PRIVATE

W. Willard Wirtz, Secretary

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BUREAU OF LABOR STATISTICS 

Arthur M. Ross, Commissioner

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Federal Reserve Bank of St. Louis
Bulletin No. 1485

June 1966

PRIVATE

PENSION

PLAN

BENEFITS

UNITED STATES DEPARTMENT OF LABOR

W. Willard Wirtz, Secretary

BUREAU OF LABOR STATISTICS

Arthur M. Ross, Commissioner

r s i

NfJ

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Federal Reserve Bank of St. Louis
Preface

T h is b u lle tin c o n c lu d e s a s e r i e s of s tu d ie s p r e p a r e d by th e B u re a u of L a b o r S ta tis tic s d e s c r ib in g th e p r iv a te p e n s io n p la n s of U .S . in d u s try a s a W hole, th e f i r s t su c h u n d e rta k in g s in c e p r iv a te p e n s io n p la n s b e c a m e a s ig n ific a n t f e a tu r e of th e A m e r ic a n e co n o m y and of e m p lo y e e w e lfa r e . T he p r e s e n t stu d y d e a ls p r im a r ily w ith th e ty p e s and le v e ls of b e n e fits a v a ila b le fo r n o r m a l, d is a b ility , and e a r ly r e tir e m e n t. A lso c o v e re d a r e v e s tin g p r o v is io n s , s u p p le m e n ta ry p e n s io n 

p la n s , and d e a th b e n e fits .

V e s tin g , e a r ly r e tir e m e n t, and p o r ta b ility p r o v is io n s , and th e ir im p lic a ­ tio n s fo r la b o r m o b ility w e re a n a ly z e d in L a b o r M o b ility and P r i v a te P e n s io n P la n s (BLS B u lle tin 1407, 1964). A s p e c ia l stu d y a p p e a rin g in th e v o lu m e of r e s e a r c h m a te r ia ls a c c o m p a n y in g th e Ju n e 1965 r e p o r t of th e S e c r e ta r y of L a b o r 

to th e C o n g re s s , e n title d "T h e O ld e r A m e r ic a n W o rk e r: A ge D is c rim in a tio n in

E m p lo y m e n t," in c lu d e d a g g re g a te d a ta on n o rm a l r e tir e m e n t b e n e fit f o r m u la s , 

in v o lu n ta ry r e tir e m e n t p r o v is io n s , s e r v ic e c re d itin g a f te r n o rm a l r e tir e m e n t a g e , 

and m a x im u m p a r tic ip a tio n ag e p r o v is io n s .

T he p la n s a n a ly z e d fo r th is stu d y w e re th o s e in e ffe c t d u rin g th e w in te r 

1962—63. T he c h a n g e s in p la n s n e g o tia te d in m a jo r in d u s tr i e s , p a r ti c u la r ly a u to ­

m o b ile s and b a s ic s te e l , in 1964 and 1965, w e re of su c h an o r d e r a s to m o d ify 

s ig n ific a n tly m u c h of th e d a ta p r e s e n te d in th is stu d y . In a d d itio n , im p o rta n t 

c h a n g e s in o ld - a g e , s u r v i v o r s , and d is a b ility in s u r a n c e b e n e fits w e re e n a c te d in 

1965. T h e s e c h a n g e s co u ld n o t be in c o r p o ra te d in th is stu d y . T he e x p e c te d in te r a c tio n and s p r e a d of th e s e c h a n g e s d u rin g th e n e x t few y e a r s is lik e ly to 

a lt e r m a rk e d ly th e sh a p e of th e p r iv a te p e n s io n s y s te m as a w h o le. T h is stu d y , 

th e n , s e r v e s a s a b e n c h m a rk a g a in s t w h ich th e s e c h a n g e s c a n be m e a s u r e d . T he 

d ig e s ts of s e le c te d p e n s io n p la n s is s u e d by th e B u re a u of L a b o r S ta tis tic s a t 

2 - o r 3 - y e a r in te r v a ls p ro v id e c u r r e n t in fo rm a tio n on th e f e a tu r e s of m a jo r p la n s .

T h a t th e B u re a u of L a b o r S ta tis tic s h ad th e fin a n c ia l r e s o u r c e s to a n a ly z e 

th e p r iv a te p e n s io n s y s te m a s a w h o le , th ro u g h th is b u lle tin and th e p re v io u s 

r e p o r ts m e n tio n e d a b o v e , w as to a la r g e e x te n t f o rtu ito u s . T he M an p o w er D e ­

v e lo p m e n t an d T ra in in g A c t of 1962 c a lle d upon th e U .S . D e p a rtm e n t of L a b o r to stu d y th e m o b ility im p lic a tio n s of p e n s io n p la n s , and fund s w e re a d v a n c e d to th e B u re a u of L a b o r S ta t is tic s , by th e D e p a r t m e n ts O ffice of M a n p o w e r, A u to ­ m a tio n an d T ra in in g , to u n d e rta k e th is stu d y . T he i n t e r e s t of th e U .S . D e p a r t­ m e n t o f H e a lth , E d u c a tio n , and W e lfa re in d is a b ility r e tir e m e n t p r o v is io n s le d to 

its s u p p o rt of a c o m p re h e n s iv e stu d y by th e B u re a u of th is f e a tu r e of p r iv a te p e n s io n p la n s . U n d e r s e c tio n 715 of th e C iv il R ig h ts A c t of 1964, th e C o n g re s s d ir e c te d th e S e c r e t a r y o f L a b o r to stu d y " th e f a c to r s w h ich m ig h t ten d to r e s u lt in d is c r im in a tio n in e m p lo y m e n t b e c a u s e of a g e ," and p a r t of th e fund s a llo c a te d by th e C o n g re s s fo r th is stu d y s u p p o rte d th e B u re a u in its stu d y of th o s e e l e ­ m e n ts in p e n s io n p la n s th a t c o n trib u te d to th e p r o b le m s of ag in g w o r k e r s . By 

ad d in g its ow n lim ite d r e s o u r c e s to th o s e of o th e r a g e n c ie s in te r e s te d in p e n s io n p la n s , th e B u re a u w a s a b le to c o m p le te th e p ic tu r e in th is b u lle tin .

T he B u re a u is a ls o g r a te f u l fo r th e c o o p e ra tio n of th e 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 r ts , w h ich is r e s p o n s ib le fo r th e D e p a r tm e n t s file of p e n s io n p la n d o c u m e n ts .

T h is stu d y w as u n d e rta k e n in th e B u r e a u ’s D iv isio n of I n d u s tr ia l and L a b o r 

R e la tio n s , J o s e p h W. B lo c h , C h ief, u n d e r th e g e n e r a l d ir e c tio n of L . R. L in s e n - 

m a y e r , A s s is ta n t C o m m is s io n e r, O ffice of W ages and I n d u s tr ia l R e la tio n s . T h is 

b u lle tin w as p r e p a r e d by W a lte r W. K o lo d ru b e tz , D o n ald J . S ta a ts , and S ta n le y S. 

S a c k s u n d e r th e s u p e r v is io n of D o nald M . L an d a y .

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Contents

P age

C h a p te r I. I n tr o d u c tio n--------------------------------------------------------------------------------------- 1 S cope an d m e th o d -------------------------------------------------------------------------------------------- 1

C h a p te r II. N o rm a l r e tir e m e n t -------------------------------------------------------------------------- 5 R e q u ire m e n ts fo r p la n p a r t i c i p a t i o n -------------------------------------------------------------- 5 A ge an d s e r v ic e r e q u ir e m e n ts fo r p a r ti c ip a t io n-------------------------------------- 6 C re d itin g p r e p a r tic ip a tio n s e r v i c e ------------------------------------------------------------ 7 M in im u m r e q u ir e m e n ts fo r n o rm a l r e t i r e m e n t --------------------------------------------- 7

N o rm a l r e tir e m e n t b e n e fit f o r m u la s-------------------------------------------------------------- 7 T y p es of b e n e fit f o r m u la s --------------------------------------------------------------------------- 8 M in im u m b e n e fit f o r m u la s------------------------------------------------------------------------- 9 P a s t s e r v ic e b e n e fit f o r m u l a s ------------------------------------------------------------------- 9

A d ju stm e n t of p r iv a te p la n b e n e fits to s o c ia l s e c u r ity b e n e f i t s _________ 10

L e v e l of b e n e f i ts ----------------------------------------------------------------------------------------------- 10

A s s u m p tio n s ------------------------------------------------------------------------------------------------ 11

A ll p la n s ------------------------------------------------------------------------------------------------------- 12 C o m b in ed b e n e f i ts --------------------------------------------------------------------------------------- 13

M ethod o f f in a n c in g ------------------------------------------------------------------------------------- 14

T ype of e m p lo y e r u n it -------------------------------------------------------------------------------- 15

C o lle c tiv e b a r g a in in g ---------------------------------------------------------------------------------- 16

T ype of w o rk e r c o v e r e d ----------------------------------------------------------------------------- 17

I n d u s t r y---------------------------------------------------------------------------- 18

C h a p te r III. D is a b ility r e tir e m e n t -------------------------------------------------------------------- 33

P r e v a le n c e of d is a b ility r e tir e m e n t p r o v i s i o n ---------------------------------------------- 34

M in im u m r e q u ir e m e n ts fo r d is a b ility r e t i r e m e n t----------------------------------------- 36 D e fin itio n of d i s a b i l i t y -------------------------------------------------------------------------------- 36

Age an d s e r v ic e r e q u i r e m e n ts------------------------------------------------------------------- 38 W aitin g p e r i o d ---------------------------------------------------------------------------------------------- 39 D is a b ility r e tir e m e n t b e n e fit f o r m u la s---------------------------------------------------------- 40

In te g ra tio n w ith s o c ia l s e c u r ity and w o rk m e n 's c o m p e n s a tio n b e n e f i ts ------------------------------------------------------------------------------------ 40 A d m in is tra tiv e p r o c e d u r e s ----------------------------------------------------------------------------- 42 L e v e ls o f d is a b ility b e n e f i ts__________________________________________________ 43 W o rk e rs q u a lifie d fo r p r iv a te p la n b e n e fit and s o c ia l s e c u r ity b e n e f i t ----------------------------------------------------------------------------------------- 44 W o rk e rs q u a lifie d fo r p r iv a te p la n b e n e fits o n l y------------------------------------- 47 M etho d of f in a n c in g ------------------------------------------------------------------------------------- 50 T ype o f e m p lo y e r u n it--------------------------------------------------------------------------------- 51 C o lle c tiv e b a r g a in in g ---------------------------------------------------------------------------------- 52 T y p es of w o rk e rs c o v e r e d -------------------------------------------------------------------------- 53 I n d u s t r y -------------------------------------------------------------------------------------------------------- 54

C h a p te r IV. E a r ly r e t i r e m e n t ---------------------------------------------------------------------------- 67 P r e v a le n c e of e a r ly r e tir e m e n t p r o v is io n and

m in im u m r e q u i r e m e n ts --------------------------------------------------------------------------------- 67

B e n e fits p a y a b le u n d e r e a r ly r e t i r e m e n t ------------------------------------------------------- 68

L e v e l of b e n e fits ---------------------------------------------------------------------------------------------- 7 0

S o c ia l s e c u r ity a d ju s tm e n t o p tio n------------------------------------------------------------------- 75

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C h a p te r V. O th e r f e a t u r e s---------------------------------------------------------------------------------- 85 V e ste d b e n e f i ts -------------------------------------------------------------------------------------------------- 85 C o m b in a tio n s of m a jo r b e n e fit p r o v is io n s----------------------------------------------------- 88

P r e v a le n c e of m a jo r b e n e fit p r o v is io n s---------------------------------------------------- 88

S u p p le m e n ta ry p l a n s ----------------------------------------------------------------------------------------- 91 B e n e fits p a y a b le u n d e r s u p p le m e n ta ry p l a n s ------------------------------------------- 92 D ea th b e n e f i t s --------------------------------------------------------------------------------------------------- 92

C h a rts :

1. P e n s io n b e n e fits fo r w o rk e rs e a rn in g $ 3 , 600 a n n u a lly w ith

20 and 30 y e a r s of s e r v i c e ---------------------------------------------------------------------- 22

2. P e n s io n b e n e fits f o r w o rk e rs e a rn in g $ 4 ,8 0 0 a n n u a lly w ith

20 and 30 y e a r s of s e r v i c e ---------------------------------------------------------------------- 23 3. P e n s io n b e n e fits f o r w o rk e rs e a rn in g $ 6 , 000 a n n u a lly w ith

20 and 30 y e a r s of s e r v i c e ---------------------------------------------------------------------- 24

4. P e n s io n b e n e fits fo r w o rk e rs e a rn in g $ 8 ,4 0 0 a n n u a lly w ith

20 an d 30 y e a r s of s e r v i c e ---------------------------------------------------------------------- 25 5. M onthly n o rm a l r e tir e m e n t b e n e fits , by s e le c te d a s s u m e d an n u a l

e a r n in g s le v e ls and s e r v ic e p e r io d s , w in te r 1962—6 3-------------------------- 26

6 . M onthly d is a b ility r e tir e m e n t b e n e fits f o r w o r k e r s e lig ib le fo r s o c ia l s e c u r ity d is a b ility b e n e fits , by s e le c te d a s s u m e d a n n u a l e a r n in g s le v e ls and s e r v ic e p e r io d s , w in te r 1962—6 3-------------------------- 45

7. M onthly d is a b ility r e tir e m e n t b e n e fits fo r w o r k e r s in e lig ib le fo r s o c ia l s e c u r ity d is a b ility b e n e fits , by s e le c te d a s s u m e d an n u a l 

e a r n in g s le v e ls and s e r v ic e p e r io d s , w in te r 1962—6 3-------------------------- 49

8 . M onthly e a r ly r e tir e m e n t b e n e fits fo r w o rk e rs r e tir in g a t age 60, by s e le c te d a s s u m e d an n u a l e a rn in g s le v e ls and

s e r v ic e p e r io d s , w in te r 1962—6 3 ------------------------------------------------------------ 71 9. M onthly e a r ly r e tir e m e n t b e n e fits fo r w o rk e rs r e tir in g a t age 55, b y s e le c te d a s s u m e d a n n u a l e a rn in g s le v e ls and s e r v ic e p e r io d s , w in te r 1962—6 3 ------------------------------------------------------------ 72 10. M onthly v e s tin g b e n e fits , by s e le c te d a s s u m e d a n n u a l e a rn in g s le v e ls and s e r v ic e p e r io d s , w in te r 1962—63 ----------------------------------------- 87

T a b le s :

1. D is trib u tio n of p r iv a te p e n s io n p la n s by in d u s try an d ty p e of e m p lo y e r u n it, w in te r 1962—6 3 __________________________________________ 3

2. D is trib u tio n of p r iv a te p e n s io n p la n s b y in d u s tr y and c o lle c tiv e

b a rg a in in g s ta tu s , w in te r 1962—6 3--------------------------------------------------------- 3

3. P ro v is io n s fo r p a r tic ip a tio n r e q u ir e m e n ts in p r iv a te p e n s io n p la n s by ty p e of e m p lo y e r u n it, m e th o d of fin a n c in g , an d c o lle c tiv e 

b a rg a in in g s ta tu s , w in te r 1962—6 3--------------------------------------------------------- 27

4. P r o v is io n s fo r p a r tic ip a tio n r e q u ir e m e n ts in p r iv a te p e n s io n p la n s

by in d u s try , w in te r 1962—6 3------------------------------------------------------------------- 27

5. M in im u m a g e and s e r v ic e r e q u ir e m e n ts fo r p a r tic ip a tio n in

p r iv a te p e n s io n p la n s , w in te r 1962—63 -------------------------------------- ----------- 28

6 . C re d itin g of p r e p a r tic ip a tio n s e r v ic e fo r n o rm a l b e n e fit c o m ­

p u ta tio n an d f o r s e r v ic e q u a lific a tio n fo r b e n e fits in p r iv a te

p e n sio n p la n s , by m e th o d of fin a n c in g , w in te r 1962—63 ____ ____-_____ 28

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T a b le s— C o n tin u ed

7. M in im u m ag e and s e r v ic e r e q u ir e m e n ts fo r n o rm a l r e tir e m e n t

in p r iv a te p e n s io n p la n s , w in te r 1962—63 ------------------------------------------ 29

8 . M in im u m ag e r e q u ir e m e n ts fo r n o rm a l r e tir e m e n t in p r iv a te

p e n s io n p la n s , by in d u s try , w in te r 1962—63 -------------------------------------- 29 9. E a rn in g s b a s e u tiliz e d in e a rn in g s f o rm u la s in p r iv a te p e n s io n

p la n s , by in d u s try , w in te r 1962—63 --------------------------------------------------- 30 10. M o nthly p r iv a te p e n s io n p la n n o r m a l r e tir e m e n t b e n e fits by s e le c te d a s s u m e d a n n u a l e a r n in g s le v e ls an d s e r v ic e p e r io d s , w in te r 1962—63 ---------------------------------------------------------------------- 30 11. D is a b ility r e tir e m e n t p r o v is io n s in p r iv a te p e n s io n p la n s by ty p e of e m p lo y e r u n it, m e th o d of fin a n c in g , and c o lle c tiv e

b a rg a in in g s ta tu s , w in te r 1962—63 ------------------------------------------------------ 56

12. D is a b ility r e tir e m e n t p r o v is io n s in p r iv a te p e n s io n p la n s by

in d u s try , w in te r 1962—63 --------------------------------------------------------------------- 56 13. D is a b ility r e tir e m e n t p r o v is io n s in p r iv a te p e n s io n p la n s by n u m b e r of a c tiv e w o rk e rs c o v e re d , w in te r 1962—63 ------------------------- 57 14. M in im u m age and s e r v ic e r e q u ir e m e n ts fo r d is a b ility r e tir e m e n t

in p r iv a te p e n s io n p la n s , w in te r 1962—63 ------------------------------------------ 57 15. W aiting p e r io d f o r d is a b iltiy r e tir e m e n t b e n e fits in p r iv a te

p e n s io n p la n s by in d u s try , w in te r 1962—63 ---------------------------------------- 58 16. P r o v is io n s f o r d e d u c tio n of s o c ia l s e c u r ity d is a b ility b e n e fits and w o rk m e n 's c o m p e n s a tio n b e n e fits fro m p r iv a te p e n s io n p la n d is a b ility b e n e fits , b y in d u s try ,

w in te r 1962—63 ------------------------------------------------------------------------------------- 59 17. M onthly p r iv a te p e n s io n p la n d is a b ility r e tir e m e n t b e n e fits fo r w o rk e rs e lig ib le f o r s o c ia l s e c u r ity d is a b ility b e n e fits , by s e le c te d a s s u m e d a n n u a l e a rn in g s le v e ls and s e r v ic e p e r io d s ,

w in te r 1962—63 -------------------------------------------------------------------------------------- 60 18. M onthly p r iv a te p e n s io n p la n d is a b ility r e tir e m e n t b e n e fits f o r

w o rk e rs in e lig ib le f o r s o c ia l s e c u r ity d is a b ility b e n e fits , by s e le c te d a s s u m e d a n n u a l e a rn in g s le v e ls and s e r v ic e

p e r io d s , w in te r 1962—63 ---------------------------------------------------------------------- 62

19. M ed ian m o n th ly p r iv a te p e n s io n p la n d is a b ility b e n e fits f o r w o r k e r s e lig ib le f o r s o c ia l s e c u r ity d is a b ility b e n e fits , a t s e le c te d a s s u m e d an n u a l e a rn in g s le v e ls and s e r v ic e p e r io d s , by in d u s try , w in te r 1962—6 3 ----------------------------------------------------------------- 65 20. M ed ian m o n th ly p r iv a te p e n s io n p la n d is a b ility b e n e fits fo r w o rk e rs in e lig ib le fo r s o c ia l s e c u r ity d is a b ility b e n e fits , a t s e le c te d a s s u m e d an n u a l e a r n in g s le v e ls and s e r v ic e p e r io d s , by in d u s try , w in te r 1962—63 ---------------------------------------------------------------- 65 21. E a r ly r e tir e m e n t p r o v is io n s in p r iv a te p e n s io n p la n s by

in d u s try , w in te r 1962—6 3 --------------------------------------------------------------------- 78 22. M in im u m age and s e r v ic e r e q u ire m e n ts fo r e a r ly r e tir e m e n t

in p r iv a te p e n s io n p ia n o , w in te r 1962—63 ____________________________ 78 23. T im e of b e n e fit p a y m e n t io r e a r ly r e tir e m e n t in p r iv a te p e n s io n p la n s b y ty p e of e m p lo y e r u n it, m e th o d of fin a n c in g , and

c o lle c tiv e b a rg a in in g s ta tu s , w in te r 1962—63 ------------------------------------ 79

24. T im e of b e n e fit p a y m e n t fo r e a r ly r e tir e m e n t in p r iv a te p e n s io n p la n s by in d u s try , w in te r 1962—6 3 ----------------------------------------- 79

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T ab le s— C o ntinu e d

25. M o nthly p r iv a te p e n s io n p la n e a r ly r e tir e m e n t b e n e fits f o r w o r k e r s r e tir in g a t ag e 60 by s e le c te d a s s u m e d a n n u a l e a r n in g s le v e ls and s e r v ic e p e r io d s , w in te r 1962—63 _________________________ 80 26. M o nthly p r iv a te p e n s io n p la n e a r ly r e tir e m e n t b e n e fits fo r w o r k e r s r e tir in g a t age 55 by s e le c te d a s s u m e d a n n u a l

e a rn in g s le v e ls and s e r v ic e p e r io d s , w in te r 1962—6 3----------------------- 82 27. P r o v is io n s f o r m a jo r s u p p le m e n ta l b e n e fits in p r iv a te p e n s io n p la n s b y ty p e of e m p lo y e r u n it, m e th o d of fin a n c in g , and

c o lle c tiv e b a rg a in in g s ta tu s , w in te r 1962—6 3------------------------------------- 95 28. P r o v is io n s f o r m a jo r s u p p le m e n ta l b e n e fits in p r iv a te p e n s io n

p la n s , by n u m b e r of a c tiv e w o r k e r s c o v e re d , w in te r 1962—63 _____ 96

29. P r o v is io n s f o r m a jo r s u p p le m e n ta l b e n e fits in p r iv a te p e n s io n p la n s b y ty p e of w o r k e r s c o v e re d , w in te r 1962—63 __________________ 96

30. P r o v is io n s f o r m a jo r s u p p le m e n ta l b e n e fits in p r iv a te p e n s io n

p la n s b y in d u s try , w in te r 1962—6 3 ------------------------------------------------------- 97 31. D ea th b e n e fit p r o v is io n s in p r iv a te p e n s io n p la n s by ty p e of e m p lo y e r u n it, m e th o d of fin a n c in g , and c o lle c tiv e b a rg a in in g

s ta tu s , w in te r 1962—6 3 -------------------------------------------------------------------------- 98 32. D ea th b e n e fit p r o v is io n s in p r iv a te p e n s io n p la n s by in d u s try ,

w in te r 1962—63 -------------------------------------------------------------------------------------- 98

A p p e n d ix e s:

A. S cope an d m e th o d of s u r v e y -------------------------------------------------------------------- 99

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Private Pension Plan Benefits

Chapter I. Introduction

A u n iv e r s a l p u b lic r e tir e m e n t s y s te m c a n n o t ta k e in to a c c o u n t a ll th e i m ­ p o r ta n t d iff e re n c e s am o n g w o r k e r s , o c c u p a tio n s , a n d in d u s tr ie s . T h is is one of th e r e a s o n s a v a r ie ty of m e th o d s of co m p u tin g a n d p ro v id in g r e t ir e m e n t b e n e ­ fits, h a s b e e n d e v e lo p e d in p r iv a te p e n s io n p la n s th a t su p p le m e n t th e o ld - a g e , s u r v iv o r s , a n d d is a b ility ( h e r e a f te r r e f e r r e d to a s s o c ia l s e c u rity ) p r o g r a m . A n o v e rw h e lm in g n u m b e r of p r iv a te p la n s r e f le c t, in th e ir p la n n in g , th e e x p e c ta ­

tio n th a t th e ir b e n e f ic ia r ie s w ill r e c e iv e s o c ia l s e c u r ity b e n e fits .

A v iew of th e p r iv a te p e n sio n s y s te m a s a w hole r e v e a ls a s p e c ts no t a p ­

p a r e n t a t c lo s e r q u a r t e r . A s th is stu d y sh o w s, th e g r e a t e r p a r t of th e r e t i r e ­ m e n t in c o m e of m o s t w o r k e r s c o v e re d by p r iv a te p la n s in e ffe c t d u rin g th e e a r ly 

1960*s w as to be p a id by s o c ia l s e c u r ity . O nly f o r w o r k e r s w ith h ig h e a rn in g s an d long s e r v ic e d id p r iv a te p la n b e n e fit a m o u n ts co m m o n ly b e g in to a p p ro a c h th e e x p e c te d s o c ia l s e c u r ity p a y m e n ts . O v e ra ll, h o w e v e r, p o te n tia l p r iv a te 

p la n b e n e fits in r e la tio n to p r e r e t i r e m e n t e a r n in g s le v e l e x h ib ite d one b a s ic c h a r a c te r is t ic o f th e s o c ia l s e c u r ity s y s te m in fa v o rin g lo w e r p a id w o r k e r s . 

A c c o rd in g ly , w h en p u b lic an d p r iv a te b e n e fits w e re c o m b in e d , th is te n d e n c y w as a c c e n tu a te d .

C h a p te r 2 of th is b u lle tin d e s c r ib e s th e m a jo r c h a r a c te r is t ic s of n o rm a l r e tir e m e n t p r o v is io n s a n d le v e ls of n o r m a l r e tir e m e n t b e n e fits . O th e r a s p e c ts 

of n o r m a l r e tir e m e n t d e a lt w ith in th is c h a p te r in c lu d e r e q u ir e m e n ts fo r p la n p a r tic ip a tio n , b e n e fit f o rm u la s an d r e q u ir e m e n ts fo r r e c e ip t of b e n e fits . 1 D is a ­ b ility r e tir e m e n t p r o v is io n s , in clu d in g m in im u m ag e an d s e r v ic e r e q u ir e m e n ts a n d o th e r e le m e n ts of th e b e n e fit p r o v is io n , a r e a n a ly z e d in d e ta il in c h a p te r 3; d is a b ility b e n e fit a m o u n ts u n d e r c e r ta in a s s u m e d c o n d itio n s w e r e c o m p u te d . C h ap ­ t e r 4 in c lu d e s b e n e fits c o m p u ta tio n s fo r h y p o th e tic a l c a s e s of e a r ly r e tir e m e n t. 2 

F in a lly , c h a p te r 5 s u m m a r iz e s d a ta on th e le v e ls o f v e s te d b e n e fits , p r o v id e s a n o v e r a ll v iew of th e p r e v a le n c e of m a jo r ty p e s of r e tir e m e n t b e n e fits , an d a n a ly z e s 

s u p p le m e n ta l p la n s a n d d e a th b e n e fits .

S co p e a n d M eth o d

A p r iv a te p e n s io n p la n , a s d e fin e d f o r th is stu d y , is a p la n e s ta b lis h e d by a n e m p lo y e r , u n io n , o r b o th , th a t p ro v id e s a c a s h in c o m e f o r life fo r q u a lifie d r e t i r e d w o r k e r s . T h is d e fin itio n in c lu d e d p la n s in tro d u c e d u n ila te r a lly by e m ­ p lo y e r s , jo in tly by e m p lo y e rs an d e m p lo y e e s , o r u n ila te r a lly by o rg a n iz e d e m ­ p lo y e e g ro u p s . A ll p r o f it- s h a r in g , s to c k b o n u s, a n d sa v in g s p la n s , in c lu d in g th o s e p ay in g out a m o u n ts a t o r a f te r a w o r k e r 1 s r e tir e m e n t, w e re e x c lu d e d b e ­ c a u s e m o s t su c h p la n s do n o t p ro v id e life tim e r e tir e m e n t b e n e fits a n d , f u r t h e r ,

1 The implications of benefit formulas and of requirements for normal retirement for employment of older workers are examined in The Older American Worker: Age Discrimination in Employment (Report of the Secretary of Labor

to the Congress under Section 715 of the Civil Rights Act of 1964), June 1965. 2 A previous study, Labor Mobility and Private Pension Plans (BLS Bulletin 1407, 1964), concentrated on the

vesting and early retirement provisions of pension plans.

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th e a m o u n ts of th e b e n e fits p a y a b le by th o se th a t do a r e n o t d e fin ite ly a s c e r ­ ta in a b le in a d v a n c e . 3 P la n s of g o v e rn m e n t a n d n o n p ro fit o r g a n iz a tio n s (o th e r th a n un io n s) w e re a ls o e x c lu d e d f ro m th e sc o p e of th is stu d y , a s w e re v e r y s m a ll p r iv a te p la n s w ith fe w e r th a n 26 p a r tic ip a n ts .

T he c h ie f s o u rc e of d a ta fo r th is stu d y w as th e r e p o r ts file d w ith th e U .S . D e p a rtm e n t o f L a b o r s O ffice of L a b o r-M a n a g e m e n t a n d W e lf a r e - P e n s io n R e p o r ts , 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. By th e en d of I9 6 0 , f in a n c ia l r e p o r ts (D -2 fo rm s ) h a d b e e n file d fo r o v e r 2 5 ,0 0 0 p r iv a te p la n s p ro v id in g r e tir e m e n t b e n e fits . T he p la n d e s c r ip tio n s ( D - 1 fo rm s ) an d s u p ­

p o rtin g d o c u m e n ts file d fo r th e s e p la n s w e r e th e b a s is fo r th is stu d y .

T o re d u c e th e s e 25, 000 r e p o r ts to a m o r e m a n a g e a b le n u m b e r fo r a n a ly s is , a ra n d o m s a m p le s tr a tif ie d by in d u s try an d s iz e of p la n (n u m b e r of a c tiv e w o rk ­ e r s c o v e re d ) w a s s e le c te d . T he s a m p le w as d e s ig n e d to p e r m it p r e s e n ta tio n of d a ta by in d u s try d iv isio n , an d in so m e c a s e s , by m a jo r in d u s try g ro u p . W ith in e a c h in d u s tr y - s iz e g ro u p in g , th e s a m p le w as s e le c te d to y ie ld th e m o s t r e lia b le 

r e s u l t s . T h is w as done by in clu d in g in th e s a m p le a h ig h e r p r o p o r tio n of la r g e p la n s th a n of s m a ll. D ata fo r e a c h s a m p le r e p o r t w e re w e ig h te d in a c c o rd a n c e 

w ith its p ro b a b ility of s e le c tio n so th a t th e ta b le s sho w e s tim a te s fo r a ll p r iv a te p e n s io n p la n s w ith fin a n c ia l r e p o r ts on file fo r I 9 6 0 .4

T he p e n sio n p la n s s tu d ie d w e re lim ite d to th o se fo r w h ich fin a n c ia l r e p o r ts w e re s u b m itte d fo r I960. C o v e ra g e d a ta , h o w e v e r, w e re o b ta in e d f ro m th e r e ­

p o r ts fo r 1961. T he p la n p r o v is io n s a n a ly z e d w e re th o s e in e ffe c t in th e w in te r of 1962—63 a n d w e re c o n s id e re d c u r r e n t a t th a t tim e . (See ap p en d ix A . )

F in a n c ia l r e p o r ts fo r a b o u t 1 6 ,0 0 0 p r iv a te p e n s io n p la n s , 5 a s d e fin e d fo r th is stu d y , w e re file d w ith th e U .S . D e p a rtm e n t of L a b o r fo r I960. O v e r 60 p e r ­

c e n t of th e w o rk e rs in v o lv e d w e re m e m b e r s of p la n s a p p ly in g to 5, 000 w o rk ­ e r s o r m o r e . A lto g e th e r, th e 15 la r g e s t p la n s , e a c h w ith o v e r 1 0 0,0 00 a c tiv e 

w o r k e r s , h ad o v e r a s ix th of th e c o v e ra g e . O v e r 60 p e r c e n t of th e p la n s h a d fe w e r th a n 200 a c tiv e m e m b e r s , b u t a c c o u n te d fo r le s s th a n 5 p e r c e n t of th e to ta l c o v e ra g e .

A b o u t 60 p e r c e n t of th e p la n s an d w o r k e r s w e re in m a n u fa c tu rin g in d u s ­ t r i e s , a p p ro x im a te ly 40 p e r c e n t in n o n m a n u fa c tu rin g in d u s tr ie s (ta b le 1). In g e n e r a l, m u ltie m p lo y e r p la n s p re d o m in a te d in in d u s tr ie s m a rk e d by m u ltie m ­ p lo y e r b a rg a in in g p a tte r n s , su c h a s th e c o n s tr u c tio n , m in in g , w h o le sa le tr a d e , an d m o to r tr a n s p o r ta tio n in d u s tr ie s .

E m p lo y e rs fin a n c e d th e e n tir e c o s t of r e tir e m e n t b e n e fits in a b o u t 3 out of 

4 p la n s an d th e s e n o n c o n trib u to ry p la n s c o v e re d a b o u t th e s a m e p r o p o r tio n of w o r k e r s . T he in d u s tr ia l p a tte r n of fin a n c in g r e f le c te d b a rg a in in g p a tte r n s ; in d u s ­

t r i e s w ith m o s tly n e g o tia te d p la n s h ad m o s tly n o n c o n trib u to ry p la n s an d v ic e v e r s a (ta b le 2).

3 Chiefly because of these exclusions, the numbers of plans and workers studied are not comparable to data on

"pension benefit plans" published by the Office of Labor-Management and Welfare-Pension Reports, or to estimates of coverage published by the Social Security Administration.

4 About 30 percent fewer reports were included in this study than the number reported for the same period by the Department's Office of Labor-Management and Wei fare-Pens ion Reports. See footnote 3 for explanation.

5 Of the 16,031 private pension plans studied, covering 15.8 million active workers, 213 plans v*ithl66,000 active workers were in the process of determining their plans provisions. For these plans, little iniormation other than size,

industry, financing, and type of worker covered, were available at the time of the study. Thus, the analysis of

pension plans and benefits provided under certain assumed conditions, relate only to 15,818 plans.

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Table 1. Distribution of Private Pension Plans by Industry and Type of Employer Unit, Winter 1962—63

(Workers in thousands)

Industry

A ll plans

Type of employer unit

Single employer Multiemployer

Number W orkers1 Plans W orkers1 Plans W orkers1

All plans studied---------------------------------------- 2 15, 818 2 15, 621 14,890 11.742 928 3,878

M ining---------------------------------------------------------- 316 327 300 89 16 238

Contract construction------------------------------ J 449 1,072 60 23 389 1, 049

Manufacturing--------- -------------------------------- j 9, 257 9, 678 8,995 8,426 262 1, 252

Transportation------------------------------------------- 673 1, 286 549 j 516 124 770

Communications and public u tilitie s ----- 849 1, 270 848 1 1,261 1 10

Wholesale and retail trade---------------------- 1,627 920 1,540 1 572 ' 87 348

Wholesale trade------------------------------------ 1, 147 479 1,082 | 171 65 308

Retail trade-------------------------------------------- 480 440 458 ! 401 22 40

Finance, insurance, and real estate----- 1,853 733 1,840 719 13 15

Services------------------------------------------------------- 719 308 686 119 33 190

1 Active workers in 1961.

2 Includes industries for which data are not shown separately.

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

Table 2. Distribution of Private Pension Plans by Industry and Collective Bargaining Status, Winter 1962—63

(Workers in thousands)

Collective bargaining status

Industry

All plans Mentioned in a collective

bargaining agreement

Not mentioned in a

collective bargaining

agreement

Numbe r W orkers1 Plans W orkers1 Plans W orkers1

All plans studied---------------------------------------- 2 15, 818 2 15, 621 5,795 10,695 3 10,023 4,9 2 6

M ining------ ------------------------------------------------ i 316 327 43 242 273 86

Contract construction-------------------------------- 449 1, 072 384 908 65 164

Manufacturing-------------------------------------------- 9, 257 9,678 4, 285 i 6,821 4 ,9 7 2 2, 857

T ransportation------------------------------------------- 673 1, 286 384 I 898 289 388

Communications and public utilities------ 849 1, 270 314 ! 1,042 535 228

Wholesale and retail trade---------------------- 1,627 920 294 i 498 1,333 421

Wholesale trade_______________________ 1, i47 479 249 j 340 898 139

Retail tra d e------------------------------------------- 480 440 45 158 435 282

Finance, insurance, and real estate----- 1,853 733 22 78 1,831 656

Services------------------------------------------------------- 719 308 54 | 191 665 118

1 Active workers in 1961.

2 Includes industries for which data are not shown separately.

3 Includes 110 plans, covering 272,000 workers, which were union sponsored and operated.

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

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Chapter II. Normal Retirement

N o rm a l r e tir e m e n t p r o v is io n s of p r iv a te p e n s io n p la n s c o n ta in th e b a s ic a s s u r a n c e of life tim e r e tir e m e n t b e n e fits f o r e lig ib le w o r k e r s and c o n s titu te th e fo u n d a tio n on w h ich o th e r p r o v is io n s a r e b a s e d . T h is c h a p te r fo c u s e s on th r e e 

m a jo r e le m e n ts of n o rm a l r e tir e m e n t p r o v is io n s : (1) M in im u m a g e and s e r v ic e r e q u ir e m e n ts fo r p la n p a r tic ip a tio n and r e c e ip t of b e n e fits , (2) f o rm u la s u s e d to co m p u te b e n e fits , an d (3) a m o u n t of b e n e fits th e s e f o rm u la s p ro v id e . The 

n o r m a l r e tir e m e n t ag e is u s u a lly d e fin e d a s th e e a r l i e s t ag e a t w h ich a w o rk e r m a y r e t i r e a t h is ow n r e q u e s t and re c e iv e im m e d ia te ly th e fu ll (u n re d u c e d ) b e n e ­ fit p a y a b le fo r h is c r e d ite d s e r v ic e and e a r n in g s up to th a t tim e . N o rm a l r e t i r e ­

m e n t f o rm u la s c o m p ris e s e v e r a l e le m e n ts , b u t th e b a s ic c o n s id e ra tio n s in c o m ­

p u tin g b e n e fits a r e c r e d ite d s e r v ic e o r e a r n in g s , o r b o th , and th e re la tio n s h ip 

of p la n b e n e fits to s o c ia l s e c u r ity b e n e fits .

R e q u ire m e n ts f o r P la n P a r tic ip a tio n

In m an y p e n s io n p la n s , p a r tic ip a tio n of new e m p lo y e e s is a u to m a tic — i . e . , 

th e y b e c o m e m e m b e r s w h en th e y c o m p le te a b r ie f p r o b a tio n a r y p e r io d an d a c h ie v e r e g u la r f u ll- tim e s ta tu s , and , u n d e r c o n tr ib u to ry p la n s w h ich a llo w a n o p tio n , w h en th e y a g r e e to c o n tr ib u te . T h e m a jo r ity of p la n s , h o w e v e r, s p e c ify e ith e r an ag e r e q u ir e m e n t o r a le n g th - o f - s e r v ic e r e q u ir e m e n t, o r bo th ; a c o n d itio n w h ich m a y w ith h o ld p e n s io n c o v e ra g e f r o m a n ew ly h ir e d w o rk e r. S uch p a r t i c i ­ p a tio n r e q u ir e m e n ts h av e b e e n ju s tif ie d c h ie fly on g ro u n d s of a d m in is tr a tiv e c o s ts 

an d d iffic u ltie s in v o lv e d in c o v e rin g young w o r k e r s an d new e m p lo y e e s w h o se 

te n u r e is u n c e r ta in . In m o s t p la n s w ith p a r tic ip a tio n r e q u ir e m e n ts , h o w e v e r, 

s e r v ic e b e fo re p a r tic ip a tio n is not c o u n te d in d e te rm in in g a n em p lo y ee* s e lig ib ility f o r a p e n s io n o r in c o m p u tin g h is p e n s io n b e n e fit, o r b o th ; a d o p tio n of a p a r t i c i ­

p a tio n r e q u ir e m e n t s ig n ifie s so m e th in g m o r e th a n a d m in is tr a tiv e c o n v e n ie n c e .

A lm o st 3 out of 5 p la n s (ap p ly in g to 3 out of 10 w o r k e r s ) h ad p a r tic ip a tio n r e q u ir e m e n ts 6 (ta b le 3). T h e s e r e q u ir e m e n ts w e re c o m m o n in s in g le - e m p lo y e r p la n s bu t r a r e in m u ltie m p lo y e r p la n s . F e w m u ltie m p lo y e r p la n s h a d p a r t i c i ­ p a tio n r e q u ir e m e n ts , 7 a s c o m p a re d to th r e e - f if th s of th e s in g le - e m p lo y e r p la n s . A m ong th e l a t t e r p la n s , h o w e v e r, m o s t w o r k e r s w e re in p la n s w ith o u t p a r t i c i ­

p a tio n r e q u ir e m e n ts .

P a r tic ip a tio n r e q u ir e m e n ts w e r e m o r e p r e v a le n t in c o n tr ib u to ry th a n in n o n c o n trib u to ry p la n s . A m ong s in g le - e m p lo y e r p la n s , 4 ou t of 5 c o n tr ib u to ry p la n s (w ith a c o m p a ra b le p r o p o r tio n of w o rk e rs ) h a d p a r tic ip a tio n r e q u ir e m e n ts , a s c o m p a re d to s lig h tly m o r e th a n h a lf of th e n o n c o n trib u to ry p la n s (w ith o n ly a fifth of th e w o r k e r s ) .

C h ie fly r e fle c tin g th e in c lu s io n of m u ltie m p lo y e r p la n s , o n ly 3 out of 10 p la n s m e n tio n e d in c o lle c tiv e b a rg a in in g a g r e e m e n ts h ad th e s e r e q u ir e m e n ts , a s c o m ­ p a r e d to 3 out of 4 p la n s (ty p ic a lly c o n trib u to ry ) no t so m e n tio n e d . A m ong jo in tly - fin a n c e d p la n s , a g ro u p w h ic h e x c lu d e s m o s t m u ltie m p lo y e r p la n s , ab o u t e q u a l

6 Plan participation may be restricted to members of certain worker groups, e. g ., those earning in excess of a specified amount. Although these restrictions are not specifically covered in this analysis, their magnitude may be de­ rived from data in BLS Bulletin 1407, op. c it., p. 13. It shows, for example, that 860 plans covering about 735,000

workers were limited to workers earning in excess of a specified amount. 7 For details of participation requirements in multiemployer plans, see Multiemployer Pension Plans Under Collective Bargaining, Spring 1960 (BLS Bulletin 1326, 1962).

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p r o p o r tio n s of p la n s '’m e n tio n e d " an d " n o t m e n tio n e d " in c o lle c tiv e b a rg a in in g 

a g r e e m e n ts h a d p a r tic ip a tio n r e q u i r e m e n t s .8

In m a n u fa c tu rin g in d u s tr ie s ( w h e r e a few la r g e m u ltie m p lo y e r p la n s w e re in e f fe c t) m o r e th a n h a lf of th e p la n s h a d p a r tic ip a tio n r e q u ir e m e n ts , b u t th e y c o v e re d le s s th a n a th ir d of th e w o r k e r s (ta b le 4). In th e c o n s tr u c tio n in d u s tr y , w h e re m u ltie m p lo y e r p la n s p r e v a ile d , few w o r k e r s h a d to m e e t p a r tic ip a tio n r e ­

q u ir e m e n ts . In c o n tr a s t, in th e fin a n c e in d u s tr y , w h e re s in g le - e m p lo y e r c o n ­ tr ib u to r y p la n s p re d o m in a te d , su c h p r o v is io n s w e r e found in a lm o s t 90 p e r c e n t 

of th e p la n s w ith 60 p e r c e n t of th e w o r k e r s . S im ila r ly , am o n g o th e r n o n m a n u ­ f a c tu r in g in d u s tr i e s , th e in c id e n c e of m u ltie m p lo y e r p la n s w as a k e y f a c to r . T e le p h o n e co m p an y p la n s d id n o t h a v e p a r tic ip a tio n r e q u ir e m e n ts , b u t a la r g e p r o p o r tio n of p la n s in o th e r p u b lic u t ilitie s d id .

A ge and S e rv ic e R e q u ire m e n ts fo r P a r t ic ip a ti o n . A ll b u t a b o u t 6 p e r ­ c e n t of th e p la n s w ith p a r tic ip a tio n r e q u ir e m e n ts h a d a m in im u m s e r v ic e r e ­ q u ir e m e n t an d 3 o u t of 5 p la n s h a d a m in im u m ag e r e q u ir e m e n t (ta b le 5). A c o m b in a tio n of m in im u m ag e and s e r v ic e w as s p e c ifie d m o r e f re q u e n tly th a n an 

a g e r e q u ir e m e n t o r a s e r v ic e r e q u ir e m e n t a lo n e . H o w e v e r, a h ig h e r p r o p o r tio n 

of w o r k e r s w e re in p la n s w ith on ly a s e r v ic e r e q u ir e m e n t th a n in p la n s w ith on ly 

a n a g e r e q u ir e m e n t, a s sho w n b elo w :

Percent

Provision Plans Workers

All plans with participation

requirements----------------------------- 100.0 100.0

Age only ----------------------------------- 5.6 9.8 Service only ------------------------------- 40.9 50.3 Age and service -------------------------- 53. 5 40.0

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

S e rv ic e p e r io d s ra n g e d fro m 1 to 5 y e a r s , th e m a x im u m p a r tic ip a tio n r e q u i r e ­ m e n t p e r m is s ib le to p la n s q u a lif ie d 9 u n d e r th e I n te r n a l R ev en u e C ode (SS 40 1(a)(3). (S ee ta b le 5 .) O v e r a th ir d of th e p la n s w ith a fifth of th e w o r k e r s r e q u ir e d 5 y e a r s of s e r v ic e , an d a fifth of th e p la n s w ith o v e r tw o -fifth s of th e w o r k e r s r e q u ir e d 1 y e a r . E m p lo y m e n t r e q u ir e m e n ts of 2 o r 3 y e a r s w e re found in o v e r a th ir d of th e p la n s . M in im u m a g e s ra n g e d fro m u n d e r 20 to 40 , w ith 25 and 

30 th e m o s t co m m o n r e q u ir e m e n ts . T he m o s t c o m m o n ag e an d s e r v ic e c o m ­ b in a tio n s , m e a s u r e d in te r m s of n u m b e rs of c o v e re d w o r k e r s , w e r e a g e 25 w ith 1 y e a r of s e r v ic e , and ag e 30 w ith 1, 3, an d 5 y e a r s of s e r v ic e .

8 Following the precise language of the act, the D -l form asks this question: "Is the plan mentioned in a col­ lective bargaining agreement?" A "no" answer can be presumed to be conclusive; that is, no part of the plan or its coverage is subject to collective bargaining. A "yes" answer would be indicated if part or all of the employees

covered by the plan were in the bargaining unit covered by the agreement, and the agreement "mentioned" the plan. Although a doubt arises as to whether 1‘mentioned" in the agreement is tantamount to bargaining on the plan, it can

reasonably be presumed that "mentioned" in the agreement brings the plan within the scope of collective bargaining,

at least with regard to continuing or changing the plan. In this study, the collective bargaining coverage figures for single-employer plans covering all employees of the company are overstated because they often include employees not covered by a collective bargaining agreement, although the plan itself was subject to bargaining. Plans in the basic steel industry, for example, were negotiated

by the Steelworkers union for members of its bargaining units, but the same plans often covered all company em­ ployees, including professional, executive, sales, and other white-collar employees not represented by the union. On the other hand, coverage under multiemployer plans will more precisely account for all workers in bargaining units. 9 To qualify for special tax treatment, pension plans must not discriminate in favor of officers, stockholders,

supervisors, or highly paid individuals. For an analysis of these and other requirements, see for example, Dan M.

McGill, Fundamentals of Private Pensions, Homewood, 111., Richard D. Irwin, Inc., 1964.

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C re d itin g P r e p a r tic ip a tio n S e r v ic e . T h r e e - f o u r th s of th e p la n s w ith p a r t i c ­

ip a tio n r e q u ir e m e n ts u s e d le n g th of p la n m e m b e r s h ip r a t h e r th a n le n g th o f s e r v ­ ic e to co m p u te b e n e fits , i. e. , p r e p a r tic ip a tio n s e r v ic e w as n o t c o u n ted (ta b le 6). T h is p r a c ti c e w as n e a r ly a s p r e v a le n t am o n g non c o n trib u to ry a s am on g c o n ­ tr ib u to r y p la n s , alth o u g h th e p r a c tic e c o v e re d a m u c h l a r g e r p r o p o r tio n of th e w o r k e r s in c o n tr ib u to ry (88 p e r c e n t) th a n in non c o n trib u to ry p la n s (67 p e r c e n t) .

C ounting p r e p a r tic ip a tio n e m p lo y m e n t to q u a lify w o r k e r s f o r r e tir e m e n t w as m o r e co m m o n ; o v e r tw o -fifth s of th e p la n s w ith p a r tic ip a tio n r e q u ir e m e n ts w ith o n e - th ir d of th e w o r k e r s c r e d ite d su c h s e r v ic e fo r e lig ib ility . O v e r tw o -fifth s of th e w o rk e rs in non c o n tr ib u to ry p la n s w ith p a r tic ip a tio n r e q u ir e m e n ts cou ld 

co u n t su c h s e r v ic e c o m p a re d to o n e -fo u rth of th e w o rk e rs in c o n tr ib u to ry p la n s .

T h u s, of th e 15.6 m illio n w o r k e r s c o v e re d by th e p la n s in th is stu d y , 20 p e r ­

c e n t b e lo n g e d to p la n s in w h ich tfoey c o u ld lo s e b e n e fits b e c a u s e th e y h a d to w o rk f o r a p e r io d of tim e th a t w as n o t c r e d ite d to w a rd s d e te rm in in g th e a m o u n t of th e ir b e n e fits . T h is lo s s is o fte n s ig n ific a n t. If, f o r e x a m p le , 3 y e a r s of 

p r e p a r tic ip a tio n e m p lo y m e n t a r e n o t c r e d ite d , th e b e n e fits of w o rk e rs r e tir in g a f te r 15 y e a r s of e m p lo y m e n t w ould be re d u c e d b y 20 p e r c e n t. O n th e o th e r h an d , 80 p e r c e n t of th e w o r k e r s w e re in p la n s w h ich g av e c r e d it fo r a ll e m ­ p lo y m e n t (o ften s u b je c t to a m a x im u m on n u m b e r of y e a r s c r e d ite d ) , in d e ­ te rm in in g e lig ib ility f o r an d c o m p u ta tio n of b e n e fits .

M in im u m R e q u ire m e n ts f o r N o rm a l R e tir e m e n t

A t th e tim e of th is s u rv e y (w in te r 1962—63), a g e 65 co n tin u e d to b e th e s ta n d a r d m in im u m r e q u ir e m e n t f o r n o rm a l r e tir e m e n t in a ll b u t a few p r iv a te p la n s (ta b le 7). 10 M o re th a n 10 p e r c e n t of th e w o r k e r s , h o w e v e r, w e re in p la n s 

p ro v id in g n o rm a l r e tir e m e n t a t ag e 60, c h ie fly te le p h o n e co m p an y p la n s and so m e la r g e m u ltie m p lo y e r p la n s , su c h a s th e U n ited M ine W o rk e rs of A m e r ic a W e lfa re and R e tir e m e n t F u n d s and th e C e n tr a l S ta te s , S o u th e a s t, and S o u th w e st A re a s P e n s io n F u n d of th e T e a m s te r s (ta b le 8 ) . 11

T he s e r v ic e r e q u ir e m e n ts f o r n o r m a l r e tir e m e n t w e re ab o u t a s li b e r a l as 

th o se n e e d e d to q u a lify fo r b e n e fits u n d e r o th e r p la n p r o v is io n s — v e s tin g , e a r ly r e tir e m e n t, and d is a b ility r e tir e m e n t. H alf of th e p la n s , w ith o v e r tw o -fifth s of th e w o r k e r s , s p e c ifie d a m in im u m s e r v ic e p e r io d of e ith e r 10 (o r 15) y e a r s . O v e r a th ir d of th e p la n s , w ith s lig h tly le s s th a n a th ir d of th e w o rk e rs , r e ­ q u ire d le s s th a n 10 y e a r s . A s ix th of th e w o rk e rs w e re in p la n s th a t r e q u ir e d 

20 y e a r s of s e r v ic e to q u a lify ; a lm o s t h a lf of th is g ro u p ' w e re in te le p h o n e c o m ­ p an y p la n s h a v in g a n o r m a l r e tir e m e n t ag e of 6 0 .12 In o th e r p la n s , n o r m a l r e t i r e ­ m e n t b e fo re 65 a ls o u s u a lly m e a n t m e e tin g a long s e r v ic e r e q u ir e m e n t.

