957, when contributions by the em p loy er began. The retirem en t b e n e fit payable at age 65 shall be based on the follow ing percen tages o f accum ulated cred ited se rv ice units sin ce May 1, 1957, m u ltip lied by the m onthly amount p rov id ed in paragraph (c) 1*

46 m Credited service units Percentage /of benefit/ Less than but less than but less than but less than but less than but leas than or m o r e Im m ediate fu ll vesting The w ork er shall be im m ediately vested in em p loyer contributions. Instead o f providing vested ben efits, 29 plans, coverin g 45,6 0 0 w o rk e rs, provid ed only fo r the paym ent of im m ediate cash benefits to w ork ers term inated after having m et sp ecified requ irem en ts. T hese plans w ere not con sid ered as having vesting p rovision s becau se they did not p rovid e any retirem en t benefits to term inated w o rk e rs. These p rov ision s re se m b le, both in term s o f re q u ire m ents and benefits paid, d ism issa l o r severa n ce allow ances. 26 The 29 cash term ination plans had their greatest cov era g e, as shown by the follow ing tabulation, in food m anufacturing, printing, m etalw orking, con stru ction, and trade. M ost of them w ere se lf-in su re d. Cash termination benefit only Cash termination benefit for worker*s not fulfilling vesting requirements Industry group Plans Workers* (thousands) Plans Workers1 (thousands) All plans with cash termination benefits * Pood and kindred products Apparel and other finished textile products Printing, publishing,and allied.5 industries Leather and leather products _.7 Metalworking Miscellaneous manufacturing _ Contract construction Motor transportation Wholesale and retail trade A Services Worker coverage includes both active and retired workers in plans with 220,800 workers allowed vested workers to elect a cash benefit instead of a vested benefit after completing further age and/or service requirements. NOTE: Because of rounding, sums of individual items may not equal totals. 26 See C ollective Bargaining C lauses: D ism issa l Pay,BL>S B ull (1957).

47 38 Another 12 plans included in the 168 plans with vesting p rov ision s p r o vided cash benefits to w ork ers not m eeting vesting requ irem en ts. T w enty-four plans, coverin g 253,700 w o rk e rs, with regular vesting p rov ision s (including 6 of the above 12 plans) gave the w ork er the option of receivin g his retirem en t b en e fits in a lump sum. Som e exam ples of cash term ination p rov ision s are: An em ployee entitled to vested benefits shall m ake application th erefor on form supplied by the board, and such vested b en e fits shall be paid in a lump sum not later than 60 days after the date paid application is re ce iv e d by the board. A s this plan did not p rovid e regu lar retirem en t benefits fo r the vested w o r k e r s, it was excluded fr o m the tables showing plans with vestin g.... An em ployee who has a ccru ed le ss than 10 yea rs of cred ited s e rv ice at the tim e he ce a se s to be em ployed by an em p loy er, shall be entitled to r e ce iv e, upon application to the tru stees, a lum p-sum paym ent in a ccord a n ce with the follow ing schedule, p rovided he applies fo r such paym ent within 1 year after b ecom in g eligib le th erefor. Years of future service credit at date of cessation of employment Withdrawal payment Less than but less than $50 3 but less than but less than but less than but less than but less than but less than but less than A s this plan also p rovided fo r a vested pension benefit fo r w ork ers with 10 o r m o re y ears o f s e r v ice, it was included with plans providing vesting. In the event an em ployee who has 5 or m ore y ea rs of future s e r v ice cre d it lo se s his cred ited s e r v ice hereunder, he shall... re ce iv e a lump sum term ination benefit equal to 50 p ercen t of the contributions m ade to the fund on his beh alf. No vesting w as included in this plan. At the tim e an e m p lo y e e ^ se rv ice is broken, his rights shall be determ ined as follow s: (a) Digitized for FRASER If, at the tim e of the break in s e r v ice, he has a total of 15 y ea rs of continuous se rv ice and has had em ployer con tributions m ade on his account fo r a total of at lea st 3, 000 co v e re d hou rs, he shall be eligible to rece iv e a cash term ination benefit at any tim e thereafter when he is not in co v e re d em ploym ent. E xcept as provid ed in a rticle VII, paym ent to an individual of his cash term ination ben efit shall be in full settlem ent of all his rights and in terests under the plan.

48 39 (b) (c) If he has m et the conditions set forth in subsection (a) fo r a cash term ination ben efit, has attained his 52d birthday, and he does not elect to re ce iv e his cash term ination b en e fit, he shall be designated as a fo rm e r em ployee and shall be entitled to a vested retirem en t ben efit as h erein a fter d e scrib e d in this a rticle. A fo rm e r em ployee m ay at any tim e elect to rece iv e his cash term ination benefit and upon paym ent th ereof to him he shall cease to be a fo r m e r em p loyee and shall not be entitled to any benefits under the plan, except as p rovided in a rticle VII. If he has not m et the conditions set forth in su bsection (a) fo r a cash term ination ben efit, his past s e r v ice cred it and future s e r v ice cred it shall be can celed and he shall thereupon cease to be an em ployee, and shall not be entitled to any benefits under the plan, except as p rov id ed in a r tic le VII. This plan provided cash benefits only fo r w ork ers not qualified fo r v e sting, and an option o f cash fo r the v ested w o rk e r. Death B en efits M ost w ork ers cov e re d by m u ltiem p loyer pension plans a re also cov ered by a separate group life insurance p rog ra m. Under an in crea sin g num ber of these p rog ra m s, retired w ork ers retain part of their life insurance covera ge. 27 Many pension plans, how ever, a lso provide death benefits to protect the w o rk e r 1 s equity in the plan as w ell as that o f his dependents. Death ben efit p rov ision s analyzed in this study called fo r a paym ent, usually a lump sum, to the w o r k e r s b e n eficia ry, in the event of his death either b e fo re o r after retirem en t. P ro v isio n s fo r the return o f w ork er contributions (with o r without in terest) and those guaranteeing the num ber o r duration o f p a y m ents w ere excluded. 28 Death ben efits are illu strated by the follow ing cla u ses: Death benefits b e fo re retirem en t Conditions fo r Q u alification fo r Death B en efit. Upon the death o f an em p loyee who has not r e tir e d and who dies a fter (a) com pletion of 10 yea rs o f continuous s e rv ice in the industry; and (b) com pletion of 5 y ears o f continuous s e rv ice under a c o lle c tive bargaining agreem en t; and (c) paym ent of 40 w eeks contributions to the trust fund by the em ployer on his behalf th ere shall be payable to his designated b e n e fic ia r y, o r if no such b e n e fic ia r y is designated, to his estate, a death benefit. 27 See Health and Insurance Plans Under C ollective B argaining: L ife Insurance, and A cciden tal Death and D ism em berm ent B en efits, E arly Sum m er I960, BLS B ull (1961). 28 Guarantees o f the num ber o r duration of paym ents w ere regarded as death b en efits in a forth com in g BLS bulletin, op. cit. Digitized for FRASER

49 Amount o f Death B en efit. The amount o f the death ben efit shall be an amount determ ined by m ultiplying $2 by the num ber of w eeks during w hich em ployer contributions have been m ade to the trust fund on behalf of the em ployee sin ce the effective date or the last break in s e r v ice, w hichever is later, but in no case shall the death benefit ex ceed $ 2, 000. Death ben efits a fter retirem en t Upon qu alification fo r a p en sion and during the p e r io d he co n tinues to be entitled to paym ent of such pension, a pensioner shall be e lig ib le fo r a death b en efit in the am ount of $ 1, 500. Death benefits b e fo re o r after retirem en t... Death ben efits shall be paid to the b en eficia ry o r b en e fic ia r ie s o f a d eceased em ployee on the follow ing b a s is : (a) (b) If the em ployee dies b e fo re retirem en t his b e n e ficia ry o r b e n e ficia rie s shall re ce iv e an amount equal to $50 fo r each year of future s e rv ice cre d it he has a ccru ed, com puted in a ccord a n ce with a rticle II, section 4, h ereof. If an em ployee dies after retirem en t, his b e n e ficia ry or b e n e ficia rie s shall receiv e an amount equal to $50 fo r each year of future s e rv ice cred it he has a ccru ed, com puted in a ccord a n ce with a rticle II, section 4, h e re o f, m inus the total retirem en t ben efits w hich have been paid to such e m p loyee up to the tim e of his death. Death benefits b e fo re and after retirem en t Subject to the p rovision s of this section, and unless pension paym ents equalling the lum p-sum paym ent have already been paid, a lu m p-su m paym ent shall be m ade to the b e n e ficia ry of an em p loyee or p en sion er upon his death after F ebru ary 1, The amount of the lum p-sum paym ent shall be in a ccord a n ce with the follow ing schedule and based on pension cred its earned by actual w ork in cov ered em ploym ent after O ctober 1, 1950, as provid ed in section IV, a rticle 3. Any pension benefits paid to pensioner shall be deducted from the lu m p-su m paym ent w hich m ay be due. Pension credits earned by actual work in covered employment, October 1, 1950 Lump-sum death benefit amount At least 5 but less than 6 years $500 At least 6 but less than 7 years At least 7 but less than 8 years At least 8 but less than 9 years At least 9 but less than 10 years years or m o r e ,000 If an em ployee incurs a break in se rv ice as defined in section 6 of a rticle III, he shall lo se all cred it fo r his p r io r cred ited s e r v ice.

50 41 F ive plans provid ed sp e cia l w id ow 's ben efits. is typical: The follow ing illu stration... In the event a w idow su rvives an em ployee who has been receivin g a pen sion and who dies after attaining the age of 65 y e a rs, and in the event such w idow shall have been m a rrie d to such em ployee fo r a p e rio d o f not le s s than 10 y ea rs and shall have attained the age o f 50 y e a rs p r io r to the death o f such e m p loy ee, then such w idow shall be eligib le fo r a pension of $25 m onthly, to be paid to h er until h er death o r rem a rria g e, w hichever shall fir s t o ccu r. P ro v isio n s fo r death benefits b e fo re retirem en t w ere found in about the sam e p rop ortion of m u ltiem p loyer plans as p rov ision s fo r such benefits after r e tirem ent 17 and 15 p ercen t, re sp e ctiv e ly, with each coverin g over a fourth of the w ork ers (table 26). In con trast, le ss than 7 p ercen t of the single em ployer plans, coverin g le s s than 10 p ercen t of the w o rk e rs, had such ben efits. P r e retirem en t death benefits w ere m o re com m on ly p rovid ed w ork ers in nonmanufacturing industries esp e cia lly m ining, con stru ction, and m otor transportation than in m anufacturing in dustries. P ostretirem en t death b en efits, h ow ever, w ere m o re prevalen t in m anufacturing in du stries, m ainly b eca u se such benefits w ere included in the apparel industry plans and la rgely excluded from the m otor tran sp ortation plans. S ixty-fou r plans with 351,1.00 w o rk e rs, provid ed death benefits both b e fo re and after retirem en t. As the follow ing tabulation show s, m o re w ork ers w ere cov ered by plans providing only p reretirem en t (including the large W estern Conferen ce of T ea m sters plan), o r only p ostretirem en t benefits (including large plans in the app arel industry) than b y those providin g both. Death benefits Workers ^ Before After Plans (thousands) retirement retirement , X X 59 <*79.9 X ** 9 **97.9 X 533 1,869.9 Not provided Information not available ^ Worker coverage includes both active and retired workers in 1959* NOTE: Because of rounding, sums of individual items may not equal totals. A fifth of the insured plans as com pared with a seventh of the s e lfinsured plans had a death ben efit b e fo re retirem en t. H ow ever, a tenth o f the insured plans had p ostretirem en t death benefits as against a sixth of the s e lfin su red plans (table 27).

51

52 Chapter IV. Administrative Procedures Joint u n ion -em p loyer adm inistration of em ployee pension funds is one o f the im portant asp ects of m u ltiem p loyer plans. This developm ent, as p reviou sly m entioned, can be d ire ctly attributed to the L abor M anagem ent R elations (T a ft- H artley) A ct, 1947, su bsection 302 (c) (5) (B ), which requ ires equal union and em ployer representation in the m anagem ent of a pension fund established by a union and partly o r w holly financed by the em p loyer. Since, only m u ltiem p loyer funds established b efore January 1, 1946, are exem pt from this su bsection, there was p ro v isio n fo r equal represen tation in the adm inistration o f a ll but 18 of the plans studied. G en erally, the join t board appointed by the union and em p lo y e rs has a l m ost unlim ited pow ers and rights, including the determ ination of plan benefits, selection o f m edium o f funding, designation of funding m ethods, d a y -to -d a y adm in istration, etc. The m a jor exception, as p reviou sly d iscu ssed, is the rev ision of the b a sis and amount of contribution, which is always rese rv e d fo r the p arties to determ ine by co lle ctiv e bargaining. Such mutual m anagem ent is, by contrast, uncom m on in single em ployer plans. 29 F orm a l rules of p roced u re are requ ired in m u ltiem p loyer plan adm in istration, p a rticu la rly sin ce the funds are the resp on sib ility of groups w hose in te r ests, in this o r other resp e cts, often clash. Thus, fo r exam ple, p roced u re fo r the settlem ent o f disputes by neutrals is n e cessa ry because the m em b ers of the board have, at least in theory, no re co u rse to the econ om ic sanctions found in c o lle ctiv e bargaining. Since the b a sic docum ents (co lle ctiv e bargaining agreem ent and tru st agreem ent) setting the pattern fo r the g en era l op era tion o f a m u ltiem p loyer plan stem from union and em ployer agreem ent, they invariably seek to p ro te ct the rights o f each group. The com p osition and p roced u res o f the b oard s, as provid ed fo r in c o lle c tive bargaining agreem ents o r in trusts agreem en ts, are d e scrib e d in this chapter. F irst, the com p osition o f the boards the num ber o f m em b ers, th eir d ivision betw een the groups represen ted, and the m ethod o f selection and rem oval is exam ined. This is follow ed by an analysis o f the selection of o ffic e r s and their duties, and the board*s quorum, voting, and related ru les. W hile all data, as explained on page 3, relate to the 736 form ulated plans, in form ation was not available fo r all plans fo r all item s selected fo r an alysis. This situation exists not only because of incom plete su bm ission s and inadequate in form ation due to tech n ica l distin ction s, but a lso because som e plans sim ply grant the board pow er to estab lish its own ru les, as in the follow in g exam ple: The tru stees shall establish p roced u ra l ru les... governing am ong other things, the calling and conduct o f m eetin gs, the giving of p ro x ie s, the constitution o f a quorum, and the e x is t ence o f a deadlock. The term s "board of adm inistration, " "b oa rd, " "b oard m em b ers, " and "join t board, " are used interchangeably throughout this study to re fe r to the group of p erson s (often also called "the board o f tru stees, " "p en sion com m ittee, " and "adm in istrative body, " in plan docum ents) with o v e ra ll resp on sib ility fo r adm in istration o f the plan. 29 Notable exceptions are found in pension plans in the autom obile industry, w here join t union-m anagem ent com m ittees ad m in ister a ll except the fin an cia l a sp ects.

53 44 C om position of the B oard An equal num ber of union and em ployer rep resen ta tives serv ed on the boards of all but 22 of the join tly adm in istered plans (as listed b elow ). H ow ever, even in these 22 plans the voting strength of both groups was equal sin ce the quorum and voting rules (pages 57 60) prevented con trol by the la rg e r group. F or exam ple, one plan with m o re em ployer than union m em b ers on the board stated: The operation and adm inistration of the pension and w elfare plan shall be the join t resp on sib ility o f the six tru stees appointed by the em p loy ers and the th ree tru stees appointed by the union. The voting pow er o f the three union tru stees shall equal the com bined voting pow er of the six em ployer tru stees. That is, each union tru stee shall have a voting strength of two as c o m pared to one fo r each em p loy er tru stee. Another plan which had m o re union than em ployer rep resen ta tives in ord e r to allow rep resen ta tion by a ll lo c a l unions a sso cia te d with the plan stated that: The tru stees under this tru st ag reem en t shall be 14 in num ber, 8 of whom shall be union tru stees, and 6 of whom shall be e m p loy er tru stees. The voting fo r this plan was based on the unit rule (m a jority vote determ in es group vote). Representation on board Plans Workers1 (thousands) All plans studied Employer appointed boards: All employer representatives Union appointed boards: All union representatives Jointly appointed boards Equal representation for union and employers More employer than union representation More union than employer representation Equal representation for union, employers, and public Equal representation for union and employers plus a public member Information not available Other , , , ^ Worker coverage includes both active and retired workers in 1959 NOTE: Because of rounding, sums of individual items may not equal totals. The m em b ers o f the boards usually served (and s u c c e s s o r s w ere appointed) at the p leasu re o f the group origin a lly appointing them, i. e., union and em ployer grou ps, as illu strated by the follow ing cla u ses: Digitized for FRASER Any union tru stee m ay be rem oved from o ffice at any tim e by the union, such rem ov a l to be evid en ced by an instrum ent in

54 45 w riting signed by the a ccred ited o ffic e r s of the union and d e liv e re d to all the tru stees. Any em ployer tru stee m ay be r e m oved from o ffice at any tim e by the a ssocia tion o r a ssociation s that designated him, such rem ov a l to be evid en ced by an in stru m ent in w riting signed by the a ccred ited o ffic e r s o f such a s s o c ia tion o r a ssocia tion s and d elivered to all o f the tru stees. * * * Any tru stee m ay be rem oved at w ill by w hom ever shall have appointed him, and m ay resign by instrum ent in w riting executed fo r that purpose and d elivered to the rem aining tru stees. sjc sje sje S u ccessor em ployer tru stees and s u c c e s s o r alternate em ployer tru stees shall be appointed by the variou s em p loyers who are su b scrib e rs to this instrum ent at the tim e such appointments are m ade. S u cce ssor union tru stees and s u c c e s s o r alternate union tru stees shall be designated by the national o ffic e... P articip ation of board m em b ers in appointm ent and rem oval, which was found in only a few plans, is illu strated by a plan in which union m em b ers could only be rem oved by the union but: Any em ployer trustee' m ay be rem ov ed fro m o ffice at any tim e by an instrum ent in w riting duly signed by a m a jority of the em ployers o r by a m a jority o f the em p loyer tru stees then in o ffice. Another plan in which an em ployer m em b er could be rem oved by the other e m p loy er m em b ers stated that: A s u cce s s o r em ployer trustee shall be im m ediately appointed by the two rem aining em ployer tru stees. R em oval and appointment of a s u c c e s s o r neutral m em b er of the board by the union and em ployees, and the board, resp ectiv ely, are illustrated below : The em p loyers shall have the right at all tim es fo r substantial cause, to rem ove and rep la ce any trustee o r tru stees designated by them including the public m em ber designated by them and representing the em ployers and to fill any vacan cy or vacancies caused by the death, resignation, or rem oval o f any trustee or tru stees represen tin g such em p loy ers. * * * The union shall have the right at all tim es, fo r substantial cause, to rem ove or rep la ce any trustee o r tru stees r e p r e senting the union, including the public m em b er designated by them and to fill any vacan cy o r v a ca n cies cau sed by death, r e s ignation, o r rem oval of any trustee o r tru stees representing the union. The im partial trustee shall be subject to rem oval at any tim e at a m eeting of the tru stees... * * *

55 46 If there is a vacancy in the o ffice of the neutral tru stee, the tru stee representing the a ssocia tion and the tru stee representing the contributing em p loyers shall se le ct a s u c c e s s o r neutral tru stee... Although m ost plan docum ents did not detail the reason s fo r which a board m em b er m ight be rem oved, som e gave the circu m sta n ces under which rem oval action could be instituted. One such p rov ision read: T ru stee m ay be rem oved fo r violation of his fid u cia ry o b lig a tions under this declaration of trust or other good legal grounds by action in a cou rt of appropriate ju risd ictio n initiated by any two tru stees o r by the party w hich appointed said tru stee. A nother plan provided fo r a board o f inquiry with pow er to rem ove fo r "m a l fe a sa n ce a term which was left undefined. A trustee can be rem oved fo r m alfeasan ce in the execution of his trust. Any em p loy er o r union m ay initiate ch a rg es o f m a l fea sa n ce against a tru stee by filin g such ch a rg es with the e m p lo y e rs and with the union and with the tru stees. Such charges shall be re fe rre d by the tru stees to a board of inquiry which shall con sist o f an equal num ber o f m em b ers appointed by the em p loyers and the union. The m em b ers so appointed shall attempt to agree upon an additional m em b er to act as im partial chairm an and, if within a p eriod o f 5 days an im partial c h a irm an is not agreed upon, then application by the tru stees shall be m ade to the Judge o f the United States D istrict Court fo r the Southern D istrict o f M ississip p i fo r the appointment of an im p a rtia l chairm an. A ll record s and other in form ation available to the tru stees shall be m ade available to the board o f inquiry. If a m a jority of said board of inquiry finds that a tru stee has been guilty of m alfeasance, he shall be rem oved and m ay not th erea fter be elig ib le to se rv e as a tru stee. To encourage the prom pt appointment of s u cce s s o r tru stees and to p r e vent the p o s s ib le interruption and cu rtailm en t of b oard action, a few plans p r o vided alternative m ethods of appointment to be used in delays o r n eglect in fillin g vacancies on the board accord in g to the n orm al p roced u res ju st d iscu ssed. Som e plans, fo r exam ple, perm itted any two tru stees to petition the cou rts to fill o ffice s that have rem ained vacant fo r a sp ecified p eriod. Two illu strative clau ses read as follow s: Digitized for FRASER... In the event of the fa ilu re o f any party to appoint a s u c c e s s o r trustee to fill a vacancy in the offic'e of tru stee, which such party has the pow er to fill, fo r a p eriod o f 30 days, any two tru stees m ay petition a cou rt of appropriate ju risd ictio n fo r an o rd e r requiring such party to appoint a s u c c e s s o r trustee forthw ith, and, in the event o f a failu re of said party to com ply with such o rd e r, m ay petition a cou rt of appropriate ju risd ictio n fo r the appointment of a s u cce s s o r trustee to fill such vacancy. * * * In the event of the rem oval term ination of a tru stee, or the resignation, death, disqu alification, d isability, o r refu sa l to act of any tru stee, o r a s u c c e s s o r to any o f them, a s u cce s s o r trustee shall be nam ed and appointed by the party w hich named his p r e d e c e s s o r, within 10 days, after the vacancy o c c u r s. In the event eith er party fa ils to appoint a s u c c e s s o r tru stee within

