Bulletin No. 1483

Financing

Supplemental 

Unemployment 

Benefit Plans

UNITED STATES DEPARTMENT OF LABOR 

W. Willard Wirtz, Secretary

BUREAU OF LABOR STATISTICS

P

Arthur M. Ross, Commissioner

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Federal Reserve Bank of St. Louis
Financing

Supplemental 

Unemployment 

Benefit Plans

Bulletin No. 1483

May 1966

UNITED STATES DEPARTMENT OF LABOR 

W. Willard Wirtz, Secretary

BUREAU OF LABOR STATISTICS

Arthur M. Ross, Commissioner

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Preface

T his b u lletin p ro v id es a rev iew of the fin an cial c h a r a c te r is tic s and re c e n t o p eratio n s of sup plem en tal unem ploym ent ben efit (SUB) p lan s. The a n a ly sis w as con­ ducted on two le v e ls, the f ir s t involving com piling w o rk er cov erag e and se le c te d fin an cial s ta tis tic s fo r the p e rio d 1960—63, and the second an a n a ly sis of SUB ex p erien ce to d eterm in e and a p p ra ise the n atu re of plan o p eratio n s. The in te rre la tio n sh ip s betw een ben efit ex p erien ce and other fin an cial ite m s, such as co n tribu tions and fund a s s e ts , w ere of p a rtic u la r in te re s t.

The in itia l im petus for th is study w as p ro v id ed by the U.S. D ep artm en t of H ealth, E ducation, and W elfare. The data w ere obtained fro m fin an cial re p o rts filed by SUB plan a d m in is tra to rs w ith the D ep artm en t of L a b o r's O ffice of L ab o r-M an ag em en t and W e lfa re -P e n sio n R e p o rts. A lim ite d am ount of ad d itio n al in fo rm atio n w as obtained fro m a few com panies and unions. BLS is g ra te fu l fo r the co o p eratio n and a s s is ta n c e re c e iv e d fro m th ese p a r tie s . R e a d e rs in te re s te d in the d etailed p ro v isio n s of SUB plans a r e r e f e r r e d to a re c e n t BLS study, M ajor C ollective B argainin g A g reem en ts: S upplem ental U nem ploym ent B en ­ efit P la n s and W age-E m ploym ent G u aran tees (BLS B u lletin 1425-35 — one of a s e rie s analyzing co llectiv e b arg ain in g p ro v isio n s in d etail.

T his b u lletin w as p re p a re d by E m e rso n B e ie r, a s s is te d by H a rry E. D avis and R o bert C. Jo in e r, un der the su p e rv isio n of Donald M. Landay, in the B u re a u 's D ivi­ sio n of In d u stria l and L abor R elatio ns, Jo sep h W. B loch, Chief, u n der the g en e ra l d ire c tio n of L. R. L in sen m ay er, A ssista n t C o m m issio n er, O ffice of W ages and In d u stria l R elatio n s.

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Contents

P a g e

I n tr o d u c tio n ________________________________________________________________________ 1 T he SUB p l a n ______________________________________________________________________ 1 S cope an d m e th o d______________________________________________________________ 2

C o v e r a g e ___________________________________________________________________________ 2 F u n d in g a r r a n g e m e n ts _____________________________________________________________ 3

C o n tr ib u tio n s ______________________________________________________________________ 4

In v e s tm e n t in c o m e _________________________________________________________________ 6 D is b u rs e m e n ts _____________________________________________________________________ 7 B e n e fits _________________________________________________________________________ 7 O th e r p la n d i s b u r s e m e n ts_____________________________________________________ 10

A s s e ts ______________________________________________________________________________ 12

A p pen dix . S cope and m e th o d of s tu d y___________________________________________ 15

T a b le s :

1 . C o n trib u tio n s , b e n e fits , an d a s s e ts of SUB p la n s , by ty p e of fu n d in g , 1960—63____________________________________________________ 16 2. C o n trib u tio n s , b e n e fits , an d a s s e ts of SUB p la n s , by in d u s try , 1960—63_____________________________________________________ 17

3. C o n trib u tio n s , b e n e fits , an d a s s e ts of SUB p la n s , by

u n io n , 1960—63_________________________________________________________ 18 4. A v e ra g e y e a r ly e x p e n s e s c h a rg e d to SUB fu n d s on a p e r em p lo y e e b a s i s , by ty p e of e x p e n s e s p a id , 1960—63____________________________ 19

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Financing Supplemental U nem ploym ent Benefit Plans, 1960—63

Introduction

Both public and p riv a te b en efit p ro g ra m s aid in reducing the im pact of

te m p o ra ry and lo n g -te rm w o rk lo s s . The nationw ide, S ta te -a d m in is te re d u n em ­

ploym ent in su ran ce sy ste m p ro vid e s te m p o ra ry fin a n cia l a s s is ta n c e through the

paym ent of w ee k ly b en efits. Its p riv a te co u n terp art is the su p p lem en tal unem -

, ploym ent b en efit (SUB) plan. T h eir com m on ob jective is fu rth e rin g the s ta b ility

<' of em ploym ent and/or w o rk e r incom e.

The SUB P lan

S u p p le m e n ta l u n e m p lo y m e n t b e n e fit p la n s , w h ic h e v o lv e d d u rin g th e 1 9 5 0 's 

a s a p ro d u c t of c o lle c tiv e b a rg a in in g , a r e a lm o s t in v a r ia b ly n e g o tia te d , s o le ly 

e m p lo y e r -f in a n c e d , an d fu n d ed th ro u g h a t r u s t fund a r r a n g e m e n t. W hile little g ro w th o c c u r r e d in e ith e r th e w o r k e r s c o v e re d o r n u m b e r of p la n s a f te r th e f i r s t 

few y e a r s , li b e r a liz a tio n of SUB b e n e fits and th e a d d itio n of r e la te d b e n e fits h av e 

c o n tin u e d am o n g e x is tin g p la n s .

V a r ia tio n s in u n e m p lo y m e n t b e n e fits m a k e a r ig id d e fin itio n of SUB p la n s 

d iffic u lt. In g e n e ra l te r m s , h o w e v e r, th e y a r e p la n s d e s ig n e d p r im a r ily to p r o ­ v id e w e e k ly s u p p le m e n ts to S ta te u n e m p lo y m e n t in s u r a n c e b e n e fits . C o n c u rre n c y 

an d in te g r a tio n of SUB an d S ta te b e n e fits a r e u s u a l. An a s s o c ia tio n of a d m in is ­ tr a tiv e p r o c e d u r e s , su c h a s th e u s e of S ta te e lig ib ility d e te r m in a tio n s to v e r if y 

th e w o r k e r 's e lig ib ility fo r SUB p a y m e n ts , is a ls o co m m o n .

B e c a u s e SUB w as in te n d e d to su p p le m e n t r a th e r th a n r e p la c e S ta te u n e m p lo y m e n t c o m p e n sa tio n , s a tis f a c to r y ru lin g s o r s ta tu to r y a m e n d m e n ts to 

S ta te la w s w e re n e c e s s a r y to p e r m it c o n c u r re n t S ta te an d p la n p a y m e n ts . F a v o r ­ a b le a c tio n p r o m p tly fo llo w e d in m o s t S ta te s , b u t le g a l o b s ta c le s to n o rm a l p la n 

fu n c tio n in g w e re not re m o v e d in C a lifo rn ia , In d ian a, an d O hio, u n til 1 9 5 9 .1 T h e se a c tio n s w e re p a r ti c u la r ly im p o rta n t in view of th e la r g e n u m b e r of p la n p a r t i c i ­ p a n ts e m p lo y e d in th e s e S ta te s . P la n s u s u a lly w e re a d ju s te d to th e s e d e la y s in 

one of tw o w a y s. M any, in c lu d in g th o se n e g o tia te d b y th e A u to m o b ile W o rk e rs , d id n o t b e c o m e e ffe c tiv e u n til fa v o ra b le r u lin g s w e r e o b ta in e d . O th e r s , su c h a s th e s te e l in d u s tr y p la n s , o p e ra te d w ith o r w ith o u t a p p ro v a l— a s u b s titu te m u ltip le - w e e k o r lu m p -s u m b e n e fit w a s p a id if a p p ro v a l w as not fo rth c o m in g . B o th d e la y s in o b ta in in g f a v o ra b le S ta te a c tio n an d th e m e th o d s u s e d to cope w ith 

th e m d is to r te d b e n e fit e x p e rie n c e fo r 1959 an d e a r l i e r y e a r s ; h o w e v e r, little d is to r tio n h a s o c c u r r e d sin c e th a t d a te .

SUB o p e ra tio n s g e n e r a lly hav e b e e n c h a r a c te r iz e d b y c o n s id e ra b le s e n s i ­

tiv ity to e c o n o m ic c o n d itio n s. T he n u m b e r an d a m o u n t of b e n e fit p a y m e n ts , w h ic h d ep e n d on th e p re v a le n c e an d d u ra tio n of la y o ffs, v a r ie d in v e r s e ly w ith e m p lo y m e n t an d th e le v e l of b u s in e s s a c tiv ity . T he e m p lo y e r 's f in a n c ia l o b lig a tio n w ith r e s p e c t 

to e a c h o p e ra tin g p e r io d w a s a lm o s t a lw a y s b a s e d on th e n u m b e r of h o u rs p a id 

fo r o r th o s e a c tu a lly w o rk e d b y c o v e re d e m p lo y e e s . C o n se q u e n tly , h is c a s h 

c o n trib u tio n s v a r ie d d ir e c tly w ith th e le v e l of b u s in e s s a c tiv ity u n le s s p a r t of h is 

o b lig a tio n a c c r u e d a s a c o n tin g e n t lia b ility .2 U n d er su c h fun d in g a r r a n g e m e n ts , 

b o th c o n trib u tio n s an d b e n e fits in c r e a s e d w h e n e v e r m a jo r c o n v e rs io n s of c o n tin ­

g en t lia b ility in to c a s h c o n trib u tio n s w e re n e e d e d to p a y b e n e fits .

Virginia is the only State that does not permit supplementation. New Hampshire, New Mexico, South

Carolina, and South Dakota have not taken a position on this issue.

Payments to discharge this liability are required only if needed to pay benefits.

