Pension Plan Safeguards

Report Outline
Regulation of Private Pension Plans
Public Aspects of Private Pensions
Growth and Impact of Pension Plans

Regulation of Private Pension Plans

Battle lines are being drawn by the federal government and the business community for a confrontation over regulation of private pension plans. Such business spokesmen as the U. S. Chamber of Commerce flatly deny that there is need for further government regulation. But the Johnson administration and some members of Congress insist that tighter regulation is required, and they are moving in that direction.

At the root of the controversy is the probability that perhaps as few as one in five of the more than 25 million persons now covered by private pension plans will ever receive any pension benefits. Most of the plans have provisions so restrictive that an eligible employee can disqualify himself for ultimate benefits in a variety of ways, and he often does so. The principal objection of business and industry to additional regulation is that it would hamper the tailoring of individual plans to fit the specific needs of particular companies and would undoubtedly cost the employers more money. Some opponents even view the push for reform as an effort to convert private pension plans into “a second system of Social Security, paid for out of private money.”

Those favoring tighter rules for pension plans contend that the worker needs more protection and that the federal government's stake in the matter is so great that it should afford that protection. It may be said that the government, by allowing certain tax deductions, now pays about 30 per cent of the cost of maintaining most pension plans. And, even though a pension plan represents a private agreement between employer and employee, it serves a definite social purpose by providing a supplement to the basic public retirement program, Social Security.