56 47 10 days after a vacancy o ccu rs as provid ed fo r in this trust agreem ent, then any two tru stees m ay petition the United States D istrict Court fo r the Southern D istrict of Ohio, w here the fund has its p rin cip a l o ffice, fo r the appointm ent o f such trustee. Im m ediately upon his acceptan ce o f the trusteeship in w riting a s u cce s s o r trustee shall b ecom e vested with all the p rop erty, rights, p ow ers, and duties of a tru stee hereunder with like affect as if origin a lly nam ed as a tru stee. T erm of B oard M e m b e rs. The m em b ers o f 80 p ercen t o f the boards w ere appointed to indefinite term s; i. e., they retained their p osition s until they w ere rem oved, resigned, o r died. (See text tabulation.) Plans Workers1 Number Term of board members Number Percent (thousands) Percent All plans studied year years years years years years Employer members, indefinite; union members, 3 years Union members, indefinite; employer members, 1 year Indefinite Other No provision, or information not available , , A 1 Worker coverage includes both active and retired workers in 1959* NOTE: Because of rounding, s m s of individual items may not equal totals. A typical clau se read: E ach tru stee shall se rv e until his death, resign ation, o r rem ov a l. S p ecific term s found in 10 p ercen t of the plans ranged fro m 1 to 6 y ears; m ost com m only they w ere fo r 1, 2, or 3 y e a rs. The union and a ssocia tion shall each designate the nam es of three tru stees, one of whom shall serv e fo r a term o f 6 y ears, one o f whom shall serv e fo r a term of 4 y e a rs, and one of whom shall serv e fo r a term of 2 y e a rs; th ereafter the union and associa tion shall every 2 y ea rs during the month of F ebruary designate one trustee to serv e fo r a p eriod of 6 y e a rs; provided, how ever, that the foregoin g shall not re s tr ic t either the right of the initial trustees to su cceed th em selves o r to serv e as many term s as either the union or a ssociation, resp ectiv ely, m ay ch oose to redesignate them. * * * The term of o ffice of the tru stees shall be 1 year and until their s u cce s s o rs a re appointed and qualify. Digitized for FRASER

57 4 8 S ize of B oards. The num ber of m em b ers cu rren tly servin g on the boards ranged fr o m 2 to 31, and was m o st frequ en tly 6. Plans Workers Number of members of Number the board * Number Percent (thousands) Percent All plans studied , Under 4 ^ * ~ * Number not available All but 68 plans had an even number of members, 2 Worker coverage Includes both active and retired workers In 1959* 5 1 plan had an Individual trustee as administrator. NOTE: Because of rounding, sums of individual items may not equal totals. An exam ple o f the m anner o f designating the siz e o f the boa rd fo llo w s: The fund shall be adm inistered by a board of eight tru stees, fou r of whom shall be designated as em ployer tru stees and four o f whom shall be designated em p loyee tru stees... T rip artite boards had three m em b ers (1 union, 1 em p loyer, ind 1 public o r neutral m em ber) in all but one plan, which had six m em b ers. Joint boards in w hich a perm anent neutral m em b er was appointed usually had seven or m o re m e m b e rs (including the neutral). Illu strative cla u ses a re: M r. _ has been selected by the d ire cto rs of the union, M r. has been selected by the em p loyers... and R ev. _ has been selected as the neutral tru stee by the other two tru stees. * * * The... retirem en t fund... shall... be adm inistered by a board of tru stees, com p osed of nine p e rson s, fou r of whom shall be represen tatives of the union, fou r of whom shall be represen ta tives of the em ployer con tributors to the said fund, and one o f whom shall be a neutral p erson, nam ely the im partial chairm an designated in this agreem ent. Som e trust agreem ents did not sp ecify the num ber o f m em b ers to be appointed to the board, or sp ecified an origin al num ber to be appointed but left open the p o s sib ility of an in crea se. The latter is illu strated by the follow ing clau se: Digitized for FRASER... The tru stees shall in itially num ber fou r, two tru stees being em ployer tru stees and two tru stees being union tru stees. M ore tru stees m ay be added from tim e to tim e as additional em ployers o r em p loyer groups b ecom e party to this agreem ent as p rov id ed h erein, except, h ow ever, that the num ber of e m p loy er tru stees shall not exceed five, nor the num ber o f union trustees exceed five. F or each such em ployer tru stee so added, one union tru stee shall be added.

58 V irtually all plans with o ffic e r s had a chairm an o r co -ch a irm e n ; n early 1 out o f 4, a v ice chairm an; and about 4 out o f 5, a se cre ta ry. Only 14 p ercen t of the plans had an o ffice r designated as tre a su re r. Digitized for FRASER 49 O ffice rs of the Board Like m ost other organ ized groups, m u ltiem p loyer plans usually provid e fo r the appointm ent o f o ffic e r s o f the board, such as chairm an, v ice chairm an, se cre ta ry, and trea su rer. The effectiven ess o f the operation o f the governing body o f a join t la bor-m an ag em en t pen sion fund is often d eterm in ed by these appointed o ffic e r s. Although, the s p e cific p ow ers and duties assign ed to these o ffic e r s o f the board w ere, in m ost in stan ces, not stated in plan docum ents, it is reasonable to assum e that the position s would entail resp on sib ilities ord in a rily a ssocia ted with such designations in like organ ization s, and that boards would adopt rules delegating sp e cific pow ers to each o ffic e r. F or exam ple, m ost plans presu m ably give the chairm an the right to p resid e ov er m eetin gs, p o s sib ly with little independent pow er to in terpret the rules o f p roced u re o f the board. A vice chairm an would act as a rep lacem en t o f the ch airm an, when needed, and a s e c retary would have the duties of keeping the re co rd s o f m eetin gs. A tre a su re r, if appointed, would probably act as fis c a l agent fo r the board. A few plans d e scrib ed the duties of the o ffic e r s as follow s: The chairm an shall notify the tru stees o f im pending m eetings and p resid e over m eetin gs, and in addition shall p e rfo rm such other duties as the tru stees m ay p rovid e. jje sje T here shall be a se cre ta ry o f the board who shall keep m inutes and reco rd s o f all m eetin gs, p roceed in g s, and acts of the board o f tru stees. C opies of all m inutes and p roceed in g s o f the board shall be sent by the se cre ta ry to all m em b ers o f the board. * * * The s e c r e ta r y -tr e a s u r e r shall keep m inutes and record s of all m eetin gs, p roceed in g s, and acts o f the tru stees. He shall send cop ies of such m inutes and re co rd s to all o f the tru stees. 5Je * * The tre a su re r shall have the ca re and custody and be resp on sib le fo r all the funds of this trust and dep osit all such funds in the nam e o f this tru st in such banks, etc. The one pow er cle a rly delegated to the o ffic e r s o f the board by nearly all plans was to ca ll sp ecia l m eetings o f the board. (See page 55.) Although the need o f sm all plans m ay not be the sam e as large plans, about a sixth o f those coverin g few er than 1,000 w ork ers selected 3 o r m o re o ffic e r s. This p rop ortion was not m uch higher in the plans coverin g over 10,000 w ork ers about a fourth. T hese variations p robably stem fro m the m ore active role which all board m em b ers m ay take in adm inistering som e of the sm a ller funds, w hile in the la rg e r plans it is m o re lik ely that a p ro fe s sio n a l adm inistrator w ill be em ployed to run the d a y -to -d a y a ctivities. In the sm a ller plans the m e m b er selected as secreta ry w ill often p erson a lly manage the plan; in many ca ses he does so in conjunction with his norm al duties as se cre ta ry o f the participating union.

59 so Plans Workers1 Officers Number Percent Number (thousands) Percent All plans with 1 or more officers designated , Chairman or co-chairmen ,89it-.it 99.2 Vice chairman Secretary , Treasurer Other Worker coverage includes both active and retired workers in 1959* NOTE: Because a plan may have several officers, the sums of individual items do not equal totals. Am ong 23 differen t com binations o f o ffic e r s, the la rg est num ber of boards ov er 50 percen t had a chairm an (or co-ch a irm en ) and se cre ta ry (table 28). A com plete slate of o ffice r s chairm an, v ice chairm an, se cre ta ry a n d /o r a tr e a s urer was selected in n early a fifth o f the plans. The only o ffic e r s found in som e plans w ere chairm an (47 plans), co-ch a irm e n (37 plans), and se creta ry (7 plans). S election o f O ffic e r s. The selection of o ffic e r s w as, as m ight be e x pected, usually left to the board. The ch oice of p articu lar board o ffic e r s, h ow ev er, was often restricte d to m em b ers of a single group. These re strictio n s a com p lex m aze of rules usually detailed in the plan docum ents w ere designed so as to c a rry out the theory of join t resp on sib ility and distribution of con trol in the join t board. In alm ost 40 p ercen t o f the plans with at least one o ffic e r, fo r exam ple, the chairm an had to be selected from a group other than that of another o ffic e r, usually the v ice chairm an, secre ta ry, o r both. O ver a third of these plans r e quired that the jo b s be alternated annually betw een the groups rep resen ted. Digitized for FRASER Plans Workers 2 Number Selection of chairman1 Numbfer Percent (thousands ) Percent All plans with chairman , By the board , Any board member Position must alternate each year Position does not alternate Must be from different group than another officer ll Position must alternate each year Position does not alternate Must be from designated group Co-chairmen Other By employers and union Information not available See table 29 for added details. 2 Worker coverage includes both active and retired workers in NOTE: Because of rounding, sums of individual items may not equal totals.

60 E xam ples of each of these com m on approaches are: Chairm an m ay be any board m em ber The trustees shall se le ct a chairm an from am ong their num ber. 5jc >5< Sjc C hairm an m ay be any board m em b er but jo b alternates The chairm an o f the board of tru stees shall be changed every 6 months to the end that the chairm anship shall rotate every 6 m onths. * * * Chairm an and other o ffic e r (s ) m ust be fro m differen t group The board shall se le ct one of its num ber who shall serv e as chairm an and one who shall serv e as s e cre ta ry. If the ch a irman is a union tru stee, the se cre ta ry shall be an em ployer tru stee. * * * At the fir s t m eeting o f the tru stees, they shall ele ct a chairm an and a se creta ry w hose term s shall com m en ce on the date of their election and continue fo r 1 year or until his other s u c c e s s o r s have been elected... At no tim e shall both such o ffice s be held by tru stees, both of whom have been designated by the em ployers o r by the brotherhood. * Chairm an and other o ffic e r (s ) m ust be fro m differen t group and jo b s alternate... During the month o f D ecem ber in each year, the trustees shall s e le ct fro m am ong the tru stees a chairm an and a c o - chairm an [ v ic e ch airm an / of the tru stees, to serv e fo r a term o f 1 year com m encing January 1 st of the year follow in g and until their s u c c e s s o r s have been regu larly elected. In od d - num bered y e a rs, the chairm an shall be selected fro m among the union trustees and the /v ic e ch airm an / co-ch a irm a n from among the em ployer tru stees, and in the even -n um bered yea rs the chairm an shall be selected from am ong the em ployer trustees and the co -ch a irm a n fro m among the union tru stees. Chairm an and other o ffice r (s ) rotate in pairs The d ire cto rs shall m eet as prom ptly as p ossib le after the e x e cution of this plan and e le ct a chairm an, a v ice chairm an, a se cre ta ry and a v ice secreta ry fro m among the d ir e c to r s. The chairm an and v ice chairm an shall be selected fro m among the em p loyer d irecto rs, and the se cre ta ry and v ice se cre ta ry shall be selected from among the union d irecto rs in the odd-num bered y e a rs. In even-num bered yea rs the chairm an and v ice chairm an shall be selected from among the union d ire cto rs and the s e c r e tary and v ice se cre ta ry shall be selected fro m among the e m p loyer d irecto rs.

61 52 On the other hand, any m em ber of the board, reg a rd less of the group he rep resen ts, could be selected as chairm an in about a fourth o f the plans, a l though, in som e ca se s, the chairm anship had to alternate betw een the groups each y ea r. The o ffice r s w ere chosen by each partisan group of tru stees or the board as a w hole in all plans with co -ch a irm e n. F o r exam ple: The tru stees shall... e lect an em ployer chairm an and.. a union chairm an. In 31 plans the chairm an always had to be selected by the board from a sp e cific group as, fo r exam ple, under the follow ing cla u se: The tru stees shall se le ct one of their num ber selected by the con tributing em p loyers to serv e fo r a term o f 1 year as chairm an. In a few o f these plans, h ow ever, although the chairm an always had to be selected fro m one group, another o ffic e r had to be appointed fro m the other group. One plan read, fo r exam ple: The chairm an of the board of tru stees shall be selected from the em p lo y e r-tru ste e s of the board and the s e c r e ta r y -tr e a s u r e r shall be se le cte d fr o m the union tru stees o f the boa rd... Twenty plans provided fo r the selection of an im partial arbitrator as chairm an, usually by the em p loyers and union, w hose function was to break d ea d lock s. In a few plans he also had adm in istrative duties. Linked with the selection of chairm an, half o f the plans providing fo r v ice chairm an required alternating of his position each year with that of another o ffic e r, usually the chairm an, as illu stra ted by the cla u se on page 51. Plans Workers 2 Selection of vice chairman Number Percent Number (thousands) Percent All plans with vice chairman By the board Any board member Must be from different group than another ~of fleer Position must alternate Position does not alternate Co-vice chairmen Must be from designated group Other Information not available * See table 29 for added details 2 Worker coverage includes both active and retired workers in 1959 NOTE; Because of rounding, sums of individual items may not equal totals.

62 In o v er 40 p ercen t o f the plans with a se creta ry, selection by the board was m ade reg a rd less of group - affiliations o f other o ffic e r s. Plans Workers 2 Selection of secretary1 Number Percent Number (thousands) Percent All plans with secretary By the board Any board member Must be from different group than another officer Position must alternate *--- Position does not alternate Must be from designated group --- Co-secretaries Other By union and employers Information not available , , See table 29 for added details. 2 Worker coverage includes both active and retired workers in NOTE: Because of rounding, sums of individual items may not equal totals. T hese clauses usually read: The board shall appoint a secreta ry who shall keep m inutes or re co rd s of all m eetin gs, p roceed in gs, and acts o f the board. A third of the plans with a se cre ta ry required that he be fro m a group other than that of another o ffic e r, usually the chairm an. Some of these plans also requ ired the alternation o f jo b s. (See cla u ses on page 5 1.) The trea su rer, selected in 84 plans, could be any board m em ber in a l m ost half o f the plans. Plans Workers 2 Selection of treasurer 1 Number Percent Number (thousands) Percent All plans with treasurer By the board Any board member Must be from different group than another officer Position must alternate Position does not alternate Must be from designated group --- Co-treasurers Other Information not available * See table 29 for added details. 2 Worker coverage includes both active and retired workers in NOTE: Because of rounding, sums of individual items may not equal totals.

63 5 4 T erm o f C hairm an, About the sam e num ber o f plans p rovided 1 -year term s fo r their chairm an as provided indefinite te rm s. About half the plans with 1 -y ear term s alternated the chairm anship between the grou ps. M ost plans, w here alternating was not requ ired, had indefinite te rm s. The latter co v e re d about half the w ork ers in plans fo r w hich inform ation was available w hile the fo rm e r cov e re d only a fourth because the la rg e r plans do not alternate jo b s as m uch as the sm a lle r plans. Pl^ns Workers 1 Term of chairman Number Percent Number (thousands) Percent All plans with chairman , y e a r years years years months meeting Indefinite , Information not available ^ Worker coverage Includes both active and retired workers in 1959# NOTE: Because of rounding, sums of individual items may not equal totals. A ffiliation o f C hairm an. The chairm an cu rren tly servin g was a union rep resen ta tive in ov er 30 p ercen t of the plans and an em p loyer m em ber in about the sam e p rop ortion o f plans. Since many of the la rg e r plans have union o r public chairm en, plans with an em ployer chairm an only co v e re d a fourth o f the w ork ers under m u ltiem p loyer plans. In 22 plans, a public m em b er acted as chairm an, usually, as pointed out p reviou sly, as an im partial u m pire. Plans Workers.,-L Affiliation of chairman, i960 Number Percent Number (thousands) Percent All plans with chairman Union member Employer member Co-chairmen Public member Other Information not available , , Worker coverage Includes both active and retired workers in NOTE: Because of rounding, sums of individual items may not equal totals. P roced u res o f the B oard The rules fo r a quorum (the num ber of board m em b ers n e cessa ry to be present in o rd e r that action can be taken on m atters b efore the board) and voting

64 55 (the num ber o f votes needed to take action) w ere designed, alm ost without e x ce p tion, to ensure either the p resen ce of equal num bers o f each group o r equal voting strength when unequal num bers are presen t. Since it is im perative that d ecision s be reach ed in every ca se, virtually all plans either had neutral m e m b ers on their board s, o r, m o re often, had a p roced u re fo r selectin g an im partial arbitrator to settle disputes. Although m ost of the plans did not define the term deadlock, " it m ay be assum ed that the deadlock* would exist, as stated in one plan:.. /u p o n / the fa ilu re of the em ployer and union tru stees to agree on a m atter relatin g to the adm inistration o r accounting o f the pension tru st fund. R egular M eetin gs. Only 22 p ercen t o f the plans had sp e cific p rov ision s fo r regu lar m eetin gs, usually scheduled quarterly, annually, o r sem iannually. Another 10 percen t o f the plans sim ply stated that the board would m eet p e rio d ica lly.,elans......wo^cersi Number Regular meetings Number Percent (thousands) Percent All plans , Specific provisions Annually Semiannually Quarterly Monthly Other Periodically No provision, or information A not available $ , Worker coverage Includes both active and retired workers in 1959* NOTE: Because of rounding, sums of individual items may not equal totals. Such p rov ision s, how ever, m ay be contained in other docum ents, e. g., board m inutes, bylaw s, e t c., as the follow ing clau se illu stra tes: M eetings o f the tru stees tru stees shall determ in e. shall be held at such tim es as the An exam ple o f regu larly scheduled m eetings is : R egu lar m eetin gs shall be held at lea st sem iannually. Special M eetin gs. O ver 60 p ercen t o f the plans had p roced u res fo r the callin g o f sp ecia l m eetings even though le ss than a fourth had p rov ision s fo r holding regu lar m eetin gs. Special m eetings m ight be ca lled by the chairm an a n d /or another o ffice r, o r by two, three, o r four board m em b ers in n early 40 percen t of the plans. (See tabulation on the follow in g p a g e.) A lm ost 10 percen t allow ed only one o r, som etim es, two designated o ffic e r s, always including the chairm an, to ca ll sp ecia l m eetin gs; w hile 15 percen t o f the plans, perm itted a sp ecified num ber of board m em b ers to ca ll sp ecia l m eetings without giving the o ffic e r s o f the board any greater authority than other board m em b ers.

65 36 Plans Workers* Number Special meetings Number Percent (thousands) Percent All plans , Plans with procedure for calling special meetings o , Special meetings may be called by: Chairman and other officer(s) or board members Chairman and other officer(s) 1, o n l y ^ Any board members ' Other No provision, or information not available , * Worker coverage Includes both active and retired workers in Usually 2 or 3 members. See table 30 for details. ^ Between 1 and 4 members. See table 30 for details. NOTE: Because of rounding, sums of individual items may not equal totals. Illustrations o f the m ore com m on of these p rov ision s are presen ted below... Any two m em b ers o f the board o f tru stees m ay ca ll a m eetin g setting the tim e and p lace by giving to the oth er m e m b e rs o f the board at least 5 days* w ritten notice by r e g is tered m a il.. * * * A m eeting m ay be ca lled at any tim e by the chairm an o r by any two o f the tru stees upon giving 5 days* w ritten notice to all the oth er tru stees... * *... Either the chairm an o r the co-ch a irm a n, o r any two tru stees m ay ca ll a m eeting o f the tru stees at any tim e by giving at lea st 5 days1 w ritten n otice of the tim e and place th ereof to each trustee... * * * Some illu stration s o f le ss com m on m ethods are:... The chairm an o r any fou r tru stees m ay c a ll a m eeting of the tru stees at any tim e by giving at least 1 week*s w ritten n otice o f the tim e and p lace th ereof to each tru stee... * * * Special m eetings of the tru stees held on the w ritten requ est of the m a jority of the em ployer tru stees or a m a jority of the union tru stees... * * $ M eetings of the tru stees m ay be ca lled by the im partial trustee in his d iscretion, and shall be called by the im partial trustee at the w ritten req u est o f any two tru stees...

66 57 Q uorum. O ver a third o f the plans sim ply sp ecified that a quorum ex isted if a m a jo rity o f each group was p resen t, as shown by the follow in g ru le s: A m a jority of the em ployer tru stees and a m a jority of the union tru stees m ust be present in p erson at any m eeting to constitute a quorum fo r the tran saction of b u sin ess. Another plan with six tru stees, three union and three em ployer m em b ers, stated that:... At any regu lar o r sp ecia l m eeting of the board o f tru stees, the ph ysical p resen ce of at least two em ployer tru stees and two em ployee tru stees shall constitute a quorum. Flans Workers,,?:, Quorum rule Number Percent Number (thousands) Percent All jointly administered plans , All board members Majority of board members Majority of members of each group Equal proportion of members* of each group Specified number of all members * Other No provision, or information not available Worker coverage includes both active and retired workers in It is assumed that the provisions for quorum, voting, and breaking of deadlocks have no significance in union- or employer-administered plans, hence the exclusion from this analysis. 5 of these, 22 plans did not specify that a certain number of each group be present; however, the total number specified always equaled, except, in a few plans, more than half of the total board members, thus insuring the presence of at least 1 member of each group. NOTE: Because of rounding, sums of individual items may not equal totals. A sixth o f the plans requ ired the p resen ce o f an equal num ber o f m e m b ers fro m each group m ost often one or two. The num ber requ ired was exactly half o r, w here the board was la rge, le ss than half o f each group. F or exam ple, one plan with four m em b ers provided: Two m em b ers o f the board o f tru stees shall constitute a quorum, provided that one of such m em b ers is a trustee designated by the union and the other is a tru stee designated by the a ssocia tion. In another plan with eight tru ste e s, the quorum rule w as: Four o r m ore trustees present in p erson at any m eeting shall constitute a quorum fo r the transaction of busin ess, provided that there is presen t at least two tru stees designated by the association s which are a party to this d eclaration of trust and two trustees designated by the unions which are a party to this d ecla ra tion of trust.

