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Defined Benefit Plans at the Dawn of ERISA

by John W. Thompson

Bureau of Labor Statistics

Originally Posted: March 30, 2005

More than 30 years after the Employee Retirement Income Security Act (ERISA) was signed into law, defined benefit plans

are under more scrutiny than ever. This article summarizes a 1974 BLS analysis of major provisions of a sample of defined

benefit plans in private industry as they existed just prior to enactment of ERISA; where possible, it also cites recent data

from the National Compensation Survey for comparison.

Although industrial pension plans have been in existence since the latter part of the 19th century, their period of greatest

growth occurred following the decision by the Supreme Court in the Inland Steel Case of 1949. The Court upheld the ruling

by the National Labor Relations Board that pension benefits constitute wages and thus were subject to collective bargaining,

as are other conditions of employment.1 By 1974, nearly 31 million workers were covered by private pensions, with 27 million

enrolled in defined benefit plans.2 Private retirement plans had become the major source of income for many retired workers.

But as the pension plan evolved into a "condition of employment" in much of the private sector, it also became apparent that

patterns of living and working had shifted since the retirement plan concept was first instituted. Fewer workers were spending

the bulk of their career with one employer. Working women were not benefiting from these plans in proportion to their

contributions to the employer’s success. Longer life spans meant years of economic hardship for some surviving spouses of

retirees. That these deficiencies were becoming evident to employees, unions, and plan sponsors is indicated by studies of

defined benefit plans conducted by the Bureau of Labor Statistics (BLS) in the early 1970s.3 Vesting and survivor benefit

provisions were either being introduced or liberalized in many plans.

During the same period the U.S. Senate held hearings on deficiencies in the pension system, which at the time was

dominated by the traditional defined benefit retirement plan. These deficiencies included a high rate of ineligibility for pension

benefits among plan participants and the forfeiture of pensions despite long years of service.4 These hearings set the stage

for eventual passage of the Employee Retirement Income Security Act of 1974 (ERISA).5 Among its other objectives, ERISA

established minimum standards employees must satisfy to ensure the receipt and protection of benefits when they either

leave their job or die.6 The changes affected virtually all plans.

More than 30 years after ERISA was signed into law, the defined benefit plan is under more scrutiny than ever. This article

summarizes a BLS analysis of major provisions of a sample of defined benefit plans in private industry as they existed just

prior to enactment of ERISA in 1974. In addition, where possible, recent data on retirement plans from the National

Compensation Survey (NCS) are cited for comparison. The 1974 sample of plans was taken to represent the universe of

basic plans with 100 or more active participants at the time.7 (See table 1.) While not all retirement plan features discussed

here were affected by the act, the data provide a unique snapshot of what defined benefit plans looked like in 1974. Most of

the data shown in this article’s tables have not been published previously.8 No other data from the 1974 analysis are

available at this time.

Participation Requirements

Before ERISA, 27 percent of active workers in defined benefit plans first had to satisfy age or service requirements (or both)

in order to accrue pension benefits. (See table 2.) The most common participation requirements were 1 or 2 years’ service,

age 25 with 1 year of service, and age 25 with no service. These provisions affected nearly half of the workers in the finance,

insurance, and real estate industry. (See table 3.) On the other extreme, restrictions on participation were rare in

construction--pension benefits in this industry were largely provided by multiemployer plans to which more than one employer

is signatory under a collective bargaining agreement. Requirements were also relatively uncommon in mining and

transportation.
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Initial ERISA regulations stipulated that most defined benefit plans should allow employees to participate at the later of two

events: 1) attainment of age 25, or 2) completion of 1 year of service. If full vesting of benefits occurred in 3 years or less,

somewhat more stringent age or service requirements could be specified. Later, the Retirement Equity Act of 1984 required

almost all plans to lower the age requirement to 21. The exception remains in place for plans with full vesting of benefits in 3

years or less. Nearly 30 years after ERISA was enacted, the BLS National Compensation Survey found that the most

common provisions for full-time private industry workers with pension plans were 1 year of service at age 21 or 1 year of

service without an age requirement.9

In addition to age and service requirements, more than 1 in 10 participants were required to contribute towards the cost of

their plan. (See table 4.) These contributions, normally 1, 2, or 3 percent of earnings, were found more often among workers

in finance, insurance, real estate and transportation. Required contributions were fairly rare in the construction industries. The

