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AU&24 1964 . 1407

document: collection

Labor Mobility and 

Private Pension Plans

A study of vesting, early retirement 

and portability provisions

UNITED STATES DEPARTMENT OF LABOR

W. Willard Wirtz, Secretary

Sponsored by

OFFICE OF MANPOWER, AUTOMATION AND TRAINING

Seymour L. Wolfbein, Director

Prepared by

BUREAU OF LABOR STATISTICS

Ewan Clague, Commissioner

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BUREAU OF LABOR STATISTICS REGIONAL OFFICES

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BLS Bulletin No. 1407

Labor Mobility and 

Private Pension Plan

A study of vesting, early retirement,

and portability provisions

U N ITED S TA TE S D EPA RTM EN T OF LABOR

W . W illa rd W irtz , Secretary

Sponsored by

OFFICE OF MANPOWER, AUTOMATION AND TRAINING

Seymour L. Wolfbein, Director

Prepared by

BUREAU OF LABOR STATISTICS

Ewan Clague, Commissioner

June 1964

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P re face

The Manpower Development and Training Act of 1962 directed the Secretary of Labor to "establish a program of factual studies of practices of employers

and unions which tend to impede the mobility of workers or which facilitate mobility. n Included among the studies requested was one of "early retirement and

vesting provisions and practices under private compensation plans. "

To fulfill this statutory directive, the Department of Labor’ s Office of

Manpower, Automation and Training requested the Department’ s Bureau of Labor

Statistics to undertake this study and supported it financially. Studies of the mobility implications of other practices of employers and unions will be sponsored

by the Office of Manpower, Automation and Training.

This undertaking had two major parts: (l) To describe the private pension structure in its entirety— the prevalence of plans, the types of plans, and

types and characteristics of benefits provided, and (2) to set forth the implications for labor mobility inherent in the provisions and practices thus accounted

for, in all their variety. The study, however, does not attempt directly to measure the effects of private pension plans on labor mobility.

An overall yet detailed view of the entire private pension structure, which

had never before been attempted, became a feasible project with the enactment

of the Welfare and Pension Plans Disclosure Act. This act brought into the custody of the Department of Labor a vast collection of basic documents and reports

dealing with welfare and pension plans in effect throughout the United States. It is

believed that this bulletin accounts for the selected provisions of virtually all private pension plans covering more than 25 workers in effect at the time of the study.

Although this study concentrates on the vesting and early retirement provisions of pension plans, it also brings into focus the pension credit portability

provided by multiemployer plans and, to a limited extent, the age and service

requirements for normal retirement. Other aspects of the private pension structure, such as disability retirement, level of benefits, and normal retirement,

which have general manpower implications, although not as directly related to

labor mobility as the practices selected for this study, will be covered in separate Bureau of Labor Statistics bulletins presently in process.

Some of the data obtained in the course of this study were made available to the President's Committee on Corporate Pension Funds and Other Private

Retirement and Welfare Programs, and to the President's Advisory Committee

on Labor-Management Policy. Some data for major plans also appeared in the

Manpower Report of the President in 1963.

The Bureau of Labor Statistics is grateful for the assistance of the staff

of its cooperating agency, the Office of Manpower, Automation and Training, in

particular Mr. Robert E. Manifold. Both agencies appreciate the assistance of

the staff of the Office of Labor-Management and Welfare-Pension Reports responsible for the Department's file of pension plan documents.

This study was undertaken in the Bureau's Division of Industrial and

Labor Relations, Joseph W. Bloch, Chief, under the general direction of

L. R. Linsenmayer, Assistant Commissioner for Wages and Industrial Relations. The bulletin was prepared by Walter W. Kolodrubetz under the supervision of Donald M. Landay.

Hi

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C o n te n ts

Chapter I. Introduction_____________________________________________________ 1

Scope and method___________________________________________________________ 2

Chapter II. Selected characteristics of private pension plans_____________ 4

Size of plans_________________________________________________________________ 6

Industry and type of employer unit________________________________________ 6

Collective bargaining_______________________________________________________ 7

Financing___________________________________________________________________ 7

Supplemental pension plans_____________________________________________ 7

Geographic area____________________________________________________________ 8

Type of worker covered____________________________________________________ 8

Administration_____________________________________________________________ 8

Implications for mobility___________________________________________________ 9

Chapter III. Vesting__________________________________________________________ 11

Prevalence of vesting______________________________________________________ 11

Types of vesting____________________________________________________________ 14

Requirements for vesting__________________________________________________ 14

Deferred full vesting____________________________________________________ 14

Deferred graded vesting________________________________________________ 16

Prospects of vesting____________________________________________________ 16

Type of separation______________________________________________________ 16

Benefits payable under vesting____________________________________________ 18

The value of vested benefits________________________________________________ 19

Implications for mobility___________________________________________________ 22

Chapter IV. Early retirement________________________________________________ 24

Prevalence of early retirement provision_________________________________ 25

Minimum requirements for early retirement_____________________________ 26

Benefits payable under early retirement__________________________________ 28

Social security adjustment option_______________________________________ 30

Special early retirement___________________________________________________ 30

Prevalence of special early retirement provisions____________________ 31

Requirements for special early retirement____________________________ 32

Benefits payable under special early retirement______________________ 33

Implications for mobility___________________________________________________ 33

Chapter V. Multiemployer plans_____________________________________________ 36

Scope of plans_______________________________________________________________ 37

Reciprocity between plans__________________________________________________ 38

Restrictions on employment after termination____________________________ 39

Implications for mobility___________________________________________________ 39

Chapter VI. Prospects of benefits____________________________________________ 41

Prevalence of protective provisions_______________________________________ 41

The effects of age and service requirements______________________________ 43

Outlook for private pension plans__________________________________________ 51

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Contents— Continued

C h a r t s :

1. G ro w th in n u m b e r and c o v e r a g e o f p r iv a te p e n sio n p l a n s _____________ 5

2. P e r c e n t o f p r iv a t e p e n sio n p la n s and w o r k e r s w ithout v e s tin g at

s p e c ifie d a g e s fo r w o r k e r s h ir e d at age 2 5, w in te r 1962—6 3 ________ 17

3. P e r c e n t of p r iv a te p e n sio n p la n s and w o r k e r s w ithout any b e n e fits

(v e stin g , e a r l y r e tir e m e n t, n o r m a l r e tir e m e n t) at s p e c ifie d a g e s

fo r w o r k e r s h ir e d at ag e 25, w in te r 1962—6 3 ___________ _____________ 47

4. P e r c e n t o f w o r k e r s in p r iv a t e p e n sio n p la n s w ithout any b e n e fits

(v e stin g , e a r l y r e tir e m e n t, n o r m a l r e tir e m e n t) a t s p e c ifie d a g e s

fo r w o r k e r s h ir e d at age 25, b y type o f w o rk e r c o v e r e d ,

w in te r 1962—6 3 ___________________________________________________________ 48

T a b l e s :

D istr ib u tio n of p r iv a t e p e n sio n p la n s b y —

1. D ate o f e s t a b li s h m e n t _____________________________________________________ 52

2. N u m b er o f a c tiv e w o r k e r s c o v e r e d , w in te r 1962—63 __________________ 52

3. In d u stry g ro u p , w in te r 1962—63 __________________________________________ 52

4. In d u stry g ro u p and type o f e m p lo y e r u n it, w in te r 1962—63____________ 5 3

5. In d u stry g ro u p and c o lle c tiv e b a r g a in in g s t a t u s , w in te r 1962—63 ____ 53

6. In d u stry g ro u p and m eth o d o f fin a n c in g , w in te r 1962—6 3 ______________ 54

7. In d u stry g ro u p and g e o g r a p h ic a r e a c o v e r e d , w in te r 1962—6 3 ________ 54

8. In d u stry g ro u p and type o f w o rk e r c o v e r e d , w in te r 1962—6 3 __________ 55

9. F in a l a u th o rity fo r b e n e fit d e te r m in a tio n , w in te r 1962—6 3 ____________ 55

V e stin g p r o v is io n s in—

10. P r iv a te p e n sio n p la n s b y ty p e , c o n d itio n s fo r v e s tin g , w in te r

1 9 6 2 - 6 3 ___________________________________________________________________ 55

11. P r iv a t e p e n sio n p la n s b y type o f e m p lo y e r u n it, m eth o d of

fin a n c in g , and c o lle c tiv e b a r g a in in g s t a t u s , w in te r 1962—6 3 ________ 56

12. S in g le e m p lo y e r p r iv a te p e n sio n p la n s b y n u m b e r o f a c tiv e

w o r k e r s c o v e r e d , w in te r 1962—63 _____________________________________ 56

13. P r iv a te p e n sio n p la n s b y in d u stry g ro u p , w in te r 1962—63 ____________ 57

T ype o f v e stin g in p r iv a te p e n sio n p la n s b y —

14. In d u stry g ro u p , w in te r 1962—6 3 __________________________________________ 57

15. T ype o f e m p lo y e r u n it, m eth o d o f fin a n c in g , and c o lle c tiv e

b a r g a in in g s t a t u s , w in te r 1962—6 3 _____________________________________ 58

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 —

16. D e fe r r e d fu ll v e s tin g in p r iv a te p e n sio n p la n s , w in te r 1962—6 3 ________ 58

17. D e fe r r e d fu ll v e s tin g in p r iv a te p e n sio n p la n s b y

co n d itio n s fo r v e s tin g and ty pe of w o r k e r c o v e r e d ,

w in te r 1962—63 ___________________________________________________________ 59

18. D e fe r r e d g r a d e d v e stin g in p r iv a t e p e n sio n p la n s b y

p e r c e n t in itia lly v e s te d , w in te r 1962—6 3 ______________________________ 62

19. F u ll v e stin g in p r iv a t e p e n sio n p la n s w hich h ave

d e fe r r e d g r a d e d v e s tin g , w in te r 1962—63 _____________________________ 63

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Contents— Continued

T a b le s— C on tin u e d

Page

E a r l y r e tir e m e n t p r o v is io n s in p r iv a t e p e n sio n p la n s b y —

20. T y p e o f e m p lo y e r u n it, m eth o d o f fin a n c in g , and c o lle c tiv e

b a r g a in in g s t a t u s , w in te r 1962—6 3 _____________________________________ 63

21. In d u str y g ro u p , w in te r 1962—63 __________________________________________ 64

22. 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 e a r l y r e tir e m e n t in

p r iv a t e p e n sio n p la n s , w in te r 1962—63 ________________________________ 65

23. S p e c ia l e a r l y r e tir e m e n t p r o v is io n s in p r iv a t e p e n sio n p la n s b y

in d u str y g ro u p , w in te r 1962—63 ________________________________________ 66

24. 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 s p e c i a l e a r l y

r e tir e m e n t in p r iv a t e p e n sio n p la n s , w in te r 1962—6 3 ---------------------- 66

P r o v is io n s fo r—

25. V e stin g and e a r l y r e tir e m e n t in p r iv a t e p e n sio n p la n s b y type o f

e m p lo y e r u n it, type o f v e s tin g , and c o n d itio n s fo r v e s tin g ,

w in te r 1962—63 ___________________________________________________________ 67

2 6. V e stin g , e a r l y r e tir e m e n t, and p o r t a b ility in p r iv a t e p e n sio n

p la n s b y type o f w o rk e r c o v e r e d , w in te r 1962—6 3 ____________________ 67

27. V e stin g , e a r l y r e tir e m e n t, and p o r t a b ility in p r iv a t e p e n sio n

p la n s b y in d u stry g r o u p , w in te r 1962—6 3 ______________________________ 68

E a r l i e s t ag e and a s s o c ia t e d s e r v ic e at w h ich the w o r k e r q u a lifie s 

fo r v e s tin g , e a r l y r e tir e m e n t, o r n o r m a l r e tir e m e n t in—

28. P r iv a t e p e n sio n p la n s , w in te r 1962—6 3 __________________________________ 68

2 9. P r iv a t e p e n sio n p la n s b y in d u str y g ro u p , w in te r 1962—63 ______________ 69

30. P r iv a t e p e n sio n p la n s b y ty pe o f w o rk e r c o v e r e d , w in te r 1962—6 3 _____ 71

A p p en d ix: S c o p e and m eth o d o f s t u d y __________________________________________ 72

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Labor Mobility and Private Pension Plans

C h a p te r I. In tro d u ctio n

T he p r e su m p tio n th at p e n sio n p la n s in h ib it w o r k e r m o b ility is w id e ly a c ­

c e p te d . In d e e d , a c o n tr a r y v iew w ould ru n co u n te r to one o f the c h ie f r e a s o n s 

fo r the e st a b lish m e n t o f m an y p e n sio n p la n s . A lm o st w ith out e x c e p tio n , h o w e v e r, 

it is a g r e e d th at o th er p r a c t i c e s —s e n io r ity , fo r e x a m p le — a r e in te r m e sh e d w ith 

the a c c u m u la tio n o f p e n sio n r ig h ts and m a y , on b a la n c e , be m o r e s ig n ific a n t d e ­

t e r r e n t s to w o rk e r m o b ility .

In d e a lin g w ith the la b o r m o b ility im p lic a tio n s o f p e n sio n p la n s , it is 

im p o rta n t to e m p h a siz e th at a p a r t ic u la r type o f m o b ility o f a p a r t ic u la r c a te g o r y 

o f w o r k e r s is u n d er c o n sid e r a tio n . T he m o b ility fu n c tio n upon w h ich p e n sio n 

p la n s h av e the g r e a t e s t e ffe c t c o n s is t s la r g e l y o f v o lu n ta ry s h ifts fro m one e m ­

p lo y e r to a n o th e r, not n e c e s s a r i l y in v o lv in g g e o g r a p h ic o r o c c u p a tio n a l c h a n g e s. 

T he w o r k e r s p r in c ip a lly in v o lv e d in th is situ a tio n a r e l a r g e l y th o se b e tw een the 

a g e s o f abo u t 35 o r 40 and 55 o r 60 who h av e a c c u m u la te d y e a r s o f c r e d ite d 

s e r v ic e u n d er a p e n sio n p la n . T he m o b ility o f young w o r k e r s , o c c u p a tio n a l 

m o b ility w ithin the co m p an y o r at l a r g e , the m o b ility o f p e rm a n e n tly d is p la c e d 

w o r k e r s , g e o g r a p h ic m o v e m e n t, the m o b ility am o n g w o r k e r s who do not s ta y 

w ith any e m p lo y e r lon g enough to a c c u m u la te s ig n ific a n t p e n sio n r ig h ts — th e se 

m a n p o w e r-m o b ility situ a tio n s a r e e ith e r n ot d ir e c t ly r e la te d to the e x iste n c e o f 

p e n sio n p la n s o r a r e b e lie v e d to b e o f s e c o n d a r y im p o r ta n c e . T he in flu en ce o f 

p e n sio n p la n s on the w illin g n e s s o f m id d le - a g e d w o r k e r s to ch an ge jo b s (e m ­

p lo y e r s ) is the k e y i s s u e .

M o b ility s tu d ie s in d ic a te th at v o lu n ta ry m o b ility am o n g m id d le - a g e d 

w o r k e r s is low in the e co n o m y a s a w hole and h as b e e n d e c lin in g in r e c e n t 

y e a r s . 1 E m p ir ic a l e v id e n c e a s to the r e a s o n s fo r th is r e la tiv e im m o b ility an d, 

m o re p a r t ic u la r l y , a s to the ro le o f p e n sio n p la n s , r e q u ir e s p ro b in g into w o rk e r 

m o tiv a tio n s and a ttitu d e s and an a tte m p t to s e p a r a t e the m u ltip le s tr a n d s th at 

bin d w o r k e r s to the co m p an y and c o m m u n ity , a d iffic u lt a r e a fo r r e s e a r c h . Y e t, 

w ith r e g a r d to p e n sio n p la n s , it m a y r e a s o n a b ly be a r g u e d th at th e ir im p a c t upon 

w o rk e r m o tiv a tio n s is s t il l d e v e lo p in g , at l e a s t fo r p ro d u c tio n and n o n s u p e r v is o r y 

e m p lo y e e s. A s p o in ted ou t in th is r e p o r t , the p r iv a t e p e n sio n m o v e m e n t in its 

p r e s e n t fo rm is r e la t iv e ly new . O nly ab o u t 1. 2 m illio n w o r k e r s w e re a c tu a lly 

r e c e iv in g b e n e fits o f any am o u n t in 1961 fro m the p r iv a te p e n sio n p la n s stu d ie d ; 

p o s s ib le h a lf o f th is n u m b e r w e re r e c e iv in g b e n e fits 5 y e a r s e a r l i e r . W ith so 

few fe llo w w o r k e r s , n e ig h b o r s , o r r e la t iv e s r e c e iv in g b e n e fits of an y s u b s ta n tia l 

am o u n t, it is q u e stio n a b le w h eth er the p r o s p e c t s o f p r iv a t e p e n sio n s h av e y et 

su n k into the c o n s c io u s n e s s o f A m e r ic a n w o r k e r s a s a p r im a r y m o tiv a tin g in ­

flu e n c e . M o r e o v e r , m an y p e n sio n p la n s s t a r t e d w ith a l o w le v e l o f b e n e fit s ; a s 

b e n e fit le v e ls r i s e , a s th ey h av e in r e c e n t y e a r s and p r o m is e to do in the fu tu r e , 

and a s p r o te c tiv e d e v ic e s b e c o m e m o r e p r e v a le n t, the p r iv a t e p e n sio n b e c o m e s 

m o r e o f a r e a lit y and a g o a l. F in a lly , a s th is stu d y sh o w s, p r iv a t e p la n s tend 

to be c o n c e n tra te d in c e r ta in in d u s t r ie s ; v a r y g r e a t ly in th e ir p r o v is io n s ; an d , in 

to ta l, s t i l l c o v e r o n ly a m in o r ity o f A m e r ic a n w o r k e r s .

1 See "Job Mobility in 1961, " Monthly Labor Review, August 1963, pp. 897-906.

1

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2

J u s t a s it is c o m m o n ly b e lie v e d th a t p e n sio n p la n s in h ib it m o b ility , it 

is b e lie v e d th a t v e s t in g , e a r l y r e tir e m e n t, an d p e n sio n c r e d it p o r t a b ilit y lo o s e n 

the t i e s o f the w o r k e r to the p e n sio n p la n w ith o u t s a c r i f ic in g h is e q u ity an d th u s 

en h an ce m o b ili t y .2 T h e re is a te n d e n c y , h o w e v e r, to o v e r lo o k the r e s t r i c t i v e 

o r lim itin g f e a t u r e s o f th e se p r o v is io n s , a s th ey a c tu a lly e x i s t , an d the s e p a r a t e , 

if l e s s e r , t i e s th e se p r o v is io n s c r e a t e in the c o u r s e o f a w o r k e r ^ c a r e e r . A lth ough the p r iv a t e p e n sio n s y s t e m can n o t e m u la te the u n iv e r s a l c o v e r a g e and 

p o r t a b ility o f the s o c i a l s e c u r it y s y s t e m , th o se who a r e c o n c e r n e d w ith the m o ­

b ilit y o f A m e r ic a n w o r k e r s w ill co n tin u e to a s s e s s the e ffe c ts o f the p r iv a t e 

s y s t e m a g a in s t th o se o f s o c i a l s e c u r it y in th is r e g a r d .

P r iv a t e p e n sio n p la n s a r e b u t one o f a n u m b e r o f o r g a n iz e d an d t r a d i ­

tio n a l g ro u p a r r a n g e m e n ts d e sig n e d and d e v e lo p e d o v e r tim e in a n sw e r to the 

q u e st fo r s e c u r it y . T he e c o n o m ic c lim a te in w h ich th e ir g r e a t e s t g ro w th o c ­

c u r r e d , an d in w h ich th ey a s s u m e d th e ir p r e s e n t s h a p e , i s in the p r o c e s s o f 

c h a n g e . If r a p id te c h n o lo g ic a l ch an ge w ill r e q u ir e m o r e fr e q u e n t jo b c h a n g e s, 

e v e n am o n g m a t u r e , lo n g - s e r v ic e w o r k e r s , a s s<jm e e x p e r t s p r o p h e sy , and if a 

d e s i r e d r a te o f e c o n o m ic gro w th can n o t b e s u s ta in e d b y the p r e s e n t r a te o f w o r k e r 

m o b ility , a ll su c h s e c u r it y a r r a n g e m e n ts w ill n e e d r e e x a m in a tio n . T he M an ­

p o w e r D e v e lo p m e n t and T ra in in g A c t s u g g e s t s th at th is p r o c e s s o f e v a lu a tio n c a n ­

not b e g in too so o n .

T he p u r p o se o f th is stu d y is to d e s c r ib e the p r iv a t e p e n sio n s t r u c t u r e 

in it s e n tir e ty , fo c u sin g on th o se a s p e c t s w h ich h av e an e s p e c ia l ly s ig n ific a n t 

im p a c t on the c a p a c it y o f the s t r u c t u r e to im p e d e o r en h an ce m o b ility . 3 T he 

stu d y d o e s n ot a tte m p t d ir e c t ly to m e a s u r e the e ffe c t s o f p r iv a t e p e n sio n p la n s 

on la b o r m o b ility . It m u s t b e e m p h a siz e d th at th is stu d y , in fo c u sin g on the 

m o b ility an d m an p o w e r im p lic a tio n s o f p e n sio n p la n s , e x c lu d e s e x a m in a tio n o f 

e q u ity r ig h ts o f w o r k e r s , c o s t im p lic a tio n s fo r e m p lo y e r s , ta x im p lic a tio n s fo r 

th e c o u n try , and m an y o th e r v a lu e s an d c o n sid e r a tio n s in h e re n t in the p r iv a t e 

p e n sio n s t r u c t u r e a s it now e x i s t s . A ll th e se f a c t o r s m u s t a ls o be ta k e n into 

a c c o u n t in a s s e s s i n g the d e s ir a b ilit y fo r ch a n g e .

S c o p e and M eth od

A p r iv a t e p e n sio n p la n , a s d e fin e d fo r th is stu d y , is a p la n e s t a b lis h e d 

b y an e m p lo y e r , un ion , o r b o th ,th a t p r o v id e s a c a s h in c o m e fo r life to q u a lifie d 

w o r k e r s upon r e tir e m e n t. T h is d e fin itio n in c lu d e s p la n s in tro d u c e d u n ila t e r a lly 

b y e m p lo y e r s , jo in tly b y e m p lo y e r s and e m p lo y e e s , o r u n ila t e r a lly b y o r g a n iz e d 

e m p lo y e e g r o u p s . P r o f it - s h a r in g , s to c k b o n u s, an d s a v in g s p la n s p a y in g o ff a t 

r e tir e m e n t a r e e x c lu d e d 4 b e c a u s e m o s t do n o t p r o v id e life tim e r e tir e m e n t b e n e ­

f it s and the am o u n t o f b e n e fits p a y a b le b y th o se th at do a r e n ot d e fin ite ly a s c e r ­

ta in a b le in a d v a n c e . P la n s o f g o v e rn m e n t and n o n p ro fit o r g a n iz a tio n s (o th er th an 

u n io n s) a r e a ls o e x c lu d e d fr o m the sc o p e o f th is stu d y , a s a r e v e r y s m a l l (fe w er 

th an 26 w o r k e r s ) p r iv a t e p la n s .

2 For definition of vesting, early retirement, and pension credit portability, see pp. 11, 24, and 36, respectively.

3 This study does not exhaust the manpower and mobility implications of private pension plans. Additional 

studies now in progress will cover such aspects as disability retirement, benefit levels, participation requirements, 

and normal retirement provisions. Some discussion of this issue along with other manpower aspects was included in 

Private Pension Plans and Manpower Policy, BLS Bulletin 1359, May 1963.

4 Chiefly because of these exclusions, the number 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. See appendix 

for details.

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3

T he c h ie f so u r c e of d a ta fo r th is stu d y w e re the r e p o r ts and d o c u m en ts 

file d w ith the U .S . D e p a rtm e n t o f L a b o r * s O ffice o f L a b o r - M a n a g e m e n t and W elfa r e - P e n s io n R e p o r t s , p u r su a n t to the W e lfa re and P e n sio n P la n s D is c lo s u r e A ct, 

b y p r iv a te p e n sio n p la n s c o v e rin g m o re than 25 w o r k e r s . B y the end o f I9 6 0 , 

fin a n c ia l r e p o r t s (D -2 f o r m s ) h ad b e e n file d fo r o v e r 25, 000 p la n s p ro v id in g r e ­

tir e m e n t b e n e f it s . The p la n d e s c r ip tio n s (D - l fo r m s ) file d fo r th e se p la n s w e re 

the b a s i s fo r th is stu d y .

T o re d u c e th e se 25, 000 r e p o r t s 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 i s , a s t r a t if ie d ran d o m s a m p le w as s e le c t e d b a s e d on in d u str y and s iz e of p lan 

(n u m b er o f w o r k e r s c o v e r e d ). The sa m p le w as d e sig n e d to p e r m it p r e s e n ta tio n 

o f d a ta b y in d u stry d iv isio n , and in so m e c a s e s , b y m a jo r in d u stry g ro u p . W ithin 

e a c h in d u s t r y - s iz e g ro u p in g , the sa m p le w a s s e le c t e d to y ie ld the m o s t r e lia b le 

r e s u l t s . T h is w as done b y in clu d in g in the sa m p le a h ig h e r p r o p o r tio n o f p la n s 

c o v e rin g la r g e n u m b e rs o f w o r k e r s . D a ta fo r e a c h s a m p le r e p o r t w e re a p p r o ­

p r ia t e ly w eigh ted in a c c o r d a n c e w ith it s p r o b a b ility o f s e le c tio n so th at the ta b le s 

show e s t im a t e s fo r a ll p r iv a t e p e n sio n p la n s w ith fin a n c ia l r e p o r t s on file fo r 

I960. 5

T he p e n sio n p la n s stu d ie d w e re lim ite d to th o se su b m ittin g fin a n c ia l r e ­

p o r t s fo r I9 6 0 . C o v e r a g e d a ta , h o w e v e r, w e re o b ta in e d fo r th e se p la n s fro m 

the 1961 r e p o r t s . T he p la n p r o v is io n s w e re a n a ly z e d in the w in te r o f 1962—6 3, 

and w e re c o n sid e r e d c u r r e n t at th at tim e . F o r fu r th e r d e ta ils o f sc o p e and 

m eth o d o f stu d y , se e a p p en d ix .

® Of the 16,031 private pension plans studied covering 15.8 million active workers, 213 plans with 166,600 

active workers were in the process of determining their plan provisions. For these plans, little information other 

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

analysis of pension plan provisions, including vesting and early retirement provisions, and benefits provided under 

certain assumed conditions, relate only to 15,818 plans.

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C h a p te r II. S e le c te d C h a r a c t e r is t ic s o f P r iv a t e P e n sio n P la n s

A bout 16, 000 p r iv a te p e n sio n p la n s , a s d e fin e d by th is stu d y , c o v e r in g 

m o r e th an 1 5 .6 m illio n a c tiv e w o r k e r s and p ay in g b e n e fits to ab o u t 1 .2 m illio n 

r e t ir e d w o r k e r s , file d fin a n c ia l r e p o r t s w ith th e U .S . D e p a rtm e n t of L a b o r fo r 

I 9 6 0 .6 A bout tw o - th ir d s of th e p la n s fo r w h ich th e d a te s o f e sta b lish m e n t w e re 

know n, w ith h a lf o f th e c o v e r a g e , w e re e s t a b lis h e d sin c e 1949 (ta b le 1 and c h a r t 1).

A lth o u gh p e n sio n p la n s in th e U n ited S ta te s d a te b a c k to th e la te 19th 

c e n tu ry , on ly in r e c e n t y e a r s h av e p r iv a t e p e n sio n p la n s b e c o m e a s ig n ific a n t 

fo r m o f e m p lo y e e c o m p e n sa tio n an d th u s a s ig n ific a n t f a c t o r in th e la b o r m a r k e t . 

O f th e p r iv a t e p la n s in e x ist e n c e in I9 6 0 , on ly 2 p e rc e n t w e r e e s t a b lis h e d in 

th e f i r s t 4 d e c a d e s o f th is c e n tu ry . S in c e m an y of th e se e a r ly p la n s , su c h a s 

th e te lep h o n e c o m p an y p la n s , a r e now l a r g e p la n s , th ey now c o v e r ab o u t 15 p e r ­

cen t o f th e w o r k e r s . T h e s e e a r ly p la n s w e re not lim ite d to s a l a r y o r p ro d u c tio n 

w o r k e r s ; r a t h e r , th ey u s u a lly c o v e r e d a ll e m p l o y e e s .7

S p u r r e d at f i r s t by fa v o r a b le F e d e r a l t a x la w s , and l a t e r by w a r tim e 

w ag e s t a b iliz a tio n m e a s u r e s , s u b s ta n tia l gro w th in p r iv a t e p la n s o c c u r r e d b etw een 

1940 an d 1949— abo u t 30 p e rc e n t o f th e p la n s w ith ab o u t th e s a m e p r o p o r tio n o f 

w o r k e r s w e re e s t a b lis h e d in th at d e c a d e . D u rin g th is p e r io d , e st a b lish m e n t o f 

p la n s s o le ly fo r b lu e - c o lla r w o r k e r s b e c a m e m o r e p r e v a le n t.

A s p u r t in th e in tro d u c tio n of p la n s to o k p la c e a ft e r 1949. T h is gro w th 

w a s in l a r g e p a r t a ttrib u ta b le to : (1) U nion p r e s s u r e s fo r s e c u r it y b e n e fits a f t e r

th e fa v o r a b le d e c is io n by th e S u p re m e C o u rt in 1949 su p p o rtin g the N a tio n a l L a b o r 

R e la tio n s B o a r d ’ s d e te r m in a tio n th at p e n sio n s w e re a p r o p e r i s s u e fo r c o lle c tiv e 

b a r g a in in g ; (2) th e S te e l In d u stry F a c t - F in d in g B o a r d ’ s r e c o m m e n d a tio n s in 1949 

th at th e in d u str y h ad a s o c i a l o b lig a tio n to p r o v id e w o r k e r s w ith p e n s io n s; (3) w ag e 

s ta b iliz a t io n p o lic ie s d u rin g th e K o r e a n c o n flic t p e r io d ; an d (4) th e union d r iv e , 

m a in ly sin c e 1954, fo r n e g o tia te d m u ltie m p lo y e r p e n sio n p la n s , p a r t ic u la r ly in 

th e c o n stru c tio n t r a d e s an d tr u c k in g . F a v o r a b le t a x tr e a tm e n t co n tin u ed th r o u g h ­

out th e se y e a r s . B e c a u s e m o s t p la n s e s t a b lis h e d iii th is p e r io d w e re n e g o tia te d 

by u n io n s r e p r e s e n tin g p ro d u c tio n w o r k e r s , a h ig h e r p r o p o r tio n th an in e a r l i e r 

p e r io d s c o v e r e d on ly b lu e - c o lla r w o r k e r s . O v e r t h r e e - fo u r t h s o f th e p la n s e s ­

ta b lis h e d in th is p e r io d w e re m en tio n ed in c o lle c tiv e b a r g a in in g a g r e e m e n t s .8 

A bout h a lf o f th e w o r k e r s b e lo n g ed to m u ltie m p lo y e r p la n s c o v e r in g on ly p r o d u c ­

tio n w o r k e r s .

8 See appendix for a recon ciliation of these data with data published by the So c ial Security A dm inistration.

7 See Murray W. Latim er, Industrial Pension System s, Industrial R elations Counselors, I n c ., New York, 1932, p. 63.

8 Follow ing the precise language of the act, the D - l form asks this question: "Is the plan m entioned in a c o llectiv e bargaining agreem en t?" A "n o" answer can be presum ed to be conclusive, that is, no part of the plan or its 

coverage is subject to co llectiv e ’bargaining. A "y e s" answer would be indicated if part or a ll of the em ployees co vered by the plan were in the bargaining unit covered by the agreem ent, and the agreem ent "m ention ed" the plan. 

Although a doubt arises as to whether "m entioned" in the agreem ent is tantam ount to bargaining on the plan, it can 

reasonably be presum ed that "m ention ed" in the agreem ent brings the plan within the scope of co llectiv e bargaining, 

at least with regard to continuing or changing the plan.

In this study, the co llectiv e bargaining coverage figures for sin gle-em ployer plans covering a ll em ployees of the 

com pany are overstated because they often include em ployees not covered by a co llectiv e bargaining agreem ent, while 

the plan itself was subject to bargaining. Plans in the b asic steel industry, for exam p le, were negotiated by the 

Steelw orkers ’ union for m em bers of its bargaining units, but the sam e plans often cover a ll com pany em ployees, including professional, execu tive, sales, and other w h ite-collar em ployees not represented by the union. On the other 

hand, coverage under m ultiem ployer plans w ill' more precisely account for a ll workers in bargaining units.

4

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is. lc

Chart 1. GROWTH IN NUMBER AND COVERAGE OF PRIVATE PENSION PLANS *

Thousands of Plans

(cumulative)

M illions of Active W orkers Covered

(cumulative)

Chart excludes 614 plans, covering 1.4 million workers, for which information was not available.

Active workers in 1961. see text.

16

15

14

13

12

1 I 

10

9 

8

7 

6 

5 

4 

3

2

I

0

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S iz e of P la n s

T he p r iv a t e p e n sio n p la n s a n a ly z e d ra n g e d in s iz e fr o m 26 a c tiv e and 

r e t ir e d w o r k e r s , the s m a l le s t r e q u ir e d to file r e p o r t s , to a p p r o x im a te ly 370, 000 

a c tiv e w o r k e r s . T h e n u m b e r of p e r s o n s c u r r e n tly d raw in g b e n e fits fr o m th e 

p la n s ra n g e d fr o m none to o v e r 1 0 ,0 0 0 p e r s o n s and to ta le d about 1 .2 m illio n .

A lth ough m o s t p r iv a te p e n sio n p la n s a r e s m a l l - s c a l e u n d e rta k in g s, o v e r 

60 p e rc e n t of th e w o r k e r s w e re c o v e r e d by p la n s w ith 5, 000 o r m o r e w o r k e r s 

(ta b le 2). T h e 15 l a r g e s t p la n s — 7 m u ltie m p lo y e r , 7 s in g le e m p lo y e r, and 1 u n io n - 

o p e r a te d — e a c h w ith o v e r 1 0 0 ,0 0 0 a c tiv e W o rk e rs, a lto g e th e r h ad o v e r a six th o f 

the w o rk e r c o v e r a g e . N e a r ly 1 4 ,0 0 0 p la n s w ith fe w e r th an 1 ,0 0 0 m e m b e r s a c ­

co u n ted fo r a lm o s t 90 p e rc e n t of th e p la n s , b u t\o n ly 15 p e rc e n t of w o r k e r co v-. 

e r a g e . O v e r 60 p e rc e n t o f the p la n s had fe w e r th ah 200 a c tiv e m e m b e r s and l e s s 

th an 5 p e rc e n t of the w o r k e r s .

In d u stry and T y p e of E m p lo y e r Unit

P r iv a t e p e n sio n p la n s r e a c h w o r k e r s in a ll se g m e n ts o f the eco n o m y , 

but th e exten t of c o v e r a g e v a r i e s c o n sid e r a b ly fr o m in d u stry to in d u str y . A bout 

60 p e rc e n t o f th e p la n s and 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 ie s , w h ile 

a p p r o x im a te ly 40 p e rc e n t o f the p la n s and w o r k e r s w e re in n o n m a n u fa c tu rin g 

(ta b le 3). T h is r a tio of 3 to 2 c o n t r a s t s w ith a r a tio of 3 to 5 in to ta l e m p lo y ­

m en t a s b etw een m a n u fa c tu rin g and p r iv a te n o n fa rm n o n m a n u fa c tu rin g .

C o n stru c tio n , tr a n s p o r ta tio n , and c o m m u n ic a tio n s and p u b lic u t ilitie s a c ­

co u n ted , in a ll, fo r o v e r 60 p e rc e n t of the w o r k e r c o v e r a g e of p e n sio n p la n s in 

n o n m a n u fa c tu rin g d iv is io n s . In m in in g, c o n stru c tio n , w h o le sa le tr a d e , and m o to r 

tr a n s p o r ta tio n — c h a r a c t e r iz e d by l a r g e n u m b e rs of s m a ll e m p lo y e r s — m o st c o v ­

e r e d w o r k e r s b e lo n g ed to m u ltie m p lo y e r p la n s , w h ile in c o m m u n ic a tio n s and 

p u b lic u t ilit ie s — w h ere l a r g e c o m p a n ie s a r e co m m o n — th ey b e lo n g e d to s in g l e - 

e m p lo y e r p la n s (ta b le 4).