67 58 T h irty-eight plans, including 18 plans with a tw o-m em b er board, requ ired all tru stees to be p resen t. A plan with fou r tru stees, fo r exam ple, stated: F ou r tru stees shall constitute a quorum fo r the purpose of holding a m eetin g and transacting b u sin ess. Although the group affiliation of the board m em b ers was not m entioned in the quorum rules of 1 out o f 8 plans (sim ply requiring that a m a jority of the board be presen t), they required the p resen ce o f at least one m em ber o f each group. F o r exam ple, one plan with six tru stees (three fro m each party) im p licity requ ired the p resen ce o f at least one from each group by sp ecifyin g M... four tru stees shall constitute a quorum at any m eeting. n O thers required at least one m em ber fro m each by providing "... a m a jority of the tru stees shall con stitute a quorum. " The ru les of 47 plans d e scrib e d a quorum in term s o f a sp ecified num ber of board m em b ers, often without further qu alification. They are illu strated by the follow in g cla u ses: A quorum shall con sist of at least three tru stees presen t or voting, as h ereinafter provided. A ll d ecision s o f the tru stees shall be by m a jority vote of the quorum, which voting shall be on a unit b asis o f the resp ectiv e em ployer and em ployee tru stees. * * * F ou r tru stees shall constitute a quorum fo r a m eeting of the tru stees, provided that at least one trustee appointed by each a ssocia tion is part of the quorum. L ack o f Q uorum. To d iscou rage any group from boycotting a m eeting to preven t action b eca u se o f the la ck o f a quorum, 1 out o f 6 plans said that: A deadlock shall be deem ed to exist w henever the lack of a n e ce ssa ry quorum of tru stees... continued fo r a sp ecified num ber ot7 su cce ssiv e m eetings o f the tru stees... The follow in g tabulation shows that nearly th ree-fou rth s of the plans with such a clause p rovided that if no quorum was presen t fo r two con secu tive m eetin gs, the m em b ers o f the board could in sist on bringing the m atter up fo r the review and d ecision o f an im partial arb itra tor. (See page 60 fo r d iscu ssion o f p roced u res fo r breaking d e a d lo ck s.) Plans Workers,! Deadlock in case of lack of quorum Number Percent Number (thousands) Percent All jointly administered plans , Deadlock exists if quorum lacks for: 1 meeting meetings U, 7 3 meetings (3 ) No provision, or information not available ,555.0 «4.2 1 Worker coverage includes both active and retired workers in 1959* 2 See footnote 2 in tabulation on p Less than 0.05 percent. NOTE: Because of rounding, sums of individual items may not equal totals.

68 V otin g. Although voting ru les, like quorum ru les, exhibited w ide v a r ia tions, all but a few ru les w ere expressed in term s o f a m a jority o r unanim ity. T h ree out o f 5 join tly adm in istered plans required a m a jority vote. This was defined as a m a jority of the entire board by 190 plans; a m a jority of the num ber of m em b ers actually presen t in 112 plans; a m a jority o f the votes ca st in 121 plans; and a m a jority o f a quorum in 12 plans (table 31). Som e o f these rules also sp ecified that equal voting pow er be assigned to each party o r that a m inim um num ber o f m em b ers fro m each party had to vote fa vora b ly. The variations are illu strated by the follow in g ex cerp ts fro m plans with m aj o r ity rule s ; Any action taken by the tru stees shall be by the con cu rrin g vote o f a m a jority of all tru stees. In one s ix -m e m b e r board the rule read: On all m atters the con cu rrin g vote of fou r tru stees shall be su fficient to c a rry any m otion o r resolu tion. Any action taken by the tru stees shall be by the con cu rrin g vote' o f a m a jority of the tru stees presen t at a m eeting at which a quorum shall be p resen t. A ction taken by the tru stees shall gen erally be by a m a jority vote, except that... each trustee presen t shall have one vote on all m a tters, provided, h ow ever, that if there are an unequal num ber of em ployee tru stees o r em ployer tru stees p r e sent at any m eeting, then in that event the group o f tru stees being the le s s e r in num ber shall be entitled to ca st an equal num ber of votes as the group that has the la rg e r num ber presen t at any such m eetin g. A unanimous vote of the m em bers of the board was needed in 1 out of 4 plans. Since these 178 plans included 18 plans with a tw o-m em b er board and 136 plans w here the unit rule (the vote of a p a rticu lar group is determ ined by the m a jority vote of the group) p revailed, in nearly all of these plans a m a jority vote was also a unanimous vote. The follow ing quotation illu strates how one plan set forth the unanimous unit rule: The one vote of the union trustees shall be ca st in accord a n ce with the d e cisio n of the m a jo rity of said union tru stees... The one vote of the em ployer tru stees shall be ca st in a ccord a n ce with the d ecision of the m a jority of said em ployer tru stees... At least a total of fou r affirm ative votes m ust be ca st by em p loyer tru stees to determ ine the one vote of the entire group of em ployer tru stees... At least a total of fou r affirm ative votes m ust be ca st by union tru stees to determ ine the one vote of the entire group of union tru stees...

69 60 T hese voting rules would by their v ery nature n ecessita te the affirm ative vote o f at lea st one m em b er o f each party in ord e r to pass a m otion with the p o s sib le exception o f som e of the plans in which the rules w ere stated in term s o f a bare m a jority of m em b ers p resen t, of votes cast, o r o f a quorum. Of the 49 plans with a "b a re m a jority o f the m em b ers p resen t" rule, 19 plans appeared to allow, through a lite ra l interpretation of the quorum and voting ru les, p o s sib le dom inance at a valid m eeting o f the board by a single group. F o r exam ple, one board with three m em b ers fro m each group had a quorum rule requiring the p resen ce o f at lea st two m em b ers of each group. If three m em b ers fro m one group and two fro m the other w ere p resen t, the m a jority of the m em b ers p resen t would be three o f the m em b ers o f a single group, and their votes would be su fficient to pass any m otion. Seven plans with a "m a jo rity of votes ca st" rule and six plans with a "quorum m a jo rity " rule also could con ceiv a b ly allow fo r in equities in adm inistration. It is entirely p o s sib le that lo o se w ording o f such trust agreem en ts, rather than actual p ra ctice, accounts fo r the existen ce o f such p o s s ib ilitie s. D eadlocks and A rb itra tion. A lm ost 90 p ercen t o f the join tly adm inistered plans coverin g alm ost all of the w ork ers had som e p ro v isio n fo r the settlem ent o f adm inistration disputes. Under 3 out o f 4 plans, an a rb itra tor was selected when the need a ro se, w hile under 1 out o f 7 plans a perm anent a rb itra tor was always available, either as a neutral m em b er o f the board o r through p rio r selection. Plans Workers1 Bnpartial arbiter Number Percent Number (thousands) Percent All Jointly administered plans 2 Temporary arbitrator selected -- Permanent arbitrator selected Board member Not a board member No provision, or information not available , ^ 7*L4 1, ,20* ^ Worker coverage includes both active and retired workers in 1959* 2 See footnote 2 in tabulation on p. 57. NOTE: Because of rounding, sums of individual items may not equal totals. W here an im partial um pire was to be selected fo r a s p e cific dispute, the boa rd was fir s t em pow ered to appoint him, as in the follow in g cla u se: In the event o f a deadlock betw een the tru stees, the question shall be decided by an im partial um pire appointed by the vote of the tru stees... If the board could not agree on a selection, virtually all plans designated that another p erson (s) would be asked to se le ct an um pire. N early 3 out of 5 plans, as shown by the follow ing tabulation, use the appropriate U. S. D istrict Court the p roced u re p rovided in the L abor M anagem ent R elations A ct. Digitized for FRASER

70 Class Workers1 If board Is unable to agree on arbitrator, he will be Number appointed by Number Percent (thousands) Percent All plans with temporary arbitrator , U.S. District Court , American Arbitration Association State authority Federal Mediation and Conciliation Service Plan documents specify person who names temporary arbitrator Other No provision Worker coverage Includes both active and retired workers in NOTE: Because of rounding, sums of individual items may not equal totals. An exam ple o f D istrict Court p roced u re is:. and upon fa ilu re o f the tru stees to a gree within a reasonable length of tim e on the selection o f an im p artial um pire, either the em ployer o r union tru stees m ay petition the United States D istrict Court fo r the D istrict o f M assachusetts fo r the appointm ent of such im partial um pire. Another plan re fe rre d m o re d ire ctly to the p ro ce d u re set forth in the a c t; In the event o f fa ilu re to appoint such an u m p ire within a r e a sonable length o f tim e (not to exceed 30 days, w hich m ay be extended by mutual agreem ent o f the two said grou ps), an im p a rtia l um pire to decid e such dispute shall, upon petition of either group, be appointed by the United States D istrict Court fo r the E astern D istrict o f M ichigan, Southern D ivision, in the m anner p re s crib e d by Section 302 of the L abor M anagement R elations A ct o f 1947, as am ended. The d e cisio n of such im p artial um pire, whether appointed by the two grou ps, as a fo r e said, o r by the D istrict Court o f the United States, shall be final and binding on all parties to this p la n.' The other outside agen cies com m only ca lled upon in board d is a g re e m ents the A m erica n A rbitration A ssocia tion and the F ed era l M ediation and C onciliation S ervice are re fe rre d to in the follow in g cla u ses:... In the event of fa ilu re o f the tru stees to agree on an im p a rtia l um pire within 5 days th ereafter, any one df the tru stees m ay petition the D irecto r o f the F e d e ra l M ediation and C oncilia tion S erv ice fo r the appointm ent o f an im p artial um pire. The d e cisio n of said u m pire shall be final, binding, and con clu sive upon the tru stees and all parties con cern ed.... In the event that no um pire shall have been selected within 20 days after such deadlock shall a ris e, the A m erica n A rb itra tion A ssocia tion shall be requested by such tru stees o r any of Digitized for FRASER them to appoint an u m p ire.

71 62 In the 32 plans with no p ro v isio n fo r an outside party to se le ct an a r b itra tor in ca se of the board*s deadlock, presu m ably the m em b ers of the board would apply to the U. S. D istrict Court as provided in the L abor M anagem ent R elations A ct. Since plans with a tripartite adm inistrative body, o r a neutral m em b er, had a "b u ilt-in perm anent a rb itra tor, n they needed no additional help to settle disputes. If the perm anent a rb itra tor was not a board m em b er, he was o r d i n arily appointed by the union and em p loyers by designation in the co lle ctiv e bargaining agreem ent, pension plan, or trust agreem ent, o r they did so pursuant to pow er granted to them by one of these instrum ents. F o r exam ple, one trust agreem en t stated: In the event that the assent o f the m a jority of the tru stees is not obtained on any issu e, the dispute shall be re fe r r e d to..., a neutral p erson to be called the "u m p ire. " H ow ever, the board. as shown by the follow ing tabulation, he is som etim es appointed by Elans... Permanent arbitrator is appointed by All plans with permanent arbitrator not a board member Board Union and employers Number Number Percent (thousands) Percent ^ * Worker coverage Includes both active and retired workers in NOTE; Because of rounding, sums of individual items may not equal totals. If the b oa rd could not reach agreem en t, the a rb itra tor could som etim es be a p pointed by an outside agency, u sually the U. S. D is tr ic t C ourt.

72 Chapter V* Functions of the Administrator and Protection of Individual Worker s Pension Rights Although the benefit p rov ision s o f pension plans determ in e the req u ire m ents w hich the w ork er m ust m eet to re ce iv e ben efits, their realization and continuation depend upon adm inistrative d ecision s as w ell as other plan p rov ision s and the legal fram ew ork in which they operate. 30 This chapter exam ines in detail the adm inistrative p ro ce d u re s and selected plan p rov ision s that m ay affect a w ork er1s rights to re ce iv e ben efits, or a pen s io n e r s assu ran ce of continued benefits. F irst, the adm inistrative deta ils, in cluding recordkeepin g activities and application, cla im s, and appeals p roced u res are exam ined, based on an analysis of the adm inistrative arrangem ents reported by plan adm in istrators in item 9 of the form D - l. 31 This is follow ed by an analysis of plan p rovision s fo r se rv ice creditin g, plan am endm ent and term ination, em ployer withdrawal, and restrictio n s on em ploym ent after retirem en t. A ll data in this chapter r e fe r to the 736 form u lated plan s. A dm inistrative P ro ce d u re s In tw o-th ird s of the plans studied, coverin g an equal p rop ortion of the w ork ers, the board of adm inistration was authorized to p e rfo rm, and had resp on sibility fo r, all o f the six adm inistrative functions listed in item s 9 and 12 o f the form D - l, nam ely: M aintaining re c o r d s, receiv in g application s, p rocessin g cla im s, determ ining elig ib ility, and in itially and fin ally determ ining appeals (table 32). In many of these plans, the board itse lf did not p e rfo rm each function; rather, it delegated one o r m o re to a paid adm inistrator o r to an individual board m em ber resp on sib le to the board. One plan, fo r exam ple, included a clause in the tru st agreem ent providing fo r the appointment of a paid adm in istrator to p e r fo rm th ese functions: The adm inistrator shall p e rfo rm the duties delegated to him by the tru stees and shall be in charge o f the adm inistration of the o ffice and re co rd s of the plan and trust, the receip t and deposit of m onies and other p ro p e rtie s of the trust, o f all cla im s against the trust and such other duties as m ay be delegated to him by the tru stees. 30 Som e o f the legal p roblem s p ecu lia r to pension plans are exam ined in: Edwin R. P atterson, L egal P rotection of P rivate P en sion E xpectations (H om ew ood, III., R ichard D. Irwin, 1961), and Benjam in A aron, L egal Status o f E m ployee Benefit Rights Under P rivate P en sion Plans (H om ew ood, III., R ichard D. Irwin, 1961). 31 A d m in istrators w ere requ ired to rep ort the nam es of the party o r p arties p erform in g sp ecified adm inistrative functions, including m aintaining r e c o r d s, d e term ining elig ib ility, p ro ce ssin g cla im s, and determ ining appeals. Each adm inistrator was also to rep ort the p roced u res follow ed in presenting cla im s fo r b en e fits and in appealing denial o f cla im s. In o rd e r to attain con sisten cy, the resp on d en ts rep orts w ere edited by the Bureau of L abor S tatistics fo r pu rp oses of this study. F or exam ple, if a paid adm inistrator (other than a s e r v ice o r ganization) o r a m em ber of the board was identified as p erform in g a sp ecified function, this was taken to show that the function was p e rfo rm e d by the board as a whole the m anner in which it was reported by m ost plans, including those known to have a paid a d m in istra tor, who, in fa ct, did p e r fo r m the function. See appendix B fo r fo rm D - l. Digitized for FRASER 63

73 64 H ow ever, the ultim ate resp on sib ility fo r the p erform a n ce of the duty was usually v ested in the b oard by the sam e plan docum ents. In the rem aining third of the plans som e of the functions w ere delegated by the board to other p a rties. In these plans, the union, a s e r v ice organization, a corp ora te tru stee, o r an insurance com pany, was m o re lik ely to m aintain plan re co rd s o r to p r o c e s s claim s than to p e rfo rm any of the other adm inistrative functions. F o r exam ple, in about 1 out of 5 o f these plans, the union m aintained plan re co rd s while the board p e rfo rm e d the other functions. A s e r v ice o rg a n iza tion re lie v e d the board o f this function in an a lm ost equal num ber o f plans. Maintaining R e c o r d s. The board of adm inistration alone or in c o o p e ra tion with another party, e. g., the insurance c a r r ie r, kept plan record s in about th ree-fou rth s of the plans. Plans Workers1 Number Maintains records Number Percent (thousands) Percent All plans studied , Board , Board only , M 8.tf 7^.9 Board and insurer ** Board and corporate trustee w Board and union Board and service organization Board and insurer and corporate trustee Board and employers * Service organization Union Employers Corporate trustee A 39*1 1.2 Insurer Employers and union A 5.i.2 Other ^ A.1 Information not available * 12.9 A 1 Worker coverage Includes both active and retired workers in 1959* 2 Less than 0.05 percent. 5 1 plan with 100 workers, an individual trustee; 1 plan with 500 workers, Insurance carrier and union; 2 plans with 1,000 workers, service organization and insurance carrier; 2 plans with 500 workers, union and corporate trustee; 1 plan with 100 workers, investment agent; and 2 plans with 200 workers, employers and insurance carrier. iote: Because of rounding, sums of individual items may not equal totals. (4) R eceivin g A p p lica tion s. A pplications fo r benefits w ere to be subm itted d ire ctly to the board in all but 19 plans. F or exam ple, one typical plan stated that: A ll applications fo r retirem en t benefits shall be subm itted to the board o f tru stees. Digitized for FRASER

74 65 Receives applications All plans studied Board Board only Board and insurer Board and union Board and service organization Union Service organization Other ^ Information not available Eiaos Number Percent Katissta.3 Number (thousands) Percent , , , (2 ) (2 ) (2 ) , (2 ) Worker coverage Includes both active and retired workers in 1959# Less than 0.05 percent. * Corporate trustee in 1 plan with 50 workers; individual trustee in 1 plan with 100 workers; employers in 1 plan with 50 workers. NOTE: Because of rounding, sums of individual items may not equal totals. P ro ce s s in g C la im s. The board o f adm inistration p r o c e s s e d the claim s fo r b e n e fits 'in ov er Sb p ercen t of the plans. Plans Workers1 Processes claims Number Percent Number (thousands) Percent All plans studied , Board , Board only , I Board and insurer Board and union Board and corporate trustee <*> Board and employers Board and service organization (2) Insurer ? Service organization Union Corporate trustee Employer Other ^ Information not available Worker coverage includes both active and retired workers in 1959* 2 Less than 0.05 percent. 3 in 2 plans with 2,100 workers, the insurer and service organization; in 1 plan with 3,400 workers, the employer and union; in 1 plan with 100 workers, an individual trustee; and in 1 plan with 500 workers, the union and insurer. NOTE: Because of rounding, sums of individual items may not equal totals. D eterm ining E lig ib ility. The board m ade the initial determ ination of the cla im a n ts application in over 90 percen t of the plans. Digitized for FRASER

75 66 Plans Workers * Determines eligibility Number Percent Number (thousands) Percent All plans studied , Board , Board only , Board and insurer Board and union Board and other (2 ) Service organization Insurer Union Other Information not available ^ Worker coverage Includes both active and retired workers in 1959* 2 Less than 0.05 percent. 3 In 1 plan with 600 workers, corporate trustee; 1 plan with 1,4-00 workers, employer and union; 1 plan with 500 workers, insurer and union; and 1 plan with 100 workers, an individual trustee. NOTE: Because of rounding, sums of individual items may not equal totals. A p p eals. Few plans lacked a sp ecified p roced u re fo r appeal o f a claim denial. In 95 p ercen t of the plans, the appeal m ust be d irected to the board (or a com m ittee of the b oa rd). F o r exam ple, one plan said: A p e rson whose application has been rejected on the m erits by the p en sion com m ittee shall have the right to have his a p p lica tion review ed by the board o f tru stees and to appear p erson a lly b e fo re them if request is m ade th erefor in w riting within 10 days after n otification by the pension com m ittee of the re je ctio n of the application. Plans Workers 1 Appeals are directed to Number Percent Number (thousands) Percent All plans studied , Board , Board o n l y , , Board and employers (2 ) Board and insurer Board and union (2 ) Board and corporate trustee (2 ) Board and service organization (2 ) Insurer Union (2 ) Other (2 ) No provision, or information not available * Worker coverage includes both active and retired workers in Less than 0.05 percent. * In 1 plan with 300 workers, a service organization; and 1 plan with 100 workers, an individual trustee. NOTE: Because of rounding, sums of individual items may not equal totals. Final D ecision on A p p eals. The final d e cisio n regarding any cla im fo r benefits was m ade by the board in 95 p e rce n t o f the plan s. Digitized for FRASER

76 67 Plans Workers * Number Finally decides appeals Number Percent (thousands) Percent All plans studied , Board ,207.^ 99.3 Board only , Board and insurer * Board and union Board and corporate trustee Board and service organization (2 ) Insurer Employers and union A 1.1 (2 ) Union A 1.2 (2 ) Other^ (2 ) Information not available ^.3 * Worker coverage Includes both active and retired workers in Less than 0.05 percent. 5 In 1 plan with 200 workers, insurer and union; and in 1 plan with 100 workers, an individual trustee. NOTES Because of rounding, sums of individual items may not equal totals. O nce this d ecision is m ade the w ork er had exhausted a ll m eans at his d isp osa l provid ed by the plans. Further re cou rse is available to the w ork er through the cou rts, o r, if co v e re d by an insured plan, the State insurance departm ent, o r in a few States, to a State agency charged with supervising such plans. Regarding the finality o f the board* s d e c is io n, one plan said: A nother read: An applicant fo r retirem en t benefits w hose application has been rejected by the board of tru stees, either upon determ ination o f his app lication in the fir s t instance o r upon appeal fr o m the r e tirem ent com m ittee as a foresa id, o r w hose application has been rejected by the retirem en t com m ittee without appeal to the board of tru stees in the m anner h ereinabove, shall have no further reco u rse w hatever.... The d e cisio n o f the board o f tru stees sustaining the pension com m ittee in rejectin g the application o r overru lin g the pension com m ittee and granting the application and as to all m atters relating to the app lication shall be fin al and binding. * * * A re je cte d applicant o r one w hose application is not granted o r approved shall have no re co u rse against the retirem en t fund,... the board o f tru stees, the pension com m ittee, the union, the em p loyer, o r any o f the o ffic e r s, agents, o r m em b ers of any o f them. In only 31 of the plans, the in su rer acted in coop eration with the board to m ake this fin al determ ination. S ervice-c red itin g P rov is io n s Interm ittent, season al, and casual em ploym ent is ch a ra cte ris tic o f many o f the industries in which m ultiem p loyer plans are found; h en ce, the plans stress s e rv ice -cre d itin g p rov ision s m o re than single em ployer plans. G enerally, to rece iv e ben efits, a w ork er m ust have fa irly regu lar em ploym ent with one o r m ore contributing em p loyers throughout the m inim um se rv ice p eriod, but only ra re ly is fu ll-tim e, y ea r-rou n d em ploym ent requ ired to obtain a y e a r s se rv ice cred it. Digitized for FRASER