BLS Digest of Selected Pension Plans show that fewer plans remained contributory in the late 1970s and early 1980s.10 In

2000, NCS data showed that only 5 percent of full-time private industry workers with pension plans were required to

contribute to the plan.11

Vesting

Vesting provisions secure for an employee a nonforfeitable right to pension benefits funded by the employer’s contribution

when changing jobs or otherwise ending employment before becoming eligible for a pension. Throughout the 1960s more

sponsors were adding vesting provisions to their plans, partly as a result of collective bargaining.12 Still, in 1974, 12 percent

of pension plan participants were covered by plans lacking vesting provisions.13 (See table 5.)

As is the case today, virtually all vesting provisions were in two forms--deferred full (or "cliff") and deferred graded (or

"graduated")--both of which require the employee to meet service conditions. When conditions for deferred full vesting are

satisfied, all accrued benefits are receivable at a later age. Under graded vesting, an initial percentage of accrued benefits

are first earned, and the vested percentage increases as additional service is credited. For all but a small percentage of

participants with this type of vesting schedule in 1974, 100 percent vesting could be eventually attained. Deferred graded

vesting covered a significant proportion of workers in transportation and finance-related businesses, while deferred full

vesting was more common in other industries. Immediate full vesting, which entitled former participants to benefit payments

with no age or service conditions, covered less than 1 percent of the participants.

Among those in plans with pre-ERISA vesting provisions, 53 percent of workers needed a minimum of 15 years’ service to

qualify for full vesting. Although accompanying age requirements were being eliminated in plans during the 1960s, in 1974

many vesting provisions still did not apply unless the employee had reached a specified age, frequently 40 or 45. The

majority of workers in plans that required 15 or more years of service for full vesting encountered a minimum age

requirement. Interestingly, for workers who secured full rights to their benefits after 10 or fewer years of service, 4 in 5 could

become vested regardless of age. These workers accounted for one-third of all participants with vesting. Plans with

graduated vesting frequently provided full vesting at any age only after 20 or more years of service had been completed.

ERISA incorporated both cliff and graded vesting in establishing vesting rules. But minimum age requirements (apart from a

minimum age for plan participation) and deferred partial grading were not permitted. The law also prescribed minimum

vesting schedules. It set a maximum of 10 years for cliff vesting schedules. Under graded schedules, ERISA required 25

percent vesting after 5 years, 5 percent vesting for each of the next 5 years, and 10 percent for each of the next 5 years,

leading to 100 percent vesting after 15 years. Nearly 3 in 4 participants were in plans that had to amend their vesting

provisions. (See table 6.) The burden fell most heavily on plan sponsors in transportation, with its higher prevalence of

graded vesting provisions. No graded vesting provisions prior to ERISA met or exceeded the new standards. By 2002, the

NCS revealed that 82 percent of full-time private industry workers with pension plans were subject to cliff vesting schedules

that granted full vesting after 5 years of service at any age.14
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Break-in-service Provisions

With few exceptions, pension plans require that a participant’s service be more or less continuous in order to qualify for a

retirement benefit. Break-in-service rules define the point at which an employee forfeits credit for any years of service before

the termination of employment. Eligibility for a retirement benefit, as well as the amount of the pension, is based on the latest

period of continuous service. For a vested employee who leaves an employer and later returns, benefits earned prior to a

break would be based on the benefit formula in place at the time the break occurred.

In 1974, the definition of a break differed considerably by industry and by the reason for termination of employment. The rules

determining a break were far stricter in manufacturing establishments when an employee quit or was fired. For 74 percent of

manufacturing participants, a break-in-service provision went into effect immediately when they quit; after a discharge, 62

percent would forfeit their time in service. (See table 7.) Outside manufacturing, 41 percent of plan participants also faced the

loss of pension rights when they separated voluntarily; 35 percent forfeited such rights if they were discharged. Most of the

remaining workers were in plans that permitted them to return to covered employment within a year or more, work regularly

and maintain continuous service in the plan as if the separation had not occurred. Multiemployer plans accounted for many of

the workers who had to work a minimum numbers of hours within a specified time.