N o rm a l R e tir e m e n t B e n e fit F o r m u la s

T he p e n s io n (b en efit) a q u a lifie d w o r k e r w ill r e c e iv e upon r e tir e m e n t is d e ­

te r m in e d by th e b e n e fit f o rm u la of th e p la n . T he p r in c ip a l e le m e n ts m a k in g up 

th e fo rm u la u s u a lly a r e y e a r s of c r e d ite d s e r v ic e o r e a r n in g s o r b o th . The

A number of plans had a lower normal retirement age for women than men. These special provisions for

women are not treated in this study. 11 Significant downward adjustments in normal retirement age resulted from some major negotiations in 1964 and 1965. 12 The telephone plans have since reduced the service requirement to 15 years for workers retiring at age 65.

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p la n m a y d is tin g u is h b e tw e e n s e r v ic e a c c u m u la te d b e fo re th e p la n w as e s ta b ­ lis h e d o r a m e n d e d (u su a lly c a lle d " p a s t s e r v ic e " ) and s e r v ic e a f te r th a t d a te ( " c u r r e n t" o r " f u tu r e " s e r v ic e ) . A n o th e r e le m e n t s o m e tim e s e x p lic it in th e p la n 

fo rm u la is th e a m o u n t of s o c ia l s e c u r ity b e n e fits to w h ich th e w o rk e r is e n ­

title d . F in a lly , m in im u m an d m a x im u m lim its m a y b e s e t on b e n e fits , e ith e r d ir e c tly ( s p e c ifie d d o lla r lim its ) o r in d ir e c tly (by m in im u m an d m a x im u m s e r v ­ ic e c r e d its o r b y a lte r n a te fo rm u la s ).

T y p es of B e n e fit F o r m u la s . A w id e v a r ie ty of m e th o d s to co m p u te r e t i r e ­ m e n t b e n e fits a r e foun d am o n g th e th o u sa n d s of p r iv a te p e n s io n p la n s a n a ly z e d . M o st f o r m u la s , h o w e v e r, can b e c la s s if ie d in to one of th e fo llo w in g c a te g o r ie s , 

d e p en d in g u p on th e v a r ia b le s in v o lv e d : B e n e fits v a ry in g by b o th le n g th of s e r v ic e

a n d e a r n in g s ; b e n e fits v a ry in g b y le n g th of s e r v ic e a lo n e ; b e n e fits v a ry in g by 

e a r n in g s a lo n e ; an d u n ifo rm o r f la t b e n e fits fo r s p e c ifie d s e r v ic e .

E a rn in g s an d s e r v ic e b e n e fit f o rm u la s a r e th e m o s t co m m o n ty p e u s e d in p r iv a te p l a n s . 13 T h ey a r e u s u a lly e x p r e s s e d a s th e p ro d u c t of th r e e f a c to r s : E a rn in g s , c r e d ite d s e r v ic e , and a p e r c e n ta g e f a c to r , e . g . , a m o n th ly b e n e fit 

e q u a l to 1 p e r c e n t of a v e ra g e m o n th ly e a r n in g s tim e s y e a r s of c r e d ite d s e r v ic e . 

T he d e fin itio n of e a r n in g s u s e d to c o m p u te b e n e fits in v o lv e s b o th th e sc o p e of e a r n in g s (e. g. , w h e th e r o v e rtim e e a rn in g s a r e to be in c lu d e d , e tc . ) an d th e p e r io d o v e r w h ich th e y a r e to b e a v e ra g e d . T w o -th ird s o f th e p la n s w ith f o rm u la s b a s e d on e a r n in g s , c o v e rin g h a lf th e w o r k e r s , u s e d c a r e e r e a r n in g s , i. e. , e a r n ­ in g s fo r a ll y e a r s of c r e d ite d s e r v ic e (ta b le 9). T he r e m a in d e r c o m p u te d b a s ic b e n e fits b y u s in g e a r n in g s of h ig h o r te r m in a l y e a r s , u s u a lly th e 5 o r 10 h ig h e s t o r th e l a s t 5 o r 10 y e a r s . U n d e r n o r m a l p a tte r n s of a d v a n c in g c a r e e r e a rn in g s 

an d a r is in g w ag e le v e l, im p o r ta n t a d v a n ta g e s a c c r u e to w o r k e r s in p la n s u s in g th e l a t t e r m e th o d , a ll o th e r f a c to r s b ein g e q u a l, b e c a u s e th e ir b e n e fits w ill be m o r e c lo s e ly r e la te d to p r e r e t i r e m e n t e a r n in g s .

T he d e fin itio n of c r e d ite d s e r v ic e u s u a lly in v o lv e s th e sc o p e of th e p la n (i. e. , e m p lo y e e g ro u p s c o v e re d ) and th e tr e a tm e n t of p r e m e m b e r s h ip s e r v ic e , la y o ffs , d is a b ility , le a v e s o f a b s e n c e , m ili ta r y s e r v ic e , an d o th e r e le m e n ts . E a c h p la n d e fin e s c r e d ite d s e r v ic e in its ow n w ay .

P e r c e n ta g e f a c to r s w e r e found to c o n c e n tra te in th e ra n g e of 1 to 2 p e r c e n t. M any p la n s u s e d " s t e p - r a t e " f o r m u la s , u n d e r w h ich a l a r g e r f a c to r is a p p lie d to e a r n in g s in e x c e s s of a s p e c ifie d a m o u n t (u s u a lly th e m a x im u m e a r n in g s c o n ­ s id e r e d in co m p u tin g s o c ia l s e c u r ity b e n e fits a t th e tim e th e p la n w as a d o p te d o r am e n d e d ) th a n to th o s e b e lo w th a t a m o u n t. F o r e x a m p le , a 2 - p e r c e n t f a c to r w a s o fte n a p p lie d to e a r n in g s o v e r $ 4 ,8 0 0 a y e a r and 1 p e r c e n t to th o se b elo w . S om e co m m o n s t e p - r a t e f o rm u la s u s e d p e r c e n ta g e f a c to r s of 1 .5 and 1 p e r c e n t 

an d 0.75 an d 0.5 p e r c e n t. A n o th e r v a r ia tio n w as to p a y no b e n e fit on th e lo w e r p o rtio n of e a r n in g s an d up to 1 .5 p e r c e n t on th e u p p e r .14

T he n e x t m o s t c o m m o n ty p e of f o rm u la r e la te d b e n e fits s o le ly to s e r v ic e by m u ltip ly in g a s p e c ifie d d o lla r a m o u n t by th e n u m b e r of y e a r s of c r e d ite d s e r v ic e 

( e . g . , m o n th ly p e n s io n e q u a ls $ 2 .8 0 tim e s y e a r s of c r e d ite d s e r v ic e ) . A t th e 

tim e of th is s tu d y ,15 th e d o lla r a m o u n ts a p p e a re d to b e c o n c e n tra te d b e tw e e n 

$ 2 an d $3 a m o n th . A s in o th e r ty p e s of f o r m u la s , w ide v a r ia tio n in th e d e fin itio n 

of c r e d ite d s e r v ic e e x is te d . M any f o rm u la s of th is ty p e a ls o lim ite d c r e d ite d

13 About 50 percent of the workers in this study were in plans whose basic formulas considered earnings and service or earnings alone, and the remainder were in plans with uniform benefits or formulas based on service alone.

1* Sec. 401(a)(5) of the Internal Revenue Code sets this limit. It also prohibits the difference between the

percentages from exceeding 1.5 percent. 15 In the settlement negotiated in the Fall of 1964, the automobile and farm equipment industries increased

their benefits to $4. 25 (formerly $2. 80) a month for each year of service.

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s e r v ic e (u su a lly to 25 o r 30 y e a r s ) w h en co m p u tin g b e n e fits . T y p ic a lly , th e s e f o rm u la s w e re u s e d to d e te rm in e b e n e fits in n e g o tia te d p la n s and m in im u m b e n e ­

fits in n o n n e g o tia te d p la n s .

F o r m u la s p ro v id in g a u n ifo rm p e r c e n ta g e of e a rn in g s fo r a ll w o r k e r s m e e ting r e tir e m e n t r e q u ir e m e n ts a r e now u n c o m m o n in p r iv a te p la n s . T y p ic a lly , th e s e fo rm u la s p ro v id e a p e n s io n e q u a l to a s p e c ifie d p e r c e n ta g e of th e e a rn in g s 

o v e r th e la s t few y e a r s of e m p lo y m e n t, e . g . , 25 p e r c e n t of a v e ra g e m o n th ly 

e a rn in g s d u rin g th e l a s t 10 y e a r s .

B e n e fit fo rm u la s in w h ich u n ifo rm a m o u n ts a r e p ro v id e d f o r a ll w o rk e rs 

w ith th e r e q u ir e d s e r v ic e a r e v ir tu a lly r e s t r i c t e d to m u ltie m p lo y e r p la n s , b u t th e y a r e im p o rta n t th e r e . U n d e r th e s e f o r m u la s , no f u r th e r b e n e fits a c c r u e on ce s e r v ic e r e q u ir e m e n ts h av e b e e n m e t; th u s th e b e n e fit is b o th a m in im u m and a 

m a x im u m b e n e fit, e . g . , $5 0 f o r 20 y e a r s o r m o r e of c r e d ite d s e r v ic e .

M in im u m B e n e fit F o r m u la s . M any p r iv a te p e n s io n p la n s p ro v id e fo r a 

m in im u m le v e l of b e n e fits , e ith e r th ro u g h a s e p a r a te m in im u m f o rm u la o r th ro u g h th e o p e ra tio n of th e m in im u m s e r v ic e r e q u ire m e n ts in th e b a s ic fo rm u la . M in im u m 

fo rm u la s a r e u s u a lly b a s e d s o le ly on s e r v ic e o r s p e c ify a f la t m in im u m p e n s io n fo r th o se w ith a c e r ta in a m o u n t of c r e d ite d s e r v ic e , w h ich is o fte n m o r e th a n th a t n e e d e d fo r th e b a s ic n o rm a l r e tir e m e n t b e n e fit. W hen th e b a s ic fo rm u la is b a s e d on b o th e a rn in g s and s e r v ic e , th e m in im u m f o rm u la u s u a lly a p p lie s to lo w e r in ­

co m e w o r k e r s ; w hen th e b a s ic p la n h a s a s o c ia l s e c u r ity o ffs e t, th e m in im u m a p p lie s to n e a r ly a ll s h o r t s e r v ic e w o r k e r s , r e g a r d le s s of e a r n in g s . F o r e x ­ a m p le , th e b e n e fit f o rm u la s in th e b a s ic s te e l in d u s try p ro v id e d th e g r e a t e r of (1) 1 p e r c e n t of a v e r a g e m o n th ly e a rn in g s in th e la s t 120 m o n th s of e m p lo y m e n t tim e s y e a r s of s e r v ic e , le s s $ 8 0 fo r s o c ia l s e c u r ity , o r (2) $ 2 .6 0 tim e s y e a r s of s e r v ic e . T he f i r s t fo rm u la a p p lie s only to h ig h e r p a id w o r k e r s and to th o se 

w ith long s e r v ic e . 16

T he se c o n d ty p e of m in im u m — th a t ste m m in g fro m th e s e r v ic e r e q u i r e ­

m e n ts in th e b a s ic f o rm u la — d e n ie s b e n e fits to w o rk e rs who do n o t fu lfill th e s e r v ic e r e q u ir e m e n ts . T h e s e f o rm u la s in c lu d e a ll f o rm u la s th a t s tip u la te a m in im u m s e r v ic e p e r io d a s q u a lific a tio n f o r b e n e fits .

P a s t S e rv ic e B e n e fit F o r m u la s . B e n e fits b a s e d on p a s t s e r v ic e f o rm u la s 

a r e o ften le s s th a n th o s e b a s e d on c u r r e n t o r fu tu re s e r v ic e f o r m u la s , c h ie fly b e c a u s e th e e m p lo y e r h ad no s ta te d o b lig a tio n and th u s h ad m a d e no c o n tr ib u ­ tio n s a s th e b e n e fits a c c r u e d . The p a s t s e r v ic e o b lig a tio n , th e r e f o r e , ty p ic a lly r e s u lts in th e a c c u m u la tio n of an a c c r u e d lia b ility w h ich , in m a n y c a s e s , a p p e a rs la r g e r e la tiv e to th e p la n 's r e s o u r c e s . N e v e r th e le s s , m o s t p la n s g r a n te d fu ll o r p a r ti a l c r e d it f o r su ch s e r v ic e ; on ly r a r e ly w as no c r e d it g ra n te d .

M u ltie m p lo y e r p la n s a lm o s t a lw a y s g r a n te d th e s a m e b e n e fit fo r e a c h y e a r of p a s t s e r v ic e a s f o r e a c h y e a r of c u r r e n t s e r v ic e . In s in g le - e m p lo y e r p la n s , h o w e v e r, p a s t s e r v ic e b e n e fit f o rm u la s w e re fre q u e n tly b a s e d on d iff e re n t f a c to r s and p ro v id e d s m a lle r b e n e fits f o r e q u iv a le n t s e r v ic e and e a rn in g s th a n th e c u r r e n t s e r v ic e f o rm u la s . F o r e x a m p le , a p la n m a y p ro v id e a w o rk e r w ith a b e n e fit of $2 a m o n th fo r e a c h y e a r of c r e d ite d s e r v ic e b e fo re th e d a te of th e e s ta b lis h m e n t of th e p la n , an d $ 2 . 50 a m o n th f o r e a c h y e a r th e r e a f te r . B e c a u s e p r iv a te p la n s 

a r e r e la tiv e ly new , it is p ro b a b le th a t th e m a jo r ity of w o rk e rs r e tir in g fro m 

s in g le - e m p lo y e r p la n s in th e n e x t d e c a d e w ill re c e iv e b e n e fits d e te rm in e d , a t 

l e a s t in p a r t , by lo w e r p a s t s e r v ic e fo rm u la s .

In a d d itio n , m a n y p la n s u tiliz e d iff e re n t p e rc e n ta g e f a c to r s o r , o c c a s io n a lly , 

a d iff e re n t f o rm u la f o r s e r v ic e a f te r e s ta b lis h m e n t of th e p la n b u t b e fo re th e

More specifically, the first formula applies to workers with 30 years of service and average monthly earnings over $527, to those with 20 years and earnings over $660, and to those with 10 years and earnings over $1,060.

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e ffe c tiv e d a te of a n in c r e a s e in b e n e fit le v e ls , i . e . , fo r ’’in te r m e d ia te s e r v i c e , " A s e a rn in g s le v e ls r i s e and p la n b e n e fits a r e lib e r a liz e d , th e s e in te r im f o rm u la s u s u a lly y ie ld lo w e r b e n e fits th a n c u r r e n t s e r v ic e f o r m u la s . A lth oug h, a s f a r a s e x is tin g p la n s a r e c o n c e rn e d , th e e ffe c ts of p a s t s e r v ic e f o rm u la s w ill d im in is h 

in im p o rta n c e o r d is a p p e a r in th e fu tu re , th e in te r m e d ia te s e r v ic e b e n e fits w ill p ro b a b ly be a s ig n ific a n t f a c to r a s long a s p la n s a r e s u b je c t to a m e n d m e n t.

A d ju stm e n t of P r iv a te P la n B e n e fits to S o c ia l S e c u rity B e n e fits . B e n e fits p a id u n d e r th e s o c ia l s e c u r ity p r o g r a m m a y be d ir e c tly in c lu d e d in th e n o rm a l r e tir e m e n t fo rm u la by th e fo llo w in g m e th o d s:

U n d er th e o ffs e t m e th o d , th e p la n p ro v id e s th a t a ll o r p a r t of th e e m p lo y e e 's s o c ia l s e c u r ity b e n e fit is to be d e d u c te d f r o m th e a m o u n t c o m ­ p u te d a c c o rd in g to th e b e n e fit f o rm u la of th e p r iv a te p la n . U su a lly th e w ife ’s b e n e fit is ig n o re d an d on ly th e p r im a r y s o c ia l s e c u r ity b e n e fit r e ­

c e iv e d by th e w o rk e r is c o n s id e re d . U n d er th is m e th o d of in te g ra tio n , 

im p ro v e m e n ts in s o c ia l s e c u r ity b e n e fits a r e w ith h e ld , a t le a s t p a r tly , 

f r o m th e p e n s io n e r u n le s s th e s iz e of th e o ffse t r e m a in s fix e d , a s in th e 

S te e lw o r k e r s p la n s . T h e o ffs e t m e th o d is g ra d u a lly b ein g e lim in a te d o r , a s in th e s te e l an d c o m m u n ic a tio n s in d u s tr ie s , a tte n u a te d so a s to m a k e it le s s d is a d v a n ta g e o u s to p r o s p e c tiv e r e t i r e e s . 17

U n d er th e s te p - r a te m e th o d , th e b e n e fit f o rm u la p ro v id e s h ig h e r 

b e n e fits fo r e a r n in g s ab o v e a sp e c ifie d a m o u n t. T h is am o u n t is u s u a lly eq u a l to th e m a x im u m e a rn in g s u se d to co m p u te s o c ia l s e c u r ity b e n e fits a t th e tim e th e f o rm u la w a s a d o p te d . In so m e p la n s , no p la n b e n e fits w e re p a y a b le on e a r n in g s b elo w th e sp e c ifie d a m o u n t. T h is m e th o d of in te g ra tio n a tte m p ts to e q u a liz e th e r a tio of to ta l r e tir e m e n t b e n e fits (p riv a te p la n p lu s s o c ia l s e c u r ity ) to p r e r e tir e m e n t e a rn in g s fo r lo w e r an d h ig h e r p a id w o r k e r s w ith o u t a p p e a rin g , ^ s th e o ffs e t p la n s do, to w ith h o ld so m e th in g f r o m th e p e n s io n e r . T h e r e la tiv e a d v a n ta g e of th is f o rm u la fo r h ig h e r p a id w o r k e r s d im in is h e s a s h a s h a p p e n e d in so m e s te p - r a te p la n s ; th e lo w e s t e a rn in g s 

to w h ich th e h ig h e r p e r c e n ta g e f a c to r a p p lie s a r e no t in c r e a s e d w h en th e 

s o c ia l s e c u r ity ta x a b le w age b a s e is in c r e a s e d .

L e v e l of B e n e fits

N o rm a l r e tir e m e n t b e n e fit f o rm u la s a p p lic a b le to c u r r e n t and fu tu re s e r v ic e r e a d ily p e r m it th e c o m p u ta tio n of th e am o u n t of m o n ey p r o m is e d by p r iv a te p la n s to w o rk e rs at any g iv e n e a r n in g s and s e r v ic e le v e l. T he c o m b in e d p r iv a te an d p u b lic p r o m is e c a n be c o m p u te d by ad d in g to p r iv a te p la n b e n e fits th e p r im a r y s o c ia l s e c u r ity b e n e fit due q u a lifie d r e t i r e e s a t a s s u m e d e a r n in g s le v e ls u n d e r c u r r e n t la w s . S uch c o m p u ta tio n s do no t r e v e a l b e n e fit a m o u n ts th a t in d iv id u a l 

w o r k e r s w ould r e c e iv e on r e tir e m e n t. T h ey a r e m o d ifie d to th e e x te n t th a t p r iv a te p la n s d e te rm in e r e tir e m e n t b e n e fits p a r tly on th e b a s is of p a s t an d in te r m e d ia te 

s e r v ic e f o rm u la s , th a t p la n s h a v e no t b e e n in e x is te n c e lo ng eno ug h fo r an y w o rk e r to a c c u m u la te lo ng y e a r s of s e r v ic e , an d th a t p u b lic b e n e fit a m o u n ts , lik e w is e , 

f a ll s h o rt of th e a s s u m e d f i g u r e s . 18 M o re o v e r, w ith c h a n g e s e x p e c te d in b o th 

p u b lic an d p r iv a te p la n s in th e f u tu re , no one c a n p ro p h e s y w h at b e n e fit f o rm u la s 

m a y be a p p lie d 10, 20, o r 30 y e a r s f ro m now . H o w e v e r, th e c o tn p u te d f ig u re s w ith w h ich th is stu d y d e a ls a r e , in o th e r c o n te x ts , m e a n in g fu l.

17 In the Steelworkers plans, the offset has been a fixed amount since 1954, when it was $85 a month. It was

reduced to $80 a month in 1960 when all benefits were increased by $5 a month. In August 1966, the $80~social

security offset will be reduced to $60. In 1962-63, in the communications industry, it was reduced from one-half of social security benefits to one-third. Because the social security benefit computation is usually based on average covered earnings since 1951, ex­ cluding those in the 5 years of lowest earnings, few workers currently qualify for the maximum primary monthly benefit.

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U n d e r u n ifo rm a s s u m p tio n s , a ll p la n s a r e p la c e d f o r c o m p a ris o n on a c o m ­ m o n fo o tin g , so th a t w ith r e s p e c t to b e n e fits , p re v a ilin g d if f e r e n tia ls and c e n tr a l te n d e n c ie s a r e r e v e a le d . T he c o m p u ted b e n e fits p ro v id e b e n c h m a rk s a g a in s t w h ich ch an g e c a n b e m e a s u r e d . In p r a c ti c a l t e r m s , th e y r e p r e s e n t th e p r o m is e to new ly h ir e d w o r k e r s of r e tir e m e n t in c o m e of th e s a m e n a tu r e a s o th e r lo n g - te r m e m p lo y m e n t p r o m is e s s u b je c t to ch an g e ( c a r e e r la d d e r s , 4 w eeks* v a c a tio n a f te r 

20 y e a r s of s e r v ic e , an d o th e r s ).

A s s u m p tio n s . T he fo llo w in g c o n d itio n s and q u a lific a tio n s w e re a s s u m e d 

in co m p u tin g h y p o th e tic a l c u r r e n t s e r v ic e b e n e fit a m o u n ts f o r e a c h p la n :

1. T he w o rk e r w ill r e t i r e a t ag e 6 5 .19

2. B e n e fits a r e co m p u te d fo r a n n u a l e a rn in g s le v e ls of $ 3 ,6 0 0 , 

$ 4 ,8 0 0 , $ 6 ,0 0 0 , an d $ 8 ,4 0 0 , a t s e r v ic e in te r v a ls of 10, 15, 20, 25, and 30 y e a r s . 20 S in ce th e s e e a rn in g s le v e ls a r e u s e d b o th in fo rm u la s b a s e d on a v e r a g e c a r e e r e a r n in g s an d f o rm u la s b a s e d on a v e r a g e te r m in a l e a r n ­ in g s (su ch a s th e a v e r a g e of th e l a s t 10 y e a r s ) , w h at m a y b e an im p o rta n t 

d iffe re n c e b e tw e e n p la n s u sin g b e n e fit f o rm u la s b a s e d on e a rn in g s is n o t ta k e n in to a c c o u n t. 21

3. C u r r e n t p r im a r y s o c ia l s e c u r ity b e n e fits w ill b e re c e iv e d by e a c h r e t i r e e . T h e se w e re $105 a m o n th fo r a v e ra g e e a r n in g s of $ 3 ,6 0 0 and $127 a m o n th fo r a v e r a g e e a r n in g s of $ 4 ,8 0 0 o r m o r e in 1962—63.

4. M e d ia n s, q u a r tile s , and d e c ile s a r e b a s e d on th e a r r a y of w o rk ­ e r s r a th e r th a n p la n s , b e c a u s e of th e la r g e s iz e d iff e re n c e s am o n g p la n s .

S lig h tly le s s th a n 3 o u t of 5 w o r k e r s a r e in p la n s in w h ich th e y could q u alify f o r n o r m a l r e tir e m e n t a t ag e 65 w ith 10 y e a r s of s e r v ic e . C o m ­ p u ta tio n of a v e r a g e b e n e fits a t th e 1 0 -y e a r s e r v ic e le v e l th u s w ould e x clu d e a s iz a b le n u m b e r of p la n s an d w o r k e r s . A p p ro x im a te ly 8 o u t of 10 w o rk ­ e r s a r e in p la n s in w h ich th e y co u ld q u alify w ith 15 y e a r s of s e r v ic e ; v irtu a lly a ll co u ld q u a lify w ith 20, 25, and 30 y e a r s of s e r v ic e .

Cumulative percent Service to qualify for normal retirement benefit Plans Workers

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

10 years or le s s ------------------------------ 65. 3 56.6 15 years or less ----------------------------- 93. 4 77.8 20 years or le s s ------------------------------ 97. 7 95.6 25 years or le s s ------------------------------ 99. 0 99.4 30 years or le s s ------------------------------ 99. 0 99.5

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

A lth oug h b e n e fit le v e ls co u ld b e co m p u te d f o r a ll e a rn in g s le v e ls , th e p o s ­

s ib ility of w o r k e r s a v e ra g in g $ 8 ,4 0 0 a y e a r , o r ev en $ 6 ,0 0 0 , u n d e r so m e p la n s 

w as r e m o te . S in ce su c h p la n s o ften p ro v id e d b e n e fits th a t w e r e , in r e la tio n to th o s e

A number of plans, covering approximately 100,000 workers, had a later normal retirement age. These plans, however, have been included in the computations, using their normal retirement formula.

20 Current service as used in this study refers to the period of continuous employment. Thus, if a plan had a participation requirement of 3 years* employment for which credit was not given, benefits were computed for 7, 12, 17, 22, and 27 years of plan membership. 21 This distinction may mean a difference of as much as 30 percent in monthly pensions, where benefits were

based on earnings and service. Of course, the influence on benefit levels would be least for 10 years of service and greatest for 30 years of service. The distinction would be reduced to the extent that career average plans used an average of earnings in the post-war period or a similar cutoff period instead of an average of all years.

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s a l a r i e s , u n u s u a lly s m a ll and s in c e su c h p la n s co u ld n o t b e e lim in a te d , a certain? d e g re e of u n d e r e s tim a tio n of b e n e fits a t th e h ig h e r w ag e le v e ls w as in e v ita b le .

A ll P la n s . A lth oug h m o s t p e n s io n p la n s re c o g n iz e th e p r in c ip le th a t lo n g e r s e r v ic e m e r i ts a l a r g e r p e n s io n , an d m a n y re c o g n iz e th a t h ig h e r p a y m e r i ts a 

h ig h e r p e n s io n , th e g r e a t v a r ia tio n am o n g p la n s in th e a p p lic a tio n of th e s e p r i n ­ c ip le s te n d s to o b s c u r e th e s e r e la tio n s h ip s am o n g a ll p la n s co m b in e d . 22 T he 

w ide ra n g e in b e n e fit a m o u n ts f o r g iv e n s e r v ic e and e a r n in g s le v e ls , a s show n in ta b le s 10 to 14 an d in c h a r ts 1 to 4 h a s a c h a r a c t e r i s t i c s im il a r to th a t of th e N atio n*s c o m p e n s a tio n s tr u c t u r e re v e a le d by o c c u p a tio n a l w ag e s tu d ie s . M o re ­ o v e r, ju s t a s th e ra n g e of w ag e r a te s te n d s to w id en to w a rd s th e u p p e r end of th e s k ill o r w age la d d e r , so d o es th e ra n g e of p e n sio n b e n e fits w id en w ith lo n g e r 

s e r v ic e an d h ig h e r p a y .

N e v e r th e le s s , on th e a v e r a g e , p e n s io n b e n e fits in c r e a s e w ith y e a r s of s e r v ic e and w ith p a y le v e ls ( c h a r t 5). F o r e x a m p le , m e d ia n m o n th ly b e n e fits fo r 20 y e a r s of s e r v ic e (the s h o r t e s t s e r v ic e le v e l a t w h ich n e a r ly a ll w o rk e rs w ould q u a lify f o r b e n e fits ) r o s e fro m $5 2 a t th e $ 3 ,6 0 0 le v e l to $7 6 a t th e $ 8 ,4 0 0 le v e l. S im ila r ly , f o r w o r k e r s e a rn in g $ 4 ,8 0 0 a y e a r , m e d ia n m o n th ly b e n e fits in c r e a s e d fro m $5 4 fo r 20 y e a r s of s e r v ic e to $7 8 f o r 30 y e a r s . M ed ian a m o u n ts 

fo r o th e r e a r n in g s le v e ls an d s e r v ic e p e r io d s a r e show n b elo w , alo n g w ith th e ra n g e of b e n e fits p ro v id e d to th e m id d le 50 p e r c e n t of th e w o rk e rs ( in te r q u a r tile ra n g e ). T he m e d ia n r e p r e s e n ts th e m id -p o in t of th e w o rk e r d is tr ib u tio n .

_________________________ Annual earning__________________________

$3.600 $4.800 $6,000 $8,400

Inter- Inter- Inter- Inter­ quartile quartile quartile quartile Service periods (years) Median range Median range Median range Median range

101 ......................—-............— $25 $20-$30 $28 $23-$40 $35 $25-$53 $50 $28-$90

151 —-------------------------- 39 30- 46 42 34- 60 50 38- 76 70 39-125

20 ----------------------------------------- 52 43- 63 54 48- 80 60 50-100 76 52-155

25 ...........................................— 63 50- 75 68 50- 99 72 61-125 111 63-194 30 ----------------------------------------- 75 57- 90 78 56-115 86 70-150 130 75-231

1 Excludes a substantial number of workers in plans with higher service requirements.

T he p r iv a te p e n sio n s y s te m a s a w hole— lik e th e s o c ia l s e c u r ity s y s te m — a p p e a rs to fa v o r lo w -w a g e w o r k e r s , la r g e ly b e c a u s e of th e g r e a t e r c o v e ra g e of p la n s th a t r e la te b e n e fits to s e r v ic e a lo n e and b e c a u s e of th e fla t b e n e fit p la n s , w h ich m o r e th a n c o u n te rb a la n c e p la n s w ith s t e p - r a t e f o rm u la s . F o r e x a m p le , th e 1 5 -p e rc e n t d if f e r e n tia l in th e m e d ia n b e n e fits f o r th e $ 3 , 6 0 0 - an d $ 6 ,0 0 0 - a - 

y e a r w o rk e r w ith 20 y e a r s of s e r v ic e s ta n d s in s h a r p c o n tr a s t to th e 6 7 - p e r c e n t d iffe re n c e in th e ir e a r n in g s .

T h e re is , h o w e v e r, a c lo s e r c o r r e la tio n b e tw e e n s e r v ic e an d b e n e fits . T he 

d iffe re n c e b e tw e e n 20 an d 30 y e a r s of s e r v ic e (50 p e r c e n t) m a y b e c o m p a re d 

w ith d iff e re n tia ls of fro m 40 to 45 p e r c e n t up to $ 6 ,0 0 0 an d 71 p e r c e n t a t th e 

$ 8 ,4 0 0 le v e l. 23 T h is r e la tio n s h ip is m o r e c le a r ly il lu s t r a t e d by re d u c in g m e d ia n 

b e n e fit a m o u n ts to th e ir m o n th ly e q u iv a le n ts fo r e a c h y e a r of s e r v ic e , 24 a s show n

22 For some of the discussions relating to pension theory and philosophy, see McGill, op. cit.

23 The 10- and 15-year levels cannot be compared with the longer service periods in this manner because of the substantial number of plans under which workers cannot qualify at these lower service levels. 24 Derived by dividing a monthly benefit by the years of service used to compute it. Benefits were related

thus, to total service and, where credited service was less than the period of employment, monthly equivalents would be smaller than if based on plan membership alone.

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in th e ta b u la tio n b elo w . T he in flu e n c e of p la n s p ro v id in g f la t a m o u n ts f o r s p e c i­ fie d s e r v ic e an d p la n s w ith a m a x im u m lim it on s e r v ic e c r e d its (e. g. , 25 y e a r s ) a c c o u n ts fo r th e o v e r a ll d e c lin e of m o n th ly e q u iv a le n t b e n e fits p e r y e a r of s e r v ic e 

a s s e r v ic e in c r e a s e d .

_________Annual earnings__________

Service periods (years) $3,600 $4,800 $6,000 $8,400

101 ____________________— $2.50 $2.80 $3.50 $5.00 151 — ------- -------- - 2.60 2.80 3. 33 4.66

2 0 ------------------------------------- 2.60 2.70 3.00 23.80

2 5 ------------------------------------- 2. 52 2. 72 2. 88 4.44

3 0 ------------------------------------- 2.50 2.60 2.86 4.33

Excludes a substantial number of workers in plans with higher qualifying service requirements. 2 The sharp decline as compared to the 15-year level is accounted for by some large plans providing uniform benefits for workers with 20 years or more of service.

T he f o rm u la s u s e d in co m p u tin g b e n e fits h a d , of c o u r s e , d if f e r e n t e ffe c ts 

on th e b e n e fit d is tr ib u tio n s an d c o m p u te d m e d ia n s . F o r m u la s b a s e d on b o th 

e a rn in g s an d s e r v ic e p u s h e d m e d ia n le v e ls u p w a rd a s e a rn in g s an d s e r v ic e in ­ c r e a s e d , w h ile f o rm u la s b a s e d on s e r v ic e a lo n e c a u s e d th e m to r i s e a s s e r v ic e 

in c r e a s e d , b u t h a d th e o p p o site e f fe c t a s e a r n in g s in c r e a s e d . U n ifo rm b e n e fit f o rm u la s te n d e d to r a is e m e d ia n b e n e fits a t th e lo w e r le v e ls of s e r v ic e an d e a r n ­ in g s , b u t d e p r e s s e d th e m a s e a rn in g s an d s e r v ic e in c r e a s e d .

M odifying p r o v is io n s in n o rm a l r e tir e m e n t f o rm u la s a ls o a f fe c t th e ra n g e of b e n e fits and a v e r a g e le v e ls . A m in im u m b e n e fit p ro v is io n , u s u a lly b a s e d 

on s e r v ic e , c r e a te s a flo o r b elo w w h ich th e b e n e fit c a n n o t f a ll. In th e a g g r e ­ g a te , su c h p r o v is io n s p u sh e d m e d ia n s u p w a rd a t th e lo w e r e a rn in g s le v e ls an d , in p la n s w ith f la t b e n e fits and o ffs e t f o r m u la s , a t s h o r t e r s e r v ic e p e r io d s . On th e o th e r h a n d , f la t b e n e fits , m a x im u m s e r v ic e c r e d its , and m a x im u m p e n s io n b e n e fits (se ld o m a p p lic a b le u n d e r th e a s s u m p tio n s of th is stu d y ) s e t b e n e fit c e ilin g s th a t te n d e d to h o ld dow n m e d ia n s a t th e h ig h e r e a rn in g s le v e ls an d lo n g e r s e r v ic e p e r io d s .

C o m b in ed B e n e f its . E x c e p t f o r long s e r v ic e w o rk e rs w ith h ig h e a r n in g s , p r im a r y s o c ia l s e c u r ity b e n e fits of $ 1 05 a t th e $ 3 , 6 0 0 - a - y e a r e a rn in g s le v e l an d $ 1 2 7 a t th e $ 4 ,8 0 0 le v e l an d ab o v e g r e a tly e x c e e d e d m e d ia n p r iv a te p la n b e n e fits . A s sh o w n b e lo w , 70 p e r c e n t of th e m e d ia n c o m b in e d b e n e fit of $181 fo r th e $ 4 , 8 0 0 - a - y e a r w o rk e r w ith 20 y e a r s of s e r v ic e w as a c c o u n te d f o r by s o c ia l s e c u r ity .

_________Annual earnings__________

Service periods (years) $3,600 $4,800 $6,000 $8,400

101 ------------------------------------ $130 $155 $162 $177 i s 1 ------------------------------------ 144 169 177 197

2 0------------------------------------- 157 181 187 203

2 5 ------------------------------------- 168 195 199 238 30 --------------- 180 205 213 257

* Excludes a substantial number of workers in plans with higher

qualifying service requirements.

S in ce th e s o c ia l s e c u r ity p a y m e n t r e p r e s e n ts a l a r g e r p r o p o r tio n of p r e ­ r e tir e m e n t e a r n in g s f o r w o rk e rs w ith low e a rn in g s th a n fo r th o s e w ith h ig h e a r n ­

in g s an d s in c e p r iv a te p la n s a ls o te n d e d in th e s a m e d ir e c tio n , lo w e r p a id w o rk ­

e r s c le a r ly r e c e iv e d a l a r g e r to ta l b e n e fit in r e la tio n to p re v io u s e a rn in g s th a n

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h ig h e r p a id w o r k e r s . F o r e x a m p le , a t an a s s u m e d e a r n in g s le v e l of $ 3 ,6 0 0 w ith 30 y e a r s of s e r v ic e , a b o u t 9 o u t of 10 w o r k e r s w ould b e e lig ib le fo r a c o m ­ b in e d b e n e fit of a t l e a s t h a lf th e ir p r e r e t i r e m e n t e a r n in g s , w h e re a s a t $ 8 ,4 0 0 a y e a r , on ly a b o u t 3 o u t of 10 w o uld s e c u r e th a t r a tio o r m o r e . T he p r o p o r tio n s 

a t th e o th e r e a rn in g s and s e r v ic e le v e ls a r e show n b elo w :

Annual earnings

Service periods (years)

$3,600 $4.800 $6.000

Percent

$8,400

101 ......... - .............. - .......... 7.1 3.1 1.3 0.7

151 — - ............................... 30.1 15.0 5.2 1.5 20 — ....................-............ 74.5 28.5 14.2 6.8

2 5 ....... ................................. 84.0 41.5 26.3 16.9

3 0 ......................................... 90.6 62.7 34.9 28.3

1 Excludes a substantial number of workers in plans with higher qualifying service requirements.

T he m e d ia n p la n b e n e fit f o r th e $ 3 , 6 0 0 - a - y e a r w o rk e r w ith 20 y e a r s of 

s e r v ic e w ould b e o n ly a six th of h is a s s u m e d p re v io u s e a r n in g s , b u t w ith th e a d d itio n of p r im a r y s o c ia l s e c u r ity , th e co m b in e d b e n e fit w ould a m o u n t to s lig h tly m o r e th a n h a lf of p r e r e t i r e m e n t e a r n in g s . 25 H o w e v e r, th e m e d ia n p la n b e n e fit f o r th e $ 8 , 4 0 0 - a - y e a r w o rk e r w ith th e s a m e a m o u n t of s e r v ic e w as a b o u t a n in th of h is e a r n in g s , w h ile h is co m b in e d b e n e fit a m o u n te d to le s s th a n a th ir d of p r e ­ r e tir e m e n t e a r n in g s . T h is te n d e n c y as show n b e lo w w as c o n s is te n t am on g o th e r 

e a r n in g s le v e ls .

Annual earnings and selected service periods

$3,600 $4.800 $6,000 $8. 400

Item 20 years 30 years 20 years 30 years 20 years 30 years 20 years 30 years

Including primary social security benefit: Monthly amount ----- Percent of earnings --

$157

52.3 $180 60.0

$181 45.2 $205 51.2 $187 37.4 $213 42.6 $203

29.0 $257 36.7

Excluding primary social security benefit: Monthly am ou n t----- Percent of earnings -- $52

17.3

$75

25.0

$54

13.5 $78 19.5 $60 12.0 $86 17.2 $76 10.9 $130 18.6

M ethod of F in a n c in g . C o n trib u to ry p la n s p ro v id e d , on th e w h o le, h ig h e r 

p e n s io n s th a n n o n c o n trib u to ry p la n s , r e fle c tin g , f o r th e m o s t p a r t, w o rk e r p a y ­

m e n ts to w a rd s b e n e fit c o s ts . In a d d itio n , s in c e b e n e fit f o rm u la s (and e m p lo y e e c o n trib u tio n s ) in c o n tr ib u to ry p la n s w e re u s u a lly g e a r e d to e a r n in g s , th e d if ­ f e r e n tia l b e tw e e n c o n trib u to ry an d n o n c o n trib u to ry p la n b e n e fits w as g r e a te s t a t 

th e h ig h e r e a rn in g s le v e ls . F u r th e r m o r e , th e r e w as a w id e r d is p e r s io n of b e n e ­

f its a t e a c h e a r n in g s le v e l in c o n trib u to ry th a n n o n c o n trib u to ry p la n s , e s p e c ia lly 

a t th e h ig h e r e a rn in g s le v e ls .

M ed ian m o n th ly b e n e fits in c o n tr ib u to ry p la n s ra n g e d f r o m $27 fo r th e 

$ 3 , 6 0 0 - a - y e a r w o rk e r w ith 10 y e a r s of s e r v ic e to $267 f o r th e $ 8 ,4 0 0 w o rk e r

25 Primary social security benefits, under the assumed conditions, represented 35 percent of annual earnings of

$3,600, 31.75 percent of $4,800, 25.40 percent of $6,000, and 18.14 percent of $8,400.

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w ith 30 y e a r s of s e r v ic e . In c o n tr a s t, m e d ia n b e n e fits in n o n c o n trib u to ry p la n s r a n g e d f ro m $ 2 5 to $ 109 a m o n th , re v e a lin g s m a lle r d iff e re n c e s in b e n e fits b e ­ tw e e n e a r n in g s le v e ls th a n in c o n tr ib u to ry p la n s .

__________ Service periods (years)___________ Annual earnings and method of financing 10 1 I S 1 20 25 30

$3,600:

Noncontributory —— $25 $39 $52 $63 $75 Contributory----- -— 27 42 54 70 84 $4,800:

Noncontributory----- 28 39 52 65 75 Contributory---------- 37 60 76 98 119 $6,000:

Noncontributory —— 28 42 53 65 84 Contributory —------- 52 84 105 130 157 $8,400: Noncontributory ----- 34 42 70 95 109 Contributory----- -— 91 130 175 221 267

1 Excludes a substantial number of workers in plans with higher quali­ fying requirements.

W hen p r im a r y s o c ia l s e c u r ity b e n e fits w e re ta k e n in to a c c o u n t, th e d if ­ f e r e n c e s b e tw e e n b e n e fits e x p r e s s e d as a p e r c e n t of p r e r e t i r e m e n t e a r n in g s w e re n o t as g r e a t b e c a u s e s o c ia l s e c u r ity ad d ed a s iz a b le u n ifo rm a m o u n t to p r iv a te p la n b e n e fits . F o r b o th c o n tr ib u to ry and n o n c o n trib u to ry p la n s a t a ll s e r v ic e 

le v e ls , th e r a tio of a v e ra g e r e tir e m e n t in c o m e to p r e r e t i r e m e n t e a r n in g s d e ­ c lin e d a t h ig h e r e a r n in g s le v e ls .

_________Annual earnings

$3.600 $4.800 $6.000 $8.400 Method of financing and service periods Percent

Noncontributory:

10 years----------- 43.0 38.5 31.0 23.0

15 y ea rs----------- 47.7 41.5 33.6 24.1

20 y ears----------- 52.0 44. 5 36.0 28.0

25 y ears----------- 56.0 47.8 38.4 31.6

30 y ears----------- 59.7 50.5 42.2 33.7

Contributory:

10 years----------- 43.7 40.8 35.8 31.0

15 y ea rs----------- 49.0 46.5 42.0 36.6

20 y ea rs----------- 53.0 50.5 46.2 43.0

25 y ea rs----------- 58.0 56.0 51.2 49.6

30 y ears----------- 62.3 61.2 56.6 58.1

T ype of E m p lo y e r U n it. S in g le -e m p lo y e r p la n s g e n e r a lly p ro v id e d la r g e r 

b e n e fits th a n m u ltie m p lo y e r p la n s , e s p e c ia lly a t th e h ig h e r e a r n in g s le v e ls . T h is w as c h ie fly due to th r e e f a c to r s : (1) T he e x te n s iv e u s e b y m u ltie m p lo y e r p la n s

of f la t b e n e fits and of b e n e fits v a ry in g b y s e r v ic e a lo n e , w h ic h p ro v id e s u b s ta n tia l b e n e fits r e la tiv e to e a r n in g s fo r w o rk e rs a t lo w e r e a r n in g s le v e ls ; (2) th e e x ­

te n s iv e u s e b y s in g le - e m p lo y e r p la n s of e a r n in g s - r e l a te d b e n e fit f o rm u la s w h ich p ro d u c e l a r g e r b e n e fits fo r w o rk e rs w ith a b o v e - a v e r a g e e a r n in g s ; an d (3) th e 

p r e v a le n c e of e m p lo y e e c o n trib u tio n s in s in g le - e m p lo y e r p la n s an d th e ir a b s e n c e

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f ro m m u ltie m p lo y e r p la n s . T he m e d ia n b e n e fit in m u ltie m p lo y e r p la n s fo r th e w o rk e r w ith 20 y e a r s o f s e r v ic e w a s $ 5 0 a t b o th th e $ 4 ,8 0 0 an d $ 8 ,4 0 0 e a r n ­ in g s le v e ls . In s in g le - e m p lo y e r p la n s , h o w e v e r, th e b e n e fit a t th e $ 8 ,4 0 0 le v e l 

w as n e a r ly tw ic e th a t a t th e $ 4 ,8 0 0 le v e l. A s sho w n b e lo w , n o n c o n trib u to ry s in g le - e m p lo y e r p la n s an d m u ltie m p lo y e r p la n s h a d a b o u t th e s a m e m e d ia n b e n e ­ f it fo r w o r k e r s w ith $ 4 , 800 e a r n in g s an d 20 y e a r s of s e r v ic e ; $ 5 2 an d $ 5 0 , r e ­

s p e c tiv e ly . D iffe re n c e s b e tw e e n m e d ia n b e n e fits in c o n tr ib u to ry an d n o n c o n trib u ­ to r y s in g le - e m p lo y e r p la n s w e r e f a r g r e a te r .

Median monthly benefits

Assumed-service periods, annual

earnings levels, and method of financing Single employer Multiemployer

20 years of service: $4,800.......................................................... $56 $50

Noncontributory--------------------------- 52 50

Contributory-------------------------------- 79 0 ) $8,400 ------------------------------------------- 105 50 Noncontributory--------------------- ----- 75 51 Contributory —----------------------------- 176 (l) 30 years of service: $4,800 ------------------------------------------ 84 63 Noncontributory--------------------------- 76 65 Contributory--------------------------- -— 120 (1) $8,400 ------------------- ----------------------- 163 65 Noncontributory --------------------------- 145 65 Contributory-------------------------------- 267 ( J)

1 Number of workers not sufficient for selection of median.

C o lle c tiv e B a r g a in in g . N o n b ar g a in e d p la n s p ro v id e d s ig n ific a n tly h ig h e r r e tir e m e n t b e n e fits th a n b a r g a in e d p la n s , la r g e ly due to th e h e a v y c o n c e n tra tio n of s in g le - e m p lo y e r c o n tr ib u to ry p la n s , ty p ic a lly w ith b e n e fits b a s e d on e a r n in g s . 

F o r e x a m p le , in n o n b a rg a in e d p la n s , th e m e d ia n m o n th ly b e n e fit fo r 20 y e a r s 

o f s e r v ic e fo r w o r k e r s a t th e $ 4 ,8 0 0 le v e l w as $ 6 8 c o m p a re d w ith $ 5 2 in p la n s 

u n d e r c o lle c tiv e b a rg a in in g . A s e x p e c te d , th e r e la tiv e a s w e ll a s a b s o lu te d if ­ f e re n c e in th e m e d ia n b e n e fits of b a r g a in e d an d n o n b a rg a in e d p la n s w as g r e a te r 

a t th e $ 8 ,4 0 0 le v e l. N o n c o n trib u to ry p la n s u n d e r c o lle c tiv e b a rg a in in g h a d s lig h tly lo w e r m e d ia n b e n e fits th a n n o n c o n trib u to ry n o n b a rg a in e d p la n s a t th e $ 4 , 800 le v e l, b u t a t th e $ 8, 400 le v e l, th e d iffe re n c e w as s u b s ta n tia l.

___________ Median monthly benefits_____

Mentioned in a Not mentioned in Assumed service periods, annual collective bar­ a collective bar­ earnings levels, and method of financing gaining agreement gaining agreement

20 years of service: $4,800 .................... .................................. $52 $68 Noncontributory-------------------------- 51 58 Contributory------------------------------- 65 85 $8,400 --------------- ----------.................... 60 150 Noncontributory-------------------------- 58 138 Contributory------------------------------- 172 181 30 years of service:

$4,800 ------------------- ------- -------------- 75 101 Noncontributory-------------------------- 74 89 Contributory------------------------------ 102 126 $8,400 ..........-........................................... 100 225 Noncontributory------------------------ - 84 203 Contributory------------------------------- 265 273

L a rg e c o lle c tiv e ly b a r g a in e d p la n s , s u c h a s th o s e in th e auto an d s te e l 

in d u s tr ie s an d th e te le p h o n e co m p an y , h a d a s u b s ta n tia l e f fe c t on o v e r a ll p la n

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le v e ls . A t the tim e of this study, plans follow ing the S te e lw o rk e rs p a tte rn (which

included ap p ro x im ately a m illio n w o rk e rs ) p ro vid ed a m onthly b en efit of $ 5 2 fo r

a w o rk e r earn in g $4,800 w ith 20 y e a rs of s e rv ic e . F o r the sam e earn in g s and

s e rv ic e , A utom obile W o rk e rs plans (also co verin g about a m illio n w o rk e rs ) p ro ­

vided a b en efit of $ 56 and telephone com pany plans (coverin g ap p ro x im ately

900,000 w o rk e rs ), a b en efit of $51. The unusual b en efit amount at the $3,600

le v e l (and 20 years* s e rv ic e ) under telephone com pany plans re fle c ts the e ffe c t

of the s o c ia l s e c u rity o ffse t.

Illustrative monthly private plan pensions for selected pattern plans at annual earnings of—

$3,600______________$4, 800______________$6,000______________$8,400 Current serv­ ice periods Tele- Tele- Tele- Tele- (years) Steel Auto phone Steel Auto phone Steel Auto phone Steel Auto phone

1 0------------- $28 - - $28 - $28 - - $28

1 5------------- $39 42 - $39 42 - $39 42 - $39 42

20 ------------- 52 56 $63 52 56 $51 52 56 $51 60 56 $76 25 ------------- 65 70 63 65 70 51 65 70 61 95 70 111

30 ------------- 78 84 68 78 84 56 78 84 86 130 84 146

1 Normal retirement formulas for current and future service at the time of this study (winter 1962—63) for steel, auto, and telephone plans were as follows: Steel—1 percent of average monthly earnings during 120 months immediately preceding retirement times years of service, less $80 for primary social security benefit. Minimum: $2.60 times years of

service.Auto—$2. 80 times years of service. Telephone—1 percent of average monthly earnings during 5 consecutive years of highest earnings times years of service, less one-half primary social security benefit when eligible. Minimum—prior to age 65 with less than 30 years' service at date of retirement—$115; at age 65 with 30 but less than 40 years' service at date of retirement—$120; at age 65 with 40 or more years' service at date of

retirement__$125; less one-half primary social security benefit when eligible.