1

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F lu c tu a tio n in th e m a g n itu d e of c o n trib u tio n s an d b e n e fit p a y m e n ts , c o u p led w ith th e te n d e n c y fo r th e m to m o v e in o p p o site d ir e c tio n s , f re q u e n tly 

le d to a b r u p t a c c u m u la tio n o r d e p le tio n of fund a s s e t s . T he r e s u ltin g n e e d fo r 

liq u id in v e s tm e n ts le d m o s t p la n s to p e r m it in v e s tm e n t on ly in h ig h -g ra d e , s h o r t - t e r m d eb t s e c u r it ie s . U .S. G o v e rn m e n t s e c u r it ie s w ith r e la tiv e ly s h o r t 

m a tu r it ie s a c c o u n te d fo r th e m a jo r p o rtio n of a ll SUB fund a s s e t s .

B e n e fit e x p e rie n c e d u rin g th e 1960—63 p e r io d te s te d th e a d e q u a c y of f in a n c ia l a r r a n g e m e n ts . F o r e x a m p le , b e n e fit p a y m e n ts f ro m a ll SUB fu n d s 

e x c e e d e d c a s h c o n trib u tio n s b y a b o u t o n e -f o u rth d u rin g 1961, th e y e a r of h e a v ie s t u n e m p lo y m e n t. A m a jo r c u r ta ilm e n t of b e n e fits w as s e ld o m n e c e s s a r y am o n g 

p la n s fund ed th ro u g h g e n e ra l t r u s t fund, p o o led fund, and in d iv id u a l a c c o u n t a r ­

r a n g e m e n ts . H o w e v e r, a c o m b in a tio n of f a c to r s led to w id e s p re a d b e n e fit r e d u c ­

tio n s in I960 and 1961, am o n g th o se w ith a g e n e r a l fund and c o n tin g e n t lia b ility . A s a r e s u lt , m a n y of th e s e p la n s w e r e s u b s e q u e n tly a m e n d e d to a s s u r e fe w e r b e n ­

e fit r e d u c tio n s by in c r e a s in g p la n r e s o u r c e s and by p o stp o n in g th e c u r ta ilm e n t of b e n e fits . T h is p r o c e s s of p la n im p ro v e m e n t by c o r r e c tin g in a d e q u a c ie s and fillin g 

g ap s in p r o te c tio n c an be e x p e c te d to c o n tin u e .

T he a g g re g a te fin a n c ia l e x p e rie n c e of SUB p la n s d u rin g 1960—63 is 

s u m m a r iz e d b y th e fo llo w in g a n n u a l a v e r a g e s :

Annual average

(in millions)

Incom e------------------------------------ $146.8

Contributions------------------------- 134.3

Other incom e----------------------- 12.4

Disbursements---------------------------- 109. 7

Benefits------------------------------- 106. 7

Expenses------------------------------- 3.1 Assets (end of 1963)-------------------- 446.9

Workers covered------------------------------ 2. 3

S cop e an d M etho d. A ll e m p lo y e e w e lfa r e p la n s w ith o v e r 25 p a r tic ip a n ts th a t in c lu d e d a s u p p le m e n ta l u n e m p lo y m e n t b e n e fit p r o v is io n f e ll w ith in th e sco p e of th e stu d y . (P la n s w ith fe w e r th a n 26 e m p lo y e e s w e re e x c lu d e d b e c a u s e of th e d iffic u lty of s e c u r in g d a ta fo r th e m .) A s tr a tif ie d , ra n d o m sa m p le w a s s e le c te d f ro m th o s e SUB p la n s fo r w h ic h fin a n c ia l r e p o r ts fo r I9 6 0 w e re s u b m itte d to 

th e U .S. D e p a rtm e n t of L a b o r p u rs u a n t to th e W e lfa re an d P e n s io n P la n s D is ­

c lo s u r e A c t.3 O p e ra tin g s ta t is ti c s fo r I9 6 0 th ro u g h 1963 w e r e o b ta in e d fro m th e a p p r o p r ia te a n n u a l fin a n c ia l (D -2) r e p o r ts . S u p p o rtin g p la n d o c u m e n ts w e re 

u s e d to id e n tify th o se p la n s th a t p ro v id e d s u p p le m e n ta l u n e m p lo y m e n t b e n e fits , 

a s w e ll a s to d e te rm in e p e r tin e n t p la n p r o v is io n s . A lim ite d a m o u n t of a d d itio n a l 

in fo rm a tio n w a s o b ta in e d d ir e c tly f ro m a few c o m p a n ie s an d u n io n s. (A m o re 

d e ta ile d e x p la n a tio n of sco p e an d m e th o d is p r e s e n te d in th e a p p en d ix .)

F in a n c ia l r e p o r ts fo r I9 6 0 an d la t e r y e a r s w e r e file d w ith th e U.S. 

D e p a rtm e n t of L a b o r by a d m i n is t r a to r s of a b o u t 700 SUB p la n s . T h e s e p la n s 

c o v e re d n e a r ly 2.3 m illio n w o r k e r s in 1963, of w h o m 4 out of 5 w e re e m p lo y e d 

in th r e e in d u s try g ro u p s — tr a n s p o r ta tio n e q u ip m e n t, p r im a r y m e ta ls , an d a p p a r e l.

3 The use of a fixed sample introduces a slight bias owing to the exclusion of new plans; however, supplementary

information obtained from BLS and union sources indicate that relatively few plans of substantial size have been

established since 1960.

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T h is c o n c e n tra tio n w ith in a few in d u s tr ie s r e f le c t s th e p r o m in e n t r o le p la y e d b y th e A u to m o b ile a n d S te e lw o r k e r u n io n s in th e e s ta b lis h m e n t of SU B. T he th ir d 

g ro u p , w h ic h a c c o u n te d fo r a s ix th of a ll w o r k e r c o v e ra g e , p a r tic ip a te d in a n a tio n a l p la n n e g o tia te d b y th e I n te r n a tio n a l L ad ies* G a rm e n t W o r k e r s ' U n io n (ILGW U) a n d e m p lo y e r s in th e w o m e n 's an d c h ild r e n 's a p p a r e l in d u s tr ie s . O v e r 96 p e r c e n t of a ll p a r tic ip a n ts w e r e c o v e re d b y n e g o tia te d p la n s .

_____Workers covered (thousands)______

Industry 1960 1961 1962 1963

All industries----------------------------------- 2,361 2,271 2,235 2,259

Manufacturing---------------------------------------- 2,258 2,168 2,138 2,157

Transportation equipment--------------

Primary metals:

----- 649 610 614 634

Ferrous------------------------------------ ----- 607 586 546 530 Nonferrous------------------------------------- 71 68 72 69 Apparel-------------------------------------------- 375 386 386 410

Machinery, except electrical—------------- 218 199 199 198

Rubber----------------------------------------- ----- 132 127 129 127

Fabricated metal products--------------------- 79 73 75 73

Electrical machinery--------------------------- 58 53 51 51 Other------------------------------------------------ 69 66 66 63

Nonmanufacturing----------------------------------- 103 102 96 102

T he c o m p o s itio n of c o v e re d g ro u p s r e f le c te d th e p ro m in e n c e of n e g o tia te d 

p la n s . T h o se w ith o n ly p ro d u c tio n o r h o u rly w o rk e r m e m b e r s h ip a c c o u n te d fo r 

m o r e th a n h a lf of a ll w o r k e r c o v e ra g e . A f o u rth of th e to ta l p la n s s p e c ific a lly 

in c lu d e d a ll c la s s e s of e m p lo y e e s . M o st of th e r e m a in in g p la n s c o n ta in e d c o v e ra g e 

p r o v is io n s th a t w e r e n o t a m e n a b le to c la s s if ic a tio n ; n e v e r th e le s s , p ro d u c tio n w o r k e r s d o m in a te d th e ir m e m b e r s h ip . In th e few in s ta n c e s w h e re a p la n c o v e re d 

s a la r ie d e m p lo y e e s on ly , th e c o m p a n y 's h o u rly e m p lo y e e s w e r e u s u a lly c o v e re d 

b y a n o th e r p la n .

T he r e la ti v e ly s e v e r e im p a c t la y o ffs m a y h av e on s m a ll c o m p a n ie s, co u p led w ith th e a b s e n c e of in s u r a n c e a r r a n g e m e n ts , h a s m a d e it d iffic u lt to 

a p p ly SUB to s m a ll e m p lo y e e g ro u p s . P la n s c o v e rin g la r g e g ro u p s a c c o u n te d fo r m o s t SUB c o v e ra g e — n e a r ly 8 out of 10 w o r k e r s w e r e in p r o g r a m s w ith 

m o r e th a n 4, 000 p a r tic ip a n ts . T h o se w ith le s s th a n 1, 000 w o r k e r s c o v e re d on ly 

9 p e r c e n t of th e to ta l.

U n lik e th e m a jo r ity of e m p lo y e e b e n e fit p r o g r a m s , g ro w th h a s n o t b e e n a c h a r a c t e r i s t i c of SU B . E x c lu d in g th e ILGW U p la n w ith its 400, 000 m e m b e r s — it w a s n e g o tia te d la te in I9 6 0 — c o v e ra g e in I9 6 0 w a s a b o u t e q u a l to e s tim a te s fo r 

1 9 5 6 .4 A d d itio n s a ttr ib u ta b le to new p la n s w e r e m o r e th a n o ffs e t b y e m p lo y m e n t 

d e c lin e s w ith in th e in d u s tr ie s a c c o u n tin g fo r a s u b s ta n tia l p a r t of to ta l c o v e ra g e (e .g ., tr a n s p o r ta ti o n e q u ip m e n t).

O v e ra ll c h a n g e s in c o v e ra g e s in c e I9 6 0 co u ld n o t ’be d e te r m in e d a s p a r t 

of th is stu d y , b e c a u s e p la n s b eg u n a f te r th a t d a te w e r e e x c lu d e d . H o w e v e r, 

s u p p le m e n ta r y in fo rm a tio n f r o m o th e r B LS s o u r c e s r e v e a ls th a t few p la n s of 

s u b s ta n tia l s iz e h av e b e e n e s ta b lis h e d s in c e I9 6 0 .