Pre-ERISA break-in-service provisions were more liberal if the separation from employment was initiated by a layoff. For

nearly half the covered workers, a break in service could not occur until the layoff was more than 1 year old, and almost 3 in

10 were in plans which left continuous service intact regardless of the length of the layoff. However, if the plan member did

not return to work following a recall, the break in service could occur immediately. Many plans treated the period of layoff as a

leave of absence and did not count all or part of the layoff as credited service. In plans that covered 15 percent of

participants, break-in-service provisions did not apply when the worker was vested in the plan. All previously credited service

was restored upon return to work.

Prior to ERISA, when plan participants returned to covered employment following a break in service, they generally lost their

previous years of service. In about 3 in 4 cases, explicit provisions prevented nonvested workers from aggregating their

service before and after the break-in-service; similar provisions applied to a majority of vested workers. (See table 8.)

Workers in plans which did provide for restoration of at least some of their prebreak service had to satisfy one of two

requirements: 1) sufficient length of service before the break (frequently 5 years), or 2) a postbreak work requirement (almost

always 2 or more years).

The length of prebreak service requirements was generally shorter when the break was due to a layoff or discharge, since 21

percent of vested workers satisfied the prebreak requirement automatically, compared with 15 percent who originally left

employment voluntarily. Therefore, under these plans, break-in-service rules did not apply to vested participants. For plans

covering 15 percent of participants, break-in-service rules did not apply to vested workers who had voluntarily left

employment and resumed work under the same plan. In those cases credited service accumulated as if the participant had

never left.

Survivor Benefits

Pension plans provide for two types of survivor benefits: Postretirement survivor benefits provide payments to the spouse of

a worker who dies after retiring, under what is called a "joint-and-survivor annuity"; preretirement survivor benefits provide

payments to the spouse of a worker who dies prior to retirement. In most current plans, the joint-and-survivor annuity is the

automatic form of payment. The spouse of a newly retired worker must waive the automatic form in writing before the retiree

can select another payment form. As a result of the Retirement Equity Act of 1984, this protection extends to the spouse of a

deceased vested employee. When a joint-and-survivor form of annuity is in effect, the size of the retiree’s pension is almost

always lower than what it would be for an unmarried participant, due to the probable longer duration of payment by the plan.

Prior to ERISA, plans were not required to make death benefits available. There often was inadequate concern for the

spouse’s interest in participant benefit accruals. Joint-and-survivor payments existed in most plans, but they seldom were the
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standard or automatic form of payment. The standard form of payment was a pension for the life of the retiree only.

Uninformed spouses who did not seek survivor annuities often found themselves facing severe reductions in income.

Joint-and-survivor annuities at normal retirement age were available to 77 percent of the active workers in pre-ERISA plans.

(See table 9.) However, while 9 in 10 single-employer plan participants had this option, it was available to only about half of

those in multiemployer plans. In rare instances, the option was not extended at early retirement. Many plans containing these

provisions offered retirees the choice of how much of the pension would continue to be paid to the surviving spouse. The

choices were usually between the 50-percent option and more generous survivor forms, such as two-thirds, 75 percent or

100 percent of the retiree’s pension. A retiree who elected to have the entire joint portion of the pension continue during the

life of the spouse would incur a larger reduction in his or her pension than one who elected the 50-percent option.

By 2002, with ERISA requiring all plans to offer survivor benefits, 5 in 8 plan participants could elect a choice of survivor

annuity options.15 These plans generally included an option that would pay 100 percent of the annuity, payable during the life

of the retired worker and his or her spouse.16

Apart from joint-and-survivor benefits, automatic survivor payments to surviving spouses of active workers were provided to

38 percent of workers in 1974. A worker usually had to satisfy an age and service requirement to qualify for this benefit,

commonly age 55 with 10 or 15 years’ service. Benefits were based on a percent of the worker’s accrued benefits and were

reduced for differences in age.17 In other cases, survivors received a flat dollar amount per month. While the duration of

some of these payments would be for the lifetime of the spouse, others were intended to bridge the gap between the time of

the worker’s death and his or her spouse reaching age 62, at which time Social Security benefits would begin. A spouse

remarrying could also be a factor in determining how long payments continued. Benefits for surviving children were also

included in some of the plans, providing flat monthly benefits ending at either age 18 or 21. Like joint-and-survivor benefits,

these provisions were found more frequently in single-employer plans. However, automatic survivor options to spouses of

retirees covered about 1 in 6 workers, regardless of the plan entity.