77 Plan rules defining how s e r v ice cred its are accum ulated varied con sid erably among the industries in which m u ltiem p loyer plans are com m on. S everal exam ples o f differen t types of s e r v ice -c r e d itin g p rov ision s are presen ted below : An e m p lo y e e ^ se rv ice cre d it shall be com puted on the basis of the total num ber of straigh t-tim e shifts fo r w hich he has been paid... in each of the calendar yea rs sin ce the last calendar y ea r (excluding y e a rs during which he was on a p rop e rly authorized leave o f absence) in which he w orked le s s than 10 stra ig h t-tim e shifts... In m aking this com putation: (a) A s to any calendar year during which an em ployee has been paid... fo r 220 or m o re stra igh t-tim e shifts he shall have 1 year of se rv ice cred it and (b) as to any calendar year during which an em ployee has been paid... fo r le ss than 220 straigh t-tim e shifts he shall have that p rop ortion of 1 year of s e rv ice cred it that the num ber of straigh t-tim e shifts fo r which he has been paid... in that year b ea rs to 220, com puted to the n earest one-tw elfth of a year... Reported employment or service during a calendar year Credited service 1,600 or more hours year 1,200 to 1,600 h o urs /4 year 800 to 1,200 hours /2 year 400 to 800 hours /4 year Less than 400 hours None * * *... A m em b er o f the plan fo r whom contributions a re m ade by a participating em ployer shall be entitled to cre d it fo r one unit o f participation in the plan fo r each m ultiple of $10 con trib uted on his behalf during a fis c a l y ear, as above defined. If le ss than $10 is contributed during any fis c a l y ear, as above defined, no cred it shall be allow ed. N or shall cred it be allow ed fo r any fra ction a l portion s o f $10 contributed during any fis c a l y ear, as above defined. Any fis c a l year during which one or m o re units of participation are earned shall be counted as a year of p a r t i cipation in the plan... * * *... any m em ber of the union in good standing who has been a m em ber of the lo ca l... continuous good standing fo r at least 20 y ears im m ediately preced in g his date of application fo r pension benefits and has reached the age of 65 or o v e r, m ay at his request be retired fro m active se rv ice and b ecom e eligible fo r retirem en t benefits... * * * To re ce iv e your retirem en t pension... you m ust be 65 yea rs old, and... you m ust have w orked in the... industry at least 25 con secu tive yea rs fo r an average of at lea st 700 hours p er year fo r the fir s t 20 y ea rs and at least 500 hours p er year fo r the last 5 y ea rs... Digitized for FRASER

78 69 M ost se rv ice -cre d itin g p rov ision s also defined the circu m sta n ces under which s e rv ice cred its are perm anently lost or continuous s e r v ice is broken. They usually provided that a m em ber who did not w ork fo r a participating em ployer during a sp ecified p eriod of tim e (frequently 1 or 2 y ears) would be dropped from the plan. If he subsequently w orked in a cov ered jo b, he would be regarded as a new m em b er without any cred its fo r p r io r s e r v ice. If, how ever, his p r io r m em bersh ip, entitled him to a retirem en t benefit e a rly, n orm al, or disability o r to a vested in terest, he was usually reinstated with appropriate cred its fo r his previou s s e r v ice, esp ecia lly if he had not re ce iv e d any benefit. E xceptions w ere often m ade if the w orker*s absence from cov ered em ploym ent was due to illn e ss, disability, or se rv ice in the A rm ed F o r c e s. Som e exam ples o f p rov ision s g o v erning the lo ss of credited s e rv ice are shown below.... If you w orked le ss than 350 hours p er year fo r any 2 years in a row, you w ill have lost cred it fo r those y ea rs and all e a rlie r y ears unless your failu re to w ork 350 hours was due to injury, sick n ess, or m ilita ry se rv ice... * * *... P articip ation by an em ployee in this plan and all credited s e rv ice p reviou sly accum ulated shall be term inated if the e m p loyee has earned no cred ited se rv ice fo r a period in a ccord a n ce with the follow in g tabulation: Credited service previously accumulated Period during which no service credit earned Less than 2 years* service credit calendar year 2 to 5 years* service credit calendar years 5 to 10 years* service credit calendar years 10 to 15 years* service credit ifcalendar years T im e of se rv ice in the A rm ed F o r c e s of the United States shall be excluded from the p eriod during which no s e rv ice cred it was earned... * * * An em ployee* s s e rv ice w ill be deem ed to have term inated upon the o ccu rren ce o f the e a rlie r of the follow ing two events: (a) When the tru stees are served with notice by a union of a legally valid term ination of em ploym ent of an em ployee due to failu re of such em ployee to tender to the union p e rio d ic dues and initiation fees o r his share of the cost of negotiating and serv icin g the colle ctiv e bargaining a g reem ent between the em ployer and union, provid ed that the said colle ctiv e bargaining agreem ent requires such paym ents. (b) Digitized for FRASER The failu re by an em ployee to com plete 600 o r m o re covered hours of em ploym ent in 2 con secu tive plan y e a rs.

79 70 If, h ow ever, an em ployee does not have 600 cov ered hours of em ploym ent in 2 con secu tive plan year p eriod s due to an absence caused by m ilita ry se rv ice with the A rm ed F o r c e s of the United States, o r a bona fide d isability, he shall be allow ed an additional p eriod of tim e equal to the length of the absence to com plete the 600 cov ered hours of em ploym ent. Am endm ent of the P en sion Plan A m ultiem p loyer pension plan can usually be am ended at any tim e by the board of adm inistration, and in this resp ect, m u ltiem p loyer plans are far m o re flexib le than the typical negotiated single em ployer plan. The b o a rd 's authority to amend a m u ltiem p loyer pension plan is usually con cis e ly stated in the fo rm a l pension plan docum ent, and is separate and distinct from the pow er of the p arties to affect changes in the trust indenture o r in contribution rates. G enerally, the changes that can be m ade are those affecting eligib ility fo r ben efits, types of benefits provid ed, amount of ben efits, p roced u res, etc. H ow ever, the b o a rd 's right to change the amounts o f benefits fo r retired w ork ers is often lim ited and guided by other plan p rov ision s. (See page 7 1.) Eighty percen t of the plans with nearly 85 p ercen t of the w ork ers sp ecified that the board o f tru stees had the pow er to amend pension plan p rov ision s at any tim e, subject, in som e ca se s, to the review and approval of the em p loy ers, the union, o r plan p articip an ts. Plans Workers 1 Provision for amendment of the pension plans Number Percent Number (thousands) Percent All plans studied , Board may amend o.8 2, Board only , Board with approval of plan participants Board with approval of union and employers Board with approval of union if 6 A.2 Board with approval of employers Board or union and employers (2 ) may amend Union and employers may amend Other No provision, or information not available * Worker coverage Includes both active and retired workers in Less than 0.05 percent. NOTE: Because of rounding, sums of individual items may not equal totals. E xam ples of typical clau ses follow : B oard only m ay amend Digitized for FRASER This plan m ay be am ended by the tru stees at any tim e..

80 71 B oard m ay amend with approval o f union and em p loy ers T hese rules and regulations m ay be added to, am ended, o r m od ified fro m tim e to tim e, without n otice by the retirem en t board provided that such am endm ents or m od ification s shall fir s t have been approved by the executive or other governing boards o f the union and the a sso cia tio n s... B oard m ay amend with approval o f p articipan ts The p rov ision s of the plan m ay be m od ified o r am ended by the board by vote o f a regu lar or sp ecia l m eeting o f the board, su bject to referendum o f the m em bersh ip of the plan.. On the other hand, 9 p ercen t of the plans could be am ended only by join t action o f the em ployer and the union cu stom arily at the expiration of the co lle ctiv e bargaining agreem ent. The benefits in m any of these plans w ere origin a lly n eg o tiated by the p a rties at the bargaining table rather than, as in m ost plans, by the join t board appointed by them. In these plans, the board usually acted solely on adm in istrative m a tters. T h ese plans ty p ica lly said: This plan is established pursuant to a co lle ctiv e bargaining a g re e - m ent^between the em p loyers and the union and m ay be am ended /o n ly / by colle ctiv e bargaining agreem en ts. One o f the im portant prerogatives of boards o f adm inistration is to adjust the ben efits paid to w ork ers alread y retired.... The em ployee shall be paid a retirem en t benefit o f $100 p er month... provided su fficient funds are available fo r paym ents as a foresa id, but if sufficient funds are not available, the m onthly benefit m ay be determ ined to be le ss than $100, as h ereinafter p rov id ed in this agreem ent. Only 2 out of 7 plans explicitly withheld this right fro m the board and allow ed fo r no reduction in benefits. In m ost o f the rem aining plans, som e d iscre tio n was given to the b oa rd s, im p licitly o r explicitly. Plans Restrictions on reduction of benefits for retired workers Number Percent Workers1 Number (thousands) Percent All plans studied , No restriction on reduction , No reduction Insured Self-insured No reduction if funds available No reduction unless fund depleted --- 1* Other ^ No provision, or information not available Worker coverage includes both active and retired workers in 1959* ^ 9 plans with 336,000 workers were self-insured before retirement, but a temporary annuity was purchased annually after retirement. NOTE: Because of rounding, sums of individual items may not equal totals. Digitized for FRASER

81 12 The 116 w holly insured plans, w hich co v e re d 10 p ercen t of the w o rk e rs, could not reduce ben efits fo r w ork ers already re tire d, owing to the p r io r p u r chase o f a life annuity fo r each p en sion er; i. e., the ben efit paid to the retired w ork er was the obligation of the in su rer, not the fund. A clau se fro m one group annuity con tra ct read: Digitized for FRASER... This con tract m ay a lso be am ended in any re sp e ct, r e tr o actively o r oth erw ise, at any tim e o r tim es by w ritten agreem ent betw een the con tract h old ers /Joint b o a rd 7 and... /th e ins u r e r /. H ow ever, no such am endm ent shall a d v ersely affect any rights with resp e ct to an annuity pu rch ased b e fo re the e ffe c tive date o f the am endm ent, unless the consent of any participant in in te re st is obtained... An additional 9 plans, coverin g 336, 000 w o rk e rs, p rim a rily in the apparel industry, purchased insured annuities of 1 y e a r 's duration fo r each pen sion er. The continuance o f these "an n u ities" depended upon the annual d ecision of the board o f each fund, w hich w as, presu m ably, influenced ch iefly by the availability of funds. In con trast with w holly in su red plans, the p en sion ers did not have the secu rity o f an insurance com pan y's obligation to fu lfill a lifetim e annuity con tract. About 30 p ercen t o f the plans (including the 116 in su red plans), coverin g about 18 p ercen t of the w ork ers proh ibited the reduction o f retired w o rk e rs ' benefits through am endm ents to the plan. E xam ples o f clauses in self-in su red plans are: The b oard o f tru stees m ay amend o r m odify this plan at any tim e in a ccord a n ce with the agreem ent and declaration o f trust. H ow ever, benefits payable to p erson s retired h ereunder, p r io r to am endm ents, shall not in any event be red u ced. * * *... In determ ining the amount o f pension to be paid, it is and shall continue to be the p o licy o f the join t com m ittee to m ake such paym ents on an actu arially sound b a s is, as the sam e m ay be determ ined by the join t com m ittee upon the advice of its actuary, pension consultants and legal cou n sel; keeping a re s e rv e at all tim es su fficien t to m eet com m itm ents to m em b e r s of the union who have retired and to m eet paym ents due in future y ears to those m em b ers of the union who m ay re tire subsequently. In no event, how ever, shall the amount of pension payable to m em b ers o f the union who have retired be red u ced... Fourteen plans coverin g 27, 000 w ork ers prohibited reductions unless requ ired by the condition o f the p en sion fund its e lf, as in the follow in g cla u se: No am endm ent shall be valid w hich w ould reduce the r e tir e m ent ben efit o f any retired em ployee, unless actu arial soundness of the plan would be jeop a rd ized and a com petent actuary so ce r tifie s. Another eighth of the s e lf-in su re d plans coverin g a tenth of the w ork ers prohibited reducing benefits fo r re tire d w ork ers as long as funds w ere available. A clau se illu stratin g this approach is : The tru stees m ay amend o r m od ify this pension plan at any tim e in a ccord a n ce with the trust agreem en ts, except that no am endm ent o r m od ification m ay reduce any benefits payable to a p e r son who retired hereunder p r io r to am endm ent o r m od ification, so long as funds are available fo r paym ent o f such b en efits, nor m ay any am endm ent or m od ification rev ert any of the a ssets o f the pen sion fund to any em p loy er...

82 75 In s e lf-in su red funds, h ow ever, reg a rd less o f the plan p rovisio n s, in case of dim inution of revenue (contributions and earnings investm ents) and a ssets, som e point m ay be reach ed w here an adjustm ent m ust be m ade in o rd e r fo r the plan to fu lfill its stated pu rp ose. If no adjustm ent is m ade in the re tire d w o r k e r s 1 b en efits, the entire burden fa lls on the w ork ers cu rren tly em ployed. F or that reason, among oth ers, both of the coa l m ining funds have reduced the benefits fo r re tire d w ork ers and the p ro m ise d benefits of future r e tire e s. It m ust be em phasized that this study deals with plan p ro v isio n s, not p ra ctice. The reduction of benefits fo r retired w ork ers co v e re d by m u ltiem p loyer plans has ra re ly o ccu rre d. On the con trary, the gen erally favorable state o f the econom y sin ce these plans w ere established, com bined with con servative funding p ra ctice s and the renegotiation of em ployer con tributions, have been conducive to the building up o f substantial pension reserv e s in m any plans. R estriction s on R eem ploym ent A fter R etirem ent E xcept fo r keeping trade se cre ts and s c a r c e sk ills fro m their com petito rs, individual em p loyers usually have little d e sire o r in terest in com pelling the w ithdraw al of pen sion ers from all active em ploym ent. Single em ployer pen sion plans, th e refo re, a re either silent on w orking fo r other em ployers after retirem en t or bar only "a ctivity detrim ental to the in terest o f the com pany. " On the other hand, the in terest of unions and groups of em p loyers in controlling the labor m arket is re fle cte d by the p rov ision s found in m o st m u ltiem p loyer plans restrictin g reem ploym ent after retirem en t. In this reg a rd, the group o r a s s o ciation o f em p loyers involved in the pension plan acts as a single em ployer under an individual pen sion plan, with a fa ir ly obvious ru le: The w o rk e r cannot both retire and continue his em ploym ent with the com pany. In gen eral, restrictiv e p rovision s a re c le a rly d irected tow ards deterrin g retire d w ork ers fro m seeking em ploym ent in d ire ct com petition with other union m e m b e rs, o r fro m em ploym ent with com peting nonunion em p loyers, o r fro m entering into bu sin ess fo r th em selves. R e stricte d E m ploym ent. R estriction s on reem ploym en t after retirem en t in m ulti em p loy er plans contain two e ssen tia l elem en ts: (1) The definition o f r e tirem en t and (2) the penalty to be a s s e sse d in case o f violation of the retirem en t rule. In addition, m any plans requ ire n otification of reem ploym en t, with additional penalties fo r n oncom pliance. The definitions of retirem en t can be cla s s ifie d in term s o f com plete or partial w ithdraw al fro m em ploym ent, i. e., restrictio n s on the p erform a n ce of w ork (1) with any contributing e m p loy er, (2) under the ju risd ictio n of the union, (3) in the industry o r cr a ft, o r (4) in any em ploym ent. Within these cla ssifica tio n s the amount of em ploym ent p erm itted, if any, m ay be ex p ressed in term s o f hours o r earnings. Clauses illustrating each o f these gen eral restrictio n s a re listed below : R estrictio n on reem ploym ent with any contributing em p loyer Digitized for FRASER R etirem en t ben efits shall be suspended during any p e r io d in w hich the elig ib le em ployee returns to active s e r v ice fo r a cov e re d em p loyer. * * *

83 74 If any pen sion er receivin g benefits resu m es em ploym ent (except casual em ploym ent) with any contributing em p loyer, he cea ses to be a pen sion er and his benefits a re suspended after the fir s t day of the month in which such resum ption of em ploym ent o c c u r s. Casual em ploym ent is that w hich is at a rate not exceeding two shifts w orked in any p a y roll w eek. If a re tire d em ployee is reem ployed by one o f the em p loy ers, the retirem en t ben efit paym ents to him shall be discontinued... p rov id ed, h ow ever, that a retired em ployee who is retired... shall not have his retirem en t benefit paym ents discontinued if he a ccep ts em ploym ent when and if o ffe re d by the em p loyers on a casual b a sis. Casual em ploym ent as used h erein is d e fined as em ploym ent by any o r all of the em p loyers w here the total w ages earned w ill not cause said retired em ployee to lo se any of his benefits under F ed era l old -a g e and su rv ivors in surance. sje $ * R e strictio n on reem ploym ent within the ju risd ictio n o f the union In o rd e r to rece iv e a pension, a w ork er m ust refra in from any w ork within the ju risd iction of the lo ca l union, o r any other lo c a l o f the international union. * >!< R e strictio n on reem ploym ent in the industry To be con sid ered retired under this pension plan, a w ork er m ust refra in fro m any em ploym ent fo r w ages o r p ro fit in the industry. * * A fter retirem en t you w ill continue to rece iv e retirem en t b en e fits if you w ork in the industry and earn not m o re than $ 1,200 in a calendar year. sje * sje R e strictio n on any further em ploym ent of any kind No p erson who has retired pursuant to the rules and regulations shall th ereafter engage in w ork in any capacity w h atsoever in any industry which yield s him an in com e in ex cess o f the amount p erm itted at any tim e by the F ed era l S ecurity A ct as m onthly earnings fo r any re tire d em p loy ee without depriving such e m p loy ee o f the ben efits under that A ct. * An em ployee who re tire s shall cease from engaging in any em ploym en t o r gainful occupation. At least 80 p ercen t of the plans coverin g alm ost 90 p ercen t of the w ork ers restricte d reem ploym en t, but the definition of what constituted prohibited em ploym ent, as p reviou sly illu strated, varied w idely. Digitized for FRASER

84 75 Flans Workers 7 Benefits are suspended when worker Number Percent Number (thousands) Percent All plans studied Works in any employment Is gainfully employed Earns more than a specified amount Works for a contributing employer - Is gainfully employed Earns more than a specified amount Works more than a specified number of hours Works in the industry or craft --- Is gainfully employed Earns more than a specified amount Works more than a specified number of hours Works in the industry or earns more than a specified amount in any employment Works in a job under collective bargaining agreement with union - Other No provision, or information not available , o n , , (2) 2.7 (2 ) Worker coverage includes both active and retired workers in 1959* 2 Less than 0,05 percent. NOTE: Because of rounding, sums of individual items may not equal totals. O ver half o f the plans which restricte d reem ploym en t required withdrawal from em ploym ent or self-em p loym en t within the cra ft o r industry. Som e plans, h ow ever, allow ed pen sion ers to do a lim ited amount o f w ork if their hours or earnings did not e x ceed sp e cifie d lim its. R etirem en t was defined as w ithdrawal fro m em ploym ent with contributing em p loyers by about a fourth of the plans. While nearly all of these required com plete withdraw al from em ploym ent within the scop e of the plan, pen sion ers could presu m ably w ork fo r other em ployers in the trade o r industry not belonging to the plan. The scop e o f prohibited w ork was defined som ew hat m o re broadly by 22 plans, coverin g 42,4 0 0 w o rk e rs, which suspended benefits if the pen sion er w orked at jo b s co v e re d by any colle ctiv e bargaining unit of the entire national union, o r, in som e c a s e s, any one of the lo ca l union(s) participating in the plan. Another 46 plans coverin g about 15 p ercen t of the w o rk e rs, m ainly in the g a r m ent trades, applied 2 retirem en t re strictio n s : (1) The w ork er could not b ecom e reem ployed in the industry, and (2) he could not earn in e x ce ss o f a sp ecified sum in any em ploym ent. F o r exam ple, one such plan stated: No p erson w hose application fo r retirem en t has been approved shall th erea fter engage in the industry in any capacity w h atsoever either as em ployee or em p loyer, d irectly or in d irectly; Digitized for FRASER nor m ay such p e rso n do any w ork in any capacity w h atsoever

85 32 This clause b eca m e am biguous when the A ct was am ended in 1954 to p erm it earnings in any amount, the reduction of o ld -a g e benefits depending on both the am ount o f earnings in each m onth and in each y e a r. (See footnote 33. ) 33 The S ocial S ecu rity A ct cu rren tly (May 1962) p rovid es fo r withholding $ 1 o f the fam ily s o cia l secu rity benefit fo r each $2 of annual earnings between $ 1,2 0 0 and $ 1,7 0 0, and d o lla r -fo r -d o lla r above that amount. H ow ever, benefits a re not withheld fo r any month that earnings are below $100 or earned after age 72. Digitized for FRASER 76 in any other industry which yield s him an in com e in e x ce ss of the amount perm itted to be earned under the F ed era l S ocial Security A ct by w ork ers receivin g o ld -a g e benefits in em p loym ent co v e re d by the A ct. 32 Sixty plans, coverin g about 6 p ercen t of the w o rk e rs, requ ired com plete, o r alm ost com p lete, w ithdraw al and continued abstention from em ploym ent of any kind. These restrictio n s on em ploym ent w ere applicable in about 1 out of 7 plans if the w ork er earned m o re than a sp ecified amount or w orked m o re than a certain num ber o f hou rs. M ost of the plans that suspended benefits if the pen sion er w orked at any em ploym ent w aived the suspension if his earnings w ere below a certain amount; but only ra re ly did plans with m o re lim ited restriction s w aive suspension. M axim um Earnings T e sts. About th ree-fou rth s of the 100 plans with a m axim um earnings test used the earnings test fo r retirem en t under the S ocial S ecu rity A ct. 33 F o r exam ple, one plan stated that: Such retired p erson shall not engage d irectly o r in d irectly in any capacity in any industry w hich w ill yield him an in com e in e x ce ss o f the amount perm itted to be earned under the F ed era l S ocia l S ecurity A ct. The rem aining plans sp ecified m onthly or annual dollar lim its. Som e o f these plans w ere p robably w ritten to con form with the so cia l secu rity retirem en t test, but w e re outm oded by the I960 and 1961 am endm ents to the S ocia l S ecu rity A ct. Illustrations o f plan p rov ision s sim ila r to the p re so cia l secu rity am endm ents are. as follow s: A n orm al pen sion er m ay engage in lim ited outside em ploym ent w hich... m eans em ploym ent or activity except em ploym ent in any kind of w ork regu larly p erfo rm e d by m em b ers o f the union... provid ed earnings from such outside em ploym ent shall not exceed $100 a month. 5jc 5jC 9jC... to be con sid ered retired under this pension plan, a p e r son m ust refra in from any em ploym ent fo r w ages o r p rofit in w hich his earnings shall aggregate m o re than $ 1,2 0 0 in any 1 calendar year... G eographic L im its. A lm ost 60 p ercen t of the plans, coverin g ov er 75 p ercen t of the w o rk e rs, in w hich reem ploym ent was restricte d placed no g e o graph ic lim it on the r e s tr ic tio n. One typ ical plan stated, fo r exam ple, that: T here shall be no lim it to the geographic area cov ered.