Type of W o rk e r C o v e re d . S a la rie d w o rk e rs could g e n e ra lly look fo rw a rd

to higher paym ents fro m p riv a te pension plans than production w o rk e rs w ith the

sam e s e rv ic e and earn in g s. This w as m ain ly because s a la rie d w o rk e rs often

contributed to w ard th e ir pensions (u su ally based on earn in g s and s e rv ic e ), w hile

production w o rk e rs and w o rk e rs in plans co verin g both production and s a la rie d

w o rk e rs w e re m o re lik e ly to be in non con trib u tory plans that b ased pensions on

s e rv ic e alone. A t the $4,800 le v e l, fo r exam ple, plans co verin g s a la rie d w o rk ­

e rs on ly p ro vid ed a m edian m onthly b en efit of $ 6 4 fo r 20 y e a rs of s e rv ic e w hile

plans co verin g production w o rk e rs only (m ainly m u ltie m p lo y e r p lans) p rovid ed

$ 5 0 and those co verin g both s a la rie d and production w o rk e rs p ro vid ed $60.

Median monthly private plan pension for workers with 20 years of service

and annual earnings of— Type of worker covered $4,800 $8,400

Salaried and production -- $60 $139

Production o n ly------------- 50 55

Salaried o n ly---------------- 64 147

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E v en if th e c o m p a ris o n is lim ite d to n o n c o n trib u to ry p la n s , p la n s th a t in ­

clu d ed s a la r ie d w o r k e r s g e n e ra lly p ro v id e l a r g e r b e n e fits — e s p e c ia lly a t h ig h e r e a rn in g s le v e ls — th a n th o s e th a t w e re co n fin ed to p ro d u c tio n w o rk e rs only.

Selected annual earnings and service periods

$4.800__________$8.400

Method of financing and type of worker covered 20 years 30 years 20 years 30 years

Noncontributory: Salaried and production — $51 $77 $76 $146

Production o n ly------------- 50 73 55 75

Salaried o n ly---------------- 58 89 140 207

Contributory: Salaried and production — 78 119 175 267

Production o n ly------------- ( 1) ( 1) (*> C1) Salaried o n ly---------------- 93 141 198 297

1 Number of workers not sufficient for selection of median.

I n d u s tr y . N o rm a l r e tir e m e n t b e n e fit le v e ls v a r ie d w id e ly am o n g in d u s ­ t r i e s as a r e s u l t of s u b s ta n tia l d iff e re n c e s in th e p re v a le n c e of e m p lo y e e c o n ­ tr ib u tio n s an d m u ltie m p lo y e r p la n s . T he b e n e fit le v e ls a ls o r e f le c te d th e in flu e n c e of th e ty p e s of fo rm u la s u s e d to c o m p u te b e n e fits an d th e p a tte r n b a rg a in in g in 

c e r ta in in d u s tr ie s .

L o w e st b e n e fits w e re p ro v id e d in in d u s tr ie s m a r k e d b y n o n c o n trib u to ry m u ltie m p lo y e r p la n s c o v e rin g b lu e - c o lla r w o r k e r s , w h o se p e n s io n s w e re m o s t f re q u e n tly b a s e d on f la t- b e n e f it f o r m u la s . In th e c o n s tr u c tio n in d u s try , fo r e x ­ a m p le , th e m e d ia n b e n e fit fo r th e $ 4, 8 0 0 - a - y e a r w o rk e r w ith 20 y e a r s of s e r v ic e w a s $ 4 0 a m o n th . S im ila rly , in th e s e r v ic e in d u s tr ie s it w as $ 50 a m o n th .

Selected annual earnings and service periods_____

$4. 800_____________$8,400

Industry 20 years 30 years 20 years 30 years

All industries1 ----------------------- $54 $78 $76 $130

M ining------------- ------------------ 75 75 75 75

Contract construction —----------- 40 60 40 56 Manufacturing----------------------- 52 78 75 130 Transportation----------------------- 72 90 80 100 Communications and public u tilities----------------------------- 51 56 76 146 Wholesale and retail tra d e------ 60 90 93 146 Wholesale trade---------------- 62 80 67 98 Retail trade-------------------- 60 98 140 188 Finance, insurance, and

real estate------------------------- 96 150 210 313 Services------------- ----------------- 50 75 52 75

1 Includes industries for which data are not shown separately.

B e c a u s e o f th e p re d o m in a n c e of b e n e fit fo rm u la s b a s e d on s e r v ic e a lo n e , m e d ia n b e n e fits in b o th th e s e in d u s tr ie s sh o w ed a ty p ic a l in c r e a s e as m o re s e r v ­

ic e w a s a c c u m u la te d , b u t n o t a s e a rn in g s in c r e a s e d . One la r g e c o n tr ib u to ry p la n 

in th e e l e c t r i c a l c o n s tr u c tio n in d u s try w ith a $ 30 b e n e fit fo r 20 y e a r s of s e r v ic e 

($ 5 0 fo r 30 y e a r s o r m o re ) e x e r te d s u b s ta n tia l in flu e n c e on th e m e d ia n and if

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this plan w e re excluded, the m edian b en efits fo r a ll plans in the in d u stry would

be c lo se to that shown fo r n on con trib u tory plans in the follow ing tabulation.

Median monthly private plan pensions by method of financing at selected annual earnings

___________ and service periods of—____________

Noncontributory Contributory

$4,:800 $8,400 $4, 800 1 00

Industry 20 years 30 years 20 years 30 years 20 years 30 years 20 years 30 years

All industries1 --------------- $54 $78 $76 $130 $78 $98 $175 $267

Mining ------------------------ 75 75 75 75 (2) (2) (2) (2) Contract construction ----- 52 65 52 65 (2) (2) (2) (2) Manufacturing---------------- 51 75 60 100 73 116 175 267 Transportation---------------- 72 90 75 90 89 138 179 268 Communications and public u tilities------------- 38 56 76 146 92 140 209 312 Wholesale and retail trade -------------------------- 60 86 70 105 67 106 140 213 Wholesale trade---------- 54 78 67 98 80 125 140 210 Retail tra d e--------------- 60 90 146 175 64 102 135 213 Finance, insurance, and real estate------------------- 95 136 200 291 100 153 220 330 Services------------------------ 36 45 36 45 120 140 140 210

1 Includes industries for which data are not shown separately.

2 Number of workers not sufficient for selection of median.

N oncontributory b en efits in the s e rv ic e in d u strie s w e re c o n sid e ra b ly lo w er

than those in any o th er in d u stry, but becau se of the co n trib u to ry plans in the

am usem ent in d u s trie s , m edian b en efits fo r the in d u stry group as a w hole w e re

co m p arab le to those in o th er in d u strie s.

In c o n tra st to the re la tiv e ly low b en efit le v e ls in the co n stru ctio n and s e r v ­

ice in d u strie s, high m edian b en efits at the $4,800 le v e l w e re p ro vid ed in the

m ining and tra n sp o rta tio n in d u strie s, w h ere m u ltiem p lo yer plans a re also p r e ­

dom inant. The United Mine W o rk e rs p lan s, w hich p ro vid ed a m onthly pension

of $ 75 26 fo r 20 y e a rs o r m o re of s e rv ic e , accounted fo r the re la tiv e ly high

b en efits in m ining. In the tra n sp o rta tio n in d u stry, m edian b en efits w e re stro n g ly

influenced by the W e ste rn C onference of T e a m ste rs plan, w hich p ro vid ed about

$ 7 2 a m onth and the C e n tra l States T e a m ste rs plan w hich p ro vid ed a b en efit a v ­

erag in g about $ 122 a month. 27 A s w as ty p ic a l fo r o th er in d u strie s, c o n trib u to ry

plans in the tra n sp o rta tio n in d u stry (m ostly in the ra ilro a d in d u stry) p ro vid ed

su b sta n tia lly h igh er b en efits than n on con trib u tory p lan s, e s p e c ia lly at higher

earn in g le v e ls .

Recently revised in the bituminous plan to provide $100 a month. 27 Benefit amounts for workers retiring under the Central States Teamsters plan varied with the weekly contribution rate. The amount most commonly contributed by employers was $6 a week for each worker (winter 1962-63). At this rate, a worker retiring at age 60 would receive $200 a month for the first 60 months of retirement and $90 a month thereafter or, given a life expectancy of about 17 years at age 60, an average benefit of $122 a month. The

Western Conference of Teamsters provided monthly benefits of 1. 76 percent of total contributions made on the worker's behalf, up to a maximum of $82.50 times the quota rating. The quota rating was $1 for a worker in whose

behalf the contribution rate was 10 cents an hour for 125 hours a month from May 1, 1955, to retirement date. For

the purposes of this study, computations were based on the assumption of 2,080 hours during each year, using the above contribution rate, quota rating, and maximum benefit.

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In p u b lic u t ili tie s , th e m e d ia n b e n e fit w a s h e a v ily in flu e n c e d b y th e n o n c o n ­ tr ib u to r y te le p h o n e c o m p a n y p la n s , w h ich c o v e re d ab o u t 5 o u t of 8 w o rk e rs in th e in d u s try . F o r e x a m p le , th e m e d ia n b e n e fit f o r th e $ 4 , 8 0 0 - a - y e a r w o rk e r w ith 20 y e a r s of s e r v ic e w a s $ 5 1 a m o n th . T he n o n c o n trib u to ry p la n s in o th e r p u b lic 

u tilitie s p ro v id e d b e n e fits c o m p a ra b le to th e te le p h o n e c o m p a n y p la n s a t th e sa m e e a r n in g s an d s e r v ic e le v e ls . H o w e v e r, ab o u t a th ir d o f th e w o rk e rs in o th e r p u b lic u t ilitie s w e re in c o n tr ib u to ry p la n s th a t h a d s ig n if ic a n tly h ig h e r b e n e fits th a n th o s e p ro v id e d b y th e n o n c o n trib u to ry p la n s — $ 9 2 fo r 20 y e a r s of s e r v ic e a t 

th e $ 4 , 800 le v e l an d m o re th a n double th a t a m o u n t a t th e $ 8 ,4 0 0 le v e l.

T he l a r g e s t m o n th ly b e n e fits w e re p ro v id e d in th e fin a n c e , in s u r a n c e , and r e a l e s ta te in d u s tr y due to b o th th e g r e a te r p r e v a le n c e of c o n tr ib u to r y p la n s 

and th e u n u s u a lly h ig h le v e l of b e n e fits p ro v id e d b y n o n c o n trib u to ry p la n s w ith e a r n in g s - b a s e d f o r m u la s ; b e n e fits r a n g e d f ro m $ 1 0 0 to o v e r $ 3 2 5 a m o n th an d c o v e re d a b o u t 40 p e r c e n t of th e w o rk e rs in th is in d u s try .

B e n e fit le v e ls in r e t a i l tr a d e w e re g e n e r a lly h ig h e r th a n th o s e in w h o le ­ s a le tr a d e (as w e ll a s th o s e in m a n y o th e r in d u s tr ie s ) b e c a u s e th e f o r m e r w e re ty p ic a lly c o n tr ib u to ry p la n s w h ile th e la t te r u s u a lly w e re n o n c o n trib u to ry m u lti­ e m p lo y e r p la n s w ith s e r v ic e o r f la t b e n e fit f o r m u la s .

B e n e fit le v e ls v a r ie d w id ely am on g m a n u fa c tu rin g in d u s tr ie s , a s sho w n b elo w .

Median monthly private plan pensions

for workers with 20 years of service

_____and annual earnings of—

Industry $4,800 $8,400

Durable goods:1 Stone, clay, and glass products---------------- $45 $55

Primary metals -------- 52 60

Machinery---------------- 56 56

Electrical equipment — 54 112

T ransportation

equipment: Motor veh icles----- 56 56

Aircraft--------------- 50 130

Nondurable goods:1 Food ----------------------- 73 92

T ob acco------------------ 96 175 Apparel------------------- 50 50

Printing------------------- 50 111

Chemicals --------------- 76 154

Petroleum---------------- 100 222

Rubber -------------------- 50 76

1 Includes industries for which data are not shown separately.

T he r e la tiv e ly h ig h b e n e fits in th e food , to b a c c o , c h e m ic a ls , an d p e tro le u m i n ­

d u s tr ie s la r g e ly r e f le c t th e p re v a le n c e of e m p lo y e e c o n trib u tio n s an d b e n e fit 

f o rm u la s b a s e d on e a r n in g s . F o r e x a m p le , a b o u t th r e e - f o u r th s o f th e w o r k e r s 

in th e p e tro le u m in d u s tr y p la n s w e re in c o n tr ib u to ry p la n s w ith li b e r a l e a r n in g s - 

b a s e d f o r m u la s , w h ic h p ro v id e d m e d ia n m o n th ly b e n e fits of $ 1 0 0 and $ 2 2 2 fo r 

th e $ 4 ,8 0 0 and $ 8 ,4 0 0 le v e ls . M ed ian b e n e fits a t th e $ 4 ,8 0 0 e a r n in g s le v e l in 

th e re m a in in g in d u s tr ie s w e r e c lo s e ly c lu s te r e d , r e f le c tin g th e in flu e n c e o f n o n ­

c o n tr ib u to ry p la n s an d m in im u m b e n e fit p r o v is io n s , w h ile a t th e $ 8 ,4 0 0 le v e l, m o r e v a r ia tio n w a s e v id e n t, la r g e ly due to th e in flu e n c e of e a r n in g s - b a s e d f o r ­

m u la s as w e ll as m in im u m b e n e fits b a s e d on s e r v ic e .

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A n a n a ly s is of so m e of th e s e in d u s tr ie s r e v e a le d th e in flu e n c e of d o m in a n t p a tte r n p la n s . In th e m o to r v e h ic le s an d th e m a c h in e r y in d u s tr i e s , d o m in a te d b y 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 , th e m e d ia n b e n e fits fo r 20 y e a r s of s e r v ic e a t b o th e a r n in g s le v e ls sho w n w as $5 6— th e b e n e fit p ro v id e d fo r 20 y e a r s o f s e r v ic e r e g a r d le s s of e a r n in g s . In th e a p p a re l in d u s try , th e m e d ia n b e n e fit o f $ 5 0 r e s u lte d fro m p la n s n e g o tia te d b y th e C lo th in g W o rk e rs an d L a d ie s 1 

G a rm e n t W o rk e rs* u n io n s.

In th e r u b b e r p ro d u c ts in d u s try , th e R u b b e r W o rk e rs p la n s u s u a lly h a d a 

p e n s io n b e n e fit b a s e d s o le ly on le n g th of s e r v ic e , b u t b e c a u s e o f a lte r n a tiv e 

p e r c e n t- o f - e a r n in g s f o rm u la s w h ic h o p e ra te d o n ly a t th e h ig h e r e a r n in g s le v e ls , m e d ia n b e n e fits r o s e f ro m $ 50 fo r w o r k e r s a t lo w e r le v e ls to $ 7 6 a t th e $ 8 ,4 0 0 

le v e l. S im ila rly , in the* p r im a r y m e ta ls in d u s try , th e d iffe re n c e b e tw e e n th e 

m e d ia n b e n e fits of $ 5 2 an d $ 6 0 a t th e $ 4 ,8 0 0 and $ 8 ,4 0 0 le v e ls , r e s p e c tiv e ly , r e s u lte d fro m th e a p p lic a tio n of th e a lte r n a tiv e b e n e fit f o rm u la s in p la n s n e g o tia te d 

b y th e S te e lw o r k e r s .

T he re m a in in g in d u s tr ie s w e re s im il a r l y d is tin g u is h e d b y n o n c o n trib u to ry p la n s p ro v id in g u n ifo rm b e n e fits (p rin tin g ) and p la n s b a s in g b e n e fits o n s e r v ic e alo n e a t th e lo w e r e a r n in g s le v e ls (sto n e , c la y , and g la s s p r o d u c ts ) an d th e m o re li b e r a l c o n tr ib u to ry p la n s b a s in g b e n e fits on e a r n in g s a s w e ll a s s e r v ic e a t th e h ig h e r e a r n in g s le v e ls ( e le c tr ic a l m a c h in e ry ).

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Chart 1. P en sion B en efits for W orkers E arn ing $ 3 ,6 0 0 A nn ually W ith 2 0 and 3 0 Y ears o f Service

W o rke rs

(in th o u s a n d s )

5,000 "

W orkers

(in th o u s an d s)

5 ,0 0 0

M o n th ly b e n e fit

Mote: This cl.art shows the n u m b e r of wo rke rs belonging to pension plans providing th e nor mal r e t ir e m e n t be ne fit am ou nt s indicated for 2 0 and 30 year s of se rv ic e. It does not show the actual num ber of wor kers

at the d i f f e r e n t s e r v i c e a n d b e n ef i t leve ls. T h e d a t a a r e b a s e d on t h e n o r m a ! r e t i r e m e n t b e n e f i t f o r m u l a s in e f f e c t in t h e w i n t e r of 1 9 6 2 - 6 3 f o u n d in a s t u d y of 1 5 , 8 1 8 p r i v a t e p e n s i o n p l a n s c o v e r i n g

15 .6 m illion actnve w o rk e rs m 1961.

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Chart 2. P en sion B enefits for W orkers E arn in g $ 4 ,8 0 0 A nnually W ith 2 0 and 3 0 Years o f Service

W orkers

(in th o u s a n d s )

5 ,0 0 0

3 ,0 0 0

2,000

1,000

W orkers

(in thousands)

5 ,0 0 0

4 ,0 0 0

— 3 ,0 0 0

1,000

U n d e r $ 1 0 $ 2 0 $ 3 0 $40 $ 5 0 $ 6 0 $ 7 0 $ 8 0 $ 9 0 $ 1 0 0 $ 1 1 0 $ 1 2 0 $ 1 3 0 $ 1 4 0 $ 1 5 0 $ 1 6 0 $ 1 7 0

to to to to to to to to to to to to to to to to and

$ 1 0 $ 2 0 $ 3 0 $ 4 0 $50 $ 60 $ 70 $ 8 0 $ 9 0 $ 1 0 0 $ 1 1 0 $ 1 2 0 $ 1 3 0 $ 1 4 0 $ 1 5 0 $ 1 6 0 $ 1 7 0 over

M o n th ly b e n e fit

Note: This ch a r t shows the num ber of workers belonging to pension pla ns prov idin g the norm al retirem e nt bene fit a m ounts in d ic a te d for 20 and 30 years of service. It does not sh ow th e actua l nu mber of workers

at t h e d i f f e r e n t s e r v i c e a n d b e n e f i t l e v e l s T h e d a t a ar e ba se d on t h e n o r m a l r e t i r e m e n t b e n e f i t f o r m u l a s in e f f e c t in t he w i n t e r of 1 9 6 2 - 6 3 f o u n d in a s t u d y of 1 5 , 8 1 8 p r i v a t e p e ns io n p la n s c o ve r i ng

15 6 m illion active workers in 1961.

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Chart 3. Pension Benefits for Workers Earning $6,000 Annually With 20 and 30 Years of Service

W o rk e rs W orkers

U n d e r $ 2 0 $ 4 0 $ 6 0 $80 $ 1 0 0 $ 1 2 0 $ 1 4 0 $ 1 6 0 $ 1 8 0 $ 2 0 0 $ 2 2 0 $ 2 4 0

to to to to to to to to to to to and

$ 2 0 $ 4 0 $ 6 0 $ 8 0 $ 1 0 0 $ 1 2 0 $ 1 4 0 $ 1 6 0 $ 1 8 0 $ 2 0 0 $ 2 2 0 $ 2 4 0 o ver

M o n th ly b e n e fit

N o te : T h is c h a r t sh ow s th e n u m b e r o f w o rk e rs b e lo n g in g to p e n sio n p la n s p ro vid in g th e n o rm a l r e tir e m e n t b e n e fit a m o u n ts in d ic a te d fo r 2 0 an d 3 0 y e ars of s e rv ic e . It do e s n o t sh ow th e a c tu a l n u m b e r o f w o rk e rs

a t th e d if f e r e n t s e rv ic e an d b e n e fit le v e ls . Th e d a ta are based on th e n o rm a l r e tir e m e n t b e n e fit fo rm u la s in e ffe c t in th e w in te r o f 1 9 6 2 -6 3 fo u n d in a stu d y of 1 5 ,8 1 8 p riv a te p e n sio n p la n s c o v e rin g

1 5 .6 m illio n a c tiv e w orke rs in 19 61 .

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Chart 4. P en sion B en efits for W orkers E arning $ 8 ,4 0 0 A n n u ally W ith 2 0 and 30 Years o f Service

W orkers

(in th o u s an d s)

5 ,0 0 0

4 ,0 0 0

2,000 —

W orkers

(in thousands)

5 ,0 0 0

3 ,0 0 0

— 1,000

U n d er $ 2 0 $ 4 0 $ 6 0 $80 $ 1 0 0 $ 1 2 0 $ 1 4 0 $ 1 6 0 $ 1 8 0 $ 2 0 0 $ 2 2 0 $ 2 4 0 $ 2 6 0 $ 2 8 0 $ 3 0 0 $ 3 2 0

to to to to to to to to to to to to to to to and

$ 2 0 $ 4 0 $ 6 0 $ 8 0 $ 1 0 0 $ 1 2 0 $ 1 4 0 $ 1 6 0 $ 1 8 0 $ 2 0 0 $ 2 2 0 $ 2 4 0 $ 2 6 0 $ 2 8 0 $ 3 0 0 $ 3 2 0 over

M o n th ly b e n e fit

N o te : T h is c h a rt show s th e n u m b e r o f w o rk e rs b e lo n g in g to p e nsion p la ns pro vid in g th e n o rm a l r e tir e m e n t b e n e fit a m o u n ts in d ic a te d fo r 2 0 and 3 0 y e a rs of s e rv ic e . It d oes n o t show th e a c tu a l n u m b e r o f w o rke rs

a t th e d if f e r e n t se rv ic e and b e n e fit le ve ls. Th e da ta are b ased on th e n o rm a l r e tir e m e n t b e n e fit fo rm u la s in e ffe c t in th e w in te r o f 1 9 6 2 -6 3 fo u n d in a stu d y o f 1 5 ,8 1 8 p riv a te p e nsion p la n s c o v e rin g

1 5 .6 m illio n active w orkers in 1961

N>U1

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26

Chart 5. M onthly Normal R etirem ent Benefits,1 by Selected Assumed

Annual Earnings Levels and Service Periods, W inter 1962-63

SERVICE

IN YEARS

10

15

20

25

30

Monthly benefit

0 $50 $100 $150 $200 $250 $300 $350

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T a b le 3. P r o v is io n s fo r P a r tic i p a t io n R e q u ir e m e n ts in P r i v a t e P e n s io n P la n s by Type of E m p l o y e r Unit,

M e t h o d of F i n a n c i n g , a n d C o l l e c t i v e B a r g a i n i n g S t a t u s , W i n t e r 1 96 2—6 3

(W orkers in thousands)

.......... ......................1

Item

All plans With participation

requi rem ents

Without participation

requirements

Numbe r W orkers 1 Plans i W o r k e r s 1 1 Plans Workers1

All plans studied--------------------------------------------- 15,818 15,621 9, 129 ! 4 , 4 6 0 6,689 i i, 161

Single em ployer ---------------------------------------------- 14,890 11,742 ! 9, 100 4 , 3 2 9 5,790 7,414

N on contribu to ry----------------------------------------- 10 ,657 8 ,4 5 5 i 5 ,6 9 3 j 1 ,7 7 7 4,964 ; 6, 678

Mentioned in a collective

bargaining agreement ------------------ 3, 933 5,668 802 569 3, 131 ; 5, 099

Not mentioned in a collective

bargaining agreement -------------------- 6, 724 2, 787 4,891 1,208 1,833 { 1, 579

Contributory------------------------------------------------ 4, 233 3, 288 3,407 i 2,552 826 | 736

Mentioned in a collective

bargaining agreement --------------------- 1,034 1,495 850 1,235 184 | 261

Not mentioned in a collective

bargaining agreement ------------------ — 3, 199 1,793 2, 557 j 1,317 642 476

Multiemployer ------------------------------------------------- j 928 3, 878 29 131 899 ! 3, 747

Noncontributory---------------------------------------- j 869 3, 212 10 ! 97 ; 859 i 3,115

Mentioned in a collective

bargaining agreement --------------------- ! 810 3, 176 5 ! 8 3 805 3, 093

Not mentioned in a collective i

bargaining a g ree m e n t---------------------- 59 36 5 ! 14 54 22

Contributory------------------------------------------------ 59 666 19 34 40 632

Mentioned in a collective

bargaining agreem ent -------------------- 18 356 3 8 15 348

Not mentioned in a collective

bargaining agreement --------------------- 41 310 16 26 25 : 284

1 Active workers in 1961.

NOTE: B ecau se of rounding, sum s of individual item s m ay not equal totals.

Table 4. Provis io n s for Participation Requirements in Private Pension Plans by Industry, Winter 1962- 63

(W orkers in thousands)

Indust ry

All plans I With pa j

1 requi

rtic ipation

rements

Without par

require

'ticipation

ments

Numbe r Workers1

T ' "

! Plans | W o r k e r s 1 Plans ! Wo rke r s 1

All plans studied--------------------------------------------- 2 1 5 ,818 j 1 2 15,621 ! 9 , 1 2 9 4 , 4 6 0 6,689 11, 161

Mining --------------------- ------------------------------------------ 316 ; 327 1 38 62 178 266

Contract construction ----------------------------------- 449 1 1 ,0 7 2 60 23 38 9 l , 049

Manufacturing ------------------------- ----------------------- 9, 257 ! 9 ,6 7 8 4, 938 2,838 4,319 b, 840

T ransportation------------------------------------------------ 67 3 ! 1,2 86 285 . 214 1 388 1, 072

Communications and public u t i l i t i e s ------- 849 i 1, 27 0 39 1 ! 386 458 98 5

Wholes?.le and retail tra de ------------------------- 1, 627 920 i, 352 j 501 265 418

Wholesale trade ---------------------------------------- 1, 147 47 9 94 3 f 193 204 286

Retail tra d e -------------- ------------------------------ 480 44 0 419 | 308 6 1 132

Finance, insurance, and real estate ____ 1,853 733 1, 622 ! 445 231 288

S e r v i c e s ------------------------------------------------■------------- 719 308 258 ! 35

J_____

461 i

I

___________________ L_

24 3

1 Active w orkers in 1961.

2 Includes industries for which data are not shown separately.

N O TE: B ecau se of rounding, su m s of individual ite m s m ay not equal totals.

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Table 5. M inim um A ge and S ervice R equirem en ts for P articipation in P rivate P en sion P la n s, W inter 1962—6 3 1

(Workers in thousands)

Minimum service

requirements (years)

All plans

Minimum age requirements2

None 20

or under 21 23 1 25

Numbe r WorkersPlans Wo rke rs

Plans

. . . . . . . . . . . . . . . . . . J

| Workers

Plans Workers

Plans Workers

Plans Workers

All plans with participation

requirem ents------- ------------------------ 9, 129 4 ,4 6 0 3, 731 2, 242 55 : 72 95 84 9 11 1,601 706

No service requirement — ------- 512 435 _ _ 3 51 31 48 _ _ 277 145

1 ----------- ------ ------------------------------------- 1,882 1,957 1,082 1,233 2 14 1 5 1 5 252 304

2 ------------------ ---------------------------------- 1, 170 515 563 244 50 7 53 15 - - 179 72

3 ----------------------- --------------- ---------------- 2, 300 628 :' 598 255 - - 10 15 8 6 412 99

4 _____________________________________ 30 24 30 24 - - - - - - - -

5 _________________________________ 3, 235 901 1, 458 486 - - - - - - 481 85

28 29 30 35 40

All plans with participation

requirem ents----------------------------------- 47 15 204 13 3, 118 1,036 253 237 16 44

No service requirem ent-------------------

_ . . _ 187 146 12 22 2 23

1 ............. - - - - 523 339 7 34 14 21

2 __________ ____________________ ______ 37 8 - - 222 109 66 60 - _

3 -------------------------- ------------------------------.— --------- 10 6 204 13 1, 030 203 28 31 - -

4 _______ _______________________________ - - - - - - - - - -

5 ------------------------------------------------------------ " - - 1, 156 240 140 90 - -

1 Based on a study of 15,818 private pension plans covering 15.6 million active workers in 1961.

2 Some plans specified alternative requirements; for each case, the one applying to a worker hired at age 25 was used.

NOTE; Because of rounding, sums of individual items may not equal totals. 1

Table 6. Crediting of Preparticipation Service for Normal Benefit Computation and for Service Qualification

for Benefits in Private Pension Plans, by Method of Financing, Winter 1962—63 1

(Workers in thousands)

Item

All plans

Method of financing

Noncontributory Contributory

Number Workers Plans Workers Plans Workers

All plans with participation

requirem ents------------------------------------------- 9, 129 4 ,460 5, 703 1,875 3,426 2, 585

Benefit computation:

Preparticipation service included__ 2, 359 943 1, 562 623 797 320

Preparticipation service excluded__ 6,770 3, 517 4, 141 1, 252 2,629 2, 265

Service qualification for benefits:

Preparticipation service included__ 3, 977 1,473 2, 346 769 1, 631 704

Preparticipation service excluded__ 5, 152 2, 987 3, 357 1, 106 1,795 1,881

1 Based on a study of 15,818 private pension plans covering 15. 6 million active workers in 1961.

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

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Table 7. M inim um Age and Service R equirem ents for N orm al R etirem en t in P rivate Pension P la n s, W inter 1962—63

(Workers in thousands)

M inimum serv ice

req u irem en ts1

(y e a r s)

A ll plans

M inimum age req u irem en ts2

60 1 65 Other

N u m b e r W o r k e r s 3 P l a n s W o r k e r s 3 i P l a n s W o r k e r s 3 P l a n s I _______________| W ork ers3

All plans stu d ied____________________ 15,818 15, 621 103 1 ,6 1 4 j

1

15,269 13, 807 446 200

N o s e r v i c e r e q u i r e m e n t ___________ 1, 078 1, 617 2 3 1. 026 1,589 1 50 25

1 -4 .......................................... ............................... 2, 652 2,277 19 59 i 2, 621 2, 205 ; 12 12

5 „ . ________________ ______________ 2, 038 946 - : 2. 028 933 ; i o 13

6-Q .................. . 310 84 3 3 307 80 t

-

in .................... 4, 067 3, 794 10 12 4, 055 3, 766 i 2

16

1 1 -1 4....... ..................................................... 860 153 - - 759 134 1 101 19

15 ______________________________________ 3, 682 3, 042 3 24 3, 577 2, 9 80 | 102 38

16- 19__________________________________ 1 9 - - 1 9 _

2 0 ______________________________________ 692 2, 844 39 1, 267 599 1, 546 | 54 31

21-24 ______ _____ __________ 3 5 - i! 3 5 _

25 . . . . ______ - 394 587 2 28 ! 292 552 [ 100 8

3 0 ............................ ... ..................... 39 248 23 204 1| 1 6 38

Ove r 30____ ___ __ ___ - ------ 2 15 2 15 i -

l ^

-

1 For those plans which specified a period of employment to be served before participation in the plan could begin, the

minimum service requirement includes the preparticipation service and the required plan membership service.

2 Some plans specified alternative requirements; for each case, the one with the earliest age or no age requirements

was selected.

3 Active workers in 1961.

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

Table 8. Minimum Age Requirements for Normal Retirement in Private Pension Plans, by Industry, Winter 1962—6 3

(Workers in thousands)

Minimum age requirements1

Industry 60 65 Other

Number W orkers2 Plans W orkers2 Plans W orkers2 Plans W orkers2

All plans studied___________________ 315, 818 315, 621 103 1,614 15,269 13,807 446 200

M ining_________________________ 316 327 2 206 314 121

Contract construction-------------------- 449 1, 072 3 24 444 1, 037 2

11

Manufacturing______________________ 9, 257 9, 678 29 405 8, 961 9, 161 267 112

Transportation--------------------------------

Communications and

673 1,286 20 224 639 1, 011 14 ;1 50

public utilities____________________ 849 1, 270 26 708 773 555 50 7

Wholesale and retail trade------------ 1,627 920 6 23 1,618 892 3 5

Wholesale trade________________ 1,147 479 5 12 1, 139 46 3 3 5

Retail trade _____________________

Finance, insurance, and

480 440 1 11 479 429 - -

real estate________________________ 1,85 3 733 7 12 1,836 715 10 6

Services-------------------------------------------- 719 308 10 12 609 289 100 8

1 Some plans specified alternative requirements; for each case, the one with the earliest age or no age requirements

was selected.

2 Active workers in 1961.

3 Includes industries for which data are not shown separately.

N O T E : B ecause of rounding, su m s of individual item s m ay not equal totals.

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T a b l e 9. E a r n i n g s B a s e U t i l i z e d i n E a r n i n g s F o r m u l a s in P r i v a t e P e n s i o n P l a n s , b y I n d u s t r y , W i n t e r 1962 —6 3 1

(Workers in thousands)

All plans

Earnings base

Industry Career Last or high

5 ye ars

Last or high

1 0 years

| L e s s than

5 years

2 form u las:

different bases

Number

Worke rs

Plans Workers

Plans Worke rsPlans Worke rsPlans | W o r k -

J e rs

Plans 1 W o rk -

i ers

All plans with basic benefit formulas based on1

e a rn in g s--------------------------------. 21 0 ,531 29 , 238 7, 002 4, 753 1,714 1,714 1, 236 2, 1 10 1 150 223 477 , 438

Mining --------------------------------------- 310 11 1 143 68 1 3 106 30 -

1

60 10

Contract construction -------- 64 21 60 17 - - - - - - 4 4

Manufacturing------------------------ 5, 527 5,997 3, 704 3, 359 652 711 831 1,698 74 58 266

1 171 Transportation — --------------- 422 486 160 150 135 65 7 1 193 4 11 52 ! 67

Communications and public

utilities ______________________ 783 1,227 429 349 254 743 29 29 3 44 68 ! 62

Wholesale and retail

trade --------------------------------------- 1 ,3 1 0 543 1, 117 317 50 35 96 86 37 23 10 82

Whole sa le t r a d e ---------------- 875 162 760 103 31 12 77 26 - - 7 21

Retail tra d e ----------------------- 435 381 357 214 19 23 19 60 37 23 3 61

Finance, insurance, and

real e s t a t e ----------------------------- 1,653 7 24 1,210 409 297 120 103 I 7 3 32 87 11 36

Services ------------------------------------ 387 102 104 58 277 38 - - ~ 6 6

1 Based on a study of 15, 818 private pension plans covering 15. 6 million active w orkers in 1961.

2 Includes industries for which data are not shown separately.

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

T a b l e 10. M o n t h l y P r i v a t e P e n s i o n P l a n N o r m a l R e t i r e m e n t B e n e f i t s 1 b y S e l e c t e d A s s u m e d

Annual Earnings L evels and Service P erio d s, Winter 1962—63 2

(W orkers in thousands)

Monthly benefit

Assumed annual earnings

$3, 600 $4, 800 $6, 000 $ 8, 400

Plans Workers Plans Workers Plans Workers Plans Workers

10 years of service

Total ---------------------------------- -------------- 10, 335 8, 839 10, 335 8, 839 10, 335 8, 839 10, 335 8, 839

None 3------------------------------------ ----------------- 210 417 245 410 185 265 134 202

Under $ 1 0 _____________________________ 526 237 414 137 368 168 3 34 105

$ 1 0 and under $ 2 0 __________________ 3, 109 1,423 2, 342 812 1, 330 5 34 1, 074 410

$20 and under $30 -------------------------- 3, 517 4, 132 2, 809 3, 489 2, 912 2, 621 1, 668 2, 166

$30 and under $ 4 0 --------------------------- 1, 239 1, 598 1, 327 1, 526 1, 227 1 ,3 1 2 716 691

$40 and under $ 5 0 __________________ 293 604 966 1, 205 788 1, 155 I, 478 581

$50 and under $ 6 0 --------------------------- 199 182 664 659 1, 023 9 37 661 603

$60 and under $ 7 0 __ _____________ 422 91 385 2 52 86 3 917 559 420

$70 and under $80 —------------------------ 150 45 43 1 19 281 473 703 1. 007

$80 and under $ 9 0 __________________ 4 8 2 04 77 194 152 457 338

$ 9 0 and under $ 1 0 0 -------------------------- 200 9 136 31 9 59 382 794

$ 1 0 0 and under $ 1 2 5 ___________ ____ 4 466 93 545 51 423 128 970 1, 114

$ 125 and under $ 1 5 0 ----------------------- - - 29 23 277 38 321 177

$ 150 and under $ 1 7 5 _______________ - - 4 226 47 201 16 87 95

$ 17 5 and under $ 200 _______________ - - - - 29 23 154 52

$ 200 and o v e r ________________________ ~ ■ " ~ 225 40 637 85

See footnotes at end of table.

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Table 10. Monthly Private Pension Plan N orm al Reti rement Benefits 1 by Selected A s s u m e d

Annual Earnings Levels and Service P erio ds, Winter 1962—6 3 2— Continued

(Workers in thousands)

Monthly benefit

— Assumed annual earnings

$ 3, 600 * $ 4, 800 !

oo°

* $8,, 400

Plans Workers

t"

j Plans

I

J W orkers | Plans Worke r s 1 Plans ' W orkers

15 ye a rs of service

Total ___________________________________ . .-1.1*777. _ 12, 161 j 14 ,7 7 7 12, 161 ! 14 ,7 7 7 | 12, 161 1 4 ,7 7 7 j 12, 161

Non e3— - --------------------- -------------------- 204 359 ) 268 397 226 261 213 i 221

Under $ 1 0 - ___________________________ 193 84 j 137 26 104 ; 28 i 1

$ 1 0 and under $ 2 0 --------------------------- 1,735 6 06 j 1,091 417 1, 006 1 468 1, 028 364

$20 and under $30 --------------------------- 2, 696 1, 281 j 1,7 2 2 891 596 ! 519 450 1 498

$30 and under $40 - —--------------------- 4, 374 4, 588 3, 770 3, 440 3, 142 ; 2 ,8 8 7 2, 1 12 ! 2, 345

$40 and under $ 5 0 --------------------------- 2, 056 2, 599 2, 142 2, 687 2, 224 1 1 ,8 9 0 858 ! 1,5 57

$50 and under $ 6 0 --------------------------- 647 i, 036 1, 173 964 1, 297 811 402 ! 626

$60 and under $ 7 0 --------------------------- 1,456 889 1, 674 1, 327 1, 587 1 1,3 4 3 1, 673 j 450

$70 and under $80 ------------------------ 435 4 34 j 617 791 951 1 1 ,0 65 1, 584 1 572

$80 and under $ 9 0 ------------ -------------- 75 71 I 325 452 536 j 544 682 I 367

$ 9 0 and under $ 1 0 0 -------------------------- 180 61 557 361 542 i 757 630 j 437

$ 100 and under $ 125------------------------ 6 64 92 | 761 258 1,4 54 I 1 ,1 1 4 1,9 8 3 ! 1,6 76

$ 125 and under $ 150------------------------ 4 62 60 | 227 55 530 1 291 978 ; i , 177

$ 150 and under $ 175--------- -------------- - - 4 313 93 67 88 853 ! 1, 115

$ 175 and under $ 2 0 0 ------------------------ - - ! - 214 j 26 446 ! 371

$ 200 and under $ 2 2 5 ------------------------ - - | - 4 301 : 69 202 182

$2 2 5 and under $ 250------------------------ - - ! - - ; 357 ' 58

$ 250 and o v e r ------------------------------------ - - | - - ■ _ j 326 106

20 years of service

Total ----------------------------------------------------- 15,462

r

14,947

1

15,462 j 1 4 ,947 1 5 ,4 6 2 1 1 4 ,947 ' 1 5 ,4 6 2 1 4 ,9 4 7

None 3_____________________ _________ — 162 335 188 i 408 152 ! 277 132 233

Under $ 1 0 ------------------------------------------- 161 133 102 ! 37 3 13 - -

$ 1 0 and under $ 2 0 ------------ -------------- - 5 37 ! 253 374 | 204 372 180 355 : 93

$ 20 and under $ 3 0 ------------------ --------- 1,818 J 561 1, 265 j 402 832 419 791 361

$30 and under $ 4 0 --------------------------- 2, 406 1,4 09 ' 1,472 | 1, 154 756 9 18 659 784

$40 and under $ 5 0 ------------------ -------- 2,736 2, 592 2,557 1 1,718 1,661 1, 2 38 1, 236 1,1 1 0

$50 and under $ 6 0 -------------------------- 2, 629 ' 4, 606 2, 1 11 ! 4,835 2, 172 4, 374 945 2, 382

$60 and under $ 7 0 --------------------------- 1,969 1 2, 195 1,843 | 1,408 1,878 745 810 1, 156

$70 and under $ 8 0 _ ------------------------ ! 60 3 935 875 i 994 886 858 409 1, 647

$80 and under $90 -- --------------------- 204 j 781 1,004 j 926 8 56 9 20 708 363

$90 and under $ 1 0 0 _________________ ! 770 | 379 1,390 960 1, 243 1, 142 1, 149 2 69

$ 1 00 and under $ 1 2 5 --------------------- 1,307 6 26 1, 180 1, 387 2, 22b 1, 796 2, 182 1,111

$ 1 25 and under $ 1 5 0 ----------------------- 6 I 23 171 ! 260 1, 068 1, 175 1,450 1,11Q

$150 and under $ 1 7 5 ----------------------- 97 69 7 75 165 531 550 1, 650 1, 391

$ 175 and under $ 2 00 _______________ 19 7 5 9 173 j 164 856 928

$ 200 and under $ 225 __ ----------------- 4 38 42 94 37 498 1 94 887 1,05 3

$ 225 and under $ 250 ----------------------- - - 4 35 4 3 . 6

10 3 28 438

$2 5 0 and under $ 27 5 --------------------- -

j - - 4 149 | 73 228 2 58

$ 27 5 and under $ 3 00 ----------------------- j - - - ! i 315 123

$ 300 and o v e r ------------------------------------

I

1

1

| ! 372 124

See footnotes at end of table.

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Table 10. Monthly Private Pension Plan Normal Retirement Benefits 1 by Selected Assumed

Annual Earnings Levels and Service Periods, Winter 1962—63 2— Continued

(Workers in thousands)

Monthly benefit

Assumed annual earning:s

$3, 600 $4, 800 $6, 000 | $8, 400

Plans Worke rs Plans ! W orkers

1

1 Plans W orkers J Plans, W orkers

25 years of service

T o t a l ------------------------------------------------------ 15 ,6 5 9 15,541 15,659 15, 541 15,659 15,541 15,659 15,541

None 3---------------------- --------------------------- 124 311 147 276 110 158 82 129

Under $ 1 0 ------------------------------------------- 26 20 13 35 10 22 - -

$ 1 0 and under $ 2 0 --------------------------- 251 122 184 188 139 140 764 91

$ 20 and under $ 3 0 --------------------------- 1, 337 426 798 321 686 328 629 254

$ 30 and under $ 4 0 --------------------------- 1,260 798 1, 014 583 630 506 480 430

$4 0 and under $ 5 0 --------------------------- 1,9 5 7 1, 351 1,0 29 1, 096 562 925 1, 322 922

$5 0 and under $ 6 0 --------------------------- 2,700 2, 741 2, 116 2,998 1,679 1,645 852 1, 572

$6 0 and under $ 7 0 --------------------------- 2,848 4, 083 2,411 2, 429 1,684 2, 975 261 974

$7 0 and under $ 8 0 --------------------------- 1,464 2, 318 1, 167 2, 218 1, 183 1,769 559 1, 381

$8 0 and under $ 9 0 --------------------------- 737 806 1,403 805 1,032 523 359 354

$ 90 and under $ 1 0 0 -------------------------- 362 775 981 715 850 486 2, 300 1, 128

$ 100 and under $ 1 2 5 ----------------------- 1,893 1,311 2, 535 2, 185 2,790 2, 148 1, 003 1 ,8 4 0

$ 125 and under $ 15 0 ----------------------- 166 285 463 934 1,427 1,458 1,782 849

$ 150 and under $ 1 7 5 _______________ 453 102 884 466 1, 355 1, 135 1, 374 692

$ 175 and under $ 200 ----------------------- 43 49 91 125 336 660 1 ,0 2 3 1 ,2 4 3

$ 200 and under $ 225 _______________ 4 28 43 143 94 682 355 1,050 1, 194

$ 225 and under $ 250 ----------------------- - - 224 28 289 157 49 3 549

$250 and under $275 ----------------------- - - 4 56 4 44 132 85 591 709

$ 275 and under $ 300 ----------------------- - - - - 4 8 3 66 501 589

$ 300 and under $ 350 ----------------------- - - - - I - 139 434

$ 350 and o v e r ------------------------------------

- - [ - 95 208

30 years of service

T o t a l ------------------------------------------------------ 15,660 15,547 15,660 15, 547

1

! 1 5 ,6 6 0 15,547 15,660 15,547

None 3___________________________________ 116 289 137 254 SZ 129 82 129

Under $ 1 0 ____________________________ 26 16 20 44 12 14 _ _

$ 1 0 and unde r $ 2 0 --------------------------- 189 96 119 78 34 35 15 16

$2 0 and under $ 3 0 --------------------------- 897 329 449 197 472 275 309 160

$3 0 and under $ 4 0 --------------------------- 994 436 1, 134 339 808 369 885 324

$4 0 and under $ 5 0 --------------------------- 1,088 983 531 853 556 770 438 696

$5 0 and under $ -6 0 --------------------------- 2, 120 1,786 1,240 2, 557 715 1, 384 405 1, 344

$6 0 and under $ 7 0 --------------------------- 2, 729 2, 821 1,776 1, 361 1, 328 881 1, 172 822

$ 7 0 and unde r $ 8 0 --------------------------- 1,815 3, 040 2, 080 2, 295 1, 187 1,965 662 967

$ 8 0 and under $ 9 0 -------------------------- 1,579 1, 726 1,286 1,517 913 2, 336 658 1, 185

$ 9 0 and under $ 1 0 0 -------------------------- 944 1, 183 1,051 1, 139 1,075 731 267 412

$ 100 and under $ 1 2 5 _______________ 1,588 1,776 2, 286 1,970 1,973 1, 339 846 869

$ 125 and under $ 15 0 ----------------------- 942 672 1 ,6 4 6 1, 333 2 ,4 5 7 1, 333 1 ,6 4 3 2, 269

$ 150 and under $ 17 5 ----------------------- 392 230 889 872 1, 173 1 ,4 6 8 1, 189 593

$ 175 and under $ 2 0 0 ----------------------- 208 75 413 364 859 850 1, 574 64 3

$ 2 0 0 and under $ 225 ----------------------- 4 63 90 192 172 1, 151 823 957 810

$ 225 and under $ 250 ----------------------- - - 338 114 387 377 1, 181 900

$ 250 and under $ 275 ----------------------- - - 4 7 3 87 251 248 944 1,047

$ 275 and under $ 300 ----------------------- - - - - 77 80 831 436

$ 300 and under $ 350 ----------------------- - - - - 4 150 140 978 1, 188

$ 350 and under $ 400 ----------------------- - - - - - - 357 476

$ 400 and ov er-------------------------------------- ~ " - - 267 261

1 Computation of benefit amounts was based on current benefit form ulas, assuming a constant level of earnings.

2 Based on a study of 15, 818 private pension plans covering 15. 6 million active workers in 1961.

No pension was provided because of the deduction of assumed social security benefits.

4 Where higher benefit amounts were relatively few and widely scattered they were accumulated in this interval.

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

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Chapter III. Disability Retirement

D isability benefits, like old-age benefits, supplement social security (OASDI)

benefits; together they are expected to provide an income which reasonably meets

the needs of the disabled w orker and his fam ily. A lm ost half of the plans,

h o w e ve r, covering 3 out of 10 w o rk e rs , did not p ro vid e d isab ility re tire m e n t

benefits. When provided, the amount of disability benefits is sometimes too

sm all to be a significant supplement to social security benefits. This is especially true for sh ort-service w orkers. M oreover, the requirements for social

security disability benefits are often more restrictive than those for private

plan benefits, so that w orkers eligible for the latter m ay not be eligible for the

fo rm er. While the difference between income before and after disability for

w orkers receiving both private and public benefits is usually substantial, for

those not eligible for social security it is, of course, far greater.

Disability retirem ent provisions usually require that a w orker be totally

and perm anently disabled (as defined in the plan) before norm al retirem ent age,

to qualify for a lifetim e benefit commencing after a short waiting period. They

apply chiefly to w orkers who are so se ve re ly incapacitated that, with few exceptions, they must withdraw from the labor force. As with other benefits,

such as early retirem ent and vesting, the attainment of a certain amount of

service or a specified age, or both, may also be required. The benefits to

be paid are most often related to the norm al retirem ent form ula, but m ore

liberal disability form ulas are frequently provided, especially for w orkers who

do not qualify fo r public d isability benefits. In addition, disability benefits p a y ­

able under the Social Security Act are often taken into account in the benefit

form ula of the private plan.

The Social Security Act was amended in 1956 to provide monthly disability

retirem ent benefits to totally and perm anently disabled w orkers between ages 50

and 65 who w e re co vered by the act fo r at le a st 5 of the 10 y e a rs p r io r to

disability. A I960 amendment removed the minimum age requirement. Since

many private plans already had a disability retirem ent provision before these

changes, the influence of the Social Security Act on extending the coverage in

private plans is difficult to gage. A BLS study of 300 negotiated pension

p la n s ,28 fo r exam ple, showed v e r y little change in the p re v a le n c e of d isability

re tire m e n t p ro visio n s in the period 1953—58. N e v e rth e le ss, by in creasin g the

awareness of the problem, the act has probably stimulated p ressure for the

inclusion of perm anent and total disability benefits in private plans, both negotiated and nonnegotiated. Two direct influences of social security disability

benefits on private plans, as will be shown, are m ore easily determined: (1) The

extent of disability required to qualify for p riva te plan benefits, and (2) the

interrelationship of benefits.

Since a disability provision provides a perm anent, though partial, rep lacement of lost wage income, it is a desirable and valuable aspect of a private

pension plan. The protection afforded by social security (and other public p ro ­

gram s) is often regarded by w orkers and their unions as inadequate. From the

e m p lo y e r’s viewpoint, the cost of d isab ility protection has to be weighed against

28 Pension Plans Under C ollective Bargaining: Normal Retirem ent, Early and D isability Retirem ent, Fall 1959

(BLS Bulletin 1284, 1961).

33

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the cost of retaining disabled w orkers on the p ayroll or, in its stead, the p rob ­

lem of terminating them without the supplement to public benefits prom ised by

the pension plan as a whole.

Plans not having disability retirem ent provisions frequently provide early

retirem ent or vesting. As will be shown later, the latter are often poor substitutes, because vesting does not confer immediate benefits, which are needed by

the disabled w ork er, and early retirem ent benefits are usually sm aller than

disability benefits.

Prevalence of Disability Retirement Provision

O ver half of the plans studied, with about 7 out of 10 w o rk e rs , contained

disability retirem ent provisions (table 11). Three-fourths of the multiemployer

plans provided for disability retirem ent, compared to only half the singleemployer plans. However, a higher proportion of workers in a single-em ployer

plans than in multiemployer plans were covered, because several of the largest

multiemployer plans (such as those negotiated by the United Mine W orkers, the

Clothing W o r k e rs , and the C en tral States T e a m ste rs) had no d isability p ro visio n . 29

With disability Without disability

________ Total______________retirem ent_________retirem ent______

_____________________________ Percent

Type of em ployer

unit Plans Workers Plans Workers Plans Workers

A ll plans stu d ied----------- 1 0 0 .0 1 0 0 .0 51. 8 69. 7 4 8 .2 3 0 .3

Single e m p lo y e r----------- 1 0 0 .0 1 0 0 .0 5 0 .3 7 4 .0 4 9 .7 2 6 .0

M ultiem ployer - .............- 1 0 0 .0 1 0 0 .0 7 6 .4 5 6 .9 2 3 .6 43 .1

NOTE: Because o f rounding, sums of individual item s may not equal totals.