F u n d in g A r ra n g e m e n ts

T he f in a n c ia l n e e d s of e m p lo y e e b e n e fit p la n s a r e m e t e ith e r on a c u r r e n t 

b a s i s o r b y a d v a n c e fu n d in g . N u m e ro u s f a c to r s , su c h a s th e n a tu r e of th e b e n ­

e fit, th e a v a ila b ility of in s u r a n c e , ta x c o n s id e ra tio n s , c o lle c tiv e b a rg a in in g

4 C f., Social Security Bulletin. April 1965.

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p r e s s u r e s , an d th e e m p lo y e r 's fin a n c ia l p o s itio n , g e n e r a lly in flu e n c e th e s e le c tiv e 

p r o c e s s . In th e c a s e of SUB p la n s , th e n a tu r e of b e n e fit p a y m e n ts is of s p e c ia l im p o rta n c e . A d van ce funding is d e s ir a b le b e c a u s e la r g e an d a b r u p t c h a n g e s in 

b e n e fit c o m m itm e n ts cou ld a d v e r s e ly a f fe c t th e c o m p a n y 's c u r r e n t o p e ra tin g 

p o s itio n . S in ce p a y m e n ts a r e tie d to la y o ffs, d is b u r s e m e n ts te n d to in c r e a s e 

w h en co m p a n y o p e ra tio n s an d e a r n in g s a r e d e c lin in g . I n s u ra n c e h a s n o t b e e n 

a v a ila b le a s a p r a c ti c a l a lte r n a tiv e to fun d in g b e c a u s e of th e u n d e r w r itin g d if f i­ c u ltie s th a t a r i s e f ro m su c h b e n e fit e x p e rie n c e an d S U B 's c lo s e in v o lv e m e n t w ith 

la r g e ly u n in s u ra b le b u s in e s s r i s k s . T h u s, SUB p la n s a r e a lm o s t a lw a y s fu n d ed w ith so m e f o r m of t r u s t fund a r r a n g e m e n t.

S e v e r a l t r u s t a r r a n g e m e n ts w e r e u s e d am o n g th e p la n s stu d ie d . T he 

m o s t f re q u e n t a p p ro a c h r e q u ir e d c o n tr ib u to r s to m e e t th e ir e n tir e fin a n c ia l 

o b lig a tio n fo r e a c h o p e ra tin g p e r io d b y p ro m p t c a s h p a y m e n ts in to a g e n e ra l t r u s t fund . T h is m e th o d w a s u s e d in p la n s n e g o tia te d b y th e A u to m o b ile W o rk e rs 

a s w e ll a s b y s e v e r a l o th e r u n io n s. O v e r 1 m illio n w o r k e r s w e r e c o v e re d b y 

p la n s fin a n c e d in th is w ay.

A s im il a r fund in g a r r a n g e m e n t w a s u s e d in p o o le d p la n s , w h ic h in c lu d e 

m u ltie m p lo y e r p la n s , e x c e p t th a t c o n trib u tio n s f r o m p a r tic ip a tin g e m p lo y e r s w e r e 

p la c e d in a sin g le fund f ro m w h ic h a ll b e n e fits w e r e p a id . A lth o u g h th e s e p la n s 

w e r e few in n u m b e r, th e y c o v e re d a b o u t o n e -h a lf m illio n w o r k e r s .

A n o th e r a p p ro a c h , d e v e lo p e d in th e b a s ic s te e l in d u s try , s p lit th e 

c o m p a n y 's fin a n c ia l o b lig a tio n in to p e r io d ic c a s h c o n trib u tio n s an d a c o n tin g e n t lia b ility . T he c a s h p o rtio n w as p la c e d in a g e n e r a l t r u s t fund, a s a b o v e , w h ile 

th e lia b ility a c c r u a ls m e a s u r e d th e e m p lo y e r 's o b lig a tio n to m a k e a d d itio n a l 

p a y m e n ts , if n e e d e d . In th is w ay, th e c o n tin g e n t lia b ility in c r e a s e d th e p la n 's 

to ta l r e s o u r c e s w h ile th e co m p a n y r e ta in e d c o n tr o l an d u s e of th e fu n d s. P la n s 

of th is ty p e c o v e re d a p p ro x im a te ly 700, 000 w o r k e r s .

P la n s a llo c a tin g r e s o u r c e s ( i.e ., c o n trib u tio n s , in v e s tm e n t in c o m e , an d fu n d a c c u m u la tio n s ) to in d iv id u a l e m p lo y e e a c c o u n ts w e r e th e o n ly p la n s th a t p ro v id e d p a r tic ip a n ts w ith a v e s te d i n te r e s t in fund a s s e t s . S u ch p la n s c o v e re d 

a b o u t 65, 000 w o r k e r s , a s show n b y th e ta b le b elo w .

Workers covered (thousands)

Funding provision 1960 1961 1962 1963

All plans---------------------------------- 2,271 2,235 2,259

General fund o n ly---------------------------

General fund with contingent 1,008 1,005 1,006

liab ility--------------------------------------- 720 689 672 Pooled (multiemployer) fund---------- - 463 464 495 Individual employee accounts —.----------------- 67 60 57 65 Unfunded---------------------------------------- 7 7 7

Other-------------------------------------------- 4 3 4

Information not available--------------------------- 9 9 9 10

NOTE: Because of rounding, sums of individual items may not equal totals.

C o n trib u tio n s

T he c a s h n e c e s s a r y to d is c h a r g e b e n e fit o b lig a tio n s an d to p a y e x p e n s e s 

c h a rg e d to th e fu n d s of th e SUB p la n s s tu d ie d w a s o b ta in e d f ro m e m p lo y e r 

c o n trib u tio n s an d in v e s tm e n t in c o m e . C o n trib u tio n s a c c o u n te d fo r $ 537 m illio n 

o r 91.5 p e r c e n t of th e $ 587 m illio n of in c o m e r e c e iv e d b y a ll p la n s d u rin g th e 

1960—63 p e r io d .

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Total

receipts

1960.................................... $131.3

1961— ..................................... 118.0

1962 ................................. 170.4

1963 ................................. 167.3

4-year totals--------------- 587.0

Total Other Other income as percent of antributions income total receipts

(Millions of dollars)

$119.6 $11.7 8.9

107.1 10.8 9.2

157.5 12.9 7.5

152.9 14.3 8.6

537.2 49.8 8.5

NOTE: Because of rounding, sums of individual items may not equal totals.

T o ta l SUB c o n trib u tio n s v a r ie d f r o m y e a r to y e a r w ith th e g e n e r a l 

e m p lo y m e n t p a tte r n , d e c lin in g in 1961, a s th e e c o n o m y w e n t th ro u g h a r e c e s s io n , a n d in c r e a s in g d u rin g th e fo llo w in g 2 y e a r s of s tr o n g r e c o v e r y (ta b le 1). H o w ev er, 

w h ile c a s h c o n trib u tio n s flu c tu a te d in a c y c lic a l m a n n e r in so m e in d u s tr ie s , c o n s e c u tiv e in c r e a s e s o r d e c lin e s o c c u r r e d in o th e r s . D is s im ila r e m p lo y m e n t e x p e rie n c e a n d fu n d in g a r r a n g e m e n ts a c c o u n te d f o r th e s e v a r ia tio n s .

T he e m p lo y e r 's fin a n c ia l o b lig a tio n fo r e a c h o p e ra tin g p e r io d w a s u s u a lly 

g e a r e d to th e c o m p a n y 's le v e l of o p e ra tio n s b y r e la tin g it to e m p lo y m e n t, g e n e r a lly 

e x p r e s s e d a s a s p e c ifie d n u m b e r of c e n ts p e r m a n - h o u r . In th e a u to p la n s , th e 

o b lig a tio n w a s r e la te d to th e h o u rs p a id f o r, a n d in s te e l p la n s to th e h o u rs w o rk e d . O th e r m e th o d s , su c h a s a p e r c e n t of g r o s s p a y r o ll o r a f la t a m o u n t 

p e r p a y p e r io d fo r e a c h a c tiv e e m p lo y e e , w e r e s e ld o m u s e d . T h o se p la n s w ith 

th e g e n e r a l t r u s t fund , p o o le d fund, an d in d iv id u a l a c c o u n t fu n d in g a r r a n g e m e n ts r e q u ir e d p r o m p t d is c h a r g e of th e e n tir e o b lig a tio n s h o r tly a f te r th e end of e a c h 

o p e ra tin g p e r io d . T h o se u n d e r th e g e n e r a l fu n d w ith c o n tin g e n t li a b ility a r r a n g e ­

m e n t, c h ie fly th o s e n e g o tia te d w ith th e S te e lw o r k e r s , a llo w e d p a r t of th e 

e m p lo y e r 's o b lig a tio n to a c c r u e in th e f o r m of c o n tin g e n t lia b ility th a t w a s o n ly 

p a y a b le if n e e d e d fo r b e n e fits . In a ll c a s e s , th e e m p lo y e r w a s n o t r e q u ir e d to 

m a k e a n y a d d itio n a l c o n trib u tio n a f te r h is c e n ts p e r m a n - h o u r c o m m itm e n t w a s d is c h a r g e d e v e n th o u g h b e n e fit r e d u c tio n s m ig h t be n e c e s s a r y ow ing to a la c k 

of fu n d s.

On th e o th e r h an d , r e d u c tio n s in th e e m p lo y e r 's o b lig a tio n s w e r e p o s s ib le 

if m a x im u m fin a n c in g p r o v is io n s b e c a m e o p e r a tiv e .5 T h e s e p r o v is io n s , w h ic h w e r e foun d in m o s t p la n s , e ith e r e lim in a te d f u r th e r a c c r u a ls o r c a n c e le d so m e of th e e m p lo y e r 's e x is tin g lia b ility , a s lo n g a s th e d e s ir e d f in a n c ia l p o s itio n s w e r e m a in ta in e d .6 In a d d itio n , a f te r 1962 m o s t p la n s n e g o tia te d w ith th e S te e l­ w o r k e r s c o n ta in e d a " s p illo v e r " a r r a n g e m e n t w h e re b y e x c e s s iv e r e s o u r c e s w e r e m a d e a v a ila b le to fund sa v in g s an d v a c a tio n p la n s .

G e n e ra l fu n d s w ith c o n tin g e n t lia b ility a r r a n g e m e n ts o r ig in a lly in c lu d e d a p r o v is io n to m a in ta in a c o n s ta n t r e la tio n s h ip b e tw e e n r e g u la r c a s h c o n trib u tio n s an d c o n tin g e n t lia b ility a c c r u a ls . H o w e v e r, a f te r th e 1962 r e v is io n s m a n y of 

th e m re d u c e d th e c a s h p o rtio n a n d in c r e a s e d th e c o n tin g e n t lia b ility p o rtio n b y 

a n e q u a l a m o u n t a s i n c r e a s e s in th e le v e l of p la n fin a n c e s o c c u r r e d u n til, a t 

th e h ig h e s t le v e l, no c a s h p a y m e n t w a s r e q u i r e d .7

A few plans do not contain maximum financing provisions. Moreover, an exception may arise among those

that do, if the general trust with contingent liability funding arrangement is used. Contingent liability must be

convened into cash contributions whenever fund assets are less than current benefit needs.