The remaining form of survivor benefits found in pre-ERISA plans was a flat dollar death benefit to survivors. These were

found in plans covering a little more than half of workers covered under multiemployer plans and were typically no more than

$5,000. Like automatic survivor payments, these benefits were superfluous in view of ERISA’s requirements, and to some

extent they have been replaced by retiree life insurance benefits.

In 2002, NCS data show that 97 percent of pension plan participants were in plans that provided preretirement survivor

benefits. They were generally equivalent to a joint-and-survivor annuity, and they typically provided the spouse with 50

percent of the worker’s pension.18

Requirements For Normal Retirement

Normal retirement age and service requirements define the point in a career when workers can retire at their option and

receive the full amount of their pension by virtue of service and earnings. There is no reduction of the retirement payment

because of the retiree’s age. As table 10 shows, nearly two-thirds of the workers covered in pre-ERISA plans had to wait until

age 65 to receive their full benefits. While the years-of-service requirement for these workers usually was 10 years or less, 15

percent were required to have worked for the company for at least 15 years. Under ERISA, benefits must be paid following

the later of 1) age 65, 2) 10 years of service, or 3) termination of service. Therefore, sponsors of these plans, which covered

3.5 million workers, were required to lower the service requirement. Later, amendments to the Age Discrimination in

Employment Act lowered the years of participation required at age 65 from 10 to 5.

Prior to the enactment of ERISA, normal retirement dates earlier than age 65 were quite common in mining, transportation,

and communications. In mining, almost half the workers could qualify for unreduced benefits at age 55 with 20 years of

service. Similarly, half the workers in public utilities qualified at age 55 with 20 years service (or at any age after 25 years’

service). The most common age and service requirement in transportation was age 60 to 64 with 15 years of service.
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Although later BLS surveys indicated a trend toward earlier ages for entitlement to a full pension, by 2002 normal retirement

requirements had come full circle. The latest NCS data for private industry establishments of 100 or more workers show little

overall change from the 1974 findings. However, normal retirement ages before age 65 applied for more than half of the

participants in collectively bargained plans.19

Requirements For Early Retirement

Nearly all traditional private pension plans have clearly defined age and service requirements for early retirement. When

these requirements are satisfied, workers can receive benefits before the normal retirement age. Because these

requirements are less stringent than for a normal pension, a worker’s accrued benefits are reduced to reflect the longer

period that the pension is expected to cost the plan. Prior to ERISA’s enactment, 89 percent of workers were in plans which

permitted them to retire early at their own option. An additional 6 percent could request early retirement, but they had to

obtain their employer’s consent.20

Fifty-three percent of workers with early retirement provisions could retire at their option between ages 55 and 59, usually if

they had worked 10 or 15 years. (See table 11.) More than a fourth had to wait until they were at least 60, with widely varying

age requirements. Thirteen percent could retire at any age. To be eligible, however, nearly all the employees in this group

needed at least 25 years of service. Nearly half of the employees could retire with 10 years of service or less. Another fourth

had to work at least 20 years.

In the 2002 NCS, 6 in 7 participants were in plans that allowed early retirement. Of these participants, nearly all could retire

by age 55 or earlier. Service requirements varied, with 5 or 10 years of service most commonly required.21 The lower

incidence of these provisions in the 2002 NCS is attributable to the advent of cash balance plans since the original study.

Cash balance and similar "hybrid" plans frequently offer a single, lump-sum payment upon separation of employment. There

is no specified provision for early retirement, unlike the traditional defined benefit plan, which in many cases partly subsidizes

the reduction in an annuity that would occur due to the longer payment period. To reflect the differences between the two

types of plans, the 2002 NCS also examined these provisions within traditional plans only. Those data show that 96 percent

of participants were in plans with early retirement provisions.

Forced Retirement

In 1974, many pension plans contained retirement provisions that could force workers to retire at a specified age (usually age

65). These provisions included automatic retirement ages, at which point the employer could not retain an elderly worker, and

compulsory retirement provisions, which permitted employees to continue working if the employer consented. As shown in 

table 12, nearly half of the workers in the 1974 analysis were in plans with such provisions. While found more often in nonnegotiated plans, forced retirement provisions affected 3 in 8 workers covered by a collectively bargained plan.22

Amendments to the Age Discrimination in Employment Act in 1980 ended such provisions, but many sponsors discouraged

employees from postponing retirement by not providing additional benefit accruals past normal retirement age. The Omnibus

Budget Reconciliation Act (OBRA) of 1986 required plans to provide credit for years of service after normal retirement age by

no later than the beginning of 1988.