A higher proportion of noncontributory plans had a disability provision

than contributory plans. This disparity stem s, in part, from the lack of d isability protection in contributory plans covering salaried w orkers (for whom this

protection often has a low p rio rity ). 30

With disability Without disability

Total_____________ r e t i r e m e n t________ retirem en t___

Percent

Method of financing Plans Workers Plans Workers Plans Workers

A ll plans stu d ied------------- 1 0 0.0 1 0 0 .0 51. 8 69. 7 48. 2 3 0 .3

Noncontributory--------------- 1 0 0 .0 1 0 0 .0 5 4 .0 7 3 .5 4 6 .0 2 6 .5

C on tributory------------------- 1 0 0 .0 1 0 0 .0 4 5 .9 5 8 .6 54 .1 4 1 .4

NOTE: Because o f rounding, sums of individual item s may not equal totals.

Because of the high prevalence of the provision in large negotiated plans

and its low incidence in the sm aller, m ore numerous (typically white-collar)

29 Several large m ultiem ployer plans provided disabled workers with deferred pensions which were not payable

until age 65 (Clothing Workers) or cash term ination benefits for disability (Central States Team sters). These b en efits were not regarded as disability retirem ent provisions in this study.

30 Other em ployee benefit plans may provide substantial short-term disability protection for these workers

(e. g . , accident and sickness insurance), and long-term disability incom e insurance.

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plans, the provision was m ore common in plans mentioned in a collective b a rgaining agreement than in those not so mentioned.

With disability Without disability

________ Total_____________ retirem ent___________retirem ent______

Percent C ollective bargaining

status Plans Workers Plans Workers Plans Workers

A ll plans stu d ied------------- 1 0 0 .0 1 0 0 .0 5 1 .8 69. 7 4 8 .2 3 0 .3

M entioned in a co llectiv e

bargaining agreem ent — 1 0 0 .0 1 0 0 .0 6 4 .4 74. 1 3 5 .6 2 5 .9

Not m entioned in a

c o llec tiv e bargaining

a g reem en t-------------------- 1 0 0 .0 1 0 0 .0 4 4 .5 6 0 .3 5 5 .5 39. 7

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

Reflecting the le sser emphasis of disability retirem ent provisions for whitecollar w orkers, disability protection was m ore prevalent in production worker

plans than in plans for salaried w orkers only.

With disability Without disability

Total_________retirem ent __________retirement_____

_ Percent Type of worker --------------------------------------------------------------------------------------------------

covered Plans Workers Plans Workers Plans Workers

A ll plans stu d ied------------- 1 0 0 .0 100. 0 51. 8 69. 7 48. 2 30. 3

Salaried and production— 1 0 0 .0 1 0 0 .0 4 1 .1 7 0 .0 5 8 .9 3 0 .0

Production o n ly-----------— 100. 0 100. 0 69. 5 69. 1 30. 5 30. 9

Salaried only ------— — 1 0 0 .0 1 0 0 .0 3 7 .0 5 9 .8 6 3 .0 4 0 .2

NOTE: Because of rounding, sums of individual item s m ay not equal totals.

Among m ajor industry groups, disability provisions were most common

in manufacturing (over half of the plans with over three-fourths of the workers),

reflecting their inclusion in the large negotiated plans in the metalworking industries (table 12). The proportion of covered w orkers protected in each m anufacturing in d u s tr y r a r e l y fell below 60 percent (except for printing). However, chiefly

because many sm all plans did not provide it, less than half the plans in chemicals,

instrum ents, and paper products, and less than a third of the plans in the e le c ­

tric m achinery, leather, rubber, textile, transportation equipment, and stone,

clay, and glass products in d u stries had the p ro visio n . On the other hand, alm ost

all of the plans in the tobacco, lum ber, furniture, and m iscellaneous m anufacturing industries had the provision. Although m ultiem ployer plans predominated,

plans in the apparel industry typically provided disability retirem ent. Both in

transportation and in communications and public utilities, three-fourths of the

w o rk e rs w e re in plans with d isability re tire m e n t. In the fo rm e r industry, the

w orkers without such protection w ere m ostly in m ultiem ployer plans in the trucking industry. In the latter, m ost of the covered w ork ers belonged to the te le ­

phone company plans.

Only about 40 to 50 percent of the w orkers in the trade and the service

industries had disability protection. In mining, because the plans negotiated

by the United Mine W orkers had no disability retirem en t p rovision, only a sm all

proportion of w orkers w ere covered. Despite typically heavy and arduous w o rk ­

ing conditions, 45 percent of the w orkers in the m ultiem ployer plans in the

construction industry w ere without disability protection. On the other hand, in

the finance industry, where alm ost all w orkers are in sales, c lerical, and other

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w hite-collar occupations, only a slightly sm aller proportion (40 percent) of the

w orkers were unprotected.

The higher prevalence in large plans of disability provisions is shown in

table 13. About three-fourths of the large plans (5,000 w orkers and over) and

w orkers— m ostly negotiated plans— had the provision, while only about half of the

s m a lle s t plans (under ZOO w o rk e rs ), covering tw o-fifth s of the w o r k e r s , had it.

Minimum Requirements for Disability Retirement

Key elements of disability retirem ent provisions are the definitions of d isability and the age and service requirem ents. O rdinarily, benefits are continued only as long as a w orker rem ains disabled, as defined.

Definition of D isa b ility . Most plans defined d isab ility in th e ir own te r m s ,

which resem bled but w ere not identical to the wording of the Social Security

Act's definition which, prior to July 30, 1965, read as follows: "Inability to engage in any substantial gainful activity by reason of any medically determinable

physical or mental im pairm ent which can be expected to result in death or to be

a long-continued and indefinite duration. " The rem aining plans eith er used the

act's definition, or delegated substantial discretion to the plan adm inistrator

(usually the employer). The act's definition was most frequently used in plans

under collective bargaining. On the other hand, except for se v e ra l larg e m u ltiem p lo yer plans in the garm ent industry, 31 alm ost a ll plans using the d is c re tio n ­

ary procedure were nonbargained.

M entioned in a c o l- Not m entioned in a

lec tiv e bargaining co llec tiv e bargaining

Total______________agreem ent___________ agreem ent_____

___________ ________ _____ Percent_____________________________

D efinition of disability Plans Workers Plans Workers Plans Workers

A ll plans with disability

retire m e n t-------------------- 110 0.0 110 0.0 UOO.O 110 0.0 10 0.0 10 0.0

S ocial Security A ct’s

definition -------------------- 8 .7 5 .5 15 .8 6 .5 2 .8 2 .8

Private plans own

definition -------------------- 71. 1 8 6 .6 7 6 .5 8 8 .3 6 6 .6 8 2 .2

Discretionary — no

d e fin itio n-------------------- 1 7 .6 7 .3 2. 1 4 .5 3 0 .6 1 5 .0

1 Includes 211 plans, covering 61, 000 workers, for which inform ation on definition of

disability was not available.

NOTE: Because of rounding, sums of individual item s m ay not equal totals.

The social security definition and the broad, discretionary definition of

disability were m ostly restricted to single-em ployer plans.

A recent study by the Social Security Administration analyzed the definition

of d isa b ility in p riv a te pension plans in detail. 32 The study, which was based

31 Plans in the garment industry were generally adm inistered by tripartite boards com posed of union, employer,

and neutral representatives. The docum ents filed for these plans under the W elfare and Pension Plans Disclosure

A ct, which are the basis for this analysis, did not include a definition of disability, although standards m ay have

been established in plan operation.

32 Joseph Krislov, "Definition of D isability in Private Pension Plans. " Social Security Bulletin. May 1964,

pp. 13-19.

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on data supplied by the Bureau of Labor Statistics, showed that where plans

defined d isability, m ost w o rk e rs w e re in plans ’’that provide benefits fo r a

m em ber who is unable to work at any job and whose disability is judged to

be p erm anent o r long-lasting----roughly the sam e individual who is lik e ly to be

able to qualify fo r benefits fro m the S o cia l S e c u rity A d m in istratio n . ” The a r ­

ticle cautioned, however, that little is known about the practical application

of the plan definition. Interpretations may vary widely with the result that

"decisions . . . w ill d iffe r fro m one plan to another even though the definitions

of d isab ility m ay be identical. ”33

In 19^5, the scope of the social, secu rity definition was broadened by e lim inating the req u irem en t that a w o r k e r ’s d isab ility m ust be expected to be of longcontinued and indefinite duration; it is now sufficient that the disability is expected

to la s t fo r a continuous period of not le ss than 12 m o n th s .34 Many pension

experts predict that private pension plans w ill alter their definitions to conform

to this change, especially since it w ill not affect m ost alternate disability income p r o g r a m s .35

The main d ifferen ce between p riv a te p la n s’ and Social S e c u rity A c t’ s d e finitions related to the extent to which an applicant must be disabled. F or ex ­

ample, the act requires that the claimant be unable to p erfo rm any job, while

about a seventh of the private plans with about a fourth of the w orkers, required

only that the w orker be unable to perform a job for which he is qualified or any

job in the company or industry. Presum ably, such w orkers would not be p ro ­

hibited from obtaining another type of employment. (Liberalization of the social

security definition in 1965 permitted w orkers disabled because of blindness to

collect benefits while working at other employment. )

_________Percent____________

Extent of disability Plans Workers

A ll plans with disability

retirem en t-------------------------- 10 0.0 1 0 0.0

Unable to perform any job L -

Unable to perform own or

5 2 .6 5 9 .3

related j o b ------------------------

Unable to perform any job in

8 .6 10.3

the company or industry----

No specific reference to

5 .5 15 .5

e x te n t2 ----------------------------- 3 3 .3 14.8

1 Includes plans follow ing the S ocial Security Act definition.

^ Includes "discretionary" plans and plans for which inform ation on extent of disability was not available.

NOTE: Because of rounding, sums of individual item s may not

equal totals.

Furtherm ore, social security benefits are provided for both physical and

mental disabilities, regardless of cause, while private plans were usually silent

as to whether they cover disabilities stemming from mental disorders (three3 3 Ibid. , p. 14 . This is illustrated by the changes in Social Security Adm inistration's own interpretation and

application of its definition. See, for exam ple, Social Security Regulation 404. 1502(c).

^ For a fuller summary of the changes, see Wilbur J. Cohen and Robert M. Ball, "Social Security Am endments of 1965: Summary and Legislative History, " Social Security Bulletin, September 1965, pp. 3—21.

35 Long-term disability insurance programs are likely to be affected by the am ended social security definition

because they are com m only integrated with both social security and applicable private pension plans. For a discussion of the effects of recent changes in the social security definition on disability insurance programs, see

Richard J. M ellm an, "Impact of New Social Security Disability D efinition on Existing Employee Benefits, " Pension

and Welfare News, New York, N. Y. , January 1966, pp. 49-61.

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fourths of the plans with 4 out of 5 w o rk e rs) and freq u en tly did not grant b en efits fo r s e lf-in flic te d in ju rie s o r w illfu l misconduct 36 (about 2 out of 5 plans*

and w orkers).

__________ Percent

Cause of disability Plans Workers

All plans with disability

retirem en t1 ------------------------------------ 1 0 0 .0 1 0 0 .0

Physical and m e n ta l--------------------------- 14. 7 1 5 .2

Physical, excluding m e n ta l---------------- . 5 1. 7

Physical, silen t on m e n ta l------------------ 3 1 .4 39. 3

D iscretionary-------------------------------------

As prescribed by the Social

1 7 .6 7.3

Security A c t ------------------------------------ 8. 7 5 .5

No sp ecific reference to c a u s e----------- 24. 5 3 0 .5

1 Includes a few plans for which information on cause of disability was not available.

NOTE: Because of rounding, sums of individual item s m ay not

equal totals.

Age and S e rv ic e R e q u ire m e n ts. As in the case of other plan p ro v isio n s,

age or service requirements, or both, were essential parts of disability re tire ­

ment provisions.

T h ree-fou rth s of the plans, like social se c u rity , had no age requirem ents.

Where they existed, they w ere usually low enough to perm it coverage of most

perm anent and total d is a b ilitie s ,37 and w e re g e n e ra lly lo w e r than those applicable

to e a r ly re tire m e n t. 38 Age 50, the e a r lie s t age at which so cia l se c u rity d i s ­

ability benefits were payable until I960, was the most common age requirement

for disability retirem en t, as compared with age 55 or 60 for early retirem ent.

____________Percent____________

Minimum age requirements 1 Plans Workers

A ll plans with disability

r e tir e m e n t------------------------------------ 1 0 0.0 1 0 0.0

Without age requirem ents----------------- 7 4 .8 7 1 .3

With age requirem ents-------------------- 2 5 .2 2 8 .7

45 and u n d e r----------------------------- -— 2 .4 3 .8

50 —.............— ........................................... 1 2 .3 1 4 .9

55 — —...........- ..........................- ................ 8 .6 7 .6

60 and o v e r ------------------------------------ 1 .9 2 .4

1 Som e plans specified alternative requirements; for each case.

the one with the earliest age or no age requirements was selected .

NOTE: Because of rounding, sums of individual item s m ay not

equal totals.

Service requirements for disability retirem ent were also generally lower

than for other retirem ent benefits. F orty-five percent of the plans, with almost

Included within this area is alcoholism , addiction to narcotics, and crim inal activity.

37 S ocial security data show that 70 percent of the disabilities among m en occur after age 49 and 82 percent

after age 44. See Social Security Adm inistration, Actuarial Note No. 18 (April 1965).

See BLS Bulletin 1407, 1964, op. c i t . , p. 27.

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3 out of 5 of the w o rk e rs , req u ired 15 y e a rs of s e r v ic e . This concentration

was chiefly due to plans negotiated by the Automobile W orkers and Steelw orkers,

and to the plans in the communications industries. The only other large concentration of w o rk e rs (1 out of 5) was in the plans that req u ired 10 y e a rs of

service. N early a third of the plans, covering only a tenth of the w ork ers,

required few er than 10 years of service, while only a seventh of the w orkers

were in plans requiring over 15 years.

__________ Percent__________

Minimum service requirem ents1

(years) Plans Workers

All plans with disability

r etirem en t---------------------------------------- 1 0 0 .0 1 0 0 .0

No service requirement

Less than 5 y e a r s---------

5 ..................— -------------

6 - 9 ...........— ---------------

1 0 ------------------------------

11 -14 -------------------------

1 5 ------------------------------

16 -19 -------------------------

2 0 --------------------------

2 5 ------------------------------

26-29 -------------------------

3 0 ------------------------------

3. 8 3 .8

1 0 .4 2. 9

1 7 .6 2. 2

1. 9 .4

1 1 .6 1 9 .0

.8 1 .2

45. 1 5 7 .0

1. 8 1 .2

4. 7 8. 7

2 .0 2. 7

(\) .2

l 2 ) < . 7

For those plans which specify a period of em ploym ent to be

served before participation in the plan could begin, the m inim um

service requirement includes the preparticipation service and the

required plan membership service.

^ Less than 0. 05 percent.

The most common combinations of age and service w ere 15 years of s e r v ­

ice and ages 50 to 55, which, altogether, applied to a seventh of the w orkers

(table 14). Plans without age requirements typically had service requirements

of 10 to 15 years.

Waiting P e rio d . D isab ility re tire m e n t benefits w e re payable by 3 out of 5

plan s, with 2 out of 3 w o rk e rs , only a fte r a waiting p eriod had elapsed.

_________ Percent__________

Provision Plans Workers

A ll plans with disability

retirem en t1 --------------------------------- 100. 0 1 0 0 .0

No w aiting p e rio d--------------------------- 39 .3 3 3 .2

1 and less than 6 m o n th s----------------- 7 .7 8 .5

6 m o n th s-------------------------------------- 3 5 .6 4 6 .0

7 and less than 12 m o n th s--------------- 5. 9 4 .2

When accident and sickness

benefits cease ----------------------------- 8. 8 7.6

1 Includes a few plans for which information on w aiting period

was not available.

NOTE: Because of rounding, sums of individual item s may not

equal totals.

In n e a rly a ll in d u stries the waiting p eriod u su ally ran 6 months fro m the

onset of disability (the same waiting period required to qualify for social secu rity

disability benefits), although in some plans it was as short as a month and in

others as long as a year (table 15).

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W aitin g p e r io d s w e r e o fte n r e la te d to th e d u ra tio n of a c c id e n t and s ic k n e s s 

b e n e fits ( te m p o r a r y d is a b ility b e n e fits ). In th e s te e l in d u s tr y p l a n s , fo r e x a m p le , d is a b ility p e n s io n b e n e fits b e g a n a f te r 6 m o n th s , d u rin g w h ich tim e te m p o r a r y 

d is a b ility b e n e fits w e re u s u a lly p a y a b le . O th e r p la n s r e la te d th e tim in g of th e tw o b e n e fits ev en m o r e c lo s e ly by sp e c ify in g th a t p e n s io n s w ould be p a y a b le o n ly 

a f te r a c c id e n t and s ic k n e s s b e n e fits w e re e x h a u s te d .39

D is a b ility R e tire m e n t B e n e fit F o r m u la s

F o r w o r k e r s e lig ib le f o r s o c ia l s e c u r ity d is a b ility b e n e fits , m o s t p la n s u s e d th e s a m e fo rm u la fo r d is a b ility b e n e fits a s th e y u s e d fo r n o rm a l r e t i r e ­

m e n t b e n e fits . F o r in e lig ib le w o r k e r s , h o w e v e r, m a n y n e g o tia te d s in g le - e m p lo y e r 

p la n s — c h ie fly th o s e in th e m e ta lw o rk in g in d u s tr ie s — h a d a s p e c ia l d is a b ility fo rm u la . F o r e x a m p le , in s te a d of b e n e fits b a s e d on th e n o rm a l b e n e fit c o m p u ­ ta tio n , th e A u to m o b ile W o r k e r s ’ p la n s p ro v id e d d o u b le th e n o rm a l b e n e fit and th e S te e lw o r k e r s p la n s p ro v id e d $100 a m o n th . O th e r s in g le - e m p lo y e r p la n s (u su a lly n o n b a rg a in e d ) s e ld o m u s e d a d iff e re n t o r s p e c ia l fo rm u la fo r w o rk e rs 

in e lig ib le fo r s o c ia l s e c u r ity , b u t w hen th e y d id , th e y u s u a lly ad d ed th e am o u n t of th e p o te n tia l s o c ia l s e c u r ity b e n e fit, a s th e y a ls o d id f o r e a r ly r e t i r e m e n t .40 T y p ic a lly , m u ltie m p lo y e r p la n s a p p lie d th e s a m e f o rm u la r e g a r d le s s of th e s o c ia l s e c u r ity s ta tu s of th e w o rk e r.

I n te g ra tio n W ith S o c ia l S e c u rity and W o rk m e n ’s C o m p e n sa tio n B e n e fits

F e d e r a l s o c ia l s e c u r ity b e n e fits a r e o fte n in c o r p o r a te d in to d is a b ility r e ­ tir e m e n t b e n e fit f o rm u la s in th e s a m e m a n n e r a s in n o r m a l r e tir e m e n t b e n e fit 

f o r m u la s , i. e. , by s t e p - r a t e f o rm u la s o r by d i r e c t o f f s e t .41 F u r th e r m o r e , w h e re a p p lic a b le , w o rk m e n ’s c o m p e n s a tio n b e n e fits a r e a lm o s t a lw ay s d e d u c te d 

in fu ll. B e c a u s e d is a b ility r e t i r e e s g e n e ra lly h a v e lo w e r e a rn in g s and le s s s e r v ­ ic e th a n n o rm a l r e t i r e e s , th e a p p lic a tio n of d i r e c t o ffs e ts a ffe c ts th e ir b e n e fits m o r e a c u te ly . In f a c t, th e o ffs e ts m a y re d u c e th e p la n b e n e fits to z e r o . S om e 

p la n s , th e r e f o r e , h av e a lte r n a te b e n e fit f o rm u la s n o t s u b je c t to d e d u c tio n s fo r s ta tu to r y b e n e fits .

T he b e n e fits p ro v id e d by s lig h tly m o r e th a n tw o -fifth s of th e p la n s w ith d is a b ility r e tir e m e n t, w ith o v e r h a lf th e w o r k e r s , w e r e d ir e c tly in te g ra te d w ith e ith e r s o c ia l s e c u r ity b e n e fits o r w o rk m e n ’s c o m p e n s a tio n , o r w ith b o th , by 

th e o ffs e t m e th o d (ta b le 16). A b ou t h a lf th e s e p la n s d e d u c te d o n ly w o rk m e n 's 

c o m p e n s a tio n , a s c o m p a re d w ith a b o u t a fo u rth th a t d e d u c te d o n ly s o c ia l s e c u r ity 

b e n e fits ; e a c h g ro u p of p la n s c o v e re d a b o u t 2 o u t of 5 w o rk e rs b elo n g in g to p la n s w ith o ffs e t f o r m u la s . T he re m a in in g fo u rth of th e p la n s d e d u c te d b o th .

In a d d itio n to d e d u c tin g a ll w o rk m e n ’s c o m p e n s a tio n b e n e fits , o v e r 7 o u t of 10 of th e s e l a t t e r p la n s , w ith a s im il a r p r o p o r tio n of w o r k e r s , a ls o d e d u c te d a ll s o c ia l s e c u r ity b e n e fits ; th e r e s t d e d u c te d h a l f . 42

for illustrative information on accident and sickness benefits see Digest of One Hundred Selected Health and Insurance Plans Under Collective Bargaining, Winter 1961-62 (BLS Bulletin 1330, 1962), and Digest of 50 Selected

Health and Insurance Plans for Salaried Employees, Spring 1963 (BLS Bulletin 1377, 1964). 40 See p. 75 , for a discussion of social security adjustment options.

41 See p. 10. 42 The 1965 amendments to the Social Security Act have limited the concurrent receipt of social security disa­ bility benefits and workmen's compensation to 80 percent of a worker's average monthly earnings credited to his social

security account before he became disabled.

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Plans _______ Workers

Provision Number Percent

Number

(thousands) Percent

A ll plans with disability

retirem ent 1 -------------------------- 8,19 3 - 10, 895 -

Plans without offset form ulas---- 4 ,4 0 5 _ 5, 040 _

Plans with offset fo r m u la s-------- 3 ,4 5 9 1 0 0 .0 5, 773 1 0 0 .0

Deducting social security

benefits o n l y -------------------- 815 2 3 .6 2 ,4 3 7 4 2 .2

Deducting workm en's com -

pensation only ----------------- 1,673 4 8 .4 2 ,2 6 5 3 9 .2

Deducting both social

security and workmen’s

c o m p e n sa tio n ------------------- 971 2 8 .1 1, 071 1 8 .6

1 Includes 329 plans covering 79 ,0 00 workers for which data were not

available.

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

Recognizing that w orkers and em ployers contribute equally to the social

se cu rity sy ste m , plan benefits fo r about 2 out of 5 w o rk e rs in plans with offset

formulas were reduced by one-half of social security disability benefits— the

amount attributable to the e m p lo y e rs ’ contributions. Three out of 10 w o rk e rs

were in plans deducting all social security benefits. A sim ilar proportion w ere

in plans that followed the basic steel industry pattern of reducing benefits com ­

puted under the basic benefit form ula by $ 80 a month. Most of these latter

plans had an alternate minimum benefit form ula without a deduction for public

benefits (i. e. , the n o rm al m inim um benefit of $ 2 . 50 or $ 2. 60 a month fo r each

year of service).

Percent

Provision Plans Workers

All plans with social security

d e d u c tio n ---------------------------------------- 1 0 0 .0 1 0 0 .0

All social security disability

benefit deducted ----------------------------- 55. 2 3 1 .4 O ne-half social security disability

benefit deducted ----------------------------- 2 3 .4 3 8 .6 $80 for social security disability

benefit deducted -----------------------------

Other1 -----------------------------------------------

2 0 .9

. 5

2 9 .6

.4

1 Various deductions ranging betw een 50 and 100 percent o f the

social security disability benefit.

NOTE: Because of rounding, sums of individual item s m ay not

equal totals.

Offsets w ere m ore common in the manufacturing industries (about half the

plans) than in the nonmanufacturing industries (about a third of the plans). (See

table 16.) However, owing to the social security deduction in the telephone

company plans and the frequent deductions of w o rk m e n ’s compensation payments

in the tra n sp o rta tio n and finance in d u s trie s ’ plans, o ve r 3 out of 5 w o rk e rs in

the nonmanufacturing industries, as compared to about half in the manufacturing

industries, w ere in plans with offset provisions.

The deduction of $ 80 for social secu rity was found alm o st exclu sively in

plans in the prim ary metals industries. Most manufacturing plans with offsets,

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h o w e v e r , r e d u c e d p la n b e n e f its o n ly f o r w o r k m e n 1 s c o m p e n s a tio n b e n e f its ( th r e e - 

f if th s o f th e p la n s w ith a b o u t 2 o u t o f 5 w o r k e r s ) , w h ile th e r e m a in in g p la n s 

e i t h e r d e d u c te d o n ly s o c ia l s e c u r i t y (a b o u t a s ix th o f th e p la n s w ith 2 o u t o f 5 

w o r k e r s ) o r d e d u c te d b o th (a f if th o f th e p la n s a n d w o r k e r s ) .

In n o n m a n u f a c tu r in g , a s a w h o le , th e m o s t c o m m o n d e d u c tio n s w e r e o n e - 

h a lf th e s o c ia l s e c u r i t y b e n e f it a n d th e e n t i r e w o r k m e n ’s c o m p e n s a tio n b e n e f it. 

T o g e th e r , th e y a c c o u n te d f o r a b o u t tw o - f if th s of th e p la n s a n d a b o u t t h r e e - f o u r t h s 

o f th e w o r k e r s .

A d m i n i s t r a t i v e P r o c e d u r e s

A d e t e r m i n a t io n o f th e e x te n t a n d e x p e c te d d u r a tio n of d i s a b i l i t y , a s d e f in e d 

b y th e p la n , is r e q u i r e d ; h e n c e , m o s t p la n s s e t f o r th a d m i n i s t r a t i v e p r o c e d u r e s g o v e r n in g t h i s d e c i s io n .

T h e d e t e r m i n a t io n w a s m a d e b y a d o c to r s e l e c t e d b y th e e m p lo y e r o r a d ­

m i n i s t r a t o r in 4 5 p e r c e n t o f th e p la n s ; b y th e c l a i m a n t in 12 p e r c e n t ; a n d by a 

b i p a r t i t e b o a r d in a s m a l l n u m b e r o f p la n s . A lth o u g h a m e d i c a l d e t e r m i n a t io n 

w a s r e q u i r e d , th e p a r t y m a k in g th e s e l e c t io n of th e d o c to r w a s n o t id e n tif ie d in 

17 p e r c e n t o f th e p la n s . T h e r e m a in in g 23 p e r c e n t o f th e p la n s h a d n o f o r m a l 

p r o c e d u r e d e s c r i b e d in th e d o c u m e n ts o n f ile .

Percent

Party providing m ed ical evidence Plans Workers

All plans with disability

r etirem en t------------------------------------------- 1 0 0 .0 1 0 0 .0

Claim ant's doctor --------------------------------- 11. 7 4 .6 Company or plan doctor ------------------------ 45. 1 4 6 .0 Neutral d o cto r---------------------------------------- .1 . 4 Bipartite c o m m itte d --------------------------- 3 .2 2 .3 Doctor— no information on selec tio n------- 17.1 30. 2 Information not a v a ila b le---------------------- 22. 8 1 6 .4

1 Includes a few plans in which a doctor is appointed by a tripartite board.

NOTE: Because of rounding, sums of individual item s m ay not

equal totals.

If a n a p p lic a tio n w a s d e n ie d o n th e b a s i s o f m e d i c a l e v id e n c e , a n a p p e a l 

c o u ld u s u a lly b e m a d e to th e e m p lo y e r (o r h is r e p r e s e n t a t i v e s ) in s i n g l e - e m p l o y e r 

p la n s , o r to a b i p a r t i t e b o a r d in m u l t ie m p lo y e r p la n s . T h e n o r m a l g r i e v a n c e 

p r o c e d u r e w a s u s e d b y s o m e l a r g e p la n s . A b o u t a n e ig h th o f th e p la n s h a d a 

s p e c i a l p r o c e d u r e f o r m a k in g th e f in a l d e c is io n . F o r e x a m p le , th e S t e e l w o r k e r s 

p la n p r o v id e d th a t in c a s e of d is a g r e e m e n t —

The em ployee shall be exam ined by a physician appointed for the purpose by the Company and a

physician appointed for the purpose by a duly authorized representative of the Union. If they shall

disagree concerning whether the em ployee is perm anently incapacitated, that question shall be subm itted to a third physician selected by such two physicians. The m ed ical opinion of the third

physician, after exam ination of the em ployee and consultation with the other two physicians, shall

decide such question.

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Percent

Appeals channels

A ll plans with disability

retirem en t1 ------------------------------

E m p lo y e r-------------------- -----------------

Bipartite board -----------------------------

Grievance procedure --------------------

Trio of doctors, 1 neutral 2 ----------

C linic ------------------------------------------

Plans Workers

100. 0 1 0 0 .0

82. 4 7 0 .0

2. 7 8 .4

1 .3 6. 7

13. 0 13. 5

. 1 . 2

1 Includes a few plans for which information was not available.

2 Appeals are directed to a panel of doctors consisting of 1 em ­

ployer designated doctor and 1 em ployee designated doctor. If they

cannot agree the 2 doctors selected a neutral doctor whose decision is

final.

NOTE: Because of rounding, sums of individual item s may not

equal totals.

E x c e p t f o r l a r g e n e g o tia te d p la n s , th e e m p l o y e r ^ d e t e r m i n a t io n w a s f in a l 

in m o s t p la n s .

Percent

Final authority for appeals

A ll plans with disability

retirem ent1 --------------------------------------

E m p loyer------------------------------

Bipartite b o a r d--------------------

Insurance com p a n y----------------

Union em ployees-bipartite

board; nonunion em ployeesem ployer ---------------------------

Other ------------------------------------

Plans Workers

1 0 0 .0 10 0 .0

8 2 .4 5 9 .4

13. 5 35. 5

2. 1 . 7

. 7 2 .4

. 8 . 7

1 Includes a few plans for which information was not available.

NOTE: Because of rounding, sums of individual item s may not

equal totals.

L e v e ls of D is a b i l it y B e n e f its

W o r k e r s f o r c e d in to r e t i r e m e n t b e c a u s e o f t o ta l d is a b i l it y a n d w h o a l s o 

q u a lif ie d f o r s o c ia l s e c u r i t y b e n e f its w o u ld u s u a ll y r e c e i v e th e s a m e a m o u n t o f 

b e n e f i ts , r e g a r d l e s s o f t h e i r a g e a t r e t i r e m e n t , a s th e y w o u ld b e e n t it l e d to f o r 

th e s a m e e a r n in g s a n d s e r v i c e a t n o r m a l r e t i r e m e n t a g e . 43 H o w e v e r , b e c a u s e 

s o m e p la n s r e d u c e d b e n e f its on a c c o u n t of a g e (i. e . , p r o v id e d th e a c t u a r i a l 

e q u iv a le n t o f th e a c c r u e d n o r m a l b e n e f i t 44), a v e r a g e b e n e f its f o r a l l c o v e r e d w o r k e r s w e r e s o m e w h a t lo w e r th a n th e c o r r e s p o n d in g a v e r a g e n o r m a l r e t i r e ­

m e n t b e n e f i ts .

43 Although benefit levels for both normal and disability retirem ent have increased since the date of this

study, the relationship betw een the two, as discussed in this report, is still valid.

44 The actuarial equivalent of the normal benefit is a benefit whose ultim ate cost is expected to be equal

to that of the normal benefit.

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O n th e o th e r h a n d , w o r k e r s q u a lif ie d f o r d i s a b i l i t y b e n e f its u n d e r a p r i v a te 

p la n , b u t n o t u n d e r s o c ia l s e c u r i t y , w o u ld r e c e i v e s u b s t a n t ia l l y h ig h e r b e n e f i ts , 

on th e a v e r a g e , th a n th o s e p r o v id e d u n d e r n o r m a l r e t i r e m e n t p r o v i s i o n s . T h e 

g e n e r o u s b e n e f its p a y a b le u n d e r s u c h c i r c u m s t a n c e s by m a n y n e g o tia te d s i n g l e ­

e m p lo y e r p la n s in th e a u to m o b ile , s t e e l , a n d r u b b e r i n d u s t r i e s l a r g e l y a c c o u n t 

f o r th e d if f e r e n c e .

A lth o u g h p r i v a t e p la n s o n th e w h o le g e n e r a l l y p r o v id e d d i s a b i l i t y b e n e f its 

r o u g h ly e q u a l to n o r m a l r e t i r e m e n t b e n e f its f o r th e s a m e e a r n i n g s a n d s e r v i c e 

l e v e l s , a s d i s c u s s e d b e lo w , t h e r e w e r e i m p o r t a n t v a r i a t i o n s a m o n g g r o u p s o f 

p la n s d e p e n d in g u p o n w o r k e r c o n tr ib u t io n s , c o l le c ti v e b a r g a in in g s t a t u s , a n d 

i n d u s t r y .

T o c o m p a r e d is a b i l it y r e t i r e m e n t b e n e f it le v e l s a m o n g p la n s a n d to r e l a t e 

th e l e v e l s of b e n e f its to p r e d i s a b l e m e n t e a r n i n g s , i l l u s t r a t i v e b e n e f its w e r e c o m ­

p u te d u n d e r th e s a m e c o n d itio n s a s th o s e f o r n o r m a l r e t i r e m e n t ( s e e p a g e 11 ), 

e x c e p t th a t d i s a b i l i t y r e t i r e m e n t w a s a s s u m e d to b e a t a g e 60. 45 B e c a u s e m a n y 

p r i v a t e p la n s k e y e d th e b e n e f it to th e r e c e i p t o f s o c ia l s e c u r i t y b e n e f i ts , th e 

c o m p u ta tio n s w e r e m a d e u n d e r tw o a l t e r n a t i v e a s s u m p tio n s : (1) T h e w o r k e r 

r e c e i v e s b o th p la n b e n e f its a n d s o c ia l s e c u r i t y b e n e f i ts , a n d (2) th e w o r k e r 

r e c e i v e s o n ly p la n b e n e f i ts .

W o r k e r s Q u a lif ie d f o r P r i v a t e P l a n B e n e f it a n d S o c ia l S e c u r it y B e n e f it . T h e 

d i s t r i b u t i o n s o f d is a b i l it y b e n e f i ts e x h ib ite d th e s a m e c h a r a c t e r i s t i c s a s th o s e 

f o r n o r m a l r e t i r e m e n t . F o r e x a m p le , a s s h o w n in ta b le s 21—25 , d i s t r i b u t i o n s 

o f d i s a b i l i t y b e n e f i ts , lik e th o s e f o r n o r m a l r e t i r e m e n t , s h if te d u p w a r d w ith i n ­

c r e a s e s in b o th e a r n i n g s a n d s e r v i c e . 46 S in c e th e i n c r e a s e s in b e n e f its w e r e 

l e s s th a n p r o p o r t i o n a t e , th e lo w e r p a id a n d s h o r t s e r v i c e w o r k e r s f a r e d r e l a t i v e l y 

b e t t e r th a n h ig h e r p a id a n d lo n g s e r v i c e w o r k e r s .

C h a r t 6 s h o w s th a t b e n e f its w e r e g r e a t e r a t th e h ig h e r e a r n i n g s a n d s e r v ­

i c e l e v e l s , a s w e ll a s m o r e w id e ly d i s p e r s e d . F o r e x a m p le , th e b e n e f it f o r th e 

m id d le 80 p e r c e n t o f th e w o r k e r s r a n g e d f r o m $ 2 0 to $ 9 1 a m o n th f o r a w o r k e r 

w ith a v e r a g e a n n u a l e a r n i n g s of $ 4 , 800 a n d 20 y e a r s o f s e r v i c e . On th e o th e r 

h a n d , th e r a n g e w a s $ 3 7 —$ 1 7 2 a m o n th f o r a w o r k e r w ith e a r n i n g s of $ 8 ,4 0 0 

a n d th e s a m e a m o u n t o f s e r v i c e .

T h e d is t r i b u t i o n s w e r e m a r k e d b y c o n c e n t r a t io n s of w o r k e r s in c o l le c ti v e l y 

b a r g a i n e d p la n s , p a r t i c u l a r l y in m a n u f a c tu r in g i n d u s t r i e s . P l a n s n e g o tia te d b y 

th e S t e e l w o r k e r s (w h ic h c a u s e d a c o n c e n t r a t io n o f w o r k e r s a t th e $ 3 9 , $ 5 2 , 

$ 6 5 , a n d $ 7 8 m o n th ly b e n e f it l e v e l f o r 15, 20, 25, a n d 30 y e a r s o f s e r v i c e ,

r e s p e c t i v e l y ) , p r o v id e d b e n e f its b a s e d on th e n o r m a l m o n th ly b e n e f it f o r m u la : 

1 p e r c e n t o f a v e r a g e m o n th ly e a r n i n g s in th e 10 y e a r s p r e c e d in g d i s a b i l it y t im e s 

y e a r s o f s e r v i c e , l e s s $ 8 0 — th e s o c ia l s e c u r i t y o f f s e t— b u t a m in im u m of $ 2 . 5 0 

o r $ 2. 60 a m o n th t im e s y e a r s o f s e r v i c e . T h e m in im u m f o r m u la g e n e r a l l y 

a p p lie d e x c e p t f o r w o r k e r s w ith e a r n i n g s o f $ 8 ,4 0 0 a y e a r a n d 20 y e a r s 1 s e r v i c e

R etirem ent at age 60 was selected so that a m axim um number of plans would be included in the com putation. Few plans had a higher age requirement. Furthermore, a report by the S ocial Security Administration,

Arthur E. Hess, "Five Years of D isability Insurance Benefits; A Progress Report, " Social Security Bulletin, July 1962,

found that, prior to the 1960 amendments to the act, more than 80 percent of the workers receiving social security

disability payments were over age 50 when the onset of disability occurred and had a m edian age of 59. Later

studies of the Social Security Adm inistration ("Disability Applicants, 1962, S elected Data"; Division of the Actuary,

April 1964 and Actuarial Note 18) showed a decrease in the m edian age of applicants at the tim e of the onset of

disability.

4^ A few plans covering special classes of highly paid em ployees (e. g . , airline pilots) paid even higher b enefits than those shown in the distributions.

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Chart 6. Monthly Disability Retirement Benefits1 for Workers Eligible

for Social Security Disability Benefits, by Selected Assumed Annual

Earnings Levels and Service Periods, Winter 1962*63

SERVICE

IN YEARS

10

15

20

25

30

Monthly benefit

a n n u a l 0 $50 $100 $150 $200 $250 $300 $350

M edian m o n th ly benefits and ranges w ithin which fell 5 0 p e rc en t and 8 0 percent of the workersu

2 Based on a study of 1 5 ,8 1 8 p riva te pension plans covering 15.6 m illion active w orkers in 19 6 1 .

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o r m o r e . 47 S i m il a r l y , th e n o r m a l f o r m u l a ( $ 2 . 80 a m o n th t i m e s y e a r s of s e r v i c e ) 

w a s u s e d in th e d i s a b i l it y r e t i r e m e n t c o m p u ta tio n in th e p la n s n e g o tia te d by th e 

A u to m o b ile W o r k e r s . 48

T h e d i s t r i b u t i o n o f m e d ia n m o n th ly b e n e f its in th e fo llo w in g ta b u la tio n 

c l e a r l y s h o w s th e e f f e c ts of th e f o r m u la ty p e s , a s w e ll a s of p a t t e r n p la n s . 

M e d ia n m o n th ly b e n e f its u n d e r th e a s s u m e d c o n d itio n s r a n g e d f r o m $2 8 49 a t th e 

$ 3 ,6 0 0 , 1 0 - y e a r l e v e l to $ 1 2 5 a t th e $ 8 ,4 0 0 , 3 0 - y e a r le v e l.

____________________________________ Annual earnings__________________________________

$ 3 ,6 0 0______________ $4, 800_______________$ 6 ,0 0 0_______________$ 8 ,4 0 0

Inter- Inter- Inter- Interquartile quartile quartile quartile

Service periods (years) Median range M edian range M edian range M edian range

1 0 1 ------------------------------------------ $28 $18-$30 $28 $20-$38 $28 $25-$42 $30 $28-$62

15 ------------------------------------------------- 38 30- 45 39 26- 50 42 30- 61 42 39- 86

20 ------------------------------------------------- 50 35- 56 51 37- 62 52 42- 80 65 50-115

25 ------------------------------------------------- 58 40- 70 64 46- 75 6 5 54- 98 95 63-141

30 ------------------------------------------------- 68 45- 84 75 53- 84 84 61-111 125 69-173

1 Excludes a substantial number of workers in plans with higher qualifying service requirements.

T h e p r o p o r ti o n of p r e d i s a b l e m e n t in c o m e r e p r e s e n t e d b y m e d ia n b e n e f its 

w a s s o m e w h a t g r e a t e r a t th e $ 3 ,6 0 0 l e v e l th a n a t th e o th e r l e v e l s , d u e m a in ly 

to th e i n f lu e n c e , a s p r e v i o u s l y n o te d , o f r e l a t i v e l y h ig h d is a b i l it y b e n e f its p r o ­

v id e d b y p la n s w ith m in im u m b e n e f its a n d f la t b e n e f it f o r m u l a s . F o r e x a m p le , 

a s sh o w n in th e ta b u la tio n b e lo w , p la n d i s a b i l i t y b e n e f its r e p l a c e d a b o u t a fifth 

of p r e v i o u s e a r n i n g s f o r th e w o r k e r s w ith 25 y e a r s of s e r v i c e e a r n in g $ 3 ,6 0 0 

a y e a r a n d a b o u t a s e v e n th a t e a r n i n g s l e v e l s o f $ 6, 000 a y e a r a n d a b o v e .

Annual earnings

Service periods (years)

1 0 1 -

15 -

20 ■ 

25 ■

30 ■

$ 3 ,6 0 0 $ 4 ,8 0 0 $ 6 ,0 0 0 $ 8 ,4 0 0

Percent

9. 3

12. 7

16. 7

19 .3

22. 7

7 .0

9. 8

12. 8 

1 6 .0

18. 8

5 .6

8 .4

1 0 .4

1 3 .0

16. 8

4 .3

6.0

9 .3

13 .6

17.9

* Excludes a substantial number of workers

service requirements.

in plans with higher qualifying

E x c e p t f o r w o r k e r s w ith h ig h e a r n in g s a n d lo n g s e r v i c e , p la n b e n e f its w e r e 

g e n e r a l l y f a r l e s s th a n s o c ia l s e c u r i t y d is a b i l it y b e n e f its w h ic h , a t th e t im e of 

th e s tu d y , w e r e $ 1 0 5 a m o n th f o r w o r k e r s e a r n in g $ 3 ,6 0 0 a y e a r a n d $ 1 2 7 f o r 

th o s e e a r n in g $ 4 ,8 0 0 a y e a r a n d o v e r . G e n e r a lly , s o c ia l s e c u r i t y b e n e f its 

a m o u n te d to f r o m t h r e e - f i f t h s to f o u r - f i f t h s o f c o m b in e d r e t i r e m e n t in c o m e .

47 The basic formula applies to workers with 30 years of service and earnings over $527 a month, 20 years

of service and earnings over $660 a month, and 10 years of service and earnings over $ 1 ,0 6 0 a month. These

plans also had a minimum disability benefit of $100 a month, including social security, but it is generally applicable

only to those not qualifying for social security.

The disability formula in the plans negotiated by the Autom obile Workers has been substantially liberalized

since the tim e of the study. These changes as w ell as others have not been incorporated in the com putation. A lthough they w ill affect the distributions of benefit amounts, they do not significantly affect the m edian benefits.

49 Because few workers belong to plans that provide disability benefits for 10 years or less of service, median

benefits for workers earning $ 6 ,0 0 0 a year or less chiefly reflected the amounts provided by the Autom obile Workers plans.

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R e t i r e m e n t in c o m e a t th e lo w e a r n in g s l e v e ls w a s m o s tly a c c o u n te d f o r b y s o c ia l 

s e c u r i t y b e n e f i ts .

C o m b in e d m e d ia n m o n th ly b e n e f its — th e s u m of m e d ia n p r i v a t e p la n d i s a ­

b il i t y b e n e f its a n d s o c ia l s e c u r i t y d i s a b i l it y b e n e f i ts — r a n g e d f r o m $ 1 3 3 to $ 2 5 2 

u n d e r th e a s s u m e d c o n d itio n s .

Annual earnings

Service periods (years) $ 3 ,6 0 0 $4, 800 $ 6 ,0 0 0 $ 8 ,4 0 0

101 --------------- -------------------- $133 $155 $155 $157 1 5 ------ ------------------------------- 143 166 169 169

2 0 ----------------- -------- -------- 155 178 179 192

25 ----------------------------------------- 163 191 192 222 3 0 ---------------------- _ ---------- 173 202 211 252

1 Excludes a substantia] number of workers

service requirements.

in plans with higher qualifying

B o th th e s o c ia l s e c u r i t y d i s a b i l i t y b e n e f its a n d p r i v a t e p la n b e n e f i ts , f o r 

th e m o s t p a r t , w e r e h ig h e r f r a c t i o n s fo p r e v i o u s e a r n i n g s f o r w o r k e r s a t th e 

lo w e r e a r n i n g s l e v e l s th a n a t th e h ig h e r e a r n in g s l e v e l s . 50 T h e c o m b in e d m e d ia n 

b e n e f its o f w o r k e r s w ith a n n u a l e a r n i n g s o f $ 3 ,6 0 0 a n d $ 4 ,8 0 0 w e r e , t h e r e ­

f o r e , a l a r g e r p r o p o r ti o n o f t h e i r p r e d i s a b l e m e n t m o n th ly in c o m e th a n f o r th o s e a t 

h ig h e r e a r n in g s l e v e l s .

______________ Annual earnings_____________

$ 3 ,6 0 0 $ 4 ,8 0 0 $ 6 ,0 0 0 $ 8 ,4 0 0

Service periods (years) Percent

1 0 1 ---------------------------------------- 44. 3 3 8 .8 3 1 .0 2 2 .4

15 --------------------------------- 47. 7 4 1 .5 33. 8 24.1

2 0 ------------------------------------------ 51. 7 44. 5 35. 8 2 7 .4

25 ------------- ---------------------- 54. 3 4 7 .8 3 8 .4 31. 7

3 0 ------------- ------------------------ 57. 7 5 0 .5 42. 2 3 6 .0

* Excludes a substantial number of workers in plans with higher qualifying service requirements.

W o r k e r s Q u a lif ie d f o r P r i v a t e P l a n B e n e f its O n ly . S in c e n o t a ll w o r k e r s 

q u a lif ie d f o r d is a b i l it y r e t i r e m e n t u n d e r a p r i v a t e p e n s io n p la n w ill r e c e iv e 

O A S D I d is a b i l it y b e n e f i ts , c o m p u ta tio n s w e r e m a d e f o r th e s a m e p la n s a s s u m in g 

th e w o r k e r w o u ld n o t q u a lify f o r s o c ia l s e c u r i t y b e n e f i t s . 51 A n o th e r r e a s o n f o r 

m a k in g th is d is t i n c ti o n w a s th a t, a s p r e v i o u s l y n o te d , s o m e o f th e l a r g e r p la n s 

p r o v id e d s p e c i a l d is a b i l it y p la n b e n e f its f o r w o r k e r s n o t r e c e iv in g s o c ia l s e c u r i t y 

b e n e f i ts . It m u s t b e e m p h a s i z e d th a t t h e s e s p e c i a l d is a b i l it y p e n s io n s w e r e 

u s u a lly t e m p o r a r y , a n d th a t th e p e n s io n r e v e r t e d to th e r e g u l a r d i s a b i l i t y f o r m u l a 

c o m p u ta tio n if e l i g i b il i t y f o r s o c ia l s e c u r i t y b e n e f its w a s e s t a b li s h e d . H o w e v e r , 

t h e s e f o r m u l a s w e r e th e e x c e p tio n ; m o s t p la n s u s e d th e s a m e d is a b i l it y f o r m u l a , 

r e g a r d l e s s of th e w o r k e r ’s s o c ia l s e c u r i t y s t a t u s .

50 Maximum social security disability benefits were 35. 0, 3 1 .8 , 2 5 .4 , and 18.1 percent of the average annual

earnings of $3, 600, $4, 800, $6, 000, and $8, 400, respectively.

51 See "Assumptions," p. 11. A study of disability retirees in the autom obile com panies showed that a fifth

of those qualified for the private pension did not qualify for social security. See "Disability Insurance Under Social

Security, " by Jerome Pollack, in O ccupational D isability and Public P olicy, Earl Cheit and Margaret Gordon, editors

(John W iley and Son, New York, 1963), p. 175. The recent liberalization of the disability definition in the autom obile com pany plans should cause this fraction to increase.

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U n d e r th e g iv e n a s s u m p t io n s , th e d i s t r i b u t i o n s o f m o n th ly p la n b e n e f its 

( ta b le 18) w e r e a t s u b s t a n t ia l l y h ig h e r l e v e l s th a n th o s e f o r th e s a m e p la n s f o r 

w o r k e r s e lig ib le f o r s o c ia l s e c u r i t y b e n e f i t s , m a in ly b e c a u s e o f th e s p e c i a l d i s ­

a b i li t y p e n s io n s p r o v id e d in m a n u f a c tu r in g i n d u s t r i e s . P l a n s fo llo w in g th e A u to ­

m o b ile W o r k e r s a n d R u b b e r W o r k e r s p a t t e r n s , f o r e x a m p le , p r o v id e d d o u b le th e 

a m o u n t c o m p u te d b y th e r e g u l a r d i s a b i l i t y f o r m u l a . P l a n s fo llo w in g th e S t e e l ­

w o r k e r s p a t t e r n p r o v id e d a s p e c i a l d i s a b i l i t y b e n e f i t o f $ 1 0 0 a m o n t h . 52 A n o th e r 

l a r g e g r o u p o f p la n s — th e te le p h o n e c o m p a n y p la n s — b a s e d t h e i r b e n e f its on th e 

g r e a t e r o f (1) 1 p e r c e n t of a v e r a g e m o n th ly e a r n i n g s 53 54 t im e s y e a r s o f s e r v i c e , 

o r (2) $ 8 5 . 54

T h e r a n g e s o f p r i v a t e p la n b e n e f i ts f o r th e m id d le 80 p e r c e n t o f th e w o r k e r 

d i s t r i b u t i o n , a s sh o w n in c h a r t 7 , w e r e c o n s id e r a b l y h ig h e r a s w e ll a s w id e r 

th a n th e b e n e f its f o r w o r k e r s e lig ib le f o r s o c i a l s e c u r i t y d i s a b i l i t y b e n e f i ts . (S ee 

c h a r t 6 .) B e c a u s e o f th e p r e v i o u s l y c ite d s p e c i a l d i s a b i l i t y f o r m u l a s , 9 o u t o f 

10 w o r k e r s w e r e in p la n s th a t h a d b e n e f its o f $ 4 8 a m o n th o r m o r e f o r w o r k e r s 

e a r n in g $ 4 ,8 0 0 , $ 6 , 0 0 0 , o r $ 8 ,4 0 0 a n n u a lly w ith 25 o r 30 y e a r s o f s e r v i c e .