Typical maximum financing provisions are discussed on p. 13. Maximum financing provisions which would

reduce contributions after a period of favorable benefit experience were seldom operative during the period of study until 1963. For the exception among steel plans see p. 9.

The 1962 steel plan revisions are discussed on p. 9.

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T he in flu e n c e of fu n d in g a r r a n g e m e n ts w a s r e f le c te d in th e a n n u a l v o lu m e 

of c o n trib u tio n s to SUB p la n s b y in d u s try . C o n trib u tio n s in th e tr a n s p o r ta tio n 

e q u ip m e n t g ro u p in d ic a te d th e in d u s tr y 's c h an g in g le v e ls of b u s in e s s a c tiv ity , w h ile th e c o n s e c u tiv e in c r e a s e s in th e p r i m a r y f e r r o u s m e ta ls g ro u p r e f le c te d 

b o th b u s in e s s a n d b e n e fit e x p e rie n c e . T he s u s p e n s io n of o b lig a tio n s d u rin g th e 

s te e l s tr ik e in 1959, c o u p led w ith in c lu s io n of th a t p e r io d in th e c a lc u la tio n of 

s u b s e q u e n t o b lig a tio n s , r e s u lt e d in a low a s s e t p o s itio n in m a n y s te e l p la n s 

d u rin g I9 6 0 . T h e s e a s s e t s w e r e q u ic k ly d e p le te d w h e n la r g e b e n e fit p a y m e n ts 

w e r e r e q u ir e d d u rin g 1961. T h u s, a d d itio n a l p a y m e n ts to f u lf ill c o n tin g e n t 

o b lig a tio n s f re q u e n tly m o r e th a n o ffs e t d e c lin e s in r e g u l a r c a s h c o n tr ib u tio n s .8 

W h ile e m p lo y m e n t le v e ls d e te r m in e d th e e m p lo y e r 's o v e r a ll o b lig a tio n a n d o r d i ­

n a r y c a s h p a y m e n ts u n d e r th e s e p la n s , b e n e fit e x p e rie n c e s tr o n g ly in flu e n c e d th e 

to ta l c a s h c o n trib u tio n s m a d e d u rin g a d v e r s e p e r io d s .

D e s p ite th e g e a r in g of c o n trib u tio n s to e m p lo y m e n t o r , a s in s te e l p la n s , 

to b o th e m p lo y m e n t an d b e n e fit a b o u t 8 o u t of 10 p a r tic ip a n ts w e r e c o v e re d b y 

p la n s in w h ic h th e a v e r a g e a n n u a l ch an g e in c a s h p a y m e n ts w a s s lig h t o r 

m o d e r a te .9 T he a m o u n t of a n n u a l SUB c o n trib u tio n s w a s r e a s o n a b ly s ta b le . 

P la n c o n trib u tio n s in th e tr a n s p o r ta ti o n e q u ip m e n t in d u s tr y w e r e m o s t s ta b le , 

w h ile th o s e in e le c t r i c a l m a c h in e r y w e r e l e a s t s ta b le . T he a n n u a l f lu c tu a tio n s in c o n trib u tio n s a r e s u m m a riz e d fo r e a c h in d u s tr y in th e fo llo w in g ta b u la tio n 

sh o w in g th e p e r c e n t of c o v e re d w o r k e r s in p la n s in e a c h s ta b ility g ro u p .

Industry

Total workers Very

stable Stable Unstable

Very

unstable

All industries------------------------- 100.0 56.6 23.7 10.8 8.8

Manuf acturing------------------------------- 100.0 55.2 24.2 11.4 9.2 Rubber------------------------------------ 100.0 15.8 72.9 - 11.3 Primary m etals------------------------ 100.0 31.4 36.7 23.3 8.6 Ferrous------------------------------- 100.0 33.1 32.9 25.5 8.4 Nonferrous-------------------------- 100.0 17.3 66.7 5.2 10.8 Fabricated metal products--------- 100.0 25.8 39.3 9.5 25.4 Machinery, except electrical------ 100.0 45.8 21.2 19.7 13.3 Electrical machinery----------------- 100.0 14.1 31.3 - 54.6 Transportation equipment---------- 100.0 95.9 .8 1.4 2.0 Other------------------------------------- 100.0 71.4 17.3 - 11.3

Nonmanufacturing------------------------- 100.0 81.2 15.0 1.5 2.3

NOTE: Because of rounding, sums of individual items may not equal totals.

I n v e s tm e n t In co m e

T he u n p r e d ic ta b le n a tu r e of SUB fu n d d is b u r s e m e n ts m a d e liq u id ity , 

r a t h e r th a n in c o m e , th e f o r e m o s t c o n s id e r a tio n in in v e s tm e n t p o lic y . T he 

p o s s ib le n e e d of s u b s ta n tia l su m s of c a s h on s h o r t n o tic e g e n e r a lly d ic ta te d th e 

s e le c tio n of h ig h -g ra d e , s h o r t - t e r m s e c u r it ie s . M an y p la n s , in c lu d in g th o s e 

n e g o tia te d b y th e A u to m o b ile W o rk e rs , r e s t r i c t e d in v e s tm e n ts to g e n e r a l o b lig a tio n s of th e U .S. G o v e rn m e n t. W hile th e m o n e y h e ld in th e SUB fu n d s n e g o tia te d 

b y th e S te e lw o r k e r s a ls o co u ld b e in v e s te d in " o th e r a p p r o p r ia te s e c u r it ie s 

a p p ro v e d b y th e co m p an y , " th e p r a c tic e h a s b e e n to in v e s t a lm o s t e n t ir e ly in 

U .S. G o v e rn m e n t s e c u r it ie s . V e ry few p la n s a llo w e d b a n k s a n d o th e r c o r p o r a te 

t r u s t e e s m u c h la titu d e in in v e s tm e n t d e c is io n s .

Benefit reductions were also common.

9 See appendix for an explanation of change computations and definition of the four stability groups.

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L im ite d a s s e t a c c u m u la tio n s a n d h ig h liq u id ity n e e d s g e n e r a lly r e s u lt e d in low le v e ls of in te r e s t, d iv id e n d s, a n d o th e r f o r m s of in v e s tm e n t in c o m e . S u ch in c o m e a c c o u n te d f o r l e s s th a n 10 p e r c e n t of th e r e c e ip t s r e p o r te d b y a l l p la n s in e a c h y e a r f r o m I9 6 0 th ro u g h 1963, a n d a v e r a g e d 8.5 p e r c e n t f o r th e e n tir e p e r io d .

T he c o m p a ris o n of in v e s tm e n t in c o m e w ith to ta l SUB r e c e ip t s in c lu d in g c o n tr ib u tio n s , in th e fo llo w in g ta b u la tio n , in d ic a te s th a t th e r e la tiv e im p o rta n c e 

of in v e s tm e n t in c o m e v a r ie d w ith th e ty p e of fu n d in g a r r a n g e m e n t. It w a s l e a s t 

a m o n g p la n s u s in g th e g e n e r a l t r u s t w ith c o n tin g e n t lia b ility a r r a n g e m e n t, 

r e f le c tin g th e ir r e la tiv e ly low a s s e t p o s itio n s .

Investment income as a percent of total receipts*

Type of funding 1960^63 1960 1961 1962 1963

All plans----------------------------- 8.5 8.9 9.2 7.5 8.6

General fluid-------------------------------

General fund with

11.1 10.9 14.5 9.1 11.4

contingent liability-------------------- 2.5 3.8 2.2 2.9 1.4

Pooled fund-------------------------------- 9.5 9 .4 7.9 9.2 11.4

Individual employee accounts —---- 18.2 14.1 20.4 20.4 18.6

Other----- ---------------------------------- 28.6 100.0 40.0 11.1 31.3

Unfunded-------------------------------- — 0 0 0 0 0

Information not available--------— 11.1 7.3 2.6 25.0 31.5

1 Includes miscellaneous veceipts, such as return of benefits erroneously paid.

These receipts were almost invariably negligible.

D is b u r s e m e n ts

E x p e n d itu re s to p a y SUB an d o th e r b e n e fits in c lu d in g m o v in g a llo w a n c e s 

a n d s e p a r a tio n p a y , a n d e x p e n s e s c h a rg e d to th e SUB fu n d s to ta le d $ 4 3 9 m illio n 

d u rin g th e 1960—63 p e r io d . B e n e fits a c c o u n te d fo r $ 4 2 7 m illio n o r 97 p e r c e n t 

of th e to ta l.

B e n e fits . M o st SUB p la n s e x p e rie n c e d a s u b s ta n tia l ch an g e in b e n e fit p a y m e n ts f r o m one y e a r to th e n e x t b e c a u s e of th e ir d e p e n d e n c e on la y o ff e x p e r ie n c e . T o ta l b e n e fit p a y m e n ts of $ 91 m illio n w e r e r e p o r te d in I9 6 0 (ta b le 1). T h e y s u b s e q u e n tly in c r e a s e d b y $ 3 8 m illio n , o r 42 p e r c e n t, in 1961. Im p ro v e d b u s in e s s c o n d itio n s le d to c o n s e c u tiv e d e c lin e s of 22 a n d 5 p e r c e n t d u rin g th e 

n e x t 2 y e a r s .