John W. Thompson

Economist, Policy Research and Analysis Department, Pension Benefit Guaranty Corporation (PBGC).

Notes

1 Inland Steel Company v. United Steelworkers of America, 77 NLRB 4 (1948).

2 Private Pension Plan Bulletin: Abstract of 1995, Form 5500 Annual Reports (Pension and Welfare Benefits Administration, Spring 1999),

Table E4, p. 67.

3 See, for example, Harry E. Davis and Arnold Strasser, "Private pension plans, 1960 to 1969-an overview," Monthly Labor Review, July 1970,

pp. 45-56; see also Evan Hodgens, "Survivor’s pensions: an emerging employee benefit", Monthly Labor Review, July 1973, pp. 31-34.

4 John H. Langbein and Bruce A. Wolk, Pension and Employee Benefit Law (Westbury, NY, Foundation Press, 1990), p. 65.
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5 President Gerald Ford signed ERISA into law on September 2, 1974.

6 Part 2 of Title 1 of ERISA, 29 U.S.C. 1051-1056.

7 The data used in this article are from a 1974 BLS analysis of a probability sample of employment-related basic defined benefit plans in

private industry, whose administrators reported to the Department of Labor in accordance with the Welfare and Pension Plan Disclosure Act of

1959, as amended. Each plan covered at least 100 active workers in the private sector of the economy. Defined benefit plans exclude deferred

profit-sharing plans and defined contribution (individual account) plans. The provisions analyzed were those in effect on September 1, 1974

immediately before the Employment Retirement Income Security Act (ERISA) was signed into law. The analysis is based on a total sample of

1,467 plans. Excluded are 59 plans, representing about 0.5 million workers, for which descriptions of plan provisions were not on file with the

Department of Labor. The study is limited to basic plans and excludes supplemental pension plans that provided workers additional benefits,

usually on a contributory or employee-pays-full-cost basis. The tabulations of the various plan provisions were compiled by the Division of

General Compensation Structures (now the Division of Compensation Data Analysis and Planning), and partly financed by the LaborManagement Services Administration (now Employee Benefits Security Administration).

8 The data in tables 1-4 and 7-11 have not been published previously.

9 See National Compensation Survey: Employee Benefits in Private Industry in the United States, 2002-2003, Bulletin 2573, (Bureau of Labor

Statistics, January 2005), table 67, p. 86; available on the Internet at http://www.bls.gov/ncs/ebs/sp/ebbl0020.pdf.

10 See Digest of Selected Pension Plans, 1976-78 edition and Supplement I (April 1978).

11 See National Compensation Survey: Employee Benefits in Private Industry in the United States, 2000, Bulletin 2555, January 2003, table

60, p. 58.

12 See Harry E. Davis and Arnold Strasser, "Private pension plans, 1960 to 1969-an overview."

13 For a detailed analysis of these vesting data, see Avy Graham, "How has vesting changed since passage of Employee Retirement Income

Security Act," Monthly Labor Review, August 1988, pp. 20-25, available on the Internet at http://www.bls.gov/opub/mlr/1988/08/art4full.pdf.

14 See National Compensation Survey: Employee Benefits in Private Industry in the United States, 2002-2003, table 83, page 102.

15 Ibid., table 81, p. 100.

16 See National Compensation Survey: Employee Benefits in Private Industry in the United States, 2000, table 67, p. 61.

17 Survivor benefits such as these were becoming more numerous in plans throughout the 1960s. For a detailed description of these kinds of

benefits, see Evan Hodgens, "Survivor’s pensions: an emerging employee benefit."

18 See National Compensation Survey: Employee Benefits in Private Industry in the United States, 2002-2003, table 82, p.101.

19 Ibid., table 74, p. 93.

20 Another 3 percent were in plans with separate requirements for both conditions. When this occurred, age and service requirements were

less stringent when the employer’s consent was needed.

21 See National Compensation Survey: Employee Benefits in Private Industry in the United States, 2002-2003, table 77, p. 96.