M e d ia n b e n e f its u n d e r t h e s e a s s u m p t io n s w e r e a b o u t $ 30 a m o n th h ig h e r 

th a n th e b e n e f its p r o v id e d b y th e s a m e p la n s to w o r k e r s e lig ib le f o r s o c ia l s e ­

c u r i t y b e n e f i ts . M e d ia n b e n e f its r a n g e d f r o m $ 5 6 to $ 1 5 0 a m o n th f o r w o r k e r s 

i n e lig ib le f o r s o c ia l s e c u r i t y , a s c o n t r a s t e d to a r a n g e o f $ 2 8 to $ 1 2 5 f o r w o r k ­

e r s w h o q u a lif ie d .

____________________________________ Annual earnings _________________________________

$ 3 ,6 0 0 _______________$4, 800_______________$ 6 ,0 0 0 _______________$ 8 ,4 0 0________

Inter- Inter- Inter- Interquartile quartile quartile quartile

Service periods (years) M edian range M edian range M edian range M edian range

10 1 ------------------------------------------ $56 $20-$56 $56 $25-$60 $56 $34-$70 $56 $46-$101

15 ------------------------------------------------- 64 45- 84 68 50- 90 75 50 -100 90 55- 105

20 ------------------------------------------------- 85 50 -100 85 50-100 100 56-112 100 65- 140

25 ------------------------------------------------- 85 53-113 1 00 63 -125 113 70-140 1 26 75- 175

30 ------------------------------------------------- 90 61 -128 100 68 -150 125 75-165 150 80- 210

1

Excludes a substantial number of workers in plans with higher qualifying service requirements.

O n th e w h o le , h o w e v e r , p r i v a t e p la n b e n e f its w e r e n o t s u f f ic ie n tly h ig h e r 

to o f f s e t th e a b s e n c e o f s o c i a l s e c u r i t y b e n e f its w h ic h , a s n o te d a b o v e , w e r e 

$ 1 0 5 o r $ 1 2 7 a m o n th f o r w o r k e r s e a r n in g $ 3 , 6 00 a n d $ 4 , 8 0 0 a y e a r o r o v e r , r e ­

s p e c tiv e ly . A s a r e s u l t , m e d ia n b e n e f its r e p r e s e n t e d — d e p e n d in g u p o n le n g th o f 

s e r v i c e — o n ly 35 to 60 p e r c e n t ( m o s t o f te n a b o u t 50 p e r c e n t ) o f th e a m o u n t p r o ­

v id e d by p r i v a t e p la n s a n d s o c ia l s e c u r i t y c o m b in e d .

T h e p r o te c ti o n a f f o r d e d b y s o c ia l s e c u r i t y b e n e f its a n d th e f a v o r in g of 

lo w e r p a id w o r k e r s b y p r i v a t e p la n s a r e s tr ik i n g l y i l l u s t r a t e d b y r e l a t in g m e d ia n 

d is a b i l it y b e n e f its to p r e r e t i r e m e n t e a r n i n g s . N o t m o r e th a n 30 p e r c e n t o f p r e ­

v io u s e a r n in g s c o u ld b e e x p e c te d by w o r k e r s i n e lig ib le f o r s o c ia l s e c u r i t y b e n e f its 

u n d e r th e a s s u m e d c o n d itio n s , a n d o n ly lo n g s e r v i c e , lo w e r p a id w o r k e r s c o u ld 

g e n e r a l l y r e c e i v e o n e - f o u r t h o r m o r e o f t h e i r e a r n i n g s .

52 Only workers with long service and high earnings would get more. In the illustrative exam ples used in

this bulletin, only the $ 8 ,400-a-yea r worker with 30 years of service would be in that group.

53 Based on average monthly earnings during the 5 consecutive years im m ediately preceding retirem ent or, at

the discretion of the benefit com m ittee, the 5 consecutive years o f highest earnings.

54 For disabled workers with 20 years or more of service only.

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Chart 7. Monthly Disability Retirement Benefits1 for Workers Ineligible

for Social Security Disability Benefits, by Selected Assumed Annual

Earnings Levels and Service Periods, Winter 1962-632

SERVICE

IN YEARS

10

15

20

25

30

A NNUAL

, E A R N IN G S

$3,600 

4,800 

6,000

^ 8,400

<

$3,600

4,800

6,000

8,400

<

$3,600

4.800 

6,000

8,400

$3,600

4.800

6,000

v 8,400

r

$3,600

4.800

6,000

v 8,400

Monthly benefit

0 $50 $100 $150 $200 $250 $300 $350

1 M ed ia n m o n th ly b en e fits and ranges w ith in w hic h fe ll 5 0 p e rc e n t and 8 0 p e rc e n t of the w o rk ers.

2 Based on a s tu d y o f 1 5 ,8 1 8 p riv a te pension plans co ve rin g 1 5 .6 m illio n a c tiv e w o rk ers in 1 9 6 1 .

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In c o n tr a s t, fo r w o rk e rs e lig ib le fo r s o c ia l s e c u r ity , to ta l r e tir e m e n t b e n e fits (p riv a te p la n p lu s s o c ia l s e c u r ity b en efit) ra n g e d fro m 22 p e r c e n t to a lm o s t 60 p e r c e n t of p r e r e tir e m e n t e a r n in g s . (See ta b u la tio n on p. 4 7 .)

Annual earnings

$3,600 $4,800 $6,000 $8,400

Service periods (years) Percent

10 1 — ------------ ---------------------- 18. 7 14.0 11.2 8.0

15 —----------------- -------------------- 21.3 17.0 15.0 12.9

2 0 ........................................... ............ 28.3 21.3 20.0 14.3

2 5 ------------------------------- --------- 28.3 25.0 22.6 18.0

3 0 ----------------------------------------- 30.0 25.0 25.0 21.4

* Excludes a substantial number of workers in plans with higher qualifying service requirements.

M eth o d of F in a n c in g , J u s t a s jo in tly fin a n c e d p la n s h a d h ig h e r n o rm a l b e n e fits th a n e n tir e ly e m p lo y e r-fin a n c e d p la n s , th e y a ls o h a d h ig h e r d is a b ility b e n e fits . B e n e fits in c o n tr ib u to ry p la n s w e r e m o s tly c o m p u te d on th e b a s is of e a r n in g s an d s e r v ic e fo rm u la s (a p e r c e n ta g e of e a r n in g s o r c o n trib u tio n s ), 55 w h ile n o n c o n trib u to ry p la n s r e f le c te d th e c o m p u ta tio n of b e n e fits by f o rm u la s s tr e s s in g s e r v ic e (u n ifo rm a m o u n ts f o r sp e c ifie d s e r v ic e o r a fix e d d o lla r a m o u n t m u lti­ p lie d by y e a r s of s e rv ic e ) o r by a p e r c e n ta g e - o f - e a r n in g s f o rm u la w h ich w as g e n e r a lly re d u c e d in w hole o r in p a r t by s o c ia l s e c u r ity .

W o rk e rs a t th e $ 4 ,8 0 0 , 2 0 -y e a r le v e l who a ls o q u a lifie d fo r s o c ia l s e c u r ity b e n e fits w o u ld r e c e iv e m e d ia n b e n e fits of $ 4 9 a m o n th fro m n o n c o n trib u to ry p la n s a s c o m p a re d w ith $ 6 2 fro m c o n tr ib u to ry p la n s . T he d is p a r ity w as f a r g r e a te r f o r $ 8, 4 0 0 - a - y e a r w o rk e rs w ith s im ila r s e r v ic e — $ 5 9 an d $ 1 4 7 , r e s p e c tiv e ly .

Workers eligible for social Workers ineligible for social security disability benefit security disability benefit Selected annual earnings and service periods Noncontributory Contributory Noncontributory Contributory

$4,800:

10 years 1------------------------ $28 $40 $51 $55 15 years ------------------------ 39 43 65 81 20 years-------------------------- 49 62 84 96 25 years-------------------------- 63 74 97 118 30 years ------------------------ 73 87 100 135 $8,400: 10 years 1------------------------ 28 70 54 88 15 years ------------------------ - * 41 108 84 110 20 years-------------------------- 59 147 99 153 25 years-------------------------- 78 183 110 190 30 years-------------------------- 88 220 130 226

1 Excludes a substantial number of workers in plans with higher qualifying service requirements.

B o th c o n tr ib u to ry an d n o n c o n trib u to ry p la n s p ro v id e d g r e a t e r b e n e fit a m o u n ts f o r w o rk e rs in e lig ib le fo r s o c ia l s e c u r ity th a n fo r e lig ib le w o r k e r s . O w ing, 

h o w e v e r, to th e in c lu sio n in th e n o n c o n trib u to ry p la n s of th e A u to m o b ile W o rk e rs an d S te e lw o r k e r s p la n s th a t p ro v id e d s p e c ia l d is a b ility b e n e fits , th e p e r c e n ta g e 

d iff e re n c e s w e re g r e a te r th a n in c o n trib u to ry p la n s .

A lth o u g h c o n tr ib u to ry p la n s a lm o s t a lw a y s p ro v id e d a h ig h e r p r o p o r tio n of p r e r e tir e m e n t e a r n in g s th a n n o n c o n trib u to ry p la n s , th e p r o p o r tio n p ro v id e d th e

55 Since worker contributions are mostly based on yearly earnings, any computation of benefits based on such contributions would be considered as being based on earnings.

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$ 8 ,4 0 0 w orker in both contributory and noncontributory plans was sm aller than for

the $ 4 ,8 0 0 w orker, as shown below. This stemmed, as it also does in normal

retirem ent benefits, from provisions in many plans favoring low er paid w orkers.

Workers eligib le for social Workers in eligib le for social

security disability benefit security disability benefit

Noncontributory Contributory ]Moncontributory Contributory

S elected annual earnings

and service periods Percent

$4, 800 per year:

10 years 1 -------------------------- 38. 8 41. 8 1 2 .8 1 3 .8

20 years --------------------------- 4 4 .0 4 7 .2 2 1 .0 2 4 .0

30 years ---------------------------- 5 0 .0 5 3 .5 2 5 .0 3 3 .8

$8, 400 per year:

10 years----------------------------- 22.1 28. 1 7. 7 1 2 .6

20 years----------------------------- 26. 6 39. 1 14.1 2 1 .8

30 years----------------------------- 30. 7 4 9 .6 1 8 .6 3 2 .2

1 Excludes a substantial number o f workers in plans with higher qualifying service requirements.

Type of Employer Unit. Median benefits provided by single-employer plans

fo r w o rk e rs writh 20 y e a r s of service and also eligible for social security benefits were much greater at the higher earnings level ($8,400) than those provided

by multiemployer plans; overall, at the $4, 800 earnings level , they w e re about the

same. As shown below, multiemployer plans paid about the same benefits at the

two earnings levels because they usually provided uniform benefits for a l l pensioners with the same amount of se rvice or for all who qualified for a pension.

Workers eligib le for social Workers in eligib le for social

security disability benefit security disability benefit

S elected service periods,

annual earnings, and Single Single

m ethod o f financing em ployer M ultiem ployer em ployer M ultiem ployer

15 years:

$4, 800 per year --------------- $39 $42 $76 $46

N oncontributory----------- 39 42 76 46

C ontributory----------------- 44 (*) 84 (M $8, 400 per y e a r----------------- 42 45 100 46

N oncontributory----------- 41 42 100 46

C ontributory----------------- 110 (M 111 (M 20 years:

$4, 800 per y e a r----------------- 52 50 90 50

N oncontributory----------- 52 50 90 50

C ontributory----------------- 61 n 100 (') $8, 400 per y e a r----------------- 7 6 50 112 50 N oncontributory----------- 6 0 50 112 50

C ontributory----------------- 147 n

156 (*)

* Number of workers not sufficient for selection of median.

The method of financing also had little effect on benefit levels in singleemployer plans. Only the median benefit for the $8 ,400, 20-year man eligible

for social security reflected the influence of contributory plans.

Single-em ployer plans provided significantly higher benefits for w orkers

ineligible for social security benefits than for qualified w orkers. For example,

benefits fo r ineligible w o rk ers with 15 y e a rs of se rv ic e w ere about twice those

provided eligible w orkers. A sim ilar but sm aller difference was found at the

20-year level. As previously noted, these differences reflect, for the most

part, special disability benefits provided in single-em ployer pattern plans negotiated by the Automobile W o rk e rs, S te e lw o rk e rs , and Rubber W o rk e rs. On

the other hand, since multiemployer plans rarely took social security benefits

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into account in the disability benefit form ula, benefits were identical whether

the w orker was eligible or ineligible for social security benefits.

As a result, total disability retirem ent income (plan benefit plus social s e ­

curity) for the $4, 800-a-year w orker with 20 years of service was about 45 p e rcent of predisablem ent income under both single-em ployer and m ultiemployer

plans. On the other hand, at the $ 8 , 4 0 0 earnings le v e l (which would include

few blue-collar workers covered by multiemployer plans), single-em ployer plans

provided alm ost 30 percent of predisablem ent earnings while m ultiem ployer plans

provided only about 25 percent. Furtherm ore, the proportion of preretirem ent

earnings provided w orkers ineligible for social security benefits was considerably

low er in m ultiem ployer plans. Single-em ployer plans provided a m ore favorable

portion of preretirem ent earnings for the ineligible group, but only about half

of the total retirem en t income payable to w orkers in the same plans who qualified for social security benefits.

Workers eligib le for social Workers in eligib le for social

security disability benefit_____security disability benefit

S elected service periods,

Single

em ployer

Single

M ultiem ployer em ployer Multi em ploy er

annual earnings, and

m ethod o f financing Percent

15 years:

$4, 800 per y e a r-------------------- 41. 5 4 2 .2 1 9 .0 1 1 .5

N oncontributory--------------- 4 1 .5 4 2 .2 1 9 .0 1 1 .5

C ontributory-------------------- 42. 8 (l ) 2 1 .0 (l) $ 8 ,4 0 0 per y e a r-------------------- 24. 1 2 4 .6 1 4 .3 6 .6

Noncontributory----------------- 2 4 .0 24 .1 1 4 .3 6 .6

C ontributory-------------------- 3 3 .9 (') 1 5 .9 (l ) 20 years:

$4, 800 per y e a r-------------------- 44. 8 4 4 .2 2 2 .5 1 2 .5

N oncontributory--------------- 44. 8 4 4 .2

(*)

2 2 .5 1 2 .5

C ontributory-------------------- 4 7 .0 2 5 .0 (M $ 8 ,4 0 0 per y e a r---------------------- 2 9 .0 2 5 .3 1 6 .0 7.1

N oncontributory--------------- 26. 7 2 5 .3 1 6 .0 7.1

C ontributory-------------------- 3 9 .1 (*) 2 2 .3 n

* Number o f workers not su fficien t for se lec tio n o f m edian.

C ollective B arg ain in g . B enefits in nonbargained plans w e re g re a te r than in

bargained plans for w orkers with the same service and earnings, except for p ro ­

duction w orkers earning $ 4 ,8 0 0 a year. Differences were much more p ro ­

nounced, for w orkers qualified for social security, at the $8, 400 level than at

the $4, 800 level.

Workers eligib le for social Workers in eligib le for social

security disability benefit_____security disability benefit

M entioned in Not m entioned M entioned in Not m entioned

S elected service periods, a collective in a c o llectiv e a co llectiv e in a collectiv e

annual earnings, and bargaining bargaining bargaining bargaining

m ethod of financing agreem ent agreem ent agreem ent agreem ent

15 years:

$4, 800 per y e a r--------------- $39 $40 $75 $64

N oncontributory---------- 39 34 68 60

C ontributory--------------- 38 56 88 65

$ 8 ,4 0 0 per y e a r--------------- 41 86 84 105

N oncontributory---------- 41 68 84 100

C ontributory--------------- 110 113 110 140

20 years:

$4, 800 per y e a r--------------- 51 56 85 80

N oncontributory---------- 50 50 85 75

C ontributory--------------- 54 76 107 86

$ 8 ,4 0 0 per y e a r--------------- 60 113 100 141

N oncontributory---------- 56 94 100 140

C ontributory--------------- 147 158 140 187

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These differences, as was previously demonstrated, w ere attributable to the

g reater prevalence of form ulas based on service only in negotiated plans and the

m ore frequent inclusion of employee contributions in nonnegotiated plans.

Because of the special disability benefits in large negotiated plans, benefits

for $4, 8 0 0 -a -y e a r w orkers ineligible for social security payments did not differ

significantly in bargained as in nonbargained plans. On the other hand, at the

$ 8 ,4 0 0 level, benefits for ineligible workers in nonbargained plans were substantially higher than those in bargained plans. On the whole, benefits fo r in ­

eligible workers in nonbargained plans reflected the level set by the application

of the standard 1-percent formula (e.g ., $60 and $80 monthly for the $ 4 , 800-

a-ye ar worker and $105 and $140 monthly for the $ 8 ,4 0 0 -a-year worker with

15 and 20 years of service, respectively). The slight decrease in benefits for

w orkers in nonbargained plans at the $ 4 ,8 0 0 level was due to the absence of

the previously mentioned special benefits provided w orkers in bargained plans,

while, at the $ 8 ,4 0 0 level, benefits w ere 33 to 40 percent greater.

As a result, total retirem ent benefits (private plan plus social security)

at the $ 4 ,800, 20-year level, as shown below, were close to 45 percent of p re ­

retirem ent earnings for w orkers eligible for social security payments in both

bargained and nonbargained plans. W orkers ineligible for social security in

both types of plans would, on the a verage, re c e iv e about half this amount.

Selected service periods,

annual earnings, and

method of financing 15*20

15 years:

$4, 800 per year -------------

N oncontributory----------

Contributory --------------

$8, 400 per y e a r---------------

Noncontributooy —------

C ontributory---------------

20 years:

$4, 800 per y e a r---------------

N oncontributory---------

C ontributory---------------

$ 8 ,4 0 0 per y e a r---------------

N oncontributory---------

C ontributory---------------

Workers eligib le for social Workers ineligible for social

security disability benefit security disability benefit

M entioned in

a collective

bargaining

agreem ent

Not m entioned

in a collective

bargaining

agreem ent

M entioned in

a collective

bargaining

agreem ent

Not m entioned

in a collectiv e

bargaining

agreem ent

Percent

4 1 .5 41. 8

4 1 .5 4 0 .2

41. 2 45. 8

2 4 .0 3 0 .4

2 4 .0 2 7 .8

3 3 .9 3 4 .3

4 4 .5 45. 8

44. 2 4 4 .2

4 5 .2 5 0 .8

26. 7 3 4 .3

26. 1 3 1 .6

39 .1 4 0 .7

1 8 .8 16. 0

1 7 .0 1 5 .0

2 2 .0 1 6 .2

1 2 .0 15. 0

1 2 .0 14 .3

15. 7 2 0 .0

2 1 .2 2 0 .0

2 1 .2 1 8 .8

2 6 .8 2 1 .5

14 .3 20 .1

14 .3 2 0 .0

2 0 .0 26. 7

Types of W o rk e rs C o v e re d . Plans e x c lu siv e ly fo r s a la rie d w o rk e rs — m o stly

nonbargained contributory plans— provided larg er disability benefits than those

for production workers or those for both salaried and production w orkers,

chiefly due, as previously discussed, to the differences in form ulas used to

compute benefits.

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S elected service periods,

annual earnings, and

method o f financing

15 years:

$4, 800 per y e a r-----------------

N oncontributory-----------

C ontributory-----------------

$ 8 ,4 0 0 per y e a r-----------------

Noncontributory-------------

C ontributory-----------------

20 years:

$4, 800 per y e a r-----------------

N oncontributory------------

C ontributory-----------------

$ 8 ,4 0 0 per y e a r-----------------

Noncontributory —--------

C ontributory-----------------

1 Number of workers not

_______Type of worker covered

Salaried

and

production Production Salaried

$38 $39 $43

34 39 41

39 ( M 65

42 42 81

41 41 75

110 (X) 124

51 50 60

48 50 56

60 n

90

76 56 108

76 55 86

147 ( M 171

for selection of m edian.

Disability plan benefits for workers ineligible for social security benefits

were greater, as shown by comparing the tabulation below with the previous

one, than for eligible w orkers, in all cases because of the influence of the

special disability benefits already discussed. The difference fo r production

w orker plans (except for those with 15 years of service or less) was usually

sm a lle st because a large proportion of the w o rk ers in such plans belong to m u ltiem ployer plans, which generally provided the same benefits for both eligible

and ineligible w orkers.

S elected service periods,

annual earnings, and

m ethod of financing 15*20

15 years:

$4, 800 per y e a r--------------

Noncontributory-----------

C ontributory--------------

$ 8 ,4 0 0 per y e a r--------------

N oncontributory---------

C ontributory--------------

20 years:

$4, 800 per y e a r--------------

N oncontributory---------

C ontributory--------------

$ 8 ,4 0 0 per y e a r--------------

N oncontributory---------

C ontributory--------------

_____ Type of worker covered_____

Salaried

and

production Production Salaried

$60 $70 $75

60 70 75

89 n

90

105 75 113

105 75 106

110 ( X) 147

85 70 90

85 66 88

100 ( M 95

140 75 150

140 74 142

150 n

195

1 Number of workers not sufficient for selectio n of m edian.

Reflecting these factors, the highest proportions of predisability earnings

would be provided by salaried worker plans, regardless of social security status;

the lowest proportions would be provided by plans covering production w orkers only.

Industry. As in the case of n o rm a l re tire m e n t benefit le v e ls , the p attern

of benefits by industry group showed wide disparity. Industries distinguished

by collective bargaining, entire financing by em ployer, and m ultiem ployer plans

fo r production w o rk e rs that usually based benefits on se rv ic e alone, generally

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revealed the lowest benefits. Industries with a large number of nonbargained,

contributory, single-em ployer plans, typically with benefits based on earnings

as well as service, usually revealed the highest benefits. For example, benefits for w orkers qualified for social security in the finance industry (prim arily

nonbargained plans) w ere the highest and showed the widest dispersion at the

selected earnings le vels (table 19). The construction industry (dominated by

multiemployer plans) generally had the lowest benefits and showed little v a ria ­

tion in benefits at the selected earnings levels.

A sim ilar pattern of benefits prevailed for w orkers not eligible for social

security benefits (table 20). The disparity between benefits provided eligible

as compared to ineligible w orkers was likewise chiefly due to form ula differences.

For example, in the communications industry (predominantly telephone company

plans), the application of the unreduced norm al or minimum form ulas (page 48)

resulted in three times the benefit provided eligible w orkers with 15 years of

service. The remaining industries, except for mining, manufacturing, and f inance, showed little variation from benefits provided eligible w orkers, due mainly

to the high p re va le n c e of plans with benefits based on s e rv ic e alone. In one

industry— wholesale trade— benefits for ineligible w orkers declined slightly because some plans did not pay benefits unless the w orker was also eligible for

social security.

Total retirem ent income (private plan benefit plus social security benefit)

as a proportion of predisablem ent income followed the same pattern as private

plan benefits. The proportions at the 15-y e a r service level ranged for the

$ 4 , 8 0 0 -a -y e a r w orker, as shown below, from 40 percent in the construction

industry to 50 percent in finance; for the $ 8 ,40 0 -a -y e a r worker, from nearly

25 percent to 40 percent, respectively.

S elected annual earnings and service periods

$ 4 ,8 0 0 $ 8 ,4 0 0

15 years 20 years 15 years 20 years

Industry

A ll industries1 --------------------------- 4 1 .5 4 4 .3

Percent

24. 1 2 7 .4

M in in g -------------------------------------- 41. 3 44. 8 23. 7 29. 0

Contract construction----------------- 40. 8 4 3 .8 2 3 .3 25. 0

M anufacturing--------------------------- 4 1 .3 44. 5 2 4 .0 26. 7 Transportation--------------------------- 44. 3 4 4 .3 2 5 .3 2 5 .3

Com m unications and public

u t i li t ie s---------------------------------- 3 7 .0 37. 0 24. 0 2 9 .0 W holesale and retail trade -------- 4 1 .5 4 1 .8 2 3 .8 25. 8 W holesale tr a d e-------------------- 4 1 .3 4 1 .3 23. 7 23. 7 Retail t r a d e------------------------- 4 2 .0 45. 3 31. 0 3 4 .0 Finance, insurance, and

real e s ta te------------------------------- 48. 8 5 5 .5 40. 7 4 8 .0

S e r v ic e s------------------------------------ 3 7 .8 4 3 .3 2 1 .6 26 .1

* Includes industries for which data are not shown separately.

The proportions of predisability income replaced, assuming the worker

was ineligible for social security benefits, were, except in finance, much lower—

rarely exceeding 25 percent.

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Table 11. D isability R etirem ent P ro v isio n s in P rivate Pen sion Plan s by Type of E m ployer Unit,

Method of Financing, and C ollective Bargaining Status, W inter 1962—63

— (Workers in thousands)

All plans With disability Without disability

Item retirement retirement

Number W orkers1 2 Plans W orkers1 Plans W orkers1

All plans studied---------------------------------------- 15,818 15, 621 8,193 10, 895 7,625 4, 726

Single em ployer___________________________ 14,890 11,742 1 7,484 8, 688 7,406 3, 055

Noncontributory_______________________ 10,657 8,454 : 5,544 6, 595 5, 113 1,859

Mentioned in a collective

bargaining agreem ent-----------------

Not mentioned in a collective

3,933 5,668 | 2,643 4, <; 22 1, 290 746

bargaining agreem ent----------------- 6,7 24 , 2,787 ; 2,901 1,674 3, 823 1, 113

Contributory----------------------------------------- 4,2 3 3 ; 3,288 1,940 2, 093 2, 293 1, 195

Mentioned in a collective

bargaining agreem ent-----------------

Not mentioned in a collective

1,034 1,495 452 994 582 502

bargaining agreem ent----------------- 3,199 | 1,793 1,488 1,099 1,711 693

M ultiemployer-------------------------------------------- 928 1 3,878 709 2, 207 219 1,671

Non contributory------------------------------------ 869 jj 3,212 679 1,984 190 1,228

Mentioned in a collective

bargaining agreem ent-----------------

Not mentioned in a collective

810 3, 176 625 1,962 185 1,214

bargaining agreem ent----------------- 59 36 54 22 5 14

Contributory----------------------------------------- 59 666 30 223 29 443

Mentioned in a collective

bargaining agreem ent-----------------

Not mentioned in a collective

18 356 14 48 4 308

bargaining agreem ent----------------- 41 310 16 175 25 135

1 Active workers in 1961.

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

Table 12. Disability Retirement Provisions in Private Pension Plans by Industry, Winter 1962—63

(Workers in thousands)

Industry

All plans With disability

retirement

Without disability

retirement

Number W orkers1 Plans W orkers1 Plans W orkers1

All plans studied__________________________ 215,8 18 215,621 8, 193 10,895 7,625 4, 726

M ining--------------------------------------------------------- 316 327 153 52 163 275

Contract construction------------------------------ 449 1,072 301 597 148 475

Manufacturing--------------------------------------------- 9, 257 9, 678 5, 183 7, 342 4, 074 2, 336

Transportation____________________________ 673 1,286 448 962 225 324

Communications and public utilities----- 849 1,270 215 944 634 326

Wholesale and retail trade---------------------- 1,627 920 533 386 1,094 5 34

Wholesale trade------------------------------------ 1, 147 479 412 24 3 735 236

Retail trade ------------------------------------------ 480 440 121 143 359 298

Finance, insurance, and real estate----- 1,853 733 1,001 436 852 298

Services------------------------------------------------------- 719 308 350 163 369 145

1 Active workers in 1961.

2 Includes industries for which data are not shown separately.

N O T E : B ecau se of rounding, sum s of individual item s m ay not equal to ta ls.

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Table 13. D isab ility R etirem ent P rovision s in P rivate Pen sion P lans by Num ber of A ctive

W ork ers C overed, W inter 1962—63

(Workers in thousands)

Number of workers covered

All plans *| With disability

1 retirement

Without disability

retirement

Number Worke rs1

1

Plans W orkers1

1

Plans W orkers1

All plans studied---------------------------------------- 15,818 15,621 8, 193 10, 895 7,625 4, 726

Under 200__________________________________ 9,914 7 04 4,709 297 5, 205 407

200 and under 500 ------------------------------------- 2, 595 810 1,396 445 1, 199 366

500 and under 1,000 --------------------------------- 1, 336 905 781 529 555 377

1,000 and under 5,000 ----------------------------- 1,490 3, 229 955 2, 143 535 1,086

5, 000 and under 10, 000---------------------------- 241 1,677 159 1, 117 82 560

10,000 and under 25,000 ------------------------- 145 2, 171 114 1,685 31 486

25, 000 and under 50, 000 ------------------------- 65 2, 209 56 1,923 9 286

50,000 and under 1 0 0 ,0 0 0 ------------------------ 17 1, 172 13 913 4 259

100, 000 and o v e r ------- ------------------------------- 15 2, 742 10 1,843 5 899

1 Active workers in 1961.

NOTE: Because of rounding, sums of individual items may equal totals.

Table 14. Minimum Age and Service Requirements for Disability Retirement in Private Pension Plans, Winter 1962—631

(Workers in thousands)

Minimum service

requirements 2

(years)

All plans

Minimum age requirements3 45

No age

requirement 45 and under 50 55 60

Number Workers Plans Workers Plans Workers Plans Workers Plans Worke rs Plans Workers

All plans with disability retirement — 8, 193 10,895 6, 127 7,766 4 194 419 1,011 1,624 708 823 153 263

No service requirement______ _________ 309 410 263 328 1 13 15 45 15 18 15 6

Less than 5 857 317 612 197 11 7 156 70 78 42 _ _

5 ______________________ 1,445 236 1,399 203 - - 10 7 36 27 _ -

6-9 ------------------------------ 156 42 156 42 - - - - - - _ _

1 0 ............................ 947 2, 074 743 1,683 66 143 105 207 26 36 7 5

11—14 _________________ 70 128 42 107 - - 27 16 1 5 - -

15 ___________________ . 3,695 6,214 2, 507 4,401 108 161 533 1, 074 541 516 6 61

16-19 _________________ 150' 132 45 27 - - 103 42 - - 2 63

20 ___________________ .. 384 944 207 558 6 55 39 63 9 142 123 127

25 170 301 145 191 2 39 21 34 2 38 _ _

26—29 _________________ 1 25 - - - - 5 1 25 - - - _

30 --------------------------------- 9 72 8 31 ~ “ 1 42 - - - “

1 Based on a study of 15,818 private pension plans covering 15.6 million active workers in 1961.

2 For those plans that specified a period of employment to be served before participation in the plan could begin, the

minimum service requirement includes the preparticipation service and the required plan membership service.

3 Some plans specified alternative requirements; in each case, the one with the earliest age or no age requirements

was selected.

4 Includes 11 plans, covering 10,000 workers that specified age 25, and 5 plans, covering 34,000 workers that specified age 40.

5 This plan specified age 47.

N O T E : B ecause of rounding, su m s of individual item s m ay not equal totals.

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Table 15. W aiting P eriod for D isab ility R etirem en t B enefits m P rivate P en sion P lan s by Industry, W inter 1 9 6 2 — 6 3 1

(Workers in thousands)

Industry

All

Waiting period

plans No waiting

period

1 and less than

6 months 6 months 7 and less than

1 2 months

When accident

and sickness

benefits cease

Number

W orkers

Plans W orkers

Plans W orkersPlans W orkersPlans W orkers

Plans Workers

All plans with disability

retirem ent1----------------------------- 38 , 193 3 10,895 3,219 3,619 633 9 26 2,923 5,012 486 454 721 823

Mining ---------------------------------------- 153 52 64 14 _ 85 28 4 10 . _

Contract construction ------------- 301 597 58 230 112 58 124 287 7 21 - -

Manufacturing -------------------------- 5,183 7, 342 1,681 1,755 230 765 ! 2,256 3,859 165 291 4640 612

Transportation ------------------------- 448 962 284 412 25 26 1 30 482 4 7 5 36

Communications and 1

public utilities------------------------ 215 944 162 794 21 12 20 H 9 3 10 4 8

Wholesale and retail trade — 533 386 164 148 211 40 127 1 36 5 23 26 39

Wholesale trade------------------ 412 243 63 75 209 23 115 106 1 9 24 ! 29

Retail trade-------------------------- 121 143 101 72 2 17 12 30 4 14 2 10

Finance, insurance, and

real estate ------------------------------ 1,001 436 477 198 31 17 159 48 291 85 43 88

S e rv ices------------------------------------- 350 163 329 67 " - 16 48 2 6 3 41

1 Based on a study of 15, 818 private pension plans covering 15. 6 million active workers in 1961.

2 Include 211 plans, covering 61,000 workers, for which information was not available.

3 Includes industries for which data are not shown separately.

4 Includes 2 plans, covering 106, 000 workers, that deferred payment until permanent and total disability benefits under the

company's group life insurance program were exhausted.

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

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59

Table 16. Provisions for Deduction of Social Security Disability Benefits and Workmen's Compensation Benefits

From Private Pension Plan Disability Benefits, by Industry, Winter 1962—63 1

(Workers in thousands)

Industry

All plans No deductions

Plans deducting social security only

Total

All social

security

disability

benefits

One-half

social

security

benefits

$ 80 a month

(subject to

minimum

form ula)1 2 3

Number

W orkers

Plans W orkers

Plans Workers

Plans W orkers

Plans W orkers

Plans W orkers

All plans with disability

retirement ------------------------------ 38, 193 31 0 ,895 4,405 5,040 815 2,437 307 357 127 1,0 30 381 1,051

Mining ------------------------------------------- 153 52 4 10 37 20 2 2 . 35 18

Contract construction — ----------- 301 597 262 499 21 18 21 18 - - - -

Manufacturing ----------------------------- 5,183 7, 342 2,464 3, 384 423 1,531 155 218 45 306 223 1,007

Transportation ---------------------------- 448 962 309 437 80 81 79 76 1 5 - -

Communications and public

u tilities--------------------------------------- 215 944 156 113 45 703 4 8 33 683 8 12

Wholesale and retail trade-------- 533 386 276 301 17 6 2 (4) - 15 6

Wholesale trade--------------------- 412 243 167 183 17 6 2 (4) - ! 15 6

Retail trade ---------------------------- 121 143 109 118 - - - - - - -

Finance, insurance, and real

estate ----------------------------------------- 1,001 436 693 159 87 58 39 22 48 36 - -

S e rv ice s---------------------------------------- 350 163 238 128 105 20 5 12 " - 100 8

Plans deducting social security and

workmen's compensation

All plans with disability retirement

Mining ----------------------------------------------------

Contract construction -------------------------

Manufacturing --------------------------------------

Transportation -------------------------------------

Communications and public utilities

Wholesale and retail trade ----------------

Wholesale trade -----------------------------

Retail trade -------------------------------------

Finance, insurance, and real estateS e rv ices-------------------------------------------------

971 1> 0 7 i

111

546

25

10

212

212

62

5

17

799

60

108

30

30

49

8

All social

security

disability

benefits and

workmen's

compensation

680

111

280

25

3

200

200

56

5

745

17

606

60

23

5

5

25

One -half

social security

benefits and

workmen's

compensation

Plans

deducting

workmen's

comp ensation

only

291

7

12

12

328 1,673 2,265

193

85

25

25

1

8

1,437

34

4

26

14

12

155

2

69

1,572

383

19

41

16

25

165

6

Information

not available

329

10

313

79

10

56

1 Based on a study of 15, 818 private pension plans covering 15.6 million active workers in 1961.

2 Includes 8 plans covering 12, 000 workers that used other deductions, such as $85 a month.

3 Includes industries for which data are not shown separately.

4 Fewer than 500 workers.

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

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60

Table 17. M onthly P rivate P en sion Plan D isab ility R etirem en t B enefits 1 for W o rk ers E ligible fo rt

Social Security D isability B en efits, by Selected A ssu m ed Annual E arnings L evels

and S ervice P e rio d s, W in ter 1962—6 3 2

(Workers in thousands)

Assumed annual earnings

Monthly benefit $3, 600 $4, 800 $6, 000 $8, 400

Plans Workers Plans J Workers Plans Worke rs Plans Workers

10 years of service

T o t a l ____________________________________ 3,774 3,116 3, 774 3, 116 3,774 3, 116 3,774 3, 116

None 3 ___________________________________ 216 244 262 237 232 164 226 109

Under $ 1 0 _____________________________ 887 185 117 109 116 110 95 70

$ 10 and unde r $ 2 0 ----------- — - 554 398 1, 172 302 788 208 36 94

$ 2 0 and under $ 3 0 ------------- ------------ 566 1,483 452 1,487 i 626 1,404 623 1,251

$ 30 and under $ 4 0 --------------------------- 285 314 340 215 399 386 759 231

$4 0 and under $ 5 0 --------------------------- i 644 218 685 294 592 162 709 307

$ 5 0 and under $ 6 0 ---------------------------- 212 82 193 149 375 79 358 225

$ 6 0 and under $ 7 0 ----- ----- ----- 143 38 207 67 213 194 208 131

$7 0 and under $8 0 — 44 88 13 116 82 175 83 138

$ 8 0 and under $ 9 0 ---------------------------- 5 13 69 49 10 31 63 28

$ 90 and unde r $ 1 0 0 -------------------------- 200 9 10 16 6 23 139 65

$ 100 and under $ 1 2 5 ----------------------- 4 18 45 4 254 77 86 137 132 270

$ 125 and under $ 150 __ ------- ----- - - - - 36 23 27 79

$ 150 and under $ 1 7 5 ----------------------- - - - - 4 213 20 10 16

$ 175 and under $ 200 _ ------- ----- - - - - - - 41 41

$ 2 0 0 and over _ — -------- _ — ~ - - - - 265 63

15 years of service

Total __________________________________ 7, 643 9, 605 7, 643 9,605 7, 643 9,605 7, 643 9, 605

N o n e 3 __ -------------------- ------- ------------- 601 857 650 850 555 523 552 417

Under $ 10--------------------------------------------- 103 109 119 77 122 123 22 42

$ 10 and unde r $ 2 0 --------------------------- 1, 561 583 601 273 153 436 65 190

$ 20 and under $ 30 - ----------------------- 644 705 1, 141 1,489 1,060 1, 197 249 465

$ 3 0 and under $ 4 0 --------------------------- 1,846 3,532 1,760 2, 744 1,881 2, 285 1, 262 2, 033

$4 0 and under $ 5 0 --------------------------- 943 1,884 993 1,679 766 1,710 1, 096 2, 374

$ 5 0 and under $ 6 0 ------- ----------------- 507 821 47 2 649 852 765 945 736

$60 and under $ 7 0 --------------------------- 746 305 1,061 721 918 713 903 350

$ 7 0 and under $ 8 0 --------------------------- 103 419 126 372 375 395 332 385

$8 0 and under $ 9 0 ------- ----------------- 124 126 203 311 242 375 390 224

$ 9 0 and under $ 1 0 0 -------------------------- 192 132 193 159 259 439 569 291

$ 100 and under $ 1 2 5 ----------------------- 4 27 3 131 50 186 141 393 560 995

$ 125 and under $ 15 0 ----------------------- - _ 230 54 26 105 247 330

$ 150 and under $ 1 7 5 ----------------------- - - 4 44 39 40 90 64 403

$ 175 and under $ 200 ----------------------- - - - - 4 25 3 58 20 146

$2 00 and under $225 ----------------------- - - - - - - 89 122

$ 225 and under $ 250 ----------------------- - - - - - - 215 30

$ 250 and ove r --------------------------- ----- ~ - ~ - - - 63 70

20 years of service

T o t a l ------------------------------------------------------ 7 ,9 3 0 10, 603 7, 930 10, 603 7,930 10, 603 7,9 30 10, 603

None 3 ---------------------------------------------------- 421 545 526 579 493 458 480 330

Under $ 1 0 ____________________________ 227 162 107 60 26 71 20 30

$ 10 and unde r $ 2 0 --------------------------- 744 332 158 178 38 109 14 78

$2 0 and under $ 3 0 --------------------------- 1,055 474 695 1,222 233 361 127 318

$ 3 0 and under $ 4 0 --------------------------- 746 1,482 1, 399 700 831 1, 348 256 333

$ 4 0 and under $ 5 0 --------------------------- 945 1, 524 731 935 1, 343 749 531 616

$5 0 and under $ 6 0 --------------------------- 1, 330 3, 788 1, 359 3, 985 1,485 3, 630 889 2, 551

$ 6 0 and under $ 7 0 ---------- -------------- 1 ,0 7 3 891 936 709 703 640 1,4 87 1, 242

$7 0 and under $ 8 0 --------------------------- 169 353 260 421 333 438 444 1, 342

$8 0 and under $ 9 0 --------------------------- 187 529 491 540 438 671 338 294

$ 90 and unde r $ 1 0 0 -------------------------- 562 173 663 509 842 395 1, 067 386

$ 100 and under $ 1 2 5 ----------------------- 412 278 279 520 643 893 655 561

$ 125 and under $ 1 5 0 ----------------------- 15 32 39 110 181 47 3 655 692

$ 150 and under $ 1 7 5 ----------------------- 4 44 39 229 78 40 196 319 736

$ 175 and under $2 00 ----------------------- - - 14 18 23 55 162 254

$200 and under $225 ----------------------- - - 4 44 39 225 69 151 436

$225 and under $250 ----------------------- - - - - 10 16 30 210

$ 2 5 0 and under $2 7 5 ----------------------- - - - - 4 43 33 18 63

$275 and under $3 0 0 ----------------------- - - - - - - 220 58

$300 and o v e r ------------------------------------ " " “ ~ “ “ 67 75

See footnotes at end of table.

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Federal Reserve Bank of St. Louis
61

Table 17. M onthly P rivate Pension Plan D isability R etirem ent B enefits 1 for W o rk ers E ligib le for

Social Security D isability B en efits, by Selected A ssu m ed Annual Earnings L evels

and S ervice P e rio d s, W inter 1962—63 2— Continued

(Workers in thousands)

Monthly benefit

Assumed annual earnings

$ 3 600 $ 4 ;,800 $6, 000 $8 ,400

Plans Workers Plans Workers Plans Worke rs Plans Workers

25 years of service

T o t a l ------------------------------------------------------ 8, 080 10, 811 8, 080 10, 811 8, 080 10, 811 8, 08 0 10, 81 1

None3--------------------------- ----------------------- 436 490 443 591 409 391 377 361

Under $ 10 ------------------------------------------- 66 151 22 39 20 30 20 30

$ 1 0 and unde r $ 2 0 --------------------------- 505 145 178 145 129 179 137 71

$2 0 and under $ 3 0 --------------------------- 1,010 508 544 234 132 294 99 202

$3 0 and under $ 4 0 --------------------------- 868 1, 301 808 1, 346 565 301 246 269

$40 and under $ 5 0 --------------------------- 445 602 911 438 388 332 84 250

$5 0 and under $ 6 0 --------------------------- 985 2, 224 779 1,780 1,204 1, 517 585 1,400

$ 6 0 and unde r $ 7 0 --------------------------- 1,482 2, 011 1,418 2, 170 1,404 2, 724 1,028 802

$7 0 and under $ 8 0 --------------------------- 584 1,866 611 1, 709 693 1, 604 410 1, 293

$ 8 0 and under $ 9 0 --------------------------- 502 505 564 447 523 464 795 245

$ 9 0 and under $ 100 ------------------------ 125 294 208 210 291 302 733 1, 101

$ 100 and under $ 1 2 5 ----------------------- 835 519 1, 039 1, 089 1, 218 1, 074 1, 288 1,711

$ 125 and under $ 1 5 0 ----------------------- 40 112 95 342 422 661 440 510

$ 150 and under $ 1 7 5 ----------------------- i 153 38 364 131 298 | 397 407 283

$ 175 and unde r $ 200 ----------------------- 444 43 22 37 81 303 621 996

$2 00 and under $225 ----------------------- - - 31 66 214 93 265 347

$2 25 and under $ 250 ----------------------- - - 443 37 12 46 114 142

$2 50 and under $2 75 -------- — ----- - - - - 4 77 102 67 252

$275 and under $3 00 ----------------------- - - - - - - 255 303

$ 300 and under $ 350 ----------------------- - - - - - - 29 141

$ 3 5 0 and o v e r ------------- -------------------- - - - - 80 103

30 years of service

Total---------- — — — ------- 8, 084 1 0, 87 1 8,084 10, 871 8,084 10,871 8, 084 10,871

None 3 -------------------------- - ----------------- 418 496 422 457 385 313 366 305

Under $ 1 0 ----------- — -------- -------- 12 16 42 174 43 100 31 86

$ 10 and unde r $ 2 0 --------------------------- 419 136 9 72 11 40 7 29

$ 2 0 and under $ 30 . _ _ ----- 458 352 545 256 200 305 184 196

$ 30 and under $ 4 0 --------------------------- 1, 138 1, 372 638 299 510 245 178 198

$4 0 and under $ 5 0 --------------------------- 589 558 356 383 329 305 172 252

$5 0 and under $ 6 0 --------------------------- 561 1, 294 905 2, 147 541 1, 228 233 1, 061

$ 6 0 and under $ 7 0 ------------- ----------- 1,031 1,457 831 1,000 919 697 803 601

$ 7 0 and unde r $ 8 0 --------------------------- 1,201 1, 968 1, 157 2, 110 1, 180 1, 692 607 754

$8 0 and under $ 9 0 --------------------------- 740 1,474 900 1,482 785 2, 282 628 1, 195

$ 9 0 and under $ 1 0 0 ------------------------- 296 651 448 507 456 565 453 261

$ 1 00 and under $ 1 2 5 ----------------------- 429 720 614 844 577 761 854 479

$ 125 and under $ 1 5 0 ----------------------- 565 217 693 588 1, 174 821 1, 158 2, 304

$ 1 50 and under $ 1 7 5 -------- ----- 26 58 262 242 316 567 414 439

$ 175 and under $ 200 ----------------------- 157 58 168 141 270 360 698 400

$200 and under $225 ----------------------- 4 44 43 27 79 262 250 409 680

$ 2 2 5 and under $2 5 0 ----------------------- - - 467 90 29 143 217 511

$250 and under $275 -------------- ----- - - - - 20 81 182 225

$275 and under $3 0 0 -------------------- - - - _ 10 28 27 2 104

$ 3 0 0 and under $ 350 ----------------------- - - - - 4 67 90 105 490

$3 50 and under $4 00 ----------------------- - - - - - - 27 160

$400 and o v e r ------------------------------------ ~ “ ~ “ - “ 86 142

1 Computation of benefit amounts was based on current benefit formulas, assuming a constant level of earnings.

2 Based on a study of 15,818 private pension plans covering 15.6 million active workers in 1961.

3 No pension was provided because of the deduction of assumed social security disability benefits.

4 Where higher benefit amounts were relatively few and widely scattered they were accumulated in this interval.

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

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
62

Table 18. M onthly P rivate P en sion Plan D isab ility R etirem en t B en efits 1 for W ork ers Ineligible for

Social Security D isab ility B en efits, by Selected A ssu m ed Annual E arnings L e v els

and Service P e rio d s, W inter 1962—6 3 2

(Workers in thousands)

Monthly benefit

Assumed annual earnings

$3, 600 $4 ,, 800 $ 6 , 000 [ $ 8 , 400

Plans W orkers Plans W ork ers Plans W o rk ers ! Plans j Workers

10 years of service

Total------------------------------------------------------- 3, 774 3, 116 3, 774 3, 116 3, 774 3, 116 3,774 3, 116

None 3 --------------------------------------------------- 695 181 695 181 684 154 680 145

Under $ 1 0 -------------------------------------------- 812 137 38 52 39 60 20 27

$ 1 0 and under $ 2 0 --------------------------- 499 373 1, 175 281 764 135 30 55

$20 and under $ 3 0 --------------------------- 484 302 370 340 555 359 558 j 236

$30 and under $ 4 0 --------------------------- 280 161 333 192 391 ! 223 754 , 201

$40 and under $ 5 0 --------------------------- 135 95 180 110 77 ; 122 186 184

$50 and under $ 6 0 --------------------------- 289 1, 288 238 1, 118 440 1,093 403 1,089

$60 and under $ 7 0 __________________ 137 153 194 111 186 1 136 123 j 108

$70 and under $ 8 0 __________________ 45 106 25 227 85 i 148 146 j 186

$80 and under $ 9 0 --------------------------- 7 74 87 161 21 ! 91 66 | 90

$90 and under $ 100 -------------------------- 215 36 10 16 7 100 134 17

$ 100 and under $ 1 2 5 ----------------------- 152 126 404 231 247 298 291 326

$ 125 and under $ 1 5 0 ----------------------- 3 13 1 11 43 76 36 172

$ 150 and under $ 1 7 5 ----------------------- 7 56 2 13 211 31 16 110

$ 175 and under $ 2 0 0 ----------------------- 4 14 16 2 6 4 24 48 54

$200 and under $225 ----------------------- - - 4 20 67 - - 262 38

$225 and under $250 ----------------------- - - - - 1 13 ! -

$250 and under $275 ----------------------- - - - - 6 43 1 11

$275 and under $300 ----------------------- - - - - 4 13 11 6 1

$300 and under $350 ----------------------- - - - - - - 7 19

$350 and o v e r ------------------------------------ - - - - “ -

7 46

15 years of service

T o t a l ------------------------------------------------------ 7,643 9, 605 7,643 9, 605 7,643 9, 605 7,643 9, 605

None 3 ---------------------------------------------------- 683 269 683 269 668 233 668 233

Under $ 1 0 -------------------------------------------- 41 21 51 38 51 38 21 35

$ 10 and unde r $ 2 0 --------------------------- 1,219 430 477 175 68 167 49 128

$20 and under $ 3 0 --------------------------- 567 534 886 544 848 348 120 262

$30 and under $ 4 0 --------------------------- 937 866 932 751 1,001 712 544 576

$40 and under $ 5 0 --------------------------- 628 1,415 672 530 430 494 731 369

$50 and under $ 6 0 --------------------------- 795 942 651 930 1,017 880 910 87 1

$60 and under $ 7 0 --------------------------- 790 689 1, 107 1,596 671 527 637 395

$ 7 0 and under $ 8 0 ---------------------------- 707 948 699 767 1, 142 1,831 857 712

$80 and under $ 9 0 --------------------------- 182 1,239 261 1,458 330 1,286 418 1, 07 1

$ 90 and under $ 100 ------------------------ 396 625 429 499 431 583 789 423

$ 100 and under $ 1 2 5 ----------------------- 520 1,446 335 1, 593 447 1,630 968 2,975

$125 and under $ 1 5 0 ----------------------- 13 36 252 209 41 306 223 262

$ 150 and under $ 1 7 5 ----------------------- 149 114 179 140 207 335 267 481

$ 175 and under $ 2 0 0 ----------------------- 4 16 29 7 26 266 136 32 278

$200 and under $225 -----------------------

- - 8 55 2 15 99 27 2

$225 and under $250 ----------------------- - - 4 14 24 2 11 226 53

$ 2 5 0 and under $ 2 7 5 ---------------------- - - - - 6 43 53 109

$275 and under $300 ----------------------- - - - - 4 6 35 - -

$300 and under $350 ----------------------- - - - - - - - -

$ 350 and o v e r ------------------------------------ ' ■ “ “ " 31 100

See footnotes at end of table.