T h e y e a r - t o - y e a r c h a n g e s in b e n e fit d is b u r s e m e n ts v a r ie d a m o n g in d u s ­

t r i e s (ta b le 2). A n n u al b e n e fit p a y m e n ts in th e tr a n s p o r ta tio n e q u ip m e n t in d u s tr y 

fo llo w e d a c y c lic a l p a t te r n th a t w a s c o u n te r to c h a n g e s in th e le v e l of c o n tr ib u tio n s . H o w e v e r, c o n s e c u tiv e y e a r - t o - y e a r in c r e a s e s o c c u r r e d in p r im a r y f e r ­

ro u s m e ta ls u n til 1963, w h ile f a b r ic a te d m e ta ls and m a c h in e r y , e x c e p t e l e c t r i c a l , 

h a d c o n s e c u tiv e d e c lin e s . T he m a g n itu d e and d ir e c tio n of y e a r - t o - y e a r b e n e fit 

c h a n g e s a r e s u m m a r iz e d b y in d u s tr y in th e fo llo w in g ta b u la tio n .10

10 Only annual data were available for all SUB plans; thus, changes of shorter duration could not be analyzed.

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Percent change in benefit payment

1960 1961 1962

to to to

Industry 1961 1962 1963

All industries---------------------------------------- 42.2 - 2 1 .5 - 4 .9

Manufacturing--------------------------------------------- 39.6 - 2 2 .2 -6 . 2

Rubber------------------------------------------- -------- 103.6 - 4 0 .0 - 1 7 .0

Primary metals-------------------------------- -------- 6.91 4. 74 -1 .3 6

Ferrous----------------------------------------------- 2.3 13.6 - 2 .7

Nonferrous------------------------------------------ 52.8 - 5 4 .6 21.3 Fabricated metal products---------------- -------- —1. 3 - 1 . 4 - 1 .2 Machinery, except electrical--------------------- 7.7 -1 1 .3 - 4 .3 Electrical machinery------------------------ -------- 51.1 -4 3 .9 - 1 1 .0

Transportation equipment-------------------------- 119.1 - 4 4 .4 - 6 .2 Other----------------------------------------------------- 25. 1 - 2 6 .3 40.6

Nonmanufacturing-------------------------------- -------- 151.2 - 5 .6 18.5

Since the data fo r a ll plans in each in d u stry w e re to taled b e fo re th ese p e rc e n t

changes w e re calcu lated , th ey a re not as g re a t as the flu ctu ation s of ind ivid u al

p lan s, e s p e c ia lly in in d u strie s that had flu ctu atio n s in opposite d ire c tio n s that

o ffse t each o th er.

M axim um financing p ro v isio n s and p re s c rib e d contribution re q u ire m e n ts

p laced d efin ite lim its on the e m p lo y e r's p o ten tial o b lig ations. T hese re s tric tio n s ,

in tu rn , m ade it n e c e s s a ry to p ro vid e fo r p o ssib le b en efit ad ju stm en ts in o rd e r

to be su re that plan com m itm ents w ould not exceed a v a ila b le re s o u rc e s . Thus,

b en efit p aym en ts did not alw a ys re fle c t la y o ff p a tte rn s e x c lu s iv e ly . A ctu al p a y ­

m ents w ould fa ll below those expected on the b a sis of em ploym ent ex p erien ce

w h en ever p rolonged la y o ffs red u ced the fund's fin a n c ia l p o sitio n or caused w o rk e rs

to exhaust th e ir e lig ib ility fo r b en efits.

It w as com m on to p ro vid e fo r red u ctio n s in e ith e r the num ber o r am ount

of w e e k ly b en efit paym ents during tim es of fin a n c ia l s t r e s s . M any plans used

both m ethods to red u ce p aym ents fro m the fund as fin a n c ia l re s o u rc e s declined.

P la n s w ith no a llo c a tio n of re s o u rc e s to in d ivid u al m em b er accounts

a lm o st in v a ria b ly used " c re d it units" to d eterm in e the extent of each em p lo yee's

rig h t to b en efits and to red u ce o v e ra ll com m itm ents. A red u ctio n in the num ber

of p oten tial paym ents w as acco m p lish ed by in c re a sin g the num ber of c re d it units

needed fo r a fu ll w e e k ly b en efit. The opposite ap p roach — a red u ctio n in the

d o lla r am ount of the re g u la r o r u su al b en efit— lo w e re d to ta l com m itm ents w hile

reta in in g the n o rm a l c re d it unit can cellatio n r a t e .11

The ILGWU plan w as a notable exception to the above p ra c tic e . In this

plan, in w hich c re d it units w e re not a ccru ed , th e re w as no au tom atic red u ction

in b en efit com m itm ents w hen fin an ces w e re low . A fix ed schedule of b en efits,

w hich v a rie d w ith the w o rk e r's fo rm e r w e e k ly earn in g s, w as p ro vid ed . The

d u ration of b en efit paym ents w as dependent on y e a rs of s e rv ic e . H ow ever, the

b o ard of tru s te e s could, at its d isc re tio n , red u ce e ith e r the am ount o r du ration

of b en efits if it w as co n sid ered n e c e s s a ry to m ain tain the so lve n c y of the fund.

It was common to provide senior employees with more favorable treatment than those with less seniority.

See Major Collective Bargaining Agreements: Supplemental Unemployment Benefit Plans and Wage-Employment Guarantees (BLS Bulletin 1425-3, 1965), pp. 22-25, for more details.

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T he e x te n t to w h ic h b e n e fit o b lig a tio n s w e r e a c tu a lly r e d u c e d v a r ie d by in d u s tr y an d fu n d in g a r r a n g e m e n ts . S u b s ta n tia l b e n e fit c u r ta ilm e n ts w e r e s e ld o m 

n e c e s s a r y am o n g p la n s th a t r e q u ir e d im m e d ia te d is c h a r g e of th e e m p lo y e e s e n tir e o b lig a tio n b y r e g u la r c a s h c o n trib u tio n s . F o r e x a m p le , th e 5 - c e n t c o n ­ tr ib u tio n r a te an d r e la ti v e ly h ig h m a x im u m fu n d in g lim its (ra n g in g f r o m a b o u t $ 300 to $ 4 0 0 p e r e m p lo y e e ), in th e p la n s n e g o tia te d b y th e A u to m o b ile W o rk e rs , 

g e n e ra lly p ro v e d to be m o r e th a n a d e q u a te . In a few in s ta n c e s , m a jo r b e n e fit 

c u r ta ilm e n ts r e s u lt e d f r o m a d v e r s e e m p lo y m e n t e x p e rie n c e d e s p ite th e r e q u i r e ­ m e n t th a t fu n d in g p o s itio n s m u s t d e t e r i o r a te s e v e r e ly b e f o r e b e n e fit r e d u c tio n s 

a r e m a d e . S u ch r e d u c tio n s w e r e , h o w e v e r, a ty p ic a l of th e s e p la n s .

F o r r e a s o n s n o t r e la te d to th e ir u s e of c o n tin g e n t lia b ility , p la n s w ith 

p a r t of th e ir fin a n c e s in th e f o rm of c o n tin g e n t lia b ility a c c r u a ls h a d le s s f a v o ra b le e x p e rie n c e . R e d u c tio n s w e r e w id e s p re a d d u rin g m u c h of I9 6 0 an d 1961. 

A bout 1 in 4 of th e s e p la n s p a id r e d u c e d b e n e fits a t th e en d of I9 6 0 . A y e a r 

la t e r 3 out of 10 p a id re d u c e d b e n e fits . T he p e r c e n ta g e w a s e v e n h ig h e r d u rin g 

so m e m o n th s in th e s e 2 y e a r s .

T h is h ig h in c id e n c e of re d u c tio n s r e s u lte d f ro m a c o m b in a tio n of f a c to r s . 

P r i o r to th e a m e n d m e n ts n e g o tia te d w ith th e S te e lw o r k e r s in 1962 an d s u b s e q u e n t 

y e a r s m o s t of th e s e p la n s p ro v id e d fo r b e n e fit re d u c tio n s w h e n e v e r to ta l fin a n c e s f e ll b elo w 75 p e r c e n t of th e ir m a x im u m le v e ls . A t th e s a m e tim e , th e m a x im u m s 

(ab o u t $ 200 p e r e m p lo y e e ) w e r e m u c h lo w e r th a n th o s e in m o s t o th e r p la n s . 

M o re o v e r, th e 1959 s te e l s tr ik e g r e a tly r e d u c e d c o n tr ib u to ry h o u rs an d e m p lo y e r o b lig a tio n s fo r s e v e r a l m o n th s. In c lu s io n of th e s tr ik e p e r io d in m a x im u m fin a n c in g c a lc u la tio n s s u b s ta n tia lly lo w e re d m a x im u m le v e ls b y re d u c in g th e h o u rs 

b a s e . T he r e s u l t of th e s e low m a x im u m le v e ls w as low c o n trib u tio n s an d e v e n c a n c e lla tio n of c o n tin g e n t lia b ility a f te r th e s tr ik e . T he h e a v y b e n e fit d e m a n d s 

th a t fo llo w e d r a p id ly d e p le te d p la n r e s o u r c e s an d le d to e ith e r a r e d u c tio n in 

b e n e fits o r th e ir u ltim a te s u s p e n s io n .

T he 1962 a m e n d m e n ts w e r e a d o p te d b y ab o u t tw o - th ir d s of th is g ro u p 

of SUB p la n s , g r e a tly re d u c in g th e lik e lih o o d of s im il a r e x p e rie n c e in th e fu tu re 

b y p ro v id in g fo r l a r g e r e m p lo y e r c o n trib u tio n s , no c a n c e lla tio n of c o n tin g e n t 

lia b ility a c c r u a ls , h ig h e r m a x im u m fin a n c in g le v e ls , e lim in a tio n of s tr ik e p e r io d s in c a lc u la tin g c o n tr ib u to r y h o u r s , an d th e in itia tio n of b e n e fit r e d u c tio n s a t m u c h 

lo w e r f in a n c ia l le v e ls . F o r e x a m p le , p a r ti a l b e n e fits w e r e to b e p a id w h en to ta l 

fin a n c e s fe ll b elo w 35 p e r c e n t of th e m a x im u m le v e l in s te a d of 75 p e r c e n t. F e w r e d u c tio n s w e r e n e c e s s a r y in 1962 an d 1963 due to th e s e im p ro v e m e n ts an d to 

a m o r e fa v o ra b le e m p lo y m e n t s itu a tio n . A t th e end of 1963, 4 out of 5 s te e l p la n s w e r e a t m a x im u m fin a n c in g .

In a c c o rd a n c e w ith th e in te n t of p ro v id in g o n ly te m p o r a r y a s s is ta n c e th ro u g h SUB p r o g r a m s , th e n u m b e r of w e e k ly p a y m e n ts th a t a w o r k e r co u ld 

r e c e iv e in an y one p e r io d of u n e m p lo y m e n t w a s lim ite d to 52 o r l e s s . A lth o u g h d a ta on e lig ib ility e x h a u s tio n s w e re n o t a v a ila b le , in fo rm a tio n fo r s e v e r a l p la n s 

w ith d i s s im ila r e x p e rie n c e in d ic a te d th a t e x h a u s tio n s s e ld o m e x c e e d e d 5 p e r c e n t of a p la n ’s m e m b e r s h ip . B e c a u s e of s e n io r ity p r o v is io n s , la y o ffs g e n e r a lly w e re c o n c e n tra te d am o n g n e w ly -h ire d w o r k e r s ; a b o u t a fo u r th of th e e lig ib ility e x h a u s tio n s w e r e fo r th e se c o n d , th ir d , o r a su b s e q u e n t lay o ff.