22 See Dorothy R. Kittner, "Forced retirement: how common is it?" Monthly Labor Review, December 1977, pp.60-61.

Table 1. Defined benefit pension plans with 100 or more participants, by number of active workers covered, plan entity,

and contributory status, September 1, 1974

Provision

Active workers Plans

Number (in thousands) Percent Number Percent

All 22,814 100.0 14,021 100.0

Size of plan

100 to 199 534 2.3 3,729 26.6

200 to 499 1,542 6.8 4,918 35.1

Note: Sample of all plans for which the administrator filed a report with the Department of Labor in compliance with the Welfare and Disclosure

Act of 1959. Excluded are 59 sample plans for which provision descriptions were not available. These plans represented 5.6 percent of all

plans and 2.9 percent of all plan participants. The data in these tables, therefore, represent less than the total study scope of plans and

participants.
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Provision

Active workers Plans

Number (in thousands) Percent Number Percent

500 to 999 1,625 7.1 2,340 16.7

1,000 to 4,999 4,764 20.9 2,277 16.2

5,000 to 9,999 2,641 11.6 381 2.7

10,000 to 24,999 3,977 17.4 267 1.9

25,000 to 49,999 2,301 10.1 69 0.5

50,000 to 99,999 1,511 6.6 22 0.2

100,000 or more 3,919 17.2 18 0.1

Type of plan

Single employer 15,282 67.0 11,693 83.4

Multiemployer 7,394 32.4 2,207 15.7

Multiple employer 139 0.6 121 0.9

Contributory status

Contributory 2,404 10.5 1,737 12.4

Noncontributory 20,411 89.5 12,284 87.6

Note: Sample of all plans for which the administrator filed a report with the Department of Labor in compliance with the Welfare and Disclosure

Act of 1959. Excluded are 59 sample plans for which provision descriptions were not available. These plans represented 5.6 percent of all

plans and 2.9 percent of all plan participants. The data in these tables, therefore, represent less than the total study scope of plans and

participants.

Table 2. Earliest age with corresponding service requirements for participation in defined benefit plans, September 1,

1974

Age and/or service requirement for plan participation

Percent of active workers

In all plans In plans with participation requirements

Total with participation requirement 27 100

No age requirement 15 54

One year or less 10 36

Greater than one year 5 18

Age 25 or less 9 32

No service requirement 3 12

One year or less 4 15

More than one year 1 5

More than age 25 4 14

No service requirement 1 3

One year or less 1 5

More than one year 2 6

With provisions which already met or exceeded initial ERISA regulations 

(1) 90 63

Footnotes:

(1) Includes workers in plans with an alternate age and service requirement which satisfied ERISA's rules for participation.
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Table 3. Prevalence of participation requirement provisions in defined benefit plans, by industry, September 1, 1974 (in

percent)

Industry All With participation

requirements

Without participation

requirements

Requirements not

determinable

Total 100 27 72 1

Manufacturing 100 31 68 1

Mining 100 18 77 6

Construction 100 1 99 0

Transportation 100 17 83 0

Communication and

public utilities 100 28 72 0

Wholesale and retail

trade 100 39 61 0

Finance, insurance,

and real estate 100 48 52 0

Services 100 30 69 1

Table 4. Incidence of requirement for employee contributions in defined benefit plans, private industry, September 1,

1974

Industry Participants in contributory plans (in thousands) Percent of participants

All 2,404 10.5

Manufacturing 1,498 12.2

Nonmanufacturing 906 8.6

Mining 37 11.7

Construction 61 2.5

Transportation 279 14.6

Communication and public utilities 70 4.3

Wholesale and retail trade 121 7.1

Finance, insurance and real estate 188 17.8

Services 150 10.6

Table 5. Earliest age and associated service requirement for vesting in private pension plans, September 1, 1974

Vesting provision Participants (in thousands) Percent of participants

All 22,814 100.0

With vesting provisions 19,816 86.9

With immediate vesting 38 0.2

Cliff vesting 15,924 69.8

Full vesting at any age, with: 8,819 38.7

Less than 10 years' service 487 2.1

10 to 14 years' service 5,445 23.9

15 to 19 years' service 2,040 8.9

20 or more years' service 847 3.7

Note: Since some plans provided both cliff and graduated forms of vesting, sums exceed totals.
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Vesting provision Participants (in thousands) Percent of participants