86 77 Plans Workers 1 Geographic limits of reemployment after Number retirement Number Percent (thousands) Percent All plans with restrictions , Unlimited geographic application , Limited geographic application ^ Worker coverage includes both active and retired workers in 1959* NOTE: Because of rounding, sums of individual items may not equal totals. The rem aining plans, either explicitly o r im plicitly, lim ited the restrictio n to the geographic area cov ered by the plan, i. e., State, county, city, or m e tro p o l itan a rea. E xcept fo r a few nationwide plan s, plans defining retirem en t as w ithdraw al from em ploym ent with contributing em p loyers im p licitly set geographic lim its. E nforcem en t of w ork re strictio n s outside the im m ediate area of the plan is, o f co u rse, d ifficu lt; apart fro m voluntary d isclo su re by the individual pen sion er, it usually req u ires the m aintenance of cen tral re co rd s a task which few, if any, national and international unions a re able and w illin g to p e r fo r m. P en a lties. O ver 3 out of 5 plans restrictin g em ploym ent rem oved the w ork er from the pension ro lls during the p eriod of reem ploym ent. T ypical of such cla u ses is one reading: If a p en sion er b ecom es an em ployee as above defined, his pension shall term inate as o f the fir s t day of the month in which he b ecom es such em ployee, and he shall again b e co m e a m em b e r of the plan. Upon subsequent retirem en t under the plan, he shall again be entitled to re ce iv e a pension. Som e of these plans rem oved offending p en sion ers fro m the roles fo r a m inim um length of tim e usually fo r 6 m onths o r a y ea r. Plans Length of suspension for engaging in restricted employment Number Percent Workers1 Number (thousands) Percent All plans with employment restrictions , Period of reemployment , Without minimum suspension period ,436.9 With minimum suspension period ^ months* minimum year minimum Suspension period in addition to reemployment period Discretion of board month months months months First time, 6 months; second time, l i f e First time, 6 months; second time, 6 months; third time, life Other specified periods L i f e Other penalties * Worker coverage includes both active and retired workers in 1959 NOTE: Because of rounding, sums of individual items may not equal totals.

87 78 The rem aining plans a s s e s s e d an additional penalty. M ost of these plans suspended benefits fo r an additional sp ecified p eriod usually fo r 3 or 6 m onths. The penalty was left to the d iscretion o f the board by 36 plans, coverin g 5 p e r cent of the w o rk e rs. The m axim um penalty the perm anent lo s s of all rights to pension benefits was autom atically im posed by only 19 plans. The follow ing clau ses illu strate these types of p ro v isio n s: The g reater of tim e or reem ploym ent o r fixed p e rio d... pen sion paym ents shall ce a se fo r so long as he shall co n tinue to be em ployed in the industry o r fo r 1 y ea r, w hichever p e rio d is g reater. T h ereafter his right to pension paym ents shall recom m en ce. * * * S p ecified duration If a retired m em ber... reen ters industry and accep ts e m ploym en t... with any em p loyer, pension paym ents shall im m ediately cease and m ay be resum ed only by reapplication to the join t com m ittee not le s s than 6 m onths after he has t e r m inated em ploym ent. D iscretion of board If a pen sion er w orks in violation of this section, he m ay be disqualified, at the sole d iscretion o f the tru stees, fo r receiv in g o r being entitled to any p en sion ben efits fro m the p en sion plan. Sje S p ecified additional suspension p e rio d If a pen sion er... enters such em ploym ent o r activity, pension ben efits shall not be payable fo r the m onths of such activity plus 6 additional m onths. A p en sion er who b ecom es reem ployed in the industry shall fo rfe it all right to benefit paym ents due on or after the fir s t day of such em ploym ent. If the em ployee again re tires and reapplies fo r retirem en t benefit, and is oth erw ise qualified, subsequent ben efit paym ents w ill begin on the fir s t day o f the calendar m onth w hich is m o r e than 90 days after his subsequent r e t ir e m ent date. 3flc * 5je L o ss o f all rights to a pension In the event that such retired m em ber of the union reen ters the industry and accep ts em ploym ent as a m em ber of the union with any em p loyer his pension paym ents shall im m ediately cea se and he shall not th ereafter be co v e re d by any of the p ro v isio n s of the plan.

88 7* N otification. To facilitate policin g the reentry of w ork ers into prohibited em ploym ent, about 40 p ercen t o f the plans with retirem en t restrictio n s a lso r e quired n otification o f reem ploym ent. Som e plans a s s e s s e d penalties (in addition to those ju st d iscu s se d ) in ca se o f nonnotification. The m a jority of the plans requ ired that the w ork er notify the adm in istrator within a given p eriod of tim e after em ploym ent was secu red, either within 1 w eek, 2 w eeks, o r a month. The rem aining plans required either prom pt or advance w ritten n otification o f reem ploypien t by a re tire d w o rk e r. Plans Workers 1 Period of notification Number Percent Number (thousands) Percent All plans requiring notification Advance written notification Promptly reemployment Within a specified time of week weeks month Worker coverage Includes both active and retired workers in 1959* NOTE: Because of rounding, sums of individual items may not equal totals. One out of four plans requiring n otification did not im p ose an additional penalty fo r not filing a n otice, i. e., the w ork er was resp on sib le only fo r the return of benefits receiv e d in violation. One plan read, fo r exam ple: Any p en sion er who a ccepts such em ploym ent within the t e r r i toria l ju risd iction o f the union, but fa ils to notify the o ffice of the trust fund within 1 w eek, shall be required to reim b u rse the trust fund fo r all such pension paym ents a ccep ted in violation o f the pen sion plan. Plans Workers1 Penalty in case of nonnotification Number Percent Number (thousands) Percent All plans requiring notification Reimbursement of benefits received in violation only Additional suspension periods Fixed penalty months* benefits omitted months* benefits omitted months* benefits omitted Double number of months of reemployment No fixed penalty Discretion of board Discretion of board, 6-month maximum Discretion of board, 12-month maximum Discretion of board, 18-month maximum Discretion of board, disqualification authorized Forfeiture of all future benefits Other penalties Worker coverage includes both active and retired workers in 1959* NOTE: Because of rounding, sums of individual items may not equal totals.

89 80 H ow ever, 47 plans im p osed a fixed penalty by om itting a sp e cifie d num b e r of m onthly benefit paym ents due the errin g p en sion er, usually 6, 12, or double the months of reem ploym ent. F o rty -fiv e p ercen t of the plans with n otification p rov ision s left the penalty to the d iscretion of the b oard, usually setting a m axim um of 12 months of ben efits. In a third of such plans, the board did have d iscretion a ry pow er to suspend benefits perm anently a penalty autom atically invoked in 26 other plans. Som e exam ples of notification clauses cla ssifie d by the pen alties fo r fa ilu re to give tim ely n otice a re: 12-m onth disqualification p eriod A retired em ployee shall notify the board of tru stees in w riting within 15 days follow ing his return to em ploym ent fo r w ages or p ro fit in the industry. If he fails to give such n otice within such 15-day p e rio d, he shall be disqu alified fo r an additional p e rio d of 12 months over and above the disqu alification p eriod of the p reced in g subsection. A p en sion er shall notify the trustees in w riting within 15 days after he returns to em ploym ent in the craft. If he fa ils to give such w ritten n otice within 15 days, he m ay be disqualified fo r benefits fo r an additional p e rio d of 12 months (over and above the disqu alification p eriod of the p reced in g su bsection ), as the tru stees determ ine in their sole d iscretion. F orfeitu re of benefits re ce iv e d during reem ploym ent A p erson who has been retired by the retirem en t fund... is required in each ca se to rep ort to the retirem en t fund, in w riting, any em ploym ent w hich he obtains... Any person who b reach es this regulation in any resp ect shall forthwith re sto re to the r e tirem ent fund all benefits receiv e d fo r the p eriod o f reem p loy m ent or lo se all rights to rece iv e retirem en t benefits again. Any p en sion er who a ccep ts such em ploym ent within the ju r is diction of the union, shall within 1 w eek of com m en cem en t of such em ploym ent, give n otice th ereof to the fund o ffice. Any p en sion er who... fa ils to notify the o ffic e o f the tru st fund within 1 week shall be requ ired to reim burse the trust fund fo r all such pen sion ben efits a ccep ted in violation o f the p en sion plan. F o rfe itu re of all future p en sion ben efits F ailu re to notify the board within 30 days after his return to em ploym ent shall be con sid ered a w aiver of any rights he m ay have to future pension ben efits, and such w aiver shall be final and binding on the em ployee; the b oard shall have no d iscretion w hatsoever in the application of this p rovision. Digitized for FRASER F ailure of a p en sion er to notify the tru stees of his reem p loy m ent in the trade within 3 days after his return to such e m ploym ent shall be deem ed a w aiver of any rights he m ay have to future pension ben efits. This p rov ision shall apply each tim e the p en sion er returns to em ploym ent in the trade after the date o f com m en cem en t of retirem ent.

90 81 The sev erity of these penalties is ju stified by m any tru stees as n e ce ssa ry to en force the reem ploym ent p rovision. They usually try to m itigate the h a rsh ness of the ru les by giving each pen sion er frequent w arnings when he re tires and while he is in retirem en t. The adm in istrators of m ost m u ltiem p loyer plans try to prevent m isunderstandings and undue hardship on the re tir e d w ork er by e x plaining the rules in cle a r language to each retired w ork er both in p erson and in w riting. A pplication form s are often used fo r this pu rp ose, but many, such as the follow ing, fail to m ention the penalties fo r violating the restriction s on reem ploym ent: I ag ree to notify the pen sion fund in w riting o f any and a ll e m ploym ent in which I shall b ecom e engaged w hile in receip t of pension. It is understood that I m ay not be reengaged in the industry o r any bran ch th ereof... w hile in re ce ip t o f a pen sion, and shall im m ediately notify the pension fund in w riting if I do b e co m e so engaged. The application used by another plan im posing pen alties a lso fa iled to m ention them by the follow ing language: I understand that I m ust withdraw com p letely and refra in from any further em ploym ent within the ju risd iction of the loca l union.. in the... industry. P reced en ce to A ssets in Case of T erm ination of the Plan To qualify fo r tax exem ption under the Internal Revenue C ode,34 pension plans are requ ired to have a p rov ision determ ining the distribution of the fu n ds assets on a n on d iscrim in a tory b a sis in case the plan is term inated; i. e., the rights of all participants in the plan are to be fully vested upon term ination. During the life of m ost m u ltiem p loyer plans, as w ell as m ost single em ployer plans, econ om ic conditions have been extrem ely favorable fo r the accum ulation o f pension r e s e r v e s ; but during a p e rio d of p rolon ged r e cessio n, term ination clau ses m ay be a valuable p rotection of the right of plan participants to plan a ssets. B ecau se of the wide d iversity and com plexity of these clauses found in m u ltiem p loyer pen sion plans, no attempt was m ade to analyze them in detail. Som e of the clau ses found in the plans allow ed con sid erable d iscretion to the boa rd, as fo r exam ple:... If... either at the expiration of the existin g c o lle c tiv e bargaining agreem ents or at som e future date, p ro v isio n shall cease to be m ade fo r further contributions to the retirem ent fund, the board of tru stees shall then make such p rov ision s as it m ay deem appropriate to enable it to continue, out of m onies then on hand in the retirem en t fund, the paym ent of retirem ent benefits to w ork ers who have already been granted the sam e, and shall apply the rem a in d er, if any, o f the m on ies in the r e tirem ent fund to provid e retirem en t benefits fo r additional w ork ers in such fo r m and amounts and on such an equitable and nondis crim in a tory basis as the board of tru stees shall determ ine. In no event shall any of the m onies in the fund rev ert or be diverted to the participating em ployers or to the union or to be used fo r any purpose other than the paym ent of benefits to the w o rk e rs o r fo r expenses in connection therew ith. 34 Internal Revenue Code, 1954, section 401a. Digitized for FRASER

91 82 M ost m ultiem p loyer pension plans, how ever, had detailed term ination p ro ce d u re s, illu strated by the follow ing exam ples. The fir s t plan quoted below p rovided pension benefits in case of plan term ination in the follow ing ord e r: (1) R etired w o rk e rs, (2) w ork ers over the n orm al retirem en t age o f 65, (3) w ork ers eligib le fo r early retirem en t, (4) vested w ork ers, including those p rev iou sly v ested, and (5) a ll oth ers. (c) If the board term inates the plan in a ccord a n ce with section 1 o f this a rticle, the realiza b le value of the trust fund r e m aining after providing fo r the expenses of the plan and of the trust fund, shall be allocated by the board, to the extent that they shall be su fficien t, fo r the pu rp ose o f paying p en sions (based on cred ited s e rv ice to the date of discon tin u ance of the plan) to em ployees in the follow ing ord er of p reced en ce: (1) To p rovid e pensions to em ployees who shall have r e tired under the plan p r io r to its discontinuance, without re fe re n ce to the o rd e r of retirem en t; and to fo rm e r em ployees then receivin g a vested d eferred pension under the plan; (2) To p rovid e pensions upon retirem en t under the term s o f the plan, as if it w ere in effect, to em ployees age 65 or over on the date of discontinuance, without r e fe r ence to the ord e r in which they shall have reached age 65; (3) To p rovide pen sion s, calculated, based upon retirem en t at age 65, under the term s of the plan, as if it w ere in effect, to em ployees eligib le fo r early retirem en t on the date o f discontinuance, without refe re n ce to the o r d e r in w hich they shall reach age 65; (4) To p rovide pen sion s, calculated, based upon retirem en t at age 65, to em ployees who as of the date of d isco n tinuance had both (i) attained age 55 but not age 60 and (ii) com pleted at least 25 yea rs of cred ited s e r v ice, and fo rm e r em ployees then eligible fo r, but not yet receiv in g, a vested d eferred pension, without referen ce to the o r d e r in which they shall reach age 65; and (5) To provide pen sion s, calculated, based upon retirem en t at age 65, under the term s of the plan, as if it w ere in effect, to all em ployees not included in (1), (2), (3), or (4), without refe re n ce to the ord e r in which they shall reach age 65. (d) If the fund is insufficient to p rovid e in full for the pensions under any of the paragraphs in subsection (c) above after p ro v isio n fo r all pensions under previou s paragraphs, each pension under such paragraph as to which the funds are insu fficien t shall be reduced p ro rata. P ro v isio n m ay be m ade by the board fo r the paym ent of pensions under this a rticle subsequent to the term ination of the plan through (i) continuance of the trust fund, (ii) purchase of insurance com pany annuity con tracts, (iii) disbursem ents in cash of the a ctu arial equivalent of such p en sion s, o r (iv) any c o m bination of these. Under no circu m sta n ces shall any portion of the trust fund be payable to or fo r the benefit of any participating com pany, the union, or any s u c c e s s o r c o m pany o r union.

92 83 The follow ing exam ple is sim ila r to the p reviou s one except that benefits fo r disability retirem en t are included, and benefits fo r early retirem en t and vesting a re exclu d ed: A rticle X T erm ination of the Plan 1. F o r the purpose of this a rticle, the plan shall be con sid ered to be term inated if discontinued by a m a jo r ity of the m e m b e r em ployers with the consent of the union. In the event of such term ination the assets then rem aining in the trust fund, after providing fo r the expenses o f the plan, shall be allocated, to the extent that they shall be su fficien t, fo r the purpose o f paying retirem en t and disability benefits (based on cred ited s e r v ice to the date of discontinuance of the plan) to retired and presen t m em ber em ployees in the follow ing o rd e r of p re ce d e n ce : (a) To provid e retirem en t benefits to em ployees who shall have retired under the plan p r io r to its discontinuance, without re fe re n ce to the ord er of retirem en t; (b) To provid e n orm al retirem en t benefits upon retirem en t to em ployees aged 65 o r over on the date o f d isco n tinuance, without re fe re n ce to the ord e r in w hich they shall have reach ed the age o f 65; (c) To provid e disability benefits fo r all m em ber em ployees then cu rren tly receiv in g such ben efits without r e f eren ce to the o rd e r in which they shall have b ecom e eligib le fo r such ben efits; (d) To provid e retirem en t ben efits, with all rem aining funds, upon n orm al retirem en t to all rem aining m e m b e r em ployees on the date of discontinuance, without refe re n ce to the ord e r in which they shall reach their norm al retirem en t age; and (e) In the event the assets of the trust fund are insufficient to provid e in full fo r the retirem en t and disability benefits in the above ord e r o f p re ce d e n ce, each benefit payable to the m em ber em ployees in the cla ss in which there is a d eficien cy shall be reduced p ro rata; subject to the foregoin g p rov ision s as to p ro rata reduction, all benefits shall be payable in full in the o rd e r of their p reced en ce to the exclu sion of all c la sse s with low er p rio rity. 2. Such a lloca tion shall be a ccom p lish ed through either (1) co n tinuance of the tru st fund o r a new tru st fund, o r (2) p u r chase of insurance annuity con tracts; provid ed, how ever, that the tru stees upon finding that it is not p ra ctica b le or d esira b le under the circu m sta n ces to do either o f the fo r e going with resp ect to som e or all of the groups listed above, m ay, with the unanimous consent of all tru stees, p rovid e fo r som e allocation of a part or all of the a ssets of the trust fund other than the continuance of a trust fund or the purchase of insurance annuity con tracts with re sp e ct to any or all such groups p rovided, h ow ever, that no change shall be effected in the ord er of p reced en ce and b a sis fo r a llo c a tion above establish ed.

93 84 In the follow ing exam ple, em ployee contributions w ere returned after p ro v isio n had been m ade fo r retired w ork ers. A rticle VI. Am endm ent and T erm ination S ection 2. D iscontinuance. If the plan is discontinued, the assets then rem aining in the pension fund (after providing the expenses o f the plan), shall be allocated to the extent that they shall be sufficient, fo r the purp ose of paying retirem en t benefits (based on cred itable s e r v ice to the date o f discontinuance o f the plan) to re tire e s in the follow ing o rd e r of p reced en ce: (a) To p rovid e their retirem en t benefits to p en sion ers who shall have retired under the plan p r io r to its discontinuance, without re fe re n ce to the ord e r of retirem en t; (b) To p rovid e the refund to em ployees of their own con trib u tions to the pen sion fund; (c) (d) To p rovid e n orm al o r reduced pensions to em ployees aged 65 o r ov er on the date of discontinuance, without re fe re n ce to the ord e r in which they shall have reached n orm al r e tirem en t age; and To provid e norm al o r reduced pensions upon attainment of age 65 to em ployees le ss than 65 y ears o f age on the date o f discontinuance, in the o rd e r in which they shall attain age 65. In no event shall any of the assets of the pension fund revert to, o r be subject to, any claim s of any kind o r nature by the em p loy ers. Under the follow ing clau se, the funds rem aining after p rov isio n has been m ade fo r retired w ork ers and those ov er age 65, are to be distributed to the rem aining m em b ers accord in g to pension cred its they have accum ulated. Digitized for FRASER Section 9. T erm ination. The plan m ay be term inated by the boa rd only with the consent of the union and the em p loy er a s s o c i ations who are then parties to the trust agreem ent, and in such event all of the funds of the plan, after n e ce ssa ry and reasonable expen ses, shall be used fo r the exclu sive benefit of m em bers and p en sion ers under the plan and shall be a lloca ted in sh ares d e te r m ined by the board on the b asis of actu arial valuation, in the f o l lowing ord er: F irst, each pen sioner shall be entitled to a share equal to the r e se rv e com puted to be requ ired fo r his pension; and Second, each m em ber who has reached his 65th birthday shall be entitled to a share equal to the re s e rv e com puted to be required fo r his pension cre d its; and Third, each other m em ber shall be entitled to a share equal to the r e se rv e com puted to be required fo r his pension c r e d its; p rov id ed that If the funds of the plan are in su fficien t to p rovid e in full fo r the sh ares under any o f above paragraphs after p r o vision fo r all shares under previou s paragraphs, each share under such paragraphs as to which the funds are in su fficien t shall be reduced p ro rata.

94 The board m ay require that all shares be withdrawn in cash or in im m ediate o r d eferred annuities o r other p e rio d ica l paym ents as the board m ay d eterm in e. P rotection o f P en sion C redits in C ase of W ithdrawal o f an Individual E m p loy er. When an individual em ployer withdraws fro m a plan, his em p loy ees1 relationship with the plan is a lso usually sev ered, unless they tra n sfer to other participating em p loy ers, usually within the tim e p r e s crib e d by the b r e a k -in - s e r v ice rule. F o r exam ple, som e plans sp e cifica lly stated that:... When an em ployer ce a se s to be a party to this agreem ent, no additional pension cred its w ill a ccru e to the em ployees of such em p loyer until they b ecom e em ployed by a p a rticip a t ing em ployer... * * *... an em p loy er is d e cla re d by the tru stees to have cea sed participation in the fund because of failu re of the em ployer to m ake contributions to the pen sion fund, as req u ired by the e m p lo y e e s colle ctiv e bargaining agreem ent with the D istrict Council, it shall be deem ed a term ination of participation by that em p loy er and the follow in g shall apply: (a) (b) (c) Em ploym ent by that em ployer after term ination shall not be cred ited as cov ered em ploym ent; and Em ploym ent by that em ployer p r io r to term ination shall still be cred ited under this plan, except if a brea k in e m p lo y m ent as defined in A r tic le III, section 5, is in cu rred ; and T here shall be no refund of contributions or rev e rs io n of a ssets to a term inated em ployer, d irectly o r in d irectly, or to a pension trust o r annuity con tract o r pension plan of a term inated em ployer... H ow ever, 45 plans with n early 273,000 w ork ers p rovided som e additional p r o tection to em ployees of withdrawing em p loyers. Plans Workers1 Provision if an employer withdraws from the plan Number Percent Number (thousands) Percent All plans , Plans with withdrawal provisions * * Worker may contribute Fund allocated to workers Service credits retained Break-in-service provision applies , Other Information not available Worker coverage Includes both active and retired workers in Includes ^ plans covering 1,700 workers to which only workers contribute and 1 plan covering 1,300 workers in the process of being terminated. NOTE: Because of rounding, sums of individual items may not equal totals.