T he v o la tility of b e n e fit p a y m e n ts d iff e re d s ig n if ic a n tly b y in d u s try . 

P la n s w ith lim ite d flu c tu a tio n in th e a m o u n t of a n n u a l b e n e fit p a y m e n ts c o v e re d 

o v e r h a lf of th e p a r tic ip a n ts in p la n s in p r im a r y f e r r o u s m e ta ls . In c o n tr a s t, 

le s s th a n a f o u r th of th o s e in tr a n s p o r ta tio n e q u ip m e n t w e r e c o v e re d b y p la n s 

w ith s im il a r e x p e rie n c e . A m a jo r ity of th e m w e r e c o v e re d b y p la n s w ith 

m o d e ra te f lu c tu a tio n .12 T he fo llo w in g ta b u la tio n sh o w s th e p e r c e n t of w o r k e r s 

in e a c h in d u s tr y b e lo n g in g to p la n s in e a c h of fo u r s ta b ility g ro u p s .

12 See appendix for an explanation of change computations and stability classes.

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Industry

Total woikeis Very stable Stable Unstable Very

unstable

All industries------------------------ 100.0 31.1 41.6 17.4 9.9

Manufacturing----------------------------- 100.0 32.0 39.8 17.9 10.2

Rubber----------------------------------- 100.0 37.7 40.8 16.0 5.5

Primary metals------------------------ 100.0 47.3 25.3 18.4 9 .0

Ferrous------------------------------- 100.0 51.7 20.3 19.3 8.8

Nonferrous-------------------------- 100.0 12.6 65.2 11.1 11.2 Fabricated metal products---------- 100.0 52.9 17.3 10.8 19.0

Machinery, except electrical----- 100.0 11.2 36.1 19.3 33.4

Electrical machinery----------------- 100.0 10.3 79.6 5.3 4.9

Transportation equipment---------- 100.0 22.4 56.3 18.3 3.0

Other------------------------------------- 100.0 23.1 26.9 28.0 22.0

Nonmanufacturing------------------------ 100.0 15.9 73.0 7.2 3.8

NOTE: Because of rounding, sums of individual items may not equal totals.

O th e r P la n D is b u r s e m e n ts . It w a s n o t u n u s u a l to c h a rg e a SUB fund 

w ith so m e of th e c o s ts of a d m in is te r in g th e p la n an d m a n a g in g th e fund. D u rin g th e 1960—63 p e r io d , s u c h c h a r g e s a c c o u n te d fo r a b o u t 3 p e r c e n t of to ta l fund 

d is b u r s e m e n ts . S om e y e a r - t o - y e a r v a r ia tio n n a tu r a lly o c c u r r e d in th e s e c h a r g e s 

s in c e th e y te n d e d to v a r y d i r e c t ly w ith th e s iz e of th e fu n d an d c la im s a c tiv ity . E x p e n s e s w e r e e s p e c ia lly h ig h in 1961 w h en in c r e a s e d b e n e fit p a y m e n ts in c r e a s e d 

th e b u rd e n of a d m in is tr a tio n .

In g e n e ra l, th e fu n c tio n s p e r f o r m e d in th e o p e ra tio n of SUB p la n s , su c h 

a s p r o c e s s in g of c la im s , p a y m e n t of b e n e fits , h a n d lin g of a p p e a ls , m a in te n a n c e 

of p e r tin e n t r e c o r d s , an d is s u a n c e of r e p o r t s , w e r e s im il a r to th o s e in m o s t 

o th e r ty p e s of e m p lo y e e b e n e fit p r o g r a m s . T he p r o f e s s io n a l s e r v ic e s o b ta in e d f ro m a tto r n e y s , a u d ito r s , an d c o r p o r a te t r u s t e e s w e r e a ls o s im il a r , b u t a n 

e x c e p tio n o c c u r r e d w ith r e s p e c t to c o n s u ltin g a c tu a r i e s . A lth o u g h g e n e r a l c o s t 

e s tim a te s w e r e n e c e s s a r y , p e r io d ic e v a lu a tio n s b a s e d on c o m m o n a c tu a r i a l 

te c h n iq u e s w e r e no t f e a s ib le , due to th e u n c e r ta in n a tu r e of u n e m p lo y m e n t 

e x p e rie n c e .

A d m in is tra tiv e p r o b le m s h av e p ro b a b ly b e e n h e ld to a m in im u m b y th e e x te n t of o r g a n iz a tio n of o p e ra tin g p r o c e d u r e s in th e p ro to ty p e p la n s an d th e ir 

a d o p tio n in m o s t of th e p la n s th a t fo llo w e d . R e la tiv e ly few a d m in is tr a tiv e c h a n g e s 

w e re n e c e s s a r y e x c e p t fo r th o s e r e q u ir e d b y p la n a m e n d m e n ts th a t lib e r a liz e d b e n e fits , e tc . W hen p r o b le m s a r o s e , a s in g le in te r p r e ta tio n o r d e c is io n w as 

fre q u e n tly a p p lic a b le to m a n y p r o g r a m s b e c a u s e of th e ir s im ila r ity . S e v e r a l p la n s in b a s ic s te e l d e lib e r a te ly u s e d th e s a m e a r b i t r a t o r to a s s u r e g r e a t e r c o n ­ s is te n c y of in te r p r e ta tio n .

D ir e c t tie s to th e S ta te - a d m in is te r e d u n e m p lo y m e n t in s u r a n c e s y s te m , 

th ro u g h u tiliz a tio n of S ta te e lig ib ility l i s t s , f u r t h e r r e d u c e d th e b u rd e n of SUB 

p la n a d m in is tr a tio n .

T he v a r io u s c o s ts in c u r r e d in th e o p e ra tio n of SUB p r o g r a m s w e re 

h a n d le d in a v a r ie t y of w a y s. T h e r e w a s a tr e n d aw ay f ro m c h a rg in g e x p e n s e s 

to th e fund d u rin g th e 1960—6*3 p e rio d , e x c e p t am o n g m u ltie m p lo y e r p la n s . F o r 

e x a m p le , u n d e r th e 1958 F o rd -U A W p la n , th e c o s ts an d e x p e n s e s of th e t r u s t e e s , 

e x p e n s e s of th e b o a rd of a d m in is tra tio n , an d th e c o s t of a d m in is tr a tiv e s e r v ic e 

p e r f o r m e d b y th e c o m p an y w e r e a ll c h a r g e a b le to th e fund. T he 1961 F o rd -U A W 

p la n , h o w e v e r, p ro v id e d fo r c h a rg in g o n ly tr u s t e e , b an k , an d a u d itin g fe e s to 

th e fund; a n y o th e r e x p e n s e s w e r e to b e b o rn e s e p a r a te ly b y th e c o m p a n y o r 

s h a r e d w ith th e u n io n . B o th th e I9 6 0 b a s ic s te e l p la n an d its r e v is e d f o rm of

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1962 r e s t r i c t e d c h a r g e s to r e a s o n a b le t r u s t e e fe e s an d e x p e n s e s . A lm o s t a ll p la n s c o n tin u e d to p ro v id e th a t t r u s t e e fe e s an d e x p e n s e s co u ld b e c h a r g e d to 

th e fu n d e v e n th o u g h o th e r c h a r g e s f re q u e n tly w e r e no t a llo w e d .

In a c tu a l p r a c ti c e , a c o n s id e ra b le n u m b e r of c o m p a n ie s d id n o t s e e k 

r e im b u r s e m e n t fo r e x p e n s e s th e y w e r e e n title d to c h a rg e to th e fund . T r u s te e c h a r g e s , th e m o s t f re q u e n t e x p e n se ite m , w e r e p a id f r o m 77 p e r c e n t of th e 

fu n d s w ith 82 p e r c e n t of th e to ta l w o rk e r c o v e ra g e . T h e s e w e r e th e o n ly c h a r g e s 

p a id f r o m 45 p e r c e n t of th e fu n d s. No e x p e n s e d is b u r s e m e n ts w e r e m a d e f ro m 

a p p ro x im a te ly 15 p e r c e n t of th e fu n d s w h ic h a c c o u n te d fo r n e a r ly 11 p e r c e n t of 

a ll c o v e ra g e .

Percent

Expenses paid Plans Workers

All plans..........-........................... 100.0 100.0

No administrative expense------------ 15.3 10.8

Trustee only------------------------------- 45.2 24. 5

Trustee and audit------------------------- .9 .5 Trustee, audit, and salaries---------- 31.0 57.4

Other administrative----------------------- 3.6 3. 5

Other...................................................... 4.1 3. 3

NOTE: Because of rounding, sums of individual items may not equal totals.

P r o f e s s io n a l f e e s , a d m in is tr a tiv e s a l a r i e s , an d e x p e n s e s w e r e c h a rg e d 

to a th ir d of th e fu n d s w h ic h c o v e re d a b o u t 6 ou t of 10 w o r k e r s . B o a rd of 

a d m in is tr a tio n e x p e n s e s u s u a lly w e r e p a id b y th e c o m p an y , w h ile th e c o m p a n y 

an d u n io n a lm o s t in v a r ia b ly p a id th e r e g u la r s a l a r i e s of th e ir r e s p e c tiv e b o a rd m e m b e r s an d th e c o m p e n s a tio n of a n y im p a r tia l c h a ir m a n o r a r b i t r a t o r w a s 

s h a r e d e q u a lly .

T he $ 12 m illio n of o p e ra tin g e x p e n s e s c h a r g e d to SUB fu n d s d u rin g th e 1960—63 p e r io d w e r e e q u a l to 2.3 p e r c e n t an d 2.8 p e r c e n t of c o n trib u tio n s an d 

b e n e fits , r e s p e c tiv e ly . H o w e v e r, b e c a u s e c o n trib u tio n an d b e n e fit e x p e rie n c e w a s b y no m e a n s u n ifo rm , in d iv id u a l p la n r a tio s te n d e d to d iffe r e v e n m o r e w id e ly b e c a u s e of th e v o la tile n a tu r e of b e n e fits an d c o n trib u tio n s . A v e ra g e a n n u a l e x p e n s e s w e r e e q u a l to le s s th a n 5 p e r c e n t of b e n e fit p a y m e n ts in p la n s c o v e rin g 58 p e r c e n t of a ll SUB p a r tic ip a n ts . H o w e v e r, 85 p e r c e n t of th e p a r ­

tic ip a n ts b e lo n g e d to p la n s in w h ic h e x p e n s e s e q u a le d le s s th a n 5 p e r c e n t of c o n tr ib u tio n s .