In m a n u fa c tu rin g in d u s t r ie s , p e n sio n p la n s in m e ta lw o rk in g , c h e m ic a ls , 

r u b b e r, and p e tr o le u m in d u s t r ie s m ad e up 70 p e rc e n t of w o r k e r c o v e r a g e . M e t a lw o rk in g in d u s t r ie s p e n sio n p la n s a c c o u n te d fo r o v e r a th ird of a ll w o r k e r s in 

p r iv a te p e n sio n p la n s and a lm o s t 60 p e rc e n t of m a n u fa c tu rin g in d u stry c o v e r a g e . 

W hile only about 1 out of 8 m a n u fa c tu rin g w o r k e r s w e re c o v e r e d by m u ltie m p lo y e r 

p la n s, th e re w as a h eav y c o n c e n tra tio n in the a p p a r e l, p rin tin g and p u b lish in g , 

and fo od ( e s p e c ia lly b re w in g and d a ir y p ro d u c ts) in d u s t r ie s . W ith th e se e x c e p tio n s, 

sin g le - e m p lo y e r p la n s d o m in a te d m a n u fa c tu rin g in d u s t r ie s .

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 in in d u s t r ie s th at a r e 

m a r k e d by m u ltie m p lo y e r b a r g a in in g p a tt e r n s . Su ch p la n s r e p r e s e n t ro u gh ly 

t h r e e - fift h s o f th e c o v e r a g e of a ll m u ltie m p lo y e r b a r g a in in g a g r e e m e n ts (e x c lu d in g 

r a i l r o a d s ) . 9 S in g le e m p lo y e r p la n s d o m in ate in in d u s t r ie s in w hich th e b a r g a in in g 

r e la tio n sh ip i s on an e sta b lish m e n t o r co m p an y b a s i s , a s w e ll a s in in d u s t r ie s 

w h ere c o lle c tiv e b a r g a in in g is u n co m m o n .

9 R ailroad workers are covered by the R ailroad R etirem ent A ct. Many firm s in the railroad industry, however, 

have single em ployer plans which usually provide benefits geared to earnings in excess of those recognized under the 

act. See Supplem entary Pension Plans in The R ailroad Industry, 1961, a digest of representative plans prepared for 

the Subcom m ittee on R ailroad R etirem ent of the C om m ittee on Labor and Public W elfare, United States Senate.

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C o lle c tiv e B a r g a in in g

R e p o r ts fo r slig h tly m o r e th an 1 out of 3 p la n s c o v e rin g abo u t Z out o f 

3 w o r k e r s in d ic a te d th at the p la n w as m en tio n ed in a c o lle c tiv e b a r g a in in g a g r e e ­

m en t (ta b le 5). T h e la r g e n u m b e r of w o r k e r s b e lo n g in g to p la n s m en tio n e d in 

c o lle c tiv e b a r g a in in g a g r e e m e n ts r e s u lt s to so m e d e g r e e fr o m the in c lu sio n of 

l a r g e m u ltie m p lo y e r p la n s , n e a r ly a ll of w h ich a r e su b je c t to c o lle c tiv e b a r ­

g ain in g , 10 a s w ell a s th e l a r g e r s in g le - e m p lo y e r p la n s , a ll but a few of w hich a r e 

su b je c t to c o lle c tiv e b a r g a in in g , at l e a s t in p a r t, and w hich o ften in clu d e e m ­

p lo y e e s not in b a r g a in in g u n its.

T h e exten t of union p a r tic ip a tio n o r in flu e n ce v a r ie d c o n sid e r a b ly by in ­

d u s tr y . W o rk er c o v e r a g e in p la n s m en tio n ed in c o lle c tiv e b a rg a in in g ra n g e d fr o m 

10 p e rc e n t of c o v e r e d w o r k e r s in fin a n c e to 85 p e rc e n t o f th e c o v e r e d w o r k e r s in 

the c o n stru c tio n in d u str y . S ev en ty p e rc e n t o f the c o v e r e d w o r k e r s in m a n u fa c ­

tu rin g w e re in clu d e d in p la n s m en tio n ed in c o lle c tiv e b a r g a in in g a g r e e m e n t s .

N o n m an u fa c tu rin g in d u s t r ie s su c h a s s e r v i c e s , tr a d e , tr a n s p o r ta tio n , and 

m in in g , w ith a la r g e n u m b e r of w o r k e r s in m u lti e m p lo y e r p la n s , had a h igh p r o ­

p o rtio n of w o r k e r s in c o lle c tiv e ly b a r g a in e d p la n s . In c o m m u n ic a tio n s and p u b lic 

u t ilit ie s , w h ere the te lep h o n e co m p an y p la n s p re d o m in a te , o v e r 80 p e rc e n t of th e 

c o v e r e d w o r k e r s w e re in p la n s m en tio n ed in c o lle c tiv e b a r g a in in g a g r e e m e n t s .

F in a n c in g

E m p lo y e r s fin a n c e d th e e n tire c o st of r e tir e m e n t b e n e fits (n o n c o n trib u ­

to ry ) of abo u t 3 out o f 4 p la n s c o v e rin g about the s a m e p ro p o rtio n o f w o r k e r s 

(tab le 6). A fo u rth of the p la n s w ith about a fo u rth of the w o r k e r s w e re fin a n c e d 

by jo in t e m p lo y e r - e m p lo y e e c o n trib u tio n s (c o n trib u to ry ), w h ile in a s m a ll n u m b er 

of union s p o n so r e d and o p e r a te d p la n s (1 1 0 ), w ith about a q u a r te r m illio n w o r k e r s , 

the w o r k e r s alo n e fin a n c e d the p la n s . M o st m u ltie m p lo y e r p la n s w e re n o n co n ­

tr ib u to r y , w h ile abo u t 30 p e rc e n t of the s in g le - e m p lo y e r p la n s w ith about the 

sa m e p ro p o rtio n o f th e w o r k e r s r e q u ir e d th e e m p lo y e e s to c o n trib u te . M o r e o v e r , 

a h ig h e r p ro p o rtio n of n o n b a rg a in e d p la n s th an b a r g a in e d p la n s w e re c o n trib u to ry .

T he in d u s t r ia l p a tte r n of fin a n c in g r e fle c t e d the p a tte r n o f b a r g a in in g ; 

in d u s t r ie s w ith m o s tly n e g o tia te d p la n s h ad m o stly n o n c o n trib u to ry p la n s and v ic e 

v e r s a . N o n c o n trib u to ry p la n s w e re , th e r e f o r e , c o m m o n in su c h m a n u fa c tu rin g 

in d u s t r ie s a s a p p a r e l, and p rin tin g and p u b lish in g , w ith a h eav y c o n c e n tra tio n 

o f n e g o tia te d m u ltie m p lo y e r p la n s , and in the h igh ly o r g a n iz e d m e ta lw o rk in g 

in d u s t r ie s . On the o th er hand, in d u s t r ie s in n o n m a n u fa c tu rin g , su c h a s fin a n c e , 

and in m a n u fa c tu rin g , su c h a s c h e m ic a ls , p e tr o le u m , and t e x t i le s , h ad a s ig n i f ­

ic an t n u m b er of jo in tly fin a n c e d a s w ell a s s in g le - e m p lo y e r n o n b a rg a in e d p la n s .

S u p p le m e n ta l P e n sio n P l a n s . In clu d ed in th e jo in tly fin a n c e d p e n sio n 

p la n s w as a g ro u p of 489 p la n s c o v e rin g a lm o s t 600, 000 w o r k e r s in w h ich th e 

e m p lo y e e m igh t e le c t to m ak e c o n trib u tio n s to b u ild up l a r g e r b e n e fits th an a 

n o n c o n trib u to ry p la n alo n e o ffe r e d . U n der th e se p la n s , the w o rk e r w as g iv e n th e 

o ptio n to m ak e c o n trib u tio n s, u s u a lly b a s e d on e a r n in g s in e x c e s s of a s p e c ifie d 

am o u n t, w ith b e n e fits u s u a lly d e te rm in e d on the s a m e b a s i s . 11

10 Ten percent of the m ultiem ployer plans were not under co llectiv e bargaining and none of those not under c o llectiv e bargaining had more than 5 ,0 0 0 workers.

11 See appendix for method of allocatin g coverage between contributory and noncontributory plans.

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G e o g ra p h ic A r e a

In 30 p e rc e n t of the p la n s c o v e r in g 70 p e rc e n t of the w o r k e r s , w o r k e r s 

c o v e r e d by th e p la n s w e re lo c a te d in m o r e th an one S ta te (ta b le 7). T h is g ro u p 

of in t e r s t a t e p la n s w as d o m in a te d by p la n s o f l a r g e s in g le - e m p lo y e r f i r m s su c h 

a s the G e n e ra l M o to rs C o rp . , G e n e ra l E le c t r ic C o ., F o r d M o to r C o ., e t c ., and 

n a tio n al an d r e g io n a l m u ltie m p lo y e r p la n s su ch a s the In te rn a tio n a l B ro th e rh o o d of 

E l e c t r ic a l W o rk e rs P e n sio n B e n e fit T r u s t F u n d , an d the W e ste rn C o n fe re n c e o f 

T e a m s t e r s P e n sio n F u n d . T he 15 l a r g e s t p e n sio n p la n s , a ll in t e r s t a t e p la n s, a c ­

co u n ted fo r o v e r a fo u rth of in t e r s ta te c o v e r a g e . On the o th er hand, in th e c o n ­

s tr u c tio n in d u stry , w h ere s m a ll m u ltie m p lo y e r p la n s p re d o m in a te , o v e r h a lf the 

w o rk e r c o v e r a g e w a s in th e in t r a s t a t e p la n s . In w h o le sa le and r e t a il tr a d e , ab o u t 

th r e e - fo u r t h s o f the p la n s w e re lim ite d to w o r k e r s in a sin g le S ta te .

T y p e of W o rk er C o v e re d

P la n s lim ite d to s a l a r i e d w o r k e r s and e x e c u tiv e g r o u p s w e re am o n g th e 

f i r s t to be c o m m o n ly e s t a b lis h e d . Of th e p r iv a te p la n s stu d ie d , a fo u rth c o v e r in g 

10 p e rc e n t o f the w o r k e r s w e re r e s t r i c t e d to th e se g r o u p s (ta b le 8). A lm o st a 

th ir d of th e p la n s , w ith o v e r 45 p e rc e n t of the c o v e r a g e , w e re p la n s fo r b lu e - 

c o lla r w o r k e r s , w h ile th e r e m a in in g p la n s , c o v e r in g 40 p e rc e n t of the w o r k e r s , 

in clu d e d both p ro d u c tio n and s a l a r i e d w o r k e r s . M any of th e se a ll- e m p lo y e e p la n s 

w e re o r ig in a lly lim ite d to w h ite - c o lla r g r o u p s and l a t e r w e r e b ro a d e n e d to in ­

clu d e p ro d u c tio n w o r k e r s .

T he p la n s fo r s a l a r i e d w o r k e r s m o re fre q u e n tly r e q u ir e d e m p lo y e e c o n ­

tr ib u tio n s th an th e p la n s c o v e r in g p ro d u c tio n w o r k e r s on ly ( s a l a r i e d p la n s c o v e r in g 

a th ir d of the w o r k e r s a s c o m p a r e d w ith p ro d u c tio n —w o r k e r p la n s c o v e r in g l e s s 

th an a ten th ). In p la n s c o v e r in g both w o r k e r g r o u p s, ro u gh ly a th ir d of th e p la n s 

w ith about th e s a m e p ro p o rtio n of w o r k e r s w e re c o n trib u to ry , a p p a r e n tly r e fle c t in g 

th e in flu e n ce of in c lu sio n of s a l a r i e d w o r k e r s w ithin the p la n .

O w ing to th e s m a ll n u m b e r of u n io n ized s a l a r i e d e m p lo y e e s, few of the 

p la n s lim ite d to s a l a r i e d e m p lo y e e s w e re m en tio n e d in c o lle c tiv e b a r g a in in g 

a g r e e m e n ts . On th e o th er hand, 90 p e rc e n t of th e w o r k e r s in p la n s lim ite d to 

p ro d u c tio n w o r k e r s w e re in p la n s n oted in c o lle c tiv e b a r g a in in g a g r e e m e n t s . 

F u r th e r , in p la n s w ith both w h ite - c o lla r and b lu e - c o lla r w o r k e r s , tw o - th ir d s of 

th e w o r k e r s w e re in p la n s m en tio n ed in c o lle c tiv e b a r g a in in g a g r e e m e n t s .12

T h e ty p e o f w o rk e r c o v e r e d v a r ie d w id e ly by in d u str y , 2 out o f 5 w o r k ­

e r s in m a n u fa c tu rin g and n o n m a n u fa c tu rin g w e re in p la n s c o v e r in g a ll e m p lo y e e s. 

In m a n u fa c tu rin g , o v e r 40 p e rc e n t of the w o r k e r s w e re in p la n s c o v e r in g on ly 

p ro d u c tio n w o r k e r s and l e s s th an 20 p e rc e n t w e r e in p la n s lim ite d to s a l a r i e d 

w o r k e r s . H alf of the w o r k e r s in n o n m a n u fa c tu rin g w e re in p ro d u c tio n w o r k e r 

p la n s , acc o u n te d fo r in la r g e p a r t by la r g e m u ltie m p lo y e r p la n s in the c o n s t r u c ­

tio n , tr a n s p o r ta tio n , and m in in g in d u s t r ie s .

A d m in istr a tio n

T he a d m in is tr a tio n o f b e n e fits, i. e . , th e fin a l d e te r m in a tio n o f e l i g i ­

b ility , h an d lin g of a p p e a ls , and fin a l d e c is io n , e tc . , w a s th e s o le r e s p o n s ib ilit y 

o f th e e m p lo y e r in o v e r 4 out of 5 p la n s c o v e r in g 3 out o f 5 w o r k e r s (ta b le 9). 

B ip a r t ite o r t r i p a r t it e b o a r d s h ad fin a l a u th o rity in abou t an eigh th of th e p la n s

12 These figures overstate co llectiv e bargaining, as explained in footnote 8.

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with over a third of the workers. Over half of these boards served in multiemployer situations. The grievance procedure of the collective bargaining agreement could be utilized in about 1, 000 plans— mostly those negotiated by the

Steelworkers— covering roughly a half million workers. In a small number of

plans— union-operated plans— the union administered benefit determinations.

Implications for Mobility

The implications for labor mobility and manpower policy of the characteristics of private pension plans highlighted above are examined in the following

chapters in relation to specific practices. Some general observations are offered

at this point.

The most striking feature of the private pension structure, in assessing

its influence on mobility, is its youth. As has been seen, the period of greatest

growth began only 15 years ago. The influence this development has had on

labor market practices, manpower policies, and worker attitudes is difficult to

assess partly because the effects have not yet fully evolved; many are still in

the developing stage. Furthermore, most pension plans started with much more

limited benefits than they provide today. Typically, as private plans mature, they

grant larger benefits and a greater range of benefits to more workers and, thereby,

become increasingly influential. Provisions protecting accrued pension credits,

particularly vesting and portability, are relatively new and are undergoing revision in the light of experience.

As informal and formal communication regarding pension plans spreads

and workers’ awareness of the plans and their provisions increases, their impact

on employee attitudes and mobility decisions will undoubtedly become stronger.

Each year, more and more workers will be retiring with a private pension; their

firsthand knowledge of the benefits to be derived from private pensions will spread

to still active workers. Thus, workers may less often view pensions as just

another segment of the security package based on service and more often recognize them as unique benefits. This evolution will probably affect production

and nonsupervisory employees— who comprise the greater part of private plan

coverage— more than executives and salaried employees. Studies of worker attitudes toward pensions should take account of these time and experience factors.

Because of variations in the impact of collective bargaining, and of other

forces affecting the growth and development of private plans, the coverage of

private pensions has become concentrated in ’’pockets of influence” in certain

industries and occupations. In addition, as will be discussed later, concentrations of plan provisions with particular mobility implications (vesting, early retirement, and portability) have also emerged. The high degree of private pension

coverage in most manufacturing industries is attributable, in large measure, to

union efforts. Whether it preceded or followed coverage for production workers

white-collar coverage is also high in manufacturing.

On the other hand, the relatively slow and selected spread of pension

plan coverage in the nonmanufacturing sector has limited its influence to workers

in certain industries. In some industries, such as public utilities and finance,

with a high proportion of professional and clerical workers, pension plans have

been in effect for a long time. However, in the expanding trade and service

industries, marked by many small employers and by high turnover both among

employees and employers, there is relatively little private pension coverage.

Much of the coverage that exists is attributable to a limited number of collectively

bargained multiemployer plans. Similarly, only in recent years has private

pension coverage been extended to significant groups of blue-collar workers in

transportation (excluding railroads) and construction through collectively bargained multiemployer plans.

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Concomitant with the unions’ influence in expanding private pension coverage through collective bargaining, the unions' attitudes have, to a large degree,

helped to shape the present structure of plan provisions. Essentially, unions

view the protective provisions of private plans— vesting, early retirement, and

portability— as equity devices to give their members an assurance of what is

rightfully earned rather than as manpower devices. Recently, however, union

attitudes appear to be changing under the impact of technological change and unemployment pressures. For example, some unions have expressed an interest

in using private plans to help meet unemployment problems by facilitating earlier

retirements.

Collectively bargained multiemployer plans, which account for nearly a

fifth of the current private pension coverage, have different manpower effects

than single-employer plans. Their most rapid, growth began somewhat later than

single-employer plans and has been limited mostly to industries marked by multiemployer collective bargaining relationships. One of their more important characteristics is that they have extended private pension coverage to many employers

who probably could not have provided such benefits on a single company basis.

Partly because of this, the characteristics and provisions of multiemployer plans

often differ sharply from those of single-employer plans. The unique character

of multiemployer plans is more fully examined in chapter V.

Some degree of flexibility and portability is also provided by multiestablishment firms and financially related companies which allow employees transferring within the corporate complex to transfer or retain their pension credits.

The Bell Telephone System, for example, permits unlimited geographic and occupational shifts within the system without loss of plan coverage. The occupational and geographic shifts permitted within other large corporations, such as

General Motors, General Electric, and U. S. Steel, are mobility assets, particularly to professional, salaried or executive groups. Even for production workers,

such intracorporate transfer possibilities may open a wider scope for readier

movement than small, localized multiemployer plans. Even in smaller firms,

vertical mobility within a firm is enhanced by the existence of all-employee

pension plans which continue pension protection to those who remain with the

firm regardless of the position to which they may be promoted or transferred.

Even if the firm has separate plans for blue-collar and white-collar workers, a

change in status is almost always acpompanied by the transfer of service credits

or at least retention of accrued benefits.

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Chapter III. Vesting

Vesting is defined as a guarantee to the worker of a right or equity in

a pension plan based on all or part of his accrued retirement benefits should his

employment terminate before he becomes eligible for retirement benefits. If his

rights are vested, the worker is entitled to a future retirement benefit when he

reaches retirement age, regardless of where he may be at the time. Through

vesting, a worker can build up retirement benefits from more than one employer.

Although the concept and use of vesting provisions in pension plans is

quite old, their incorporation into private pension plans has been limited until recent years, especially in noncontributory and collectively bargained pension plans.

For example, the Bureau’s study of 300 large collectively bargained plans in

1952 showed that only 25 percent of the plans had vesting (of which three-fourths

were contributory); in 1958, the Bureau found that almost 60 percent of a similar group of negotiated plans had vesting. 13 This rapid growth reflects mainly

the addition of vesting provisions to the noncontributory plans negotiated by the

Automobile Workers and Steelworkers. Since 1958, the trend toward adding a

vesting provision to existing plans has continued, especially in bargained plans.

The attitudes and values of employers and unions have shaped the development and nature of vesting provisions, including the rigidities and restrictions

built into them. From the employer’s viewpoint, the inherent contradiction between the concept of equity, flexibility, and mobility implied in vesting, on one

hand, and the traditional purpose of a retirement plan to attract and keep workers on the job until normal retirement, on the other, is resolved mainly by restricting vesting to workers who have attained a specified age and substantial

service. Unions concerned with workers' equities, and viewing pensions as deferred wages, see vesting as a desirable protection, particularly necessary in

single employer plans. In the formative years of negotiated plans, however,

vesting was largely set aside in favor of benefit levels, reasonable funding, benefits for workers near retirement, and financing solely by employers. In recent

years, liberal vesting has been high on the list of union demands.

Prevalence of Vesting

Vesting was provided by 2 out of 3 private pension plans covering 3 out

of 5 workers (table 10). Vesting was far more common in single employer plans

Type of employer unit

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

Single employer--------------

Multiemployer---------------

Total

Workers1 *

Plans (thousands)

15,818 15,621

14,890 11,742

928 3,878

With vesting

Workers 1

Plans (thousands)

10,634 9,307

10,340 8,393

294 914

Without vesting

Workers 1

Plans (thousands)

5,184 6,313

4, 550 3,349

634 2,964

1 Active workers in 1961.

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

I3 Pension Plans Under Collective Bargaining, BLS Bulletin 1147 (1953), and Pension Plans Under Collective

Bargaining, Part I. Vesting Provisions and Requirements for Early Retirement; Part II. Involuntary Retirement Provisions, Late 1958, BLS Bulletin 1259 (1959).

II

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than in multiemployer plans, which provide portability of pension credits among

member employers. (See chapter V. ) About 7 out of 10 single employer plans

covering about the same proportion of workers had a vesting provision, as compared to about 1 out of 3 multiemployer plans with about 1 out of 4 workers.

Almost 80 percent of the workers covered by contributory plans had

vesting protection, as against about 55 percent of the workers in noncontributory

plans.

Total With vesting Without vesting

Workers1 Workers1 Workers1

Method of financing Plans (thousands) Plans (thousands) Plans (thousands)

All plans studied---------------- — 15,818 15,621 10,634 9,307 5,184 6,313

Noncontributory---------------- - 11,526 11,667 7,360 6,216 4,166 5, 450

Contributory--------------------- -- 4,292 3,954 3,274 3,091 1,018 863

1 Active workers in 1961.

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

This disparity results from the heavy concentration in the latter group of noncontributory multiemployer plans without vesting (table 11). If limited to single employer plans, 9 out of 10 workers in contributory plans had vesting as compared

to about 2 out of 3 in noncontributory plans.

Vesting in contributory pension plans is usually conditional, i. e. , the

worker must leave his contributions in the plan in order to retain a right to the

employer's portion. If the worker terminates before vesting, or if no vesting

is provided, he is invariably entitled at least to the return of his own contributions, usually with interest. Many plans give these workers the option of

choosing between the return of contributions or a deferred annuity based on their

own contributions. Studies of the operation of vesting provisions show that most

workers prefer to receive a cash settlement at time of termination rather than

a deferred annuity, even at the sacrifice of a large employer-financed deferred

annuity. 14

Vesting was les*s prevalent for workers in negotiated than in nonnegotiated plans. About 2 out of 3 plans mentioned in collective bargaining agreements and covering 55 percent of the workers in such plans had vesting, as compared to 2 out of 3 nonbargained plans with the same proportion of the workers,

as shown in the following tabulation.

Total

Workers1

Collective bargaining status Plans (thousands)

All plans studied------------------■ 15,818 15,621

Mentioned in a collective

bargaining agreement----------- 5,795 10,695

Not mentioned in a collective

bargaining agreement----------• 10,023 4,926

1 Active workers in 1961.

With vesting______ ____ Without vesting

Plans

Workers1 

(thousands) Plans

Workers1 

(thousands)

10,634 9,307 5,184 6,313

3,888 5,982 1,907 4,713

6,746 3,326 3,277 1,600

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

1 4 Forfeiture of Civil Service Retirement Benefits, " Social Security Bulletin, October 1961, pp. 18-21.

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Most of this difference between bargained and nonbargained plans stemmed

from the low prevalence of vesting in multiemployer plans (almost entirely under

collective bargaining). Among single employer plans, over 70 percent of the

workers in plans mentioned in collective bargaining agreements had vesting, as

compared to a like proportion of workers in nonbargained plans.

Plans for salaried workers only were more likely to have vesting than

plans for production workers, due to the large coverage of multiemployer plans

for production workers. Three-fourths of the plans covering white-collar workers, with four-fifths of the workers, had vesting as compared to three-fifths of

the plans covering blue-collar workers, with fewer than half the workers. Similarly, plans including both salaried and production workers had a much higher

proportion of workers with vesting than plans for production workers only— about

3 out of 5 plans with 2 out of 3 workers.

Total________

Workers*

Type of worker covered Plans (thousands)

All plans studied------------------ 15,818 15,621

Salaried and production-------- - 6,038 6,263

Salaried only---------------------- 3,995 1,584

Production only------------------- 4,925 7,039

Earning in excess of a 

specified amount-------------- 860 735

* Active workers in 1961.

With vesting_____ Without vesting

Workers1 Workers1

Plans (thousands) Plans (thousands)

10,634 9,307 5,184 6,313

3,775 4,127 2,263 2,135

3,047 1,279 948 306

3,014 3,298 1,911 3,741

798 603 62 132

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

Size of plans was not a significant factor in explaining variations in the

prevalence of vesting among single employer plans. The proportion of single

employer plans with vesting was roughly similar for all the size groups (table 12).

Among major industry groups, vesting was common in manufacturing

(over 7 0 percent of plans and workers) mainly because of the high prevalence

of vesting in the metalworking industries (table 13). In transportation, wholesale and retail trade combined, and service industries, because large proportions of covered workers were in multiemployer plans without vesting, only 40

to 50 percent of the workers were in vested plans. In finance, where nonbargained white-collar plans prevail, three-fourths of the plans and workers had

vesting. In both mining and construction (predominantly multiemployer coverage),

less than a third of the workers were in plans with vesting. In communications

and public utilities, about 2 out of 3 workers (800,000 workers) were covered by

plans of the Bell Telephone System or similar plans, which have no vesting provisions. However, these plans allow the worker to retire on an immediate unreduced benefit at an early age with the approval of the company and at age 60

(55 for women) without company approval. These and other partial substitutes

for vesting are discussed in chapters IV and V.

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Types of Vesting

Three types of vesting provisions are found in pension plans, distinguished by the requirements the worker must fulfill to achieve a vested position.

Under deferred full vesting, eligible workers retain a right to all accrued benefits upon meeting the specified requirements (e. g. , age 40 and 10 years of service). Under deferred graded vesting, workers initially acquire a right to a certain percentage of accrued benefits upon fulfilling the stipulated requirements; the

percentage increases as additional requirements are fulfilled, until workers become fully vested. A plan might, for example, provide 50-percent vesting on

completing 10 years of service and an additional 10 percent for each additional

year of service, up to 100 percent for 15 years or more of service. In contrast to these deferred methods, under immediate full vesting, all benefits are

fully vested as soon as they are earned, i. e. , starting from the day of participation. Of these three methods, deferred full vesting is the most common, followed by deferred graded vesting. Immediate full vesting is rare.

Plans Workers1

Type of vesting Number

All plans with vesting-------------- 10, 634

Immediate fu ll--------------------- 14

Deferred fu ll------------------------ 7,198

Deferred graded--------------------- 3, 422

1 Active workers in 1961.

Percent

Number

(thousands) Percent

100.0 9,307 100.0

0.1 40 0.4

67.7 7,298 78.4

32.2 1,969 21.2

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

Deferred full vesting was dominant in all industries except transportation (table 14), where one large multiemployer plan— the Western Conference of

Teamsters Pension Fund— had graded vesting. Because of this, over 40 percent

of the workers with vesting in multiemployer plans had graded vesting (table 15).

About a third of the single employer plans with vesting, covering about a fifth of

the workers, had deferred graded vesting. Many of these were large plans in the

aircraft and missile industries.

Requirements for Vesting

Except for the few plans that vested workers immediately upon employment or upon plan membership, vesting provisions establish age and service requirements which must be met to qualify. In addition, vesting may be conditioned

on the type of termination.

Deferred Full Vesting. Ten years of service or less was required for

deferred full vesting by about 45 percent of the plans covering the same fraction

of workers. Over half the plans with about the same fraction of workers required

15 years or more of service.

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Percent

Minimum service requirements*

All plans with deferred full vesting----

No service requirement---------------------

Less than 10 y ears---------------------------

10 years---------------------------------------

11—14 years-----------------------------------

15 years---------------------------------------

16“ 19 years-----------------------------------

20 years-------------------------------------

21—24 years-----------------------------------

25 years---------------------------------------

26—29 years-----------------------------------

30 years---------------------------------------

Plans Workers'

100.0 100.0

0.2 0.2

17.5 7.7

24.8 37.9

3.3 2.6

30.5 37.3

1.2 1.0

13.8 8.1

.2 .4

7.6 4.0

.4 .3

.4 .4

* For those plans which specify 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 Active workers in 1961.

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

Thirty percent of the plans with 40 percent of the workers required 10

to 14 years of service. A heavy concentration of workers in plans requiring 10

(38 percent of the workers) or 15 (37 percent of the workers) years results mainly

from the vesting arrangements in plans in the metalworking industries, many of

which were negotiated by the Automobile Workers (10 years) and Steelworkers

(15 years), or were influenced by these plans. Only 1 out of 6 plans, covering

more than a half million workers, specified less than 10 years, while a fifth of

the plans, covering almost a million workers, required 20 years or more of

service.

In addition to service requirements, minimum age requirements were

specified by 7 0 percent of the plans with the same proportion of workers. Attainment of age 40 was required by roughly a fourth of the plans covering over

45 percent of the workers.

Percent

Minimum age requirements 1

All plans with deferred full vesting------

No age requirement------------------------

Age 40 and under-------------------------

Age 45---------------------------------------

Age 50---------------------------------------

Age 55---------------------------------------

Age 60---------------------------------------

Plans Workers

100.0 100.0

30.4 29.8

27.2 46.2

8.8 8.6

9.9 8. 1

20.8 6.5

3.0 .8

* 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.

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

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Other common age requirements were 45, 50, and 55 years; the two latter ages,

as will be pointed out, were also commonly required for early retirement.

The combination of age 40 and 10 or 15 years of service (the minimum

requirements in plans negotiated by the Automobile Workers and Steelworkers,

respectively), applied to over 2 out of 5 workers covered by deferred full vesting provisions (table 16). Another 30 percent of the workers were in plans that

had no age requirement. In these plans, service requirements of 10 or 15 years

were most common. In general, the service requirements were longer where no

age requirement was specified.

The service requirements for deferred full vesting were slightly more

liberal in salaried plans than in plans covering either blue-collar workers only

or both types of workers (table 17). Only 2 percent of the blue-collar workers

could vest with less than 10 years' service, against 1 out of 7 white-collar workers. Where both groups were covered by the same plan, 8 percent of the workers could vest with less than 10 years' service. Age requirements were less

frequently stipulated for white-collar workers than for blue-collar workers; only

two-tenths of the latter did not have to meet such requirements, as compared

to three-tenths of the former. Where both groups were included in the same

plan, the no age requirements were found in plans with four-tenths of the workers.

Deferred Graded Vesting. The age and service requirements of plans

with deferred graded vesting were more heterogeneous than those with deferred

full vesting. Workers under the former procedure usually could qualify for vesting at an earlier age with less service than under the latter, but, of course,

only part of the worker's equity was initially vested. To become fully vested

under graded plans usually required longer service than under deferred full vesting plans.

Ten or 15 years was most often required to vest the first step (i. e. ,

the smallest fraction) of the worker's equity in deferred graded plans (table 18).

The initial percent vested varied widely, ranging from 5 percent for 5 years'

service up to 75 percent for 10 years' service. The most common grading plan

vested 50 percent after 10 years of service. To become fully vested, 85 percent

of the workers under graded plans had to have 15 years or more of service (table

19). More than half the workers were in plans with no age requirement, but

service requirements were usually 15 years or more.

Prospects of Vesting. The combined effect of the age and service requirements for vesting, as well as the absence of vesting provisions, can be seen

readily by considering the probability of workers becoming vested upon entering

plans at a specified age. 15 Beginning at age 25, for example, only 1 out of 5

would vest by age 35, and 1 out of 2 by age 45 (chart 2).

Type of Separation. In about 95 percent of the vesting plans of all types,

with 85 percent of the workers, a worker meeting the age and service requirements would be entitled to his vested right if separated for any reason: Quit,

layoff, discharge, etc.

^ Strictly speaking, he would not be covered until a later age under plans with preparticipation service requirements, but his employment would date from age 25. It should also be noted that vesting requirements other 

than age and service, such as type of separation, have not been considered.

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CHART 2. PERCENT OF PRIVATE PENSION PLANS AND WORKERS WITHOUT VESTING AT SPECIFIED

. AGES FOR WORKERS HIRED AT AGE 25, WINTER 1962-63

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Plans Workers 1

Number

Conditions for vesting Number Percent (thousands) Percent

All plans with vesting------------- 10,634 100.0 9,307 100.0

Any separation--------------------- 9,993 94.0 7,920 85.1

Involuntary separation-----------

1 Active workers in 1961.

641 6.0 1,388 14.9

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

Under the remaining plans, all workers who leave their jobs voluntarily forfeit

their pension rights. For example, plans in the basic steel and fabricated metals

products industries generally limited vesting to workers terminated as the result

of a permanent shutdown of a plant, department, or subdivision, or laid off and

not recalled in 2 years. These restrictions were chiefly found in production

worker plans and in plans covering both white-collar and blue-collar workers.

Only 1 out of 7 workers in plans for white-collar workers with deferred full

vesting were affected compared to over 1 out of 4 in plans for blue-collar workers and combined plans. Four out of 5 of the plans with deferred full vesting

requiring that the separation be involuntary, also required the attainment of age

40 and 15 years of service.

Benefits Payable Under Vesting

The vested benefit is usually payable in the form of a monthly retirement benefit— a life annuity— commencing at normal retirement age. In about 75

percent of the plans, covering 60 percent of the workers under vested plans, the

benefit was payable only in that form— the benefit usually commencing at age 65.

Plans_______ _____Workers1

Number

Time of benefit payment Number Percent (thousands) Percent

All plans with vesting---------------- — 10,634 100.0 9,307 100.0

At normal retirement age only-----

At normal retirement age or—

— 8,023 75.4 5,602 60. 2

In prior 5-year period------------ 207 2.0 1,732 18.6

In prior 10-year period-----------— 2,057 19.3 1,740 18.7

In prior 15-year period---------- 23 .2 103 1.1

At any time requested by worker -- 324 3.0 131 1. 4

1 Active workers in 1961.

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

On the other hand, a fourth of the plans with two-fifths of the workers

allowed the vested worker to choose between starting his monthly benefits at an

earlier age (usually the early retirement age) in a reduced amount, or receiving

it in full beginning at the normal retirement age. The benefit could be received

5 years prior to the normal retirement age (generally age 65) in plans* covering

over 1 out of 6 workers, while another 1 out of 6 workers could receive it as

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early as 10 years before the normal age. Vesting in these plans contained some

elements of regular early retirement, i. e. , the alternative to receive reduced

benefits at an earlier age than normal, although the worker initially qualified at

an earlier age (in some cases substantially earlier) under the vesting conditions.

A small group of plans with about 130,000 workers gave the vested worker the

option of receiving the benefit at any time he chose. A few of these also allowed an immediate lump-sum payment.

Although the sharp reduction of benefits com m encing at an e a rlie r age 

than n orm al— where 65 is the norm al retirem en t age, a 35-percent reduction at 

60 is com m on— d isco u rages the election of early ben efits, the reduced benefits 

can partly replace incom e lo ss becau se of job term ination. This reduction in 

alm o st all plans followed the form u la used to determ ine regu lar early retirem en t 

benefits, but occasion ally there w as som e variation b ecau se the w orker w as not 

retiring under regu lar early retirem en t conditions. As the resu lt, an actu arial 

r e d u c t i o n 16 w a s s p e c i f i e d in abo u t 4 out of 5 p la n s with v e s tin g with th is option 

c o v e r in g m o r e than 2 out of 5 w o r k e r s . S p e c i f ie d r e d u c tio n f a c t o r s , su ch a s 

s i x - t e n t h s , o n e - t h ird , f iv e - n in t h s , of 1 p e r c e n t f o r e ac h m onth the w o r k e r ’s a g e 

w as under the n orm al age, w ere stipulated in plans covering 45 percen t of the 

w o rk ers. A few plans m ade no reduction if the em p lo y er's consent w as obtained.

