Evening star., 1947-07-07
10000 Pension Plans
Filed With Treasury
In Past Five Years

News that the Ford Motor Co. will
esta ollsh g. pension system covering
100000 hourly-wage employees draws
aCtentlon to the great growth of in
olIStrlal pension plans in the past
five years.
Inc Treasury Department reports
more than 10000 company pension
plans have been filed with it since
l942. Congress changed the law
lhat year to make the employer con-
trrbutlons to pension systems tax
free.
Under the wartime excess profits
lax law this enabled many corpora
lions to make 81 contributions to 9
pension system at cost of As little
as cents. The balance represented
taxes not collected by the Govern
ment.
Under the law today a company
operating at a profit may meet its
pension costs at q rate of 81 cents
for each 81 contributed. The balance
of 80 cents represents tax exemption
The Treasury has made no esti-
mate of the number of employees COW
cred by pension plans.
5000. 900 May Be Covered.
II The 100000 workers covered by
2,033 group annuity policies on file
in l945 are an average cross-section,
the plans would cover approxima teiy
100000 workers today. They would
become entitled TO $3.50, 900 900 an
nuai retirement income on full ma
turltv of the programs
Pension systems were eSCa ablished
by some firms during the war period
as a means Of increasing employe
compression. A tendency 10 abandon
the plans mas been noted at the
Treasury. leading TO an announce
ment that abandonment proposals
will be carefully scrNtinized.
II the department believes the
plan was esta abliShad primarily to
evade wartime wage controls. the
tax exemptions granted in those
years may be disa llowed i.
The Ford plan appears to con-
form to q. normal corporation pen
sion pa ttern. Studies of several
hundred plans in opera zion show
that p fourth of them cover only
salaried employees earning more
than $1,000 year That is the
limit OF income on which the Gov
ernment old-age insurance system
is based.
Sixty per cent of the plans are of
the definite benefit" type. They
provide pensions calculated as a per
centage Of the beneficisry's pay
times his years of membership.
Three Financing Plans.
Twenty-six per cent are Of the
money purchase" type. They allow
pensions based on d percentage of
wages set aside during membership
i'll the plan.
Ten per cent are Of newer type,
featuring r. minimum pension plus
earned increases
Before the corpora ton pension
plans began TO grow, companies
adopIing ;hem usually paid all the
coSDs. In The '30s the custom of
requiring employe contributions
grew UP. and the Ford plan is of
this type
Employe contributions customar-
lily take into account the costs of
the Government oId-eEe pension
tax An employe will pay per
cent of the first $1,000 he earns,
and 3 per cent of what he earns
above that. or 4 and s per cent,
depending on the plan
Pension plans are underWritten
by insurance companies on group
annuity plan or an individual pol
icy" plan. A third way of financing,
which has become popular since
l943, Is by trust fund.
Copyright, 1947, Chicaso Daily News)
Two eeIipses O Yeor
On the average there are two total !
eclipses of the sun, over some part /
of the world, every three years.