E x a m in a tio n of e x p e n s e s on a p e r e m p lo y e e b a s is i’s m o r e u s e fu l. D u rin g 

th e 1960—63 p e r io d , a p p ro x im a te ly h a lf of th e SUB fu n d s w e r e c h a r g e d w ith 

a v e r a g e a n n u a l e x p e n se p a y m e n ts a m o u n tin g to le s s th a n a d o lla r p e r m e m b e r . 

T he ty p e s of e x p e n s e s c h a r g e d to th e fu n d s a r e a m a jo r d e te r m in a te of th e ir 

a m o u n t; f o r e x a m p le , a lm o s t 3 ou t of 4 p la n s w ith e x p e n s e s of le s s th a n $ 1 p e r 

m e m b e r h a d d is b u r s e m e n ts o n ly fo r t r u s t e e fe e s an d e x p e n s e s . T he g r e a te s t 

v a r ia tio n in e x p e n s e s o c c u r r e d am o n g fu n d s w ith p r o f e s s io n a l fe e s an d s a l a r i e s . 

A r e la tio n b e tw e e n p la n s iz e an d e ffic ie n c y of o p e ra tio n w a s e v id e n t w h en c o s t 

c o m p a ris o n s w e r e m a d e of p la n s w ith s im ila r e x p e n s e s c h a r g e d a g a in s t th e ir 

fu n d s— a ll b u t one of th e la r g e p la n s th a t p a id o n ly t r u s t e e f e e s an d e x p e n s e s 

s p e n t le s s th a n $ 1 p e r m e m b e r , w h ile a lm o s t h a lf th e s m a ll p la n s w ith s im il a r 

c h a r g e s s p e n t m o r e th a n th a t a m o u n t.

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Even without considering the type of expenses charged, only a fourth of

the funds— chiefly those of sm all plans— had expense disbursements of m ore than

$ 3 per m em ber.

____ Percent

Average annual administrative

expense paid per employee Plans Coverage

All plans-------------------------- 100.0 100.0

Less than $1 ---------------------------- 49. 8 52. 5

$1 but less than $3-------------------- 23. 5 37. 1

$3 but less than $5-------------------- 12.4 4.4

$5 but less than $7-------------------- 7. 4 2. 2

$7 and over----------------------------- 6.9 3.7

NOTE: Because of rounding, sums of individual items may not equal totals.

A s sets

SUB funds held assets, exclusive of contingent liability, worth almost

$ 340 m illio n at the end of the I960 re p o rtin g y e a r (table 2). 13 In 19 6 1, a net

d rain of $ 20 m illio n reduced them by about 6 p ercen t. By 1963, a s s e ts totaled

almost $447 million, a 40-percent gain over 1961.

Plans of the transportation equipment industry consistently accounted

for m ore than half of all SUB a sse ts. In contrast, a low asset position was

characteristic of funds in the prim ary m etals industries, where contingent lia ­

bility accruals exceeded regular cash contributions.

The funds for the individual account plans, which functioned somewhat

as savings plans, contained the m o st a s s e ts p er p articipant. 14

Average amount of resources per employee

Funding provision 1960 1961 1962 1963

Assets per worker:

General fund------------------------------ $247.48 $243.54 $301.91 $359.94

Pooled fund------------------------------- 149.15 158.67 162.09 133.13

General fund with contingent

liability---------------------------------- 41.21 34. 08 42.25 41.33

Individual accounts-------------------- Total resources— general fund with contingent liability --------------

337.46 387.95 414.12 403.16

206.65 170.93 235. 55 258.31

Includes contingent liability accruals.

Despite significant year-to -y e a r changes in the relation between assets

and contingent liability in plans so managed, contingent liability has consistently

accounted for the m ajor portion of the plans' resources— frequently m ore than

7 5 percent. Contingent lia b ility a c c ru a ls accounted fo r a la r g e r p rop ortion of

the re s o u r c e s of the la rg e plans than of the sm a ll ones. In 1963, contingent

liability accounted for 87 percent of the reso u rces of plans with m ore than 4, 000

m em bers as against 75 percent among those with few er m em bers. Sm aller

d iffe re n c e s p re v a ile d in the preceding 3 y e a r s .

13 About 80 percent of all financial reports were on a calendar-year basis. The remainder used a fiscal year.

14 As mentioned previously, participants had no equity or interest in these fund assets, except for those covered

by plans that made allocations to individual employee accounts.

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The yearend asset data generally reflected the results of different contribution rates and the impact of dissim ilar benefit experience. However, by

the end of 1963, many of the general trust fund plans and general funds with

contingent liability were near or had reached maximum financing levels. When

their maximum levels were attained, further asset increases were curtailed.

Many of the original SUB plans set maximums as a flat dollar amount

per employee, even though reductions w ere provided for if benefit experience

proved favorable. Subsequent amendments usually tied them m ore directly to

benefit experience. For example, for most current UAW plans, maximum funding

requirem ents are a multiple (usually 16 times) of the product of the average full

weekly benefit and the number of covered em ployees. The original steel plans

used the product of a specified number of cents (usually 10 cents) and the total

number of hours worked by covered employees during a given 12-month period.

This approach has been retained; greater flexibility, however, was achieved

by adding an alternative computation of 100 times the amount of benefits paid

during an average month. The le s s e r of the two determ ined the maximum

financing level.

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Appendix. Scope and M ethod o f Study

T h is stu d y a p p lie s to a ll e m p lo y e e b e n e fit p la n s p ro v id in g s u p p le m e n ta r y 

u n e m p lo y m e n t b e n e fits th a t a r e o n file w ith th e L a b o r D ep artm en t* s O ffice of L a b o r-M a n a g e m e n t an d W e lf a r e - P e n s io n R e p o rts (L M W P ). P u r s u a n t to th e W e lfa re an d P e n s io n P la n s D is c lo s u r e A c t (P L 8 5 -8 3 6 r e v is e d ) , a d m in is tr a to r s 

of p r iv a te p la n s w ith m o r e th a n 25 m e m b e r s a r e r e q u ir e d to f ile p la n d e s c r ip tio n s 

an d s u p p o rtin g d o c u m e n ts , a s w e ll a s a n n u a l f in a n c ia l r e p o r t s . A ra n d o m s a m p le 

w a s s e le c te d f ro m th o s e p la n s fo r w h ich I9 6 0 fin a n c ia l r e p o r ts w e r e file d . T he 

s e le c te d p la n s w e r e w e ig h te d a c c o rd in g to th e p r o b a b ility of th e ir s e le c tio n . It w a s n e c e s s a r y to u s e th e s a m e s a m p le f o r e v e r y y e a r , b e c a u s e m o r e c u r r e n t lis tin g s of p la n s p ro v id in g u n e m p lo y m e n t b e n e fits w e re n o t a v a ila b le .

U se of a fix e d s a m p le in tr o d u c e s a b ia s w h ich te n d s to u n d e r s ta te SUB 

g ro w th ; n e v e r th e le s s , o th e r u n p u b lis h e d B LS s ta t is ti c s an d in fo rm a tio n o b ta in e d 

f r o m v a r io u s s o u r c e s in d ic a te th a t a g g re g a te c o v e ra g e an d f in a n c ia l s ta t is ti c s h av e no t b e e n s u b s ta n tia lly in c r e a s e d b y new p la n s .

T he a n n u a l (D -2) r e p o r ts file d w ith L M W P g e n e r a lly c o v e re d a c a le n d a r 

y e a r ; h o w e v e r, ab o u t 20 p e r c e n t of th e r e p o r ts w e re fo r a f is c a l y e a r w h ich d iff e re d b y a m o n th o r m o r e f ro m th e c a le n d a r y e a r . A lth o u g h r e p o r tin g y e a r an d c a le n d a r y e a r d a ta o c c a s io n a lly v a r ie d s u b s ta n tia lly fo r so m e in d iv id u a l p la n s , 

i t w a s n o t p r a c ti c a l to r e q u e s t c a le n d a r - y e a r d a ta f ro m a ll of th e c o m p a n ie s 

in v o lv e d . F u r th e r m o r e , c a le n d a r e s tim a te s o r a v e r a g e s w o uld n o t be a p p r o p r ia te 

fo r u s e in a r a tio a n a ly s is . P la n d a ta w e re c o n s e q u e n tly a n a ly z e d a s r e p o r te d .

O p e ra tin g s ta t is ti c s g e n e r a lly r e f le c t v a r io u s in te r r e la tio n s h ip s b e tw e e n 

e c o n o m ic c o n d itio n s an d p la n o p e r a tio n s . 15 D ue to d iff e re n c e s in p e r tin e n t p la n 

p r o v is io n s an d v a r ia tio n s in im m e d ia te e c o n o m ic c o n d itio n s , e x p e rie n c e p a tte r n s a ls o d if f e r . In o r d e r to c o m p a re th e s e d iff e re n c e s w ith o u t r e g a r d to p e r f o rm a n c e 

in th e p re c e d in g y e a r , th e p e r c e n t b y w h ic h a n n u a l p a y m e n ts d e v ia te d f ro m th e ir 1960—63 m e a n w as d e te rm in e d on an in d iv id u a l p la n b a s is fo r c o n trib u tio n s an d 

b e n e f its . T h e ir a v e r a g e a n n u a l d e v ia tio n s d u rin g th e 4 - y e a r p e r io d w e re g ro u p e d fo r th is stu d y a s fo llo w s:

Stability group Percent deviation

Very stable--

Stable--------- Unstable------

Very unstable<

Less than 30

30 but less than 50 50 but less than 70 70 and over

D ata o b ta in e d f ro m D -2 r e p o r ts a r e n o t n e c e s s a r il y id e n tic a l to th o s e 

o b ta in e d f ro m tr a d e - u n io n an d in d u s tr y r e p o r ts , e v e n th o u g h th e r e p o r tin g y e a r 

is th e s a m e . D iffe re n t r e p o r tin g te c h n iq u e s m a y h av e b e e n u s e d . C o n trib u tio n s 

m a y h av e b e e n r e p o r te d on e ith e r a n in c u r r e d o r d a te - o f - d e p o s it b a s i s . D if f e r ­

e n c e s in th e r e p o r tin g of a c c r u e d m o n th ly b e n e fits p r o c e s s e d b u t n o t p a id c o u ld 

a ls o m a k e it d iffic u lt to r e c o n c ile b e n e fits . W ith r e s p e c t to c o v e ra g e , th e D -2 

c a lls fo r a r e p r e s e n ta tiv e f ig u re fo r th e y e a r — it m a y be an a v e r a g e o r c o v e ra g e 

a s of a s p e c ific d a te . D is s im ila r te c h n iq u e s m a y h av e b e e n u s e d in o th e r r e p o r ts .