At age 40 or earlier, with: 3,642 16.0

5 to 9 years' service 66 0.3

10 to 14 years' service 1,231 5.4

15 to 19 years' service 2,329 10.2

20 or more years' service 16 0.1

At age 41-45, with: 1,804 7.9

5 to 9 years' service 40 0.2

10 to 14 years' service 488 2.1

15 to 19 years' service 1,227 5.4

20 years' service 49 0.2

At age 50 or later, with: 1,477 6.5

No service 95 0.4

10 to 14 years' service 490 2.1

15 to 19 years' service 511 2.2

20 or more year's service 381 1.7

When age plus service reaches a specified sum 159 0.7

Other requirement 23 0.1

Graduated vesting 4,120 18.1

Full vesting at any age, with: 2,762 12.1

5 to 9 years' service 182 0.8

10 to 14 years' service 555 2.4

15 to 19 years' service 860 3.8

20 or more years' service 1,165 5.1

After specified age, with: 1,176 5.2

No service requirement 11 0.0

Less than 5 years' service 36 0.2

5 to 9 years' service 2 0.0

10 to 14 years' service 18 0.1

15 to 19 years' service 924 4.1

20 or more years' service 185 0.8

Age and service requirement not determinable 35 0.2

Full vesting never achieved 147 0.6

Without vesting provisions 2,708 11.9

Vesting provisions not determinable 280 1.2

Note: Since some plans provided both cliff and graduated forms of vesting, sums exceed totals.

Table 6. Comparison of vesting provisions in defined benefit plans as of September 1, 1974, with initial ERISA vesting

standards, by industry group

Industry group

Percent of active workers in plans which satisfied ERISA requirements

All plans Plans with vesting

All industries 27 31

Manufacturing 35 39
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Industry group

Percent of active workers in plans which satisfied ERISA requirements

All plans Plans with vesting

Mining 17 38

Construction 20 20

Transportation 5 8

Communication and public utilities 13 13

Wholesale and retail trade 31 36

Finance, insurance, and real estate 24 26

Services 8 11

Table 7. Definition of a "break in service" in defined benefit plans by industry group and reason for termination of

employment, September 1, 1974 (percent of workers)

Definition

Voluntary separation (quits) Discharge Layoff

All

industries

ManufacturingNonmanufacturingAll

industries

ManufacturingNonmanufacturingAll

industries

ManufacturingNonmanufacturing

Total 100 100 100 100 100 100 100 100 100

Immediately

when service

ends

59 74 41 51 62 35 – – – After a year of

insufficient

hours, shifts,

earnings, etc.

2 3 2 2 3 2 2 3 2

After more than a

year of

insufficient

hours, shifts,

earnings, etc.

18 4 34 18 4 34 18 4 34

Less than a year

after service

ends

3 4 2 4 5 2 3 4 1

A year or more

after service

ends

7 4 10 5 5 6 29 32 25

Other definition 1 (1) 0 (1) 0 (1) 3 4 2

Break in service

cannot occur – – – (1) 0 – 28 34 21

Not determinable 10 11 10 20 19 21 17 19 15

Footnotes:

(1) Less than 0.5 percent.

Note: Dash indicates no active workers in this category.
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Table 8. Prevalence of provisions for restoration of service credited before a break-in-service occurred, upon return to

covered employment, by vested status, September 1, 1974

Provision for restoration and work requirement upon return

Percent of active workers in plans with restoration of previous

service lost due to:

Voluntary quit Discharge or layoff

If not vested If vested If not vested If vested

Total 100 100 100 100

Previous service cannot be restored 74 55 73 54

Previous service can be restored 14 12 6 7

If a work requirement is satisfied after return to work 9 7 5 7

Length of one year or less (1) (1) (1) (1)

More than one year 4 4 4 3

Based on length of previous service 5 (1) 1 (1)

Based on length of break in service (1) (1) (1) 1

When service requirements are met after re-employment -- 3 -- 2

Other service requirement (1) -- 1 --

If length of previous service was sufficient 5 5 1 -- All previous service is restored -- 15 9 21

Not determinable 12 18 12 18

Footnotes:

(1) Less than 0.5 percent.