Plans __________ Workers 1__________

Reduction factor Number Percent

Number

(thousands) Percent

All plans with vested benefit payable early------- 2,611 1 0 0 . 0 3,705 1 0 0 . 0

No reduction for early retirement------------------ 1 1 0 4.2 24 0 . 6

Actuarial----------------------------------------------- 2,097 80.3 1,619 43.7

l/ 4 of 1 percent for each month--------------------- 9 (2) 23 . 6

1 /3 of 1 percent for each month--------------------- 26 . 1 300 8 . 1

5/ l 2 of 1 percent for each month-------------------- 43 . 2 75 2 . 0

V2 of 1 percent for each month---------------------

5/ 9 of 1 percent for each month---------------------

127 4.9 176 4.8

55 2 . 1 452 1 2 . 2

VlO of 1 percent for each month-------------------- 37 1.4 670 18. 1

Table of reduction factors not uniform3 ---------- 98 3.8 125 3.4

Other--------------------------------------------------- 9 (2) 241 6.5

1 Active workers in 1961.

2 Less than 0.05 percent.

3 Not based on uniform monthly reduction; often an approximate actuarial reduction. 

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

The vested benefit payable at n orm al retirem en t age w as usually d e te rm ined by the n orm al retirem en t fo rm u las, except that the m inim um n orm al benefit fo r m u la w as often not a p p lic a b le . In m an y p la n s w h ere the m in im u m w as 

applicable to vested w o rk ers, its u se requ ired additional se rv ic e beyond that r e ­

quired for full vesting under the "r e g u la r " form u la.

The Value of V ested Benefits

When a w orker ach ieves a vested statu s after the y e a rs of se rv ic e r e ­

quired by m o st p lan s, he has by this event secu red a valuable a sse t. To illu strate the value of this a sse t, illu strativ e benefits earned up to the point of v e sting w ere computed for all plans with d eferred full vesting for a ssu m e d constant

16 The actuarial equivalent of the normal benefit is a benefit whose ultimate cost is expected to be equal to

that of the normal benefit.

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e a r n in g s l e v e l s of $ 3 , 6 0 0 , $ 4 , 8 0 0 , $ 6 ,000, and $ 8 , 4 0 0 a y e a r . 17 In m o s t c a s e s , 

these would be m inim um benefits; se rv ic e after fulfilling the vesting requ irem en ts 

usually would bring higher benefits.

The distribution of the monthly pensions payable at norm al retirem en t 

age a ssu r e d to w ork ers earning $ 4 ,8 0 0 a y e ar is shown below for plans p r o ­

vidin g fu ll v e s t in g a f t e r 10 y e a r s and a f t e r 15 y e a r s of s e r v i c e . 18

Plans with full vesting after—

1 0 years' service 15 years' service

Monthly pension payable at normal retirement Workers2 Workers 2

age for workers earning $4,800 per yearl Plans (thousands) Plans (thousands)

Total3 ------------------------------- ---------- 3,573 3,707 2,019 2,717

No benefit4 ---------------------------------------------- 35 8 6 69 73

Under $10------------------------------------------------- 71 2 0 - -

$ 1 0 and under $ 2 0 --------------------------------------- 350 90 140 82

$20 and under $30--------------------------------------- 1,153 2,182 16 62

$30 and under $40--------------------------------------- 295 409 908 1,422

$40 and under $50--------------------------------------- 800 386 217 238

$50 and under $60--------------------------------------- 152 307 338 131

$60 and under $70--------------------------------------- 215 152 129 358

$70 and under $80--------------------------------------- 1 0 17 52 113

$80 and under $90--------------------------------------- 32 14 1 0 2 1 0 2

$90 and under $100-------------------------------------- - - 48 137

$100 and under $125------------------------------------ 247 24 - -

$125 and over------------------------------------------- 213 2 0 - -

1 Computation of benefit amounts is based on future service formulas, assuming a constant level of earnings 

and monthly primary social security benefits of $105 for workers earning $3,600 a year, and $127 for workers earning 

$4,800, $6,000, and $8,400 a year.

2 Active workers in 1961.

^ Excludes 46 plans, covering 31,000 workers, with deferred full vesting in which plan benefits were not 

computable.

4 These are plans in which no pension from the plan was provided because of the deduction of primary social 

security benefits.

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

T he a v e r a g e b e n e f i t 19 a m o u n te d to $ 3 4 f o r 1 0 - y e a r p la n s and $ 4 6 f o r 15- y e a r 

plan s, or $ 3 .4 0 for each y e ar of se rv ic e in the 10-year plans and $ 3 .0 7 for 

each y ear in the 15-year plan s.

In the s a m e m a n n e r, the a v e r a g e m onthly b e n e fits v e s te d upon m ee tin g 

the se rv ic e requ irem en ts are shown in the tabulation on the next page for the four 

assu m e d earnings lev els and the p rin cip al serv ic e requ irem en ts of d eferred full 

vesting plan s.

1 7 For the computations the future service formula was used.

18 All plans with graded vesting have been excluded from the table, including those that grant full vesting 

after 1 0 or 15 years of service.

1 9 Weighted by number of workers in the plans.

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Average2 monthly pensions initially vested in 

______ plans with full vesting after—________

Assumed annual earnings level1 10 years 15 years 20 years 25 years

$3,600------------------------------- $28 $41 $54 $64

$4,800------------------------------- 34 46 72 77

$6,000------------------------------- 42 55 98 95

$8,400------------------------------- 59 74 148 132

1 Computation of benefit amounts is based on future service formulas, assuming 

a constant level of earnings and monthly primary social security benefits of $105 for 

workers earning $3,600 a year, and $127 for workers earning $4,800, $6,000, and 

$8,400 a year.

2 Arithmetic mean of plan benefits weighted by number of active workers 

covered.

Another way of evaluating the vested right at the tim e the w orker achieves 

it, is to determ ine how m uch it would co st the w orker to pu rch ase an individual 

annuity of the sa m e am ount fro m an in su ran ce com pany. In the follow ing ta b u la ­

tion, the co st of purchasing annuities payable at 65, within the range of the a v ­

e rag e s p resen ted in the previou s tabulation, has been computed for w ork ers m ak ­

ing such p u rch ases at the age of 45 and at 65. T hese estim ates relate to m en; 

co sts to women would be higher b ecau se of their longer life expectancy.

Cost of individual annuities purchased for 

______________a man when he is 1—________

Monthly amount payable

at age 65 Age 45 Age 65

$20----------------------------------- $1,330 $2,840

$30----------------------------------- 1,995 4,260

$40----------------------------------- 2,660 5,680

$50----------------------------------- 3,325 7,100

$60----------------------------------- 3,990 8,520

$70----------------------------------- 4,655 9,940

$80----------------------------------- 5,320 11,360

$90----------------------------------- 5,985 12,780

$100---------------------------------- 6,650 14,200

$120--------------------------------- 7,980 17,040

$140--------------------------------- 9,310 19,880

$160--------------------------------- 10,640 22,720

1 Computed from the following nonparticipating individual premium rates of 

a large life insurance company. For the purchase of immediate annuities of 

$10 monthly at age 65, $1,420 for men and $1,630 for women, and deferred 

annuities purchased at age 45 of $10 monthly commencing at age 65, $665 for 

men and $835 for women.

Thus, to take a sp ecific exam ple, the 2,000 pension plans providing full 

v e s t in g a f t e r 15 y e a r s of s e r v i c e , on the a v e r a g e , a s s u r e to w o r k e r s at the $ 4 , 8 0 0 - 

a -y e a r earnings level a monthly pension of $46 payable at 65. It would co st m ale 

w o r k e r s $ 3 , 059 to p u r c h a s e an annuity of this am ount at 45 or $6 , 532 at 65. In 

other w ords, the act of vesting at 45 a s s u r e s to these w ork ers an a s s e t worth, 

on the a v erag e, about tw o-thirds of a y e a r's pay (m ore if they a re over age 45 

when they vest). This a sse t, it m ight be noted, exceeds the amount that s e v e r ­

a n c e p a y p l a n s , on the a v e r a g e , p r o v id e to w o r k e r s with 15 y e a r s of s e r v i c e . 

It am ounts to m o re than a third of the "v a lu e " of the m ax im u m p r im a r y so c ia l 

secu rity benefit due the w orker at 65. The value of this vested a sse t, of co u rse, 

in c re a se s as m o re y e a rs of se rv ic e are accum ulated, as the w orker gets n eare r 

to retirem en t, and, as is typical, as the w o rk e r's earnings level r is e s .

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Implications for Mobility

If private pension plans tend to lim it labor m obility, then vesting tends 

to loosen or rem ove the b a r r ie r s and, thus, to in c re a se m obility. E xcept for 

plans that lim it vesting to involuntary term in ation s, it does this by giving a qualified w orker the chance to change em ployers while he is able to, without s a c r i ­

ficing his equity in the plan. A vesting p rov ision also adds flexibility to the p r ivate p en sio n s y ste m . It can e a s e the tra n sitio n s involved in tech n ological change, 

for unions and em p loy ers, by dealing equitably with the pension rights of d is ­

placed w o rk ers. Vesting m ak es it p o ssib le for a w orker to pick up pension c re d ­

its from m o re than one em ployer during his working life. All of these advantages 

of vesting are given added significance during a period of rapid econom ic change. 

P arad o x ically , vesting p rov ision s m ay also create sh o rt-term b a r r ie r s to voluntary m ovem ent; that is, a w orker m ay feel "lo ck ed -in " a plan during the period 

im m ediately before he qualifies for vesting b ecau se he is so close to assu rin g 

h im self of a right to a valuable a sse t.

Both co st con sideration s and the conflict between a traditional pu rpo se 

of a pension plan and the concepts of m obility and flexibility re stra in the p r e s ­

su re s for lib eral vesting. Since the cost of vesting depends on m any facto rs 

(such as the age and sex com position of the work fo rce, the rate of turnover, 

and plan pro v isio n s) and since the above-m en tion ed conflict can be reso lv ed 

through countless variatio n s, wide d iv ersity in age, se rv ic e , and other re q u ire ­

m ents for vesting p rev ail.

The three types of vesting differ in their im plication s for m obility. Im ­

m ediate full vesting offers the ultim ate in protection of the w o rk er's pension 

righ ts, and hence his m obility, but, it is by fa r the c o stlie st m ethod of vesting. 

M oreover, it a s s u r e s benefits for w ork ers with short se rv ic e , a violation of one 

b a sic pension prin ciple. Its rarity is attributable to these two fa c to rs. Under 

d eferred full vesting (provided to m o st w ork ers in vesting plan s), a w orker m e e ting the n e c e ssa ry requ irem en ts gains the a ssu ra n c e of his full accru ed benefits. 

Of co u rse, if he w ithdraw s, he stands to lose future a c c ru a ls of pension righ ts, 

usually at higher lev els, but this is only one of the facto rs that m ay enter into 

d ecisio n s on job changing. Since under d eferred full vestin g, there is typically 

a single point of tim e when the individual w orker b eco m es vested, the "lo ck -in " 

effect of this type of vesting p rov ision is p resu m ab ly g re a te r than under d eferred 

graded vesting, under which the w orker is eased into a fully vested statu s. The 

graduation of vesting over lo n g-serv ice p erio d s p rov id es additional rew ards for 

long continuous se rv ic e (the traditional pension concept), and tends to reduce the 

co sts of vestin g, thereby in creasin g its attractiv en ess to em ployers; but if the 

se rv ic e requ irem en ts a re so lengthy as to withhold a vested statu s fro m the 

w orker until he is too old to m ake use of it, the contributions to potential w orker 

m obility m ay be larg ely annulled.

S erv ice requ irem en ts for vesting are usually not so g reat as to nullify 

som e positive effects on potential m obility. About 45 p ercen t of the w ork ers in 

p lan s with v e stin g need co m p lete 10 o r fe w er y e a r s of s e r v ic e to qualify and an 

a d d itio n a l 2 out of 5 w o r k e r s b e lo n g to p la n s r e q u ir in g b e tw e e n 11 and 15 y e a r s . 

H owever, the key elem ent for an individual w o rk e r's potential m obility is often 

the age requ irem ent— usually 40 y e a rs or m o re . F o r exam ple, the 10-year s e r v ­

ice requirem ent in m any plans m ay not be as im portant a restrictio n as the a ttainm ent of age 40. S im ilarly , plans which requ ire the attainm ent of age 45, 50, 

o r 55, m a y e f f e c t i v e ly deny v e s t in g ev en f o r w o r k e r s with 15 y e a r s o r m o r e of 

serv ic e .

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Since the propen sity of w ork ers to change jobs undoubtedly declin es as 

they grow older and as they accum ulate m ore serv ic e (hence secu rity in their 

em ploym ents), high age and long se rv ic e requ irem en ts in vesting p ro v isio n s counte ract the th eoretical m obility potential of vesting. Age requ irem en ts, in p a r tic ­

u lar, appear to be a rb itra ry (perhaps even from a cost standpoint), lacking the 

gen eral so cial acceptability afforded the age of n orm al retirem en t. If vesting 

p ro v isio n s, in their inception, are not designed by pension plan n ers to encourage 

voluntary m obility, as se e m s to be the c a se , experien ce under the plans m ay 

su ggest that they do, in fact, have such an effect. Although p r e s s u r e s to re v ise 

vesting p ro v isio n s, p a rtic u larly from collective bargain in g, a re p rim a rily p r o ­

tective in nature, they also have m obility im plication s.

The preceding re m a rk s obviously do not apply to plans that lim it vesting 

to involuntary term ination. T hese m u st be viewed as a sp ecial c a se. T hese 

conditions have all the e a rm a rk s of a sev eran ce arran gem en t; that is, they o p e rate only under c irc u m stan c es beyond the control of the em ployee. Although they 

protect the equity of the involuntarily sep arated w orker m eeting the age and s e r v ­

ice requ irem en ts, their contribution to voluntary m obility is negligible.

At the p resen t stage of developm ent of private pension plan s, it is r e a ­

sonable to question the degree to which w ork ers understand the value of vesting. 

Plan docum ents d escribin g pension plans to w o rk ers rarely , if ever, s tr e s s the 

dollar value of vesting to w o rk ers. If the values that m ay logically be assig n ed 

to vesting, as they w ere developed in this chapter, or to pension rights in general, w ere m ade m o re widely available to pension plan p articip an ts, one might 

expect an in c re a se in the holding pow er of pension plan s; at le a st up to the point 

of full vesting.

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Chapter IV. Early Retirement

The early retirement age, like the normal retirement age, is defined by

each pension plan with an early retirement provision. The technical definition

of early retirement differs from the popular concept which holds that any retirement prior to age 65, the age when full social security benefits are payable, is

early retirement. As the term is used in pension plans, and in this bulletin,

early retirement means retirement before reaching the plan*s normal retirement

age, whatever it may be. The normal retirement age may be defined as the

earliest age at which a worker meeting the stipulated requirements can retire on

his own volition and receive the full amount of the benefits due him under the

plan*s normal retirement formula. This age is usually 65, but it may be 60,

62, or even 68 or 70.

In over 100 plans, covering 1.6 million workers, the normal retirement

age was under age 65, usually age 60. Included in the coverage of these plans

were almost a million workers in plans, like those of the Bell Telephone System,

which also had early retirement provisions. Under some of these plans, including

the telephone plans, workers could retire on full benefits as early as age 55,

with the employees consent; only reduced benefits were provided by the others.

The remaining plans with normal retirement before 65, including the Electrical

Workers (IBEW) National Plan, the United Mine Workers, and the Central States

Teamsters Plan, did not have early retirement provisions. 20

The Social Security Act was amended in 1956 to provide permanently

reduced benefits for women retiring between ages 62 and 65, and in 1961 this

option was extended to men. Since most private plans already had provision for

early retirement, usually at earlier ages, the influence of this change in the Social Security Act on private plan provisions has probably been negligible, although

it may have influenced the age at which early retirement actually occurs under

private plans. 21

Because provisions for disability retirement, which usually require that

a worker be totally and permanently disabled in addition to meeting age and service requirements, have a special role in a retirement scheme, they have not

been considered in this study. They may, however, be deemed a form of early

retirement. These provisions, found in about 50 percent of the private plans with

about 70 percent of the workers, will be covered in detail in a subsequent Bureau study.

Early retirement provisions permit workers meeting stipulated age and

service requirements, or both, to retire on an immediate, although usually reduced, annuity. Although the benefits are always payable immediately, some plans

allow the worker to defer benefits until he reaches normal retirement age when

they are payable in the full amount.

20 Provisions for disability retirement before the normal or early retirement age were provided by plans in both 

groups.

21 National Industrial Conference Board, Inc. Corporate Retirement Policy and Practices (Studies in Personnel 

Policy, No. 190). New York, 1964, pp. 28-30.

24

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Because they protect the worker* s equity, early retirement provisions

are a partial substitute for vesting, where no vesting is provided. 22 In general,

however, age requirements for early retirement are stricter than for vesting.

In addition, the employer1 s consent for early retirement may be required.23 24

One of the more recent innovations in private pension plans is special

early retirement provisions whereby the employer may compel a worker to retire

or, in some instances, the worker may be retired under 1,mutually satisfactory

conditions*' (i. e ., the employees, the unions, and presumably, the worker*s

consent is required). They usually grant substantially higher benefits than regular early retirement benefits and, in some plans, even more than normal retirement benefits. Like other retirement provisions, specified age and service

requirements, or both, have to be met.

Prevalence of Early Retirement Provision

Approximately 3 out of 4 private pension plans, covering the same proportion of workers, provided for early retirement (table 20). The provision was

far more prevalent among single employer plans than among multiemployer plans—

4 out of 5 for the former as against 2 out of 5 for the latter.

T o tal

Type of em ployer unit Plans

W oikers1

(thousands)

A ll plans studied----- ------------ - 15,818 15,621

Single em p lo y er— ---------------- 14,890 11,742

M ultiem ployer -------------------- 928 3 ,8 7 8

1 A ctive workers in 1961,

W ithesarly retirem ent Without early retirem ent

Plans

W orkers1 

(thousands) Plans

Workers1

(thousands)

12,099 11,786 3 ,7 1 9 3 ,8 3 5

1 1,735 10,6 5 7 3 ,1 5 5 1 ,0 8 5

364 1,129 564 2 ,7 5 0

NOTE: Because of rounding, sums of individual item s m ay not equal totals.

This marked difference between single employer and multiemployer plans

reflected the greater prevalence of early retirement provisions in contributory

plans, in plans not mentioned in collective bargaining agreements, and in salaried

workers* plans. The greater prevalence of early retirement provisions in industries in which single employer plans were predominant also reflected the influence of these factors (table 21).

Among the single employer plans without early retirement, most were

smaller noncontributory plans— chiefly in trade, service, and manufacturing industries. Early retirement provisions, or normal retirement before age 65, in

multiemployer plans were found mainly in industries characterized by heavy and

arduous working conditions, such as mining, motor transportation, and water

transportation. 2*

22 See chapter VI.

23 Since 19S7, plans requiring em ployer* s consent for early retirem ent had to provide vesting under the sam e 

age and service requirem ents to receiv e Internal R evenue Service approval (Revenue Rulings 57-163 and 58-151).

24 The sign ifican ce of early retirem ent in m ultiem ployer plans is discussed in chapter V.

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A number of private plans, accounting for less than a million workers,

allowed early retirement for women only, usually starting at age 62. A large

proportion of these plans with most of the workers were in the apparel industry,

where a large number of women employees are found, and most of them were in

multiemployer plans negotiated by the Amalgamated Clothing Workers and the

International Ladies1 Garment Workers1 Union.

Minimum Requirements for Early Retirement

As in the case of vesting and other benefit requirements, a worker must

meet an age requirement, a service requirement, or both, to retire under an

early retirement provision. However, many plans have a requirement not found

in other benefit provisions, that is, early retirement may depend upon employer

approval or, in some plans, his request.

In general, the minimum length of employment for early retirement was

not significantly longer than for vesting. Specified minimum amounts of service,

however, were found more often in early retirement provisions than in normal

retirement.

Fifteen years was the most common service requirement for early retirement— more than 1 out of 4 plans with over 1 out of 4 workers.

Percent

M inim um service requirem ents1 Plans W orkers2

A ll plans with early retirem ent--------------------------- 1 0 0 .0 1 0 0 .0

No service req u irem e n t------------------------------------- 4 .0 4.7

Less than 10 y e a rs-------------------------------------------- 3 0 .9 18. 5

10 y e a r s --------------------------------------------------------- 1 7 .7 2 4 .3

11-14 y e a r s---------------------------------------------------- 2 .3 1 .3

15 y e a r s --------------------------------------------------------- 2 7 .0 2 6 .8

16-19 y e a r s---------------------------------------------------- .3 .5

20 y e a r s --------------------------------------------------------- 1 2 .0 9 .6

21—24 y e a r s---------------------------------------------------- .1 .2

25 y e a r s ------------------------------------------------------- 3 .5 3 .0

26-29 y ears----------------------------------------------------- . 4 .1

30 y e a r s------------------------------------------------------- 1 .6 1 0 .8

Over 30 y ears--------------------------------------------------- . 2 . 3

1 For those plans which specify a period of em ploym ent to be served before 

p articipation in the plan could b egin , the m inim um service requirem ent includes 

the preparticipation service and the required plan m em bership service.

2 A ctive workers in 1961.

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

Ten years was needed in a sixth of the plans with a fourth of the workers.

However, almost a third of the plans, with about a fifth of the workers, specified

less than 10 years and a fourth of the workers were in plans requiring 20 years

or more of service.

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Minimum age requirements were more likely to be specified for early

retirement than for vesting and were also typically at a higher age. As shown

below, almost two-thirds of the plans with almost half the workers stipulated

age 55, while another two-fifths of the workers were in plans requiring age 60.

Less than 5 percent of the plans specified an age below 55.

_____________ Percent _________

M inim um age requirem en ts1 Plans W orkers2

A ll plans with early retirem ent--------------------------- 1 0 0 .0 1 0 0 .0

No age req u irem e n t----------------------------------------- 2 .4 9 .5

A ge 50 --------------------- 1 .0 2 .9

A ge 5 5 .................................... ...........- ..............—.................. 6 4 .1 4 7 .3

A ge 60 ------------------ 3 0 .1 3 8 .4

A ge 6 1 - 6 4 ------------------------------- 1 .1 1 .7

A ge 65 — ..................- ........... ................................................... 1 .2 .3

Som e plans sp ecified alternative requirem ents; for each case , the one with 

the earlie st age or no age requirem ents was selected.

2 A ctive workers in 1961.

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

The combinations of age 55 and 10 to 15 years1 service were stipulated

for over 20 percent of the workers covered by plans with early retirement, while

attainment of age 60 and 10 or 15 years was necessary for another 30 percent

(table 22).

The minimum age requirements for early retirement in plans with vesting

provisions were, in general, higher than in the plans that did not have vesting.

For example, a fourth of the workers with early retirement in nonvesting plans

had no age requirement to meet, while almost all the workers in plans with vesting

had such requirements. On the other hand, the service required under the early

retirement— vesting plans was less than in plans in which no vesting was provided.

The overall picture of age and service requirements of normal and early retirement and vesting is discussed in chapter VI.

A requirement that the worker could retire only with the consent of, or

at the request of, the employer was contained in almost half of the plans with

early retirement, covering 2 out of 5 workers.

Plans Woriters 1

Conditions for early retirem ent Number Percent

Num ber

(thousands) Percent

A ll plans with early retirem ent---------------- ------- 12,099 1 0 0 .0 11,786 1 0 0 .0

Solely a t em ploy ee's o p tio n --------------------------- 6 ,3 2 7 5 2 .3 7 ,1 3 3 6 0 .5

Em ployer's consent or request re q u ire d ------------- 5 ,7 7 2 4 7 .7 4 ,6 5 3 3 9 .5

With em ployer's consent---------------------------- 5 ,3 6 9 4 4 .4 3 ,7 2 9 3 1 .6

A t em ployer's request------------------------------- 89 .7 273 2 .3

A t em ployer's request or consent----------------- 247 2 .0 389 3 .3

Under m utually satisfactory conditions---------- 55 .5 219 1 .8

O ther----------------------------------------------------- 12 .1 43 . 4

1 A ctive workers in 1961.

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

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While multiemployer plans seldom required employer consent for early

retirement, it was common in single employer plans, particularly in nonmanufacturing industries* In addition, white-collar workers were more likely to need

employer consent to retire early than blue-collar workers.

Benefits Payable Under Early Retirement

Early retirement benefits were always payable immediately, but in half

the plans with over half the workers, the benefit could be deferred by the worker

until normal retirement age or, in some plans, any time up to that age.

_______Plans_______ Woikers1 .

T im e of ben efit paym ent Num ber Percent

Num ber

(thousands) Percent

A ll plans with early retirem ent------- — 12,099 1 0 0 .0 11,786 1 0 0 .0

Im m ediately o n ly ------------------------ — 6 ,0 6 3 5 0 .1 5 ,6 0 5 4 7 .6

Im m ediately or a t age 6 5 --------------— 2 ,6 6 0 2 2 .0 4 ,1 1 0 3 4 .9

Im m ediately or any tim e up to 65 — — 3 ,3 7 6 2 7 .9 2 ,071 1 7 .6

1 A ctive workers in 1961.

NOTE: Because of rounding, sums of individual item s m ay not equal totals.

To avoid increasing costs excessively, early retirement benefits are almost

always less than normal retirement benefits for equivalent service, because of

the longer period of time over which they are likely to be paid. The worker who

chooses to retire early will receive a smaller benefit than he would receive if he

remained until the normal retirement age. For early retirement at age 60, the

actuarial equivalent25 of accrued benefits was payable as shown below, by twothirds of the plans with half the workers.

_ _________ Plans ___________ W orkers1

Reduction factor for early 

retirem ent a t age 60 Num ber Percent

Number

(thousands) Percent

A ll plans with early retirem ent---------------------- 12,099 1 0 0 .0 11,786 1 0 0 .0

No re d u c tio n ---------------------------------------------- 2 169 1 .4 1,162 9 .9

A c tu a ria l-------------------------------------------------- 8 ,0 6 7 6 6 .7 5,821 4 9 .4

Uniform percent for each month prior to 

age 6 5 ---------------------------------------------------- 2 ,8 3 7 2 3 .4 4 ,1 9 3 3 5 .6

74 of 1 percent--------------------------------------- 32 .3 108 .9

V3 of 1 percent--------------------------------------- 52 . 4 545 4 .6

710 of 1 p e r c e n t------------------------------------ 62 .5 193 1 .6

V2 of 1 percent--------------------------------------- 934 7 .7 1 ,2 4 5 1 0 .6

~/9 of 1 percent--------------------------------------- 179 1 .5 710 6 .0

/l0 of 1 p e r c e n t------------------------------------ 1 ,0 0 6 8 .3 1,2 9 0 1 0 .9

5/ s of 1 percent--------------------------------------- 520 4 .3 71 .6

3/4 o f 1 percent--------------------------------------- 52 . 4 31 .3

T able of reduction factors not uniform 3 ---------- 836 6 .9 419 3 .6

T ab le of reduced benefit am ounts3 ---------------- 31 .3 91 .8

Other-------------------------------------------------------- 159 1 .3 102 .9

1 A ctive workers in 1961.

2 Includes 57 plans, covering 966, OCX) workers, with norm al retirem ent a t age 60 and early retirem ent a t ages 

earlier than 60.

3 N ot based on uniform monthly reduction; often an approxim ate actuarial reduction.

NOTE: Because of rounding, sums of individual item s m ay not equal totals.

25 Op. c i t . , footnote 16.

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The actuarial reduction typically results in the male worker retiring at

age 60 receiving about two-thirds of the benefit amount payable at 65 for equivalent

service. Thus, if he postponed receipt of benefits until normal age, he would

increase his monthly retirement income by about one-half. Most of the remaining

plans reduced benefits by other factors, ranging from one-fourth to three-fourths

of 1 percent for each month the pensioner was under age 65 when he retired.

These factors often resulted in a somewhat greater than actuarial reduction at

age 60. For example, more than 10 percent of the workers were in plans with

a reduction of six-tenths of 1 percent for each month under age 65, or a total

of 36 percent at age 60. On the other hand, over 1 million workers were in plans

which provided a reduction of 30 percent (one-half of 1 percent for each month

under age 65) for workers retiring at age 60.

Not all workers retiring at 60, however, would receive smaller benefits

than they would be entitled to at 65, apart from the reduction due to their service. About 1, 200,000 workers were in plans that did not require a reduction

in benefits at age 60; about a million were in plans with normal retirement at

60 (usually with early retirement at lower ages), and almost 200, 000 were in plans

that paid the same benefits at age 60 as at age 65. 26

The reduction of benefits for plans allowing early retirement as early as

age 55 generally followed the pattern for the reduction at age 60, i. e ., the actuarial equivalent of benefits was most frequently specified.

Plans Workers1

R eduction factor for early 

retirem ent a t age 55 Num ber Percent

Num ber

(thousands) Percent

A ll plans with early retirem ent------------------------ - 11,786 -

No provision for early retirem ent between

55 and 60-------------------------------------------------- _ 4 ,7 2 6 _

A ll plans with early retirem ent at age 5 5 ---------- 8 ,1 6 9 1 0 0 .0 7 ,0 6 0 1 0 0 .0

No reduction-------------------------------------------- 1.1 878 1 2 .4

A ctu arial------------------------------------------------- 8 0 .7 4 ,1 4 9 5 8 .8

Uniform, percent for each month prior

to age 6 0 ---------------------------------------------- 1 0 .9 1 ,5 6 5 2 2 .2

V3 of 1 p erce n t------------------------------------

T 5 o f 1 p erce n t------------------------------------

of 1 p e rc e n t------------------------------------

of 1 percent-----------------------------------

of 1 p erce n t-------------------------------------

'12 of 1 percent-----------------------------------

.5 305 4 .3

.9 241 3 .4

5 .0 561 7 .9

2 .1 212 3 .0

2. 1 174 2 .5

.2 72 1 .0

T able o f reduction factors not uniform 2 ------- 580 7 .1 377 5 .3

O ther------------------------------------------------------ .2 92 1 .3

1 A ctive workers in 1961.

2 N ot based on uniform m onthly reduction; often an approxim ate actu arial reduction.

NOTE: Because o f rounding, sums o f individual item s m ay not equ al totals.

T he norm al retirem ent age in these plans was 65 because the em ployer*s consent was required to retire prior 

to that age.

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The sharpness of the actuarial reduction of benefits at age 55— typically

over 50 percent for men—due to increased longevity and foregone interest suggests

that the provision of early retirement at that age is designed for extreme circumstances. An even greater reduction was often required. For example, a reduction of one-half of 1 percent for each month under age 65 leaves the worker

at 55 with 40 percent of his accrued monthly benefit.

However, a significant number of workers belonged to plans permitting

retirement as early as 55 without a reduction because of age. Most of these

workers were in telephone company plans, which require 25 years of service and

the employer*s consent for such a benefit. They also have normal retirement

at age 60.

Social Security Adjustment Option. In most plans, early retirement is

permitted prior to eligibility for benefits (full or reduced) under the Social Security

Act. Consequently, the worker retiring early will usually suffer an immediate

and substantial reduction in income and then, a few years later, a substantial

increase, when social security becomes payable. To counteract these fluctuations,

more than a fourth of the plans with almost a third of the workers in plans with

early retirement offered a social security adjustment option. Under this option,

workers receive a larger-than-usual benefit before social security benefits are

payable, which they pay for by getting smaller benefits afterwards. The private

plan benefits are in such amounts that, when added to the social security benefits, an approximately uniform combined benefit is received by the pensioner

throughout his life. Employers paid the cost of larger initial benefits in a few

plans that provided supplemental retirement benefits (usually equal to anticipated

social security) until social security benefits were payable. These supplemental provisions are similar to special early retirement provisions discussed in

detail below.

Plans Workers 1

Num ber

Provision Num ber Percent (thousands) Percent

A ll plans with early retirem ent— - 12,099 1 0 0 .0 11,786 1 0 0 .0

With le v e l incom e o p tio n ---------- 3 ,2 0 3 2 6 .5 3 ,6 6 8 31 .1

Without le v e l incom e option-----

1 A ctive workers in 1961.

- 8 ,8 9 6 7 3 .5 8 ,1 1 8 6 8 .9

NOTE: Because of rounding, sums of individual item s m ay not equal totals.

Special Early Retirement

In recent years, "special early" retirement provisions have been incorporated into many plans, mostly in manufacturing industries. Because of their

compulsory nature, as opposed to the voluntarism usually associated with regular

early retirement; the worker is usually granted benefits substantially higher than

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under regular early retirement. 27 In general, these special benefits have resulted from union-management bargaining to meet special circumstances, rather

than unilateral employer action. For that reason, although they are found chiefly

in negotiated plans covering production workers or both salaried and production

workers, they have often been extended to plans for nonunion salaried workers

in the same firm.

Prevalence of Special Early Retirement Provisions. A fifteenth of the

plans with over a sixth of the workers had special early retirement benefits.

Plans Workers1

Provision Number

A ll plans studied---------------------- 15,818

With sp ecial early retirem ent----- 1,051

Without sp ecial early retirem ent— 1 4,767

1 A ctive workers in 1961.

Num ber

Percent (thousands) Percent

1 0 0 .0 15,621 100 .0

6 .6 2 ,6 7 4 17.1

9 3 .4 12 ,9 4 7 8 2 .9

NOTE: Because of rounding, sums of individual item s m ay not equal totals.

They were concentrated in manufacturing (table 23) and single employer, noncontributory plans in these industries, particularly metalworking, rubber products,

and food products (meatpacking). They were most common in plans negotiated

by the Steelworkers, Automobile Workers, Rubber Workers, and United Packinghouse Workers unions.

The distribution of these special provisions were dominated by the pattern

plans in manufacturing industries. Plans following the steelworkers pattern, mostly

under collective bargaining, covered about a fourth of the workers with special

early retirement. Under these plans, the worker could qualify at age 60 and

15 years of service (the same as regular early retirement at the worker*s request) if he retired under mutually satisfactory conditions, or at age 55 and 20

years of service, if terminated as result of a plant shutdown, layoff, or a disability not serious enough to qualify .under the regular disability retirement provision. 28 The normal benefit based on accumulated service is payable immediately. A variation was found in other Steelworkers plans permitting special

early retirement as early as age 50 and 15 years under mutually satisfactory

conditions, or layoff, and for age 55 and 15 years, in case of permanent shutdown or partial disability, and/or age 60 and 30 years, under mutually satisfactory

conditions. The normal benefit formula also applied.

In the automobile industry (Automobile Workers), special early retirement usually requires the attainment of age 60 and 10 years of service (the same

as for regular early retirement at the worker*s request), but is conditioned upon

27 Employers m ay also inform ally supplem ent regular early retirem ent benefits to encourage som e workers to 

retire. The extent of this practice is unknown. However, form al life tim e supplem entation of early retirem ent benefits for workers retiring during specified tim e periods, e. g . , 6 months, to encourage early retirem ent, has been used 

by several firm s in the past few years. A lso see N ational Industrial Conference Board, In c ., op. cit. , pp. 30-34.

28 Sp e cial early retirem ent for at least half of these workers has been im proved since the inform ation for this 

study was obtained. The plans now provide early retirem ent with full benefits under the sam e conditions, but the 

workers can qualify if the com bination of age plus service equals 75 (m inim um of age 50 and 15 years' service), or 

if age plus service equals 80 (at any age).

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the employer*s request or upon mutually satisfactory conditions. In these plans,

with over a third of the workers (1 million) covered by special early retirement, the special benefits are double the amount of accrued normal benefits.

They are payable from retirement until the worker is eligible for unreduced social security benefits (age 65, unless he qualified for disability benefits); afterwards, the normal benefit is payable. Most salaried workers* plans in this industry allow both regular and special early retirement after age 55 and 10 years

of service. However, to obtain the twice-normal special benefits, the salaried

worker has to retire under the same conditions as the production worker and be

at least 60. If he is under 60, his benefit is reduced actuarially.

In the rubber products industry, as in the automobile industry, special

early retirement is possible only at the employer*s request or under mutually

satisfactory conditions. However, unlike automobile plans, the rubber plans require the attainment of age 55 and 20 years of service. They also provide double

the normal benefit for accrued service, until the worker is eligible for social

security, when the normal benefits are payable. In the meatpacking industry,

more variation was evident. Some plans provided for double the normal benefit

at age 60 and 10 years, if retirement because of inability to perform work satisfactorily was at employer* s request or worker*s option. In addition to this benefit for workers over 60, other plans provided that those over age 55 with 20

years of service terminated because of plant shutdown, would be paid an amount

equal to or one and one-half times the normal benefit until eligible for social

security.