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
63

Table 18. M onthly P rivate P en sion Plan D isab ility R etirem en t B enefits 1 for W ork ers Ineligible for

Social Security D isab ility B en efits, by Selected A ssu m ed Annual E arnings L e v els

and Service P e rio d s, W in ter 1962—6 3 2— Continued

(Workers in thousands)

Monthly benefit

Assumed annual earnings

$3, 600 $4, 800 $6, 000 $8,, 40 0

Plans W orkers | Plans | W orkers Plans W orkers Plans | W orkers

20 years <of servic e

T o t a l ------------------------------------------------------ 7,930 10, 603 7, 930 10, 603 7, 930 10, 603 7,930 10,603

None 3 ---------------------------------------------------- 624 229 624 229 606 160 606 160

Under $ 1 0 ------------------------------------------- 60 26 50 33 25 64 20 30

$ 1 0 and unde r $ 2 0 --------------------------- 561 221 77 68 18 60 8 63

$2 0 and under $3 0 — ----------------------- 930 347 542 241 152 200 96 175

$3 0 and under $ 4 0 --------------------------- 578 514 1, 212 536 67 3 363 197 291

$4 0 and under $ 5 0 --------------------------- 795 748 620 550 1, 032 408 423 358

$5 0 and under $ 6 0 --------------------------- 360 1,418 473 1, 372 672 1,451 239 1, 222

$6 0 and under $ 7 0 --------------------------- 1, 539 897 1, 107 761 912 626 1, 573 5 34

$ 7 0 and under $ 8 0 --------------------------- 314 542 428 531 449 411 360 382

$ 8 0 and under $ 9 0 --------------------------- 414 1,451 749 1, 541 564 460 398 320

$ 9 0 and under $ 1 0 0 -------------------------- 436 489 427 511 490 526 712 464

$ 100 and under $ 1 2 5 ----------------------- 974 3, 077 964 3, 072 1, 317 4, 168 1, 106 2, 518

$ 125 and under $ 1 5 0 ----------------------- 36 423 52 439 297 628 692 1,767

$ 150 and under $ 17 5 ----------------------- 152 150 389 494 214 367 613 788

$ 175 and under $ 200 ----------------------- 9 36 23 81 38 227 153 403

$ 2 0 0 and under $ 2 2 5 ----------------------- 135 23 173 96 394 319 331 299

$ 225 and under $ 2 5 0 ----------------------- 4 1 3 11 5 14 19 43 54 242

$ 250 and under $ 275 ----------------------- - - 1 13 43 87 19 134

$ 275 and under $ 300 ----------------------- - - 4 14 22 - - 240 231

$ 3 0 0 and under $ 35 0 ----------------------- - - - - 4 1 5 36 20 80

$ 350 and under $ 4 0 0 —--------------------- - - - - - 45 84

$ 4 0 0 and o v e r ________________________ - - “ -

-

25 57

25 years of service

T o t a l ------------------------------------------------------ 8, 080 10,811 8, 080 10,811 8, 080 10,811 8, 080 10, 811

None 3 ---------------------------------------------------- 623 227 623 227 605 159 586 150

Under $ 1 0 -------------------------------------------- 10 13 20 30 20 30 20 30

$ 10 and unde r $ 2 0 --------------------------- 414 106 53 53 9 85 22 36

$ 20 and under $ 3 0 --------------------------- 681 241 361 115 63 109 33 93

$3 0 and under $ 4 0 --------------------------- 661 384 641 334 492 219 182 201

$4 0 and under $ 5 0 --------------------------- 381 422 689 319 329 237 66 216

$50 and under $ 6 0 --------------------------- 875 1,644 706 1,529 1,084 1, 375 524 1, 310

$ 6 0 and unde r $ 7 0 --------------------------- 712 464 681 453 494 470 637 361

$7 0 and under $ 8 0 --------------------------- 883 1,072 847 765 776 689 619 532

$80 and under $ 9 0 --------------------------- 641 1,362 526 444 523 349 808 302

$ 9 0 and unde r $ 1 0 0 -------------------------- 480 506 396 371 607 358 574 337

$ 100 and under $ 1 2 5 ----------------------- 784 1,894 1,034 3, 176 77 5 1,730 870 1,465

$ 125 and under $ 1 5 0 ----------------------- 570 1,916 762 2, 002 1, 173 3, 387 721 1,617

$ 150 and under $ 1 7 5 ----------------------- 74 436 336 325 354 532 357 327

$ 175 and under $ 200 ----------------------- 39 49 48 244 155 301 734 2, 147

$200 and under $225 ----------------------- 105 50 171 325 329 167 502 341

$ 225 and under $ 250 ----------------------- 4 147 27 16 37 40 237 125 236

$250 an d u n d e r $27 5 ----------- ----------- - - 155 27 199 286 289 209

$275 and under $300 ----------------------- - - *15 35 7 20 254 242

$ 300 and under $ 350 -------------------- - - - - 4 46 73 43 294

$350 and under $4 00 ----------------------- - - - - - - 54 266

$400 and over ---------------------------------

' "

60 99

See footnotes at end of table.

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Federal Reserve Bank of St. Louis
64

Table 18. M onthly P rivate P en sion Plan D isab ility R etirem en t B en efits 1 for W o rk ers Ineligible for

Social Security D isab ility B en efits, by S elected A ssu m ed Annual E arnin gs L e v els

and S ervice P e rio d s, W in ter 1962—6 3 2— Continued

(Workers in thousands)

Monthly benefits

Assumed annual earnings

$3, 600 $4, 800 $6, 000 $8,,400

Plans Worke rs Plans Workers Plans Workers Plans Workers

30 years of service

T o ta l________________________________ 8. 084 10.871 8, 084 10,871 8, 084 10,871 8, 084 10, 871

None 3 ------------------------------------------------ 625 279 624 238 605 159 586 150

Under $ 1 0 ---------------------------------------- 10 13 20 30 20 30 20 30

$ 10 and under $ 2 0 ------------------------- 363 74 3 63 2 21 2 21

$20 and under $ 3 0 ------------------------- 293 139 339 97 32 150 19 81

$ 30 and unde r $ 4 0 ------------------------- 712 312 560 233 493 202 167 175

$40 and under $ 5 0 ------------------------- 497 339 193 260 225 204 93 157

$50 and under $ 6 0 ------------------------- 549 1, 340 765 1,219 548 1,209 242 1, 119

$60 and under $ 7 0 ------------------------- 1, 112 797 841 653 860 441 830 447

$ 70 and under $ 8 0 ------------------------- 616 639 575 546 492 547 356 470

$80 and under $ 9 0 ------------------------- 537 333 716 341 579 263 476 216 $90 and under $ 100------------------------ 759 1,817 781 722 874 635 687 419

$ 100 and under $ 1 2 5 --------------------- 879 1,774 872 2,914 606 1,477 666 562

$ 125 and under $ 1 5 0 --------------------- 216 732 330 629 741 710 660 1, 219

$ 150 and under $ 1 7 5 --------------------- 578 1,854 971 1,980 923 3, 287 767 1, 592

$ 175 and under $ 200 --------------------- 54 312 85 267 299 386 688 370

$200 and under $225 --------------------- 14 38 77 275 296 198 367 1,774

$225 and under $250 --------------------- 4 270 79 136 263 187 313 416 561

$ 250 and under $ 275 ------------------ - - 15 56 68 207 292 255

$ 275 and under $ 300 --------------------- - - 4 181 86 14 151 259 148

$300 and under $350 --------------------- - - - - 170 205 328 428

$350 and under $400 --------------------- - - - - 4 50 78 55 312

$400 and under $500 --------------------- - - - - - - 55 269

$ 500 and o v e r ------ ------------------------ “ ~ ~ 53 95

1 See footnote 1, table 17. 2 See footnote 2, table 17. 3 No pension was provided to workers ineligible for social security disability benefits. 4 See footnote 4. table 17.

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

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T able 19. M edian M onthly P riv a te P en sio n P lan D isa b ility B en efits for W orkers E lig ib le for S o cia l S ecu rity D isa b ility B e n efits, at S e lec ted A ssu m ed Annual E arn in gs L ev els and S e r v ic e P e r io d s, by Industry, W inter 1962—63

A ssum ed annual earnings lev els and serv ice periods

Industry $4, 800 $ 8 , 400

15 years 20 years 15 years 20 years

All in d u stries1 ------------------------------------------------- $39 $51 $42 $65

M in in g------------------------------------------------------------ 39 52 39 76 Contract c o n str u ctio n------------------------------------- 36 48 36 48 M anufacturing------------------------------------------------- 39 52 42 60

T ran sp o rta tio n ------------------------------------------------ 50 50 50 50 Com munications and public u tilitie s---------------- 21 21 41 76 W holesale and retail tr a d e------------------------------ 39 40 42 54 W holesale tr a d e ------------------------------------------ 38 40 39 40 Retail t r a d e ------------------------------------------------ 42 55 91 111 Finance, insurance, and real e s t a t e---------------- 75 100 165 209 S e r v ic e s ---------------------------------------------------------- 24 46 24 56

1 Includes industries for which data are not shown sep arately.

NOTE: B ecause of rounding, sum s of individual item s may not equal totals.

Table 20. Median Monthly P rivate P ension Plan D isability B enefits for W orkers Ineligible for Social Security D isability B en efits, at Selected A ssum ed Annual Earnings L evels and Service P erio d s, by Industry, W inter 1962—63

Assum ed annual earnings lev e ls and serv ice periods

Industry $4 , 800 $ 8 ,4 0 0

15 years 20 years 15 years 20 years

A ll in d u stries1 ------------------------------------------------- -$68 $85 $90 $100

M in in g ------------------------------------------------------------- 90 100 100 100

Contract c o n str u ctio n------------------------------------- 36 48 38 50 M anufacturing------------------------------------------------- 80 90 90 100

T ran sp o rta tio n ------------------------------------------------ 50 50 50 50

Com munications and public u tilitie s---------------- 60 85 105 140

W holesale and retail tr a d e------------------------------ 36 40 39 51

W holesale tr a d e ------------------------------------------ 29 36 30 36 R etail trad e—-----—— —— -------—-----------------— 42 56 94 120 F inance, insurance, and real esta te---------------- 120 133 210 233

S ervices ---------------------------------------------------------- 30 60 50 73

1 Includes industries for which data are not shown sep arately.

NOTE: B ecause of rounding, sum s of individual item s may not equal totals.

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Digitized for FRASER 

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Federal Reserve Bank of St. Louis
Chapter IV. Early Retirement

In c o n tr a s t to d is a b ility r e tir e m e n t, w h ich m a y be r e g a r d e d a s a s p e c ia l ty p e of e a r ly r e tir e m e n t d e s ig n e d e x p r e s s ly fo r w o rk e rs w ho a r e p e r m a n e n tly in c a p a c ita te d , r e g u la r e a r ly r e tir e m e n t p ro v is io n s c o v e r s itu a tio n s w h e re , fo r o th e r r e a s o n s , r e tir e m e n t b e fo re n o rm a l r e tir e m e n t a g e (u su a lly age 65) a p p e a r s d e s ir a b le o r n e c e s s a r y . F o r e x a m p le , so m e w o r k e r s m a y d e s i r e to r e t i r e e a r ly b e c a u s e of il l h e a lth , lo s s of s k ill, o r o th e r p e r s o n a l r e a s o n s . F o r th e s e an d 

o th e r r e a s o n s r e la te d to c h a n g e s in m a n p o w e r r e q u ir e m e n ts , e m p lo y e rs m a y a ls o w ish to r e t i r e w o rk e r^ b e fo re th e n o r m a l r e tir e m e n t a g e .

E a r ly r e tir e m e n t p r o v is io n s p e r m it w o r k e r s m e e tin g s p e c ifie d ag e o r s e r v ­

ic e r e q u ir e m e n ts , o r b o th , to r e t i r e on an im m e d ia te , r e d u c e d m o n th ly r e t i r e ­ m e n t b e n e fit p a y a b le fo r life . 56 T he b e n e fits a r e u s u a lly m u c h le s s th a n th o s e fo r d is a b ility r e tir e m e n t b e c a u s e , a s p o in te d o u t in th e p re v io u s c h a p te r , d i s ­ a b ility r e tir e m e n t b e n e fits a r e fre q u e n tly e q u a l to o r g r e a t e r th an n o rm a l r e ­ tir e m e n t b e n e fits fo r e q u iv a le n t e a rn in g s an d s e r v ic e . A lth o u g h e a r ly r e tir e m e n t b e n e fits a r e alw a y s p a y a b le im m e d ia te ly , so m e p la n s allo w th e w o rk e r to d e f e r th e r e c e ip t of b e n e fits u n til he r e a c h e s n o rm a l r e tir e m e n t a g e , w hen th ey a r e p a y a b le in th e fu ll a m o u n t.

P r e v a le n c e of E a r ly R e tire m e n t P r o v is io n an d M in im u m R e q u ire m e n ts 57

A b o u t 3 o u t of 4 p r iv a te p e n sio n p la n s , w ith th e s a m e p r o p o r tio n of w o r k e r s , p ro v id e d e a r ly r e tir e m e n t (ta b le 21). T he p ro v is io n w as f a r m o r e co m m o n am o n g 

s in g le - e m p lo y e r p la n s th a n am o n g m u ltie m p lo y e r p la n s . T h is m a r k e d d iffe re n c e 

w as a ls o r e f le c te d in th e g r e a t e r p r e v a le n c e of e a r ly r e tir e m e n t p ro v is io n s in c o n tr ib u to ry p la n s , in p la n s n o t m e n tio n e d in c o lle c tiv e b a rg a in in g a g r e e m e n ts , an d in s a la r ie d w o r k e r s 1 p la n s . T he p re v a le n c e of e a r ly r e tir e m e n t p ro v is io n s am o n g in d u s tr ie s w a s a ls o s tr o n g ly in flu e n c e d by th e p r e s e n c e of m u ltie m p lo y e r p la n s .

In g e n e r a l, le n g th - o f - s e r v ic e r e q u ir e m e n ts fo r e a r ly r e tir e m e n t w e re n o t s ig n ific a n tly d iff e re n t fro m th o s e fo r d is a b ility r e tir e m e n t. F if te e n y e a r s of s e r v ic e w as th e m o s t co m m o n r e q u ir e m e n t f o r e a r ly r e tir e m e n t a s it w as fo r d is a b ility r e tir e m e n t— m o r e th an 1 out of 4 p la n s a n d w o r k e r s (ta b le 22). T en y e a r s w e re n e e d e d in a six th of th e p la n s w ith a fo u rth of th e w o r k e r s . A fo u rth of th e w o r k e r s w e re in p la n s r e q u irin g 20 y e a r s o r m o r e of s e r v ic e , an d a fifth of th e w o r k e r s w e re in p la n s sp e c ify in g le s s th an 10 y e a r s .

M in im u m age r e q u ir e m e n ts , on th e o th e r h an d , w e re m u ch m o r e c o m m o n fo r e a r ly th a n fo r d is a b ility r e tir e m e n t, an d w h e re s p e c ifie d , w e re a t h ig h e r a g e s . A lm o s t 95 p e r c e n t of th e p la n s w ith e a r ly r e tir e m e n t, w ith o v e r 85 p e r c e n t 

of th e w o r k e r s , s tip u la te d a g e 55 o r 60. T he c o m b in a tio n s of ag e 55 an d 10 o r 15 y e a r s of s e r v ic e w e re s p e c ifie d in p la n s w ith o v e r 20 p e r c e n t of the w o r k e r s . A n o th e r 30 p e r c e n t w e re in p la n s r e q u irin g th e a tta in m e n t of a g e 60 and 10 o r 

15 y e a r s of s e r v ic e .

^ If the full accrued benefit is payable before the normal retirement age specified in the plans, it is regarded

in this study as a normal retirement benefit unless the employer's consent is required. (See definition of normal re­ tirement age on p. 5.) 57 This section summarizes detailed data appearing in BLS Bulletin 1407, 1964, op. cit. , pp. 24-35.

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T he e m p lo y e r 's c o n s e n t o r h is r e q u e s t— a c o n d itio n n o t p r e s e n t in d is a b ility r e tir e m e n t— w as r e q u ir e d by a lm o s t h a lf the p la n s w ith e a r ly r e tir e m e n t, c o v e r ­ ing tw o -fifth s of th e w o r k e r s .

Plans ___ Workers

Conditions for early retirement Number Percent Number (thousands) Percent

All plans with early retirement ----------------------- 12,099 100.0 11, 786 100.0

Solely at employee's option -------------------------- 6,327 52.3 7,133 60.5

Employer's consent or request required------------- 5, 772 47. 7 4,653 39.5

With employer's consent--------------------------- 5,369 44.4 3,729 31.6 At employer's request-------------------------------- 89 . 7 273 2.3

At employer's request or consent ---------------- 247 2.0 389 3.3

Under mutually satisfactory conditions -------- 55 .5 219 1.8

Other------------------------------------------------------ 12 .1 43 .4

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

A lm o s t a ll of th e s e p la n s w e re s in g le - e m p lo y e r p la n s , b e c a u s e o n ly a s m a ll n u m b e r of m u ltie m p lo y e r p la n s h a d e a r ly r e tir e m e n t p r o v is io n s . F u r th e r m o r e , in m u ltie m p lo y e r p la n s w ith e a r ly r e tir e m e n t p r o v is io n s , th e r e w ould be g r e a t 

d iffic u lty in d e c id in g w h ich e m p lo y e r ’s c o n se n t m u s t be o b ta in e d .

B e n e fits P a y a b le U n d e r E a r ly R e tire m e n t

T o c o m p e n s a te fo r th e lo n g e r p e r io d of tim e o v e r w h ich th ey a r e lik e ly to b e p a id , e a r ly r e tir e m e n t b e n e fits w e re u s u a lly c o m p u te d by re d u c in g th e a c c r u e d n o rm a l r e tir e m e n t b e n e fit by a f a c to r d e te rm in e d by th e w o r k e r 's ag e a t r e tir e m e n t. In a d d itio n , e a r ly r e tir e m e n t b e n e fits w e re s m a lle r th a n n o rm a l b e n e fits b e c a u s e th e w o rk e r w o uld, of c o u r s e , h av e le s s s e r v ic e a c c u m u la te d a t e a r ly r e tir e m e n t. H o w e v e r, n o t a ll w o rk e rs r e tir in g a t ag e 60 w ould r e c e iv e s m a lle r b e n e fits th a n th ey w ould be e n title d to a t 65, a p a r t fro m th e re d u c tio n due to s h o r te r s e r v ic e . A b ou t 1 ,2 0 0 ,0 0 0 w o r k e r s w e re in p la n s th a t d id n o t r e q u ir e a r e d u c tio n in b e n e fits a t ag e 60; a b o u t a m illio n w e re in p la n s w ith n o r m a l r e tir e m e n t a t 60 (u su a lly w ith e a r ly r e tir e m e n t a t lo w e r a g e s ); an d a lm o s t 

2 0 0, 000 w e re in p la n s th a t p a id th e sa m e b e n e fits a t a g e 60 a s a t ag e 65. 58

E a r ly r e tir e m e n t b e n e fits w e re a lw a y s p a y a b le im m e d ia te ly upon r e tir e m e n t, an d in ab o u t h a lf th e p la n s , c o v e rin g th e sa m e p r o p o r tio n of w o r k e r s , m o n th ly b e n e fits h ad to s t a r t a t th a t tim e . 59 T he re m a in in g p la n s p e r m itte d th e w o rk e r to d e fe r th e r e c e ip t of b e n e fits u n til n o rm a l r e tir e m e n t a g e o r , in so m e p la n s , u n til an y e a r l i e r ag e a t w h ich he w as e lig ib le .

________________ Percent

Time of benefit payment Plans Workers

All plans with early retirem ent-------------------------- 100.0 100.0

Immediately on ly--------------------------------------------- 50.1 47.6 Immediately or at age 6 5 ---------------------------------- 22.0 34.9 Immediately or any time up to age 6 5 ---------------- 27.9 17.6

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

58 The normal retirement age in these plans was 65 because the employer's consent was required to retire prior to that age.

59 Includes 169 plans with 1. 2 million workers which provided unreduced benefits. Since benefits are not increased (except for service) in the event of postponement, in most instances, workers retiring early in these plans would receive benefits immediately.

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T he c h ie f a d v a n ta g e of p o stp o n in g th e r e c e ip t of b e n e fits u n til n o rm a l r e ­

tir e m e n t a g e is , of c o u r s e , th a t a h ig h e r b e n e fit w o uld be p a id . F o r e x a m p le , an a c tu a r i a l e q u iv a le n t 60 ty p ic a lly r e s u lt s in a m a le w o rk e r r e c e iv in g a t a g e 60 ro u g h ly tw o - th ird s of th e b e n e fit p a y a b le a t a g e 65. If th e b e n e fit w as d e ­ f e r r e d u n til a g e 65, h e w o uld r e c e iv e th e fu ll b e n e fit b a s e d on s e r v ic e to e a r ly 

r e tir e m e n t d a te , a n in c r e a s e of ab o u t 50 p e r c e n t.

T he ty p e of e m p lo y e r u n it an d th e m e th o d of fin an cin g d id n o t a p p e a r to 

be r e la te d to th e a v a ila b ility of th e d e f e r m e n t p r iv ile g e ; a b o u t h a lf th e p la n s of e a c h ty p e p e r m itte d d e f e r m e n ts (ta b le 23). B e n e fits co u ld n o t be d e f e r r e d , h o w ­ e v e r , in a th ir d of th e n e g o tia te d p la n s a n d in th r e e - f if th s of th o se n o t u n d e r c o lle c tiv e b a rg a in in g . In m o s t in d u s tr ie s , a t l e a s t h a lf th e p la n s p e r m itte d d e ­ f e r m e n t (ta b le 24). H o w e v e r, in c o n s tr u c tio n , tr a n s p o r ta tio n , a n d w h o le s a le a n d r e t a i l tr a d e , tw o -fifth s o r le s s of th e p la n s p e r m itte d it. S till fe w e r p la n s in th e c o m m u n ic a tio n s an d p u b lic u t ilitie s in d u s try p e r m itte d a c h o ic e , c h ie fly b e ­

c a u s e th e d e fe rm e n t of b e n e fits w o uld n o t r e s u lt in l a r g e r m o n th ly b e n e fits .

T he s iz e of th e re d u c tio n of th e n o r m a l b e n e fit p a y a b le a t ag e 65 v a r ie d w id ely fo r r e tir e m e n t b e tw e e n a g e s 60 an d 65. A c tu a r ia l re d u c tio n s w e re m o s t co m m o n , a c c o u n tin g fo r tw o - th ird s of th e p la n s an d n e a r ly h a lf the w o r k e r s . 

A n o th e r fo u rth of th e p la n s w ith o v e r a th ir d of th e w o r k e r s p ro v id e d b e n e fits 

re d u c e d by a u n ifo rm p e r c e n ta g e f a c to r , m o s t fre q u e n tly o n e -h a lf of 1 p e r c e n t o r s ix -te n th s of 1 p e r c e n t fo r e a c h m o n th p r io r to n o rm a l r e tir e m e n t a g e . (See ta b le s in a p p e n d ix B . ) F o r th e r e m a in d e r , a ta b le of f a c to r s fo r re d u c e d b e n e fit a m o u n ts w as u s u a lly a p p lie d th a t sho w ed no u n ifo rm ity f ro m age to a g e . 61

___________________Percent__________________

Reduction factor for early retirement at age 60

All plans with early retirement ------------------------

No reduction1 ------------------------------------------------ Actuarial------------------------------------------------------

Uniform percent for each month prior to age 6 5 ------------------------------------------------- ----- Table of reduction factors not uniform 2 ------------ Table of reduced benefit amounts 2 ------------------- Other -----------------------------------------------------------

Plans Workers

100.0 100.0

1.4 9.9 66. 7 49.4

23.4 35.6

6.9 3.6

.3 .8

1.3 .9

1 Includes 57 plans, covering 966,000 workers, with normal retirement at age 60 and early retire­ ment at ages earlier than 60.

2 Not based on uniform monthly reduction; often an approximate actuarial reduction.

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

T he re d u c tio n f a c to r s fo r r e tir e m e n t a s e a r ly a s ag e 55 w e re u s u a lly th e sa m e a s a t a g e 60 s in c e m o s t p la n s a p p lie d a u n ifo rm re d u c tio n f a c to r r e g a r d le s s of ag e a t e a r ly r e tir e m e n t. A m ong p la n s u sin g d iff e re n t f a c to r s , h o w e v e r, m a n y p la n s u sin g a u n ifo rm p e r c e n ta g e f a c to r a t ag e 60 a p p lie d a n a c tu a r ia l re d u c tio n 

to d e te rm in e b e n e fits below th a t ag e .

A s p r e v io u s ly d is c u s s e d , fu ll b e n e fits w e r e p ro v id e d a t a g e 60 by 169 p la n s c o v e rin g 1. 2 m illio n w o r k e r s , o r a b o u t 1 o u t of 10 w o rk e rs in p la n s w ith r e t i r e ­

m e n t a t ag e 60. 62 In so m e of th e s e p la n s , su c h a s th o s e in th e B e ll T e le p h o n e S y ste m , w o rk e rs co u ld a ls o r e t i r e on fu ll b e n e fits a s e a r ly a s a g e 55 (p ro v id e d s e r v ic e r e q u ir e m e n ts a r e m e t).

60 For definition of actuarial equivalent, see footnote 44. 61 For greater detail on actuarial factors, see BLS Bulletin 1407, 1964, op. c it., pp. 28-29. 62 Some plans, such as the Electrical Workers (IBEW) National Plan, the United Mine Workers, and the Central States Teamsters Plan, did not have early retirement but had normal retirement at age 60 or earlier. These are

not included in the discussion above.

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I llu s tr a tio n s of e a r ly r e tir e m e n t b e n e fits c o m p u te d w ith s e v e r a l ty p e s of r e ­ d u c tio n f a c to r s a r e show n b elo w a s a p e r c e n ta g e of th e n o rm a l r e tir e m e n t b e n e fit.

Type of reduction and percent of normal retirement benefit

0. 25 percent per month ages

Actuarial 0. 6 percent 65-60; 0.583 per­ Table of

Actuarial (other per month cent per month factors (not

(steel) plan) (auto) ages 59-55 uniform)

Retirement age Percent

65 (normal)----------------------- 100.00 100.00 100.00 100.00 100. 00

6 4 ..............—.................. ........... 91.84 90.90 92.80 97.00 90. 59

63 — ------------------- ----------- 84.60 82. 90 85. 60 94.00 82. 36

62 — ......... ...................... ......... 79.14 75.90 78.40 91.00 75.14

6 1 ................................ .............. 72.36 69. 70 71.20 88.00 68. 76

6 0 ---------- ------------------------- 67. 18 64. 20 64.00 85.00 63.12

5 9 ................................- ..........- 59. 40 _ 78.00 58.09

5 8 ...................... .............. ...........

_ 55.00 - 71.00 53.61

5 7 ---------------------- ------------

_ 51.10 - 64.00 49. 59

56 — ..........- ..........- ................. _ 47.60 - 57.00 45. 98

5 5 ............................................... - 44.40 - 50.00 42.72

R e d u c tio n f a c to r s in s in g le - e m p lo y e r p la n s d iff e re d s h a r p ly f ro m th o s e in m u ltie m p lo y e r p la n s . S in g le -e m p lo y e r p la n s u s u a lly p ro v id e d th a t th e a c tu a r i a l e q u iv a le n t be p a id to e a r ly r e t i r e e s , w h ile m u ltie m p lo y e r p la n s m o s t fre q u e n tly s p e c ifie d th e p e r c e n ta g e re d u c tio n . T h is d iff e re n c e in tr e a tm e n t of e a r ly r e ­ ti r e m e n t b e n e fits w as a ls o r e f le c te d in th e d is tr ib u tio n s by c o lle c tiv e b a rg a in in g 

s ta tu s an d m e th o d of fin a n c in g . P la n s u n d e r c o lle c tiv e b a rg a in in g u s u a lly u s e d 

u n ifo rm re d u c tio n f a c to r s , an d n o n b a rg a in e d p la n s u s u a lly u s e d a n a c tu a r ia l r e ­ d u c tio n . (See a p p e n d ix B. ) S im ila rly , n o n c o n trib u to ry p la n s u s u a lly s p e c ifie d p e r c e n ta g e re d u c tio n f a c to r s w h ile c o n tr ib u to ry p la n s m o r e fre q u e n tly u s e d a c tu ­ a r i a l r e d u c tio n s .

L e v e l of B e n e fits

B e n e fits w e re c o m p u te d fo r r e tir e m e n t a t a g e s 60 an d 55 u n d e r a s s u m p tio n s s im il a r to th o s e p re v io u s ly u s e d fo r n o r m a l a n d d is a b ility r e tir e m e n t. (See p. 11 .) In a d d itio n , w h e re b e n e fits w e r e r e d u c e d a c tu a r ia lly a n d th e f a c to r s to be a p p lie d w e re n o t s ta te d , th e a c tu a r ia l re d u c tio n f a c to r s c o m m o n ly u s e d fo r m a le w o r k e r s w e re a p p lie d (32. 8 p e r c e n t a t a g e 60 an d 5 1 .8 p e r c e n t a t a g e 55).

R e tir e m e n t b e n e fits a t ag e 60 f o r a s s u m e d e a r n in g s le v e ls an d s e r v ic e p e r io d s 63 a r e show n in ta b le 25. T he d is p e r s io n of e a r ly r e tir e m e n t b e n e fits a t a g e 60 fo r th e m id d le 50 p e r c e n t an d m id d le 80 p e r c e n t of th e w o rk e r d i s ­ tr ib u tio n r e s e m b le d th a t fo r n o rm a l r e tir e m e n t b e n e fits ( c h a r t 8). B e n e fits fo r 

th e m id d le 80 p e r c e n t of w o r k e r s w ith 20 y e a r s of s e r v ic e an d e a rn in g $ 4 ,8 0 0 , f o r e x a m p le , ra n g e d f ro m $ 26 to $ 89 a m o n th , w h ile th e m id d le 50 p e r c e n t of 

th e ra n g e w as b e tw e e n $ 3 5 a n d $ 70 a m o n th . T h e s e ra n g e s (the m id d le 50 an d m id d le 80 p e rc e n t) w e r e , of c o u r s e , w id e r a t h ig h e r e a r n in g s an d s e r v ic e le v e ls . 

S im ila r ly , c h a r t 9 an d ta b le 26 show th e ra n g e of b e n e fits f o r w o r k e r s r e tir in g 

a t a g e 55 a t v a r io u s e a rn in g s a n d s e r v ic e le v e ls . T he s m a lle r b e n e fits p ro v id e d fo r r e tir e m e n t a t ag e 55 te n d e d to n a r r o w th e ra n g e of b e n e fits ; n e v e r th e le s s , 

th e r e d u c tio n s in th e s iz e of b e n e fits w e r e , on th e w h o le, to o s lig h t to h av e m u c h e ffe c t on th e r a n g e .

63 Includes some plans with normal retirement at age 60 and early retirement at earlier ages, and a few plans

with normal retirement at age 60 and no early retirement provisions. However, money purchase plans and other

plans for which benefits could not be computed were excluded.

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Chart 8. Monthly Early Retirement Benefits' for Workers Retiring at Age 60, by Selected Assumed Annual Earnings Levels

and Service Periods, Winter 1962-632

SERVICE

IN YEARS

10

15

20

25

30

Monthly benefits

A N N U A L

EA R N IN G S

" $3,600 

$4,800 

$6,000 

^ $8,400

"$3,600 

$4,800 

$6,000

^ $8,400

"$3,600 

$4,800 

$6,000 

v $8,400

'$3,600

$4,800

$6,000

$8,400

"$3,600

$4,800

$6,000

^$8,400

0 $50 $100 $150 $200 $250 $300 $350

^ M edian m o n th ly b e n e fits and ranges w ith in w hich fe ll 50 p e rc e n t and 8 0 p erc e n t of the w o rk e rs . 2

B ased on a study of 1 5 ,8 1 8 p riv a te pension p lans c o v e rin g 1 5 ,6 m illio n a ctiv e w orkers in 19 6 1 .

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Chart 9. Monthly Early Retirement Benefits1 for Workers Retiring

at Age 55, by Selected Assumed Annual Earnings Levels

and Service Periods, Winter 1962-632

SER V IC E

IN YEARS

10

15

20

25

A N N U A L

EARNING S

^ $3,600 

4,800

<

6,000

8,400

$3,600

4,800

6,000

8,400

$3,600

4,800

6,000

8,400

$3,600

4.800

6,000

8.400 V

r

$3,600

4.800

6,000

8.400

Monthly benefit

0 $50 $100 $150 $200 $250 $300 $350

M

[M J cm

i

LEGEND

N in th D ecile

F irs t Q u a rtile T h ird

F irs t D ecile I M e d ia n

t \ t

Q u a rtile /

I / wmm

CM]

M e d ia n m o n th ly b e n e fits an d ran g e s w ith in w hich fe ll 5 0 p e rc e n t and 8 0 p e rc e n t o f th e w o rk e rs ,

o

* Based on a s tu d y of 1 5 ,8 1 8 p riv a te pen s io n p lan s co v e rin g 1 5 .6 m illio n a c tiv e w o rk ers in 1 9 6 L

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M e d ia n m o n th ly b e n e f its u n d e r th e a s s u m e d c o n d itio n s r a n g e d f r o m $ 1 8 to 

$ 122 f o r r e t i r e m e n t a t a g e 60.

$ 3 ,6 0 0

Interquartile

Service periods (years) M edian range

1 0 1__________________________ $18 $13-$20

1 5 1 ______________________________ 27 22- 33

2 0 _______________________________ 36 30- 56

25 ----------------------------------------------- 46 38- 70

3 0 _______________________________ 54 46- 79

Excludes a substantial number of workers in plans

Annual earnings

$4, 800 $ 6 ,0 0 0 $ 8 ,4 0 0

M edian

Interquartile

range M edian

Interquartile

range M edian

Interquartile

range

$19 $16-$29 $23 $18-$42 $37 $18-$66

28 25- 44 34 26- 57 50 26- 88

42 35- 70 58 35- 92 85 39-136

54 4 4 - 88 74 45 -116 107 50-171

65 50-106 82 53-136 122 59-208

ith higher qualifying service requirements.

T h e y r a n g e d o n ly s li g h tl y l e s s (i. e . , f r o m $ 12 to $ 1 1 3 ) f o r r e t i r e m e n t a t 

a g e 55.

M e d ia n e a r l y r e t i r e m e n t b e n e f its a f t e r 30 y e a r s o f s e r v i c e d id n o t e x c e e d 

18 p e r c e n t o f p r e r e t i r e m e n t e a r n i n g s a t a g e 60.

Annual earnings

$3,600 $4,800 $6,000 $8,400

Service periods (years)

1 0 ! ......... ............-..................—• 6.0

Percent

4. 8 4. 6 5.3

151 — -..............- ...................... 9.0 7.0 6.8 7.1 2 0 ---------------------------- -------- 12.0 10.5 11.6 12.1 2 5 --------------------------- ----------- 15.3 13.5 14.8 15.3 3 0 -------------------------------------- 18.0 16.3 16.4 17.4

1 Excludes a substantial number of workers in plans with higher qualifying service requirements.

B e c a u s e of th e l o n g e r t im e o v e r w h ic h p a y m e n ts a r e to b e m a d e , a s h a s 

b e e n d is c u s s e d , e a r l y r e t i r e m e n t p a y m e n ts a r e g e n e r a l l y lo w e r th a n n o r m a l r e ­

t i r e m e n t p a y m e n ts . M e d ia n e a r l y r e t i r e m e n t b e n e f i ts , h o w e v e r , w e r e g e n e r a l l y 

h ig h e r th a n th e y w o u ld b e if a c c e p te d a c t u a r i a l f a c t o r s w e r e u s e d . A c t u a r i a ll y 

r e d u c e d p e n s io n s c o m m e n c in g a t a g e 60 a r e u s u a lly a b o u t t w o - t h i r d s of th e n o r m a l 

r e t i r e m e n t b e n e f it p a y a b le a t a g e 65, a n d a b o u t h a lf th e n o r m a l p e n s io n if th e y 

b e g in a t a g e 5 5 . T h e r e a s o n s f o r th e h i g h e r - t h a n - e x p e c t e d e a r l y r e t i r e m e n t b e n e ­

f it l e v e l s a r e : ( l ) A b o u t 10 p e r c e n t o f th e w o r k e r s w e r e in p la n s th a t d id n o t

r e d u c e b e n e f i ts ; (2) a b o u t 5 p e r c e n t o f th e w o r k e r s w e r e in p la n s th a t r e d u c e d 

b e n e f its b y l e s s th a n th e a c t u a r i a l e q u iv a le n t; a n d (3) a s m a l l n u m b e r o f w o r k e r s 

w e r e in p la n s p r o v id in g s u p p le m e n ts u n til th e w o r k e r w a s e lig ib le f o r s o c ia l 

s e c u r i t y b e n e f i ts .

S i m il a r l y , th e m e d ia n b e n e f its p a y a b le a t a g e 55 w e r e h ig h e r th a n if th e 

a c t u a r i a l f a c t o r s w e r e u s e d in c o m p u ta tio n s f o r a l l p la n s , c h ie f ly b e c a u s e m a n y 

l a r g e in d u s tr y w id e p la n s p r o v id in g b e n e f its to w o r k e r s r e t i r i n g v o lu n t a r i ly a t a g e 

60 d id n o t p r o v id e f o r v o lu n ta r y e a r l y r e t i r e m e n t a t a g e 55. A s a r e s u l t , m e d ia n 

b e n e f its a t a g e 55 r e f l e c t e d to a g r e a t e r d e g r e e th e g e n e r o u s b e n e f its p r o v id e d 

b y c o n tr ib u t o r y p la n s .

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F o r the f i r s t few y e a r s of e a r ly r e tir e m e n t, th e w o rk e r o ften m u s t r e ly on 

p la n b e n e fits p lu s e m p lo y m e n t in c o m e a n d sa v in g s s in c e s o c ia l s e c u r ity b e n e fits a r e no t p a y a b le u n til age 62, w hen th e w o rk e r m a y e le c t to r e c e iv e a p e rm a n e n tly 

re d u c e d b e n e fit. S in ce p r im a r y s o c ia l s e c u r ity b e n e fits p ay a b le a t a g e 62 w e re $ 8 4 and $ 1 0 1 .6 0 a m o n th to w o rk e rs a v e ra g in g $ 3 ,6 0 0 an d $ 4 ,8 0 0 a y e a r o r m o re a t th e tim e of th is stu d y , th e c o m b in e d p u b lic an d p r iv a te b e n e fits a t ag e 62 p ro v id e d a m e d ia n m o n th ly in co m e ra n g in g fro m $ 1 0 2 to $ 224. 64

Annual earnings

Service periods (years) $ 3 ,6 0 0 $ 4 ,8 0 0 $ 6 ,0 0 0 $ 8 ,4 0 0

1 0 1 -------------------------------------- $102 $121 $125 $139 15 1 ---------------------------------------- 111 130 136 152

2 0 ------------------------------------------ 120 144 160 187

2 5 ------------------------------------------ 130 156 176 209

3 0 ------------------------------------------ 138 167 184 224

* Excludes a substantial number of workers in plans with higher qualifying service requirements.

T h u s, p e n s io n e r s w ho r e t i r e d a t a g e 60 w ould r e c e iv e , upon a tta in in g ag e 62, fro m 20 to 46 p e r c e n t of th e ir p r e r e tir e m e n t e a r n in g s . D e fe rm e n t of p r i ­

m a r y s o c ia l s e c u r ity b e n e fits u n til ag e 65 w ould r a is e th e ra n g e an a d d itio n a l 

5 to 10 p e r c e n t.

R e tir e m e n t b e n e fits p a y a b le a t ag e 60 d iff e re d w id ely am o n g in d u s tr ie s , 

in flu e n c e d by m e th o d s of fin an cin g and ty p e s of f o r m u la s , a s w ell a s by p a tte r n p la n s in so m e in d u s tr ie s . T he h ig h e st b e n e fits w e re p ro v id e d in th e t r a n s ­ p o rta tio n , c o m m u n ic a tio n s and p u b lic u tilitie s , and fin a n c e , in s u r a n c e , and r e a l e s ta te in d u s tr ie s .

Selected annual earnings and service periods

$ 4 ,8 0 0 $ 8 ,4 0 0_______

Industry 20 years 30 years 20 years 30 years

A ll industries 1 ---------------------- $42 $65 $85 $122

M in in g ----------------------------------- 75 75 75 75

Contract construction------------- 32 42 32 42

M anufacturing------------------------ 36 55 66 112

Transportation------------------------ 80 90 118 109

Communications and public

u t i li t ie s------------------------------- 80 119 138 20S

W holesale and retail trad e------ 43 57 75 113

W holesale tr a d e----------------- 45 66 45 84

R etail t r a d e---------------------- 37 59 84 122

Finance, insurance, and

real e s t a te--------------------------- 69 107 147 221

S e r v ic e s-------------------------------- 50 76 88 133

* Includes industries for which data are not shown separately.

64 Had the worker actually retired at age 62, his private plan pension based on actuarial factors would most

lik ely be about 13 percent greater. Private plan benefits for retirem ent at age 62 were not computed. The inclusion o f plans paying normal retirem ent benefits and supplem ental benefits in the computations of benefits for retirem ent at age 60 does not lend itself to application o f an across-the-board actuarial increase.

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Tw o of th e s e in d u s tr ie s ra n k e d h ig h b e c a u s e th ey in c lu d e d m an y p la n s th a t p a id u n re d u c e d b e n e fits a t age 60. T he $8 0 m e d ia n b e n e fit in th e c o m m u n ic a ­

tio n s in d u s try f o r 20 y e a r s of s e r v ic e an d a n n u a l e a rn in g s of $ 4 , 800, fo r e x a m p le , w as la r g e ly d e te rm in e d by th e $8 5 b e n e fit p ro v id e d by th e te le p h o n e co m p an y p la n s . T he la r g e T e a m s te r s an d r a ilr o a d p la n s w h ich a ls o p ro v id e d n o rm a l b e n e ­

fits a t ag e 60 e x e r te d a s im ila r in flu e n c e in th e tr a n s p o r ta tio n in d u s try .

G e n e ra lly , b e n e fits fo r 30 y e a r s of s e r v ic e w e re a b o u t 50 p e r c e n t h ig h e r th a n b e n e fits fo r 20 y e a r s . In th e tr a n s p o r ta tio n in d u s try , h o w e v e r, m e d ia n 

b e n e fits fo r th e lo n g e r s e r v ic e p e r io d s w e re no t p r o p o r tio n a te ly h ig h e r th a n fo r th e s h o r te r s e r v ic e p e r io d s b e c a u s e th e f o r m e r in c lu d e d a n u m b e r of la r g e p la n s w h ich p ro v id e d no b e n e fit fo r le s s th a n 25 y e a r s of s e r v ic e . B e c a u se th e M ine W o rk e rs p la n s p ro v id e d a u n ifo rm b e n e fit of $ 7 5 fo r 20 o r m o r e y e a r s of s e r v ic e o n ly , th e m e d ia n b e n e fit in th e m in in g in d u s try a t th e v a r io u s e a rn in g s 

an d s e r v ic e le v e ls w as $ 7 5 — h ig h in r e la tio n to th e b e n e fits a t the lo w e r e a rn in g s le v e l, p ro v id e d in o th e r in d u s tr ie s . On th e o th e r h an d , b e n e fits in th e fin a n c e in d u s try , m a rk e d by c o n trib u to ry p la n s , w e re am o n g th e h ig h e s t d e s p ite th e fa c t th a t th ey w e re u s u a lly a c tu a r ia lly re d u c e d .

B e n e fits in m a n u fa c tu rin g , tr a d e , a n d s e r v ic e in d u s tr ie s w e re so m e w h a t lo w e r th an in th e in d u s tr ie s ju s t d is c u s s e d m a in ly b e c a u s e m o s t p la n s h ad a c tu ­

a r ia ll y re d u c e d b e n e fits . M ed ian b e n e fits ra n g e d fro m $ 3 7 fo r 20 y e a r s 1 s e r v ic e 

to $ 133 a m o n th fo r 30 y e a r s . T he c o n s tr u c tio n in d u s try , d o m in a te d by n o n ­ c o n tr ib u to ry m u ltie m p lo y e r p la n s , h a d th e lo w e st b e n e fits .

A t th e $3, 600 and $4,800 e a rn in g s le v e ls , th e in d u s tr ia l p a tte r n of m e d ia n b e n e fits p a y a b le a t ag e 55 w as g e n e ra lly s im il a r to th a t p a y a b le a t a g e 60, i. e. , th e s a m e in d u s tr ie s h a d r e la tiv e ly h ig h m e d ia n b e n e fits . A few v a r ia tio n s d id o c c u r a t th e h ig h e a r n in g s an d low s e r v ic e le v e ls , m a in ly b e c a u s e so m e la r g e 

p la n s , s u c h a s th e T e a m s te r s 65 an d M in e W o rk e rs p la n s , d id n o t p ro v id e r e t i r e ­ m e n t b e n e fits a t ag e 55. O th e r p la n s , su c h a s th e te le p h o n e co m p an y p la n s , r e q u ir e d su c h long s e r v ic e to q u a lify fo r b e n e fits a t ag e 55 th a t th ey a r e in c lu d e d on ly in d a ta fo r long s e r v ic e w o rk e rs .

S o c ia l S e c u r ity A d ju s tm e n t O ption

A b o u t a f o u rth of th e p la n s w ith e a r ly r e tir e m e n t, c o v e rin g a p p ro x im a te ly a th ir d of th e w o r k e r s , p ro v id e d a n s o c ia l s e c u r ity a d ju s tm e n t o p tio n , n 66 u n d e r w h ich w o r k e r s m a y e le c t to r e c e iv e la r g e r - t h a n - u s u a l b e n e fits fro m th e p la n b e fo re s o c ia l s e c u r ity b e n e fits a r e p a y a b le , in r e tu r n fo r re c e iv in g s m a lle r b e n e ­ f its a f te r w a r d s .

P r iv a te p la n b e n e fits a r e a d ju s te d so th a t, w hen a d d ed to s o c ia l s e c u r ity 

b e n e fits , th e p e n s io n e r r e c e iv e s an a p p ro x im a te ly u n ifo rm c o m b in e d b e n e fit f o r 

life . F o r e x a m p le , if th e o p tio n is e le c te d by a w o rk e r r e tir in g a t a g e 60 w hen 

e lig ib le u n d e r th e p la n fo r a m o n th ly b e n e fit of $95 u n til a g e 65, h is m o n th ly 

p la n b e n e fit w ill be in c r e a s e d to $ 1 8 9 u n til ag e 65 and r e d u c e d to $ 6 2 th e r e -

65 After this study was completed the Central States Teamsters plan was amended to permit retirement as early as age 47, For details, see Digest of 100 Selected Pension Plans Under Collective Bargaining, Late 1964 (BLS Bulletin

1435, 1965), p. 62. 66 May be referred to in a plan as a " level income option," "adjustment for Federal old-age benefit," "early

retirement equalization income, " etc.

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a f t e r (w h e n th e $ 127 s o c ia l s e c u r i t y b e n e f it is p a y a b le ) . T h u s , i n s t e a d o f s t a r t i n g 

w ith a lo w e r b e n e f it a n d h a v in g to t a l in c o m e i n c r e a s e d s h a r p ly a t a g e 65, th e 

e le c tio n of th e o p tio n g iv e s th e p e n s io n e r a l e v e l in c o m e of $ 189 c o m m e n c in g a t 

a g e 60 a n d c o n tin u in g f o r lif e .

In a n u m b e r o f p la n s , th e e m p lo y e r p a id th e e n t i r e c o s t o f th e l a r g e r i n i t i a l 

b e n e f its ( u s u a lly e q u a l to a n t ic ip a t e d s o c ia l s e c u r i t y b e n e f its ) u n til s o c ia l s e c u r i t y 

b e n e f its w e r e p a y a b le . A fe w p la n s w ith n o r m a l r e t i r e m e n t b e f o r e a g e 65, s u c h 

a s th e C e n t r a l S ta te s T e a m s t e r s p la n , h a v e a n a p p r o x im a tio n to th e s o c ia l s e c u r i t y 

a d j u s t m e n t b u ilt in to th e n o r m a l r e t i r e m e n t b e n e f it f o r m u l a . 67

M o r e th a n a f o u r th o f th e s i n g l e - e m p l o y e r p la n s w ith e a r l y r e t i r e m e n t a s 

c o m p a r e d to n e a r l y tw o - f if th s o f th e m u l t ie m p lo y e r p la n s p r o v id e d a le v e l i n ­

c o m e o p tio n .

W ithout social

With social security security adjustment

Total______ adjustment option__________ option______

____ _________ Percent

Type of em ployer unit Plans Workers Plans Workers Plans Workers

A ll plans with early

retirem en t---------------------------- 1 0 0 .0 1 0 0 .0 26. 5 31. 1 73 .5 68. 9

Single e m p lo y e r--------------------

M ultiem ployer ----------------------

1 0 0 .0

1 0 0 .0

1 0 0 .0

1 0 0 .0

26. 1

3 7 .9

3 1 .6

2 6 .3

73 .9

6 2 .1

6 8 .4

73. 7

NOTE: Because of rounding, sums of individual item s m ay not equal totals.

T h e p r e v a l e n c e of th e o p tio n w a s h ig h e r in c o n tr ib u t o r y p la n s th a n in n o n ­

c o n tr ib u t o r y p la n s .

Without social

With socia l security security adjustment

Total__________adjustment option ______option_______

_____ Percent

Method o f financing Plans Workers Plans Workers Plans Workers

A ll plans with early

retirem ent -------------------------- 1 0 0 .0 1 0 0 .0 2 6 .5 31. 1 73 .5 68. 9

Noncontributory -------------------- 1 0 0 .0 1 0 0 .0 2 3 .3 2 8 .9 76. 7 71.1

Contributory -------------------------- 1 0 0 .0 1 0 0 .0 34. 7 37. 1 6 5 .3 6 2 .9

NOTE: Because of rounding, sums of individual item s m ay not equal totals.

^7 The Central States Teamsters plan provided $200 a month for the first 60 months of retirem ent and $90 a

month thereafter.

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A g r e a te r p e r c e n ta g e of c o lle c tiv e ly b a r g a in e d p la n s th a n n o n b a rg a in e d p la n s c o n ta in e d a le v e l in c o m e p ro v is io n , but th e p ro p o r tio n of w o r k e r s c o v e re d w as s lig h tly h ig h e r in th e la t te r p la n s .

W ithout social

With social security security adjustment

Total__________adjustment option__________ option______

Percent _______ _____

C ollective bargaining status Plans Workers Plans Workers Plans Workers

A ll plans with early

retirem en t--------------------------- 1 0 0 .0 1 0 0 .0 26. 5 31. 1 73 .5 6 8 .9

M entioned in a collectiv e

bargaining agreem ent — .------

Not m entioned in a col1 0 0 .0 1 0 0 .0 3 7 .2 3 0 .4 6 2 .8 6 9 .6

lectiv e bargaining

ag reem en t---------------------------- 1 0 0 .0 1 0 0 .0 20. 1 3 2 .6 8 0 .0 6 7 .5

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

T he d is tr ib u tio n of th e o p tio n by in d u s try w as f a ir ly u n ifo rm ; ab o u t a th ir d of th e p la n s in th e m a n u fa c tu rin g , tr a n s p o r ta tio n , and r e ta il tr a d e in d u s tr ie s p r o ­ v id e d th e o p tio n . H o w ev er, a p p ro x im a te ly 45 p e r c e n t of th e p la n s w ith on ly about 20 p e r c e n t of th e w o rk e rs in th e c o n s tr u c tio n in d u s try had th e o p tio n . O nly abo ut 

20 p e r c e n t of th e p la n s in m in in g , c o m m u n ic a tio n s and p u b lic u tilitie s , and s e r v ­

ic e in d u s tr ie s had th e p ro v is io n .