Table 9. Survivor benefits in defined benefit pension plans by plan entity and employee category, September 1, 1974

(percent of active workers)

Type of survivor benefit Total Plan entity Type of employee

Single employer Multi-employer Hourly Salaried Both

Joint-and-survivor options:

At normal retirement 77 89 52 71 94 82

At early retirement (when provided) 77 90 49 69 93 84

Automatic monthly benefit for survivor of

Active workers 38 47 20 29 49 46

Retirees 17 18 16 28 15 16

Flat amount benefits (1) to survivor of

Active workers 32 22 54 29 20 34

Retirees 36 26 56 36 26 37

Footnotes:

(1) Excluding return of employee contributions.
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Table 10. Earliest age and corresponding service requirement for normal retirement, defined benefit plans, September

1, 1974

Age and/or service provision

Active workers

Number in thousands Percent

Total 22,814 100.0

At any age, with 1,164 5.1

Less than 20 years 8 (1)

20 years 28 0.1

25 years or more 1,127 4.9

Age 55 1,641 7.2

10 to 19 years 33 0.1

20 years 1,267 5.6

25 or more years 341 1.5

Ages 56 to 59 467 2.0

10 to 19 years 39 0.2

20 years 424 1.9

25 or more years 4 (1)

Age 60 1,160 5.1

No service requirement 174 0.8

Less than 10 years 4 (1)

10 years 134 0.6

15 years 250 1.1

20 years 299 1.3

25 years or more 299 1.3

Ages 61 to 64 3,417 15.0

No service requirement 725 3.2

Less than 5 years 118 0.5

5 to 9 years 173 0.8

10 years 1,217 5.3

15 years 743 3.3

20 years 95 0.4

25 years or more 346 1.5

Ages 65 or later (2) 14,649 64.2

No service requirement 5,521 24.2

Less than 5 years 233 1.0

5 to 9 years 635 2.8

10 years 5,045 22.1

15 years 2,405 10.5

20 years 810 3.6

25 years or more 187 0.8

Provision not determinable 165 0.7

Footnotes:

(1) Less than 0.5 percent.

(2) Less than 0.5 percent of these workers were in plans providing normal retirement at age 70 with service requirement.
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Table 11. Earliest age and corresponding service requirement for early retirement at the employee's option, defined

benefit plans, September 1, 1974

Age and/or service requirement

Active workers

Number (in thousands) Percent

Total 20,259 100.0

At any age 2,673 13.2

Less than 25 years 108 0.5

25 years or more 2,565 12.7

Under age 50 64 0.3

10 to 24 years 64 0.3

Age 50 to 54 1,058 5.2

No service requirement 35 0.2

Less than 5 years 61 0.3

10 to 15 years 469 2.3

20 to 24 years 494 2.4

Ages 55 to 59 10,696 52.8

No service requirement 1,213 6.0

Less than 5 years 141 0.7

5 to 9 years 315 1.6

10 to 14 years 4,831 23.8

15 to 19 years 3,540 17.5

20 to 24 years 476 2.3

25 or more years 180 0.9

Age 60 3,804 18.8

No service requirement 469 2.3

Less than 10 years 139 0.7

10 to 14 years 1,586 7.8

15 to 19 years 1,453 7.2

20 to 24 years 100 0.5

25 years or more 57 0.3

Later than age 60 1,495 7.4

No service requirement 55 0.3

10 to 14 years 230 1.1

15 to 19 years 257 1.3

20 to 24 years 863 4.3

25 years or more 90 0.4

Sum of age plus service equals specified number 305 1.5

Provision not determinable 165 0.8

NOTE: Because of rounding, sums may not equal totals.
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Table 12. Forced retirement provisions in defined benefit plans, by bargaining status, September 1, 1974 (Percent of

active workers)

Type of provision Bargaining status

Total Negotiated (1) Nonnegotiated Not determinable

All plans studied 100 100 100 100

With forced retirement 45 37 64 35

Mandatory retirement 44 37 62 35

Compulsory retirement only 30 24 43 28

Automatic retirement only 8 9 8 6

Compulsory and automatic

retirement 6 4 11 2

Forced early retirement 9 12 5 – Without forced retirement 55 63 36 65

Footnotes:

(1) For this study, negotiated plans included (1) those established for the first time through collective bargaining and (2) those originally

established by either employer or union but later brought within the scope of collective bargaining for some (but not necessarily all) plan

participants. Nonnegotiated plans are plans unilaterally established, controlled, and administered by a company or union.

Note: Dash indicates no active workers in this category.

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