Requirements for Special Early Retirement. The minimum age and service requirements for special early retirement29 were concentrated, like those

for regular early retirement, at age 55 and 20 years of service (a third of the

workers) and age 60 and 10 years of service (two-fifths of the workers) (table 24),

owing largley to the plans in the steel and auto industries described above.

Another tenth of the workers, altogether, could qualify at age 55 with 10 or 15

years of service.

Unlike regular early retirement, which usually was at the worker*s request, special early retirement usually depends, to some degree, upon the employer. Special early retirement was possible, as shown in the following summary,

at the employer*s request in plans covering over half the workers.

Total

Conditions for sp ecial early retirem ent

A ll plans with sp e cial early retirem ent--------

A t em ploy er's re q u e st---------------------------—

Under m utually satisfactory conditions--------

T erm inated as a result of plan t shutdow n--— 

D isability (not qualifying under regular

disability provision)-------------------- -------- -

Layoff------------------------------------------------—

O th er------------- ----------- -------------- ----------

Workers1

Plans (thousands)

1,051 2 2 ,6 7 4

818 1,429

498 1 ,8 8 6

128 1,0 1 3

227 1 ,0 9 5

121 943

37 170

1 A ctive workers in 1961.

2 Because alternative conditions m ay be sp ecified, sums o f individual item s 

do not equal totals.

Where alternative requirem ents were specified, the one with the earliest age was used for this analysis.

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A somewhat greater number of workers in plans with special early retirement

would qualify under mutually satisfactory conditions, i. e ., either the worker or

employer could request retirement, but the consent of the other party had to be

obtained. Termination because of the permanent shutdown of a plant, because of

permanent layoff, or because of disability not qualifying for a pension under the

regular disability provision— covered roughly a million workers each.

Benefits Payable Under Special Early Retirement. Half of the workers

were in plans providing the same special benefit as for normal retirement, and

a slightly lesser number of workers received double normal benefits until normal

age or until eligible for social security benefits. Most of the remainder belonged

to plans that gave benefits slightly in excess of the normal formula.

Plans Workers 1

S p e cial early retirem ent 

benefit am ount Num ber Percent

Num ber

(thousands) Percent

A ll plans with sp e cial early

retirem ent-------------------------------— 1,051 100.0 2 ,6 7 4 100.0

Sam e as n o rm a l------------------------- 391 3 7 .2 1 ,3 3 7 5 0 .0

Double n o r m a l-------------------------- 646 6 1 .5 1,3 0 3 4 8 .7

D ifferen t but larger than norm al — 14 1 .3 34 1 .3

1 A ctive workers in 1961.

NOTE: Because of rounding, sums of individual item s m ay not equal totals.

Implications for Mobility

To some extent, an early retirement provision, like a vesting provision,

counteracts the potential immobilizing effects of a private pension plan by retaining the rights to accrued benefits for qualified workers who leave a job before

normal retirement age, regardless of whether they leave the labor force, become

self-employed, or go to work for another employer. Early retirement provisions

have other manpower or personnel management implications. They introduce

flexible retirement ages into the pension system and complement the flexibility

imparted by optional early retirement after age 62 under social security. They

provide an equitable device for easing older workers into retirement when their

capacities deteriorate. These provisions also lead to the opening or retaining of

jobs for young workers when other opportunities are not available. Thus, in

recent years, more and more attention has been given to early retirement, in

collective bargaining and in unilateral actions of management.

Early retirement partially substitutes for vesting in plans without a

vesting provision. Because of high age requirements, however, early retirement

is in most cases available only to an older worker with long service. Thus,

workers vest through early retirement when their potential mobility has been substantially reduced. Since they are also apt to be high seniority employees with

a proven inclination to stay with the employer, the provision seems most valuable

in case of employer directed, rather than voluntary, termination. Therefore, the

potential lock-in effects observed for vesting hardly seem to apply to the same

degree to early retirement provisions.

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One re a so n fo r the p re v a le n c e of e a rly re tire m e n t p ro v isio n s in sin g le

em p loy er p lan s is th eir low c o st to the e m p lo y e r. Settin g a sid e oth er em p lo y ­

m en t and re p la ce m e n t c o s ts , it w ould se e m that the r e t ir e e s b e a r the en tire c o st

of e a r ly re tire m e n t in m o st p la n s, b e c a u se th eir b e n e fits a r e a c tu a ria lly red u ced .

F u rth e r, b e c a u se it a p p lie s m o stly to w o rk e rs a few y e a r s aw ay fro m n o rm a l

re tire m e n t, it is c o n siste n t with the tra d itio n a l con cept of p en sio n s a s a re w a rd

fo r long se r v ic e and a ssu ra n c e , of continued in co m e. W ere th e se the only fa c to r s

to be taken into accou n t, e a r ly re tire m e n t p ro v isio n s w ould p rob ab ly be u n iv e r sa l.

Som e e m p lo y e rs, h ow ever, d e s ir e to hold th e ir em p lo y e e s u ntil n o rm al re tire m e n t

age o r la te r , and often ju stify th eir p en sio n p lan s in su ch t e r m s . W here e a r ly

re tire m e n t is a u to m a tic a lly gran ted at the w o rk e r’ s re q u e st, which is tru e fo r

m o st p riv a te p la n s, the e m p lo y er h a s relin q u ish ed , a s in v e stin g , so m e m e a su r e

of con tro l o v e r h is p e rso n n e l p o licy . In m u ltie m p lo y e r p la n s, w h ere e a r ly r e ­

tire m e n t p ro v isio n s a r e not com m on, a s im ila r c o n sid e ra tio n m ay in fluen ce e m ­

p lo y e rs, although the unions a r e m o re lik ely to be guided by the d e s ir e to re w a rd

lo y al, lo n g - se r v ic e union m e m b e r s.

The em p lo y er r e ta in s a m e a su r e of co n tro l o v e r h is long s e r v ic e w o rk e rs

in p lan s w h ere h is con sen t is n e c e s s a r y fo r e a r ly re tire m e n t. W hether the e m ­

p lo y e r, in p r a c tic e , d o es e x e r c is e h is p re fe re n c e am ong ap p lic a n ts fo r e a r ly r e ­

tire m e n t or m u st bow to exped ien cy and tr e a t a ll a lik e a t any given tim e is not

known, but even if the la tte r situ atio n p re v a ile d , an elem en t of fle x ib ility , fro m

h is point of view , is p r e s e r v e d . T h at is , con sen t m ay be lo o se o r tigh t, d e ­

pending upon the c u rre n t n eed s of the b u s in e s s .

F ro m the w o rk e r’ s stan dpoint, a ssu m in g h is c a p a c itie s re m a in unchanged,

th ere u su a lly is little in cen tive v o lu n tarily to apply fo r e a r ly re tire m e n t. R e ­

tire m e n t its e lf, even a t age 65, b rin g s with it a sh a rp d ro p in in co m e. E a r ly

re tire m e n t, a s d e m o n strate d in th is ch ap ter, m e a n s a su b sta n tia lly g r e a te r lo s s ,

although m any p lan s allow the w o rk e r to d e fe r b e n e fits until n o rm a l re tire m e n t

age so that he m ay be ab le to av oid the red u ction of b e n e fits b e c a u se of ag e (but

not fo r s e r v ic e ). Som e w o rk e rs, h ow ever, m ay d e s ir e o r m ay h ave to r e tir e

e a rly , o r change jo b s, b e c a u se of red u ced p h y sic a l o r m en ta l cap a c ity , lo s s of

sk ill, d ifficu lty in le a rn in g a new jo b , o r oth er p e r so n a l r e a s o n s . In so m e o c ­

cup ation s and in d u strie s, o ld e r w o rk e rs m ay w ish to change h eavy jo b s fo r lig h te r

on es which w ould p e rm it them to w ork lo n g e r.

To co u n teract the heavy c o st of e a r ly re tire m e n t to the w o rk e r and to

m ak e volu n tary re tire m e n t or w ith draw al d e s ir a b le , o r a t le a s t l e s s u n d e sira b le ,

the em p lo y er m ay , in so m e c ir c u m sta n c e s, in fo rm a lly "sw e e te n " the b en e fit. In

the p a s t few y e a r s , so m e e m p lo y e rs have en co u raged vo lu n tary e a r ly re tire m e n t

by p rov id in g in c r e a s e d life tim e b e n e fits fo r w o rk e rs re tir in g durin g a p a r tic u la r

p e rio d of la b o r fo rc e ad ju stm en t, o c c a sio n e d by tech n o lo g ical change o r fo r oth er

r e a s o n s . The extent of th is p r a c tic e is unknown. The su b sta n tia l c o st of su p ­

plem entin g b e n e fits in th is w ay, h ow ever, d is c o u r a g e s its g e n e ra l and e x te n siv e

u se , although se le c tiv ity , a s in the c a s e of sp e c ia l e a rly re tire m e n t p ro v isio n s,

c o n tro ls and le s s e n s th e se c o s t s .

D e sp ite s e r io u s d raw b ack s in e a rly re tire m e n t p ro v isio n s, so m e unions

r e g a r d e a r ly re tire m e n t a s an a p p ro p ria te , though lim ite d , d ev ice to en co u rage

or en able o ld e r, high se n io rity union m e m b e rs to r e tir e e a r ly so a s to open up

jo b op p ortu n ities fo r younger union m e m b e rs, p a r tic u la r ly in in d u strie s u n d e rgoing e x te n siv e tech n o lo gical change o r during p e rio d s of high unem ploym ent. 30

30 For exam p le, see Resolutions C om m ittee, F in al Report, 19th Constitutional Convention, United A utom obile 

Workers, March 20-27, 1964, A tlan tic C ity, New Jersey, p. 11.

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U nions have attem p ted to take so m e of the b e n e fit-re d u ctio n stin g out of e a r ly

re tire m e n t by n egotiatin g lib e r a l red u ction sc h e d u le s. F o r ex am p le, so m e of the

UAW n ego tiated p lan s adopted le s s - th a n - a c tu a r ia l red u ction sc h e d u le s fo r e a rly

r e t ir e e s , so that e m p lo y e rs now sh a re a g r e a te r p a rt of the c o st of re g u la r e a rly

re tire m e n t with the w o rk e r.

W hile c o s ts , ra th e r than m anpow er c o n sid e ra tio n s, accou n t fo r the sh a rp

b en e fit-red u ctio n fa c to r s in n e a rly a ll re g u la r e a r ly re tire m e n t p ro v isio n s, the

r e v e r s e is tru e in sp e c ia l e a r ly re tire m e n t p ro v isio n s. The m o re ge n ero u s b en ­

e fits p rov id ed by th e se p lan s w e re adopted to so lv e m an p o w e r-p e rso n n e l p ro b le m s

r e s is tin g oth er eq u itab le and conventional m e an s of re so lu tio n . On the w hole,

s p e c ia l e a rly re tire m e n t p ro v isio n s w ere not d e sign e d to fo s te r volu n tary job

change o r to en co u rage e a r ly re tire m e n t. R a th e r, they w ere d esign ed to help

in vo lu n tarily se p a ra te d w o rk e rs, and to p rovid e a su ita b le , equ itab le m ethod of

e a sin g out w o rk e rs unable by r e a so n of ag e to cope with changed job re q u ire m e n ts,

p a r tia lly d isa b le d w o rk e rs, and w o rk e rs with o b so le te s k ills . M an p o w er-p erson n el

p ro b le m s of th is n atu re have alw ay s con cern ed m an agem e n ts and u nion s, and w ill

lik ely b ecom e even m o re p r e s s in g a s tech n o lo gical change b e c o m e s m o re p e r ­

v a siv e ; the unique fe a tu re of sp e c ia l e a r ly re tire m e n t is its u se of the pen sion

m e c h an ism a s a le v e r . T h e se p ro v isio n s have given the em p loy er ad d ition al fle x ­

ib ility with in c r e a s e d p en sio n c o s t s , but o ffse ttin g th e se c o sts a r e the r e la tiv e

c o s ts of other so lu tion s (e. g . , re tra in in g w o rk e rs).

It m u st be e m p h asiz e d that c o m p reh en siv e in fo rm atio n on the p r a c tic a l

ap p licatio n of e a r ly re tire m e n t p ro v isio n s is not a v a ila b le . Undoubtedly, durin g

p e rio d s of high unem ploym ent, p r e s s u r e s upon e m p lo y e rs, union s, and w o rk e rs

tow ard e a r lie r re tire m e n t tend to m ount. A re ce n t study of r e t ir e e s under s e v e r a l

p lan s in the auto in d u stry in d icated that e a rly r e tire m e n ts con stitu ted a h igh er

p rop ortion of to tal re tire m e n ts in re ce n t y e a r s than had been tru e in the p a st. 31

W hether th is is in d icativ e of a tren d in the econom y is unknown.

A nother fa c to r to be taken into account is the influence of e a rly r e t ir e ­

m ent under the S o c ia l S e c u rity A ct. In view of the red u ction in pen sion b en e fits

en tailed by e a rly re tire m e n t under m o st p riv a te p la n s, the e ffe c tiv e o p eratio n of

such p ro v isio n s d ep en d s, in p a rt, on the e a r lie s t re tire m e n t age under s o c ia l

se c u rity . Sin ce s o c ia l se c u rity now allo w s re tire m e n t at ag e 62, it would a p p e a r

that th is m ay b ecom e the ag e at which e a r ly re tire m e n t w ill o ccu r m o st often

under p riv a te p la n s, although age re q u ire m e n ts fo r e a r ly re tire m e n t in p riv a te

p lan s a r e u su a lly lo w e r. If e a r ly re tire m e n t under s o c ia l se c u rity w ere low ered

to age 60, re tire m e n t at that ag e under p riv a te p lan s w ould p rob ab ly be e n co u raged , d e sp ite the red u ction in b e n e fits in m o st p la n s. Below th is ag e , the sh a rp

a c tu a r ia l red u ction in both p riv a te o r public p r o g r a m s w ould p rob ab ly d isc o u ra g e

its u se in ty p ica l situ a tio n s.

31 Harold L. Orbach, "S o c ia l V alues and Institutionalization of R etirem ent, " in R ichard H. W illiam s, Clark 

T ibbitts, and W ilm a Donahue (editors). Processes of A ging: S o c ial and Psychological Perspectives (Prentice -

H all, In c ., 1963) V o l.II, pp. 399-400.

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C h ap ter V, M u ltiem p lo y er P la n s 32

The u ltim ate in the p ro tectio n of the p en sio n rig h ts of w o rk e rs who t r a n s ­

fe r fro m one em p lo y er with a p en sio n plan to an oth er with a p en sio n p lan is to

allow them to c a r r y along th e ir p re v io u sly earn ed p en sio n c r e d its , a s they do

u n d er the n ation al s o c ia l se c u r ity sy ste m . Although s e v e r a l a p p ro a c h e s have

been su g g e ste d to attain th is o b je c tiv e , they h ave b een lim ite d la rg e ly to th eor e tic a l d is c u s s io n s . M u ltiem p lo yer p la n s p ro v id e the c lo s e s t ap p ro ach to the

ach ie v em e n t of fu ll p o rta b ility of p en sio n c re d its in p riv a te p en sio n p la n s. W orke r s belon gin g to m u ltie m p lo y e r p la n s h ave an ad v an tage not en joyed by w o rk e rs

c o v e re d by sin g le em p lo y er p lan s— they m ay change jo b s and e m p lo y e rs a s f r e ­

quently a s they w ish and g e t fu ll c re d it fo r a ll th e ir s e r v ic e , r e g a r d le s s of a g e ,

length of s e r v ic e , o r type of se p a ra tio n , a s long a s th e ir new em ploym ent is with

an em p lo y e r p a rtic ip a tin g in the p lan . The sc o p e of the p lan , i. e . , the e m ­

p lo y e rs p a rtic ip a tin g , thus e sta b lish e s the b o u n d arie s to its p o rta b ility fe a tu r e s .

M u ltiem p lo y er p la n s c h a r a c te r is tic a lly w e re c re a te d out of ex istin g m u ltie m p lo y e r b a rg a in in g a rra n g e m e n ts. T h u s, they a ssu m e d th e ir p la c e am ong

oth er u n ifo rm con ditions of em ploym en t which w e re d ev elop ed out of, and a c c o m ­

m od ated , the a b ility of w o rk e rs re a d ily to sh ift fro m one em p lo y e r to an other

within the b a rg a in in g unit. Sin ce m u ltie m p lo y e r p en sio n p lan s c o v e r only about

th re e -fifth s of the w o rk e rs un d er m u ltie m p lo y e r c o lle c tiv e b a rg a in in g a g re e m e n ts,

so m e grow th in p en sio n plan c o v e ra g e m a y be exp ected . In the lo n g er run, howe v e r , the s p r e a d of m u ltie m p lo y e r p en sio n p lan s w ill depend la rg e ly upon the

sp r e a d of m u ltie m p lo y e r b a rg a in in g .

M u ltiem p lo y er p la n s a r e r e la tiv e ly young. L e s s than 10 p e rc e n t of the

p la n s w e re e sta b lish e d b e fo re 1950. A sp u rt in developm en t took p la c e a fte r

1954, so th at 60 p e rc e n t of the p lan s w e re l e s s than 6 y e a r s old in I9 6 0 . A s

th e se r e la tiv e ly new p lan s m a tu re , it is lik e ly that m an y w ill add e a r ly and d i s ­

a b ility re tire m e n t b e n e fits, a s sin g le em p lo y er p la n s did. A lso so m e new c h a r ­

a c t e r is t ic s and p ro v isio n s that a r e uncom m on today a r e lik e ly to in c r e a s e . F o r

e x am p le , with grow ing a w a re n e ss of the d e s ir a b ility of extended p en sio n c re d it

p ro te c tio n , p r e s s u r e fo r re c ip ro c ity of p en sio n c re d its betw een d iffe re n t p lan s

m ay in c r e a s e , p a r tic u la r ly am ong p la n s co v erin g w o rk e rs in s im ila r occu p ation s

and unions in the sa m e o r con tiguous g e o g rap h ic a r e a s . W hether p ro v isio n fo r

v e stin g w ill u ltim a te ly b eco m e a s p re v a le n t am ong m u ltie m p lo y e r p lan s a s am ong

sin g le em p lo y er p la n s i s , h ow ever, an oth er m a tte r.

In g e n e ra l, m u ltie m p lo y e r p lan s a r e p ro c e d u ra lly m o re fle x ib le than

n ego tiated sin g le e m p lo y er p la n s b e c a u se th e ir jo in t u n ion -m an agem en t b o a rd s a r e

u su a lly au th o rized to am end the p lan a t any tim e . M any ch an ges can b e m ad e

that do not depend upon fo rm a l c o lle c tiv e b arg ain in g n ego tiatio n s at sp e c ifie d con ­

t r a c t ex p iratio n d a te s . T h u s, within the lim its of the b ro a d m an d ate to p ro v id e

re tire m e n t b e n e fits, and the a v a ila b ility of fu n d s, a m u ltie m p lo y e r p lan m ay be

m o re re a d ily ad ap ted to help m e e t p a r tic u la r n eed s and p ro b le m s of the co v ­

e re d gro u p .

32 In addition to the data presented in previous chapters, this chapter draws upon a com prehensive study of 

m ultiem ployer plans presented in M ultiem ployer Pension Plans Under C o llectiv e Bargaining, Spring 1960 (BLS Bulletin 

1326, 1962).

36

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Scope of P la n s

P o rta b le p en sion c r e d its, the d istin g u ish in g c h a r a c te r is tic of m u ltiem p lo y er p la n s, m e an s that the in dividu al w o rk e r re m a in s c o v e re d and b u ild s up

s e r v ic e c re d its a s long a s he is em ployed by one of the e m p lo y er p a rtic ip a n ts,

A s d is c u s s e d la te r , ad d ition al p ro tectio n m ay be p rov id ed by the adoption of

r e c ip ro c ity a rra n g e m e n ts betw een p la n s. B a s ic a lly , the latitu d e of p o ssib le job

change with u n im p aired p en sio n c re d it c o v e ra g e depends on the sco p e of the p lan .

M u ltiem p lo y er p en sion p lan s tend to p a r a lle l the sco p e of m u ltiem p lo y er

c o lle c tiv e b a rg a in in g a g re e m e n ts. A num ber of e m p lo y e rs under a sin g le con ­

tr a c t with a union, o r in so m e c a s e s , a num ber of e m p lo y e rs und er s e p a ra te

a g re e m e n ts, con tribu te sp e c ifie d am oun ts to a pooled c e n tra l fund. T y p ic a lly ,

a s h a s been d is c u s s e d , th e se p lan s a r e found in in d u strie s c h a r a c te r iz e d by s e a ­

so n al o r ir r e g u la r em ploym ent, freq u en t job ch an ges o r tu rn ov er in fir m s , m akin g

it d ifficu lt, if not im p o ssib le , fo r a w o rk er to re m a in with a sin g le fir m long

enough to q u alify fo r a p en sio n . T h u s, m a jo r gro u p in gs of c o v e re d w o rk e rs w e re ,

found iii food and a p p a re l m an u factu rin g, in c o a l m in ing, c o n trac t co n stru ctio n ,

m o to r tra n sp o rta tio n , s e r v ic e s , and tra d e .

M u ltiem p lo y er p lan s v a ry w idely in s iz e ; in th is study, they ran g e fro m

26 w o rk e rs to o v er 250, 000 w o r k e rs. Although m any m u ltie m p lo y e r p lan s a r e

la r g e sc a le e n te r p r is e s — the eigh t la r g e s t c o v e re d a th ird of the w o rk e rs under

m u ltiem p lo y er p lan s— a th ird c o v e re d few er than 500 w o rk e rs each . The la r g e s t

m u ltiem p lo y er pen sion p la n s, each with o v er 100, 000 w o rk e rs, w ere a s fo llo w s:

The C e n tra l S ta te s, So u th east and Southw est A r e a s P en sio n Fund (T e a m s te r s );

W estern C on feren ce of T e a m s te r s P en sio n Fun d; The A m alg am ated In su ran ce

F u n d -P e n sio n Fund (C lothing W o rk ers); A m alg am ated Cotton G arm e n t and A llie d

In d u strie s R e tire m e n t Fund (C lothing W o rk ers); In tern ation al B ro th erh o o d of E l e c ­

t r ic a l W ork ers P en sio n B e n efit T r u s t Fund; The In tern ation al L a d ie s 1 G arm en t

W ork ers* C lo ak and Suit P en sio n Fun d; The U nited M ine W ork ers of A m e ric an

W elfare and R e tire m e n t Fund (co v erin g the b itum inous c o a l in d u stry ); and S tr u c ­

tu ra l Iron W ork ers P e n sio n Fund (a union o p e ra te d p lan ).

Only about 13 n ation al unions r e p re se n te d a s m any a s 5 0 ,0 0 0 o r m o re

w o rk e rs in m u ltiem p lo y er p la n s. The T e a m s t e r s (In d .), with p lan s m ain ly in

m oto r tra n sp o rta tio n , had the la r g e s t num ber of in d ivid u al p lan s and about a

fifth of the c o v e ra g e . The In tern ation al L a d ie s 1 'G arm en t W ork ers and the A m a lgam ated C lothing W ork ers accou n ted fo r a lm o st a ll of the p en sio n p la n s 1 c o v e ra g e

in the a p p a re l m an u factu rin g in d u strie s. In the co n stru ctio n in d u stry , the C a r ­

p e n te rs, E le c t r ic a l W ork ers (IBEW ), B r ic k la y e r s , P lu m b e rs, and Iron W ork ers

a ll w e re h e av ily r e p re se n te d in m u ltiem p lo y er p la n s. U nions in the m a ritim e

in d u stry had a high p ro p o rtio n of th eir m e m b e rs c o v e re d by th e se p la n s, but only

one (In tern ation al L o n g s h o r m e ^ s A sso cia tio n ) re p re se n te d o v e r 5 0 ,0 0 0 w o r k e rs.

The B re w e ry W o rk e rs, both B a k e ry W ork ers* u n ion s, the R e ta il C le r k s , the R e ­

ta il, W h olesale and D ep artm en t S to re Union, and the M eat C u tte rs com m only n e ­

go tiated m u ltiem p lo y er p lan s in th eir re sp e c tiv e in d u strie s.

With th is high p ro p o rtio n of in volvem ent in m u ltie m p lo y e r p la n s, an

eq u ally high p rop o rtio n of m e m b e rs of c e rta in unions h ave m u ltiem p lo y er p en sion

plan p ro tectio n . F o r ex am p le, n e a rly the e n tire m e m b e rsh ip of the In tern ation al

L a d ie s* G arm en t W o rk ers, A m alg am ated C lothing W o rk ers, and U nited M ine

W ork ers (In d .) (exclu din g D is tr ic t 50), and s e v e r a l m a rin e u n ion s, belon ged to 3

33 A few plans allow the worker to continue his coverage if he contributes the em ployer's share to the fund 

in case of unem ploym ent.

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th e se p la n s. In o th e rs, such a s T e a m s te r s (In d .), both B a k e ry unions, C a rp e n ­

t e r s , E le c t r ic a l W ork ers (IBEW ), and P lu m b e rs, union m e m b e rsh ip w as su b ­

sta n tia lly r e p re se n te d in m u ltie m p lo y e r p la n s. On the oth er hand, so m e la rg e

unions such a s the A utom obile W o rk ers, S te e lw o rk e rs, and E le c t r ic a l W ork ers (IUE)

w e re r a r e ly in volved in m u ltie m p lo y e r p la n s.

N e a rly h a lf the w o rk e rs in m u ltiem p lo y er p lan s b elon ged to p lan s that

w e re lim ite d to a sin g le c ra ft, occu p atio n al group, o r in d u stry in a lo c a lity . Of

the re m a in d e r, w o rk e r c o v e ra g e w as about eq u ally divided betw een re g io n a l p lan s

and in d u stryw id e n ation al p r o g r a m s .

The m o st lim ite d m u ltiem p lo y er plan, and the m o st com m on, is a lo c a l

one which c o v e r s a c r a ft o r occu p atio n al grou p in a sp e c ific in d u stry in a s p e ­

c ific city o r m e tro p o litan a r e a . T y p ic a lly , m u ltie m p lo y e r p lan s in the c o n stru c ­

tion, d a iry , and p rin tin g and pu blish in g in d u strie s a r e of th is type. In m any

in sta n c e s, v irtu a lly a ll the w o rk e rs in the en tire in d u stry in the a r e a a r e in ­

cluded in a plan o r p la n s; in oth er in sta n c e s, how ever, only the union ized sectio n ,

which m ay exclu de a su b sta n tia l a r e a of em ploym ent, is co v e re d .

Som e p la n s, such a s th o se u su a lly found in the r e ta il, a p p a re l m a n u fa c ­

tu rin g, and se r v ic e in d u strie s, include a w ide ran g e of s k ills and o ccu p atio n s,

w hile so m e in clude m o re than one union, but th e se , too, a r e u su a lly confined to

a lim ite d ge o g rap h ic a r e a . In so m e in d u strie s and o ccu p atio n s, m u ltiem p lo y er

p en sio n p lan s have expanded to c o v e r an e n tire re g io n . The v e ry n atu re of the

h irin g a rra n g e m e n ts in the w ate r tra n sp o rta tio n in d u stry v irtu a lly d ic ta te s such

p la n s. S im ila r b ro a d re g io n a l p lan s a r e found in the tru ck in g in d u stry .

A b ro a d e r occu p ation and in d u stry c o v e ra g e is p rov id ed by a few p lan s

which co v e r w o rk e rs in a num ber of fir m s en gaged in d iffe re n t in d u strie s in the

a r e a . A plan such a s the W estern C on feren ce of T e a m s te r s P en sio n Fund, which

c o v e r s e m p lo y e rs in d iffe re n t in d u strie s in d iffe re n t a r e a s , p e rm its the w o rk e r

to m ove to any sig n a to ry em p lo y er and s t ill c a r r y h is accu m u la te d p en sio n

p ro tectio n .

N ationw ide p o rta b ility of p en sio n c re d its w ithin an in d u stry is p o ssib le

only under a few la r g e p lan s that a r e n ation al in sc o p e ; they involve about a

fourth of a ll w o rk e rs under m u lti em p loy er p la n s. A m ong th e se a r e the M ine

W ork ers Fund, the E le c t r ic a l W ork ers (IBEW ) P e n sio n Fund, p lan s of both

B a k e ry W ork ers u nion s, two p lan s of the A m alg am ated C lothing W o rk ers, the

F u rn itu re W o rk ers, and the U p h o ls te r e r s 1 In tern ation al Union p la n s. In addition,

union fin an ced and o p e ra te d p en sio n p la n s, such a s th o se of the In tern ation al

T y p o g rap h ic al Union and the Iron W o rk ers, include m e m b e rs throughout the

N ation.

R e c ip ro c ity Betw een P la n s

The p o ssib ility of m ovin g fro m the c o v e ra g e of one m u ltiem p lo y er plan

to an other through r e c ip r o c a l a rra n g e m e n ts p ro v id e s ad d ition al p o rtab le p en sion

c re d it p ro tectio n . H ow ever, only about a tenth of the p lan s had r e c ip r o c a l a r ­

ran g em en ts and th e se r a r e ly c o v e re d p en sion p lan s e sta b lish e d by d ifferen t u n ion s.

R e c ip r o c a l a rra n g e m e n ts u su a lly p ro v id e that the w o rk e r who d o es not

q u alify fo r a b en efit und er the re q u ire m e n ts of one fund can u se se r v ic e a c c u ­

m u lated in oth er p r o g r a m s to attain e lig ib ility fo r re tire m e n t b e n e fits. In o th e rs,

the w o rk e r m ay a c tu a lly t r a n s fe r the m o n ie s ac c u m u la te d in h is account under

one plan to an oth er fund which w ill pay him , on re tire m e n t, a m onthly b en efit

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based on the amount transferred. 34 About a fourth of the workers covered by

multiemployer plans belonged to plans with reciprocity arrangements. However,

a large proportion of these workers were covered by the International Ladies*

Garment Workers* Union plans, which, in practice, operate as a large pension

plan covering nearly all members of the union.

The joint boards of trustees of a relatively few plans are specifically

empowered to work out reciprocal arrangements with plans of their own union,

and in some cases, other unions as well. As has been pointed out, the joint

board administering a multiemployer pension plan usually has the power to formulate and amend the pension plans, including, presumable, the power to enter

into reciprocal arrangements. Suitable arrangements, which may be difficult to

achieve, must first be negotiated. Additional cost to the plan is also an important deterrent.

Restrictions on Employment After Termination

After termination of employment because of retirement, single employer

plans rarely restrict the individual worker*s choice of employment, should he

wish to continue working, except that which would be injurious to the firm. Thus,

the retired worker is free to pursue a job quest, even in the same occupation or

industry. On the other hand, multiemployer plans usually do not permit the

worker to remain in his trade or industry and still receive his pension. The

employers as a group assume the role of single employers who, typically, do

not provide both employment and a pension benefit to workers at the same time.

The craft interests of national unions, moreover, would not be protected if retired members were to compete with other members for jobs or were to carry

their skills into the nonunion sectors of the industry.

Implications for Mobility

Multiemployer pension plans were, in most cases, developed in industries

and employments where workers characteristically shift from employer to employer within the industry. Portability of pension rights, therefore, evolved as

a natural and readily acceptable feature of multiemployer plans.

The worker who feels destined to spend his entire work career in one

company and to retire at 65 or later may feel no need for vesting or early retirement provisions or any other device to protect his pension credits before retirement. The same is true of a worker under a multiemployer plan, except

that it is likely that, in general, a substantially higher proportion of workers

actually will spend their working lives within the scope of the plan. For skilled

craftsmen or other specialized workers, the portability inherent in a multiemployer plan may provide all of the protection against loss of pension credits

through mobility that the individual worker may need or desire during his working

life, barring a substantial change or decline in the sector of the industry in which

he is employed. But such changes and declines do take place, as exemplified

by the experience of coal miners. Moreover, multiemployer plans also operate

in industries where there is little craft or trade attachment on the part of workers;

in these instances, turnover or the need for job change maybe so high that portability alone affords little pension protection to most covered workers.

34 To a lesser extent, the w orkers age at the tim e of the transfer, the earnings o f the fund, and other a c ­

tu arial considerations w ill also affec t the size o f his benefit.

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The portability of pension credits inherent in all multiemployer pension

plans, desirable as it is, often tends to overshadow the possible restraints on

outward worker mobility implicit in the plans. No multiemployer plan answers

all criteria of truly portable pension credits, for the scope of portability is

limited, although a few grant substantial protection within the limits of existing

institutional and labor market practices. Reciprocity arrangements extend these

limits. Basically, the right to portable credits was not designed to maintain

protection for, or enhance the movement of, workers beyond the area of the collective bargaining relationship. In effect, multiemployer plans accommodate the

maximum amount of voluntary or involuntary movement within the scope of the

plan, but where they lack vesting and early retirement provisions, they discourage

movement to other industries, other areas, and, more generally, employers

outside the plan.

Although many single employer plans originated, in part, from a desire

to encourage workers to stay with the company until retirement, the widespread

adoption of vesting and early retirement provisions represents a substantial relaxation of this purpose. The growth of pension plans in multiemployer situations

may not have been motivated by a similar desire to hold workers, but it is consistent with the concern on the part of an employers’ group to conserve its labor

force and on the part of the union to conserve its membership. These reasons

may be amplified in such industries as construction, where the unions, employers,

and workers often have a heavy investment in training. Reciprocity arrangements

typically represent a shift of these interests to a higher and broader level. Restrictions on employment after retirement reflect another facet of these concerns.

Just as the absence of vesting and early retirement provisions in single employer

plans, or rigidities and restrictions in these provisions, tend to tie the employed

worker to his company, a similar tendency would be present in multiemployer

plans, except that the worker’s attachment would be to a particular group of employers rather than a single employer.

The tendency to tie a worker to a particular group of employers is far

less significant where multiemployer plans cover all jobs in a particular industry

or occupation, since, in many cases, the worker is already bound to the employer

group by the specialized nature of his training or experience. For example, a

journeyman electrician in a large city, or a skilled cutter in a clothing center

may never contemplate the possibility of another career, or of moving elsewhere,

and may never have to. Such workers traditionally have a strong inclination to

cling to their trades and their markets, even after the likelihood of steady employment has passed. A pension plan without vesting and early retirement may reinforce these ties, especially among workers with a sizable stake in the plan. Thus,

it may well be that the immobilizing influence of a multiemployer pension plan

chiefly effects unemployed members rather than those employed. As in the case

of single employer plans, the better the plan (i. e. , benefit levels, etc.), the

greater is its potential influence on workers* decisions on leaving its shelter.

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Chapter VI. Prospects of Benefits

The vesting, early retirement, portable credits, and normal retirement

provisions determine whether workers will eventually receive benefits from participation in a pension plan. Two aspects of the interrelationships among these

provisions are discussed in this chapter: (1) The extent to which these provisions

supplement each other or substitute for another, and (2) the earliest ages, and

the required service, at which workers are assured of a benefit by the provisions

of the plans, whether in the form of a vested right or retirement income.

Prevalence of Protective Provisions

As previously mentioned, of the 15. 6 million workers in the pension plans

studied, 9. 3 million or 60 percent belonged to a plan with a vesting provision

(table 25). About 1 out of 7 workers in these vesting plans could qualify only if

involuntarily separated. However, slightly over half of the workers in plans without vesting belonged to plans that had an early retirement feature, as shown below.

Almost a fifth of the workers had neither vesting nor early retirement.

Percent

Provision Plans Workers

A ll plans----------------------------------------- 100.0

With vesting----------------------------------------- 6 7 .2 5 9 .6

Any sep aration---------------------------- ----- 6 3 .2 5 0 .7

Involuntary separation------------------- 4 .1 8 .9

Without v e stin g ------------------------------- ----- 3 2 .8 4 0 .4

With early retirem en t------------------------ 1 8 .4 2 1 .9

Without early re tire m e n t------------------- 14.4 1 8 .5

A ctive workers in 1961.

NOTE; Because of rounding, sums of individual item s m ay not equal totals.

In single employer plans without vesting (about 30 percent of the plans

with almost 30 percent of the workers), over 4 out of 5 workers had an early

retirement provision. An eighth of the single employer plans with about 600,000

workers (5 percent) had neither vesting nor early retirement.