95 86 N early tw o-th irds of these plans allocated part of their assets to the affected m em b ers; i. e., they treated an em ployer w ithdraw al as if it w ere a partial term ination of the plan, as the follow ing clau se illu stra tes: In the event any em ployer d isa sso cia te s itse lf fro m the plan through the nonpayment of contributions o r oth erw ise, the actuary acting on the inform ation and em ployee data furnished with the m utual consent and agreem ent of all em p loyers and union, shall determ ine that portion of the fund in re sp e ct of the em ployees of the disa ssocia tin g em ployer then in the p o s s e s s io n of the tru stee o r insurance com pany. Said portion of the fund shall be allocated, subject to p ro v isio n fo r expenses of adm inistration or liquidation, fo r benefit pu rp oses in resp e ct o f the em ployees of the d isa ssocia ted em ployer in the sam e m anner and o rd e r, to the extent of the su fficien cy o f such a ssets, as p re s crib e d in section 3 above. In all other resp e cts, this plan with the rem aining em p loyers and unions shall continue in fu ll fo r c e and e ffect in the sam e m anner as if no em p loyer had withdrawn fr o m the plan. Another plan re fe rre d to the withdrawal of an em ployer as a "p a rtia l term ination" in the follow ing w ords: P a rtia l T erm ination. In the event o f the term ination of the plan and trust with resp ect to any p a rticu lar em ployer fo r any reason w hatsoever, but not with resp ect to all em p loyers, an actuarial com putation shall be m ade as if the plan w ere term inating in its entirety as of the term inating em ployer* s com putation date so as to segregate from the trust fund within a reason able tim e after the com putation date the assets th ereof which on the b a sis of such com putation are applicable to the em ployees em ployed by the term inating em ployer at the term ination date and, at the com putation date, are not then in cov ered em ploym ent in the industry with an em ployer with resp ect to which the plan is then effective. Follow ing such segregation of assets upon p artial discontinuance of the plan and trust, as a foresa id, the amount of assets segregated after the com putation date shall be allocated by the join t com m ittee, on the basis of an actu arial valuation, among the person s who w ere em ployees on the term ination date but are not on the com putation date as p rovided in section 6 of this a rticle. Any em ployee who was em ployed by any term inating em ployer shall, on becom ing an em ployee of any other em p loyer h e r e under betw een his term inating em p loyerf s term ination date and com putation date, autom atically b ecom es cov ered hereunder again. The 15 plans coverin g over 200,000 w ork ers, which perm itted the w orker to con tribute instead o f his em ployer and to continue accum ulating s e rv ice cred its, are illu stra ted by the follow in g clau se: If any participating em ployer discontinues busin ess or ceases fo r any reason to be a participating em ployer by ceasing to m ake paym ents to the fund in behalf of his em ployees... he shall thereupon cease to be deem ed a participating em ployer... and the em ployee fo r whom paym ents to the plan by such em ployer have ceased, shall be deem ed to have been laid off by such em ployer and such em ployee shall have the p riv ile g e of preventing cancellation of his or her qualifications and cred ited s e r v ic e by... paying to the pen sion fund, each w eek, such amount as such em ployer would be required to pay in his or her behalf...

96 Chapter VI. Financial Management The la rge num ber and rapid turnover of em p loyers and w ork ers in m ost industries with m u ltiem p loyer pension plans requ ire plan adm in istrators to devote m uch tim e and effort to prom pt paym ent and colle ctio n o f em p loyer contributions. Like other funds, m ultiem p loyer plans also have investm ent p ro b le m s. These funds, as a w hole, p resen tly constitute only a sm a ll fra ction of total private pension a ssets, which w ere estim ated to total $50 b illion at the end of I H ow ever, sin ce m ultiem p loyer plans on the w hole are rela tively recen t their assets can be expected to grow rapidly. This w ill p robably spur in terest in identifying the parties in charge of investing these funds and in the safeguards o f the funds, esp ecia lly those contained in trust agreem en ts. The inform ation requ ired by the W elfare and P en sion Plans D isclo su re A ct identifies the p arties handling the financial reins in m u ltiem p loyer pension plans. The analysis of these form s 36 shows that, with only a few exception s, the board p erform ed and had resp on sibility fo r fin an cial adm inistration, except that, as p reviou sly noted (chapter II), it often delegated the investm ent of funds and paying of ben efits to an in su rer or co rp o ra te tru stee. V arious d ev ices and system s have been d evised to con trol and p rotect the m oneys due the cen tral fund fo r the benefit of co v e re d w ork ers. The m ost im portant of these are the clauses found in many trust agreem ents which give the board or its representative pow er to co lle c t contributions, in spect em ployer r e co rd s, and com p el paym ent of contributions. The authority to select the org a n i zation through which benefits are to be provided, a lso, was usually reserv ed fo r the board. This chapter identifies the p arties p erform in g each of the m o re sig n ificant financial functions in m ulti em ployer pension plans under co lle ctiv e b a r gaining. These functions include the authorization o f benefits and expenses, the paym ent o f benefits, the selection of insurance c a r r ie r o r corp ora te tru stee, and the determ ination of investm ent p o licy. In addition, certain clauses in plan docum ents designed to en force collection and p rotection of m oneys due the f u n d - inspection of em ployer re co rd s, collection of contributions, selection of funding m edium, and bonding o f em ployees and board m em b ers are exam ined. A ll data relate, as in the p rev iou s three ch apters, to the 736 form u lated plans. 35 U.S. S ecu rities and Exchange C om m ission, C orporate P en sion Funds. I96 0. S ta tistical S eries R elea se No. 1750, M ay 3, (See table 6.) 36 The entries reco rd e d on the form D - l, p a rticu la rly the item identifying the party with pow er to determ ine investm ent p o licy, w ere edited by the Bureau fo r p u rp oses of this study to rem ove in con sisten cies and to com plete the data. In all insured plans, the investm ent d ecision s w ere con sid ered as being m ade by the in su rer, and in corp ora te trusteed plans by the board and corp ora te tru stee. F or exam ple, som e of the insured plans indicated that the board, or the board and in su rer determ ined investm ent p o licy, presu m ably because the board origin a lly selected the in su rer and could change to another in su rer o r to self-in su ra n ce; these w ere edited to read "in su ran ce com pany" the resp on se given by m o st in su red plans. Digitized for FRASER 87

97 88 S election o f M edium o f Funding The sign ifican ce of the organization through which benefits are provided (the m edium of funding) has already been dem onstrated. (See pages 71 and 72. ) In ov er 75 p ercen t of the plans, with 70 p ercen t o f the w o rk e rs, the board was given the so le authority to d ecid e w hether to use an in su ran ce com pany, a c o r p o rate tru stee, o r its own organ ization. The follow in g cla u se is ty p ica l: The tru stees shall without lim itation have the pow er and duty to:... enter into app ropriate con tra cts with in su ran ce c o m panies... enter into ag reem en ts, con tra cts, and other in strum ents fo r the deposit o f funds with banks, trust com panies, o r other institutions which accep t and hold m oneys on deposit and authorize such d e p o sito rie s to act as custodian o f the p en sion fund, whether in cash or secu rities o r other p rop erty and to authorize such d ep ositories to con vert, invest, and rein vest the funds in such type of secu rities as the tru stees d e te r m ine... enter into and execute an agreem en t with one or m o re banks o r trust com panies w hose prin cip al o ffice s are l o cated... to p rovide fo r the investm ent and reinvestm ent of the trust funds in the d iscre tio n of such banks or trust com pan ies. Plans Workers1 Responsibility for selecting medium of funding Number Percent Number (thousands) Percent All plans studied , Board , Employers and union Union (2 ) ( > Employers (?) Other (3) No provision, or information not available Worker coverage includes both active and retired workers in * Fewer than 50 workers. 3 Less than 0.05 percent. NOTE: Because of rounding, sums of individual items may not equal totals. In alm ost 1 out of 5 plans, the pension plan or trust agreem ent sp ecified the funding m edium to be used, i. e., the union and em p loyers m ade the d ecision in drafting the agreem en t. E xam ples o f such d ir e c tiv e s to the board follow : The tru stees are hereby em pow ered, authorized, and d irected... to enter into a group annuity con tract with a reputable insur-% ance com pany. * * * The board shall se le ct a bank to be trustee of the fund and shall enter into a trust ag reem en t with such bank.

98 Selection o f C a rrier or C orporate T ru stee. R egard less o f how the funding m edium was to be selected, the board had the sole resp on sib ility and pow er to sele ct the insurance c a r r ie r o r corp ora te tru stee in 90 p ercen t of the plans appointing either one o r both. Responsibility for selecting insurance carrier and/or corporate trustee Number Percent Workers1 Number (thousands) Percent All plans with carrier and/or corporate trustee Board Board only Board and employers Board and union Employers and union Employers Union Information not available , l , , (2) Worker coverage includes both active and retired workers in Less than 0.05 percent. NOTE: Because of rounding, sums of individual items may not equal totals. R eceip t o f C ontributions The board of adm inistration d ire ctly receiv ed em p loyer and w orker con tributions (if any) in 7 out of 8 plans. Plans Workers1 Party receiving contributions Number Percent Number (thousands) Percent All plans studied , Board Corporate trustee Union Employers Service organization Information not available Worker coverage includes , ' * both active and retired workers in NOTE: Because of rounding, sums of individual items may not equal totals. F o r exam ple, one plan stated: The tru stees, in their nam es as tru stees, shall have the pow er Digitized for FRASER to demand, co lle ct, and re ce iv e and hold em ployer paym ents.

99 90 The m oneys went d irectly fro m the em ployer con trib u tors to the corp ora te tru stee in 55 plans. One plan, fo r exam ple, p rov id ed that: The a rea em p loy ers shall pay a ll contributions to the c o r p o rate tru stee. The corp ora te trustee, how ever, was not ord in a rily resp on sib le fo r the a ccu ra cy and co lle ctio n o f such paym ents, as is illu strated by a d iscla im e r clau se in a typical co rp o ra te trust agreem ent o r "in den tu re: Notwithstanding any other p rovision s of this indenture the tru stee shall be under no obligation w hatever to require with resp ect to n or to institute any leg a l action w hatever to e n fo rce the o b ligation of any em ployer. Under insured plans, em ployer contributions w ere n orm a lly fir s t d irected to the board and then transm itted to the c a r r ie r in the fo rm o f prem iu m s. F o r exam ple, one in su red plan stated that: A ll em ployer contributions, after paym ent of expenses of the tru stees in adm in isterin g the plan, shall be paid to the in s u r ance com pany under the group annuity con tra ct. C ollection of E m ployer C ontributions. R egard less of the b a sis of con tributions, the em ployer was usually required to m ake paym ent within a short tim e (5 to 10 days) after the end of each sp ecified p a y roll p eriod in w hich w ork was p e rfo rm e d. F o r exam ple, one plan stated that: E m p loyer contributions shall b ecom e due on the p a y roll date. The fa ilu re of an em ployer to pay the contributions required h ereu n der within 10 days after the date due shall be in v io la tion of the colle ctiv e bargaining agreem ent. Since the em ployer*s obligation to contribute sp ecified sum s is determ ined by the term s of a co lle ctiv e bargaining agreem ent, the fa ilu re to m ake such p a y m ent is a v iolation o f the agreem en t. H ow ever, w here a join t b oard was r e spon sible fo r the receip t of funds, m ost plans delegated to it part o r all of the resp on sib ility fo r enforcem ent. The follow ing clause is typical: The tru stees m ay take w hatever steps, including the institution and p rosecu tion of, or intervention, in, any p roceed in gs at law, in equity o r in bankruptcy, as they deem d esira b le to effectuate the colle ctio n of em ployer contributions. A fourth of the plans sp e cifica lly gave the board pow er to a ssess pen alties in ca se o f em ployer delinquency, usually a penalty to be determ ined at the d iscre tio n of the board, o r fixed at 6 p ercen t in terest p er year. Plans Workers 1 Penalty for delinquent payment Number Percent Number (thousands) Percent All plans studied No penalty provided, or Information not available Penalty At board*s discretion percent interest per year --- Maximum legal interest Other , , Digitized for FRASER ^ Worker coverage includes both active and retired workers in 1959* NOTE: Because of rounding, sums of individual items may not equal totals.

100 n The follow in g cla u ses illu stra te such p en alties: In addition to any other rem ed ies to which the p a rties m ay be entitled a con tra ctor in default fo r 10 w orking days shall be obligated to pay in terest, at the rate o f 6 p ercen t p e r annum, on the m oney due to the tru stees fr o m the date when the p a y m ent was due to the date when paym ent was m ade, together with all expenses o f co lle ctio n in cu rred by the tru stees. * * * In addition to any other rem ed ies to which the p a rties m ay be entitled, an em ployer in default fo r 10 w orking days m ay be requ ired at the d iscretio n of the tru stees to pay such re a so n able rate o f in terest. # # * The tru stees m ay com p el and en force the paym ent o f c o n tr i butions in any m anner w hich they m ay, in th eir so le and uncon trolled d iscretion, deem p rop er. Inspection o f E m ployer R ecord s. In tw o-th ird s o f the plans coverin g alm ost fo u r-fifth s o f the w ork ers, the board was granted pow er to in spect e m p loy er p a y ro ll reco rd s to a scerta in whether p rop er paym ent was m ade. Many industries in which m u ltiem p loyer plans are found are ch a ra cterized by num erous sm all em p loyers and the p roblem of delinquency m akes such p ro v isio n s as the follow ing n e cessa ry : The tru stees shall have the right through an independent c e r t i fied public accountant o f their ch oice, to exam ine em ploym ent r e co rd s of em p loyers with resp ect to w hose em ployees c o n tr i butions should have been m ade to the tru st fund. J5c 5je sjc The tru stees shall have the pow er to req u ire any contributing em p loyer, and a contributing em ployer, when so requ ired, shall furnish to the tru stees such inform ation and rep orts as they m ay req u ire in the p erform a n ce of their duties under this a g r e e m ent and declaration of trust. The tru stees o r any authorized agent o r represen tative o f the tru stees shall have the right at all reasonable hours during business hours to enter upon the p re m ise s of the em ployer and to exam ine and copy such o f the books, re co rd s, papers, and rep orts of said em ployer as m ay be n e ce ssa ry to p erm it the tru stees to determ ine whether said em p loyers are making full paym ent to the tru stees of the amounts requ ired under this tru st a greem en t and the a fo r e m entioned colle ctiv e bargaining agreem ent. * *

101 92 Each em ploy ei shall prom p tly furnish to the B oard o f tru stees on demand any and all reco rd s of his em ployees concerning the cla ssifica tion s of such em p loyees, their nam es, s o cia l secu rity num bers, amount of w ages paid and hours w orked, and any other p a y roll record s and inform ation that the tru stees m ay requ ire in connection with the adm inistration of the trust fund and fo r no other purp ose. Each em ployer shall a lso subm it in w riting to the board of tru stees at such regular p e rio d ic in tervals and in such fo rm as the tru stees m ay establish such of the above data as m ay be requested by the tru stees. The board o f tru stees or their authorized represen ta tives m ay exam ine the p a y roll books and reco rd s of each em ployer w henever such exam ination is deem ed n e ce ssa ry or advisable by the tru stees in con n ection with the p r o p e r adm inistration o f the trust. Investm ent P o licy The board retained exclu sive con trol over investm ent p o licy in m ore than half of the plans, with alm ost 2 out of 3 w ork e rs. A s the follow ing tabulation show s, h ow ev er, in n ea rly 1 out o f 4 plans, the b oa rd sh ared the in v estm ent function with a corp ora te trustee. U sually the board set broad investm ent p o licy with the advice of the corp ora te tru stee, but left the selection of s p e cific secu rities and other investm ent m edia fo the latter. Of cou rse, in the w holly Plans Workers 1 Party determining Number investment policy Number Percent (thousands) Percent All plans studied , Board , Board only , Board and corporate trustee ---- Board, corporate trustee, ** A.2 and insurer Board and union (2 ) Insurer Union (2 ) Investment agent Other (2 ) Information not available A 1 Worker coverage includes both active and retired workers in 1959* 2 Less than 0.05 percent. ^ Employers and corporate trustee in 1 plan with 700 workers; employers and union in 1 plan with 200 workers; and an individual trustee in 1 plan with 100 workers. NOTE: Because of rounding, sums of individual items may not equal totals. insured plans 1 out of 6 plans with m o re than 1 out of 5 w ork ers the in su rer had com plete con trol over the investm ent of the funds once they had been d e p osited as p rem iu m s. (See page 87 fo r b a sic analytical assum ption. ) H ow ever, these data include 9 plans coverin g 336, 000 w ork e rs, p rim a rily in the apparel industry, that pu rch ased annuities of only 1 y e a r 's duration, and invested the g reater p rop ortion of their funds in se cu ritie s, e tc., usually selected by the board.

102 The b o a rd 's d iscretion m ay be lim ited by the trust agreem ent to certain types of secu ritie s or other investm ents. The follow ing clause is illu strative of such re s trictio n s :... The tru stees m ay in vest and rein v est such p a rt o f the fund as in their so le judgm ent is not req u ired fo r cu rren t e x penditures in such investm ents as are legal fo r investm ent of tru st funds under the laws o f the State o f New Y ork. By con tra st, another tru st agreem en t gave the b oa rd w ide latitude: Such m oneys in the fund as the tru stees in their sole d iscretion m ay determ in e are not req u ired fo r cu rren t expenditures... m ay be invested and rein vested in any secu rities o r other p ro p e rtie s, either real or p erson a l, including part in terests therein, regard less o f whether the sam e are now o r a re h erea fter auth orized as legal investm ents fo r fid u cia rie s, whether by statutory enactm ent, ju d icia l d ecision or otherw ise which the trustees m ay pu rch ase in the e x e r cis e o f that degree of judgm ent and ca re under the circu m sta n ces then p revailin g, w hich m en of prudence, d iscretion, and in telligen ce e x e r cis e in the m anagem ent of their own a ffa irs, not in regard to speculation but in regard to the perm anent disp osition of their funds, con siderin g the probable in com e to be d erived th erefrom as w ell as the p rob a b le safety of their capital. The d iscretion that could be e x e rcise d by corp ora te trustees is illu s trated by the follow in g cla u ses. Often unlim ited investm ent d isc r e tio n was given to the corp ora te trustee as in the follow ing clause: The trustee shall have the follow ing pow ers and authority in the adm inistration of the trust fund to be e x e r c is e d in its uncon trolled d iscretion : To purchase o r su b scrib e fo r any secu rities or other p rop erty and to retain in trust such secu rities or other p rop erty; in the event investm ents are to be m ade in secu rities or other p ro p erty o f any contributing em p loyer, advance n otice shall be given to the C om m ission er of Internal Revenue of such contem plated investm ents. In no event shall any investm ent be m ade in s e cu rities o r other p rop erty o f the tru stee. Another exam ple o f granting virtually unlim ited investm ent pow ers to the corp ora te trustee is :... the corp ora te trustee shall, from tim e to tim e, su bject to the other p rov ision s of this agreem ent, invest and rein vest p rin cip a l and in com e of the trust and keep the sam e invested in such se cu ritie s, bonds, debentures, stocks (com m on or p r e fe rre d ), real estate, m ortgages, deeds of trust, shares o f investm ent tru sts, com m on trusts or other p rop erty, as the c o r p o rate trustee shall b eliev e to be sound and suitable investm ents fo r the trust, reg a rd less o f whether the sam e, without this e x p re s s p rovision, would be p rop er investm ents fo r funds of a trust estate, provid ed, h ow ever, that in no event shall the p rin cipal or incom e of the trust be invested in the stock s, bonds, notes or other secu ritie s or prop erty of any com pany who shall have adopted the pension plan pursuant to the p rov ision s o f the c o lle c tiv e bargaining agreem en t as defined... nor shall the

103 p rin cip a l or in com e of the trust be invested in the stock s, bonds, notes or other secu rities o r p rop erty of any other... c o m pany, w hether o r not it shall have adopted the... plan... Another corp ora te trust agreem ent requ ired the trustee to apportion the in vestm ent o f funds betw een com m on stock s and other investm ents. It read, in p a rt: Invest and rein vest such part of the trust estate as the tru stees shall determ ine is not required fo r cu rrent expenditures, in such se cu ritie s (of any cla ssifica tio n ) as it m ay sele ct; p rovid ed, h ow ever, that no investm ent shall be m ade in any com m on stock w hich w ould cause the total investm ents in the trust estate in com m on stocks (at then curren t values) to exceed 35 p ercen t of the value o f all of the a ssets (at then curren t valu es) of the trust estate, but this p ro v iso shall not require the sale of any com m on stock p rev iou sly purchased if such purch ase was not in contravention h ere o f; and provid ed further, that no in vestm ent shall be in secu rities of any corp ora tion which is, at the tim e such investm ent is m ade, an em p loyer which is a party to said d ecla ra tion o f trust. The corp ora te trustee was quite lim ited under the follow ing agreem ent: The investm ent pow ers o f any corp ora te trustee acting pursuant to the p rov ision s h e re o f or otherw ise with re fe re n ce to this pension plan shall be lim ited to those investm ents which are authorized as r e se rv e investm ents fo r life insurance com panies organized under the laws o f the State o f New Y ork or fo r fiducia rie s as m ay be perm itted by the p rov ision s o f law of the State of New Y ork. A uthorization o f E xpenses and B enefits The b oa rd authorized the paym ent of both expenses and benefits in ov er 90 p ercen t of the plans with 90 p ercen t of the w ork e rs. B enefit paym ents w ere authorized by the in su re r in on e-six th o f the in su red plans and join tly by the insu rer and the b oa rd in one-tw elfth of such plans. The board alone, h ow ever, authorized the paym ent of expenses in these plans. Authorizes Workers 1 ~ Plans (thousands) Payments Expenses 736 3, ,866.2 Board Board Board and insurer Board Insurer Board 1.3 Insurer Board and insurer Insurer Not available Board Board and insurer Board Corporate trustee and board Union Board 1.1 Board Other Other 5 Board 2.2 Other ^ Other ^ Not available Not available x Worker coverage includes both active and retired workers in 1959* 2 A service organization and board, 1 plan covering 100 workers. ^ A service organization and board, 1 plan covering 1,000 workers; a service organization, 1 plan covering 300 workers; employers, 1 plan covering 100 workers; a corporate trustee and board, 1 plan covering 200 workers; employers and union, 1 plan covering 1,400 workers. An individual trustee, 1 plan covering 100 workers; union, 1 plan covering 100 workers.