Without social

With social security security adjustment

Total_______ adjustment option _______option______

___ ___ Percent______________________________

Industry

A ll plans with early

retirem ent1----------------------------

Mining ---------------------------------

Contract construction-------------

M anufacturing------------------------

Transportation------------------------

Com munications and public

u t ilit ie s-------------------------------

W holesale and retail trade------

W holesale tr a d e-----------------

R etail t r a d e----------------------

Finance, insurance, and

real e s t a te---------------------------

Services ---------------------------------

Plans Workers Plans

1 0 0 .0 1 0 0 .0 2 6 .5

10 0 .0 1 0 0 .0 2 1 .5

1 0 0 .0 1 0 0 .0 4 6 .2

1 0 0 .0 1 0 0 .0 30. 9

1 0 0 .0 1 0 0 .0 33. 1

1 0 0 .0 1 0 0 .0 1 9 .0

1 0 0 .0 1 0 0 .0 14. 2

1 0 0 .0 100. 0 1 1 .6

1 0 0 .0 1 0 0 .0 28.1

1 0 0 .0 100. 0 1 2 .0

1 0 0 .0 1 0 0 .0 21. 1

Workers Plans Workers

31. 1 73 .5 6 8 .9

22. 7 7 8 .5 77.3

21. 9 53. 8 78. 1

3 3 .9 69 .1 66. 2

30. 7 6 6 .9 6 9 .3

1 6 .0 8 1 .0 8 3 .9

34. 9 8 5 .8 65. 1

35. 3 8 8 .4 6 5 .0

3 4 .9 71.9 65. 1

26. 2 8 8 .0 7 3 .8

27. 1 78 .9 7 2 .9

1

Includes industries for which data are not shown separately.

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

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T a b l e 21. E a r l y R e t i r e m e n t P r o v i s i o n s in P r i v a t e P e n s i o n P l a n s b y I n d u s t r y , W i n t e r 1 962—63

(W orkers in thousands)

Industry

All plans With early retirem en t Without early retirem en t

Num ber W ork ers1 Plans W ork ers1 Plans W ork ers1

A l l p l a n s s t u d i e d ---------------------------------------- 2 15 , 8 1 8 2 1 5 , 6 2 1 12,099 11,786 3, 719 3,835

M in in g----------------------------------------------------------- 316 327 312 119 4 208

Contract c o n stru ctio n------------------------------- 449 1,072 156 343 293 729

M anu facturing--------------------------------------------- 9, 257 9,678 7,4 0 9 7,981 1,848 1, 6 9 7

Transportation ----------------------------------------- 673 1, 286 496 644 177 642

Com m unications and public u tilities ------ 849 1,270 600 1, 184 249 87

W holesale and retail tr a d e ----------------------- 1,627 920 1,271 690 356 230

W holesale tr a d e ------------------------------------- 1, 147 479 1,075 337 72 142

R e t a i l t r a d e -------------------------------------------- 480 440 196 352 284 88

Finance, insurance, and real e s ta te ------ 1,853 733 1,439 660 414 73

S e r v ic e s -------------------------------------------------------- 719 308 341 140 378 168

1 A c t i v e w o r k e r s in 1 9 61 .

2 I n c l u d e s i n d u s t r i e s f o r w h i c h d a t a a r e n ot s h o w n s e p a r a t e l y .

NOTE: B eca u se of rounding, sum s of individual item s m ay not equal totals.

T a b l e 22 . M i n i m u m A g e an d S e r v i c e R e q u i r e m e n t s f o r E a r l y R e t i r e m e n t in P r i v a t e P e n s i o n P l a n s , W i n t e r 1962 —6 3 1

(W orkers in thousands)

M inimum serv ice

req u irem en ts2

(y ea rs)

All plans

M inim um age requirem ents 3

No age

requirem ent 50 55 60 Other

Num ber W orkers Plans W orkers Plans W orkers P lans W orkers Plans W orke rs Plans W orkers

All plans with early

retirem en t ------------------------------ 12, 099 11, 786 289 1, 120 115 345 7 ,7 6 1 5, 567 3, 647 4, 522 287 233

No serv ice r e q u ire m e n t______ 489 552 12 43 15 14 379 378 33 91 50 25

1 4 ________________________________ 2 ,4 9 2 1, 536 157 52 17 58 1,931 1, 067 387 359 - ‘ -

5 ___________________________________ 936 547 11 23 1 5 811 4 5 5 112 55 1 10

6 - 9 ________________________________ 313 93 - - - - 313 93 - - - -

1 0 _________________________________ 2, 140 2, 859 1 7 51 57 937 1, 019 1, 045 1 ,6 7 3 106 103

1 1 -1 4_____________________________ 27 3 155 - - - - 150 106 121 30 2 18

15 _________________________________ 3, 270 3, 157 1 4 16 66 2, 108 1,469 1, 020 1, 556 125 62

1 6 - 1 9 -------------------------------------------- 40 57 - - - 29 30 11 26 - -

2 0 _________________________________ 1 ,4 4 6 1, 135 4 16 8 61 867 738 564 305 3 15

2 1 - 2 4 _____________________________ 10 24 - - - - 7 18 3 5 - -

2 5 _________________________________ 429 355 3 45 5 20 150 133 271 158 - -

26-29 ____________________________ 4 9 10 19 7 - - 30 3 - - - -

3 0 _________________________________ 191 1, 27 3 61 907 2 63 48 40 80 263 - -

O v e r 3 0 ___________________________ 21 33 20 16 " “

1 17 ' “ “ ~

1 B a s e d on a s t u d y o f 1 5 , 8 1 8 p r i v a t e p e n s i o n p l a n s c o v e r i n g 1 5 . 6 m i l l i o n a c t i v e w o r k e r s in 1 9 6 1 .

2 F o r t h o s e p l a n s w h i c h s p e c i f i e d a p e r i o d of e m p l o y m e n t to b e s e r v e d b e f o r e p a r t i c i p a t i o n in th e p l a n c o u l d b e g i n , th e

m in im u m serv ice requirem ent includes the preparticipation serv ice and the required plan m em b ersh ip serv ice.

3 S o m e p l a n s s p e c i f i e d a l t e r n a t i v e r e q u i r e m e n t s ; f o r e a c h c a s e , th e o n e w i t h t h e e a r l i e s t a g e o r n o a g e r e q u i r e m e n t s

was selected .

N O T E : B ecau se of rounding, su m s of individual item s m ay not equal to ta ls.

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Table 23. Tim e of Benefit Paym en t for Early R etirem ent in Private P en sion Plans by Type of Em ployer Unit,

M e t h o d o f F i n a n c i n g , and C o l l e c t i v e B a r g a i n i n g S t a t u s , W i n t e r 1 9 6 2 —6 3 1 2

(W orkers in thousands)

Tim e of benefit paym ent

Item All plans Im m ediately

only

Im m ediately or

at age 65

Im m ediately or any

tim e up to age 65

Num ber W orkers Plans W orkers Plans W orkers Plans W orkers

All plans with early retirem en t ----- 12,099 11,786 6,063 5,605 2, 660 4, 110 3, 376 2 ,071

Type of em p loyer unit

S i n g l e e m p l o y e r --------------------------------- i 11,735 10,657 5,8 76 4, 829 2, 596 3,897 3, 263 1,931

M u l t i e m p l o y e r ------------------------------------ 3 6 4 1,129 187 778 64 213 113 140

Method of financing

N o n c o n t r i b u t o r y --------------------------------- 8 , 7 6 3 8, 589 4, 325 3, 842 1, 922 3,445 2, 516 1,302

C o n t r i b u t o r y ---------------------------------------- 3, 336 3,197 1,738 1,763 738 665 860 769

C ollective bargaining status

M entioned in a collective

bargaining a g reem en t -------------------- 4,511 7 ,680 1,571 3,587 1,62 4 3,090 1,316 1,003

Not m entioned in a collective

bargaining a greem en t -------------------- 7 ,5 8 8 4 ,1 0 6 4,4 9 2 2,018 1,036 1,020 2,060 1,068

1 B a s e d o n a s t u d y o f 15, 8 1 8 p r i v a t e p e n s i o n p l a n s c o v e r i n g 1 5 . 6 m i l l i o n a c t i v e w o r k e r s in 1 961.

NOTE: B ecau se of rounding, sum s of individual item s m ay not equal totals.

T a b l e 24. T i m e o f B e n e f i t P a y m e n t f o r E a r l y R e t i r e m e n t in P r i v a t e P e n s i o n P l a n s b y I n d u s t r y , W i n t e r 1 9 62 —6 3 1

(W orkers in thousands)

Industry

A ll plans

Tim e of benefit paym ent

Im m ediately

only

Im m ediately or

at age 65

Im m ediately or any

tim e up to age 65

Num ber W orkers Plans W orkers Plans W orkers Plans W orkers

All plans with early retirem en t — 2 12,099 2 1 1 , 7 8 6 6 , 0 6 3 5,605 2, 660 4,110 3, 376 2,071

M i n i n g --------------------------------------------------- 312 119 104 43 15 17 193 59

C o n t r a c t c o n s t r u c t i o n ---------------------- 156 343 95 313 4 3 57 27

M anufacturing------------------------------------ 7,409 7,981 3,466 2,9 9 4 2,277 3, 536 1,666 1,451

T r a n s p o r t a t i o n ------------------------------------ 4 9 6 6 4 4 324 476 95 82 77 87

Com m unications and public

u tilitie s ---------------------------------------------- 600 1,184 484 1,038 32 76 84 70

W holesale and retail t r a d e ------------- 1,271 690 919 347 131 221 221 121

W holesale tr a d e --------------------------- 1,075 337 791 170 121 123 163 44

Retail trade ---------------------------------- 196 352 128 177 10 98 58 77

Finance, in su rance, and

r e a l e s t a t e ---------------------------------------- 1,439 660 613 337 98 137 728 186

S e r v i c e s ----------------------------------------------- 341 140 49 45 8 38 284 57

1 B a s e d o n a s t u d y o f 15, 8 1 8 p r i v a t e p e n s i o n p l a n s c o v e r i n g 15. 6 m i l l i o n a c t i v e w o r k e r s in 1961.

2 I n c l u d e s i n d u s t r i e s f o r w h i c h d a t a a r e n o t s h o w n s e p a r a t e l y .

N O T E : B ecau se of rounding, su m s of individual item s m ay not equal totals.

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Table 25. M onthly P rivate P en sion Plan E a r ly R etirem en t B en efits 1 for W o rk ers R etiring at Age 60

by Selected A ssu m ed Annual E arnin gs L e v els and S ervice P e rio d s, W in ter 1962—63 2

(W orkers in thousands)

Monthly benefit

A ssu m ed annual earnings

$ 3 , 600 $4, 800 $6, 000 $ 8 ,4 0 0

Plans W orkers Plans W orkers Plans W orkers Plans W orkers

10 y e a rs <of serv ice

Total ________________________________ „ 6, 502 5 ,722 6, 502 5, 722 6, 502 5,722 6, 502 5,722

N one3 __________________________________ 246 180 181 169 153 110 104 72

U n d e r $ 10 ---------------------------------------- 1,4 0 4 479 1,158 254 418 183 374 122

$10 and under $20 -------------------------- 2,889 3, 372 2, 368 2,729 2, 593 2, 140 1,481 1,763

$20 and under $ 3 0 -------------------------- 897 1,122 1,143 1,1 94 911 932 1,279 574

$30 and under $ 4 0 -------------------------- 562 236 812 731 925 655 823 452

$ 4 0 and u n d e r $ 5 0 -------------------------- 103 78 275 240 660 992 402 437

$50 and under $ 6 0 -------------------------- 136 55 123 104 226 274 556 518

$ 60 and u n d er $ 7 0 -------------------------- 10 115 178 189 117 149 221 514

$70 and under $ 8 0 -------------------------- 224 27 1 19 51 57 529 676

$80 and under $ 9 0 -------------------------- 4 20 58 8 9 183 51 191 157

$90 and under $ 1 0 0 ------------------------ - - 24 18 1 19 16 81

$ 1 0 0 an d u n d e r $ 1 2 5 ---------------------- - - 4 231 68 36 15 212 189

$125 and under $ 1 5 0 ---------------------- - - - - 4 228 45 57 101

$ 150 and o v e r ---------------------------------- " - - ~ - -

257 66

1 5 y e a r s o f s e r v i c e

T o t a l --------------------------------------------------- 9,6 4 7 8,947 9,647 8,947 9,647 8,947 9,647 8,947

N o n e 3 --------------------------------------------------- 243 213 191 207 169 143 163 119

Under $10 ----------------------------------------- 642 138 352 50 218 40 215 32

$10 and under $ 2 0 -------------------------- 1,923 1,087 1,483 775 687 434 535 380

$20 and under $30 -------------------------- 3,664 4, 633 2, 896 3,909 2,802 3,482 1,672 3,001

$30 and under $ 4 0 -------------------------- 1,555 1,272 1,849 1,2 24 1,593 761 886 407

$40 and under $ 5 0 -------------------------- 843 680 1,651 1,106 1,513 1,167 1,406 430

$50 and under $ 6 0 -------------------------- 430 273 385 592 1,070 791 1,135 568

$60 and under $70 -------------------------- 57 131 363 342 546 628 496 571

$70 and under $ 8 0 -------------------------- 224 180 125 115 184 425 603 637

$80 and under $ 9 0 -------------------------- 2 28 30 150 382 300 750 606

$90 and under $ 1 0 0 ------------------------ 8 9 55 90 119 141 311 366

$ 1 00 an d u n d e r $ 1 2 5 ---------------------- 38 277 213 329 97 420 826 1, 146

$ 1 2 5 an d u n d e r $ 1 5 0 ---------------------- 4 18 24 7 16 205 149 284 293

$ 1 5 0 an d u n d e r $ 1 7 5 ---------------------- - - 4 47 43 15 25 85 197

$ 1 7 5 and u n d e r $ 2 0 0 ---------------------- - - - - 4 29 43 18 104

$ 200 and o v e r ---------------------------------- " - “ - - -

262 89

20 years of serv ice

T o t a l ------------------------------------------------- 11,272 11,422 11,272 11,422 11,272 11,422 11,272 11,422

N one3 ------------------------------------------------- 205 161 122 234 105 183 105 183

U n d e r $ 1 0 ---------------------------------------- 92 130 51 39 5 12 - -

$10 and under $ 2 0 ------------------------ 1,312 441 902 261 449 258 425 179

$20 and under $ 3 0 ------------------------ 2 ,8 3 6 1 ,7 2 3 2, 271 1,299 1,495 675 1,025 609

$30 and under $ 4 0 ------------------------ 3,167 4, 316 2, 199 3,455 1,971 3,140 1,033 1,934

$40 and under $ 5 0 ------------------------ 1 ,556 1,219 2,026 1,221 1,775 780 861 1,127

$50 and under $ 6 0 ------------------------ 922 826 1,471 861 1,4 14 721 1,134 375

$60 and under $ 7 0 ------------------------ 520 483 743 968 789 1,127 616 411

$70 and under $ 8 0 ------------------------ 331 408 264 782 904 850 849 611

$80 and under $ 9 0 ------------------------ 42 928 283 1,234 729 738 851 423

$90 and under $ 1 0 0 ----------------------- 190 201 455 265 463 514 704 562

$100 and under $ 1 2 5 -------------------- 51 268 377 377 691 1,669 1,625 1,613

$125 and under $ 1 5 0 -------------------- 18 267 35 337 335 429 952 2, 156

$150 and under $ 1 7 5 -------------------- 4 30 49 29 21 73 216 530 473

$175 and under $200 -------------------- - - 15 26 1 19 178 361

$200 and under $225 -------------------- - - 4 29 42 36 45 274 157

$225 and under $250 -------------------- - - - - 4 37 34 28 131

$250 and under $275 -------------------- - - - - - - 5 26

$ 2 7 5 an d o v e r --------------------------------- " • ” “

77 91

See footn otes at end o f table.

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(W orkers in thousands)

Table 25. M onthly P rivate P en sion Plan E a rly R etirem en t B en efits 1 for W ork ers R etirin g at Age 60

by S elected A ssu m e d Annual E arnings L e v els and Service P e rio d s, W inter 1962—6 3 2— Continued*

A ssu m ed annual earnings

M o n t h l y b e n e f i t $ 3 , 600 $ 4., 800 $ 6 , , 000 $ 8 , 4 0 0

Plans W orkers Plans W orkers Plans W orkers Plans W orkers

25 years of serv ice

Total ------------------------------------------------- 11,677 11,791 11,677 11,791 11,677 11,791 11,677 11,791

N one3 ------------------------------------------------- 117 186 118 165 97 115 72 101

U n d e r $ 1 0 ---------------------------------------- 80 37 25 109 20 97 10 75

$10 and under $20 ------------------------ 746 243 316 158 261 106 256 77

$ 20 and under $30 ------------------------ 1 ,843 882 1,285 510 535 344 526 292

$30 and under $40 ------------------------ 2, 476 1 ,774 1,987 1,242 1,378 722 965 654

$40 and under $50 ------------------------ 2,740 3,876 1,961 3, 219 1,466 2,966 791 1,709

$50 and under $60 ------------------------ 1 ,414 1,156 1,704 1,064 1,709 7 38 633 350

$60 and under $70 ------------------------ 728 638 1,238 848 693 434 638 1,027

$70 and under $80 ------------------------ 934 843 1,228 1,064 1,693 1,085 1,027 528

$80 and under $90 ------------------------ 193 1 ,084 439 651 860 910 649 328

$90 and under $ 1 0 0 ----------------------- 86 157 365 328 559 461 437 427

$100 and under $ 1 2 5 -------------------- 226 510 740 1,754 1,433 1,416 2,082 1,325

$125 and under $ 1 5 0 -------------------- 39 291 109 398 674 1,738 1,329 1,289

$150 and under $175 -------------------- 23 50 105 150 131 257 745 727

$175 and under $200 -------------------- 11 22 5 45 63 248 766 1,806

$200 and under $225 -------------------- 4 21 40 22 38 51 77 424 406

$225 and under $250 -------------------- - - 4 30 48 - - 138 237

$250 and under $275 -------------------- - - - - 4 54 78 55 129

$275 and under $300 -------------------- - - - - - - 74 211

$ 300 and o v e r ---------------------------------

- - - -

60 93

30 y e a rs of s e r v ic e

Total ------------------------------------------------- 11,802 12, 205 11,802 12, 205 11,802 12, 205 11,802 12, 205

N one3 ------ ------------------------------------------ 147 292 144 265 93 151 93 151

U n d e r $ 1 0 ---------------------------------------- 32 24 20 44 27 22 - -

$10 and under $20 ------------------------ 639 178 254 99 252 125 230 58

$20 and under $30 ------------------------ 1 ,0 8 0 392 661 327 326 329 298 276

$30 and under $40 ------------------------ 1,7 1 7 926 1, 101 714 719 376 398 311

$40 and under $50 ------------------------ 2, 261 1 ,7 4 3 2,035 1,183 1,233 736 1,114 657

$50 and under $60 ------------------------ 2, 716 3,711 1,987 2,983 1,519 2, 767 958 1,656

$60 and under $70 ------------------------ 1, 179 1 ,0 7 9 1,080 948 1,035 598 525 234

$70 and under $80 ------------------------ 608 843 1,065 875 728 790 97 506

$80 and under $90 ------------------------ 716 459 1,265 735 1,500 604 911 1,071

$ 9 0 and u n d e r $ 1 0 0 ---------------------- 237 1,221 7 30 685 7 9 2 669 289 169

$100 and under $125 -------------------- 188 751 853 2,149 1,633 1,502 1,523 1,102

$125 and under $150 -------------------- 192 188 329 490 1,233 993 1,520 978

$150 and under $175 -------------------- 47 307 141 421 322 1,746 1,248 996

$175 and under $200 -------------------- 11 30 51 138 190 330 1 ,0 0 3 611

$200 and under $225 -------------------- 4 32 62 46 87 68 143 821 1,944

$225 and under $250 -------------------- - _ 4 40 61 48 191 295 537

$250 and under $275 -------------------- - - _ _ 44 74 243 357

$ 2 7 5 and u n d e r $ 300 -------------------- - _ - _ - - 63 196

$ 3 00 and u n der $ 350 -------------------- _ _ _ _ 4 40 60 85 289 $ 350 and o v e r ------------------------------- “ _ - ~ -

88 107

1 C o m p u t a t i o n o f b e n e f i t a m o u n t s w a s b a s e d on c u r r e n t b e n e f i t f o r m u l a s , a s s u m i n g a c o n s t a n t l e v e l o f e a r n i n g s .

2 B a s e d o n a s t u d y o f 1 5 , 8 1 8 p r i v a t e p e n s i o n p l a n s c o v e r i n g 15. 6 m i l l i o n a c t i v e w o r k e r s in 1 9 6 1 .

3 N o p e n s i o n w a s p r o v i d e d b e c a u s e o f th e d e d u c t i o n o f a s s u m e d s o c i a l s e c u r i t y b e n e f i t s .

4 W h e r e h i g h e r b e n e f i t a m o u n t s w e r e r e l a t i v e l y f e w an d w i d e l y s c a t t e r e d t h e y w e r e a c c u m u l a t e d in t h i s i n t e r v a l .

N O T E : B ecause of rounding, su m s of individual item s m ay not equal totals.

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(W orkers in thousands)

Table 26. M onthly P rivate Pen sion Plan E a rly R etirem en t B en efits 1 for W ork ers R etiring at Age 55

by S elected A ssu m ed Annual E arnin gs L e v els and Service P e rio d s, W inter 1962—63 2

A ssu m ed annual earnings

Monthly benefit $3, 600 $4, 800 $6, 000 $ 8 ,4 0 0

Plans W ork e rs P l a n s W or k e rs Plans W orkers Plans W orkers

10 y e a rs of s e r v ic e

T o t a l --------------------------------------------------- 4, 651 3, 397 4, 651 3, 397 4, 651 3, 397 4, 651 3,397

None 3 ------------------------------------------------- 104 136 ' 139 128 121 79 72 40

U n d e r $ 1 0 ----------------------------------------- 1,804 829 1, 346 389 841 220 499 135

$ 10 an d u n d e r $ 2 0 -------------------------- 1,741 1,851 1, 5 8 5 % 1 ,5 9 2 1,476 1, 133 732 567

$ 20 an d u n d e r $ 3 0 -------------------------- 538 464 855 ' 915 909 847 1, 206 627

$30 and under $ 4 0 _________________ 217 53 252 229 601 758 662 617

$40 and under $ 5 0 _________________ 1 19 197 76 185 213 287 580

$ 5 0 a n d u n d e r $ 6 0 -------------------------- 219 16 31 23 110 57 498 493

$ 6 0 an d u n d e r $ 7 0 -------------------------- 4 27 28 29 19 161 33 138 119

$ 7 0 an d u n d e r $ 8 0 -------------------------- - - 4 217 26 - - 93 116

$80 and under $ 9 0 -------------------------- - - - - 29 19 166 22

$ 9 0 and under $ 100 ----------------------- - - - - - - 51 24

$ 100 an d u n d e r $ 1 2 5 ---------------------- - - - - 4 21 8 38 29 19

$ 125 and o v e r ---------------------------------- - - - - - 218 38

15 y e a r s o f s e r v i c e

T o t a l --------------------------------------------------- 6, 904 5, 057 6,9 0 4 5, 057 6, 904 5,057 6, 904 5,057

None 3 ------------------------------------------------- 89 132 137 130 122 72 122 72

U nder $ 1 0 ----------------------------------------- 965 305 503 156 165 86 157 65

$ 10 and u n d e r $ 2 0 -------------------------- 3 , 4 0 8 2, 187 2, 334 1 , 3 9 7 2, 099 1,008 1,081 632

$ 2 0 and u n d e r $ 3 0 -------------------------- 1 , 4 9 3 1,512 2, 262 1,656 1,480 970 896 494

$30 and under $ 4 0 ------------------------- 520 627 772 936 1, 317 1, 123 889 462

$ 4 0 an d u n d e r $ 5 0 -------------------------- 138 154 407 424 720 782 929 651

$ 5 0 and u n d e r $ 6 0 -------------------------- 231 17 121 113 27 0 485 926 674

$ 6 0 an d u n d e r $ 7 0 -------------------------- 12 66 78 111 334 230 481 520

$ 7 0 an d u n d e r $ 8 0 -------------------------- 12 32 24 0 20 88 104 485 659

$ 8 0 an d u n d e r $ 9 0 -------------------------- 4 36 24 2 59 29 69 312 340

$ 9 0 and u n der $ 1 0 0------------------------ - - 11 21 30 4 203 122

$ 100 and u n der $ 125----------------------- - - 4 37 35 213 89 128 211

$ 125 an d u n d e r $ 1 5 0 ---------------------- - - - - 4 37 35 248 107

- $ 150 and o v e r ---------------------------------- * - - - 47 47

20 years of serv ice

T o t a l --------------------------------------------------- 7, 8 3 3 5 , 8 9 8 7, 8 33 5 , 8 9 8 7 , 8 3 3 5,898 7, 833 5, 898

N o n e 3--------------------------------------------------- 51 81 47 75 42 51 42 51

U n d er $ 1 0 ___________________________ 441 183 66 71 15 32 14 7

$ 10 and u n d e r $ 2 0 _________________ 2, 296 1, 193 1, 606 867 655 497 578 348

$ 2 0 a n d u n d e r $ 3 0 -------------------------- 3, 580 2,441 2,4 94 1,483 2, 138 1,028 1,033 632

$ 3 0 an d u n d e r $ 4 0 -------------------------- 593 1,020 1,744 1,227 1, 181 647 278 355

$ 4 0 an d u n d e r $ 5 0 -------------------------- 274 607 843 1, 127 1,253 1,285 935 404

$50 and under $ 6 0 ------------ ---------- 306 116 268 414 930 673 918 416

$ 6 0 a n d u n d e r $ 7 0 -------------------------- 188 96 302 262 800 809 97 2 614

$ 7 0 an d u n d e r $ 8 0 -------------------------- 41 15 295 104 193 242 7 24 706

$ 8 0 an d u n d e r $ 9 0 -------------------------- 24 86 76 123 177 256 858 514

$ 9 0 a n d u n d e r $ 100 ----------------------- 10 12 1 5 88 117 210 496

$ 100 and u n d er $ 1 2 5 ______________ 4 30 50 52 79 27 0 122 772 830

$ 125 a n d u n d e r $ 1 5 0 ---------------------- - . 20 27 52 79 370 274

$ 150 and under $ 1 7 5 --------------------- - - 4 20 35 21 38 29 99 $ 175 and under $ 200 ______________ - - - - 4 18 23 37 80

$ 200 and o v e r ----------------------------------

- - - - " 63 73

S ee footn otes at eftd of table.

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Table 26. M onthly P rivate Pen sion Plan E a rly R etirem en t B enefits 1 for W ork ers R etirin g at Age 55

by S elected A ssu m e d Annual E arnin gs L e v els and S ervice P e rio d s, W inter 1962—6 3 2— Continued

(W orkers in thousands)

Monthly benefit

A ssu m ed annual earnings

$ 3 600 $4, , 8 0 0 $6,, 0 0 0 $8 ,400

Plans W o r k e rs P l a n s W o r k e r s P l a n s W o r k e r s P l a n s | W o r k e r s

25 y e a rs of service

T o t a l -------------------------------------------------- 8, 025 7, 030 8, 025 7, 030 8, 025 7, 030 8, 025 7, 030

N o n e 3-_________________________________ 51 81 47 75 42 ! 51 42 51

U n d er $ 1 0 ----------------------------------------- 76 65 64 52 14 27 4 5

$ 10 a n d u n d e r $ 2 0 -------------------------- 1 , 3 6 6 629 756 378 343 206 332 167

$ 20 and under $ 3 0 -------------------------- 2, 808 1,616 1, 966 859 1,054 552 590 390

$ 3 0 a n d u n d e r $ 4 0 -------------------------- 2, 354 1,764 1,970 1,469 1,626 898 716 455

$ 4 0 and u n d e r $ 5 0 -------------------------- 4 5 5 909 1,298 1. 059 1, 046 597 357 304

$ 5 0 an d u n d e r $ 6 0 -------------------------- 448 589 776 809 1,048 1,089 629 404

$ 6 0 and u n d e r $ 7 0 -------------------------- 123 169 231 616 1,021 746 1, 039 389

$ 7 0 an d u n d e r $ 8 0 -------------------------- 233 148 4 97 320 450 541 488 305

$80 and under $ 9 0 ------------------------- 60 910 137 160 558 5 34 1, 07 0 57 6

$ 9 0 and un der $ 100 ----------------------- 15 26 78 63 171 224 313 610

$ 10 0 an d u n d e r $ 1 2 5 ---------------------- 5 66 161 1,051 455 423 1, 160 1, 095

$ 125 and u n d e r $ 1 5 0 ---------------------- 4 31 59 12 56 153 1,025 846 767

$ 150 an d u n d e r $ 17 5 ---------------------- - - 4 32 63 15 76 203 304

$ 175 and u n d e r $ 2 0 0 ---------------------- - - - - 4 29 43 164 1,070

$ 2 0 0 an d u n d e r $ 2 2 5 ---------------------- - - - - - - 35 32

$ 225 and o v e r ----------------------------------

- - - - 37 108

30 years of service

Total ------------------------------------------------- 8, 121 7 ,094 8, 121 7, 094 8, 121 7 ,0 9 4 8, 121 7, 094

None 3 ------------------------------------------------- 50 81 47 75 4 2 51 4 2 51

U nder $ 1 0 ___________________________ 26 34 14 27 4 5 4 5

$ 10 a n d u n d e r $ 2 0 -------------------------- 1,036 421 516 214 ! 2 2 0 152 210 130

$ 2 0 and u n d e r $ 3 0 -------------------------- 2, 197 1,218 1,2 7 6 831 735 436 370 313

$ 30 an d u n d e r $ 4 0 -------------------------- 2, 555 1,668 2, 231 949 1, 141 639 912 362

$ 4 0 and u n d e r $ 5 0 - ---------------------- 97 5 1,277 1, 194 1, 185 1, 349 728 457 362

$ 5 0 and u n d e r $ 6 0 -------------------------- 6 5 4 535 917 757 903 513 116 269

$ 6 0 an d u n d e r $ 7 0 -------------------------- 148 430 564 695 1, 096 827 474 248

$ 7 0 an d u n d e r $ 8 0 -------------------------- 102 169 602 564 627 653 440 316

$ 8 0 a n d u n d e r $ 9 0 -------------------------- 101 144 237 231 293 572 1, 107 377

$ 9 0 and under $ 100 ----------------------- 239 978 196 204 622 450 732 298

$ 100 and u n d e r $ 1 2 5 ---------------------- 5 36 279 1, 183 745 619 1, 345 1, 320

$ 125 and u n d e r $ 1 5 0 ---------------------- 2 44 14 75 199 339 768 799 $ 150 and u n der $ 1 7 5 ______________ 4 31 69 4 24 112 1,005 702 641

$ 175 and u n d e r $ 2 0 0 ---------------------- - - 5 46 7 28 22 8 3 35

$ 2 0 0 an d u n d e r $ 2 2 5 ---------------------- - - 425 37 2 46 148 1,074

$ 2 2 5 and u n d e r $ 2 5 0 ---------------------- - - - - 4 2 31 29 87 $ 2 5 0 a n d u n d e r $ 2 7 5 ---------------------- - - - - - - 3 47

$ 275 and ove r ---------------------------------- " - - 34 61

1 S e e f o o t n o t e 1. t a b l e 25.

2 S e e f o o t n o t e 2, t a b l e 25 .

3 S e e f o o t n o t e 3. t a b l e 25.

4 S e e f o o t n o t e 4, t a b l e 25.

NOTE: B ecau se of rounding, sum s of individual item s m ay not equal totals.

Digitized for FRASER 

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Digitized for FRASER 

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Federal Reserve Bank of St. Louis
Chapter V. Other Features

P r iv a te p e n sio n p la n s a r e ta ilo r e d to m e e t th e n e e d s of p a r ti c u la r in d iv id u a l w o rk e rs an d g ro u p s of w o r k e r s , p a r ti c u la r c o m p a n ie s , an d s p e c ia l s itu a tio n s , su c h a s th o se a r is in g out of te c h n o lo g ic a l c h an g e. T h is c h a p te r d e a ls w ith v e s t ­

in g , a n o th e r m a jo r b e n e fit; th e c o m b in a tio n s of b e n e fit p r o v is io n s in p la n s; th e p r a c tic e of p ro v id in g s u p p le m e n ta ry p e n s io n s ; an d fin a lly , d e a th b e n e fits . W hile th is c h a p te r d o es n o t e x h a u s t th e u n iq u e f e a tu r e s of p r iv a te p e n sio n p la n s , it il lu s t r a t e s th e ir p o te n tia l fle x ib ility , an d h ig h lig h ts s e v e r a l im p o rta n t an d g ro w in g fa c e ts of p r iv a te p la n s .

V e ste d B e n e fits 68

V e stin g p r o te c ts th e w o r k e r 1 s e q u ity in w h at m a y be one of h is m o r e v a lu ­ a b le a s s e ts — th e r ig h t to a d e f e r r e d p e n sio n b e n e fit if h is e m p lo y m e n t te r m in a te s 

b e fo re he is e lig ib le fo r r e tir e m e n t. In a d d itio n , v e s tin g m a y p e r m it th e w o rk e r to a c c u m u la te a n d , th u s , b u ild up p e n sio n b e n e fits fro m m o re th a n one p la n . 

C h an ces of a c q u irin g r ig h ts to b e n e fits fro m m o r e th an one p e n sio n p la n , h o w e v e r, a r e lim ite d by ag e a n d s e r v ic e r e q u ir e m e n ts an d by th e f a r - f r o m - u n i v e r s a l a d o p ­ tio n of p r iv a te p la n s . 69

T h e re is a c lo s e r e la tio n s h ip b e tw e e n v e s te d and n o rm a l r e tir e m e n t b e n e fit 

a m o u n ts b e c a u s e b o th b e n e fits a r e a lm o s t a lw a y s c o m p u te d by th e sa m e fo rm u la . T h u s, v e s te d and n o rm a l r e tir e m e n t b e n e fits w ill be eq u a l if e a rn in g s an d le n g th of s e r v ic e a r e th e s a m e . In so m e in s ta n c e s , h o w e v e r, th e v e s te d p e n sio n w ill be le s s th a n the n o rm a l p e n sio n , ev en if e a rn in g s an d s e r v ic e a r e th e s a m e , b e ­ c a u s e so m e p la n s p ro v id e g ra d e d v e s tin g , a n d th e w o rk e r m a y n o t q u a lify fo r a 

fu ll b e n e fit a t te r m in a tio n . In a d d itio n , so m e p la n s s e t a m in im u m b e n e fit fo r n o rm a l b e n e fits but h av e no ne f o r v e s tin g .

F o r th is stu d y , v e s te d b e n e fits w e re c o m p u ted fo r e a c h p la n u sin g th e s a m e a s s u m p tio n s a s fo r n o rm a l r e tir e m e n t b e n e fits . I t w as a ls o a s s u m e d th a t v e s te d b e n e fits w ould be p a y a b le a t n o rm a l r e tir e m e n t a g e , a lth o u g h a fo u rth of th e p la n s 

w ith tw o -fifth s of th e w o rk e rs p ro v id e d th a t w o r k e r s c o u ld e le c t to r e c e iv e v e s te d b e n e fits in a re d u c e d a m o u n t (u su a lly th e a c tu a r ia l eq u iv a le n t) a t an e a r l i e r a g e , 

m o s t fre q u e n tly 10 y e a r s b e fo re n o rm a l a g e .

A t th e 1 0 - y e a r s e r v ic e le v e l, b e n e fits w e re c o m p u ta b le fo r a lm o s t t h r e e - 

fifth s of th e p la n s w ith v e stin g c o v e rin g s lig h tly m o r e th a n h a lf th e w o r k e r s . In m o re th a n 4 out of 5 p la n s , c o v e rin g 9 out of 10 w o r k e r s , v e s tin g w as p o s ­

s ib le w ith 15 y e a r s of s e r v ic e .

Percent

Plans Workers

Service to qualify for vesting (cum ulative) (cum ulative)

A ll plans with v e stin g -------------------------------------------- 100.0 100.0

10 years or l e s s ---------------------------------------------------- 57.4 54.1

15 years or l e s s ---------------------------------------------------- 83.8 89.1

20 years or l e s s ---------------------------------------------------- 91.8 96.5

25 years or l e s s ------------------------------------------------------ 99.1 99.6 30 years or l e s s ---------------------------------------------------- 99.6 99.8

00 This section supplements detailed data appearing in BLS Bulletin 1407, op. c i t . , pp. 11—23.

69 Ib id ., p. 46.

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A s e x p e c te d , v e s te d b e n e fits ra n g e d w id ely a t th e d iffe re n t s e r v ic e and e a rn in g s le v e ls d isp la y in g th e sa m e c h a r a c te r is t ic s e x h ib ite d by th e n o rm a l b e n e ­

f it d is tr ib u tio n s . F o r the m id d le 80 p e r c e n t of the w o rk e rs e a rn in g $ 4 ,8 0 0 w ith 20 y e a r s of s e r v ic e , the ra n g e w as $ 3 8 to $ 1 0 5 a m o n th ( c h a rt 10). In c o n ­ t r a s t , a t th e $ 8 ,4 0 0 le v e l, w ith th e sa m e s e r v ic e , th e ra n g e w as $ 4 8 to $ 2 1 9 a m o n th .

M e d ia n b e n e fits ra n g e d fro m $ 2 5 fo r a w o rk e r e a rn in g $ 3 , 600 w ith 10 y e a r s of s e r v ic e to $ 1 6 9 fo r a w o rk e r e a rn in g $ 8 ,4 0 0 w ith 30 y e a r s of s e r v ic e .

______________________________ Annual earnings___________________________

$ 3 ,6 0 0 _______________$4 ,8 0 0_______________$ 6 ,0 0 0 _______________$ 8 ,4 0 0

Inter­ Inter­ Inter­ Interquartile quartile quartile quartile

Service periods (years) M edian range Median range Median range Median range

1 0 1 --------------------------------------- $25 $16-$28 $28 $22-$36 $28 $25-$48 $37 $28-$81

15 1 ---------------------------------------- 39 34- 45 42 38- 60 50 39- 78 68 39 -125

2 0 ........................................................ 52 45- 63 56 50- 82 72 52 -110 106 56 -175

2 5 ------------------------------------------ 65 56- 80 70 63-108 90 65-139 140 70-221

3 0 ------------- ----------------------------- 78 68- 90 84 75-127 105 78-165 169 84 -267

1 Excludes a substantial number of workers in plans with higher qualifying service requirements.

T he p o in t of in itia l v e stin g m a r k s an im p o rta n t m ile s to n e in th e w o r k e r 's c a r e e r b e c a u s e he h a s g a in e d th e rig h t to a v a lu a b le a s s e t. T he v alu e of the 

m e d ia n v e s te d b e n e fit to th e $ 3, 6 0 0 - a - y e a r m a le w o rk e r w ith 10 y e a r s of s e r v ­

ic e w o uld be a b o u t $ 1 ,6 6 2 if it w e re p u rc h a s e d fo r h im a t ag e 45 , o r $ 3, 550 if 

p u rc h a s e d a t a g e 65. 70 A t th e o th e r end of th e s c a le , th e $ 8, 4 0 0 - a - y e a r w o rk e r w ith 30 y e a r s of s e r v ic e w ould h av e th e r ig h t to an a s s e t a m o u n tin g to $ 1 1 ,2 3 8 if th e m e d ia n b e n e fit w e re p u rc h a s e d a t ag e 45, o r $ 23, 998 if p u rc h a s e d a t age 65. O th e r illu s tr a tiv e a m o u n ts can be d e riv e d fro m th e follow ing ta b u la tio n .

Monthly amount payable

at age 65

$20 

$30

$40

$50

$60

$70

$80

$90 ■

$100 

$120 

$140

$160

Cost of individual annuities purchased for

__________ a man when he is----------------------

Age 45

$ 1 ,3 3 0

1,995

2, 660

3, 325

3, 990

4, 655

5,32 0

5, 985

6, 650

7, 980

9 ,3 1 0

10,640

A ge 65

$2, 840

4, 260

5, 680

7, 100

8 ,5 2 0

9, 940

11 ,3 60

12 ,7 80

1 4 ,2 00

17 ,0 40

19, 880

2 2 ,7 2 0

70 Computed from the follow ing nonparticipating individual premium rates o f a large life insurance company.

For the purchase o f im m ediate annuities o f $10 monthly at age 65, $ 1 ,4 2 0 for m en and $ 1 ,6 3 0 for wom en, and

deferred annuities purchased at age 45 o f $10 m onthly com m encing at age 65, $665 for m en and $835 for wom en.

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Chari 10. Monthly Vesting Benefits,1 by Selected Assumed Annual

Earnings Levels and Service Periods, Winter 1962-632

SER V IC E

IN YEARS

10

15

20

25

30

Monthly benefit

a n n u a l o $50 $100 $150 $200 $250 $300 $350

1 M e d ia n m o n th ly b e n e fits and ranges w ith in w hich fe ll 5 0 p e rc e n t and 8 0 p e rc e n t of th e w o rk e rs .

^ Based on a s tu d y o f 1 5 ,8 1 8 p riv a te pension plans c o ve rin g 1 5 .6 m illio n a c tiv e w o rk e rs in 1 9 6 1 .

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Combinations of M ajor Benefit Provisions

The combinations of m ajor benefit provisions— norm al, disability, and early

retirem ent, and vesting— determine the extent of protection afforded covered

w orkers by private pension plans. Although one retirem en t provision may serve

as a substitute for another— for example, ea rly retirem en t for disability r e t ir e ­

ment, or e a rly retirem en t for vesting— the substitution usually lacks a key e le ­

ment that may be of great importance in individual situations.

The independent decisions of thousands of em ployers and unions responsible

for private pension plans led to wide variety in plan provisions. Union interest

at the inception of a plan usually centers on norm al retirem ent benefit levels.

L ater, in the light of plan experience and developments in other plans, interest

spreads to other p ro visio n s, such as total d isability protection. S im ila rly , nonnegotiated plans have expanded the variety of benefits. Regardless of the p re s ­

ence or absence of collective bargaining, costs continue to be the overriding

constraint on such pension planning decisions.

P re v a le n c e of M a jo r Benefit P r o v is io n s . A t le a s t one of the m a jo r benefits

supplementing normal retirem ent— early and disability retirem ent and vesting—

was found in m ost plans (table 27). In about a tenth of the plans, how ever, with

about a tenth of the w o rk e rs, a w ork er had to reach norm al retirem en t age to

re c e iv e any plan benefits. On the other hand, a high degree of protection was

afforded by 30 percent of the plans with 40 percent of the w orkers that had all

three m ajor benefits that supplement norm al retirem ent. Another sixth of the

plans with over a fifth of the w o rk ers had disability retirem en t plus vesting o r

e a rly re tire m e n t, while a sm a ll number had disability re tire m e n t only. In a l ­

m ost 40 percent of the plans with a fifth of the w o rk ers, a disabled w orker had

to substitute, if possible, e a rly retirem ent or vesting for the regular disability

provision.

Major benefits provided ___________ Percent

in addition to normal

retirem ent Plans Workers

A ll plans studied ----------------------------- 100.0 100.0

No other benefit ----------------------------- 9 .4 1 0 .0

D isability, early and vesting ----------- 3 0 .9 39. 1

D isability and early ------------------------ 9 .9 17 .2

D isability and vesting ---------------------- 6 .0 4 .9

D isability o n l y --------------------------------- 5 .0 8 .5

Early and vesting ----------------------------- 27. 3 14 .4

Early only ---------------------------------------- 8 .5 4 .7

Vesting only ------------------------------------ 3. 1 1 . 1

NOTE: Because o f rounding, sums of individual item s may not

equal totals.

M ultiem ployer plans w ere less likely to have m ajor supplemental benefits

than single-em ployer plans; about an eighth of the m ultiem ployer plans with about

a third of the w orkers provided only norm al retirem ent benefits as compared to

le s s than 10 percent of the sin g le -e m p lo y e r plans with fe w e r than 5 percent of

the w orkers.

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Single employer______M ultiem ployer

Major benefits provided Percent in addition to normal ------------------------------------------------------ “

retirem ent Plans Workers Plans Workers

A ll plans studied ---------------------- 100.0 100.0 100.0 100.0

No other benefit ---------------------- 9 .2 2 .2 12.8 3 3 .6

D isability, early and vesting ---- 32. 1 4 9 .7 10.8 7 .0

D isability and e a r l y------------------ 9 .3 1 8 .5 19 .0 1 3 .4

D isability and vesting --------------- 5 .4 2 .8 1 5 .9 11.3

Disability only ------------------------- 3 .4 3 .0 3 0 .7 2 5 .3

Early and vesting ---------------------- 2 8 .7 1 7 .7 3 .7 4 .6

Early only --------------------------------- 8 .6 4 .8 5 .8 4 .2

Vesting only ----------------------------- 3. 2 1.3 1 .3 .7

NOTE: Because of rounding, sums of individual item s may not equal

totals.

The highest degree of protection was found in sin g le -e m p lo y e r plans— 1 out

of 3 sin g le -e m p lo y e r plans with 1 out of 2 w o rk e rs , com pared to only 1 out of

10 m ultiem ployer plans with about the same proportion of w o rk ers, had all m ajor

supplemental benefits. M ultiem ployer plans concentrated on providing at least

disability benefits— 30 percent of the m ultiem ployer plans with a fourth of the

workers had only disability retirem ent.

M ajor supplemental benefits were more prevalent in contributory plans,

almost all of which are single-em ployer plans. About 50 percent of the workers

in contributory plans, compared to about 35 percent in noncontributory plans,

had all m a jo r benefit p ro visio n s. On the other hand, about equal proportions of

w o rk ers— 10 percent— in both types of plans had no m ajor supplemental benefits.

Most of the remaining contributory plans provided early retirem ent, or vesting,

or both, while the noncontributory plans showed wider variations in pension benefits, typically including disability retirem ent protection.

Noncontributory Contributory

Major benefits provided __________________Percent

in addition to normal

retirement Plans Workers Plans Workers

A ll plans studied -------------------- 100. 0 1 0 0 .0 1 0 0 .0 1 0 0 .0

No other b e n e f it---------------------- 10. 1 9 .8 7. 5 10. 5

D isability, early and v estin g---- 3 0 .6 36. 2 31. 7 4 7 .5

Disability and e a r l y----------------- 11. 8 21. 7 4. 9 3 .9

D isability and vesting ------------- 6 .3 5. 8 5. 1 2 .2

D isability o n l y ----------------------- 5 .4 9. 7 4. 1 4. 9

Early and vesting -------------------- 24. 8 10 .2 3 3 .9 2 6 .9

Early only ------------------------------- 8. 9 5 .4 7. 1 2 .5

Vesting only --------------------------- 2. 2 1.0 5. 5 1 .6

NOTE: Because of rounding, sums of individual item s may not equal

totals.

About 10 percent of the w orkers in plans mentioned in collective bargaining a g re e m e n ts— m o stly m u ltiem p lo yer plans— as com pared to about 5 p ercen t of

the w orkers in nonbargained plans had only norm al retirem ent.

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About 40 percent of the workers in collectively bargained plans had all

m ajor supplemental benefits (mostly accounted for by plans negotiated by the

Automobile W orkers and Steelworkers) as against about a third of the w orkers

in nonbargained plans. Plans not mentioned in collective bargaining agreements

usually had at least vesting and early retirem ent (about a fourth of the w orkers

were covered), while plans mentioned in collective bargaining agreements usually

added early and disability retirem ent (about a fifth of the workers).

M entioned in a c o llec tiv e Not m entioned in a co llectiv e

bargaining agreem ent bargaining agreem ent

Major benefits provided ___________________________ Percent

in addition to normal

retirem ent Plans Workers Plans Workers

A ll plans studied ---------------------- 100.0 100.0 100.0 100.0

No other benefit ---------------------- 10.4 12.7 8.8 4.2

D isability, early and v e s t i n g---- 42.3 40.3 24.3 36.4

D isability and early ----------------- 10.8 18.7 9.4 14.1

D isability and vesting --------------- 3.6 5.7 7.4 3.3

D isability only ------------------------- 7.8 9.4 3.4 6.5

Early and vesting ---------------------- 20.8 9.5 31.0 25.3

Early only --------------------------------- 4.0 3.3 11. 1 7.6

Vesting only ----------------------------- 0.4 0.4 4.6 2.6

NOTE: Because of rounding, sums of individual item s may equal totals.

Sm all plans w ere less likely than large ones to provide supplemental benefits. Ten percent of the plans with under 1,000 w orkers as compared to less

than 5 p ercen t of the la r g e r plans provided only n o rm a l re tire m e n t (table 28).

A ll three m ajor benefits— early and disability retirem ent and vesting— were p rovided by 2 out of 5 of the la rg e s t plans; by o v e r 1 out of 3 of the plans in the

1 ,0 0 0 —5 ,0 0 0 size group; and by le s s than 1 out of 3 of the s m a lle r plans. About

1 out of 5 of the la r g e r plans had e a r ly re tire m e n t and d isability, com pared to

only 1 out of 10 plans with fe w e r than 1,0 0 0 w o rk e rs .

S a la rie d w o r k e r s ’ plans g e n e ra lly provided m o re types of supplem ental

benefits than those covering only production w orkers. Chiefly reflecting the lack

of protective provisions in m ultiem ployer plans, a fifth of the w o rk ers in bluecollar plans were in plans with only norm al retirem ent (table 29). However,

blue-collar plans commonly provided all m ajor supplemental benefits (plans with

a third of the w orkers). Many had only disability retirem en t (plans with a sixth

of the w orkers) or early and disability retirem en t (plans with a seventh of the

w o rk e rs). On the other hand, only a few s a la rie d w o r k e r s ’ plans had only n o rm a l

retirem ent, while half the workers were covered by plans with all three m ajor

supplemental benefits. Another tenth of the w orkers in w h ite-collar plans w ere

protected by at least a disability retirem ent provision. W here both w hite- and

b lu e -c o lla r w o rk e rs w e re c o v e re d in the sam e plan, 2 out of 5 w o rk e rs w e re in

plans with all m ajor supplemental benefits. Nearly all of the remaining w orkers

belonged to plans with e a rly re tire m e n t plus either vesting o r d isability re tire m e n t.

The industry distribution of supplemental benefits exhibited wide diversity,

chiefly accounted for by the pattern of coverage of collectively bargained plans,

particularly multiemployer plans (table 30).

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Supplementary Plans

Since social security old-age benefits com prise a la rg e r fraction of the

retirem ent income of lower paid than of higher paid w orkers, many private plans1

counteract this imbalance by making additional pension benefits available to higher

paid w o rk e rs. A s has been discussed in chapter II, the norm al benefit form ula

may be designed to integrate with social security by the offset method or the

step -rate method. Another method sim ilar to the step-rate method provides

extra retirem en t benefits to eligible employees covered by a basic pension plan

(which is usually noncontributory) who elect to make voluntary contributions to

a supplem entary plan. This method has the advantage of permitting a change

in the sources of financing, which is not usually practicable in a single plan.

M oreover, the basic plan is often the result of collective bargaining while the

supplementary plan is not. Although some supplementary plans are available to

all em ployees, they are usually lim ited to w h ite-co llar w o rk ers or to employees

with earnings exceeding the amount subject to social security taxes ($4, 800 a

year at the time of the study).

About 600, 000 w orkers were covered by m ore than one plan of a single

employer. About 75 percent of these w orkers w ere in plans with over 5,000

w ork ers— a g reater concentration than was found in basic plans.

Workers

Number of workers covered Plans Percent (thousands) Percent

A ll supplementary plans ---------- 489 10 0.0 596 10 0.0

Under 200 ...................................— 260 5 3 .2 23 3 .9

200 and under 500 ------------------ 154 3 1 .5 42 7 .0

500 and under 1,00 0 --------------- 15 3 .1 12 2 .0

1, 000 and under 5 ,0 0 0 ----------- 37 7 .6 67 11 .2

5, 000 and under 10,000 ---------- 8 1 .6 57 9 .6

1 0 ,0 00 and under 2 5 ,0 00 -------- 10 2 .0 139 2 3 .3

2 5 ,0 0 0 and under 5 0 ,0 00 -------- 3 .6 102 17.1

5 0 ,0 0 0 and o v e r---------------------- 2 (>) 154 2 5 .8

1 Less than 0. 05 percent.

NOTE: Because of rounding,

totals.

sums of individual item s m ay not equal

Supplementary plans were most common in manufacturing industries—almost

70 p e r c e n t of th e p la n s w it h o v e r 90 p e r c e n t of th e w o r k e r s in s u p p l e m e n t a r y p l a n s .