Percent

Provision Plans Workers

A ll single em ployer plans------------------ 100.0 100.0

With v e stin g ----------------------------------- 6 9 .4 7 1 .5

Any se p a ra tio n --------------------------- 65. 2 5 9 .9

Involuntary se p aration------------------ 4 .2 11.6

Without v e s tin g ------------------------------- 3 0 .6 2 8 .5

With early re tire m e n t------------------ 1 8 .0 2 3 .4

W ithout early retirem ent--------------- 12.6 5 .2

1 A ctive workers in 1961.

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

41

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42

On the other hand, only 1 out of 4 of the workers in multiemployer plans

without vesting had an early retirement provision. More than 2 out of 5 multiemployer plans, covering about 2.3 million workers (3 out of 5 workers), had

neither vesting nor early retirement.

Percent

Provision Plans W orkers1

A ll m ultiem ployer plans------------------- 100.0 100.0

With v e stin g ---------------------------------- 3 1 .7 2 3 .6

Any se p a ra tio n ---------------------------- 3 0 .3 22.8

Involuntary se p aration------------------ 1 .4 . 7

W ithout v e s tin g ------------------------------- 6 8 .3 7 6 .4

With early re tire m e n t------------------ 2 4 .8 1 7 .6

W ithout early retirem ent--------------- 4 3 .5 5 8 .9

1 A ctive workers in 1961.

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

Taking into account the portability features of multiemployer plans, the

degree of pension protection offered to all covered workers by their plans can be

arrayed, as illustrated below, in scale. At the bottom (least protection) are those

workers who must retain their employment with a single employer until normal

retirement age if they are to qualify for any retirement benefits. Failure to do

this, whether voluntarily or involuntarily, would cost them all of their pension

rights. Only about 4 percent of the workers were in this category. If workers

who must remain within the scope of a multiemployer plan, although not dependent

on one employer, were added to this, over a fifth of the workers would be included. Protection of accrued pension rights after meeting early retirement qualifications was available to another fifth of the workers. Vesting upon involuntary

separation after qualifying, a protection apparently lost upon voluntary job change,

was available to a tenth. Finally, enjoying the protection of vesting upon any type

of separation was half of the coverage of private plans. At all stages, protection

was usually conditioned on meeting age and service requirements.

W orkers1

How workers becom e assured 

o f pension benefits

Number

(thousands)

A ll w ork ers---------------------------------------------------------— 15,621

Must rem ain with particular em ployer or w ithin 

coverage o f m ultiem ployer plan until—

Q ualifying for vestin g2 *4------------------------------------ -— 7 ,9 2 0

Q ualifying for vesting and involuntary separation — 1 ,3 8 8

Q ualifying for early retirem en t------------------------------ 3 ,4 2 4

Norm al retirem ent a g e ----------------------------------------- 2 ,8 8 9

Must rem ain with particular (individual) em ployer 

until norm al retirem ent a g e ------------------------------------- 606

Percent

100.0

50. ,7 

8 .9 

2 1 .9 

* 18. S

3 .9

1 A ctive workers in 1961.

2 About 3 m illio n workers were in contributory plans in which vesting for 

qu alified workers was conditioned upon nonwithdrawal o f em ployer contributions.

2 N early a ll o f the workers in this category (about 1 ,3 0 0 ,0 0 0 ) belonged to 

plans with early retirem ent.

4 Includes category below.

NOTE: Sums o f individual items do not equal totals.

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Plans covering salaried workers only, offered the highest degree of pension protection, followed closely by combined production and salaried worker

plans (table 26); only 2.4 percent of salaried plan employee coverage and 4.3

percent of the combined coverage lacked both vesting and early retirement. Production worker plans, dominated by multiemployer plans, did not offer either

type of protection for over a third of total coverage, as shown below, offering

in their stead portability of credits to all but a small number of the workers.

(See table 26.)

Salaried and 

production workers

Production 

workers only

Salaried 

workers only

Percent Percent Percent

Provision Plans W orkers1 Plans W orkers1 Plans Workers

A ll plans-------------------------------- 100.0 100.0 100.0 100.0 100.0 100.0

With vesting--------------------------- 6 2 .5 6 5 .9 6 1 .2 4 6 .9 7 6 .3 8 0 .7

W ithout v e stin g ----------------------- 3 7 .5 34 .1 3 8 .8 5 3 .1 2 3 .7 1 9 .3

With early retirem en t---------- 1 9 .8 2 9 .8 1 7 .4 17 .2 1 9 .8 1 6 .9

W ithout early re tire m e n t----- 1 7 .7 4 .3 2 1 .4 3 5 .9 3 .9 2 .4

1 A ctive workers in 1961.

NOTE: Because of rounding, sums of individual item s m ay not equ al totals.

Industries differed substantially in the proportion of plans and covered

workers with neither vesting nor early retirement because of wide variations in

the relative importance of multi employer, production worker plans and of collective bargaining (table 27). The lowest degree of such protection for workers was

in the mining and construction industries, where most workers belonged to multiemployer plans without vesting or early retirement, i.e., they must qualify for

normal retirement to obtain any benefits. In transportation, services, and trade,

where collectively bargained multiemployer plans were less common, a smaller

proportion of employees— about a third, two-fifths, and a fifth, respectively— had

neither early retirement nor vesting. On the other hand, in other nonmanufacturing industries, such as finance (typically including contributory plans for salaried workers) and communications and public utilities, the vast majority of workers had either vesting, early retirement, or both.

In manufacturing industries, as a whole, a large proportion of workers

had vesting, early retirement, or both. Only in the apparel industries where

multiemployer plans prevail, did a large proportion of workers have little pension credit protection other than portability and, in some industries, reciprocity.

The Effects of Age and Service Requirements

An evaluation of the significance of vesting and early retirement provisions in terms of their protection of accumulated pension rights requires consideration of minimum age and service requirements for benefits. This is most

readily done by considering the earliest age and associated service (regardless

of other conditions such as restriction or type of termination, etc.) at which a

worker can qualify for a vested, early, or normal retirement benefit (excluding

disability retirement and special retirement benefits). This also eliminated the

sometimes artificial distinction between vesting and early and normal retirement

in the plans.

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On the w h o le, r e g a r d l e s s o f the ty p e o f b e n e fit p r o v is io n s , o v e r tw o - 

th ir d s o f the w o r k e r s in p r iv a t e p e n sio n p la n s w ou ld h av e to sta y w ith th e s a m e 

f i r m o r p la n fo r 15 y e a r s o r m o r e in o r d e r to r e ta in o r q u a lify fo r p e n sio n r ig h ts 

(ta b le 28 ). N e a r ly a ll o f the r e m a in in g w o r k e r s w ou ld q u a lify w ith 10 o r fe w e r 

y e a r s .

Percent

M inim um service requirem ents 1 2

A ll plans studied---------------------------------

No service requirem en t------------------------

Less than 10 y ears--------------------------------

10 y e a rs--------------------------------------------

11—14 y e a rs----------------------------------------

15 y e a rs---------------------------------------------

16-19 y e a rs----------------------------------------

20 y e a rs--------------------------------------------

21-24 y e a rs----------------------------------------

25 y e a rs--------------------------------------------

26-29 y e a rs----------------------------------------

30 y e a rs--------------------------------------------

Over 30 y e a r s -------------------------------------

Plans Workers

100.0 100.0

1.2 0 .9

1 3 .2 5 .3

1 8 .3 2 2 .3

2.8 2 .3

3 1 .8 3 2 .0

2.0 1 .5

1 5 .8 1 9 .2

2 .7 1.1

8 .7 7 .0

2 .3 . 4

.9 7 .7

.3 . 4

1 For those plans which sp ecified a period of em ploym ent to be served before 

participation in the plan could begin , the m inim um service requirem ent includes 

the preparticipation service and the required p lan m em bership service.

2 A ctive workers in 1961.

NOTE: Because of rounding, sums of individual item s m ay not equ al totals.

A bout 2, 7 5 0 ,0 0 0 w o r k e r s , o r ab o u t a six th o f th e to ta l h ad no a lt e r n a ­

tiv e b u t to a tta in a g e 65 w ith th e ir e m p lo y e r o r in th e sc o p e o f th e p la n in o r d e r 

to r e ta in p e n sio n r ig h t s , A bout 10 p e r c e n t f i r s t q u a lifie d fo r e a r ly o r n o r m a l r e ­

tir e m e n t a t a g e 6 0.

Percent

M inim um age requirem ents1

A ll plans studied------------------------------

No age requ irem en t--------------------------

Under age 40-----------------------------------

Age 4 0 --------------------------------- --------

Age 4 5 .................................................................

Age 5 0 -------------------------------------------

A ge 5 5 -------------------------------------------

A ge 6 0 -------------------------------------------

A ge 6 1 - 6 4 --------------------------------------

A ge 6 5 -------------------------------------------

Over age 65-------------------------------------

Plans Workers

100.0 100.0

3 0 .8 2 6 .6

4 .0 .6

8.8 2 2 .4

4 .9 5 .2

7 .8 5 .1

2 0 .5 12.6

8.2 9 .8

. 4 2.1

1 4 .6 1 5 .4

(3 ) .1

1 Som e plans specified alternative requirem ents; for each case, the one with 

the earliest age or no age requirem ents w as selected .

2 A ctive workers in 1961.

3 Less than 0 .0 5 percent.

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

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A ninth o f the w o r k e r s , a s show n in the fo llo w in g ta b u la tio n in d ic atin g 

the c o m b in e d e ffe c ts o f a g e an d s e r v ic e r e q u ir e m e n ts , h ad to h av e o v e r 15 y e a r s 

o f s e r v ic e and a tta in a g e 65 in o r d e r to q u a lify fo r b e n e fits in th e ir p la n s . On 

the o th er h an d , o v e r a th ird o f the w o r k e r s w ould q u a lify fo r b e n e fits if th ey had 

a tta in e d 15 y e a r s o f s e r v ic e and a g e 40.

Minimum service requirements for workers2

Total 10 years 11-15 16-20 Over 20

workers and under years years years

Minimum age requirements 1 Percent Percent Percent Percent Percent

All workers 3----------------------------- 100.0 28.4 34. 3 20.7 16.5

No age requirement--------------------- 26.6 6.2 7.7 3.7 8.9

Age 40 and under------------------------ 23.0 13.0 9. 1 .9 (4)

Age 45------------------------------------ 5.2 2. 1 2.4 .5 .2

Age 50------------------------------------ 5.1 .7 2.0 1.4 1.0

Age 55------------------------------------ 12.6 2.6 6.2 2.6 1.1

Age 60------------------------------------ 9.8 1.7 2.2 3.6 2.3

Age 65------------------------------------ 17.6 2.1 4.6 7.9 3.0

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

was selected.

2 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.

3 Active workers in 1961.

4 Less than 0.05 percent.

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

O th er co m m o n c o m b in a tio n s w e re a g e 55 an d 15 y e a r s o f s e r v ic e o r l e s s , and 

a g e 60 w ith m o r e th an 15 y e a r s o f s e r v ic e . G e n e r a lly , lo n g s e r v ic e w a s r e ­

q u ire d in p la n s w ith no a g e r e q u ir e m e n t.

T he c o m p o site o f a g e and s e r v ic e r e q u ir e m e n ts v a r ie d w id e ly am o n g in ­

d u s t r i e s , r e fle c tin g d iv e rg e n t p a tt e r n s o f r e q u ir e m e n ts fo r v e stin g and e a r ly r e - 

tir e m e n t and the in d u str y d istr ib u tio n o f m u ltie m p lo y e r p la n s (ta b le 29). In m an u ­

fa c tu r in g in d u s t r ie s a s a w h o le, only ab o u t a sev en th o f the w o r k e r s h ad to re a c h 

a g e 65 in o r d e r to q u a lify fo r a b e n e fit, a s a g a in s t a lm o s t a fo u rth o f th e w o r k e r s 

in n o n m a n u fa c tu rin g in d u s t r ie s . T he h e a v ie s t c o n c e n tra tio n o f th e se r e s t r i c t i v e 

r e q u ir e m e n ts w a s in in d u s t r ie s w ith a la r g e n u m b e r o f c o lle c tiv e ly b a r g a in e d 

m u ltie m p lo y e r p la n s fo r b lu e - c o lla r w o r k e r s , su ch a s c o n stru c tio n , t r a n s p o r t a ­

tio n , w h o le sa le t r a d e , and s e r v i c e s . In m a r k e d c o n t r a s t , m o r e lib e r a l p r a c t i c e s 

fo r q u a lify in g fo r b e n e fits p r e v a ile d in the fin a n c e in d u str y , w h e re c o n trib u to ry 

p la n s fo r w h ite - c o lla r w o r k e r s w e r e co m m o n . L i b e r a l r e q u ir e m e n ts w e r e a ls o 

found in the p la n s o f p u b lic u t ilit ie s (in clu d in g the d o m in atin g te lep h o n e co m p an y 

p la n s ) .

N e a r ly a ll o f the w o r k e r s in s a l a r i e d w o r k e r p la n s c o m p a r e d to 2 out of 

3 w o r k e r s in p ro d u c tio n w o r k e r p la n s w ou ld q u a lify fo r b e n e fits b e fo r e a g e 65 

(ta b le 30). T he s m a l le r p ro p o rtio n in b lu e - c o lla r p la n s s t e m s fr o m the d o m in an ce 

o f m u ltie m p lo y e r p la n s in th at g ro u p . In p la n s c o v e rin g both s a l a r i e d and p r o ­

d u ctio n w o r k e r s , 95 p e rc e n t o f the w o r k e r s q u a lifie d e a r l i e r th an a g e 65.

T he a g e and s e r v ic e r e q u ir e m e n ts o f v e s tin g , e a r ly , and n o r m a l r e t i r e ­

m en t, a s p r e v io u s ly d is c u s s e d , can be in te g r a te d b y c o n sid e r in g the a g e s a t w hich 

a w o r k e r h ir e d at a g e 25 can f i r s t q u a lify fo r a b e n e fit u n d e r p la n p r o v is io n s .

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F o r p u r p o s e s o f th is r e p o r t , the im a g e i s r e v e r s e d to p r e s e n t th e p ro p o rtio n o f 

w o r k e r s h ir e d a t a g e 25 who s t il l do not q u a lify fo r b e n e fits a s th ey a tta in p r o ­

g r e s s i v e l y g r e a t e r a g e an d s e r v ic e , w ith the s a m e e m p lo y e r o r w ithin th e sc o p e 

o f a m u ltie m p lo y e r p la n . A s c h a r t 3 i l l u s t r a t e s , b y a g e 5 0 , w ith 25 y e a r s of 

s e r v ic e , 45 p e r c e n t o f th e p la n s c o v e rin g a s lig h tly h ig h e r p r o p o r tio n o f th e w o r k ­

e r s , p r o v id e no p r o te c tio n to w o r k e r s ' e q u itie s in th e p la n s . B y a g e 6 0, 13 p e r ­

cen t o f th e w o r k e r s in 17 p e rc e n t o f the p la n s r e m a in e d u n p ro te c te d .

T h e r e i s a m u ch b e t te r ch an ce th at a m e m b e r o f a s a l a r i e d w o r k e r s 

p la n w ou ld q u a lify fo r b e n e fits a t an e a r ly a g e th an a m e m b e r o f a p ro d u c tio n 

w o r k e r s p la n . (S e e c h a r t 4 .) T h e c h a n c e s fa c in g w o r k e r s in c o m b in e d p la n s 

a r e c lo s e ly r e la t e d to the s a l a r i e d w o r k e r s 1 p r o s p e c t s . O v e r 3 out o f 5 o f the 

p ro d u c tio n w o r k e r s w e r e in p la n s in w h ich a w o r k e r w ou ld not q u a lify u n til a g e 

50 c o n tr a s t e d w ith 1 out o f 4 s a l a r i e d w o r k e r s . B y a g e 6 0 , a lm o s t a ll s a l a r i e d 

w o r k e r s and w o r k e r s in c o m b in e d s a la r ie d - p r o d u c t io n w o r k e r p la n s co u ld q u a lify 

u n d e r th e a s s u m e d c o n d itio n s, bu t o v e r a th ir d o f th e p ro d u c tio n w o r k e r s w e r e in 

p la n s w h e re th ey s t il l w ou ld not q u a lify .

G iv e n th e a g e an d s e r v ic e r e q u ir e m e n ts fo r v e s tin g an d r e tir e m e n t, the 

c h a n c e s , even u n d e r fa v o r a b le a s s u m p t io n s , a r e l e s s th an 5 0 -5 0 th at w o r k e r s 

w ill e a r n r ig h ts o r b e n e fits in two p e n sio n p la n s by th e tim e th ey r e a c h a g e 6 5. 

A s w o r k e r s a c c u m u la te s e r v ic e an d a g e u n d e r a p e n sio n p la n , th ey in c r e a s e th e ir 

c h a n c e s o f r e c e iv in g a b e n e fit fr o m th at p la n , b u t, a s th ey a g e , th e ir c h a n c e s o f 

q u a lify in g fo r b e n e fits u n d e r o th e r p la n s , sh o u ld th ey ch an ge e m p lo y e r s , l e s s e n . 

T o i l l u s t r a t e , a s s u m e th at w o r k e r s b eg in n in g co n tin u o u s p e n sio n p la n c o v e r a g e at 

a g e 25 a r e c o m p e lle d to ch an ge e m p lo y e r s m id w ay in th e ir c a r e e r s (b etw een a g e s 

40 an d 50) and th at th ey im m e d ia te ly o b tain c o v e r a g e u n d e r a n o th e r p e n sio n p la n , 

w h e re th ey r e m a in u n til r e tir e m e n t a t a g e 65. 35 B y th is t im e , w ith p e n sio n p la n 

c o v e r a g e o f ab o u t 40 y e a r s d iv id e d b etw een tw o p la n s , l e s s th an h a lf w ill h av e 

b e e n a s s u r e d a p e n sio n b e n e fit b y both p l a n s . 36 S o m e a d d itio n a l w o r k e r s m a y , 

h o w e v e r, s e c u r e a se c o n d p e n sio n b y w o rk in g b ey o n d a g e 6 5 . T h e r e m a in d e r 

m a y h av e q u a lifie d fo r b e n e fits fr o m one o f th e p la n s , bu t so m e m a y not h av e 

q u a lifie d in e ith e r p la n .

Im p lic a tio n s fo r M o b ility

T h is stu d y p r e s e n t s d a ta r e la tin g to p r iv a t e p e n sio n p la n s th at sh o u ld b e 

ta k e n in to a c c o u n t in a s s e s s i n g th e im p lic a tio n s o f the p e n sio n s t r u c t u r e fo r la b o r 

m o b ility ; in e v a lu a tin g p a s t s tu d ie s o f la b o r m o b ility an d w o r k e r s ' a ttitu d e s to w a rd 

m o b ility d e t e r r e n t s ; an d in fo r m u la tin g fu tu re s tu d ie s in th e se a r e a s . It fo c u s e s 

on the p o s s ib l e d e t e r r e n t s fo r the w o r k e r who h a s a c c u m u la te d su b s ta n tia l p e n ­

sio n c r e d it s — u s u a lly w o r k e r s fr o m a g e s 35 to 40 an d 55 to 60— v o lu n ta r ily to 

ch an ge jo b s . T h e stu d y , h o w e v e r, d o e s not a tte m p t d ir e c t ly to m e a s u r e th e e f ­

f e c t s o f p r iv a t e p e n sio n p la n s on la b o r m o b ility .

A t th e o u ts e t, it w a s e m p h a siz e d th at th e in flu e n c e o f o th e r p r a c t i c e s 

r e la t e d to s e r v ic e ( s e n io r it y , in p a r t ic u la r ) i s in te rtw in e d w ith th e in flu e n c e o f 

p e n sio n p la n s , and m a y , on b a la n c e , ou tw eigh c o n sid e r a tio n o f a c c u m u la te d p e n ­

sio n c r e d it s a s m o b ility d e t e r r e n t s . It w a s a ls o p o in te d out th at a r a th e r e l e ­

m e n ta l ty p e o f m o b ility w a s p r im a r ily in v o lv e d in th is c o n sid e r a tio n o f p e n sio n 

p la n s , n a m e ly , th e a b ility o f w o r k e r s to ch an ge e m p lo y e r s , an d th at o c c u p a tio n a l 

o r g e o g r a p h ic m o v e m e n t w a s n ot n e c e s s a r i l y in v o lv e d .

35 It is assum ed in respect to both in itial coverage and subsequent coverage that the workers are distributed 

am ong the plans studied in proportion to the number of activ e workers covered by them .

36 This conclusion is based not only on the data in this study, but also on data relatin g to norm al retirem ent 

requirem ents to be presented in a subsequent bulletin.

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CHAR T 3. PERCENT OF PRIVATE PENSION PLANS AND WORKERS W ITH O U T ANY BENEFITS (V ESTIN G , 

EARLY R ETIR E M E N T, NORMAL RETIR EM ENT) AT SPECIFIED AGES FOR WORKERS HIRED AT AGE 25,

WINTER 1962-63

Percent

J / Based on a study of 15,818 private pen si on plans covering 15.6 million active workers in 1961,

2/ A few plans have requirements of age 68 or 70.

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Chart 4. PERCENT OF WORKERS IN PRIVATE PENSION PLANS W ITHO U T ANY BENEFITS (VESTING, 

EARLY R ETIR EM ENT, NORMAL RETIREM ENT] AT SPECIFIED AGES FOR WORKERS HIRED AT AGE 25, 

BY TYP E OF WORKER COVERED, W INTER 1962-63

Percent

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Any d e te rre n t e ffe c ts of a pen sion plan on m o b ility a r e ob v iou sly a lso

re la te d to the valu e of the pen sion b en e fits to the in d ivid u al w o rk e r and to h is

evalu ation of h is c u rre n t sta tu s and of h is fu tu re p r o s p e c ts . Both a r e e ss e n tia lly

su b je c tiv e o r sp e cu la tiv e c o n sid e ra tio n s, the la tte r m o re so than the fo r m e r . The

elem en ts of p riv a te pen sion p lan s that p rov id e the settin g fo r th e se c o n sid e r ­

atio n s a r e high ligh ted in th is study, a s a r e the ele m e n ts that m igh t c ir c u m sc r ib e

the a r e a of ch oice w ithin which the w o rk er d e c id e s.

The a s p e c ts of the p riv a te pen sion stru c tu re which a p p e a r to b e a r m o st

sig n ific a n tly on m o b ility (and oth er m anpow er) p ro b le m s a r e su m m a riz e d below ,

concluding with the im p lic a tio n s of the in te gratio n o f p ro te c tiv e p ro v isio n s d e v e loped in th is ch ap ter and a b r ie f statem en t on the outlook. It m u st be e m p h asiz e d

that th is su m m a riz a tio n , e x p r e s s e d in g e n e ra l t e r m s , d o es not tak e into account

d iffe re n c e s am ong fir m s and in d u strie s in the p o ssib le e ffe c ts of p en sion plan

p ro v isio n s.

1. The p riv a te pen sion m ovem en t is a young in stitu tio n . The im p act of

p riv a te p lan s on w o rk e r attitu d es and c o n sc io u sn e ss is undoubtedly s t ill in the e m ­

b ry on ic sta g e . It is lik ely that m any w o rk e rs s t ill do not fu lly r e a liz e the im p o rtance and m o n etary valu e of the pen sion c re d its they a r e accu m u la tin g. A s p lan s

sp re a d , a s b en efit le v e ls r is e , a s v e stin g and oth er p ro te ctiv e fe a tu r e s im p ro v e,

a s s e r v ic e under pen sion p lan s in c r e a s e s , and a s the p e r so n a l re tire m e n t e x p e ­

r ie n c e s of fr ie n d s, r e la tiv e s , and n eigh b ors b ecom e m o re com m o n p lace, p riv a te

pen sion p lan s a r e lik ely to b ecom e a m o re in flu en tial fo rc e a ffe ctin g the m o tiv a ­

tion s of in dividu al w o rk e rs.

2. P riv a te pen sion p lan s a r e not d istrib u te d evenly throughout the eco n ­

om y. R ath e r, plan c o v e ra g e now ten d s to be con ce n trate d in c e rta in in d u strie s

and am ong c e rta in gro u p s of w o rk e rs.

3. The tra d e union m ovem en t h as been an in flu en tial fo rc e sh apin g the

developm en t of p en sio n p la n s. T y p ically , union co n ce rn s sh ift fro m ach ievin g

’‘a d e q u ate " b en efit le v e ls , the f i r s t o b je ctiv e , to d evelopin g p ro te c tiv e fe a tu r e s,

such a s v e stin g . F o r both e m p lo y e rs and union s, a m an pow er p o licy o b je ctiv e

of m in im izin g r e s t r a in t s on volu n tary m ob ility m ay con flicy with oth er o b je c tiv e s.

4. V estin g , found in tw o -th ird s of the p lan s with th re e -fifth s of the w o rk ­

e r s , is the key p ro v isio n fo r lo osen in g the tie s im p lic it in the p riv a te pen sion

stru c tu re . It p ro te c ts the q u alified w o r k e r's fin a n cia l stak e in the plan, th ereb y

enhancing h is p o ten tial m o b ility .

H ow ever, b e c a u se of c o st c o n sid e ra tio n s and the often d iffe rin g attitu d es

and v a lu e s of the p a r tie s — em p lo y er, union, and em p loy ee— r ig id itie s and r e s t r i c ­

tion s a r e con tained in v e stin g p ro v isio n s which tend to coun ter th is im puted m o ­

b ility ad v an tage: (a) Long continuous s e r v ic e (com m only in e x c e s s of 10 y e a r s )

and the attain m en t of m id d le ag e (u su ally ag e 40, 45, o r o ld er) a r e re q u ire d to

qu alify fo r v e stin g , (b) a w o rk e r c lo se to m eetin g the re q u ire m e n ts fo r v e stin g

m ay fe e l "lo c k e d -in " b e c a u se he is c lo se to se c u rin g a valu ab le a s s e t , (c) the

p r a c tic e of lim itin g v e stin g to in voluntary term in atio n in so m e p lan s fu rth e r r e ­

s t r ic ts the p ro m ise of the p r o v isio n s.

L e s s than 1 out of 3 n ego tiated m u ltie m p lo y e r p lan s p rov id e v e stin g .

T h e se p lan s do have a p a r tia l su b stitu te— p o rtab le pen sion c re d its— which a s s u r e

no im pedim en t to m o b ility am ong p a rtic ip a tin g e m p lo y e rs.

5. V estin g c o n fe rs valu ab le pen sion rig h ts on w o rk e rs who q u alify . F o r

ex am p le, to buy an in d ivid u al annuity providin g the a v e r a g e am ount v e ste d a fte r

15 y e a r s of se r v ic e by w o rk e rs earn in g $ 4 ,8 0 0 a y e a r would c o st a m a le w o rk er

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$ 3 ,0 0 0 at ag e 45, or n e a rly tw o -th ird s of a y e a r *s pay. The valu e of th is a s s e t

in c r e a s e s a s m o re se r v ic e is c re d ite d , a s the w o rk er n e a r s re tire m e n t, and a s

the w o rk er* s earn in g le v e l r i s e s .

6. E a r ly re tire m e n t p r o v isio n s , although d e sign e d fo r a d ifferen t p u r ­

p o se than v e stin g , a ls o en able q u a lifie d w o rk e rs to re ta in th e ir equity in a p lan .

In m o b ility t e r m s , h ow ever, it is a lim ite d su b stitu te fo r v e stin g b e c a u se it u s u ­

a lly a p p lie s only to w o rk e rs who have attain e d ag e 55 o r 60 and long s e r v ic e . In

add ition , the e m p lo y e e s con sen t is often n eeded . B e c a u se it a d d s fle x ib ility to

the re tire m e n t sy ste m and co m p lem en ts e a r ly re tire m e n t under s o c ia l se c u rity ,

e a r ly re tire m e n t a ls o h a s im p o rtan t m an pow er im p lic a tio n s. It p ro v id e s an e q ­

u itab le d ev ice to help m ove o ld er w o rk e rs into fu ll re tire m e n t o r into l e s s d e ­

m anding w ork.

S p e c ia l e a r ly re tire m e n t p ro v isio n s can m ean even m o re fle x ib ility , but

only at sh a rp ly in c r e a s e d c o st to the em p lo y e r. T h e se p r o v isio n s w ere d esign ed

to help so lv e d ifficu lt m an pow er and p e rso n n e l p ro b le m s, such a s th o se stem m in g

fro m plant shutdow ns. The p r e s s u r e s of m o re ra p id te c h n o lo g ical change a r e

lik e ly to h asten the exten sion of th e se p ro v isio n s d e sp ite th e ir c o st.

7. A s long a s the w o rk er sta y s in the sco p e of a m u ltiem p lo y er plan ,

he m ay m ove fro m em p lo y er to em p lo y er and s t ill re ta in h is p en sio n c r e d its .

The p o rtab le p en sio n c r e d its thus p ro v id e d m ay a s s u r e the w o rk e r of a ll the m o ­

b ility he m ay n eed durin g h is w orking life in m any occu p atio n s and in d u strie s in

which such p lan s a r e com m on. N o n e th e le ss, the p o ten tial latitu d e of job m o v e ­

m ent betw een e m p lo y e rs depends on the sco p e of the p lan . N e a rly h alf the w o rk ­

e r s belong to p la n s lim ite d to a sin gle c r a ft, occu p ation , o r in d u stry in a sin g le

lo c a lity . The rem ain in g w o rk e rs a r e rough ly eq u ally d ivided betw een re g io n a l

and n ation al p la n s— m o stly on an in d u stry b a s is .

M u ltiem p lo yer p lan s through th e ir g e n e ra l la c k of v e stin g and e a r ly r e ­

tire m e n t p ro v isio n s m ay d isc o u ra g e vo lu n tary m ovem en t to e m p lo y e rs ou tsid e

the sco p e of the plan . On the oth er hand, it is p ro b ab le that a h igh er p r o p o r ­

tion of w o rk e rs in m u ltiem p lo y er p lan s than in sin g le em p lo y er p lan s exp ect to

spend th e ir w orking liv e s in the sco p e of the p lan . M ost w o rk e rs in m an y in ­

d u s tr ie s with su ch p lan s tra d itio n a lly have stro n g tie s to th e ir c r a fts and la b o r

m a r k e ts , even a fte r the likelih ood of stead y em ploym ent is gone. T h u s, it is

p o ssib le that the ch ief im m o b ilizin g e ffe c t of m u ltie m p lo y e r p la n s, in the a b ­

sen ce of v e stin g and e a r ly re tire m e n t, is to hold an unem ployed m e m b e r to

the plan in a declin in g in d u stry or c ra ft at a tim e when v o lu n tary jo b ch an ges

a r e d e s ir a b le .

8. The su m m ary ev alu atio n in th is ch ap ter of the p ro v isio n s which d e ­

te rm in e w hether w o rk e rs w ill u ltim ate ly r e c e iv e re tire m e n t b e n e fits— v e stin g ,

e a r ly and n o rm a l re tire m e n t, and p o rta b ility — s u g g e s ts that they m ay be too r e ­

s tr ic te d to o ffse t fu lly the p o ten tial r e str a in in g e ffe c ts of p riv a te pen sion p la n s.

The b alan ce sh eet of p ro te c tiv e d e v ic e s show s that at the bottom of the s c a le

a r e the 5 p ercen t of the w o rk e rs c o v e re d in p riv a te p en sion p lan s who have to

sta y with one em p lo y er until n o rm al re tire m e n t to e a rn any p en sio n b e n e fits. If

they do not, they lo se a ll th e ir p en sion r ig h ts. When the w o rk e rs in m u ltiem p lo y er p lan s who m u st re m a in within the scop e of the plan (although not with

a sin gle em p loy er) a r e added to th is grou p , a lm o st a fifth of the w o rk e rs a r e

in cluded. E a r ly re tire m e n t p ro tectio n is a v a ila b le to an oth er fifth of the w o rk ­

e r s in p riv a te p la n s. V estin g only fo r in voluntary te rm in atio n is a v a ila b le to

slig h tly l e s s than a tenth of the w orkers . T h is le a v e s about h a lf of the w o rk ­

e r s , m o stly in sin g le em p loy er p la n s, who, if they q u alify would upon vo lu n tary

te rm in atio n be p e rm itte d to re ta in a c c ru e d p en sio n b e n e fits through v e stin g .

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O ver tw o -th ird s of the w o rk e rs in p riv a te p en sio n p lan s would have to

sta y in the sa m e fir m o r plan fo r 15 y e a r s o r m o re to q u alify fo r v e stin g o r

re tire m e n t b e n e fits. About a fourth would qu alify with 10 y e a r s o r l e s s . In a d ­

dition to a s e r v ic e re q u ire m e n t, about a sixth of the w o rk e rs would have to sta y

with th e ir em p lo y er o r in the scop e of the plan until age 65 in o rd e r to re ta in

p en sio n r ig h ts. A nother tenth would f i r s t q u alify at age 60.

9. D esp ite the e x iste n ce of a wide sp e c tru m of p ro te c tiv e p en sion f e a ­

t u r e s , the p r o s p e c ts of the newly h ire d w o rk er ac tu a lly re a liz in g the pen sion

c re d its he is beginning to accu m u late re m ain som ew hat re m o te . A s h a s been

shown, 45 p e rce n t of the w o rk e rs w ere in p riv a te p lan s in which a w o rk e r h ire d

at age 25 would not q u alify fo r any benefit by age 50 under the p ro v isio n s of the

p la n s. About 55 p ercen t of the w o rk e rs w ere in p lan s in which such a w o rk e r

h ire d at age 25 would not q u alify fo r b en efits by age 45. In m ob ility te r m s ,

th is m ean s that only a s a w o rk e r ac c u m u la te s long s e r v ic e and a g e s in the

p r o c e s s d o es the p o ssib ility b righ ten that he w ill be en titled to a p en sion benefit

should he m ove to another em p lo y er d e sp ite h is age and accu m u lated s e r v ic e .

M o reo v er, a s he a c c u m u la te s m o re s e r v ic e and y e a r s of age the l e s s lik e ly is

the p o ssib ility of qu alifyin g fo r a p en sio n fro m an other em p lo y er.

Outlook fo r P riv a te P en sio n P la n s

D uring the next 2 d e c a d e s, the c o v e ra g e of p riv a te p en sio n p lan s is not

exp ected to in c r e a s e at the sa m e ra te it h as in the p a st 2 d e c a d e s. A slo w ­

down in the ra te of grow th is a lre a d y evident. P riv a te p en sio n c o v e ra g e , how ­

e v e r, w ill continue to grow , p o ssib ly doubling fro m I960 to 1980 37— a ra te of

in c r e a s e su b sta n tia lly g r e a te r than the exp ected ra te of in c r e a s e in the la b o r

fo r c e . C ou n teractin g to so m e extent the m ob ility e ffe c ts of the sp r e a d of p en sion

p lan s is the tre n d to w ard s lib e ra liz a tio n and ex ten sion of v e stin g , e a r ly r e t i r e ­

m ent, and p o rtab le p en sio n c r e d its . F u rth e rm o re , in te re st in sp e c ia l p ro v isio n s,

such a s sp e c ia l e a r ly re tire m e n t, that a lle v ia te d isp la c e m e n ts c a u se d by tech n o ­

lo g ic a l and oth er change and plant shutdown, m ay be exp ected to in c r e a s e .

The ra te of grow th of c o lle c tiv e ly b arg ain e d m u ltiem p lo y er p lan s h as

d eclin ed sin c e the la te 1950fs . P en sio n p lan s have been n ego tiated in the m o st

lik e ly and e a s ie r situ a tio n s; the re la tiv e ly d ifficu lt a r e a s re m ain . Not a ll m u ltiem p loy er b argain in g gro u p s now without a plan a r e cap ab le of su p p ortin g and

w orking out su ch a p ro g ra m , u n le ss sm a ll gro u p s a r e com bined into la r g e r p la n s.

M ost of the grow th of m u ltiem p lo y er p lan s in the im m ed iate fu tu re can be e x ­

p ected to com e fro m an in c r e a s e d c o v e ra g e of e x istin g p la n s, p a r tic u la r ly th o se

in s e r v ic e , tra d e , and oth er in d u strie s in which em ploym ent is expanding. B e ­

c a u se m u ltiem p lo y er p lan s a r e re la tiv e ly new, they m ay be exp ected to undergo

su b sta n tia l ch an ges a s they m a tu re . The p r e s s u r e s to extend the sco p e of c o v ­

e ra g e through r e c ip ro c ity a g re e m e n ts, m e r g e r s , and oth er d e v ic e s w ill mount

w here w o rk e r d islo c a tio n b e co m e s a p ro b le m . S im ila r p r e s s u r e s m ay a ls o stim u ­

la te the exten sion and lib e ra liz a tio n of v e stin g and e a r ly re tire m e n t p ro v isio n s.

