Evening star. [volume] (Washington, D.C.) 1854-1972, 1935-07-18
600 ANNUITY PLANS|
in OPERATION now
Clark Amendment Backers
Cite Figures as Battle
RACES at Capitol.

private annuity plans might be con-
tinued In lieu of the compulsory con-
tributory old-age benefit plan, propo-
nents of the amendment continued to
cite figures in support Of their stand.
1t was pointed out. for instance,
that some 600 voluntary private an
nuity plans are now in effect, affording
coverage to about 100000 persons.
Three hundred of the plans are being
maintained on a reserve basis, in
which the employers guarantee GER
tain scale OF annuities to retire en-
ployes and assure this payment by the
regular building up Of reserve fund.
These 300 plans, found among rail-
road. public utility. manufacturing
and financial concerns, are appli-
cable to more than 100000 en-
ployes and involve reserves of more
than $7O0,0O0,00O, a fair proportion
of which has already been contributed
by the employers.
So Now Get Pensions.
Pensions now are being paid to
about 10000 persons from the 5000
900 covered, the number receiving
benefits amounting to about per
cent Of those covered.
Most effective defense for these
plans, however, is based upon figures
cited by Murray w. Latimer. one of
the Governments own experts in
connection with the social security
program. who declares in a book en-
titled Industrial Pension Systems
that a survey of several hundred
voluntary plans in 1881 showed the
on-contributory ones (those in which
employees do not share in the cost
to be carrying average pensions of
$50 per month. while the contributory
ones were paying $84.
U. s. Maximum SIS.
In contrast. the maximum benefit
payable under the Federal plan would
be SIS per month for employees retir-
ing in 1912. $3.50 in 1e47 and so on
up to s85 per month for those retiring
in 1882. To receive this maximum,
however. which is just 81 per month
more than the average found BIZ Mr.
Latimer in contributory plans. an en-
ploye must earn $4,000 per year for
a 45-year period
To the suggestion that supplemental
plans be established by employers who
wish to pay higher pensions. pro-
ponents Of the Clark amendment de-
clare the complexities of maintain
ing a plan on the guaranteed basis SC
great as to turn most employers back
to the practice of giving additional
pensions on a discretionary basis
This they dub return 10 the horse
and buggy days" of pension plans.
Although failure to accept the Clark
amendment will not necessarily mean
abandonment of all private plans now
in operation, its proponents fear this
will be the practical result. In such
event. employees are covered in vir-
tually all plans to the extent of receiv-
ing back whatever they may have
contributed. together with accrued in
terest. They would not. however, be
assured Of any benefit from a plan
which has been operated on a non-
reserve basis by employers only.
Evasion Attempts Secuted.
Insisting first that only the better
class of employers has maintained
private annuity systems, which have
shown themselves good business in
vestments, not merely philanthropic
ventures, supporters Of the Clark
amendment deny that granting ex-
emption to such concerns would re-
suit In wholesale attempts at evasion
of the detectives OF the old-ags
pension program.
To the objections Of discharging
older employees to save pension costs
hiring very young employees and
therby deriving the Federal plan OF
expected profits, and excessive super
visory costs as to employees who
leave such plans and go into Federal
ones, they point to a memorandum
submitted to the Senate by Senator
McNary. Republican of Oregon, in
part, as follows:
"DiScharging older employes-Q)
No profit can be made by the employer
because for each employe VINO leave:
his plant he must pay the Treasury ar
amount equal to taxes withheld, plus
per cent interest. (2) An exempted
plan will cost the employer far more
than taxes His chief interest in a
more liberal plan is because Of his
relatively old employees He would
never ask for exemption If he expected
to discharge his older employees anc
have no maturing pensions for decades
to come.
No Loss by Young Employees.
Hiring young employes-(D The
Federal plan gives older employees fan
more pension than the taxes will sup
port, and expects to make up the def.
cit through a profit from future en-.
trants into the Federal plan. (2) Nc
exempted private plan could cause the
Federal plan loss through very young
ages Of entry, because it is diff1cult IL
imagine that an employer would be
able to get employees at a lower aver.
age age than that of those entering the
Federal plan, whose average age viii
obviously be the age Of those just 60
ing to work. Every employer will neces-
sarily employ some persons who have
had some previous working experience
which automatically will raise his
average age of employment above the
Federal one.
Excessive administration expense
I'd When employees leave an exempt
ed plan. the employer must pay thu
Treasury sum for each, easily tabu-
lated from the necessary employment
records. The periodic reports and pay
ments required of such employer
could be checked by annual audits. Al
a matter of fact, only employers Of
the best type will have exempted
plans, and because they value theil
exemption, which can be Withdrawn
IL operating practices are not salts
factory, they will be especially careful
in the details of their operation. (2)
On the other hand. the balance Of
more than $4,000, 900 employees. ex.
1919 ,...a.s Al. raadapai s,lon at thf