Among manufacturing industries, large firm s in the automobile, steel, chemical,

and rubber products offered these plans to salaried employees or, less frequently,

to a ll em ployees with earnings over a certain amount. In nonmanufacturing, such

plans were most common in public utilities., covering both salaried and production w orkers.

Only a sm a ll num ber of supplem entary plans c o v e re d only production w o rk e rs;

where they did, a separate plan was usually available to salaried w orkers. About

two-fifths of the plans with a third of the w orkers w ere combined production and

salaried w orker plans, and the rem ainder w ere lim ited solely to salaried w orkers.

____________ Percent____________

Type of worker covered Plans Workers

A ll supplementary plans ------------— 1 0 0.0 1 0 0.0

Salaried and production -------------- ............. 3 7 .6 34 .1

Salaried only --------------------------------------- 60 .1 6 2 .8

Production only -------------------- -— ............. 2 .2 3 .1

NOTE: Because o f rounding, sums of individual item s m ay not

totals.

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Regardless of the type of worker covered, these plans usually required that

participating em ployees earn in excess of a specified amount and contribute a

specified p ercentage of th eir ’’excess earnings. " Benefits in turn w e re also based

solely on excess earnings. The minimum earnings level varied widely because

the m axim um amounts used to compute social secu rity benefits at the time the

plans w ere adopted or amended have ranged from $ 3 ,0 0 0 to $ 4 ,8 0 0 . However,

there w ere also several plans that based both contributions and supplementary

benefits on a ll earnings.

Benefits P ayable Under Supplem entary P la n s . While the benefit p ro visio n s

and the age and service requirements of the optional supplementary plan typically

differed from those of the associated basic plan, requirements and other p rovisions (although not the benefit amounts) were identical in 180 plans with about

12 0 ,0 0 0 w o rk ers. These supplem entary plans m e re ly added on additional benefits for covered em ployees. The other supplementary plans often had m ore

liberal provisions than their associated basic plan. For example, 20 percent

of the w o rk ers in basic plans associated with supplem entary plans did not have

a vesting provision, but for half these w orkers, the supplem entary plan did have

vesting. Alm ost all of these plans without vesting had an early retirem ent p rovision. However, since ea rly retirem ent required the attainment of a later age

than vesting, to vest in full in both plans m em bers would probably have to wait

until they qualified for early retirem ent under the basic plan.

Normal retirem ent benefit amounts were usually geared to earnings as well

as service. For example, for workers earning $8,400 a year they ranged from

$1.50 to over $ 8 for each year of participating service. In m ost plans, the

supplementary plan benefits equaled or exceeded those provided by the basic plan

at the same earnings level especially where, as commonly occurred, the basic

form ula was based solely on service, while the supplementary plan form ula was

based on both earnings and service.

Death Benefits

P rivate pension plans, as a ru le, do not approach the protection afforded

su rviving dependents under the F e d e ra l social se c u rity system . 71 72 But a substantial number of private plans do offer two means of protecting the su rv iv o rs

of re tir e d as w ell as active plan m e m b e rs. In some plans the w o rk e r d ire c tly

bears the entire burden of protection by electing a pension with su rvivo r benefits

(an option^ in place of his earned annuity at the cost of a reduced annuity fo r

h im se lf. 7 In other plans pensions a re au to m atic ally continued to the s u rv iv o rs

upon the death of retired or active w orkers.

The two most common options provided by private pension plans are joint

and survivor and period-certain. Under the first type, the w orker receives a

reduced annuity until his death, after which a specified annuity is paid for the

lifetim e of a designated joint annuitant. A p erio d -certain option assu res a r e ­

duced annuity for a specified number of payments, but if the pensioner lives b eyond the guarantee period, he continues to receive reduced monthly amounts.

71 In addition to providing lum p-sum death benefits, OASDI provides extensive survivors’ benefits. See, for

exam ple, U. S. Department of Health, Education, and W elfare, Social Security Adm inistration, Your Social Security

(OASDI-35, May 1963).

72 In som e plans, notably those negotiated by the Autom obile Workers, the worker only pays part of the cost

if he names his spouse as a joint annuitant because the reduction in his benefit is less than actuarial; i. e ., the joint

and survivor benefit he may e le c t is of greater actuarial value than the straight life annuity payable if he makes

no election .

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The analysis in this study was lim ited to the second of the two methods

that p riv a te plans use to p ro te c t s u rv iv o rs of co ve re d w o rk e rs , i. e. , to the type

not dependent upon the w o r k e r s 1 election. This includes: (l) L um p -su m payments

made to a w o rk e r's b e n e fic ia ry , (Z) autom atic lifetim e continuation of pension

paym ents to s u rv iv o rs of active and re tir e d w o rk e rs , and (3) autom atic continuation of pension payments to su rvivo rs for a guaranteed period of time (payment

ce rta in guarantee). 73

Life insurance protection under a separate health and insurance plan is

generally provided for active w orkers covered by private pension plans but less

freq u en tly fo r s u rv iv o rs of re tir e d w o rk e rs. 74 In addition, w o rk e rs in co n trib ­

utory pension plans are afforded some protection through guaranteed return of

their own contributions to the plan.

Death benefit p rovision s, as defined above, w ere found in a third of the

pension plans covering slightly m ore than a third of the w orkers (table 31). While

about equal proportions of single-em ployer and multiemployer plans had them, a

somewhat higher percentage of w orkers in m ultiem ployer plans had this added

protection. With death Without death

________ Total_______________benefits______________benefits______

Percent

Type of em ployer unit Plans Workers Plans Workers Plans Workers

All plans ----------------------------------- 1 0 0 .0 1 0 0 .0 3 3 .1 3 5 .0 6 6 .8 6 5 .0

Single em ployer ---------------------- 10 0.0 10 0.0 3 3 .0 3 3 .5 6 6 .9 6 6 .4

M ultiem ployer -------------------------- 10 0.0 10 0.0 3 4 .2 3 9 .6 6 5 .7 6 0 .3

NOTE: Because of rounding, sums of individual item s m ay not equal totals.

Death benefits were, however, less common in negotiated plans than in plans

not under collective bargaining. Despite this fact, owing to the g reater fraction of

w orkers in multiemployer plans with death benefits about equal proportions of

workers in plans of both types had some death benefit protection. (See table 31.)

With death Without death

_______ Total________________benefits______________benefits_______

C ollective bargaining status Plans

A ll plans ----------------------------------- 10 0.0

M entioned in c o llec tiv e

bargaining a g reem en t------------- 10 0.0

Not m entioned in co llec tiv e

bargaining agreem en t-------------- 100. 0

Percent

Workers Plans Workers Plans Workers

10 0.0 33. 1 3 5 .0 6 6 .9 6 5 .0

10 0.0 2 0 .5 3 4 .2 7 9 .5 6 5 .8

10 0.0 4 0 .4 3 6 .8 6 0 .0 63. 1

NOTE: Because of rounding, sums of individual item s m ay not equal totals.

73 Optional survivor benefits were not included in the analysis for this study. For details of the options in a

selected group of 300 negotiated plans, see Pension Plans Under C ollective Bargaining, Benefits For Survivors, Winter

1960-61 (BLS Bulletin 1334, 1962).

74 For exam ple, see Health and Insurance Plans Under C ollective Bargaining, Life Insurance and A ccidental

Death and Dism em berm ent Benefits, Early Summer 1960 (BLS Bulletin 1296, 1961).

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Although jointly-financed plans invariably prom ise at least the return of

worker contributions in the form of pension payments or lump sums (usually with

interest) in case of death, a slightly higher porportion of contributory plans had

death benefits than did entirely employer-financed plans.

With death Without death

_______Total_________________benefits______________benefits_______

Percent

Method of financing Plans Workers Plans Workers Plans Workers

All p la n s------------------------------------ 10 0.0 1 0 0.0 3 3 .1 3 5 .0 6 7 .7 6 5 .0

Noncontributory ------------------------ 10 0.0 1 0 0.0 3 1 .4 3 4 .2 6 8 .6 6 5 .8

Contributory ----------------------------- 100.0 10 0.0 3 7 .8 3 7 .6 6 2 .2 6 2 .4

NOTE: Because of rounding, sums of individual item s m ay not equal totals.

The industry patterns of death benefits provisions showed wide differences.

Plans in manufacturing industries had the lowest prevalence of death benefits; less

than 30 percent of the plans and w orkers (table 32). In contrast, in com m unications and public utilities, a third of the plans with over tw o-thirds of the w o rk ers

had them, chiefly because they were provided by all of the telephone company

plans. Because several large T eam ster plans had death benefits, alm ost 30 p e rcent of the plans with over half the w orkers in the transportation industry had

this protection. In finance, o ver half the plans with a slightly lo w er proportion

of w o rk ers had a death benefit. In the mining industry, because the Mine W orkers

plan provides death benefits from another part of the welfare and retirem ent fund,

only a lim ited number of w o rk ers w ere in plans with su rvivo r protection,. While

only 30 to 40 percent of the w o rk ers in construction, trade, and service industry plans w ere in plans with death benefits, the proportion was g reater than in

plans in manufacturing industries.

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Table 27. P ro v isio n s for M ajor Supplem ental B enefits in P rivate P en sion Plans by Type of E m p loye r Unit,

Method of Financing, and C ollective Bargaining Status, W inter 1962—63

(W orkers in thousands)

No supplem ental

benefits

D isability retirem en t and—

Item

All plans No

additional

benefits

Early

retirem en t

and

vesting

E arly

retirem en t Vesting

Num ber W orke r s 1 Plans W orke r s 1 Plans W orke r s 1 Plans W orke r s 1 Plans W orke r s 1 Plans W orkers 1

All plans stu d ied----------------------- 15,818 15,621 1,485 1,561 796 1,328 4,88 5 6, 104 1 , 5 6 6 2 , 6 9 3 94 6 7 7 0

Single e m p lo y er ------------------------ 1 4 , 8 9 0 1 1 , 7 4 2 1, 366 259 511 348 4 , 7 8 5 5 , 8 34 1,3 9 0 2, 175 798 331

Noncontributory ----------------- 10, 657 8 ,454 1, 051 232 336 ! 312 3,439 3, 976 1, 180 2, 024 589 283

M entioned in a c o lle c ­

tive bargaining

a g r e e m e n t -------------------- 3, 933 5, 668 487 138

i

189 193 2, 050 3, 154 358 1,419 46 155

Not m entioned in a

co llective bargaining

a g r e e m e n t -------------------- 6, 7 2 4 2 , 7 8 7 564 94 147 118 1,389 822 822 605 543 128

C on trib u tory------------------------ 4, 233 3, 288 315 26 175 36 1, 346 1 ,858 210 151 209 48

Mentioned in a c o lle c ­

tive bargaining

a g r e e m e n t -------------------- 1, 034 1 ,4 9 5 32 9 315 903 93 68 12 14

Not m entioned in a

collective bargaining

a g r e e m e n t -------------------- 3, 199 1,793 315 26 143 27 1 ,0 3 1 955 117 83 197 34

M u l t i e m p l o y e r -------------------------- 928 3, 878 119 1,302 285 981 100 270 176 518 148 439

N oncontributory------------------- 869 3, 212 110 914 283 823 84 250 175 512 137 398

Mentioned in a c o lle c ­

tive bargaining

a g r e e m e n t_____________ 810 3, 176 110 914 231 803 82 248 175 512 137 398

Not m entioned in a

collective bargaining

a g r e e m e n t -------------------- 59 36 52 20 2 2

C on trib u tory------------------------ 59 666 9 388 2 157 16 20 1 5 11 4 0

Mentioned in a c o lle c ­

tive bargaining

a g r e e m e n t -------------------- 18 356 3 302 3 8

Not m entioned in a

collective bargaining

a g r e e m e n t -------------------- 41 310 6 86 2 157 13 13 1 5 - -

Without disability retirem en t with—

A l l p l a n s s t u d i e d ------------------------------------------------------------------------------------------------------------------- 4 ,3 1 1 2, 257 1, 337 732 492 176

Single em p loyer ------------------------------ --------------------------------------------------------------------------------- 4, 277 2, 0 80 1,283 568 480 148

N o n c o n t r i b u t o r y --------------------------------------------------------------------------------------------------------------- 2, 827 1,053 990 488 245 86

M entioned in a collective bargaining a g reem en t___________ _______________ — 628 420 171 176 4 12

Not m entioned in a co llective bargaining a g r e e m e n t_________________________ 2, 199 633 819 312 241 74

C o n t r i b u t o r y -------------------------------------------------------------------------------------------------------------------- 1,450 1,027 293 80 235 62

M entioned in a collective bargaining a greem en t ------------------------------------------ 555 459 17 35 10 8

Not m entioned in a collective bargaining a g r e e m e n t --------- -------------------------- 8 95 568 276 45 22 5 54

M u l t i e m p l o y e r ----------------------------------------------------------------------------------- ------------------------------- 34 177 54 164 12 28

N on contribu tory------------------------------------------------- ---------------------------------------------------------- 27 141 41 144 12 28

M entioned in a collective bargaining a g r e e m e n t_______________________________ 22 127 41 144 12 28

Not m entioned in a co llective bargaining a g r e e m e n t --------------------------------------- 5 14 - - - -

C o n t r i b u t o r y -------------------------------------------------------------------------------------------------- --------------- 7 36 13 19 - -

M entioned in a collective bargaining a g reem en t ---------- ------------------------------------ 1 6 - -■ - -

Not m entioned in a co llective bargaining a g r e e m e n t -------------------------------------- 6 29 13 19 "

1 Active w ork ers in 1961.

NOTE: B eca u se of rounding, sum s of individual item s m ay not equal totals.

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Table 28. P rovision s for M ajor Supplem ental B enefits in P rivate Pen sion P lan s,

by N um ber of A ctive W ork ers C overe d, W in ter 1962—6 3

(W orkers in thousands)

Major supplem ental

benefits provided

All plans

Num ber of w o rk ers covered

Under 1 , 0 0 0

1 , 0 0 0 and

under 5, 0 0 0

5, 000 and o v er

Num ber W orkers 1 2 Plans W orkers 1 P lans W orkers 1 Plans W o r k e r s 1

A l l p l a n s s t u d i e d ------------------------------ 1 5 , 8 1 8 15, 621 13,845 2, 420 1,490 3, 229 483 9,9 72

N o s u p p l e m e n t a l b e n e f i t s --------------- 1,485 1, 561 1 , 3 9 3 214 61 129 31 1 ,2 1 8

Disability retirem en t and—

No additional b en efits ---------------- 796 1, 328 643 1 2 0 1 1 1 227 42 981

Early retirem en t and v estin g — 4, 885 6 , 104 4 , 166 7 3 7 5 18 1, 198 2 0 1 4, 169

E arly retirem en t ------------------------ 1,566 2 , 693 1 , 2 0 9 295 266 615 91 1,783

V esting------------------------------------------ 946 770 8 6 8 119 60 103 18 548

Without disability retirem ent

with—

E a r l y r e t i r e m e n t and v e s t i n g — 4 ,3 1 1 2, 257 3,883 603 357 714 71 940

Early retirem en t ------------------------ 1, 337 732 1,236 253 74 159 27 320

V esting------------------------------------------ 492 176 447 79 43 84 2 1 2

1 A ctive workers in 1961.

NOTE: B ecau se of rounding, sum s of individual item s m ay not equal totals.

Table 29. P ro v isio n s for M ajor Supplemental B enefits in Private Pen sion Plans

b y T y p e o f W o r k e r C o v e r e d , W i n t e r 1962 —63

(W orkers in thousands)

Major supplem ental

benefits provided

All plans

Type of w orker covered

Salaried and

production Production only Salaried only

Num ber W ork ers 1 Plans W ork ers 1 Plans W ork ers 1 Plans W ork ers 1

A l l p l a n s s t u d i e d ------------------------------ 2 15,818 2 15, 621 6,03 8 6 , 263 4 , 9 2 5 7, 039 3, 995 1, 584

N o s u p p l e m e n t a l b e n e f i t s --------------- 1,485 1, 561 827 103 505 1,424 153 33

Disability retirem en t and—

No additional b enefits---------------- 796 1, 328 241 166 551 1, 105 2 5

E a r l y r e t i r e m e n t and v e s t i n g — 4, 885 6 , 104 950 2,461 1,989 2, 316 1,254 794

Early retirem en t ------------------------ 1,566 2, 693 634 1,546 67 2 9 4 0 2 0 0 127

V esting------------------------------------------ 946 770 655 215 2 1 2 500 2 1 2 2

Without disability retirem ent

with—

Early retirem ent and v estin g — 4, 311 2, 257 1,841 1,385 791 446 1,651 402

E arly retirem en t ------------------------ 1,337 732 561 320 183 271 593 141

V esting------------------------------------------ 492 176 329 6 6 2 2 37 1 2 1 60

1 Active w ork ers in 1961.

2 Includes w orkers for which data are not shown separately.

N O T E : B ecause of rounding, su m s of individual item s m ay not equal to ta ls.

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Table 30. P ro v isio n s for M ajor Supplem ental B enefits in P rivate P ension P lans by Industry, W inter 1962—63

thousands)

D i s a b i l i t y r e t i r e m e n t ;and—

Industry

All plans supplem ental

benefits

N o

additional

benefits

Early

retirem ent

and

vesting

1 E a r l y

retirem en t | V e s t i n g

Number W orke r s 1

Plans W orke r s 1

Plans W orke r s 1

Plans W orke r s 1

! P l a n s W orke r s 1

Plans W orke r s 1

All plans studied -------------------- Z15, 8 18 215,621 1,485 1,561 796 1, 328 4, 885 L 6 ,1 0 4 _ 1, 566 2, 693 946 770

M in in g----------------------------------------- 31 6 : 327 2 206 1 0 1 46 50 4 2

2

Contract c o n stru ctio n------------- 449 j 1 , 0 7 2 1 0 1 371 141 217 46 94 72 1 6 8 42 118

M anu facturing--------------------------- 9,257 9,678 784 638 233 665 3,425 5, 080 967 1,313 | 558 284

T r a n s p o r t a t i o n -------------------------- 6 7 3 !1 1,286 | 7 188 169 2 13 : 182 25 3 96 255 1 242

Com m unciations and public

u t i l i t e s __________________________ 849 , 1, 27 0 2 0 1 13 2 1 47 143 143 50 748 1 5

W holesale and retail

trade ----------------------------------------- 1 , 6 2 7 ! 9 2 0 1 2 1 57 80 123 281 139 150 8 6 2 2 38

W holesale trade ----------------- 1, 147 479 7 30 59 78 2 2 0 75 130 62 3 28

Retail t r a d e ------------------------- 480 440 114 27 2 1 45 61 64 2 0 24 19 1 0

Finance, insurance, and

real e s ta te ------------------------------- 1, 853 733 5 17 4 9 13 479 304 164 8 6 309 33

S e r v ic e s -------------------------------------- 719 308 264 71 103 49 225 39 1 1 27 1 1

I

47

A l l p l a n s s t u d i e d ________________________________

M i n i n g ______________________________________________

Contract co n stru ction___________________________

M anufacturing------------------------------------------------------

T r a n s p o r t a t i o n -----------------------------------------------------

Com m unications and public u t il it ie s --------------

W holesale and retail tr a d e --------------------------------

W holesale tr a d e ----------------------------------------------

R e t a i l t r a d e -----------------------------------------------------

Finance, insurance, and real estate -------------

S e r v i c e s ------------------------------------------------------------------

Without disability retirem ent with—

4 , 311 2, 257 1, 337 732 492 176

59 46 1 0 2 23

27 63 1 1 18 9 2 2

2, 345 1, 378 672 2 1 0 273 1 1 0

1 2 0 50 98 87 - -

313 206 94 86 26 2 1

702 269 138 1 9 6 133 13

644 159 81 41 3 6

58 1 1 0 57 155 130 7

580 185 216 85 51 1 0

99 46 6 28 "

1 Active w orkers in 1961.

2 Includes industries for which data are not shown separately.

NOTE: B ecau se of rounding, sum s of individual item s m ay not equal totals.

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T a b l e 31. D e a t h B e n e f i t P r o v i s i o n s in P r i v a t e P e n s i o n P l a n s b y T y p e o f E m p l o y e r U n it ,

M e t h o d of F i n a n c i n g , and C o l l e c t i v e B a r g a i n i n g S t a t u s , W i n t e r 1962—63

(W orkers in thousands)

All plans I With death benefit Without death benefit

Item

Num ber W ork ers 1 2 1 Plans 1 W o r k e r s 1 Plans W ork ers 1

A l l p l a n s s t u d i e d ---------------------------------------- 15, 818 15,621 5, 241 ! 5 , 4 7 2 10,577 1 0 , 149

Single e m p lo y e r ------------------------------------------ 14,890 11,742 , 4, 923 1 3,934 9,967 7,808

N o n c o n t r i b u t o r y ------------------------------------- 10, 657 8 ,4 5 4 , 3, 329 I 2 , 5 2 0 7,32 8 5, 935

M entioned in a collective

bargaining a greem en t --------------------

Not m entioned in a collective

3, 933 5, 6 6 8 760 ; 1 , 5 5 4 3, 173 4, 114

bargaining a g r e e m e n t ----------------- 6 , 72 4 2, 7 8 7 2 , 569 ! 9 66 4, 155 1,821

C on trib u tory------------------------------------------ 4, 233 3, 288 1, 594 1,4 1 5 2 , 639 1,873

Mentioned in a collective

bargaining a g r e e m e n t -----------------

Not m entioned in a collective

1, 034 1 ,4 9 5 127 | 621 907 875

bargaining a g r e e m e n t ----------------- 3, 199 1,793 1,467 794 1,732 999

M u l t i e m p l o y e r -------------------------------------------- 9 2 8 3 ,8 7 8 318 1, 538 610 2, 340

N o n c o n t r i b u t o r y ------------------------------------- 869 3,21 2 ; 2 90 1 , 4 6 7 579 1,745

M entioned in a collective

bargaining a g r e e m e n t -----------------

Not m entioned in a collective

810 , 3 , 1 7 6 i 2 9 0 1,467 520 1,710

bargaining a g r e e m e n t ----------------- 59 36 - - 59 36

C on trib u tory------------------------------------------ 59 6 6 6 28 71 31 595

M entioned in a collective

bargaining a g r e e m e n t -----------------

Not mentioned in a collective

18 356 1 1 17 7 339

bargaining a g r e e m e n t ----------------- 41 310 17 55 24 256

1 Active w ork ers in 1961.

NOTE: B ecau se of rounding, sum s of individual item s m ay not equal totals.

T a b l e 32. D e a t h B e n e f i t P r o v i s i o n s in P r i v a t e P e n s i o n P l a n s b y I n d u s t r y , W i n t e r 1 962—6 3

(W orkers in thousands)

Industry

All plans With death benefit Without death benefit

N um ber W ork ers 1 Plans W ork ers 1 Plans W ork ers 1

A l l p l a n s s t u d i e d ----------------------------------------- 2 1 5 , 8 1 8 2 15,621 | 5 , 2 4 1 5,47 2 10,577 1 0 , 149

M in in g----------------------------------------------------------- 316 327 4 35 312 ! 29 3

C o n t r a c t c o n s t r u c t i o n ------------------------------ 449 1, 072 264 313 185 759

M anufacturing--------------------------------------------- 9, 257 9, 678 2, 534 2 , 811 6 , 723 6 , 86 7

T r a n s p o r t a t i o n -------------------------------------------- 6 73 1 , 286 194 676 479 610

C om m unications and public u tilities------ 849 1, 270 301 873 548 398

W holesale and retail tr a d e ----------------------- 1, 627 9 2 0 551 284 1, 076 636

W h o l e s a l e t r a d e ------------------------------------- 1, 147 479 441 103 706 377

R e t a i l t r a d e -------------------------------------------- 480 440 1 1 0 181 370 259

Finance, insurance, and real esta te____ 1,853 733 947 345 9 0 6 388

S e r v ic e s -------------------------------------------------------- 719 308 374 118 345 1 9 0

1 Active w ork ers in 1961.

2 Includes industries for which data are not shown separately.

N O T E : B ecause of rounding, sum s of individual item s m ay not equal totals.

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Appendix A . Scope and Method o f Survey

The c h ie f s o u r c e s of in fo rm a tio n fo r th is study w e r e r e p o r ts and su p p o rtin g d o cu ­ m en ts file d w ith the U. S. D ep a rtm en t of L ab or p u rsu an t to the W elfa re and P e n s io n P la n s

D is c lo s u r e A ct (P L 8 5 -8 3 6 , a s a m en d ed ). The a d m in is tr a to r s of any e m p lo y ee w e lfa r e or

p e n sio n b en efit p la n , a s d efin ed by th e a c t, co v erin g m o r e than 25 w o r k e r s w e r e req u ired

to file w ith the D ep a rtm en t two c o p ie s of a d e s c r ip tio n of the p lan ( D - l form ) w ith in 90 days

a fte r the e ffe c tiv e date of the act (Jan u a ry 1, 1959) o r plan (w h ic h ev e r o c c u r s la te r ), and

two c o p ie s of the annual fin a n c ia l rep o rt (D -2 form ) w ith in 120 d ays (now 150 d ay s) a fter

th e end of ea ch c a le n d a r , p o lic y , or o th er f is c a l y e a r . B y the fa ll o f I9 6 0 , annual re p o rts

had b een file d for o v e r 25, 000 p en sio n p la n s.

T he p r iv a te p en sio n plan and w o rk er c o v e r a g e e s tim a te s in th is rep o rt d iffer su b ­

sta n tia lly fro m s im ila r data for p la n s on file w ith the D e p a rtm en t's O ffice of L a b o r -M a n a g e -

m en t and W e lfa r e -P e n s io n P la n R ep o rts for the sa m e p e r io d . About 30 p e r c e n t fe w e r plan s

and about 12 p e r c e n t fe w e r w o r k e r s a r e in clu d ed in th is stu d y. The fu n d am en tal r e a so n for

th is d iffe r e n c e is that m an y p la n s rep o rtin g that th ey p ro v id ed r e tir e m e n t b e n e fits w e r e r e ­ je c te d fro m the study b e c a u s e th ey did not p ro v id e p en sio n b e n e fits a s d efin ed in th is stu d y. 75

M ost r e je c te d p la n s w e r e d e fe r r e d p r o fit-s h a r in g p la n s; so m e w e r e sto ck bonus and sa v in g s

p la n s . 76

S im ila r ly , c o v e r a g e e s tim a te s in th is rep o rt d iffer fro m e s tim a te s of p en sio n b e n e ­ fit c o v e r a g e by the D ep a rtm en t of H ealth , E d u cation , and W elfa re (HEW ). The HEW e s t i ­

m a te s in clu d e d e fe r r e d p r o fit-s h a r in g p la n s, th o se of n on p rofit o r g a n iz a tio n s and p la n s w ith fe w e r than 26 w o r k e r s , a ll of w h ich w e r e ex clu d ed fro m th is stu d y. H o w ev er, a s in th is

stu d y, th ey a ls o do not in clu d e sto ck bonus and sa v in g s p la n s.

T yp es of D o cu m en ts S tu d ied . The D - 1 d e s c r ip tio n p lan fo rm r e q u ir e s that the f o l ­ low in g in fo rm a tio n and d o cu m en ts be su b m itted :

1. N am e and a d d r e s s of the p lan .

2. A ccou n tin g p e r io d of the p lan .

3. T ype of plan ( i . e . , w e lfa r e , p e n sio n , or co m b in a tio n ). 4. G roup(s) c o v e r e d by the p lan (h ou rly r a te , s a la r ie d , or a ll e m p lo y e e s ).

5. In d u stry in w h ich m o st p a r tic ip a n ts a r e em p lo y ed (8 in d u stry d iv is io n s a r e lis te d ) .

6. W hether the plan is m en tio n ed in a c o lle c tiv e b a rg a in in g a g r e e m e n t.

7. P a r tie s m ak in g co n trib u tio n s (e m p lo y e r , p a r tic ip a n ts , u n ion ).

8. The n am e and a d d r e s s of the a d m in istr a to r (in m u ltie m p lo y e r p la n s, u su a lly a

b oard of tr u s te e s ) and the n a m e s and a d d r e s s e s o f p e r so n (s) co n stitu tin g the a d m in is ­

tr a to r , th eir o ffic ia l p o sitio n s w ith r e s p e c t to the p lan , th e ir r e la tio n sh ip to the e m ­

p lo y e r and em p lo y ee o r g a n iz a tio n , and any o th er o f f ic e s , p o s itio n s , or em p lo y m en t h eld

by th em .

9. A d eta ile d d e s c r ip tio n of the a d m in istr a tio n o f the p lan , in clu d in g the n a m es of the p a rty or p a r tie s p e r fo r m in g th e fo llo w in g fu n ction s: M ain tain in g r e c o r d s; d e te r m in ­ ing e lig ib ility ; p r o c e s s in g c la im s ; m ak in g d eter m in a tio n on a p p e a ls; a u th o rizin g p a y m en ts; m aking p a y m en ts; a u th o rizin g e x p e n se s; s e le c tin g the in su r a n c e c a r r ie r , c o rp o r a te

tr u s t e e , or s e r v ic e o r g a n iza tio n ; and d eter m in in g in v e stm e n t p o lic y .

10. The nam e and a d d r e s s of the p a rty or o r g a n iza tio n th rou gh w h ich b e n e fits a r e p ro v id ed .

11. N a m e s , t it le s , and a d d r e s s e s of any tr u s te e (s ) not m en tio n ed u nder ite m s

8 or 10.

12. C o p ies of plan d ocu m en ts under w h ich the plan is e s ta b lis h e d and o p e ra ted ,

sc h e d u le of p lan b e n e fits , and a sta te m en t of the p r o c e d u r e s to be fo llo w ed u nder the

p lan in p r e se n tin g c la im s fo r b e n e fits and fo r ap p ea lin g the d en ia l of cla irtis. *7

7 ^ For definition of a pension plan used in this study, see p. i .

76 In addition, since sec. 4(b)(4) of the act exempted plans with 25 or fewer employees (amended to "participants" by the 1962

amendments), they were omitted from the study even though reports were voluntarily filed for many of them.

9 9

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The D -2 fo rm , w h ich in th is study w a s u se d o n ly to ob tain the n u m b er o f m e m b e r s

(a c tiv e and re tir ed ) c o v e r e d by ea ch p lan , a ls o sh o w s, am on g o th er it e m s , the a s s e t s , lia b il­ i t ie s , co n tr ib u tio n s, b e n e fits p aid , and s a la r ie s and c o m m is s io n s p aid .

The sta n d ard d ocu m en ts u sed in th is stu dy a r e b r ie fly d e s c r ib e d b elo w . A lthough

th e s e d ocu m en ts a r e u su a lly n e c e s s a r y to p ro v id e a c o m p le te d e s c r ip tio n of the e s t a b lis h ­

m en t and o p e ra tio n of a p en sio n plan as r e q u ire d by the a c t, o th er d o cu m en ts o r d e s c r ip ­ tiv e m a te r ia ls m ay h av e b een and often w e r e su b stitu ted .

1. C o lle c tiv e b arga in in g a g r e e m e n t b etw een the u n ion (s) and the e m p lo y e r (s) (o r a s ­ so c ia tio n of e m p lo y e r s) d e s c r ib in g , am ong o th er th in g s, th e e m p lo y e r s ’ o b lig a tio n e ith e r

to m ak e s p e c ifie d co n trib u tio n s to a tr u s t fund o r p ro v id e s p e c ifie d p en sio n b e n e fits o r both.

2. P e n sio n p lan sta tin g in fu ll the p en sio n p lan ad op ted by th e b oa rd of t r u s te e s or

n eg o tia ted by the e m p lo y e r s and union , or u n ila te r a lly e s ta b lis h e d by the e m p lo y e r . Only

sim p lifie d b o o k le ts is s u e d to p lan p a r tic ip a n ts, ra th e r than th e fu ll tex t of the p lan , w e r e

ty p ic a lly a v a ila b le for in su r e d p la n s.

3. M a ster group annu ity co n tr a ct settin g forth th e fu ll tex t of the in s u r e d p en sio n

p lan and o b lig a tio n s of the p a r tie s .

4. In d ivid u al c e r t ific a t e s of p a r tic ip a tio n is s u e d to p a r tic ip a n ts u nder so m e in ­

su red p la n s.

5. The D - l and D -2 fo r m s and a tta ch m e n ts w h ich g iv e an o v e r a ll d e s c r ip tio n of

the plan and su m m a ry fin a n c ia l in fo rm a tio n .

F o r c e r ta in k ey c h a r a c te r is tic s , as ex p la in ed b elo w , th e a n a ly s is w a s b a sed on su p ­

p o rtin g d o cu m en ts file d by th e a d m in is tr a to r s , ra th er than on th e fo rm it s e lf , su p p lem en ted

by o th er s o u r c e s of in fo rm a tio n a v a ila b le to the B u rea u o f L ab or S ta t is t ic s .

P la n a d m in is tr a to r s in d ic a ted on the D - l fo rm (ite m 5) the in d u stry d iv is io n in w h ich

m o st of the p a r tic ip a n ts w e r e em p lo y ed . E igh t b ro ad d iv is io n s w e r e lis te d : M anufactu rin g;

m in in g; co n stru c tio n ; tra n sp o r ta tio n ; co m m u n ica tio n s and u tilitie s ; w h o le s a le and r e ta il tra d e;

fin a n c e , in s u r a n c e , and r e a l e sta te ; and s e r v ic e s . To p ro v id e a m o re in fo r m a tiv e and m e a n ­ in gfu l b reak d ow n of the p la n s stu d ied and to c o r r e c t e r r o r s in rep o rtin g (p rob ab ly m o s tly

due to th e la c k of in d u stry d e fin itio n s), ea ch plan w a s c la s s if ie d into th e 2 -d ig it in d u stry

grou p s of the Standard In d u stria l C la ss ific a tio n .? 7 G u id an ce for th is c la s s if ic a t io n w a s o b ­

ta in ed fro m the D - l fo rm , and w a s ch eck ed a g a in st su p p o rtin g p lan d o c u m e n ts . F o r som e

p la n s it w a s a ls o n e c e s s a r y to ch eck o th er s o u r c e s a v a ila b le to the B u rea u of L ab or S ta tis tic s .

T im e P e r io d s . Due to a la g in filin g and p r o c e s s in g r e p o r ts , the study in v o lv ed s e v ­

e r a l tim e p e r io d s . The r e p o r ts stu d ied w e r e s e le c te d fr o m a l i s t of a ll I960 D -2 re p o rts

file d w ith the U .S . D ep a rtm en t of L ab or— the la t e s t c o m p le te l i s t a v a ila b le at the tim e of the stu d y. The w o rk er c o v e r a g e d ata, h o w ev e r, w e r e o b ta in ed fro m th e la te s t annual f i ­ n a n c ia l re p o rt (D -2 form ) on f ile . T h is u su a lly sh ow ed a v e r a g e w o rk er c o v e r a g e during

ca len d a r y e a r 1961 or a f is c a l v e a r ending in 19-61. H o w ev e r, th e m a jo r c h a r a c te r is tic s

and p lan p r o v is io n s r e la te to 1962—63, s in c e th e p lan p r o v is io n a n a ly s is w a s b a sed on the D - l p lan d e s c r ip tio n fo rm w h ich w a s up to date at tim e o f th e a n a ly s is , th e w in te r of 1962—6 3 .7 8

S am p lin g M ethod- The stu dy w a s b a se d on a s tr a tifie d random s a m p le . The s a m ­

p le w a s s tr a tifie d by two k ey c h a r a c te r is tic s r e p o rted by p lan a d m in is tr a to r s and ta b u la ted

by th e O ffice of L a b o r-M a n a g em en t and W e lfa r e -P e n s io n R ep o rts: (1) The in d u stry d iv isio n

in w h ich m o s t p a r tic ip a n ts a r e em p lo y ed , and (2) the n u m b er of a c tiv e and r e tir e d w o r k e r s .

A ll p lan s w ith 5, 000 p a r tic ip a n ts o r m o r e w e r e in clu d ed in the stu d y , r e g a r d le s s o f in d u stry .

In m in in g , a ll w ith 3, 000 p a r tic ip a n ts or m o r e w e r e in clu d ed . A ran d om sa m p le of r e p o r ts ,

s tr a tifie d by in d u stry and w o rk er c o v e r a g e , w a s s e le c te d fo r th o se w ith fe w e r w o r k e r s .

T he la r g e p la n s s e le c te d w ith c e r ta in ty r e p r e s e n te d l e s s th an 3 p e r c e n t o f the p lan s

and o v e r 60 p e r c e n t o f th e w o r k e r s c o v e r e d by p e n sio n p la n s that file d r e p o r ts w ith the

L ab or D ep artm en t fo r I9 6 0 .

77 Bureau of the Budget, Standard Indistrial Classification Manual, 1957.

78 Sec. 6(b), as amended, requires the reporting of amendments within 60 days after they have been effectuated.

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D ata fo r ea ch p lan s e le c te d in the sa m p le w e r e w e ig h ted in a c c o r d a n c e w ith th e p ro b ­ a b ility of s e le c tin g it s r e p o r t. F o r e x a m p le , w h e r e 1 re p o rt out o f 5 w a s sa m p le d in an in d u s t r y - s iz e grou p , it w a s c o n sid e r e d a s r e p r e se n tin g i t s e l f and fou r o th er p la n s and w a s

g iv e n a w eig h t of 5. T h e r e fo r e , if the p lan p ro v id ed v e s tin g , it w ou ld be co u n ted a s 5 p la n s p ro v id in g v e stin g in the to ta l e s t im a t e s .

B e c a u se of le g a l, a d m in is tr a tiv e , and fin a n c ia l a r r a n g e m e n ts and p r e fe r e n c e s o f a d ­ m in is tr a t o r s , th e sco p e o f th e s u b m iss io n s v a r ie d w id e ly . F o r e x a m p le , a fir m w ith s e p a ­

ra te p la n s fo r p ro d u ctio n and s a la r ie d w o r k e r s and co m m o n fin a n c ia l and a d m in is tr a tiv e te c h ­

n iq u es m ig h t file on ly a sin g le r e p o r t. On the o th er hand, se p a r a te r e p o r ts m ig h t be m ad e

fo r the two p lan s b e c a u se d iffere n t a d m in is tr a tiv e a r r a n g e m e n ts w e r e u s e d . F o r th is stu d y,

co m b in ed r e p o r ts of the f ir s t typ e w e r e ex a m in ed and a n a ly zed , and se p a r a te c o v e r a g e f ig ­ u r e s (rep o rted or estim a te d ) w e r e a s s ig n e d to ea ch p la n . On the o th er hand, if , a s in the

seco n d c a s e , se p a r a te r e p o r ts w e r e m a d e , both p la n s w e r e a n a ly zed o n ly if both w e r e s e ­

le c te d for th e sa m p le .

In a d d itio n , so m e fir m s o r m a jo r d iv is io n s o ffe r su p p lem e n ta l p la n s to a ll o r c e r ­

ta in grou p s of w o r k e r s c o v e r e d by a b a s ic p lan . A g a in , s e p a r a te s u b m iss io n s fo r ea ch plan

m igh t be m a d e, o r th ey m ign t be co m b in ed . If the b a s ic p lan f e ll in the sc o p e o f th e s a m ­ p le (w h eth er by c e r ta in ity or ch an ce) the su b o rd in a te p lan w a s a ls o a n a ly zed ev en if it w a s

d e s c r ib e d in an o th er r e p o r t. H o w ev e r, if th e re p o rt s e le c te d in sa m p lin g w a s that o f a su b ­

o rd in a te p lan , it w a s d rop p ed fr o m th e sa m p le and c o n sid e r e d out of sc o p e u n le s s the a s ­

s o c ia te d b a s ic p lan w a s a ls o s e le c te d . B y th is m eth o d , th e p la n s for w h ich th e r e w e r e two

s u b m iss io n s w e r e not g iv e n a b e tte r ch a n ce o f b ein g s e le c te d than th o s e w h ere th e b a s ic and su b o rd in a te plan w e r e in clu d ed in on e s u b m iss io n (in w h ich both c a s e s w e r e a n a ly zed ).

F o r p la n s in w h ich a b a s ic and su b o rd in a te p lan w e r e a n a ly zed , it w a s found that

c e r ta in b e n e fits w e r e in clu d ed in one p lan but not the o th er and, in so m e in sta n c e s, r e q u ir e ­

m en ts fo r b e n e fits w e r e d iffe r e n t, e.g., the b a s ic p lan had v e stin g w h ile th e su b ord in a te

plan did n ot. F o r th e ta b u la tio n s in th is stu d y , the r e q u ir e m e n ts o f the plan w h ich ap p lied

to and y ie ld e d th e h ig h e st b en efit fo r a w o rk er a s s u m e d to ea rn $ 5 0 0 a m onth w e r e u se d .

A group of 286 p la n s w ith 4 7 5 ,0 0 0 w o r k e r s had to be a d ju sted in th is m a n n er. In the r e ­

m ain in g c a s e s the r e q u ir e m e n ts fo r b e n e fits o f the b a s ic and su b o rd in a te p la n s w e r e id e n ­

tic a l so that no a d ju stm en t w a s n ee d ed .

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Appendix B. Tables

Table B -l. Reduction Factors for Early Retirement Between Ages 60 and 65, in Private Pension Plans

by Employer Unit, Collective Bargaining Status, and Method of Financing, Winter 1962—63*

(Workers in thousands)

Reduction factors

All plans with early

retirem ent S i n g l e e m p l o y e r M u l t i e m p l o y e r

M entioned in a

collective bargaining

ag reem en t

Number W o r k e rs P l a n s W o r k e r s P l a n s W o r k e r s | P l a n s W o r k e r s

All plans with early retirem en t----- 1 2 , 09 9 1 1 , 7 8 6 11,735 10, 657 364 1, 129 ! 4 , 5 1 1 7, 680

No reduction 2 ------------------------------------- 169 1 , 1 6 2 169 1 , 16 2 . . 51 977

A ctu a ria l--------------------------------------------- 8 , 067 5,821 7, 968 5, 540 99 281 2, 150 3, 072

Uniform percen t for each month

prior to age 6 5 ------------------------------- 2, 837 4, 192 2 ,6 3 5 3, 552 2 0 2 640 1,898 3, 185

V4 of 1 p e r c e n t ----------------------------- 32 108 32 108 - - 1 1 51

V3 of 1 p e r c e n t___________________ 52 545 50 529 2 16 24 439

Vi0 of 1 p e r c e n t --------------------------- 62 193 60 181 2 1 2 8 130

V2 of 1 p e r c e n t ----------------------------- 934 1,245 821 727 113 518 462 989

5/g o f 1 p e r c e n t ---------------------------- 179 71 0 166 672 13 38 91 493

6/io ° f 1 p e r c e n t --------------------------- 1,006 1,294 937 1,242 69 47 781 997

5/ 8 of 1 p e r c e n t ---------------------------- 520 71 517 62 3 9 i 520 71

3/ 4 of 1 p e r c e n t ---------------------------- 52 31 52 31 - - • 1 15

Tables of reduction factors not

uniform 3 -------------------------------------------- 8 3 6 419 804 284 32 135 324 289

Table of reduced benefit

amounts ------------------------------------------ 31 91 1 25 30 6 6 31 1 9 1 O th e r --------------------------------------------------- 159 1 0 2 158 94 1 8 57 67

Not m entioned in a

collective bargaining N o n c o n t r i b u t o r y Contributory

agreem en t

All plans with early r e tir e m e n t ------ 7, 588 4, 106 8 , 7 63 8 , 58 9 3, 336 3, 197

No reduction 2 --------------------------------------- 118 186 132 1,042 37 1 2 0

A ctu a ria l------------------------------------------------ 5,917 2,749 5, 593 | 3 , 8 6 9 2, 474 1,952

Uniform p ercen t for each month prior to age 65 _ _ . . . . 939 1,006 2, 575 ' 3 , 2 2 8 262 965

V4 of 1 p ercent _____________________________________________ 2 1 57 2 0 ! 46 1 2 ! 62

V3 of 1 p e r c e n t ------------------------------- 28 106 41 152 1 1 : 393

4/io o f 1 p e r c e n t ------------------------------ 54 63 61 180 1 13

V2 of 1 p e r c e n t ------------------------------- 472 256 736 1,044 198 2 0 1

% of 1 p e r c e n t ------------------------------- . ...................... . 8 8 217 162 59 2 17 1 18

6/io ° f 1 p e r c e n t ------------------------------ 225 2 9 2 983 1 , 1 1 2 23 178

5/s o f 1 p e r c e n t ------------------------------- - - 520 71 - -

3/ 4 of 1 p e r c e n t ------------------------------- 51 15 52 31 - -

Table of reduction factors not u n ifo r m 3-------------- 512 130 374 289 462 129

Table of reduced benefit amounts — - - 31 91 - -

O t h e r ------------------------------------------------------- 1 0 2 34 58 71 1 0 1 31

1 Based on a study of 15, 818 private pension plans covering 15. 6 million active workers in 1961.

2 Includes 57 plans covering 966,000 workers with normal retirement at age 60 and early retirement at ages earlier than 60.

3 Not based on a uniform monthly reduction; often an approximate actuarial reduction.

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

103

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Table B -2. Reduction F a ctors for Early R etirem ent B etw een Ages 55 and 60, in P rivate P en sion Plans

b y E m p l o y e r U n it, C o l l e c t i v e B a r g a i n i n g S t a t u s , a n d M e t h o d of F i n a n c i n g , W i n t e r 1962 —63 1

(W orkers in thousands)

Reduction factors

All plans with early j

retirem en t | Single em p loyer M u l t i e m p l o y e r

I M e n t i o n e d in a

1 collective bargaining

agreem ent

Num ber W orkers Plans W o r k e r s P l a n s W o r k e r s ! P l a n s W orkers

All plans with early retirem ent — 12,099 i 11,786 11,735 10, 657 364 1, 129 j 4,511 7,68 0

No p rovision for early retirem ent

between ages 55 and 6 0 ---------------- 3, 930 4, 726 3,748 4, 300 182 426 | 2 , 1 0 1 3,641

All plans with early retirem ent

at age 55 ------------------------------------------ 8 , 169 7, 060 7,987 6 , 357 182 703 i 2 , 4 1 0 4, 039

No red u ctio n-------------------------------------- 93 878 93 878 - - 27 825

A ctu aria l--------------------------------------------- 6 , 592 4 , 149 6 , 5 32 4 , 012 60 137 1, 5 4 0 1 , 7 3 0

Uniform p ercen t for each month

p r i o r to 6 0 ---------------------------------------- 8 9 0 1,565 j! 80 1 1, 148 89 417 , 516 1, 135

V3 of 1 p e r c e n t ---------------------------- 4 4 305 1 4 3 2 9 6 1 9 18 143

2/ 5 of 1 p e r c e n t ---------------------------- 73 241 1 71 229 : 2 1 2 9 161

V2 of 1 p e r c e n t ----------------------------- 406 563 - 322 214 ! 84 347 1 329 513

V1 2 1 p e r c e n t --------------------------- ; 173 1 2 1 2 j 170 163 2 49 1 42 144

3/s o f 1 p e r c e n t ----------------------------- : 175 ; 174 175 174 j I 115 149

7/ i 2 °f 1 p e r c e n t --------------------------- 2 0 72 2 0 72 ! - 3 25

Table of reduction factors not

uniform 2 ____________________________ 580 377 '! 549 249 ' 31 128 319 276

O th er---------------------------------------------------- 14 91 1 2 69 i! 2 22 8 73

Not m entioned in a

collective bargaining ' N o n c o n t r i b u t o r y Contributory

agreem en t

All plans with early r e tir e m e n t ------ 7,5 8 8 j 4 ,1 0 6 8,7 63 8, 589 3, 336 3, 197

No p rovision for early retirem ent between ages

-------------- — !

i

i

55 and 6 0 --------------------------------------------- 1,829 1,085 I 3, 198 4, 000 732 726

All plans with early retirem ent at age 5 5 ---------- 5,759 3 , 0 2 2 1 5, 565 4 , 588 2, 6 0 4 2,47 0

N o r e d u c t i o n ----------------------------------------- 66 53 83 865 10 13

A c t u a r i a l ------------------------------------------------ 5, 052 2, 419 4, 387 2, 255 2, 205 1,893

Uniform percen t for each month prior to age 60 _______________________ - 3 7 4 4 3 0 768 1, 156 122 407

V 3 o f 1 p e r c e n t ------------------------------ ___________________________ 26 162 36 153 8 152

2/ s o f 1 p e r c e n t ------------------------------- _________________________ 64 80 71 197 2 44

V 2 o f 1 p e r c e n t ------------------------------- __________________________ 77 48 385 502 21 58 5/ i 2 o f 1 p e r c e n t ------------------------------ __________________________ 130 68 111 135 61 77

% o f 1 p e r c e n t ------------------------------- ________________________________________________________ 60 25 154 150 21 23

7/ l 2 o f 1 p e r c e n t ------------ --------------- 17 47 11 19 9 53

Table of reduction factors not u n ifo rm 2 ------------- ................. 261 101 318 254 262 123

Other ----------------------------------------------------- 6 19 9 58 5 34

1 B a s e d on a s tu d y o f 1 5 , 8 1 8 p r i v a t e p e n s i o n p la n s c o v e r i n g 15. 6 m i l l i o n a c t i v e w o r k e r s in 1961. 2 Not based on a uniform monthly reduction; often an approxim ate actuarial reduction.

NOTE: B ecau se of rounding, su m s of individual item s m ay not equal totals.

☆ U .S. GOVERNMENT PRINTING OFFICE : 1966 O - 227-801

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BLS PUBLICATIONS ON EMPLOYEE BENEFIT PLANS

Bulletin

number

1326

1334

1394

1407

1435

1477

1293

1296

1330

1377

1325

Pensions

Multiemployer Pension Plans Under C ollective Bargaining, Spring 1960.

Pension Plans Under C ollective Bargaining: Benefits for Survivors,

Winter 1960—61.

Unfunded Private Pension Plans.

Labor Mobility and Private Pension Plans.

Digest of One-Hundred Selected Pension Plans Under C ollective Bargaining,

Late 1964.

Digest of 50 Selected Pension Plans for Salaried Employees, Summer 1965.

Relationship of Employee Hiring Ages to the Cost of Pension Plans (July 1965).

Changes in Negotiated Pension Plans, 1961—64, Monthly Labor Review,

September 1965. (Reprint 2479. )

Health and Insurance

Health and Insurance Plans Under C ollective Bargaining: Major Medical

Benefits, Fall 1960.

Health and Insurance Plans Under C ollective Bargaining: Life Insurance and

Accidental Death and Dismemberment Benefits, Early Summer 1960.

Digest of One Hundred Selected Health and Insurance Plans Under C ollective

Bargaining, Winter 1961—62.

Digest of 50 Selected Health and Insurance Plans for Salaried Employees,

Spring 1963.

Recent Changes in Negotiated Health and Insurance Plans, Monthly Labor

Review, September 1962. (Reprint 2402.)

Other

Digest of Profit-Sharing, Savings, and Stock Purchase Plans, Winter 1961—62.

(20 Selected Plans.)

Health, Insurance, and Pension Plan Coverage in Union Contracts, Late 1960.

BLS Report 228.

Price

65 cents

25 cents

30 cents

45 cents

50 cents

40 cents

Free

Free

20 cents

25 cents

$1. 25

$ 1.00

Free

30 cents

Free

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