37 National Bureau of Economic Research, The Uses of Economic Research. 43d Annual Report, 1963, p. 58.

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T a b le 1. D is t r ib u t io n o f P r iv a t e P e n s io n P la n s by D a te o f E s t a b lis h m e n t

(W o rk e r s in th o u sa n d s)

Y e a r o f e s t a b lis h m e n t P la n s W o r k e r s 1 Y e a r o f e s t a b lis h m e n t P la n s W o r k e r s 1

A ll p la n s s t u d i e d --------------------------- 1 5 ,8 1 8 1 5 ,6 2 1 1 9 4 6 _________________________________ 4 1 8 637

1 9 4 7 -------------------------------------------- 532 366

1 9 0 0 - 1 9 0 4 ____________________________ 14 172 1 948_________________________________ 579 4 0 2

1 qrm—1 QftQ ............................... 5 10 1Q4Q ........................................................ 287 290

1 9 1 0 - 1 4 ----------------------------------------- 34 1 , 162 1 9 5 0 -------------------------------------------- 939 1 ,9 0 1

1qi c;—1 q 19 98 1QR1 949 707

1 9 2 0 - 2 4 ______________________________ 14 185 195 2 _________________________________ 4 3 3 4 5 4

1925—29 __ -......... ..... 24 166 i q<^ 1 ,3 5 1 4 7 9

lQ^n- ^4 134 351 1954 . .................................................... 694 330

118 272 1 9 5 5 _________________________________ 1, 232 1 ,0 9 0

1 940 .............................. . 75 4 0 3 1 956 ______________ _____________ 1, 194 665

1 941 42 4 554 1 9 57__________________ ________________ 642 559

199 279 1 9 5 8 -------------------------------------------- 528 4 9 9

1 94^ ................... . 742 377 19 59... ................................................... ...... 1, 572 347

1 q 4 4 7 1 5 4 9 6 1 9 6 0 ............................................. 812 154

1 9 4 5 ___________________________________ 525 789 In fo r m a tio n not a v a i l a b l e ----------- 614 1 ,4 2 8

1 A c tiv e w o r k e r s in 196 1 .

N O T E : B e c a u s e o f ro u n d in g , s u m s o f in d iv id u a l it e m s m a y n ot e q u a l t o t a l s .

T a b le 2. D is t r ib u t io n o f P r iv a t e P e n sio n P la n s by 

N u m b e r o f A c tiv e W o r k e r s C o v e r e d , W in ter 1962—63

^ W o rk e rs in th o u sa n d s)

N u m b e r o f P la n s W o r k e r s 1

w o r k e r s c o v e r e d N u m b e r P e r c e n t N u m b e r P e r c e n t

A ll p la n s s t u d i e d --------- 1 5 ,8 1 8 100. 0 1 5 ,6 2 1 100. 0

U n d e r 2 0 0 ------------------- 9 ,9 1 4 6 2 . 7 704 4 . 5

200 an d u n d e r 5 0 0 -------- 2, 595 1 6 .4 810 5. 2

500 an d u n d e r 1 ,0 0 0 ----

1 ,0 0 0 an d u n d er

1 ,3 3 6 8 .4 905 5 .8

5, 0 0 0 ------------------------

5, 000 an d u n d e r

1 ,4 9 0 9 .4 3, 229 20. 7

1 0 ,0 0 0 _________________

10, 000 a n d u n d e r

241 1. 5 1, 677 10. 7

2 5 ,0 0 0 _________________

25 , 000 an d u n d e r

145 .9 2, 171 13. 9

5 0 , 0 0 0 _________________

5 0 ,0 0 0 an d u n d e r

65 . 4 2, 209 14. 1

1 0 0 ,0 0 0 _______________ 17 . 1 1, 172 7. 5

1 0 0 ,0 0 0 an d o v e r--------- 15 . 1 2, 742 17. 6

1 A c tiv e w o r k e r s in 196 1 .

N O T E : B e c a u s e o f ro u n d in g , s u m s o f in d iv id u a l

it e m s m a y n ot e q u a l t o t a l s .

T a b le 3. D is t r ib u t io n o f P r iv a t e P e n sio n P la n s 

b y I n d u str y G r o u p , W in ter 1962—63

^W^rkers^ju^housand^

I n d u str y

P la n s W o r k e r s 1

N u m b e r P e r c e n t N u m b e r P e r c e n t

A ll p la n s s t u d i e d --------- 1 5 ,8 1 8 100 . 0 15, 621 100 . 0

A g r ic u lt u r e , f o r e s t r y , 

an d f i s h e r i e s ------------ 75 0. 5 26 0. 2

M in in g ------------------------- 316 2-. 0 327 2. 1

C o n t r a c t C o n s t r u c t io n - 4 4 9 2. 8 1 ,0 7 2 6 .9

M a n u fa c tu r in g — 9, 257 58. 5 9, 678 6 2 . 0

T r a n s p o r t a t i o n ________ 673 4 . 2 1 ,2 8 6 8. 2

C o m m u n ic a t io n s an d 

p u b lic u t i l i t i e s ---------- 849 5 .4 1 ,2 7 0 8. 1

W h o le sa le an d r e t a il 

t r a d e ------------------------- 1 ,6 2 7 10. 3 920 5. 9

W h o le sa le t r a d e ____ 1, 147 7. 2 4 7 9 3. 1

R e t a il t r a d e ------------ 4 8 0 3. 0 4 4 0 2. 8

F in a n c e , in s u r a n c e , 

an d r e a l e s t a t e ---------- 1 ,8 5 3 11. 7 733 4 . 7

S e r v i c e s ________________ 719 4 . 5 308 2. 0

1 A c tiv e w o r k e r s in 196 1 .

N O T E : B e c a u s e o f ro u n d in g , s u m s o f in d iv id u a l!

it e m s m a y n ot e q u a l t o t a l s .

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
53

T a b le 4. D ist r ib u tio n of P r iv a t e P e n sio n P la n s b y I n d u str y G ro u p an d T y p e of E m p lo y e r U nit, W in ter 1962—63

(W o r k e r s in th o u sa n d s)

In d u str y

A ll p la n s

T y p e of e m p lo y e r u n it

S in g le e m p lo y e r M u lt ie m p lo y e r

N u m b e r W o r k e r s 1 P la n s W o r k e r s 1 P la n s W o r k e r s 1

A ll p la n s s t u d i e d ______ ____ __ __ _ __ __ 1 5 ,8 1 8 15, 621 1 4 ,8 9 0 1 1 ,7 4 2 928 3, 878

A g r ic u lt u r e , f o r e s t r y , an d f i s h e r i e s 75 26 72 18 3 8

M in in g _ __ __ __ ______ __ ____ 316 327 300 89 16 238

C o n t r a c t c o n s t r u c t io n . __ ______ __ _ __ 449 1, 072 6 0 23 389 1, 049

M a n u fa c tu r in g ___ _ ______ __ _ __ _____ _ 9 , 257 9 ,6 7 8 8 ,9 9 5 8 ,4 2 6 262 1, 252

T r a n s p o r t a t io n __ __ _ _ _ _ _ __ ------- _ 673 1 , 286 549 516 124 770

C o m m u n ic a tio n s an d p u b lic u t i l i t i e s __ _ __ _ 849 1, 270 -848 1 ,2 6 1 1 10

W h o le sa le an d r e t a i l t r a d e . __ _ _ 1 ,6 2 7 920 1, 540 572 87 348

W h o le sa le t r a d e ________________________________ 1, 147 479 1 , 082 171 65 308

R e t a il t r a d e _______ _ __ _ ___ _ 480 440 458 401 22 40

F in a n c e , in s u r a n c e , an d r e a l e s t a t e . 1 ,8 5 3 733 1, 840 719 13 15

S e r v i c e s . _ _ __ _______ __ 719 308 686 119 33 190

1 A c tiv e w o r k e r s in 1961.

N O T E : B e c a u s e o f ro u n d in g , s u m s o f in d iv id u a l it e m s m a y n o t e q u a l t o t a l s .

T a b le 5. D ist r ib u tio n of P r iv a t e P e n sio n P la n s b y I n d u str y G ro u p an d C o lle c t iv e B a r g a in in g S t a t u s , W in ter 1962—63

j^Worker,siiin iit^

C o lle c tiv e b a r g a in in g s t a t u s

I n d u str y

A ll p la n s M e n tio n ed in a c o lle c t iv e 

b a r g a in in g a g r e e m e n t

N ot m e n tio n e d in a 

c o lle c t iv e b a r g a in in g 

a g r e e m e n t

N u m b e r W o r k e r s 1 P la n s W o r k e r s 1 P la n s W o r k e r s 1

A ll p la n s s t u d i e d . _ _ __ _____ 1 5 ,8 1 8 1.5, 621 5 , 795 1 0 ,6 9 5 2 1 0 ,0 2 3 4 , 926

A g r ic u lt u r e , f o r e s t r y , an d f i s h e r i e s __ __ __ _ 75 26 15 18 60 8

M in in g _ ____ _____ ______ _ _ ___ __ __ 316 327 43 242 273 8 6

C o n t r a c t c o n s tr u c tio n ______ 449 1 ,0 7 2 384 908 65 164

M a n u fa r h ir in o . ... ___... ___ 9 , 257 9 , 678 4 , 285 6 , 821 4 , 972 2, 857

T r a n s p o r t a t io n __ ___ ____ _ __ __ 673 1 ,2 8 6 384 898 289 388

C o m m u n ic a tio n s and p u b lic u t il it i e s _ ..... 849 1, 270 314 1, 042 535 228

W h o le sa le an d r e t a i l t r a d e . __ __ 1 ,6 2 7 920 294 498 1, 333 421

W h o le sa le t r a d e _ ______ 1, 147 479 249 340 898 139

R e t a il t r a d e __ __ __ __ ________ _ 480 440 45 158 435 282

F in a n c e , in s u r a n c e , an d r e a l e s t a t e ____________ 1 ,8 5 3 733 22 78 1, 831 656

S e r v i c e s ___ ________ ... 719 308 54 191 665 118

1 A c tiv e w o r k e r s in 1961.

2 In c lu d e s 110 p la n s , c o v e r in g 2 7 2 , 000 w o r k e r s , w h ich w e r e u n ion s p o n s o r e d an d o p e r a te d . 

N O T E : B e c a u s e of ro u n d in g , s u m s of in d iv id u a l it e m s m a y n o t e q u a l t o t a l s .

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
54

T a b le 6. D ist r ib u tio n o f P r iv a t e P e n s io n P la n s b y In d u str y G ro u p a n d M eth o d o f F in a n c in g , W in ter 1962—63

(W o rk ers in thousands)

Industry

A ll plans

M ethod of financing

N oncontributory C o n trib u tory

Number W o rk ers 1 P lan s W o rk e rs 1 P lan s W o rk ers 1

A ll plans stu d ied ----------------------------------------------- 15, 818 15, 621 11, 526 1 1 ,6 6 7 2 4, 292 3, 954

A g ric u ltu re , fo r e s tr y , and fis h e r ie s --------------- 75 26 60 8 15 18

M ining___________________ -______________________ 316 327 305 309 11 18

C o n tract co n stru ctio n --------------------------------------- 449 1, 072 37 3 600 76 472

M anufacturing--------------- _ __________________ 9, 257 9, 678 7, 248 7, 292 2, 009 2, 387

T ra n sp o rta tio n -------------------------------------------------- 673 1 , 286 374 979 299 307

C om m unications and public u tilitie s ---------------- 849 1, 270 691 1, 084 158 186

W h olesale and re ta il t r a d e ------------------------------- 1, 627 920 1, 279 749 348 171

W h olesale t r a d e _____________________________ 1, 147 479 896 4 1 6 251 63

R eta il tra d e _________________________________ 480 440 383 333 97 108

F inan ce, in su ran c e, and re a l e s t a t e --------------- 1, 853 733 1, 125 442 728 292

719 308 71 204 648 104

1 A ctive w o rk e rs in 19 6 1.

2 Includes 110 plans, co verin g 272, 000 w o rk e rs , w hich w e re union sp o n so red and op erated .

NOTE: B ecau se of rounding, sum s of individual ite m s m ay not equal to ta ls.

Table 7. D istrib u tion of P riv a te P ensio n P lan s by Industry Group and G eographic A re a C o vere d , W in ter 1962—63

(W o rk ers in thousands)

A ll plans

A re a c o v ere d

Industry In trastate In tersta te

N umber W o rk e rs 1 P lan s W o rk e rs 1 P lan s W o rk ers 1

A ll plans s tu d ied ------------------------------------ — — 15, 818 15, 621 11, 229 4, 766 4, 589 10, 855

A g ric u ltu re , fo r e s t r y , and fis h e r ie s ____ -____ 75 26 15 18 60 8

M in in g______ __________________________ _________ 316 327 217 54 99 273

C o n tract co n stru ctio n __________________________ 449 1, 072 433 571 16 501

M anufacturing__________________________________ 9, 257 9, 678 6, 479 2, 097 2, 778 7, 581

T ran sp o rta tio n _________________________________ 673 1, 286 433 251 240 1, 035

C om m unications and public u tilitie s ---------------- 849 1, 270 717 733 132 538

W holesale and re ta il t r a d e _____________________ 1, 627 920 1, 231 573 396 347

W h olesale t r a d e _____________________________ 1, 147 479 833 421 314 58

R eta il tra d e --------------------- ---- __ ------------ 480 440 398 152 82 289

F inan ce, in su ran c e, and re a l e s t a t e --------------- 1, 853 733 1, 360 286 493 447

S e r v ic e s -------------— __ _______ _____________ ___ 7 19 308 344 183 375 125

1 A ctiv e w o rk e rs in 1 9 6 1.

N O T E : B e c a u s e o f ro u n d in g , s u m s o f in d iv id u a l it e m s m a y n ot e q u a l t o t a l s .

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
55

T a b le 8. D is t r ib u t io n o f P r iv a t e P e n sio n P la n s by In d u str y G ro u p an d T y p e o f W o rk e r C o v e r e d , W in ter 1962—63

(W o rk ers in thousands)

Industry

A ll plans

Type o f w o rk e r co vered

S a la rie d and

production P roduction only S a la rie d only

E arning in

ex c ess of a

sp ecified

am ount

N umber W o rk e rs 1 Plans W o rk e rs 1 P lans W o rk e rs 1 P lan s W o rk e rs 1 P lans W o rk e rs 1

A ll plans s tu d ied _________________________ 15, 818 15, 621 6 , 038 6 , 263 4, 925 7, 039 3, 995 1, 584 860 735

A g ric u ltu re , fo re s try , and fis h e r ie s ___ 75 26 6 6 12 9 13

M ining____________________________________ 316 327 55 28 50 257 211 42 _ _

C o n tract co n stru ctio n ____________________ 449 1, 072 6 0 23 389 1, 049 - - _ _

M anufacturing____________________________ 9, 257 9, 678 2 , 392 3, 951 3, 802 4, 147 2 , 359 1 , 000 704 581

T ran sp o rta tio n ------------------------- ------------- 673 1 , 286 144 192 354 876 133 79 42 140

C om m unications and public u tilitie s ------- 849 1, 270 785 1, 182 63 81 1 7 _ _

W holesale and re ta il t r a d e --------------------- 1, 627 920 697 368 107 395 715 149 108 7

W holesale t r a d e --------------------------------- 1, 147 479 417 63 76 330 554 83 100 4

R eta il tra d e ----------------------------------------- 480 440 280 305 31 66 161 66 8 3

F inance, in su ran ce, and

re a l e s t a t e -------------------------------------------- 1, 853 733 1, 478 429 13 15 356 282 6 8

S e r v i c e s -------------------------------------------------- 719 308 361 77 138 206 220 25

1 A ctiv e w o rk e rs in 1961.

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

Table 9. D istrib u tion of P riv a te P ension P lan s by F in al

A u th o rity f o r B e n e fit D e te r m in a tio n ,

W in ter 1962—63

(W o rk ers in thousands)

F in al au th ority

P lan s W o rk ers 1

N um ber P e rc e n t N um ber P erc e n t

A ll plans s tu d ie d -------- 15, 818 100 . 0 15, 621 100 . 0

E m p loyer o n ly ------------ 1 2 , 729 80. 5 9, 298 59. 5

B ip a rtite b o a rd ---------- 2 , 001 12. 7 5, 365 34. 3

T rip a rtite b o ard --------- 8 . 1 227 1 .4

Union o n ly------------------- 110 . 7 272 1 .7

G rievan ce p ro ced u re

of co lle c tiv e

bargaining

ag reem en t___________ 970 6 . 1 459 2 .9

1 A ctive w o rk e rs in 1 9 6 1.

N O T E : B e c a u s e o f ro u n d in g , s u m s o f in d iv id u a l

it e m s m a y n o t e q u a l t o t a l s .

Table 10. V estin g P ro v is io n s in P riv a te P ension P lan s

by Type, and C onditions fo r V esting,

W in ter 1962—63

(W o rk ers in thousands)

Item

P lan s W o rk ers 1

N um ber P erc en t N umber P erc en t

A ll plans studied --------- 15, 818 100..0 15, 621 100 . 0

W ith v e s tin g ---------------- 10, 634 67. 2 9, 307 59. 6

D e fe rre d f u ll 2 -------- 7, 212 45. 6 7, 338 47. 0

Any s ep a ra tio n __ 6 , 681 42. 2 5, 977 38. 3

Involuntary

s ep a ra tio n -------- 531 3. 4 1, 361 8 . 7

D e fe rre d g rad ed----- 3, 422 2 1 . 6 1, 969 1 2 . 6

Any sep a ra tio n — 3, 312 2 0 . 9 1, 943 1 2 .4

Involuntary

s ep a ra tio n _____ 110 . 7 27 . 2

W ithout v e s tin g _______ 5, 184 32. 8 6 , 313 4 0 .4

1 A ctiv e w o rk e rs in 1961.

2 Includes a few plans w ith im m ediate fu ll vestin g .

N O T E : B e c a u s e o f ro u n d in g , s u m s o f in d iv id u a l

it e m s m a y n o t e q u a l t o t a l s .

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
56

T a b le 11. V e stin g P r o v is io n s in P r iv a t e P e n s io n P la n s b y T y p e of E m p lo y e r U n it, M eth o d of F in a n c in g , 

an d C o lle c tiv e B a r g a in in g S t a t u s , W in ter 1962—63

(W o r k e r s in th o u sa n d s)

Item

A ll plans W ith vestin g W ithout vestin g

N um ber W o rk ers 1 P lan s W o rk ers 1 P lan s W o rk e rs 1

A ll plans s tu d ie d ____ _ __ _______ _ _ ____ _____ 1 5 ,8 1 8 15, 621 1 0 ,6 3 4 9 ,3 0 7 5, 184 6 , 313

Single e m p lo y e r_ _______ _ __ _ — — 1 4 ,8 9 0 1 1 ,7 4 2 1 0 ,3 4 0 8 , 393 4, 550 3 ,3 4 9

N oncontributory. __ __ _ ___ ___ 1 0 ,6 5 7 8 ,4 5 4 7, 100 5 ,3 9 8 3, 557 3, 056

M entioned in a c o lle c tiv e bargainin g

a g re e m e n t. _ __ __ ________ ____ — __ 3 ,9 3 3 5 ,6 6 8 2, 728 3 ,7 4 1 1, 205 1 ,9 2 6

Not m entioned in a c o lle c tiv e bargaining

ag reem e n t __ __ _______ . . . 6 ,7 2 4 2 ,7 8 7 4, 372 1 ,6 5 7 2, 352 1, 130

C o n trib u to ry________ ______ ________ __ 4, 233 3, 288 3, 240 2 ,9 9 5 993 293

M entioned in a c o lle c tiv e bargainin g

ag r e em ent ____. . . _____ _______ ____________ ________ _ 1 ,0 3 4 1 ,4 9 5 892 1 ,3 8 4 142 111

Not m entioned in a c o lle c tiv e bargainin g

a g re e m e n t__ ______ _ __ __ ___ ___ 3, 199 1 ,7 9 3 2 ,3 4 8 1,611 851 182

M u ltie m p lo y e r____ __ __ __ _______ ____ 928 3 ,8 7 8 294 9 14 634 2, 964

N oncontributory. ___ ____ . __ __ ____ — __ __ __ 869 3, 212 260 818 609 2, 394

M entioned in a c o lle c tiv e barg ainin g

a g re e m e n t___ ____ ____ __ _ __ __ 810 3, 176 253 802 557 2, 374

Not m entioned in a c o lle c tiv e bargainin g

ag reem en t __________ ___ 59 36 7 16 52 20

C o n trib u to ry .. ____ _ _ ____ _. ._ _ __ __ 59 666 34 96 25 570

M entioned in a c o lle c tiv e bargaining

a g re e m e n t. __ _ __ __ __ __ _ 18 3 56 15 54 3 302

Not m entioned in a c o lle c tiv e bargainin g

a g re e m e n t__ ____ ____ . . . . . . 41 310 19 42 22 269

1 A c tiv e w o r k e r s in 1961.

N O T E ; B e c a u s e of ro u n d in g , s u m s of in d iv id u a l it e m s m a y n o t e q u a l t o t a l s .

T a b le 12. V e st in g P r o v is io n s in S in g le E m p lo y e r P r iv a t e P e n s io n P la n s b y N u m b e r of 

A c tiv e W o r k e r s C o v e r e d , W in ter 1962—63 1

(W o r k e r s in th o u sa n d s)

N u m b e r of w o r k e r s c o v e r e d

A ll p la n s W ith v e s t in g W ithout v e s t in g

N u m b e r W o r k e r s P la n s W o r k e r s P la n s W o r k e r s

A ll s in g le e m p lo y e r p l a n s ______________________________________ 1 4 ,8 9 0 1 1 ,7 4 2 1 0 ,3 4 0 8 ,3 9 3 4 , 550 3 , 349

9 , 710 690 6 ,8 0 0 449 2,910 240

2 ,4 6 9 778 1 ,6 9 1 552 778 227

1 ,0 9 4 734 705 487 389 247

1 J nnn anrl Iinflpr s , non _r„ „ 1 ,2 5 6 2, 656 885 1 ,8 7 1 371 785

180 1, 258 135 944 45 314

112 1 ,7 0 1 '7 6 1, 196 36 505

47 1 ,6 0 7 33 1, 130 14 477

15 1 ,0 2 3 9 616 6 407

7 1, 295 6 1, 150 1 145

1 B a s e d on a stu d y of 1 5 ,8 1 8 p r iv a t e p e n s io n p la n s c o v e r in g 15.6 m illio n a c tiv e w o r k e r s in 1961.

N O T E : B e c a u s e o f ro u n d in g , s u m s of in d iv id u a l it e m s m a y n ot e q u a l t o t a l s .

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57

T a b le 13. V e st in g P r o v is io n s in P r iv a t e P e n s io n P la n s by In d u str y G ro u p , W in ter 1962—63

(W o rk ers in thousands)

Industry

A ll plans W ith vestin g W ithout vestin g

Number W o rk ers 1 P lan s W o rk e rs 1 P lan s W o rk ers 1

A ll plans stu d ie d ------- -------------------------------------- 15, 818 15, 621 10, 634 9, 307 5, 184 6 , 313

A g ric u ltu re , fo r e s t r y , and fis h e r ie s ---------------- 75 26 69 20 6 5

M ining------------------------ ------------ ---------------- ---- 316 327 162 94 154 233

C o n trac t c o n stru ctio n ----------------------------------------- 449 1, 072 124 298 325 774

M anufacturing-------- ------ -------------------- ---------- 9, 257 9, 678 6 , 601 6 , 852 2, 656 2 , 826

T ran sp o rta tio n ________ ________ _____ — ---- 673 1, 286 303 544 370 742

C om m unications and public u t ilitie s --------- 1------- 849 1, 270 483 376 366 895

W h olesale and r e ta il t r a d e -------------------------------- 1, 627 920 1, 138 458 489 461

W h olesale t r a d e -------------------- ---- ---------- 1, 147 479 870 268 277 211

R eta il trad e ------ — --------------------------- ---- 480 440 268 190 212 250

F inan ce, in su ra n c e, and re a l e s t a t e ---------- --— 1, 853 733 1, 4 19 532 434 201

719 308 335 133 384 176

1 A ctiv e w o rk e rs in 1961.

NOTE: B ecau se of rounding, sum s of individual ite m s m ay not equal to ta ls.

Table 14. Type of V estin g in P riv a te P ension P lans by Industry G roup, W in ter 1962—63 1

(W o rk ers in thousands)

Industry

A ll plans

Type o f vestin g

D e fe rre d fu ll 2 D e fe rre d graded

Number W o r k e r s P lan s W o rk ers P lans W o rk ers

A ll plans w ith v e stin g ----------------------------------------- 10, 634 9, 307 7, 212 7, 338 3, 422- 1, 969

A g ric u ltu re , fo r e s t r y , and fis h e r ie s ---------------- 69 20 6 6 12 3 8

M ining__-__________________________ _____ ___ 162 94 82 81 80 14

C o n tract co n stru ctio n ----------------------------------------- 124 298 111 228 13 70

M anufacturing----------------------------------------------------- 6 , 601 6 , 852 4, 612 5, 683 1, 989 1, 170

T ran sp o rta tio n ---------------------------------------------------- 303 544 136 210 167 334

C om m unications and public u tilitie s ____________ 483 376 272 3 15 211 6 0

W holesale and re ta il t r a d e -------------------------------- 1 , 138 458 832 356 306 103

W h olesale t r a d e -------------------------------------------- 870 268 646 199 224 70

R eta il tra d e ---------------------------------------------------- 268 190 186 15.7 82 33

F inan ce, in su ran c e, and r e a l e s t a t e ---------------- 1, 4 19 532 767 351 652 181

S e r v ic e s ------------------------------------------------------------- 335 133 334 103 1 30

1 B ased on a study of 15, 8 18 p riv a te pension plans co verin g 15. 6 m illio n ac tive w o rk e rs in 1961.

2 Includes a few plans w ith im m ediate fu ll vestin g .

N O T E : B e c a u s e o f ro u n d in g , s u m s o f in d iv id u a l it e m s m a y n o t e q u a l t o t a l s .

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58

T able 15. Type of V estin g in P riv a te P ension P lan s by Type of E m p loyer Unit, M ethod of F inancing,

and C o lle c tiv e B argainin g S tatu s, W in ter 1962—63 1

(W o rk ers in thousands)

Item

A ll plans

Type of vestin g

D e fe rre d f u l l 1 2 D e fe rre d graded

N um ber W o rk e rs P lan s W o rk e rs P lan s W o rk e rs

A ll plans w ith v e stin g ----------------------------------------------------------- 1 0 ,6 3 4 9, 307 7, 212 7, 338 3 ,4 2 2 1 ,9 6 9

Single em p lo yer 1 0 ,3 4 0 8 , 393 6 ,9 4 1 6 , 8 15 3, 399 1, 578

N o n co n trib u to ry--------------------------------------------------------------- 7, 100 5, 398 4, 767 4 ,4 2 7 2, 333 971

M entioned in a c o lle c tiv e bargainin g

a g r e e m e n t---------------------------------------------------------------- 2 ,7 2 8 3, 741 2, 094 3, 163 634 578

Not m entioned in a c o lle c tiv e bargaining

a g r e e m e n t---------------------------------------------------------------- 4 , 372 1 ,6 5 7 2 ,6 7 3 1 ,2 6 4 1 ,6 9 9 393

C o n trib u to ry--------------------------------------------------------------------- 3 ,2 4 0 2 ,9 9 5 2, 174 2, 388 1 ,0 6 6 607

M entioned in a c o lle c tiv e bargaining

a g r e e m e n t---------------------------------------------------------- — 892 1 ,3 8 4 661 1 , 118 231 266

Not m entioned in a c o lle c tiv e bargaining

a g r e e m e n t----------------------------------------------------------- 2 ,3 4 8 1 ,6 1 1 1, 513 1 ,2 7 0 835 341

M u ltie m p lo y e r---------------------------------------------------------------- _ 294 914 271 523 23 391

N o n co n trib u tory -------------------------------------------------------- — 260 8 18 244 483 16 335

M entioned in a c o lle c tiv e bargaining

a g r e e m e n t----------------------------------------------- -------------- 253 802 237 467 16 335

Not m entioned in a c o lle c tiv e bargaining

ag reem en t ---------------------------------------------------------------- 7 16 7 16 - -

C o n trib u to ry------------------------------------------------------------ 34 96 27 41 7 56

M entioned in a c o lle c tiv e bargaining

a g r e e m e n t------ -------- --------------------- ------------ — 15 54 11 17 4 38

Not m entioned in a c o lle c tiv e bargaining

ag eem ent 19 42 16 24 3 18

1 B ased on a study of 1 5 ,8 1 8 p riv a te pension plans co verin g 1 5 .6 m illio n a c tiv e w o rk e rs in 19 6 1.

2 Includes a few plans w ith im m ediate fu ll vestin g .

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

T able 16. M inim um Age and S e rv ic e R equ irem en ts fo r D e fe rre d F u ll V estin g in P riv a te

P en sio n P la n s, W in ter 1962—63 1

(W o rk ers in thousands)

M inim um s e rv ic e

re q u irem en ts 2

A ll plans

M inim um age re q u irem en ts 3

No age

re q u irem en t 40 and under 45 50 55 60

Numb e r

W o rk ­

e rs

P lan s W o rk ­

e rs

P lan s W o rk ­

e rs

P lan s W o rk ­

e rs

P lan s W o rk ­

e rs

P lan s W o rk ­

e rs

P lan s W o rk ­

e rs

A ll plans- w ith d e ­

fe rre d fu ll v e s tin g 4__ 7, 212 7, 338 2, 189 2, 186 1 ,9 6 5 3, 388 634 632 7 11 595 1 ,4 9 7 478 216 59

No s e rv ic e re q u ire ­

m ent --------- -------------- 12 17 12 17 - - - - - - - _ _ _

1—4 y e a r s --------------------- 44 32 6 22 - - - - 1 4 37 6 - -

5 y e a r s ------------------------- 916 233 182 108 501 65 148 34 66 22 19 4 - -

6—9 y e a r s --------------------- 302 297 250 185 1 88 51 24 - - - - - -

10 y e a r s ---------------------- 1 ,7 8 8 2 ,7 7 8 687 537 871 1 ,8 7 2 79 257 14 55 136 52 1 6

11—14 y e a r s ------------------ 239 190 58 104 12 15 25 19 42 24 1 5 101 24

15 y e a r s ---------------------- 2, 198 2 ,7 3 7 622 781 571 1 ,2 8 8 213 190 4 1 4 268 374 192 4 16

16—19 y e a r s ------------------ 87 73 8 29 2 11 50 17 23 12 4 4 - _

20 y e a r s ------------------ __ 998 593 283 208 7 49 11 50 125 155 472 121 100 10

21—24 y e a r s ------------------ 18 32 18 32 - - - - - - - - - -

25 y e a r s ---------------------- 547 295 31 130 - - 56 15 26 57 42 4 90 10 3

26—29 y e a r s ------------------ 31 28 - - - - 1 25 - - 30 3 - -

30 y e a r s ----,------------------ 32 33 32 33 " " “ " “ " " ■ "

1 B ased on a study o f 1 5 ,8 1 8 p riv a te pension plans co verin g 1 5 .6 m illio n a c tiv e w o rk e rs in 1 9 6 1.

2 F o r those plans w hich sp e cified a p e rio d o f em ploym ent to be s e rv e d b e fo re p a rtic ip atio n in the plan could begin,

the m inim um s e rv ic e re q u irem en t includes the p re p a rticip a tio n s e rv ic e and the re q u ire d plan m em b ersh ip s e rv ic e .

3 Som e plans sp e cified a lte rn a tiv e re q u ire m e n ts; fo r each c a se , the one w ith the e a rlie s t age o r no age re q u irem en ts

w as se le cte d .

4 Includes a few plans w ith im m ediate fu ll vestin g .

N O T E : B e c a u s e o f ro u n d in g , s u m s o f in d iv id u a l it e m s m a y n o t e q u a l t o t a l s .

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
59

T a b le 17. M in im u m A ge an d S e r v i c e R e q u ir e m e n t s f o r D e f e r r e d F u ll V e st in g in P r iv a t e P e n sio n P la n s by

C o n d itio n s f o r V e st in g a n d T y p e o f W o rk e r C o v e r e d , W in ter 1962—63 1

(W o rk ers in thousan ds)

M inim um s e rv ic e

re q u irem en ts 2

A ll p]

M inim um age re q u irem en ts 5

Urns No age

re q u irem en t 40 and under 45 50 55 60

Numb e r

W o rk ­

e r s

P lan s W ork ­

e r s

P lan s W ork ­

e rs

P lans W orke rs

P lan s W orke rs

P lan s W orke rs

P lan s W orke rs

A ll plans w ith defe r r e d fu ll v e s tin g 4— 7. 212 7. 338 2, 189 2 . 186 1. 965 3. 388 634 632 711 595 1, 497 478 216 59

A ny s ep a ra tio n -------- 6 , 681 5, 977 2, 136 2 , 082 1, 514 2, 223 632 622 695 564 1, 488 428 216 59

No s e rv ic e

re q u ire m e n t---- 12 17 12 17 - - - - - - - - - -

1—4 y e a r s ----------- 43 25 5 16 - - - - 1 4 37 6 - -

5 y e a r s --------------- 906 223 172 98 501 65 148 34 6 6 22 19 4 - -

6—9 y e a r s ----------- 302 297 250 185 1 88 51 24 - - - - - -

10 y e a r s ------------- 1, 761 2, 712 686 536 846 1 , 812 78 252 14 55 136 52 1 6

11—14 y e a r s -------- 239 190 58 104 12 15 25 19 42 24 1 5 101 24

15 y e a r s ----- ---- 1, 753 1, 570 604 725 150 203 212 186 4 1 4 268 369 172 4 16

16—19 y e a r s -------- 72 66 8 29 2 11 50 17 8 5 4 4 - -

2 0 y e a r s ------------- 990 551 280 187 2 29 11 50 125 155 472 121 100 10

21—24 y e a r s _____ 18 32 18 32 - - - - - - - - - -

25 y e a r s ------- - 542 241 31 130 _ _ 56 15 25 32 420 61 10 3

26—29 y e a r s ----- 31 28 - - . - 1 25 - - 30 3 - -

30 y e a r s ------------- 12 23 12 23 - - - - - - - ■ - "

Involuntary

sep a ra tio n ------------- 531 1, 361 53 104 451 1, 165 2 10 16 32 9 50 - -

No s e rv ic e

re q u ire m e n t---- - - - - - - - - - - - - . - -

1—4 y e a r s ----------- 1 6 1 6 - - - - - - - - - -

5 y e a r s --------------- 10 10 10 10 - - - - - - - - - -

6—9 y e a r s ----------- - - - - - - - - - - - - - -

10 y e a r s ------------- 27 6 6 1 1 25 60 1 5 - - - - - -

11—14 y e a r s -------- - - - - - - - - - - - - - -

15 y e a r s ------------- 445 1 , 166 18 56 421 1, 085 1 5 - - 5 21 - -

16—19 y e a r s -------- 15 7 - - - - - - 15 7 - - - -

2 0 y e a r s ___ ___ 8 41 3 21 5 2 0 - - - - - - - -

21—24 y e a r s -------- - - - - - - - - - - - - - -

25 y e a r s ------------- 5 54 - - - - - - 1 25 4 29 - -

26—29 y e a r s -------- - - - - - - - - - - - - - -

30 y e a r s ------------- 2 0 10 20 10 “ “ “ “ “ " " “ -

P roduction w o rk e rs

o n ly __-____________ -_ 2, 637 2 , 620 436 501 1 ,4 0 7 1, 592 182 157 430 165 78 174 104 31

A ny sep a ra tio n -------- 2, 275 1 ,8 8 3 392 437 1, 094 965 182 157 430 165 73 128 104 31

No s e rv ic e

re q u ire m e n t---- - - - - - - - - - - - - - -

1—4 y e a r s ----------- - - - - - - - - - - - - - -

5 y e a r s ------------- 563 36 63 23 500 13 - - - - - - - -

6—9 y e a r s ----------- - - - - - - - - - - - - - -

10 y e a r s ------------- 541 1 , 108 43 167 477 826 14 70 5 23 1 15 1 6

11—14 y e a r s -------- 8 20 6 15 - - - - 2 4 - - - -

15 y e a r s ------------- 901 471 256 116 117 126 118 71 347 8 6 6 0 57 3 15

16—19 y e a r s -------- 52 23 2 6 - - 50 17 - - - - - -

2 0 y e a r s ------------- 160 78 3 23 - - - - 56 40 1 5 100 10

21—24 y e a r s _____ - - - - - - - - - - - - - -

25 y e a r s ------------- 39 128 8 65 - - - - 2 0 12 11 51 - -

26—29 y e a r s _____ - - - - - - - - - - - - - -

30 y e a r s ------------- 11 2 0 11 20 " ■ ~ " ~ " “ “ ~ “

Involuntary

sep ara tio n - ______ 362 737 44 64 313 627 - - - - 5 46 - -

No s e rv ic e

re q u ire m e n t---- - - - - - - - - - - - - - -

1—4 y e a r s ----------- - - - - - - - - - - - - - -

5 y e a r s --------------- 10 10 10 10 - - - - - - - - - -

6—9 y e a r s ------------ - - - - - - - - - - - - - -

10 y e a r s ------------- 2 6 61 1 1 25 60 - - - - - - - -

11—14 y e a r s -------- - - - - - - - - - - - - - -

15 y e a r s ________ 301 618 12 35 288 567 - - - - 1 16 - -

16—19 y e a r s -------- - - - - - - - - - - - - - -

2 0 y e a r s ------------- 1 8 1 8 - - - - - - - - - -

21—24 y e a r s -------- - - - - - - - - - - - - - -

25 y e a r s ------------- 4 29 - - - - - - - - 4 29 - -

2 6 —2 9 y e a r s _____ - - - - - - - - - - - - - -

30 y e a r s ________ 20 10 20 10

.

