Evening star., 1935-07-23
Pensions Under the
Clark Amendment

To the Editor Of The Star:
The letter of Mr.. Joseph B. Glenn in
your July 10 issue indicates that, If
granted exemption under the Clark
amendment employers who have long
record of generous treatment OF their
employees will suddenly change their
spots, become hard hearted and deprive
their older employees Of the same liberal
pensions which many Of their former
associates are now enjoying.
Everybody admits that the Federal
system for many years to come will be
cheaper for employers than exempted
plans, because those employees who retire
during the next 20 to 30 years Will re
ceive far more pension than the taxes
will provide. However, while the PEN
sions will be bargains" they will be
far lower than the scale hundreds of
employers now provide. For example
An employe, age 55 when the Federal
plan becomes effective, and earning 500
per month, will get a Federal pension OF
$22.5O when he becomes age IS. If he
were As years old in 1887 the pension
would be $3.50. This same employe
under a private plan would receive at
least twice the latter figure, because he
gets credit for service before ages As
or SIS, as well as between then and
age IS.
If employers with private pension
plans have given and are giving liberal
pensions now, why should they, as Mr..
Glenn claims, induce" their older en-
ployes to go under the Federal plan.
If all they want is to have their en-
ployes receive the Federal scale of bene-
fits, they would never ask for exemp-
tion, because under an exempted plan
. they must pay the full cost of the bene-
fits which equal the Federal scale plus
such additional benefits as they may
desire to add.
Mr.. Glenn claims that If employers
put older employees into the Federal plan
and younger employees into private
one, cost to the employer would be less
than taxes. This the Clark amendment
absolutely prevents. No employer can
put into the plan sums less than the
taxes otherwise payable.
While many present plans are not
financially sound, several hundred such
plans are now insured with the great
life insurance companies whose solvency
no one doubts Only plans whose
financing is approved by the Social Sc
curity Board can be exempted. This
incidentally also answers another one of
Mr.. Glennis points, to the effect that the
Solvency Of plans would be affected by
the investment by the employer of pen
sion funds in his own business
The Clark amendment protects en-
ployes who leave a private plan, gives
the Social Security Board supervision of
exempted plans and will encourage the
continuance of liberal pensions. 1t is
obvious that successful and generous
employers can provide larger pensions
than the scale established by national
act.
Finally, if the Clark amendment is
not included. the subsequent failure of
titles and 8 of the social security bill
to stand up in court, a failure prophe-
sled by many eminent attorneys, will
result in the complete elimination of
pension plans for some three million
employees, unless their employers are
willing to take another chance and TO
re-establiSh the social security which
they had voluntarily provided and
which had been ruthlessly destroyed
by social security act.
H. WALTER FORSTER.