Twin city review. [volume] (Champaign, Ill.) 19??-1929, 1925-08-07
promised Pensions
Are Deferred Pay

Chicago, Aug. 3.-"Promsed pen
sions to employees are deferred pay,
and even then the workers will not re-
ceive the PENSIONS" said George C.
Skies, secretary of the Chicago police
pension board, writing in local news
paper on the evils of company-con-
trolled pension plans.
Mr.. Skies said that the recent col
lapse of the pension plan of Morris 4
Co., meat packers, through the alb
sorption of that concern by the Ar
mour meat packing corporation, is not
unique. Most of the private pension
systems are unsound he said.
Had Morris & Co. remained in
business, the evil day with respect to
pensions merely would have been post
poned," said Mr.. Skies. 1.-The time
would come when the revenues would
be insufficient to meet payments. The
company might make contributions to
the fund for while in addition to
the fund for while in addition to
what it had promised.
I'm practically every case the com
pany establishing a pension system
protects itself by stipulation in the
II
in excess of certain limited promises,
and usually these promises are subjecl
to modification or abandonment.
What will happen then is that persons
who have served for years are liable
to disappointment in their old age.
Pension payments will be lower than
| anticipated, or may not be forthcom-
ling at all.
No one knows what the real liabil-
tiles of the Morris pension system
were. No actuary has ever been
called in TO calculate them. Esti-
mates of the amount necessary TO con-
tinue payments for life to the 400
pensioners on the Morris roll vary
from S3,00O,0O0 to $7,000,000.
| Private pension systems in this
country are comparatively young.
They are destined to repeat the un-
fortunate history of fratefnal insur-
ance organizations. except that the
discrepancy between expectations and
Iealizations is likely to be greater in
| pension systems than in the ease OF
| fraterna insurance organizations.
| "A pension system does not reach
its peak until 80 or 40 years after it
is established. In its early years a
system operating on the cash receipts
and disbursements basis will have n
large surplus in the treasury. But at
some point outgo begins to exceed in
come, and then bankruptcy is in sight.
| This means merely bankruptcy of
the pension fund, not the company
sponsoring it, for the credit of the
company is not back of the fund.
| 1T is mistake to assume that a
pension fund is sound because the
company under whose auspices it ex-
lists is wealthy.
1T is simply amazing that heads of
great business organizations should
bindly have started pension systems
for their employees without counting
the cost or realizing what they were
getting into. There was no intention,
of course, of raising hopes that prob
ABLY could not be realized.
| The fact is, however, that nearly
all of these private pension systems
are unsound, and most of them are
likely to give rise to pathetic diSap-
pointment sooner or later. A few
banks in Chicago have pension syS-
| TENS on the actuarial reserve basis.
but unSOund systems are the rule
both in Chicago and throughout the
country.
Il happened TO be present a few
weeks ago at 4 conference i'm New
York of actuaries and railroad men.
Representatives of greas railroad SyS-
TENS admitted that their pension plans
were unsound.
1T should be regarded as contrary
ito public policy to permit an employer
to hold out pension homes that are not
likely to be realized. This is so, even
if the system is noncontributory, is
most private pension systems are"
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