Se e fo o tn o te s a t e n d o f ta b le .

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
60

T a b le 17. M in im u m A ge an d S e r v ic e R e q u ir e m e n t s f o r D e f e r r e d F u ll V e st in g in P r iv a t e P e n sio n P la n s b y

C o n d itio n s f o r V e st in g an d T y p e o f W o rk e r C o v e r e d , W in ter 1962—63 1— C o n tin u ed

(W ork ers in thousands)

M inim um age re q u ire m e n ts 3

M inim um s e rv ic e

re q u irem en ts 2

a i i pians No age

re q u irem en t 40 and under 4 5 50 55 60

Numb e rW o rk ­

e r s

P lan s W o rk ­

e rs

P lan s W o rk ­

e r s

P lan s W o rk ­

e r s

P lan s W o rk ­

e r s

P lan s W o rk ­

e rs

P lan s W o rk ­

e rs

S a la rie d w o rk e rs

o n ly --------------------------- 2 , 339 987 7 19 285 404 336 288 211 103 105 8 14 45 11 5

A ny se p a ra tio n --------

No s e rv ic e

2, 242 849 718 279 324 216 287 206 88 98 8 14 45 11 5

re q u ire m e n t---- 1 6 1 6 - - - - - - - - - -

1—4 y e a r s ----------- 1 4 - - - - - - 1 4 - - - -

5 y e a r s __________ 166 99 2 20 1 52 100 12 63 15 - - - -

6—9 y e a r s ----------- 51 20 1 1 - - 50 19 - - - - - -

10 y e a r s ---------- 889 363 529 130 309 121 37 90 4 2 0 10 3 - -

11—14 y e a r s -------- 21 9 - - - - 21 9 - - - - - -

15 y e a r s ------------- 236 205 123 91 12 32 32 41 13 29 55 10 1 1

16—19 y e a r s -------- 2 11 - - 2 11 - - - - - - - -

2 0 y e a r s ------------- 4 19 106 57 21 - - 10 28 7 31 345 27 - -

21—24 y e a r s _____ - - - - - - - - - - - - - -

25 y e a r s ------------- 456 25 5 10 - - 37 7 - - 404 5 10 3

26 —2 9 y e a r s -------- - - - - - - - - - - - - - -

30 y e a r s -------------

" " “ ' “ " ' '

Involu n tary

se p a ra tio n -------------

No s e rv ic e

97 138 1 6 80 120 1 5 15 7 “ “ ”

re q u ire m e n t---- - - - - - - - - - - - - - -

1—4 y e a r s ----------- 1 6 1 6 - - - - - - - - - -

5 y e a r s --------------- - - - - - - - - / - - - - -

6—9 y e a r s ----------- - - - - - - - - - - - - - -

10 y e a r s ------------- - - - - - - - - - - - - - -

1 1—14 y e a r s -------- - - - - - - - - - - - - - -

15 y e a r s ------------- 96 132 - - 80 120 1 5 15 7 - - - -

16—19 y e a r s -------- - - - - - - - - - - - - - -

2 0 y e a r s ------------ - - - - - - - - - - - - - -

21—24 y e a r s -------- - - - - - - - - - - - - - -

25 y e a r s ------------- - - - - - - - - - - - - - -

26—29 y e a r s -------- - - - - - - - - - - - - - -

30 y e a r s -------------

" " " ' ' "

S a la rie d and p ro ­

duction w o r k e r s -------- 2, 031 3, 240 968 1, 243 140 1 , 192 164 264 155 296 603 238 1 8

A ny se p a ra tio n --------

No s e rv ic e

1, 969 2, 813 961 1, 213 91 829 163 259 154 271 599 234 1 8

re q u ire m e n t---- 11 11 11 11 - - - - - - - - - -

1—4 y e a r s ----------- 42 22 5 16 - - - - - - 37 6 - -

5 y e a r s --------------- 175 82 106 50 _ _ 48 23 2 5 19 4 - -

6—9 y e a r s ----------- 249 157 248 152 - - 1 5 - - - - - -

10 y e a r s ------------- 327 1, 124 1 14 238 57 759 27 92 5 12 124 24 - -

11—14 y e a r s -------- 90 136 32 79 12 15 4 10 40 2 0 1 5 1 8

15 y e a r s ------------- 589 807 202 476 20 27 62 74 52 136 253 93 - -

16—19 y e a r s -------- 18 32 6 23 - - - - 8 5 4 4 - -

2 0 y e a r s ------------- 377 303 206 90 2 29 1 22 42 73 126 89 - -

21—24 y e a r s -------- 13 25 13 25 - - - - - - - - - -

25 y e a r s ------------- 46 82 17 49 - - 19 8 5 2 0 5 5 - -

26—29 y e a r s -------- 31 28 - - - - 1 25 - - 30 3 - -

30 y e a r s ------------- 1 3 1 3 “ “ “ " “ “ _ -

Involuntary

se p a ra tio n -------------

No s e rv ic e

62 427 7 30 49 363 1 5 1 25 4 4 ~ “

re q u ire m e n t___ - - - - - - - - - - - - - -

1—4 y e a r s ------------ - - - - - - - - - - - - - -

5 y e a r s --------------- - - - - - - - - - - - - - -

6—9 y e a r s ________ - - - - - - - - - - - - - -

10 y e a r s ------------- 1 5 - - - - 1 5 - - - - - -

11—14 y e a r s -------- - - - - - - - - - - - - - -

15 y e a r s ------------- 53 364 5 17 44 342 - - - J- 4 4 - -

16—19 y e a r s -------- - - - - - - - - - - - - - -

2 0 y e a r s ------------- 7 33 2 13 5 2 0 - - - - - - - -

21—24 y e a r s -------- - - - - - - - - - - - - - -

25 y e a r s ------------- 1 25 - - - - - - 1 25 - - - -

26—29 y e a r s -------- - - - - - - - - - - - - ' -

30 y e a r s -------------

S e e fo o tn o te s a t en d o f ta b le .

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
T a b le 17. M in im u m A ge a n d S e r v ic e R e q u ir e m e n t s f o r D e f e r r e d F u ll V e st in g in P r iv a t e P e n s io n P la n s by

C o n d itio n s f o r V e st in g an d T y p e o f W o rk e r C o v e r e d , W in ter 1962—63 1— C o n tin u ed

6 1

(W ork ers in thousands)

M inim um s e rv ic e

re q u irem en ts 2

A ll plans

M inim um age re q u irem en ts 3

No age

re q u irem en t 40 and under 45 50 55 6 0

Numb e r

W o rk ­

e rs

P lan s W o rk ­

e rs

P lan s W o rk ­

e r s

P lan s W o rk ­

e rs

P lan s W o rk ­

e rs

P lan s W o rk ­

e rs

P lans W o rk ­

e rs

W o rk e rs earning in

ex c ess of a

sp e cified am ou n t------- 205 491 6 6 156 14 268 - - 23 29 2 21 100 16

A ny sep a ra tio n -------- 195 432 65 153 5 212 - - 23 29 2 21 100 16

No s e rv ic e

re q u ire m e n t---- - - - - - - - - - - - - ' -

1—4 y e a r s ------------ - - - - - - - - - - - - - -

5 y e a r s --------------- 2 5 1 4 - - - - 1 1 - - - -

6—9 y e a r s ------------ 2 120 1 32 1 88 - - - - - - -

10 y e a r s ------------- 4 116 - - 3 106 - - - - 1 10 - -

11—14 y e a r s -------- 120 25 20 9 - - - - - - - - 100 16

15 y e a r s ----- ---- 27 8 8 23 41 1 18 - - 2 17 1 12 - -

16—19 y e a r s -------- - - - - - - - - - - - - - -

2 0 y e a r s ------------- 34 65 14 53 - - - - 20 11 - - - -

21—24 y e a rs ------ 5 7 5- 7 - - - - - - - - - -

25 y e a r s ________ 1 6 1 6 - - - - - - - - - -

26—29 y e a r s -------- - - - - - - - - - - - - - -

30 y e a r s -------------

" " -" " " " " ' ' "

Involuntary

s ep a ra tio n ________ 10 59 1 3 9 56 - - - - - - - -

No s e rv ic e

re q u ire m e n t---- - - - - - - - - - - - - - -

1—4 y e a r s ----------- - - - - - - - - - - - - - -

5 y e a r s --------------- - - - - - - - - - - - - - -

6—9 y e a r s ------------ - - - - - - - - - - “ - -

10 y e a r s -------- — - - - - - - - - - ‘ - - - -

11—14 y e a r s -------- - - - - - - - - - - - - - -

15 y e a r s ------------- 10 59 1 3 9 56 - - - - - - - -

16—19 y e a r s -------- - - - - - - - - - - - - - -

2 0 y e a r s ------------- - - - - - - - - - - - - - -

21—24 y e a r s -------- - - - - - - - - - - - - - -

25 y e a r s ------------- - - - - - - - - - - - - - -

26—29 y e a r s -------- - - - - - - - - - - - - - -

30 y e a r s -------------

1 B a se d on a study of 15, 818 p riv ate pen sion p lan s co v erin g 15. 6 m illio n activ e w o rk ers in 1961.

2 F o r th ose p lan s w hich sp e c ifie d a p erio d of em ploym ent to be se rv e d b efo re p articip atio n in the plan could begin, the 

m in im um se r v ic e req u irem e n t in clu d es the p re p a rtic ip a tio n se r v ic e and the re q u ire d plan m e m b ersh ip se r v ic e .

3 S o m e p la n s s p e c if ie d a lt e r n a t iv e r e q u ir e m e n t s ; f o r e a c h c a s e ,, th e on e w ith the e a r l i e s t a g e o r no a g e r e q u ir e m e n t s w a s 

s e le c t e d .

4 Includes a few p lan s with im m ed iate fu ll v estin g .

N O T E : B e c a u s e o f ro u n d in g , s u m s o f in d iv id u a l it e m s m a y n ot e q u a l t o t a l s .

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
62

T a b le 18. M in im u m A ge an d S e r v ic e R e q u ir e m e n t s fo r D e f e r r e d G r a d e d V e st in g in P r iv a t e P e n s io n P la n s

b y P e r c e n t I n it ia lly V e s t e d , W in ter 1962—63 1

(W o r k e r s in th o u sa n d s)

M in im u m a g e an d 

s e r v ic e r e q u ir e m e n t s 2

A ll p la n s

P e r c e n t in it ia lly v e s t e d

U n d e r 10 10 an d 

u n d er 2 0

2 0 an d 

u n d e r 30

30 an d 

u n d e r 40

40 an d 

u n d e r 50 50 an d o v e r

N u m ­

b e r

W o rk ­

e r s

P la n s W o rk ­

e r s

P la n s W o rk ­

e r s

P la n s W o rk ­

e r s

P la n s W o rk ­

e r s

P la n s W o rk ­

e r s

P la n s W o rk ­

e r s

A ll p la n s w ith d e -

f e r r e d g r a d e d

v e s t i n g _______________ - 3, 422 1, 969 47 4 98 406 104 593 283 132 152 5 71 1 , 812 1 , 262

N o a g e r e q u ir e m e n t---- 2, 871 1, 117 474 98 374 90 498 218 108 59 5 71 1, 412 581

N o s e r v ic e

r e q u ir e m e n t — ---- 12 68 2 42 - - - - - - - - 10 26

1—4 y e a r s ____________ 74 47 18 9 50 10 6 28 - - - - - -

5 y e a r s ______________ 153 154 30 4 - - 105 56 10 14 - - 8 80

6~9 y e a r s ____________ 871 173 300 4 137 11 251 2 6 47 9 1 66 135 56

10 y e a r s _____________ 933 382 13 15 60 34 71 67 51 36 - - 738 229

11—14 y e a r s------------ 143 94 - - 27 21 60 26 - - 4 4 52 44

15 y e a r s ----------------- 503 99 - - 100 13 - - - - - - 403 8 6

16—19 y e a r s _________ 57 31 - - - - - - - - - - 57 31

2 0 y e a r s _____________ 11 36 - - - - 5 16 - - _ - 6 21

21—24 y e a r s------------ 3 8 - - - - - - - - - - 3 8

O t h e r---------- --------- 111 24 I l l 24 - - - - - - - " - -

A ge 4 0 an d u n d e r------- 187 406 _ _ 21 8 76 33 2 0 81 _ _ 70 284

1—4 y e a r s ____________ 1 5 - - 1 5 - - - - - - - -

5 y e a r s ______________ 41 13 - - - - 37 8 - - - - 4 4

10 y e a r s ----------------- 121 379 - - - - 39 24 2 0 81 - - 62 273

11—14 y e a r s------------ 24 9 - -

2 0 3 - - - - -

4 6

A ge 4 5 ___________________ 21 4 62 _ _ _ _ _ _ _ _ _ _ 214 62

10 y e a r s _____________ 194 46 - - - - - - - - - - 194 46

11—14 y e a r s _________ 1 7 - - - - - - - - - - 1 7

2 0 y e a r s _____________ 19 9 " - - - - - " - 19 9

A ge 5 0 ----------------------- 100 127 _ _ 11 6 11 28 4 11 _ _ 74 81

1—4 y e a r s ____________ 10 6 - - 10 6 - _ - _ _ _ _ _

10 y e a r s _____________ 6 53 - - - - - - - - - - 6 53

11—14 y e a r s _________ 1 (3) - - 1 (3) - - - - - - - -

15 y e a r s ----------------- 72 28 - - - - 1 7 4 11 - - 67 10

2 0 y e a r s ----------------- 10 22 - - - - 10 22 - V - - - - -

25 y e a r s ----------------- 1 18 - " ~ - - - - - - - 1 18

A ge 5 5 ___________________ 50 257 _ _ _ - 8 3 _ _ _ _ 42 254

5 y e a r s - ______________ 8 3 - - - - 8 3 - - _ _ _ _

15 y e a r s ----------------- 38 250 - - - - - - - - - - 38 250

O th e r --------------------- 4 4 4 4

1 B a s e d on a stu d y o f 15, 818 p r iv a t e p e n s io n p la n s c o v e r in g 1 5.6 m illio n a c t iv e w o r k e r s in 1961.

2 S o m e p la n s s p e c if ie d a lt e r n a t iv e r e q u ir e m e n t s ; fo r e a c h c a s e , the one w ith the e a r l i e s t a g e o r no a g e r e q u ir e m e n t s 

w a s s e le c t e d . F o r th o se p la n s w h ich s p e c if ie d a p e r io d o f e m p lo y m e n t to b e s e r v e d b e fo r e p a r t ic ip a t io n in the p la n c o u ld 

b e g in , th e m in im u m s e r v i c e r e q u ir e m e n t in c lu d e s th e p r e p a r t ic ip a t io n s e r v i c e an d the r e q u ir e d p la n m e m b e r s h ip s e r v ic e .

3 F e w e r th an 500 w o r k e r s .

N O T E : B e c a u s e o f ro u n d in g , su m s o f in d iv id u a l it e m s m a y n o t e q u a l t o t a l s .

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
63

T a b le 19. M in im u m A g e an d S e r v i c e R e q u ir e m e n t s fo r F u ll V e st in g in P r iv a t e P e n sio n P la n s W hich H ave

D e f e r r e d G r a d e d V e s t in g , W in ter 1962—6 3 1

(W o r k e r s in th o u sa n d s)

M in im u m s e r v ic e 

r e q u ir e m e n t s 2

A ll p la n s

M in im u m a g e r e q u ir e m e n t s 3

N o a g e 

r e q u ir e m e n t

40 an d u n d er 45 50 55 6 0 an d o v e r

N u m ­

b e r

W o rk ­

e r s

P la n s W o rk ­

e r s

P la n s W o r k - 

e r s

P la n s W o rk ­

e r s

P la n s W o rk ­

e r s

P la n s W o rk ­

e r s

P la n s W o rk ­

e r s

A ll p la n s w ith d e -

f e r r e d g r a d e d

v e s t i n g ----------------- — 3 ,4 2 2 1 ,9 6 9 2, 589 1 ,0 4 8 72 211 140 194 376 61 50 145 195 311

1—4 y e a r s --------------------- 5 21 _ _ _ _ _ _ _ _ 5 21 _ _

5 y e a r s------------------------ 2 8 - - - - - - - - 2 8 - -

6—9 y e a r s --------------------- - - - - - - - - - - - - - -

10 y e a r s ________________ 131 131 4 4 82 4 5 1 5 60 10 20 22 2 7

11—14 y e a r s----------------- 168 135 121 121 - - 37 8 - - - - 10 6

1 5 y e a r s ---------------------- 1 ,0 8 8 773 665 203 5 117 59 154 186 9 1 32 1.72 257

16—19 y e a r s _____________ 201 131 192 112 4 6 4 5 1 7 - - - -

2 0 y e a r s ---------------------- 766 397 685 223 39 80 10 10 - - 22 62 10 22

21—24 y e a r s----------------- 505 133 4 2 5 120 2 0 3 10 3 50 7 - - - -

25 y e a r s ________________ 179 129 91 90 - - 19 9 6 8 11 - - 1 18

2 6 —29 y e a r s----------------- 335 33 335 33 - - - - - - - - - -

30 y e a r s ---------------------- 31 67 2 0 50 - - - 11 16 - - - -

O v e r 30 y e a r s------------- 11 14 11 14 " " ~ ~ ~ “ - “

1 B a s e d on a stu d y o f 1 5 ,8 1 8 p r iv a t e p e n s io n p la n s c o v e r in g 1 5 .6 m illio n a c t iv e w o r k e r s in 1961.

2 F o r th o se p la n s w h ich s p e c if ie d a p e r io d o f e m p lo y m e n t to b e s e r v e d b e fo r e p a r t ic ip a t io n in th e p la n c o u ld b e g in , 

th e m in im u m s e r v ic e r e q u ir e m e n t in c lu d e s th e p r e p a r t ic ip a t io n s e r v i c e an d th e r e q u ir e d p la n m e m b e r s h ip s e r v i c e .

3 S o m e p la n s s p e c i f ie d a lt e r n a t iv e r e q u ir e m e n t s ; f o r e a c h c a s e , th e one w ith th e e a r l i e s t a g e o r no a g e r e q u ir e m e n t s 

w a s s e le c t e d .

N O T E : B e c a u s e o f ro u n d in g , s u m s o f in d iv id u a l it e m s m a y not e q u a l t o t a l s .

T a b le 20. E a r l y R e t ir e m e n t P r o v is io n s in P r iv a t e P e n sio n P la n s b y T y p e o f E m p lo y e r U n it, M eth o d o f F in a n c in g , 

an d C o lle c t iv e B a r g a in in g S t a t u s , W in ter 1962—63

(W o r k e r s in th o u sa n d s^

Ite m

A ll p la n s W ith e a r l y 

r e t ir e m e n t

W ithout e a r l y 

r e t ir e m e n t

N u m b e r W o r k e r s 1 P la n s W o r k e r s 1 P la n s W o r k e r s 1

A ll p la n s s t u d i e d ---------------------------------------------------------------- 1 5 ,8 1 8 1 5 ,6 2 1 1 2 ,0 9 9 1 1 ,7 8 6 3, 719 3, 835

S in g le e m p l o y e r ------------------------------------------------------------------ 1 4 ,8 9 0 1 1 ,7 4 2 1 1 ,7 3 5 1 0 ,6 5 7 3, 155 1, 085

N o n c o n tr ib u to r y ______________________________ _______ ______ 10, 657 8 ,4 5 4 8 ,4 3 6 7, 541 2,2 2 1 913

M en tio n ed in a c o lle c t iv e b a r g a in in g

a g r e e m e n t _____________________________ ______________ 3 ,9 3 3 5, 668 3, 207 5, 169 726 4 9 9

N ot m e n tio n e d in a c o lle c t iv e b a r g a in in g

a g r e e m e n t ______________________________________________ 6 ,7 2 4 2 ,7 8 7 5, 229 2, 372 1 ,4 9 5 4 1 5

C o n t r ib u t o r y ------------------------------------------------------------------- 4 , 233 3, 288 3 ,2 9 9 3, 116 934 172

M en tio n ed in a c o lle c t iv e b a r g a in in g

a g r e e m e n t-------------------------------------------------------------- 1 ,0 3 4 1 ,4 9 5 980 1 ,4 6 5 54 31

N ot m e n tio n e d in a c o lle c t iv e b a r g a in in g

a g r e e m e n t-------------------------------------------------------------- 3, 199 1 ,7 9 3 2 , 319 1 ,6 5 1 880 141

M u lt ie m p lo y e r -------------------------------------------------------------------- 928 3, 878 364 1, 129 564 2, 750

N o n c o n tr ib u to r y ------------------------------------------------------------- 869 3, 212 327 1 ,0 4 8 542 2, 164

M e n tio n ed in a c o lle c t iv e b a r g a in in g

a g r e e m e n t ______________________________________________ 810 3, 176 320 1 ,0 3 2 4 9 0 2, 144

N ot m e n tio n e d in a c o lle c t iv e b a r g a in in g

a g r e e m e n t -------------------------------------------------------------- 59 36 7 16 52 2 0

C o n t r ib u t o r y ------------------------------------------------------------------- 59 666 37 81 2 2 586

M e n tio n ed in a c o lle c t iv e b a r g a in in g

a g r e e m e n t-------------------------------------------------------------- 18 356 4 14 14 342

N ot m e n tio n e d in a c o lle c t iv e b a r g a in in g

a g r e e m e n t -------------------------------------------------------------- 41 310 33 67 8 244

1 A c tiv e w o r k e r s in 1961.

N O T E : B e c a u s e o f ro u n d in g , s u m s o f in d iv id u a l it e m s m a y n o t e q u a l t o t a l s .

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64

T a b le 21. E a r l y R e t ir e m e n t P r o v is io n s in P r iv a t e P e n sio n P la n s b y I n d u str y G ro u p , W in ter 1962—63

(W o rk ers in thousands)

In dustry

A ll p lan s With e a rly re tire m e n t Without e a rly re tire m e n t

N um ber W orkers 1 P lan s W orkers 1 P lan s W ork ers 1

A ll p lan s stu d ie d ----------------------------------------- 15, 818 15, 621 12, 099 11, 786 3, 719 3, 835

A g ric u ltu re , fo r e str y , and f is h e r ie s __________ 75 26 75 26

M ining__________________________________________ 316 327 312 119 4 208

C o n tract co n stru ctio n __________________________ 449 1, 072 156 343 293 729

M an u factu rin g---------------------------------------------- 9, 257 9, 678 7, 409 7, 981 1, 848 1, 697

T ran sp o rtatio n --------------------------------------------- 673 1, 286 496 644 177 642

C om m un ication s and public u tilitie s-------------- 849 1, 270 600 1, 184 249 87

W holesale and r e ta il t r a d e --------------------------- 1, 627 920 1, 271 690 356 230

W holesale t r a d e -------------------------------------- 1, 147 479 1, 075 337 72 142

R e tail tr a d e --------------------------------------------- ' 480 440 196 352 284 88

F in an ce, in su ran c e , and r e a l e s t a t e __________ 1, 853 733 1, 439 660 414 73

S e r v i c e s ________________________________________ 719 308 341 140 378 168

1 A ctive w o rk ers in 1961.

N O T E : B e c a u se of rounding, su m s of in dividual ite m s m ay not equal to ta ls.

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65

T a b le 22. M in im u m A ge a n d S e r v i c e R e q u ir e m e n t s fo r E a r l y R e t ir e m e n t in P r iv a t e P e n s io n P la n s , W in ter 1962—63 1

(W orkers in thousands)

M inim um se r v ic e req u irem e n ts 1 2

A ll p lan s

M inim um age req u irem e n ts 3

No age 

req u irem e n t 50 55 60 Other

N um ber W orke r s

P lan s W orke r sP lan s W orke r s

P lan s W orke r s

P lan s W orke r sP lan s W orke r s

A ll p lan s with e a rly

r e tir e m e n t------------------------------- 1 2,099 11, 786 289 1, 120 115 345 7, 761 5, 567 3, 647 4, 522 287 233

No se r v ic e re q u ire m e n t________ 489 552 12 43 15 14 379 378 33 91 50 25

1—4 y e a r s ------------------------------- 2, 492 1, 536 157 52 17 58 1, 931 1, 067 387 359, _ -

5 y e a r s _________________________ 936 547 11 23 1 5 811 455 112 55 1 10

6—9 y e a r s ------------------------------- 313 93 - - - - 313 93 - - - -

10 y e a r s -------------------------------- 2, 140 2, 859 1 7 51 57 937 1, 019 1, 045 1, 673 106 103

11—14 y e a r s ____________________ 273 155 - _ - - 150 106 121 30 2 18

15 y e a r s ________________________ 3, 270 157 1 4 16 66 2, 108 1, 469 1, 020 1, 556 125 62

16—19 y e a r s ---------------------------- 40 57 _ _ - _ 29 30 11 26 - -

20 y e a r s ________________________ 1, 446 1, 135 4 16 8 61 867 738 564 305 3 15

Z 1 —2 4 ye a r s _________ ________ 10 24 - _ - _ 7 18 3 5 _ -

25 y e a r s ____________*________ __ 429 355 3 45 5 20 150 133 271 158 - -

26—29 y e a r s ---------------------------- 49 10 19 7 - - 30 3 - - - -

30 y e a r s -------------------------------- 191 1, 273 61 907 2 63 48 40 80 263 - -

O ver 30 y e a r s __________________ 21 33 20 16 - -

1 17 - - - -

P lan s with v e s t in g ---------------------- 9, 196 8, 362 201 208 80 238 6, 063 4, 212 2, 731 3, 555 121 148

No se r v ic e re q u ire m e n t________ 416 472 11 30 15 14 363 356 27 71 - -

1—4 y e a r s ------------------------------- 2, 312 1, 441 127 48 17 58 1, 783 1, 001 385 334 - -

5 y e a r s---------------------------------- 719 474 11 23 1 5 705 432 1 5 1 10

6—9 y e a r s ------------------------------- 313 93 _ _ - _ 313 93 _ - - -

10 y e a r s ________________________ 1, 507 2, 468 1 7 26 40 648 838 828 1, 507 4 75

11—14 y e a r s ____________________ 266 125 _ _ _ _ 144 87 121 30 1 8

15 y e a r s ________________________ 2, 464 2, 119 1 4 13 51 1, 409 738 926 1, 271 115 55

16—19 y e a r s--------------------------- 16 46 _ _ - - 5 19 11 26 - -

20 y e a r s -------------------------------- 917 733 3 11 2 25 589 517 323 180 - -

21—24 y e a r s ____________________ 7 18 - - - - 7 18 - - - -

25 y e a r s ________________________ 93 163 1 34 5 20 23 65 64 44 - -

26—29 y e a r s ____________________ 49 10 19 7 - - 30 3 - - - -

30 y e a r s ________________________ 116 181 27 44 1 25 43 27 45 86 - -

O ver 30 y e a r s------------------------ 1 17 - - - -

1 17 - - - “

P lan s w ithout v e s t in g _____________ 2, 903 3, 424 88 912 35 106 1, 698 1, 355 916 967 166 85

No se r v ic e re q u ire m e n t_______ 73 80 1 13 - - 16 22 6 20 50 25

1—4 y e a r s _______________________ 180 95 30 4 - _ 148 66 2 25 - -

5 y e a r s _________________________ 217 73 - - - - 106 23 111 50 - -

6—9 y e a r s _______________________ _ _ _ - _ - - - - - - -

10 y e a r s ________________________ 633 392 - - 25 17 289 181 217 166 102 27

11—14 y e a r s ____________________ 7 29 - - - - 6 19 - - 1 11

15 y e a r s -------------------------------- 806 1, 038 _ - 3 15 699 731 94 284 10 7

16—19 y e a r s ____________________ 24 11 _ _ _ - 24 11 - - - -

20 y e a r s ________________________ 529 401 1 5 6 36 278 221 241 126 3 15

21—24 y e a r s ____________________ 3 5 _ _ _ _ _ _ 3 5 - -

25 y e a r s -------------------------------- 336 192 2 11 - - 127 67 207 114 - -

26—29 y e a r s--------------------------- - - - - - - - - - - - -

30 y e a r s ________________________ 75 1, 093 34 863 1 38 5 14 35 177 - -

O ver 30 y e a r s __________________ 20 16 20 16

1 B a se d on a study of 15, 818 p riv ate p en sio n p lan s co v erin g 15.6 m illio n activ e w o rk e rs in 1961.

2 F o r th ose p lan s w hich sp e c ifie d a p e rio d of em ploym ent to be se rv e d b efo re p articip atio n in the plan could begin, the 

m inim um se r v ic e req u irem e n t in clu des the p re p a rtic ip a tio n se r v ic e and the re q u ire d p lan m e m b ersh ip se r v ic e .

3 Som e p lan s sp e c ifie d alte rn ativ e re q u ire m e n ts; fo r each c a se , the one with the e a r lie s t age or no age req u irem e n ts 

w as se le c te d . *

N O T E : B e c a u s e of ro u n d in g , s u m s of in d iv id u a l it e m s m a y not e q u a l t o t a ls .

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66

T able 23. S p e c ia l E a r ly R etirem en t P ro v isio n s in P riv a te P en sio n P lan s 

by In dustry G roup, W inter 1962—63

(W ork ers in thousands)

In dustry

A ll p lan s With sp e c ia l e a rly 

re tire m e n t

Without sp e c ia l 

e a rly re tire m e n t

N um ber W orkers 1 2 P lan s W ork ers 1 P lan s W o rk ers1

A ll p lan s stu d ie d ------------------------------------------ 15, 818 15, 621 1, 051 2, 674 14, 767 12, 947

A g ric u ltu re, fo r e str y , and fis h e r ie s------------- 75 26 75 26

M ining__________________________________________ 316 327 34 18 282 310

C o n tract co n stru ctio n ----------------------------------- 449 1, 072 2 7 447 1, 065

M an u factu rin g---------------------------------------------- 9, 257 9, 678 992 2, 551 8, 265 7, 128

T ra n sp o rta tio n --------------------------------------------- 673 1, 286 2 38 671 1, 248

C om m un ication s and public u tilitie s--------------- 849 1, 270 4 11 845 1, 260

W holesale and r e ta il t r a d e ---------------------------- 1, 627 . 920 7 24 1, 620 895

W h olesale t r a d e -------------------------------------- 1, 147 479 - - 1, 147 479

R e tail t r a d e --------------------------------------------- 480 440 7 24 473 416

F in an ce, in su ran c e , and r e a l e s t a t e ------------- 1, 853 733 5 17 1, 848 716

S e r v ic e s----------------------------------------------------- 719 308 5 8 714 300

1 A ctive w o rk ers in 1961.

N O T E : B e c a u se of rounding, su m s of in dividu al ite m s m ay not equ al to ta ls.

T able 24. M inim um Age and S e rv ic e R eq u irem en ts fo r S p e c ia l E a r ly R etirem en t 

in P riv a te P en sio n P la n s, W inter 1962—6 3 1

(W ork ers

A ll p lan s M inim um age and A ll p lan s

N um ber W orkers se r v ic e re q u ire m e n ts 2 N um ber W orkers

A ge 55-------------------------------------- 191 1, 211

1, 051 2, 674 No se r v ic e re q u ire m e n t--------- 5 7

10 y e a r s — ------------------------- 4 169

15 y e a r s--- ---------------- ------- 72 80

9 32 20 y e a r s ------------------------------- 105 938

4 4 25 y e a r s ------------------------------- 5 17

3 5

1 19 A ge 60_____________________________ 773 1, 299

1 4 5 y e a r s----------------------- ------- 1 5

10 y e a r s _______________________ 577 1, 074

15 y e a r s — ------------------------- 28 ' 39

78 132 20 y e a r s _______________________ 153 72

76 128 25 y e a r s ------------------------------- 5 80

2 3 30 y e a r s ------------------------------- 9 29

M inim um age and 

s e r v ic e re q u ire m e n ts 2

A ll p lan s with sp e c ia l e a rly 

r e tir e m e n t_________________

No age re q u ir e m e n t----------

No s e r v ic e req u irem e n t.

5 y e a r s------------------------

10 y e a r s ________________

25 y e a r s ----------------------

Age 50-----------------------------

15 y e a ir s----------------------

20 y e a r s----------------------

1 B a se d on a study of 15, 818 p riv ate p en sion p lan s co v erin g 15. 6 m illio n ac tiv e w o rk e rs in 1961.

2 Som e p lan s sp e c ifie d a lte rn ativ e re q u ire m e n ts; fo r each c a se , the one with the e a r lie s t age o r no age re q u ire m e n ts 

w as se le c te d . F o r those p lan s which sp e c ifie d a p erio d of em ploym ent to be se rv e d b e fo re p a rticip atio n in the p lan could 

begin, the m inim um s e r v ic e req u irem e n t in clu des the p re p a rtic ip a tio n se r v ic e and the re q u ire d plan m e m b ersh ip se r v ic e .

N O T E : B e c a u s e o f ro u n d in g , su m s o f in d iv id u a l it e m s m a y n ot e q u a l t o t a l s .

Digitized for FRASER 

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T able 25. P ro v isio n s fo r V e stin g and E a r ly R etirem en t in P riv a te P en sio n P lan s by Type of E m p lo y er Unit, 

Type o f V estin g, and C onditions fo r V estin g, W inter 1962—63

(W ork ers in thousan ds)

67

Type of em ploy er unit

Type of v estin g and 

conditions fo r v estin g

A ll p lan s Sin gle em ploy er M u ltiem ploy e r

A ll p lan s With e arly 

retirem en t

Without e arly 

re tire m e n t A ll p lan s With early 

re tire m e n t

Without e a rly 

re tire m e n t

N um ­

b er

W orke r s 1 P lan s W orke r s 1 P lan s W orke r s 1 P lan s W orke r s 1 P lan s W orke r s 1 P lan s W orke r s 1 P lan s W orke r s 1

A ll p lan s stu d ie d _____ 15,818 15,621 14,890 11,742 11,735 10,657 3,155 1,085 928 3,878 364 1,129 564 2,750

With v e s t in g ------------- 10,634 9,307 10,340 8,393 9,062 7,914 1,278 479 294 914 134 447 160 467

D e fe rre d fu ll2------- 7,212 7,338 6,941 6,815 6,623 6,491 318 324 271 523 121 380 150 143

Any s e p a r a t io n - 6,681 5,977 6,423 5,482 6,127 5,186 296 297 258 495 119 378 139 117

involuntary

se p a ra tio n ------ 531 1,361 518 1,333 496 1,305 22 28 13 28 2 2 11 27

D e fe rre d g ra d e d ---- 3,422 1,969 3,399 1,578 2,439 1,424 960 155 23 391 13 68 10 323

Any se p a r a t io n - 3,312 1,943 3,289 1,552 2,329 1,397 960 155 23 391 13 68 10 323

involuntary

se p a ra tio n ------ 110 27 110 27 no 27 " - - - - - - -

Without v e s t in g _______ 5,184 6,313 4,550 3,349 2,673 2,743 1,877 606 634 2,964 230 681 404 2,283

1 A ctive w o rk ers in 1961.

2 In cludes a few p lan s with im m ed iate fu ll v estin g .

N O T E : B e c a u se of rounding, su m s of individu al ite m s m ay not equal to ta ls.