104 95 P arty Making P aym en ts. The m edium of funding la rgely, though not entirely, determ ined the party paying ben efits. In n early all the insured plans, fo r exam ple, the insurance com pany m ade paym ents d irectly to the b en eficia ry. But in only th ree-fifth s of the corp ora te trusteed plans was paym ent m ade by the tru stee. A nother party usually the b o a rd m ade paym ent in the rem aining c o r p o rate trusteed plans. As shown in the follow ing tabulation, the board its e lf paid ben efits in 3 out o f 5 plans. Plans Workers * Party making payments Number of benefits Number Percent (thousands) Percent All plans studied , Board Board only , Board and insurer If Board and corporate trustee (2 ) Board, corporate trustee, and insurer Corporate trustee ^ Insurer Service organization Investment agent Other Information not available A ^ Worker coverage includes both active and retired workers in 195$. 2 Less than 0.05 percent. ^ The employers in 1 plan with 800 workers; the union in 2 plans with 200 workers; the employers and union in 1 plan with 3,^00 workers; the insurer and corporate trustee in 3 plans with 2,600 workers; and the individual trustee in 1 plan with 100 workers. NOTE: Because of rounding, sums of individual items may not equal totals. Bonding R equirem ents The L abor M anagement R eporting and D isclo su re A ct, w hich req u ires, among other things, the bonding of any union represen ta tive, including o ffice r s and em ployees who handle the m oneys of any union or trust funds37 was p assed sev era l months after n early all of the docum ents analyzed in this rep ort w ere subm itted to the Departm ent of L abor. N everth eless, the trust agreem ents and other docum ents filed by alm ost half of the plans studied required the bonding of its m em b ers. Many of the other plans p resu m ably bonded board m em bers and em ployees handling funds as a m atter of pru den ce, although not sp e cifica lly req u ired to do so by plan docum ents. About 1 out of 6 plans sp ecified that all m em b ers m ust be bonded, w hile n ea rly 1 out o f 3 req u ired that all m em b ers handling funds m ust be bonded. 37 Section 502(a), L abor M anagement R eporting and D isclosu re A ct of 1959.

105 Plans Workers1 Provision for bonding of board members Number Percent Number (thousands) Percent All plans studied , No provision, or information not available ,670.^ 51.7 All must be bonded * All those handling funds * Discretion of board * Specified member of board No bonding required * Worker coverage Includes both active and retired workers In 1959* NOTE; Because of rounding, sums of individual items may not equal totals. The rem aining 35 plans with bonding requ irem en ts left the arrangem ents to the d iscre tio n of the board. Illustrative cla u ses of each of these are: A ll m em b ers m ust be bonded The tru stees shall p rovide fo r fidelity position bonds with such com p an ies and in such am ounts as they m ay d eterm in e.. * * * A ll m em b ers handling funds m ust be bonded The tru stees who a re em pow ered and authorized to sign ch ecks as a fo r e sa id shall each be bonded... * * * D iscre tio n of board The tru stees authorized to sign checks or engaged in handling m oneys of the trust, m ay be bonded by duly authorized surety com pany, and, if so, the prem iu m s on such bonds shall be paid by the trust. T w en ty-th ree plans, on the other hand, s p e c ific a lly stated that no bond was r e qu ired fo r board m e m b e rs. One of these plans stated: No bond or other secu rity shall be requ ired of any m em ber of the b oa rd in such capacity. In addition to bonding of board m em b ers, about a third of the plans s p e c i fied bonding fo r certain em ployees of the fund, i. e., those handling funds. (See the follow ing tabulation.) A lm ost another 10 p ercen t of the plans required that a ll em p loy ees be bonded, while in 30 plans (4 p ercen t) this was left to the d is cre tio n of the board. Digitized for FRASER

106 97 Plans Workers1 Provision for bonding of employees Number Percent Number (thousands) Percent All plans studied , All must be bonded All those handling funds , Discretion of board No bonding required No provision, or information not available , Worker coverage Includes both active and retired workers in 1959* NOTE: Because of rounding, sums of individual items may not equal totals. E xam ples of these p rov ision s fro m plan docum ents a re: E m p loyees shall be bonded The tru stees shall... p rov id e fo r fid elity bonds fo r e m p loy ees of the tru stees. * * * E m ployees handling funds shall be bonded Each em ployee em ployed by the tru stees who m ay be engaged in handling of m oneys of the pension fund shall be bonded... by a duly authorized surety com pany. Plans requ irin g that som e or a ll of the tru stees be bonded usually a lso required that som e or all of the em ployees of the fund be bonded. F or exam ple, one plan said: The tru stees and the em ployees of the trust fund who handle cash or d isbu rse cash, secu rities, or transfer p rop erty of any kind w hatsoever shall each be bonded, and any other tru stees or em ployees m ay be bonded in the d iscretio n of the tru stees by a duly authorized surety com pany qualified under laws of the State of New Y ork in such am ounts as m ay be determ ined from tim e to tim e by the tru stees. Only 12 plans, cov erin g 223,000 w ork ers, req u ired the bonding of em p loy ees handling funds even though they had no bonding requ irem en t fo r the board. On the other hand, 72 plans which required, or left to the d iscre tio n of the board, bonding arrangem ents fo r its e lf had no bonding requ irem en t fo r em ployees.

107 98 T a b l e 1. M u l t i e m p l o y e r p e n s i o n p l a n s u n d e r c o l l e c t i v e b a r g a i n i n g b y d a te o f e s t a b l i s h m e n t, s p r i n g I (Workers in thousands) Date of establishment Plans Workers , ^ _ A ft... _ io^n Q R _ ^ 7... _ r, _ ]O fta * _ IQ Information not available Worker coverage includes both active and retired workers in NOTE: equal totals. Because of rounding, sums of individual items may not Table 2. Multiemployer pension plans under collective bargaining by number of workers covered, spring I960 Number of workers covered (Workers in Plans Workers 1 Plans Pericent Workers A ll plans 798 3, Under and under and under 1, ,000 and under 5, ,000 and under 10, ,000 and under 25, , 000 and under 50, ,000 and under 100, , 000 and over , Worker coverage includes both active and retired workers in NOTE: Because of rounding, sums of individual items may not equal totals.

108 99 T a b l e 3. M u l t i e m p l o y e r p e n s i o n p l a n s u n d e r c o l l e c t i v e b a r g a i n i n g b y i n d u s t r y g r o u p, s p r i n g I Industry Plans Workers 1 Plans Percent Workers A ll in d u strie s , Manufacturing Food and kindred p r o d u c t s Apparel and other finished textile Printing, publishing, and allied industries Leather and leather products Metalworking Other manufacturing Nonmanufacturing M ining Contract constru ction Motor transportation Water transportation Wholesale and retail trade Services Motion pictures and recreation Other nonmanufacturing Interindustry manufacturing and nonmanufacturing Worker coverage includes both active and retired workers in NOTE: Because of rounding, sums of individual items may not equal totals.

109 Table 4. National and international unions1 participating in multi employer pension plans, spring I960 (Number of plans indicated in parentheses) workers and over Carpenters (18) Clothing (14) Electrical (IBEW) (32) Garment, Ladies (48) Mine (excluding District 50) (I) (2) Teamsters (I) (121) 50,000 and under workers Bakery (I) (8) Hod Carriers (23) Hotel (13) Longshoremen (21) Meat Cutters (31) Plumbing (63) Retail Clerks (11) 25,000 and under 50,000 workers Bakery, American (5) Building Service (8) Engineers, Operating (18) Iron (20) Maritime (4) Painters (23) Retail, Wholesale (12) Sheet Metal (24) Upholsterers (1) 5, 000 and under 25, 000 workers Actors (1) Automobile (6) Bookbinders (6) Brewery (9) Bricklayers (30) Electrical (IUE) (3) Furniture (6) H atters (23) Lathers (5) Leather goods (5) Longshoremen and Warehousemen (I) (5) Machinists (10) Marine Engineers (3) M asters, Mates (2) 5, 000 and under 25, 000 Continued Musicians (1) Plasterers (8) Printing Pressm en (14) Pulp (6) Shoe W orkers, United (1) Stage (13) Toy Workers (1) Textile Workers (TWUA) (1) Typographical (13) 1,000 and under 5,000 workers Asbestos (17) Boilermakers (2) Distillery (5) Jewelry (1) Leather Workers (1) Lithographers (I) (1) Mine District 50 (I) (3) Newspaper Guild (2) Newspaper and Mail Deliverers (I) (1) Pattern Makers (5) Photo Engravers (4) Roofers (4) Stereotypers (3) Watchmen*s Ass*n. (I) (3) Fewer than 1,000 workers Engineers, Technical (I) (1) Firemen and Oilers (1) Garment, United (2) Hosiery (l) Machine Printers (I) (1) M ailers (I) (2) M arb le (1) Metal Polishers (1) Office (2) Radio (1) Shoe and Boot Workers (1) Telegraphers (1) Textile Workers (UTWA) (1) 1 A ll unions are affiliated with A FL-C IO except those followed by (I). For full union identification and addresses, see Directory of National and International Labor Unions in the United States, 1961, BLS Bull (1962). Excluded from this list are 26 plans covering 110,000 workers which included m embers of 2 or more unions and 12 plans covering 13,000 workers which were negotiated by local Federal labor and industrial unions or unaffiliated local unions.

110 101 T a b le 5 M u ltie m p lo y e r p e n sion plan s under c o lle c tiv e b argaining by region and State, sprin g I9 6 0 Region and State Plans Workers1 (Workers in thousands) Percent Region and State Plans Workers Plans Workers Plans Workers All plans Interregion , New England In trareg ion Maine (12). 1 (3). 1 Vermont M assachusetts Rhode Isla n d Connecticut (3). 4 South A tla n tic Intraregion Delware M arylan d District of C olum bia V irgin ia West Virginia North C arolina Georgia Florida (3) Middle Atlantic , Intraregion New York New Jersey Pennsylvania East North Central Intraregion F T Ohio Indiana Illinois Michigan Wisconsin West North Central Minnesota Iowa (3) Missouri East South C e n t r a l Kentucky -. Alabama Mississippi West South C e n tr a l Louisiana. Texas M ountain C o lo r a d o N e v a d a P a c ific Intraregion Washington California A l a s k a (L_ (3) 1. 1 (L_ (3) 1 Worker coverage includes both active and retired workers in Fewer than 50 workers. 3 Less than 0.05 percent. NOTE: Because of rounding, sums of individual items may not equal totals. Table 6. Type of administrator in multiemployer pension plans under collective bargaining, spring I960 (Workers in thousands Type of administrator Plans Workers1 Plans Percent Workers AUplans Bipartite b o a r d 735 2, Bipartite board plus 1 neutral member Tripartite board Union appointed board Employer appointed board Other Information not available (3) 1 Worker coverage includes both active and retired workers in Although employer-administered multiemployer pension plans under collective bargaining would presumably be eliminated by method of selection of the plans for study, it was determined during the course of analysis that the administrator (by Bureau definition) was, in fact, an employer appointed board. 3 Less than percent. NOTE: Because of rounding, sum s of individual item s m ay not equal totals.

111 Table 7. Multiemployer pension plans under collective bargaining by industry group and medium of funding, spring I Medium of funding Industry All plans Insured Self-administered Self-insured Corporate trusteed Other Information not available Number Workers1 Plans Workers1 Plans Workers 1 Plans Workers1 Plans Workers1 Plans Workers BsBgj^27M_ Manufacturing Food and kindred p ro d u c ts Apparel and other finished textile products.. ' _ Printing, publishing, and allied industries Leather and leather products _ Metalworking _ Other manufacturing Nonmanufacturing _ - _ Mining $ Contract construction - _ M otor tran sp ortation Water tran sp ortation Wholesale and retail trade Services Motion pictures and recreation _ Other nonmanufacturing Interindustry manufacturing and nonmanufacturing Worker coverage includes both active and retired workers in plans covering 336,000 workers were self-insured before retirement, but a temporary annuity was purchased annually after retirement. NOTE: Because of rounding, sums of individual items may not equal totals. Digitized for FRASER

112 Table 8. M inim um age and service requirem ents for participation in m ultiem ployer pension plans under collective bargaining, spring I Minimum age requirements (Workers in thousands) Minimum service requirements Plans 1 year 2 years 3 years 5 years None Number Workers Plans Workers Plans Workers Plans Workers Plans Workers Plans Workers All plans with age and service participation requirements Age <j> 0. 1 Age Age Age Age None " 1 Based on a study of 736 multiemployer pension plans under collective bargaining covering approximately 3,229,800 active and retired workers in An additional 106 plans covering 306,700 workers had a union membership requirement. 3 This plan also required union membership. NOTE: Because of rounding, sums of individual items may not equal totals. Industry Table 9. Normal retirement age in multiemployer pension plans under collective bargaining by industry group, spring I960, W orkeri iiir^jhou ands}> Normal retirement age All plans Age 55 Age 60 Age.65 Information Age 68 and 70 not available Number Workers1 Plans Workers1 Plans Workers1 Plans Workers1 Plans Workers1 Plans Workers1 All industries Manufacturing Food and kindred products _ Apparel and other finished textile products Printing, publishing, and allied industries (3) Leather and leather products Metalwo rking Miscellaneous manufacturing Nonmanufacturing , Mining _ _ Contract construction Motor transportation Water transportation Wholesale and retail trade Services Miscellaneous nonm anufacturing Interindustry manufacturing and nonm anufacturing _ 1 Worker coverage includes both active and retired workers in Includes 2 plans covering 300 workers with a normal retirement age at 68, and 7 plans covering 12,900 workers with a normal retirement age at Fewer than 50 workers. N O T E : B ecause of rounding, sum s of individual item s m ay not equal totals.

113 Table 10. N orm al retirem ent age in m ultiem ployer pension plans under collective bargaining by m edium of funding, spring I Normal retirement age All plans Medium of funding Insured Self-insured Other Number Workers 1 Plans Workers1 Plans Workers1 Plans Workers1 AUplans 736 3, Age Age Age , , Age 68 and _ Information not available Worker coverage includes both active and retired workers in Includes 2 plans covering 300 workers with a normal retirement age at 68, and 7 plans covering 12,900 workers with a normal retirement at age 70. NOTE: Because of rounding, sums of individual items may not equal totals. Table 11. Types of benefit formulas in multiemployer pension plans under collective bargaining by industry group, spring I960 (Workers in thousands) Industry All plans Flat benefit for specified service Benefits vary by service alone Benefits vary by earnings and service Benefits are a percent of employer contribution Other No specific formula Information not available Number! Workers 1 Plans Plans Plans Plans Workers1 Workers1 Workers1 Workers 1 Plans Plans Plans Workers1 Workers1 Workers1 All industries ^ ^ ^ 5 8 ^ Manufacturing Food and kindred products Apparel and other finished textile products Printing, publishing, and allied industries Leather and leather products _ - _ (12) - Metalworking m Miscellaneous anufacturing Nonmanufacturing Mining Contract construction Motor transportation Water transportation Wholesale and retail trade Services , _ - Motion pictures and recreation _ Miscellaneous nonmanufacturing Interindustry manufacturing and nonm anufacturing _ _. 1 Worker coverage includes both active and retired workers in Fewer than 50 workers. N O TE: B ecause of rounding, sum s of individual item s m ay not equal totals. Digitized for FRASER

114 Table 12. Types of benefit form ulas in m ultiem ployer pension plans under collective bargaining by m edium of funding, spring I960 Type of benefit formula (Workers in thousands) Medium of funding Plans Insured Self-insured Other Number Workers 1 Plans Workers1 Plans Workers1 Plans Workers1 All plans , , Flat benefit for specified service , , Benefits vary by service alone , I, Benefits vary by earnings and service Benefits are a percent of employer contributions No specific formula O th e r Information not available Worker coverage includes both active and retired workers in NOTE: Because of rounding, sums of individual items may not equal totals. Table 13. Form of payment of retirement benefit in multiemployer pension plans under collective bargaining by industry group, spring I960 Industry All plans Number Payment for life only Plans (Workers in thousands) Payment for liie plus Modified cash refund Plans Option methods Plans Cash refund Plans Cash benefit Plans Information not available Plans Workers1 Workers1 Payment certain guarantee Workers1 Plans Workers1 Workers1 Workers1 Workers1 Workers1 All industries 736 3, , Manufacturing , , Food and kindred products _ Apparel and other finished textile products _ Printing, publishing, and allied industries (12) Leather and leather products Metalworking _ Miscellaneous manufacturing Nonmanufacturing , , Mining Contract construction Motor transportation _ Water transportation Wholesale and retail trade (2) Services _ 1. 3 Motion pictures and recreation Miscellaneous nonmanufacturing Interindustry manufacturing and nonmanufacturing Worker coverage includes both active and retired workers in Fewer than 50 workers. N O TE: B ecause of rounding, sum s of individual items m ay not equal totals. i 105

115 106 Table 14. Form of payment of retirement benefits in multiemployer pension plans under collective bargaining by medium of funding, spring I960 Form of payment Medium of funding Plans Insured Self-insured Other Number Workers1 Plans Workers1 Plans Workers 1 Plans Workers , , Payment for life o n ly , , Payment for life plus Payment rarfain guarantee Modified cash refund Optional methods Cash r e fu n d Cash benefit Information not available Worker coverage includes both active and retired workers in N OTE: Because of rounding, sum s of individual item s m ay not equal totals.

116 Table 15. Optional annuity forms in multiemployer pension plans under collective bargaining by industry group, spring I960 Industry Plans Number Workers 1 No option provided Plans Workers 1 Plans T< offe ring options (Workers in thousands) Workers 1 Joint and survivor option Plans Workers 1 Option provided Joint and survivor or other option Period certain option Plans Joint and surviv< ar or period c:ertain ootion Workers1 Plans Plans Workers1 Workers 1 Other option Plans Workers 1 Information not available Plans Workers 1 All in d u s t r i e s Manufacturing Food and kindred products Apparel and other finished textile products Printing, publishing, and allied industries _ Leather and leather ( ) products Metalworking Miscellaneous Nonmanufacturing _21.J Mining _ Water transportation Wholesale and retail trade Services Motion pictures and recreation Miscellaneous manufacturing Interindustry manufacturing and nonmanufacturing Worker coverage includes both active and retired workers in plan covering 200 workers also provided a straight life annuity option. 3 This plan also provided a modified cash refund annuity option. 4 This plan provided for any option. 5 This plan provided a straight life annuity option. 6 Fewer than 50 workers. 7 1 plan covering 1,000 workers also provided a straight life annuity option, and 1 plan with 700 workers also provided a cash refund annuity option. 8 1 plan with 27, 400 workers provided for a cash refund option, and the other plan with 200 workers had any option. 9 This plan also provided a cash refund annuity option plan covering 900 workers also provided a cash refund annuity option. 11 This plan also provided a straight life annuity option. N O T E : Because of rounding, sums of individual item s m ay not equal totals.

117 1 0 8 Table 16. Optional annuity forms in multiemployer pension plans under collective bargaining by medium of funding, spring I960 (Workers in thousands) Medium of funding Provisions for options Insured Self-insured Other Number Workers1 Plans Workers1 Plans Workers1 Plans Workers1 All plans 736 3, , No option provided 594 2, , Options provided Joint and survivor option Joint and survivor or period certain option Joint and survivor or othe r option j Period certain option _ Other option Not available Worker coverage includes both active and retired workers in plan covering 200 workers also provided a straight life annuity. 3 1 plan covering 900 workers also provided for a cash refund annuity option. 4 1 plan covering 2,100 workers also provided a modified cash refund annuity option; 1 with 1,000 workers provided a straight life annuity option; and 1 with 1, 100 workers provided for a cash refund annuity option. 5 This plan also provided a straight life annuity option. 8 This plan also provided a cash refund annuity option. 7 1 plan covering 400 workers provided for a straight life annuity option; and the other plan with 1,800 workers provided for any option. 8 1 plan covering 27,000 workers provided for a cash refund annuity option; and 1 plan with 4,900 workers provided for any option. 9 This plan provided for any option. N OTE: B ecause of rounding, sum s of individual item s m ay not equal totals.

118 Table 17. N orm al retirem ent monthly benefits, excluding social security benefits, for w orkers earning $ 4,8 0 0 per year for 30 years of future credited service by industry grou p, in m u ltie m p lo y e r pen sio n p lan s under c o lle c tiv e b a rgain in g, sprin g I9 6 0 Industry All plans Under $301 (Workers in thousands) $30 and under $40 $40 and under $50 $50 and under $60 $60 and under $70 $70 and under $80 Number Workers2 Plans Workers2 Plans Workers2 Plans Workers2 Plans Workers2 Plans Workers2 Plans Workers2 All industries 736 3, Manufacturing , Food and kindred products Apparel and other finished textile products Printing, publishing, and allied industries Leather and leather products Metalworking Miscellaneous manufacturing Nonmanufacturing 454 1, Mining _ Contract construction Motor transportation Water transportation Wholesale and retail trade _ Motion pictures and recreation Miscellaneous nonmanufacturing Interindustry manufacturing and nonmanufacturing _ See footn o te s at end o f table.