15 Because its recent origin distorts the analysis of such relationships, data for the ILGWU plans are omitted from text tabulations of contribution and benefit stability and of plan resources per worker.

15

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Table 1. Contributions, Benefits, and Assets of SUB Plans, by Type of Funding, 1960-63

(In millions of dollars)

Funding provision

Contributions Benefits

1960 1961 1962 1963 1960 1961

All plans--------------------------------------- $119.6 $107.1 $157.5 $152.9 $91.3 $131.3

General fund---------------------------------------- $72.9 $48.2 $94.5 $88.2 $41.5 $72.2

Pooled fund------------------------------------------ 4.3 8.8 9. 1 8.8 1.2 4.4

General fund with contingent liability------ 37.3 46.3 49.9 51.4 45.3 50.7

Individual employee accounts----------------- 4.7 3. 3 3.7 4.4 3.1 3.5

Other-------------------------------------------------- (*) <n .1 (j) C1) . 1

Unfunded--------------------------------------------- (*) . i (M ( 1) 0 ) . 1

Information not available----------------------- .4 .4 . 1 .1 .1 .3

Benefits— ■ Continued Assets 2

1962 1963 I960 1961 1962 1963

All plans--------------------------------------- $104.6 $99.6 $339.9 $319.9 $386.3 $446.9

General fund--------------------------------------- $44.5 $40. 1 $265.1 $245. 6 $303. 4 $361.9

Pooled fund------------------------------------------ 6. 1 7.0 19.5 24.9 28.4 29.4

General fund with contingent liability----- 49.6 50.2 30.9 24.5 29. 1 27.8

Individual employee accounts----------------- 4.2 2.1 22.6 23.3 23.8 26.1

Other-------------------------------------------------- . 1 . 1 .5 .4 .4 .3

Unfunded--------------------------------------------- ( 0 (}> - - - -

Information not available----------------------- . 1 ( 1) 1 . 1 1.1 1.2 1.3

Less than $0.05 million.

2 Excludes contingent liability.

NOTE: Because of rounding, sums of individual items may not equal totals.

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Table 2. Contributions, Benefits, and Assets of SUB Plans, by Industry, 1960-63

fin millions of dollars!

Industry

Contributions Benefits

1960 1961 1962 1963 1960 1961

All industries--------------------------------- $119.6 $107. 1 $157.5 $152.9 $91. 3 $131.3

Manufacturing------------------------------------- $116. 1 $101.8 $152.5 $148.0 $89.2 $125.9

Rubber------------------------------------------- 4.3 3.7 3.7 2.3 1.9 4.0

Primary metals-------------------------------- 33.2 41.8 46.6 47.8 41.4 44.2

Ferrous-------------------------------------- 28.9 37. 1 43.0 44.9 37.6 38.5

Nonferrous--------------------------------- 4.3 4.8 3.5 2.9 3.7 5.7

Fabricated metal products------------------ 3.9 2. 1 3.0 3.6 3.8 3.3

Machinery, except electrical------------- 9.2 9.6 11.3 12.7 11.7 10.8

Electrical machinery------------------------ 1.9 1.0 4.7 1.9 2. 1 3.2

Transportation equipment------------------ 58.5 34.5 74. 1 70.6 25. 1 55.0

Apparel------------------------------------------ 1. 1 4.9 5.1 5.3 - 1.5

Other --------------------------------------------- 3.9 4.2 3.8 3.9 3. 1 3.9

Nonmanufacturing-------------------------------- 3.6 5.4 5.1 4.9 2. 1 5.4

Benefits—■ Continued Assets 1

1962 1963 1960 1961 1962 1963

All industries-------------------------------- $104.6 $99.6 $339.9 $319.9 $386. 3 $446.9

Manufacturing------------------------------------ $99.5 $93.5 $329.4 $309.1 $375.3 $437. 3

Rubber-------- ----------------------------------- 2.4 2.0 24.5 24.5 26.3 26.6

Primary metals----------- - -------------------- 46.3 45.7 27.8 23.3 27.6 26.0

Ferrous--------------------------------------- 43.7 42.5 24.6 21.0 24.4 23.0

Nonferrous---------------------------------- 2.6 3.2 3.2 2.3 3.3 3.0 Fabricated metal products------------------ 3.3 3.2 12.0 11. 1 11. 1 11.4

Machinery, except electrical------------- 9.6 5.6 42.7 42.0 45.0 55.7 Electrical machinery------------------------ 1.8 1.6 16.4 14.6 18.3 19.2

Transportation equipment------------ ------ 30.6 28.7 182.4 165. 3 214.8 263.9 Apparel------------------- ----------------------- 2.7 2.7 8. 1 12.7 15.7 18. 1 Other---------------- •----------- --------------- 2.9 4. 1 15.4 15.6 16.6 16.4

Nonmanufacturing--------------------------------- 5. 1 6.0 10.5 10.8 11.0 9.7

1

Excludes contingent liability.

NOTE: Because of rounding, sums of individual items may not equal totals.

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Table 3. Contributions, Benefits, and Assets of SUB Plans, by Union, 1960-63

(In millions of dollars)

Union

Contributions Benefits

1960 1961 1962 1963 1960 1961

All plans--------------------------------------- $119.6 $107. 1 $157.5 $152.9 $91.3 $131.3

Negotiated plans---------------------------------- $118.6 $106.1 $156.1 $151.9 $90.6 $130. 1

Auto workers------------------------------------ 65.8 42.4 83.8 81.6 34.3 64. 5

Rubber workers-------------------------------- 3. 1 2.9 3.0 1.9 1.6 3.3

Steel workers----------------------------- ------ 35.4 43.6 48. 1 51.3 43.1 46.6

Ladies’ garment workers--------------------- 1. 1 4.9 5. 1 5.3 - 1.5

Two unions or more-------------------------- 3.8 3.9 3. 1 .9 3.4 4.0

Other AFL-CIO unions----------------------- 7.3 6.8 11.4 8.2 6. 5 8.4

Independent unions---------------------------- 2. 1 1.6 1.7 2.7 1.6 1.8

Nonnegotiated plans----------------------------- 1. 1 1.0 1.4 1.0 .7 1.2

Benefits—Continue d Assets 1

1962 1963 1960 1961 1962 1963

All plans--------------------------------------- $104.6 $99.6 $339.9 $319.9 $386.3 $446.9

Negotiated plans---------------------------------- $100.7 $98.3 $334. 7 $314.8 $383.3 $443.4

Auto workers------------------------------------ 37. 1 33.5 225.7 207.5 261. 1 317,8 Rubber workers-------------------------------- 1.8 1.7 21.0 21.0 22.9 23.0

Steel workers------------------------------------ 47.0 48.8 28.7 23.6 28.6 27.7

Ladies' garment workers--------------------- 2.7 2.7 8.1 12.7 15.7 18. 1

Two unions or more-------------------------- 2.5 1.5 4.8 4.5 5.0 4.5 Other AFL-CIO unions----------------------- 7. 2 8.4 38.3 37.8 43.3 45.7 Independent unions---------------------------- 2.5 1.6 8. 1 7.7 6.8 6.5 Nonnegotiated plans----------------------------- 3.9 1.3 5.2 5. 1 3.0 3.6

1

Excludes contingent liability.

NOTE: Because of rounding, sums of individual items may not equal totals.

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T able 4. Average Y early Expenses Charged to SUB Funds on a Per Em ployee Basis,

by Type o f Expenses Paid, 1960-63

J^Wjorkers^ii^thousandsJ^

Expenses paid and group size

Range of charges per employee

Total None Less than $1 $1 but less than $3

Plans Workers Plans Workers Plans Workers Plans Workers

All plans------------------------------ 704 1,890 108 204 243 789 166 703

No administrative expense --------------- 108 204 108 204 _ _ _ _

4, 000 workers or m ore---------------- 5 171 5 171 - - - -

Less than 4, 000 workers--------------- 103 32 103 32 - - - -

Trustee only----------------------------------- 318 463 - - 178 413 55 37 4,000 workers or m ore---------------- 22 260 - - 21 251 1 9

Less than 4, 000 workers--------------- 296 202 - - 157 162 54 28

Trustee and audit--------------------------- 6 10 - - - - 5 5 4, 000 workers or m ore---------------- 1 5 - - - - - -

Less than 4, 000 workers-------------- 5 5 - - - - 5 5

Trustee, audit, and salaries------------- 218 1,085 - - 31 284 98 629 4,000 workers or more------------------ 32 972 - - 8 265 12 575 Less than 4, 000 workers-------------- 186 113 - - 23 18 86 54 Other administrative------------------------ 25 66 - - 7 34 6 27 4, 000 workers or m ore---------------- 3 55 - - 2 31 1 24

Less than 4, 000 workers--------------- 22 11 - - 5 3 5 3

Not classified 1------------------------------ 29 63 - - 27 58 2 5 4, 000 workers or m ore---------------- 3 31 - - 3 31 - -

Less than 4, 000 workers--------------- 26 32 - - 24 27 2 5

$3 but $5 but less than less than $7 and over $5 $7

All plans--------------------------------- 87 84 52 42 48 69

No administrative expense -----------------

. . . .

4, 000 workers or m ore------------------- - - - - - -

Less than 4, 000 workers----------------- - - - - - -

Trustee only------------------------------------- 45 10 20 2 20 1

4, 000 workers or m ore------------------- - - - - - -

Less than 4, 000 workers----------------- 45 10 20 2 20 1

Trustee and audit----------------------------- - - 1 5 - -

4, 000 workers or m ore------------------- - - 1 5 - -

Less than 4, 000 workers------------------- - - - - - -

Trustee, audit, and salaries---------------- 30 68 31 35 28 68

4, 000 workers or m ore------------------- 6 52 2 18 4 60 Less than 4, 000 workers----------------- 24 16 29 16 24 8

Other administrative ------------------------- 12 5 - - - -

4, 000 workers or m ore------------------- - - - - - -

Less than 4, 000 workers----------------- 12 5 - - - -

Not classified 1 --------------------------------- - - - - - -

4, 000 workers or m ore------------------- - - - - - -

Less than 4, 000 workers----------------- - - ~

* Plans lack in g consistency in the type o f expenses charged to the fund.

NOTE: Because o f rounding, sums o f individual totals m ay not equal totals.

U.S. GOVERNMENT PRINTING OFFICE : 1966 0 - 217-204

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