Table 26. P ro v isio n s fo r V estin g, E a rly R etirem en t, and P o rtab ility in P riv a te P en sio n P lan s 

by Type of W orker C overed, W inter 1962—63

(W orkers in thousands)

P ro v isio n s

Type of w ork er co v ered

A ll p lan s No e a rly 

re tire m e n t 

or v estin g

E a r ly

re tire m e n t 1 V estin g 1

E a rly 

re tire m e n t 

and v estin g 1

P o rtab ility 2

N um ber W orke r s 3 P lan s W orke r s 3 P lan s W orke r s 3 P lan s W orke r s 3 P lan s W orke r s 3 P lan s W orke r s 3

A ll p lan s stu d ie d ----------------------- 15,818 15,621 1,877 606 2,903 3,424 1,438 946 9,196 8,362 404 2,283

S a la r ie d and p ro d u ctio n ------------- 6,038 6,263 1,068 269 1,195 1,866 984 281 2,791 3,846

P rodu ction only------------------------- 4,925 7,039 652 247 855 1,211 234 536 2,780 2,762 404 2,283

S a la r ie d o n ly _____________________ 3,995 1,584 155 38 793 268 142 82 2,905 1,196 - -

E arn in g in e x c e ss of a 

sp e cifie d am o u n t--------------------- 860 735 2 52 60 80 78 46 720 557 - -

1 May include a few p lan s providin g p o rtab le pen sion c r e d its.

2 T h e se p lan s had n o rm al re tirem en t only.

3 A ctive w o rk e rs in 1961.

N O T E : B e c a u s e o f ro u n d in g , s u m s o f in d iv id u a l it e m s m a y not e q u a l t o t a l s .

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68

T a b le 27. P ro v isio n s fo r V e stin g , E a r ly R etirem en t, and P o rta b ility in P r iv a te P en sio n P lan s 

by In d u stry G rou p, W inter 1962—63

(W o rk ers in thousan ds)

In d u stry

A ll p lan s

P ro v isio n s

No e a r ly 

re tirem en t or 

v estin g

E a r ly

r e tir e m e n t1 V estin g 1

E a r ly 

retirem en t 

and v e s t in g 1

P o rta b ility 2

N um ­

b er

W orke r s 3 P lan s W orke r s 3 P lan s W orke r s 3 P lan s W orke r s 3 P lan s W orke r s 3 P la n s W orke r s 3

A ll p lan s stu d ie d ------------------------ 1 5,818 15,621 1,877 606 2, 903 3 ,4 2 4 1 ,4 3 8 946 9, 196 8, 362 404 2, 283

A g ric u ltu re , fo r e str y ,

and f is h e r ie s ---------------------------- 75 26 - - 6 5 - - 69 20 - -

M ining--------------------------------------- 316 327 - - 152 27 2 2 160 92 2 206

C o n tract c o n str u c tio n ----------------- 449 1 ,072 50 7 83 185 51 140 73 157 192 582

M an u factu rin g---------- ---------------- 9, 257 9 ,6 7 8 939 373 1,639 1 ,5 2 3 831 394 5 ,7 7 0 6 ,4 5 8 78 930

T r a n s p o r t a tio n -------------------------- 673 1 ,286 105 64 194 342 1 242 302 302 71 336

C om m un ication s and public

u t ilit ie s __________________________ 849 1, 270 222 61 144 834 27 26 456 349 - -

W h olesale and r e ta il t r a d e ---------- 1,627 920 147 51 288 282 155 51 983 408 54 129

W h olesale t r a d e --------------------- 1, 147 479 32 9 211 103 6 34 864 234 34 98

R e ta il tr a d e --------------------------- 480 440 115 41 77 178 149 16 119 174 20 31

F in an c e, in su ran c e , and

r e a l e s t a t e ------------------------------- 1 ,853 733 54 30 380 171 360 43 1 ,059 489 - -

S e r v ic e s------------------------------------ 719 308 360 20 17 55 11 47 324 85 7 100

1 M ay include a few p lan s providin g p o rtab le pen sion c r e d its.

2 T h ese plan s had n o rm al re tire m e n t only.

3 A ctive w o rk e rs in 1961.

N O TE: B e c a u se of rounding, su m s of individu al item s m ay not equ al to ta ls.

T ab le 28. E a r lie s t A ge and A sso c ia te d S e rv ic e at Which the W orker Q u alifies fo r V e stin g , E a r ly R etirem en t, 

or N o rm al R etirem en t in P riv a te P en sio n P la n s, W inter 1962—63

(W ork ers in thousan ds)

M inim um service 

req u irem e n ts 1

A ll p lan s

M inim um age req u irem e n ts 2

No age req u irem en t 40 and under 45

N um ber W o rk ers 3 P lan s W o rk ers 3 P lan s W ork ers 3 P lan s W ork ers 3

A ll p lan s stu d ie d ------------------------ 15,8 1 8 15,621 4 ,8 7 0 4 , 157 2, 037 3, 599 774 811

L e s s than 5 y e a r s----------------------- 730 328 149 61 _ _ .

5—10 y e a r s --------------------------------- 4 ,4 4 4 4, 114 1, 163 912 1,377 2, 029 279 321

11—15 y e a r s -------------------------------- 5 ,4 6 5 5, 357 1,4 6 6 1 ,2 0 8 588 1,4 2 0 335 382

16—20 y e a r s -------------------------------- 2 ,8 2 3 3, 239 1, 170 583 52 147 75 81

O ver 20 y e a r s ----------------------------- 2, 356 2, 583 922 1,3 9 3 20 3 85 27

M inim um age re q u ire m e n ts 2

50 55 60 65

P lan s W o rk ers 3 P lan s W o rk ers 3 P lan s W ork ers 3 P lan s W o rk ers 3

A ll plan s stu d ie d ------------------------ 1,226 796 3, 242 1 ,972 1 ,294 1 ,5 3 4 2, 375 2 ,7 5 0

L e s s than 5 y e a r s----------------------- 1 4 206 115 8 44 366 105

5—10 y e a r s------------ ------------------ 165 103 572 289 334 232 554 228

11—1 5 y e a r s_________________ ____ 644 307 1,081 980 343 341 1,0 0 8 720

16—20 y e a r s -------------------------------- 159 221 797 414 350 562 220 1,230

O ver 20 y e a r s-------- ------------------ 257 162 586 174 259 355 227 468

1 F o r th ose p lan s which sp e c ifie d a p erio d of em ploym ent to be se r v e d b efo re p a rticip atio n in the plan could begin , 

the m in im um se r v ic e req u irem e n t in clu des the p re p artic ip atio n s e r v ic e and the re q u ire d p lan m e m b ersh ip s e r v ic e .

2 Som e p lan s sp e c ifie d altern ativ e re q u ire m e n ts; fo r each c a s e , the one w ith the e a r lie s t age or no age req u irem e n ts 

w as se le c te d .

3 A ctive w o rk e rs in 1961.

N O T E : B e c a u s e o f ro u n d in g , s u m s o f in d iv id u a l it e m s m a y not e q u a l t o t a l s .

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
69

(Workers in thousands)

T a b le 29. E a r l i e s t A ge a n d A s s o c ia t e d S e r v i c e a t W hich th e W o rk e r Q u a lif ie s fo r V e st in g , E a r l y R e t ir e m e n t, o r

N o r m a l R e t ir e m e n t in P r iv a t e P e n s io n P la n s b y I n d u str y G ro u p , W in ter 1962—63

Industry

Minimum age and service

requirements 1

All plans Agriculture,

forestry, and

fisheries

Mining Contract

construction Manufacturing

Number Workers 2 Plans Workers 2 Plans Workers 2 Plans Workers 2 Plans W orkers2

All plans studied_____________ 15, 818 15, 621 75 26 316 327 449 1, 072 9, 257 9, 678

No age requirement-------------- 4, 870 4, 157 69 20 35 32 43 154 2, 528 2, 305

Less than 5 years________ 149 61 - - - - - - 8 33

5—1 0 y ea rs------------------------- 1, 163 912 - - 2 3 22 32 125 •562

11—15 years------------------------ 1, 466 1, 208 66 12 7 19 14 27 1, 029 930

16—20 years------------------------ 1, 170 583 - - 22 6 4 52 826 311

Over 20 years_____________ 922 1, 393 3 8 4 5 3 43 540 469

Age 40 and under-------------------- 2, 037 3, 599 _ 37 25 4 5 1, 755 3, 393

Less than 5 years------------- - - _ - - _ _ - - -

5—10 years — ------------------- 1, 377 2, 029 - - - - 4 5 1, 209 1, 913

11—15 years_______________ 588 1, 420 - - 37 25 - - 500 1, 365

16—20 years------------------------ 52 147 - - - - - - 26 111

Over 20 years------------------- 20 3 - - - - -

20 3

Age 45 ------------------------------------ 774 811 _ 30 26 9 35 526 602

Less than 5 years________ _ _ _ _ - - - - _ _

5—10 y e a rs ________________ 279 321 - - - - 1 7 198 235

11—15 years_______________ 335 382 - - 30 26 8 29 243 283

16—20 years_______________ 75 81 - - - - - - 75 81

Over 20 years_____________ 85 27 - - - - - - 10 3

Age 50_________________________ 1, 226 796 _ _ 60 10 59 46- 651 409

Less than 5 years------------- 1 4 - - - - - - 1 4

5—10 y e a rs ------------------------- 165 103 - _ 60 10 - - 23 48

11—15 years------------------------ 644 307 - - - - 39 34 467 153

16—20 years___________ — 159 221 - - - - - - 104 139

Over 20 years ______ _ 257 162 - - - - 20 12 56 65

Age 55 ------- ------------- --------- 3, 242 1, 972 6 5 152 27 19 172 1, 910 1, 110

Less than 5 years------------- 206 115 6 5 - - - - 67 33

5—1 0 y e a rs ---------------------- 572 289 - - 2 1 1 15 372 191

11—15 years------------------------ 1, 081 980 _ - 150 26 17 151 435 485

16—20 years------------------------ 797 414 - - - - 1 6 516 284

Over 20 years______ _______ 586 174 - - - - - 520 117

Age 60--------------------- — --------- 1, 294 1, 534 _ _ 2 206 64 69 711 521

Less than 5 years------------- 8 44 _ _ - _ - - 2 16

5—10 y e a rs ---------------------- 334 232 _ _ _ - 60 39 167 111

11—15 years--------------------- 343 341 _ - _ - 3 24 176 206

16—20 years- — -------------- 350 562 - - 2 206 1 7 328 68

Over 20 years-------------------- 259 355 - - - - - - 38 120

Ago AR 2, 375 2, 750 _ _ _ _ 251 590 1, 176 1, 339

Less than 5 years________ 366 105 - - - - - - 152 57

5—10 years 554 228 _ - - - 69 39 477 135

11—15 years------------------------ 1, 008 720 _ _ - - 38 76 422 242

16—20 years__________ 220 1, 230 _ _ - - 8 307 111 770

Over 20 years-------------------- 227 468 136 169 14 135

See footnotes at end of table.

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(Workers in thousands)

T a b le 29. E a r l i e s t A g e an d A s s o c ia t e d S e r v i c e a t W hich th e W o rk e r Q u a lif ie s fo r V e st in g , E a r l y R e t ir e m e n t, o r

N o r m a l R e t ir e m e n t in P r iv a t e P e n s io n P la n s b y In d u str y G ro u p , W in ter 1962—6 3 — C o n tin u ed

Industry

Minimum age and service

requirements 1 Transportation

C ommuni c ati on s

and public

utilities

Wholesale and retail trade Finance,

insurance,

and real estate

Services

Wholesale trade Retail trade

Plans Workers 2 Plans Workers 2 Plans Workers 2 Plans Workers 2 Plans Workers 2 Plans Workers 2

All plans studied______________ 673 1, 286 849 1, 270 1, 147 479 480 440 1, 853 733 719 308

No age requirem ent— ---------- 243 230 335 876 610 157 208 92 524 237 275 54

Less than 5 years-------------- 10 7 101 18 - - 30 4 - - _ _

5—10 y e a rs _________________ 55 34 33 50 364 100 100 4 217 91 245 36

11—15 years________________ 7 78 148 69 30 5 1 21 153 34 11 12

16—20 years________________ 16 79 14 44 157 19 67 26 45 41 19 6

Over 20 years______________ 155 32 39 696 59 33 10 36 109 71 - -

Age 40 and under--------------------- 28 16 17 23 16 18 7 26 158 87 15 8

Less than 5 years-------------- - - - - - - - - - _ _ _

5—1 0 y e a rs _________________ 4 2 5 8 1 13 2 7 137 73 15 8

11—15 years------------------------- 20 7 12 15 15 6 4 2 - _ - _

16—20 years------------------------- 4 6 - - - - 1 16 21 14 _ _

Over 20 years______________ - - - - - - - - - - - -

Age 45__________________________ 11 37 4 25 1 7 _ _ 183 68 10 12

Less than 5 years_________ - - - - - - - _ _ _ _ _

5—10 y e a r s _________________ 11 37 2 10 1 7 - - 56 15 10 12

11—15 years________________ - - 2 14 - - - - 52 29 - -

16—20 years------------------------- - - - - - - - - - - - _

Over 20 years______________ - - - - - - - " 75 24 - -

Age 50---------------------------------------- 25 32 39 103 no 44 19 84 163 60 100 8

Less than 5 years-------------- - - - - - - - - _ _ - _

5—1 0 year s _________________ - - 6 12 76 34 - - _ _ - -

11—15 years------------------------- 1 9 14 32 - - 7 30 116 48 _ -

16—20 years________________ 24 23 17 24 3 6 11 29 - - - _

Over 20 years---------------------

- - 2 34 31 5 1 25 47 13 100 8

Age 55---------------------------------------- 67 100 215 110 220 88 89 142 525 146 39 73

Less than 5 years_________ 10 7 1 6 68 38 - 54 26 - -

5—1 0 y e a r s _________________ - - 8 15 101 12 3 12 64 33 21 10

11—15 years________________ 57 93 108 35 6 28 23 108 273 27 12 28

16—20 years------------------------- _ - 85 37 15 6 63 22 111 24 6 35

Over 20 years---------------------

- - 13 17 30 3 - -

23 37 - -

Age 60---------------------------------------- 124 406 18 115 127 49 22 25 213 101 13 42

Less than 5 years_________ 4 3 - - - - - - 1 8 1 16

5—10 year s -------------------------- 52 13 12 11 13 20 15 8 10 23 5 8

11—15 years________________ 10 64 - - 3 13 2 6 144 16 5 11

16—20 years------------------------- 3 190 3 58 3 9 2 6 8 18 - _

Over 20 years______________ 55 135 3 46 108 7 3 5 50 35 2 6

Age 65---------------------------------------- 175 467 221 20 63 116 135 72 87 34 267 113

Less than 5 years-------------- 1 25 - - 5 10 _ _ 8 6 200 6

5—1 0 year s _________________ 1 5 - - 2 36 3 4 - - 2 9

11—15 years________________ 102 250 221 20 38 26 109 19 74 12 4 76

16—20 years------------------------- 6 55 - - 15 37 14 23 5 16 61 22

Over 20 years--------------------- 65 131 3 7 9 27

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

was selected. 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 Active workers in 1961.

N O T E : B e c a u s e o f ro u n d in g , s u m s of in d iv id u a l it e m s m a y not e q u a l t o t a l s .

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T a b le 30. E a r l i e s t A ge an d A s s o c ia t e d S e r v i c e a t W hich the W o rk e r Q u a lifie s fo r V e st in g , E a r l y R e t ir e m e n t , o r N o r m a l

R e t ir e m e n t in P r iv a t e P e n s io n P la n s b y T y p e of W o rk e r C o v e r e d , W in ter 1962—63

(Workers in thousands)

Minimum age and service

requirements 1

All plans

Type of worker covered

Salaried and

production Production only Salaried only

Earning in

excess of a

specified amount

Number Workers 2 Plans Workers 2 Plans Workers 2 Plans Workers 2 Plans Workers 2

All plans studied_____________________ 15,818 15,621 6, 038 6, 263 4, 925 7, 039 3, 995 1, 584 860 735

No age requirem ent_________________ 4, 870 4, 157 2, 343 2, 744 727 713 1, 211 442 589 257

Less than 5 years________________ 149 61 147 49 - - 2 12 - -

5—10 year s ________________________ 1, 163 912 510 501 118 218 533 156 2 36

11—15 years_______________________ 1, 466 1, 208 895 742 277 205 149 135 145 126

16—20 years_______________________ 1, 170 583 437 301 282 144 316 67 135 71

Over 20 years-------------------------------- 922 - -,3 9 3 354 1, 151 50 145 211 73 307 24

Age 40 and under-------------------------------- 2, 037 3, 599 171 1, 304 1, 437 1, 667 415 361 14 268

Less than 5 years------------------------- - _ - - - _ - - - -

5—10 y e a r s ------------------------------------- 1, 377 2, 029 57 759 1, 006 904 310 173 4 194

11—15 years_______________________ 588 1, 420 78 419 407 754 93 174 10 74

16—20 years_______________________ 52 147 36 126 4 6 12 14 - -

Over 20 years_____________________ 20 3 - -

20 3 - - - -

Age 45--------------------------------------------------- 774 811 170 289 238 272 365 246 1 4

Less than 5 years------------------------- - - _ - - - - _ - -

5—10 y e a rs ________________________ 279 321 77 125 14 70 188 126 - -

11—15 years_______________________ 335 382 69 129 174 185 91 64 1 4

16—20 years_______________________ 75 81 5 27 50 17 20 37 -

Over 20 years_____________________ 85 27 19 8 - -66 19 - -

Age 50_________________________________ 1, 226 796 383 425 531 183 229 156 83 32

Less than 5 years________________ 1 4 _ _ - - 1 4 _ _

5—1 0 y e a rs ------------------------------------- 165 103 22 22 5 23 137 56 1 1

11—15 years------------------------------------ 644 307 220 167 349 91 13 29 62 20

16—20 years_______________________ 159 221 56 110 56 40 27 60 20 11

Over 20 years_____________________ 257 162 85 126 121 30 51 7 - -

Age 55--------------------------------------------------- 3, 242 1, 972 1, 369 843 503 839 1, 307 220 63 71

Less than 5 years________________ 206 115 44 32 30 26 131 56 1 1

5—10 y e a rs ------------------------------------- 572 289 323 170 27 67 220 36 2 16

11—15 years_______________________ 1, 081 980 563 318 260 521 206 89 52 51

16—20 years------------------------------------ 797 414 276 258 168 126 345 27 8 3

Over 20 years-------------------------------- 586 174 163 64 18 99 405 12 - -

Age 60--------------------------------------------------- 1, 294 1, 534 491 396 380 952 314 126 109 61

Less than 5 years________________ 8 44 2 12 2 29 - - 4 3

5—1 0 y e a rs ------------------------------------- 334 232 35 64 136 122 160 38 3 8

11—15 years------------------------------------ 343 341 176 71 54 227 13 28 100 16

16—20 years------------------------------------ 350 562 221 110 119 452 10 (3 ) - -

Over 20 years-------------------------------- 259 355 57 140 69 122 131 60 2 34

Age 65--------------------------------------------------- 2, 375 2, 750 1, 111 262 1, 109 2, 413 154 34 1 42

Less than 5 years________________ 366 105 209 25 155 73 2 6 - -

5—1 0 y e a rs ________________________ 554 228 260 45 244 164 50 18 - _

11—15 years_______________________ 1, 008 720 551 103 356 608 101 8 _ -

16—20 years------------------------------------ 2 20 1, 230 80 58 138 1, 130 1 1 1 42

Over 20 years-____________________ 227 468 11 31 216 437

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

was selected. 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 Active workers in 1961.

3 Fewer than 500 workers.

N O T E : B e c a u s e o f ro u n d in g , s u m s of in d iv id u a l it e m s m a y not e q u a l t o t a ls .

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Federal Reserve Bank of St. Louis
Appendix: Scope and Method of Survey

The ch ie f s o u r c e s o f in fo rm a tio n fo r th is stu dy w e re r e p o r ts and su p p o rtin g d o cu ­

m e n ts file d w ith the U .S . D ep artm e n t of L a b o r p u rsu a n t to the W elfare and P e n sio 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 e n d ed ). The a d m in is t r a t o r s of any em p lo y e e w e lfa r e o r 

p en sio n b en efit p la n , a s d efin ed by the a c t, c o v e rin g m o re than 25 w o rk e rs w e re re q u ir e d 

to file w ith the D ep artm e n t two c o p ie s o f a d e sc r ip tio n of the p la n (D - l fo rm ) w ithin 90 d a y s 

a fte r the e ffe c tiv e d ate of the a c t (Ja n u a r y 1, 1959) o r p lan (w h ich ev er o c c u r s l a t e r ) , and

two c o p ie s o f the an n u al fin a n c ia l re p o r t (D -2 fo rm ) w ithin 120 d a y s (now 150 d a y s) a fte r 

the end of each c a le n d a r , p o lic y , o r o th e r f is c a l y e a r . B y the fa ll o f I9 6 0 , an n u al r e p o r ts 

h ad b een file d fo r o v e r 2 5 ,0 0 0 p en sio n p la n s.

The p r iv a te p en sio n p lan and w o rk e r c o v e r a g e e s t im a t e s in th is r e p o r t d iffe r su b ­

sta n tia lly fro m s im ila r d a ta fo r p la n s on file w ith the D e p a rtm e n t's O ffice of L a b o r - M a n a g e ­

m ent and W e lfa re - P e n sio n P la n R e p o rts fo r the sa m e p e r io d . A bout 30 p e rc e n t fe w e r p la n s 

and about 12 p e rc 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 fo r 

th is d iffe re n c e i s th at m an y p la n s re p o rtin g th at they p ro v id e d r e tir e m e n t b e n e fits w e re r e ­

je c te d fro m the stu d y b e c a u s e they did not p ro v id e p e n sio n b e n e fits a s d efin ed in th is stu d y . 38 

M o st r e je c t e d p la n s w e re 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 re sto c k b on u s and sa v in g s 

p la n s. 39

S im ila r ly , c o v e r a g e e s t im a t e s in th is r e p o r t d iffe r fr o m e s t im a t e s of p en sio n b e n e ­

fit c o v e r a g e by the D ep artm e n t of H ealth , E d u c a tio n , and W elfa re (H EW ). 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 o f n o n p ro fit o r g a n iz a tio n s and p la n s w ith 

few er than 26 w o r k e r s , a ll of w hich w e re ex c lu d ed fro m th is stu d y . H ow ev er, a s in th is 

stu d y , they a ls o do not in clu d e sto c k bonus and sa v in g s p la n s.

T y p e s of D ocu m en ts S tu d ie d . The D - l d e sc r ip tio n p la n fo rm r e q u ir e s that the f o l ­

low ing 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 la n .

2. A ccoun tin g p e r io d of the p lan .

3. T y p e o f p lan (i. e. , w e lfa r e , p e n sio n , o r co m b in atio n ).

4. G ro u p (s) c o v e r e d by the p lan (h ou rly r a t e , s a l a r i e d , o r a ll e m p lo y e e s).

5. In d u stry in w hich m o st p a r tic ip a n ts a r e em p lo y e d (8 in d u stry d iv isio n s a r e lis t e d ).

6. W hether the p lan i s m en tio n ed in a c o lle c tiv e b a rg a in in g a g re e m e n t.

7. P a r t i e 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 t s , union ).

8. The n am e and a d d r e s s of the a d m in is tr a to r (in m u ltie m p lo y e r p la n s , u su a lly a 

b o a rd o f t r u s t e e s ) and the n a m e s and a d d r e s s e s o f p e r s o n (s) co n stitu tin g the a d m in is ­

t r a t o r , th e ir o ffic ia l p o sitio n s w ith r e s p e c t to the p la n , th e ir r e la tio n sh ip to the e m ­

p lo y e r and em p lo y e e o rg a n iz a tio n , and any o th er o f f ic e s , p o s itio n s , o r em p loy m en t h eld 

by th e m .

9. A d e ta ile d d e sc r ip tio n of the a d m in istra tio n o f the p lan , in clu din g the n a m e s of 

the p a r ty o r p a r t ie s p e rfo r m in g the follow in g fu n ctio n 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 e te rm in a tio n on a p p e a ls ; a u th o riz in g p a y m e n ts; 

m ak in g p a y m e n ts; a u th o riz in g e x p e n se s; se le c tin g the in s u r a n c e c a r r i e r , c o r p o r a te 

t r u s t e e , o r s e r v ic e o rg a n iz a tio n ; and d e te rm in in g in v e stm e n t p o lic y .

10. The n am e and a d d r e s s o f the p a r ty o r o r g a n iz a tio n th ro u gh w hich b e n e fits a r e 

p ro v id e d .

11. N a m e s, t it l e s , and a d d r e s s e s of any t r u s t e e (s ) not m en tion ed u n d er ite m s 

8 o r 10.

12. C o p ie s o f p lan d o cu m en ts u n d er w hich the p lan i s e s ta b lish e d and o p e ra te d , 

sc h e d u le of p lan b e n e fits, and a sta te m e n t o f the p r o c e d u r e s to be follow ed u n d er the 

p lan in p re se n tin g c la im s fo r b e n e fits and fo r a p p e a lin g the d e n ia l of c la im s .

38 For definition of a pension plan used in this study, see p. 2.

39 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.

72

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73

Th e D -2 fo rm , w hich in th is study w a s u se d only to ob tain the n u m b er of m e m b e rs 

(a c tiv e and r e tire d ) c o v e r e d by each p la n , a ls o sh o w s, am on g o th er ite m s , the a s s e t s , l ia b i l ­

i t i e s , co n trib u tio n s, b e n e fits p a id , and s a l a r i e s and c o m m iss io n s p aid .

The sta n d a rd d o cu m en ts u se d in th is stu dy a r e b r ie fly d e s c r ib e d b elow . A lthough 

th e se d o cu 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 sc rip 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 p lan a s re q u ir e d by the a c t, o th e r d o cu m en ts o r d e s c r i p ­

tiv e m a t e r ia ls m a y h ave b een and often w e re su b stitu te d .

1. C o lle c tiv e b a rg a in in g a g re e m e n t betw een the un ion (s) and the e m p lo y e r(s) (o r a s ­

so c ia tio n o f e m p lo y e rs) d e s c r ib in g , am on g o th er th in g s, the e m p lo y e r s' o b lig a tio n e ith e r 

to m a k e sp e c ifie d co n trib u tio n s to a t r u s t fund o r p ro v id e sp 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 o p ted by the b o a rd of t r u s t e e s o r 

n e g o tia te d by the e m p lo y e rs and union, o r u n ila te r a lly e s ta b lish 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 la n p a r tic ip a n t s , r a th e r than the fu ll tex t of the p lan , w e re 

ty p ic a lly a v a ila b le fo r in s u r e d p la n s.

3. M a s te r gro u p annuity c o n tra c t se ttin g fo rth the 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 o f the p a r t ie s .

4. In dividu al c e r t if ic 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 n d er so m e in ­

su r e d p la n s.

5. The D - l and D -2 fo r m s and a tta c h m e n ts w hich g iv e an o v e r a ll d e sc rip tio n of 

the p lan and su m m a ry fin a n c ia l in fo rm a tio n .

F o r c e rta in key c h a r a c t e r i s t i c s , a s e x p la in e d b elo w , the a n a ly s is w a s b a se d on su p ­

p o rtin g d o cu m en ts file d by the a d m in is t r a t o r s , ra th e r than on the 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 re a u o f L a b o r S t a t is t ic s .

P la n a d m in is t r a t o r s in d ic a te d on the D - l fo rm (ite m 5) the in d u stry d iv isio n in w hich 

m o st o f the p a r tic ip a n ts w e re em p lo y e d . E igh t b ro a d d iv isio n s w e re lis t e d : M an u factu rin g; 

m in in g; co n stru c tio n ; tr a n s p o r ta tio n ; co m m u n ica tio n s and u tilit ie s ; w h o le sa le and r e ta il tr a d e ; 

fin a n c e , in s u r a n c e , and r e a l e s t a te ; and s e r v i c e s . T o p ro v id e a m o re in fo rm 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 re p o rtin g (p ro b a b ly m o stly 

due to the la c k o f in d u stry d e fin itio n s), each p lan w a s c l a s s if i e d into the 2 -d ig it in d u stry 

g ro u p s of the S ta n d ard In d u str ia l C la s s ific a t io n . 40 G u id an ce fo r th is c la s s if ic a t io n w a s o b ­

tain 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 cu m e n ts. F o r so m 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 e r s o u r c e s a v a ila b le to the B u re a u of L a b o r S t a t is t ic s .

T im e P e r i o 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 t s , 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 re se le c te d fro m a l is t of a ll I960 D -2 re p o r ts 

file d w ith the U .S . D ep artm e n t of L a b o r— the la t e s t co 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 e r c o v e r a g e d a ta , h o w ev er, w e re o b tain e d fro m the la te s t annual f i ­

n a n c ia l r e p o r t (D -2 fo rm ) on f ile . T h is u su a lly sh ow ed a v e r a g e w o rk e r c o v e r a g e du rin g 

c a le n d a r y e a r 1961 o r a f is c a l y e a r ending in 1961. H o w ev er, the m a jo r c h a r a c t e r is t ic s 

and p lan p r o v isio n s r e la te to 1962—63, sin c e the p lan p ro v isio n a n a ly s is w a s b a se d on the D - l 

p lan d e sc r ip tio n fo rm w hich w a s up to d ate at tim e o f the a n a ly s is , the w in te r of 1962—6 3 .41

S am p lin g M eth od. The stu dy w a s b a se d on a s t r a t if ie d ran d o m s a m p le . The s a m ­

p le w a s s t r a t ifie d by two k ey c h a r a c t e r is t ic s re p o r te d by p lan a d m in is t r a t o r s and ta b u la te d 

by the O ffice of L a b o r-M a n a g e m e n t and W e lfa re - P e n sio n R e p o r ts: (l) The in d u stry d iv isio n 

in w hich m o st p a r tic ip a n ts a r e em p lo y e d , and (2) the n u m b er of a c tiv e and r e t ir e d w o r k e r s . 

A ll p la n s w ith 5, 000 p a r tic ip a n ts o r m o re w e re in clu d ed in the stu d y , r e g a r d le s s of in d u stry . 

In m in in g, a ll w ith 3, 000 p a r tic ip a n ts o r m o re w e re in clu d e d . A ran d o m sa m p le of r e p o r t s , 

s t r a t ifie d by in d u stry and w o rk e r c o v e r a g e , w a s s e le c te d fo r th o se w ith few er w o r k e r s .

The la r g e p la n s s e le c te d w ith c e rta in ty r e p r e se n te d l e s s than 3 p e rc e n t of the p la n s 

and o v e r 60 p e rc e n t of the w o r k e r s c o v e r e d b y p en sio n p la n s th at file d r e p o r ts w ith the 

L a b o r D ep artm e n t fo r I9 6 0 . *4

40 Bureau of the Budget, Standard Industrial Classification Manual, 1957.

4* Sec. 6(b), as amended, requires the reporting of amendments within 60 days after they have been effectuated.

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Data for each plan selected in the sam ple w ere weighted in accordance with the probability of selecting its report. For exam ple, where 1 report out of 5 was sam pled in an 

in du stry-size group, it was considered as representing itse lf and four other plans and was 

given a weight of 5. T herefore, if the plan provided vesting, it would be counted as 5 plans 

providing vesting in the total estim ates.

Because of legal, adm inistrative, and financial arrangem ents and preferen ces of adm in istrato rs, the scope of the subm issions varied widely. F o r exam ple, a firm with sep arate plans for production and salaried w orkers and common financial and adm inistrative techniques might file only a single report. On the other hand, separate reports might be made 

for the two plans because different adm inistrative arrangem ents w ere used. For this study, 

combined reports of the first type were examined and analyzed, and separate coverage fig ­

u res (reported or estim ated) were assign ed to each plan. On the other hand, if, as in the 

second case, separate reports were made, both plans w ere analyzed only if both were s e ­

lected for the sam ple.

In addition, some firm s or m ajor divisions offer supplemental plans to all or c e rtain groups of w orkers covered by a basic plan. Again, separate subm issions for each plan 

might be made, or they mignt be combined. If the basic plan fell in the scope of the sam ­

ple (whether by certainity or chance) the subordinate plan was also analyzed even if it was 

described in another report. However, if the report selected in sam pling was that of a subordinate plan, it was dropped from the sam ple and considered out of scope unless the a s ­

sociated basic plan was also selected. By this method, the plans for which there were two 

subm issions were not given a better chance of being selected than those where the b asic and 

subordinate plan were included in one subm ission (in which both c a se s w ere analyzed).

For plans in which a b asic and subordinate plan w ere analyzed, it w as found that 

certain benefits were included in one plan but not the other and, in some instances, requ irements for benefits w ere different, e.g., the b asic plan had vesting while the subordinate 

plan did not. For the tabulations in this study, the requirem ents of the plan which applied 

to and yielded the highest benefit for a w orker assum ed to earn $500 a month w ere used. 

A group of 286 plans with 475, 000 w orkers had to be adjusted in this manner. In the r e ­

maining ca ses the requirem ents for benefits of the b asic and subordinate plans w ere identical so that no adjustm ent was needed.

☆ U. S. GOVERNMENT PRINTING O FFICE : 1964 O - 735-359

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Recent BLS Publications on Employee Benefit Plans

Pensions Price

1284 Pension Plans Under C o lle ctiv e Bargaining: N orm al R etirem ent, Early 

and D isability R etirem ent, F all 1959.

40 cents

1307 D igest of One-Hundred S ele cted Pension Plans Under C o lle ctiv e 

Bargaining, Spring 1961.

50 cents

1326 M ultiem ployer Pension Plans Under C o lle ctiv e Bargaining, Spring 1960. 65 cents

1334 Pension Plans Under C o lle ctiv e Bargaining: Benefits for Survivors, 

Winter 1960—61.

25 cents

1373 D igest of 50 S ele cted Pension Plans for S alaried Em ployees, Spring 1963. 35 cents

1394 Unfunded Private Pension Plans. 30 cents

R ecent C hanges in N egotiated Pension Plans. Monthly Labor R eview , 

M ay 1962. (R eprint 2 3 9 2 .)

Free

Prelim inary R e lease : Prevalence of M ultiem ployer Pension Plans Under 

C o lle ctiv e Bargaining, Spring 1960. (February 1 9 6 1 .)

Free

H ealth and Insurance

1250 H ealth and Insurance Plans Under C o lle ctiv e Bargaining: A ccident and 

Sickness Benefits, F all 1958.

25 cents

1274 H ealth and Insurance Plans Under C o lle ctiv e Bargaining: H ospital 

Benefits, Early 1959.

30 cents

1280 H ealth and Insurance Plans Under C o lle ctiv e Bargaining: Surgical 

and M edical Benefits, Late Sum m er 1959.

30 cents

1293 H ealth and Insurance Plans Under C o lle ctiv e Bargaining: M ajor 

M edical Benefits, F all 1960.

20 cents

1296 H ealth and Insurance Plans Under C o lle ctiv e Bargaining: Life Insurance 

and A cciden tal D eath and D ism em berm ent Benefits, Early Sum m er 1960.

25 cents

1330 D igest of One Hundred S ele cted H ealth and Insurance Plans Under 

C o lle ctiv e Bargaining, Winter 1961—62.

$ 1 .2 5

1377 D igest of 50 S elected H ealth and Insurance Plans for Salaried 

Em ployees, Spring 1963.

$ 1 .0 0

R ecen t C hanges in N egotiated H ealth and Insurance Plans, Monthly 

Labor R eview , Septem ber 1962. (R eprint 2 4 0 2 .)

Free

Other

1325 D igest of Profit-Sharing, Savings, and Stock Purchase Plans, 

Winter 1961—62. (20 S elected P la n s.)

30 cents

1365 D igest of Nine Supplem ental U nem ploym ent Benefit Plans, Early 1963. 25 cents

Health,- Insurance, and Pension Plan C overage in Union Contracts, 

Late 1960. BLS Report 228.

Free

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