119 Table 17. N orm al retirem ent monthly benefits, excluding social security benefits, for w orkers earning $ 4, 800 per year for 30 years of future credited service by industry group, in m ultiem ployer pension plans under collective bargaining, spring I960 Continued 110 ^W orkersin (itiiousands2i Industry $80 and under $90 $90 and under $100 $100 and under $110 $110 and under $120 $120 and under $130 $ 130 and over 3 Benefits were not computed Plans Workers2 Plans Workers2 Plans Workers2 Plans Workers2 Plans Workers2 Plans Workers2 Plans Workers2 All industries Manufacturing Food and kindred products Apparel and other finished textile products Printing, publishing, and allied industries (5 ) Leather and leather products Metalworking Miscellaneous manufacturing " " Nonmanufacturing Mining Contract construction Motor transportation Water transportation Wholesale and retail trade Services Motion pictures and recreation Miscellaneous nonmanufacturing Interindustry manufacturing and nonmanufacturing The smallest benefit was $10 a month. 2 Worker coverage includes both active and retired workers in The largest benefit was $230 a month. 4 Includes 23 plans with 23,900 workers which had no specific benefit and formula; 40 plans with 60,300 workers for which information was not available; and 6 plans with 5, 300 workers for which computation of benefit was impossible. 5 Fewer than 50 workers. 6 Includes 1 plan with 1,000 workers which provided $90 a month for the first 5 years of retirement, and $25 thereafter. 7 Includes 3 plans with 174,500 workers which provided $135 a month for the first 5 years of retirement, and $70 thereafter; and 1plan with 3,000 workers which provided $175 a month for the first 5 years of retirement and $85 thereafter. N O TE; Because of rounding, sum s of individual item s m ay not equal totals. Digitized for FRASER

120 Table 18. N orm al retirem ent benefits, excluding social security benefits, for w orkers earning $ 4,8 0 0 ($400 per month) per year for 30 years o f fu tu re cred ite d s e r v ic e by m ediu m o f funding, in m u ltie m p lo y e r p e n sio n pla n s under c o lle c tiv e b a rgain in g, sp rin g I9 6 0 Amount of monthly benefit. i wor Plans Medium of funding Insured Self-insured Other Number Workers 1 Plans W orkers1 Plans W orkers1 Plans Workers1 All plans ^ ^ 7 ^ T in d e r $ $ 3 0 and under $ $ 4 0 and tinder $ 5 0 _ $ 5 0 an d u n d e r $ $60 and under $ $ 7 0 an d u n d e r $ 8 0 n $80 and under $ _ $90 and under $ $ and under $ , 4 $11 0 and under $12 0 « _ $ 120 an d u n d e r $ $ and o v e r Plans for which benefits were not computed $ Worker coverage includes both active and retired workers in See footnote 2, table See footnote 3, table See footnote 4, table 17. Arithmetic mean weighted by number of workers. N O T E : B ecause of rounding, sum s of individual item s m ay not equal totals. $ L. $ i

121 Table 19. N orm al retirem ent benefits, excluding social security benefits, for w orkers earning $ 4,8 0 0 per year for 30 years of future credited service.by type of benefit form ula, in m ultiem ployer pension plans under collective bargaining, spring I i thousands) Amount of monthly benefit Plans Flat benefit for specified service Benefits vary by service alone Benefits vary by earnings and service Benefits are a percent of employer contribution Benefits are a percent of employee contribution Other Number Workers1 Plans Workers1 Plans Workers1 Plans Workers1 Plans Workers1 Plans Workers1 Plans Workers1 All plans Under $ $30 and under $ _ _ $40 and under $ $50 and under $ $60 and under $ $70 and under $ _ $80 and under $ _ $90 and under $ $100 and under $ _ $ 110 and under $ _ $ 120 and under $ $130 and over Plans for which benefits were not computed Average $68. 34! $ _ $ L 1 1r _ 1 1 Worker coverage includes both active and retired workers in Includes 1 plan with 1,000 workers which provided $90 a month for the first 5 years of retirement, and $25 thereafter. 3 Includes 3 plans with 174, 500 workers which provided $135 a month for the first 5 years of retirement, and $70 thereafter; and 1plan with 3,000 workers which provided $175 a month for the first 5 years of retirement, and $85 thereafter. 4 Includes 23 plans with 23,900 workers which had no specific benefit formula; 31 plans with 31,000 workers for which information was not available; and 6 plans with 5, 300 workers for which the computation of benefits was not possible. 5 Arithmetic mean weighted by number of workers. N OTE: B ecause of rounding, sum s of individual item s m ay not equal totals.

122 T a b le 2 0. P r o v is io n s fo r n o rm a l, e a r ly, d isa b ility r e tir e m e n t, and v e stin g in m u ltie m p lo y e r p e n sion pla n s under c o lle c tiv e b argain in g by plans and w orkers covered, spring I960 All plans Percent Normal retirement Early retirement1 Disability retirement Vesting Number Workers 12 Plans Workers2 Plans Workers2 Plans Workers2 Plans Workers2 Plans Workers , , , >c 3t 3c X 3t >: 3c X X 3c 202 1, >i * X >i X X (N o t a v a i l a b l e ) Excludes 38 plans covering 677, 000 workers which provided early retirement for women only. 2 Worker coverage includes both active and retired workers in N O TE: B ecause of rounding, sum s of individual item s m ay not equal totals. 1 1!1 1 i1

123 114 Table 21. Type of benefit provisions in m ultiem ployer pension plans by industry group, spring I960 (Workers in thousands) Industry All plans Number Workers 2 Normal retirement Early retirement1 Disability retirement Vesting , Manufacturing industries , Food and kindred products X X X X X X X X X - X X X X - X X X - X X - - X X (N o t av a i l a b l e ) Apparel and other finished textile products X X X X X X - X X - X X (N o t av a i l a b l e ) Printing, publishing, and allied industries X X X X X X X X X - X X X - _ X - X X X - X - 1 (3) X X - - X - 1 (3) (N o t a v a i l a b l e ) Leather and leather products X - X X X X X - - Metalworking X X X X X X X X X - X X X X - X X X - X _ X (N o t av a i l a b l e ) Miscellaneous manufacturing X X X X X X X _ X X X - X X X - X X - _ X X - - Nonmanufacturing industries , Mining X X X - Contract construction X X X X X X X X X - X X X - _ X - X X X - X _ X - _ X X - - _ (N o t av a i l a b l e ) See footnotes at end of table.

124 Table 21. Type of benefit provisions in multiemployer pension plans by industry group, spring I960 Continued (Workers in thousands) Industry All plans Number Workers12 Normal retirement Early retirement1 Disability retirement Vesting Nonmanufacturing industries Continued Motor transportation X X X X X X X X X - X X X X - X X X - X X - - X X (N o t av a i l a b l e ) Water transportation X X X X X X X X - X X (N o t av a i l a b l e ) Wholesale and retail trade X X X X X X X X X - X X X X - X X X - X - 1 (3) X - - X X (N o t av a i la b le ) Services X X X X X X X X X - X X X X - X X - - Motion pictures and recreation X X X X X X X - X X - - 3i X - Miscellaneous nonmanufacturing X X X - Interindustry manufacturing and nonmanufacturing X X X X X X X X X - X 1.4 X X X - X X X 1 Excluded are 38 plans with 677,000 workers which provided early retirement for women only, however, these plans were found mainly with apparel industry where a large majority of the employees are women. 2 Worker coverage includes both active and retired workers in Fewer than 50 workers. N O TE: Because of rounding, sum s of individual item s m ay not equal totals.

125 116 Table 22. Type of benefit provisions in multiemployer pension plans by medium of funding, spring I960 M e d iu m o f funding (Workers in thousands) P la n s N u m b e r W o r k e r s 2 N o r m a l E a r l y 1 D is a b ility V e s tin g AU plans , 2 2 9, 8 In su r e d X X X X X X X X X - X X X X - X X X - X X - - X X ( N o t a v a i l a b l e ) S e lf -in s u r e d 590 2, X X X X X X X X X - X X X X _ X X X - X X - - X 165 1, X (Not a\railable)1 O th e r X X X X 1. 5 X X X X X - X X - X X 1. 2 X - - X X X - X !( Not available) 1 Excludes 38 plans covering 677, 000 workers, mainly self-insured plans, which provided early retirement for women only. 2 Worker coverage includes both active and retired workers in NOTE: Because of rounding, sums of individual items may not equal totals.

126 T a b le 23. P r o v isio n s fo r e a r ly and d isa b ility r e tir e m e n t, and v e stin g in m u ltie m p lo y e r pe n sio n plan s under c o lle c tiv e bargain in g by in d u stry grou p, sp rin g I960 (Workers in thousands) Industry All plans Plans with early retirement1 Plans with disability retirement12 Plans with vesting 3 Information not available for early and disability retirement and vesting Number Workers4 Number W orkers4 Number Workers4 Number Workers4 Plans Workers , Food and kindred p r o d u c ts Apparel and other finished textile products Printing, publishing, and allied industries Leather and leather products (5) - M etalwo r k i n g Miscellaneous manufacturing Nonmanufacturing Mining _ Contract con stru ction Motor transportation Water transportation Wholesale and retail trade Services Motion pictures and recreation Miscellaneous nonmanufacturing Interindustry manufacturing and nonmanufacturing Excluded are 38 plans covering 677,000 workers which provided early retirement for women only. These plans were mainly in the apparel industry where the large majority of the employees are women. 2 Excluded are plans which provided lump-sum disability benefits only. (See p. 34.) 3 Excluded are plans which provided lump-sum termination benefits only. (See p. 37.) 4 Worker coverage includes both active and retired workers in Fewer than 50 workers. N O T E : Because of rounding, sum s of individual item s m ay not equal totals.

127 118 Table 24. Prevalence of level incom e option under early retirem ent provisions in m ultiem ployer pension plans under c o lle c tiv e bargaining by industry group, sprin g I Industry (Workers in thousands) All plans with early retirement With level income option Without level income option Plans Workers Plans Workers Plans Workers All industries Manufacturing Food and kindred products Apparel and other finished textile products Printing, publishing, and allied industries Leather and leather products Metalworking Miscellaneous manufacturing Nonmanufacturing Mining _ Contract construction Motor transportation Water transportation Wholesale and retail trade Services Motion pictures and recreation Miscellaneous nonmanufacturing Interindustry manufacturing and nonmanufacturing Based on a study of 736 multiemployer pension plans under collective bargaining covering 3,229,800 active and retired workers in NOTE: Because of rounding, sums of individual items may not equal totals. 1 Table 25. Prevalence of level income option under early retirement provisions in multiemployer pension plans under collective bargaining by medium of funding, spring I960 1 Provision (Workers in thousands) Medium of funding Plans Insured Self-insured Other Number Workers Plans Workers Plans Workers Plans Workers All plans with early retirement With level income option No level income option Based on a study of 736 multiemployer pension plans under collective bargaining covering 3,229,800 active and retired workers in N OTE: Because of rounding, sum s of individual item s m ay not equal totals.

128 119 Table 26. Provisions for death benefits before and after retirem ent in m ultiem ployer pension plans under collective b argaining by indu stry grou p, sprin g I9 6 0 Industry (Workers in thousands) Death benefits All plans Before retirement After retirement Information not available Number Workers1 Plans Workers1 Plans Workers1 Plans Workers , Manufacturing , Food and kindred products Apparel and other finished textile products Printing, publishing, and allied industries Leather and leather products (2) Metalworking Miscellaneous manufacturing Nonmanufacturing 454 1, Mining Contract construction _ _ Motor transportation Water transportation _ Wholesale and retail tra d e Services _ Motion pictures and recreation Miscellaneous nonmanufacturing Interindustry manufacturing and nonmanufacturing Worker coverage includes both active and retired workers in Fewer than 50 workers. NOTE: Because of rounding, sums of individual items may not equal totals. Table 27. Provisions for death benefits before and after retirement in multiemployer pension plans under collective bargaining by medium of funding, spring I960 Medium of funding (Workers in thousands) Plans Before retirement Death benefits After retirement Number Workers 1 Plans Workers1 Plans Workers 1 All plans , Insu red Self-insured 590 2, Other Worker coverage includes both active and retired workers in N O TE: B ecause of rounding, sum s of individual item s m ay not equal totals.

129 120 Table 28. Designated officers of boards in m ultiem ployer pension plans under collective bargaining, spring I9601 (Workers in thousands) Chairman Co-chairmen Vice chairman Secretary Treasurer Other officers Plans Workers nore officers 591 2, X _ X _ X - X X X _ - X ,025.8 _ X - X X _ X X X - X - X X X _ - - X X X - - X X X - X X X - X X X X - X - - X X - X - X X - - X X X X - 2X X X X - X X X X _ X _ 3X X - _ X 4x X - 2x X - X X - 3x X 2X X Based on a study of 736 multiemployer pension plans under collective bargaining covering approximately 3, 229, 800 active and retired workers in Co-vice chairmen. 3 Co-secretaries. 4 Co-treasurers. NOTE: Because of rounding, sums of individual items may not equal totals.

130 Table 29. Provisions for selection of officers in m ulti em ployer pension plans under collective bargaining, spring I960 (Workers in thousands) Chairman Vice chairman Secretary Treasurer Other officers Plans Workers Plans Workers Plans Workers Plans Workers Plans Workers All plans with designated officers , , By the board _ , , No alternating required , , No group limitation _ From specified group From different group than that of Chai rm a m Vice chairm an Secretary Treasurer Secretary and tre a su re r Chairman and vice chairman Other officers Alternating between groups each term No further limitation _ From different group than that of Chairman..., Vice chairman Secretary, Treasurer _ Vice chairman and treasurer Chairman and secretary _ Secretary and trea su rer Chairman and vice chairman Secretary and other o ffic e r Chairman and vice chairman Co-chairmen Co-vice chairmen _ Co-secretaries Co-treasurers " By union and/or employers _ _ No group limitation _ Alternating between groups each term " From different group than: ' Chairman Secretary " Other (2) Information not available Based on a study of 736 multiemployer pension plans under collective bargaining covering approximately 3,229,800 active and retired workers in Fewer than 50 workers. NOTE: Because of rounding, sums of individual items may not equal totals.

131 Table 30. Provisions for special meetings in multiemployer pension plans under collective bargaining, spring I960 Table 31. Voting rules in jointly adm inistered m ultiem ployer pension plans under collective bargaining, spring I (Workers in thousands) Special meeting called by Plans Workers Chairman or board members Chairman or 2 members Chairman or 4 and more board members Chairman or another officer or board members Chairman or another officer only Chairman or another officer or 2 board members Chairman or another officer or 3 board m e m b e r s Chairman or another officer or 4 and more board members Chairman and another officer or board members Chairman and another officer only Chairman and another officer or 3 board members Chairman and another officer or 4 board members Any board members board member, ,------,nr. i.. r * board members board members and more board members No provision, or information not available , Worker coverage includes both active and retired workers in NOTE: Because of rounding, sums of individual items may not equal totals. Voting rule (Workers in thousands) Plans Workers Number Percent Number Percent All jointly administered plans Majority Board Votes cast Majority with equal voting power Members present Votes cast Q u o r u m Majority with specified number Board Members p r e s e n t Votes c a s t Unanimous or unit rule , , Other No provision, or information not available Based on a study of 736 multiemployer pension plans under collective bargaining covering approximately 3, 229,800 active and retired workers in See footnote 2 in text tabulation on p. 57. NOTE: Because of rounding, stuns of individual items may not equal totals.

132 Table 32. Parties perform ing specified functions in m ultiem ployer pension plans under collective bargaining, spring I960 Number All plans Workers1 (Workers in thousands) Maintains records Receives applications Determines eligibility Processes claims Appeals are directed Makes final decision on appeals , Board Board Board Board Board Board Employers Board Board Board Board Board Board Board Board Insurer Board Board Employers Board Board Employers Board Board Board Board Board Board and insurer Board Board Union Board Board Board Board Board Union Board Board Union Board Board Corporate trustee Board Board Board Board Board Corporate trustee Board Board Corporate trustee Board Board Service organization Board Board Board Board Board Service organization Board Board Service organization Board Board Service organization Board Service organization Service organization Board Board Board and insurer Board Board Board and insurer Board Board Board and insurer Board Board Board and insurer Board Board M i s c e lla n e o u s I n f o r m a t io n n o t a v a i l a b le Worker coverage includes both active and retired workers in Does not exceed 3 plans for any one combination. NOTE: Because of rounding, sums of individual items may not equal totals.

133

134 Appendix A: Scope and Method of Study The chief sources of information for this study were the reports and documents filed with the U. S. Department of Labor s Bureau of Labor Standards pursuant to the Welfare and Pension Plans Disclosure Act (PL ). Administrators of any employee welfare or pension benefit plan, as defined by the act, covering more than 25 workers are required to file with the Department two copies of a description of the plan, within 90 days after the effective date of the act (January 1, 1959) or plan (whichever occurs later), and two copies of an annual financial report within 120 days after the end of each calendar, policy, or other fiscal year. By the spring of I960, plan descriptions for over 136,000 welfare and pension plans, and about 100, 000 annual financial reports had been filed. Virtually all reports are filed on the forms issued by the Department: The D -l form for use in describing the plan and the D-2 form for making the annual financial report. The D -l description plan form (reproduced in appendix B) requires that the following information and documents be submitted: 1. Name and address of the plan. 2. Accounting period of the plan. 3. Type of plan (i. e., welfare, pension, or combination). 4. Group(s) covered by the plan (hourly rate, salaried, or all employees). 5. Industry in which most participants are employed (8 industry divisions are listed). 6. Whether the plan is mentioned in a collective bargaining agreement. 7. Parties making contributions (employer, participants, union). 8. The name and address of the administrator (in multiemployer plans, usually a board of trustees) and the names and addresses of person(s) constituting the administrator, their official positions with respect to the plan, their relationship to the employer and employee organization, and any other offices, positions, or employment held by them. 9. A detailed description of the administration of the plan, including the names of the party or parties performing the following functions: Maintaining records; determining eligibility; processing claims; making determination on appeals; authorizing payments; making payments; authorizing expenses; selecting the insurance carrier, corporate trustee, or service organization; and determining investment policy. 10. The name and address of the party or organization through which benefits are provided. 11. Names, titles, and addresses of any trustee(s) not mentioned under items 8 or Copies of plan documents under which the plan is established and operated, schedule of plan benefits, and a statement of the procedures to be followed under the plan in presenting claims for benefits and for appealing the denial of claims. The D-2 form, which in this study was used only to obtain the number of members (active and retired) covered by each plan, also shows the assets, liabilities, contributions, benefits paid, and salaries and commissions paid. 125

135 126 One of the initial problems in the conduct of this study was to locate the multiemployer pension plans among the 136,000 welfare and pension plan descriptions filed with the U. S. Department of Labor by the spring of I960. Twenty-five thousand of these plans were readily identified by the Bureau of Labor Standards as providing pension benefits or a combination of welfare and pension benefits, from item 3 (type of plan) on the D -l form. However, no information on the forms would serve to distinguish directly multiemployer from single employer pension plans. To reduce the 25, 000 plans to a manageable number for investigation, it was assumed that few multiemployer pension plans under collective bargaining are administered solely by an employer(s) or an employers' association. On this basis, nearly 20,000 pension plans for which item 8 (D -l) showed employer administration were removed from consideration. The descriptions and supporting documents of each of the remaining 5, 600 pension plans administered jointly or by an employee organization were examined to determine whether they were, in fact, multiemployer pension plans under collective bargaining. A comparison of the resulting list of plans with plans mentioned in other sources in the Bureau of Labor Statistics union convention proceedings, financial reports, the Bureau's file of collective bargaining agreements, and staff knowledge of the field revealed some omissions. A subsequent check of the Bureau of Labor Standards' union index reference file filled in these and some other gaps. In all, 798 multiemployer pension plans, each with more than 25 workers, covering a total of 3,324,800 workers (active and retired), were identified. It is believed that all or virtually all such plans in effect in the spring of I960 are accounted for in this study. Multiemployer pension plans not under collective bargaining were excluded from the study because of their unimportance in relation to the whole pension field. 38 The standard documents used for analysis are briefly described below. Although these documents are usually necessary to provide a complete description of the establishment and operation of a multiemployer pension plan as required by the act, other documents or descriptive materials may have been and often were substituted. 1. Collective bargaining agreement between the union(s) and the employer(s) (or association of employers) describing, among other things, the employers' obligation either to make specified contributions to a trust fund or provide specified pension benefits or both. 2. Pension plan stating in full the pension plan adopted by the board of trustees or negotiated by the employers and union. Only simplified booklets issued to plan participants, rather than the full text of the plan, were typically available for insured plans. 3. Trust agreement (also called "agreement and declaration of trust" or "trust indenture") detailing the powers, duties, and obligations of the board of trustees appointed to administer the plan. 4. Master group annuity contract setting forth the full text of the insured pension plan and obligations of the parties. 5. Individual certificates of participation issued to participants under some insured plans. 6. The corporate trust agreement setting forth the responsibilities of the parties where a bank or trust company is given the responsibility for the investment or safekeeping of funds or both. 7. The D -l and D-2 forms and attachments which give an overall description of the plan and summary financial information. 38 To the Bureau's knowledge, although there are some multiemployer pension plans established outside of a collective bargaining relationship, they are believed to comprise only a small fraction of the total. The expense and effort involved in locating these plans precluded their inclusion. Further, had they been included, it would have been necessary to study them apart from collectively bargained plans, because of the basic difference in administrative procedures.

136 127 For certain key characteristics, as explained below, the analysis was based on supporting documents filed by the administrators, rather than on the form itself, supplemented by other sources of information available to the Bureau of Labor Statistics. Plan administrators indicated on the D -l form (item 5) the industry division in which most of the participants were employed. Eight broad divisions were listed: Manufacturing; mining; construction; transportation; communications and utilities; wholesale and retail trade; finance, insurance, and real estate; and services. To provide a more informative and meaningful breakdown of the plans studied and to correct errors in reporting (probably mostly due to the lack of industry definitions), each plan was classified into the 2-digit industry groups of the Standard Industrial Classification. Guidance for this classification was obtained from the D -l form, and was checked against supporting plan documents. For some plans it was also necessary to check other sources available to the Bureau of Labor Statistics. The unions participating in the plan were usually not fully identified on the D -l form (i. e., the name of the national or international union with which the participating local was affiliated was often omitted); in most cases, the supporting plan documents thus had to be examined. For some plans, however, complete identification was only possible by utilizing other sources. The number of employees participating (active and retired) in each plan was usually obtained from the D-2 forms (item 6B). For some 100 plans, however, estimates of coverage had to be made by using other sources, primarily the Bureau s current file of collective bargaining agreements and reports submitted for the Bureau s union wage scale surveys. In the absence of such data, or as a check on its accuracy, additional sources (union constitutions, union financial reports, and other Bureau files) were used. In a few cases where there were no reports on which to base an estimate, estimates were made by drawing upon the general knowledge of the Bureau's professional staff. Complete information about some subjects analyzed in this report was not available, either because no documents were submitted or the documents submitted were oversimplified or incomplete. However, the notation that information was "not available" does not necessarily mean that the submission was incomplete. The information desired could not be obtained from some complete submissions becaus-e it was not given in a suitable form. It was impossible, for example, to determine the employers' pension contribution rate under some plans with a single, combined contribution rate for both welfare and pension benefits. Nor could the rate be obtained for other plans with flexible contribution rates, where the applicable rate was dependent on each individual em ployer's collective agreement. Since these rates affected some benefit provisions, the latter also were classified as "not available." If, however, the rate and benefits applicable to the largest number of workers were known, they were used, as in other studies by the Bureau of Labor Statistics, to represent the rate and benefits for all workers under the plan. For the above reasons, data are not presented for alt plans for all items. However, the selectioh of items for analysis and the techniques used were based on the Bureau s previous experiences in pension plan analyses and on the range of data usually available in pension plan documents. Analysis for each plan included in this study encompassed some or all of the documents described on page 126, usually the pension plan text, trust agreement, collective bargaining agreement, and D -l form. The D -l items analyzed financing, plan administrator, etc. were all verified and edited by examination of plan documents. Many misinterpretations, errors, and omissions were corrected by this check, and as previously explained, some items were only obtainable from outside sources. Most items selected for analysis were only available in the documents themselves. The complete analysis of a single plan usually involved the critical examination of at least four separate legal and descriptive documents which were marked by a wide diversity in language and format. 39 U. S. Bureau of the Budget, Standard Industrial Classification Manual, 1957.