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Bulletin No. 1199-2
O ctober 1956

Older Workers
Under Collective
Bargaining
part

n
Health and
Insurance Plans
Pension Plans

UNITED STATES DEPARTMENT OF LABOR
James P. Mitchell, Secretary
BUREAU O F LABOR STATISTICS
Ewan Ciague, Commissioner







Reports on the Department of Labor’ s Older Worker Program:

Job Performance and Age: A Study in Measurement

Older Workers under C ollective Bargaining:
Part I. Hiring, Retention, Job Termination

Older Workers under C ollective Bargaining:
Part II. Health, Insurance, and Pension Plans

Pension C osts in Relation to the Hiring of Older Workers

Older Worker Adjustment to Labor Market P ractices:
An Analysis of Experience in Seven Major Labor Markets

Counseling and Placement Services for Older Workers

How to Conduct an Earning-Opportunities Forum in Your
Community

Bulletin N o. 1199-2
O ctober 1956

Older Workers
Under Collective
Bargaining
part

I
Health and
Insurance Plans
Pension Plans

UNITED STATES DEPARTMENT O F
James P. Mitchell, Secretary

LABOR

BUREAU OF LABOR STATISTICS
E w a n C l a g u e , Commissioner

For sale by the Superintendent of Documents, U. S. Government Printing Office, W ashington 25, D. C.




Price 2 5 cents







Preface

As a part of the U. S. Department of Labor*s com­
prehensive program relating to employment problems of
older workers, the Bureau of Labor Statistics has analyzed
the status of older workers under collective bargaining
agreements. The first report (Part I .— Hiring, Retention,
and Job Termination) dealt with collective bargaining pro­
visions affecting the employment and job security of older
workers.
This report covers the ways in which selected
aspects of collectively bargained health, insurance, and
pension plans affect the status of older workers.
The
agreements and plans analyzed were selected from the
Bureau*s current files which are maintained for public and
governmental use in accordance with Section 211 of the
Labor Management Relations Act of 1947.
The incentive for these studies was provided by
the Departments deep concern for the economic well-being
of older workers. The purpose of these studies, however,
was to investigate, not to influence, collective bargaining
provisions relating to older workers.
This study of health and insurance plans andpension
plans was conducted in the Bureaus Division of Wages and
Industrial Relations by Evan Keith Rowe and Donald M.
Irwin, under the direction of Joseph W. Bloch.

- iii -




Contents

Page
Introduction ___________________________________________________________________________________________

1

Part I . — Health and insurance p la n s ______________________________________________________________
S u m m a r y ___________________________________________________________________________________________
Scope of study _____________________________________________________________________________________
P revelance of benefits for active w orkers ___________________________________________________
L o ss or reduction of benefits to older active w o r k e r s ______________________________________
L o ss or reduction of benefits upon retirem ent ____________________________________________ _
Length of tim e retired w orkers receive b e n e fits ____________________________________________
Benefit le v e ls for retired w o rk e rs1 d ep en d en ts______________________________________________
Financing retired w o rk ers1 benefits __________________________________________________________

3
3
4
5
7
7
10
10
13

Part I I .— Pension plans ____________________________________________________________________________
S u m m a ry ___________________________________________________________________________________________
Scope of study ____________________________________________________________________________________
Types of benefits _________________________________________________________________________________
Participation r e q u ir e m e n ts _____________________________________________________________________
Minimum qualifications for benefits ___________________
Joint survivor b e n e fits ___________________________________________________________________________
Vesting ____________________________________________________________________________________________
Com pulsory and automatic retirem ent _______________________________________________________
Service after norm al retirem ent a g e _____________________________
Recent m odifications ____________________________________________________________________________

15
15
15
16
17
18
20
21
23
25
25

T ables:
Health
1.
2.
3.
4.
5.

and insurance plans—
By industry division, worker coverage, and type of bargaining u n it ____________
Prevalence of benefits by groups covered __________________________________________
Maintenance of benefits for active w orkers ______________________ ^_________________
E ffect of age at hiring on availability or level of b e n e fits _________________________
Benefit le v e ls for w orkers retiring at age 65 com pared with those
provided im m ediately prior to r e tir e m e n t_________________________________________
6.
Amount of life insurance provided men at ages 65 and 70 who
retired at age 65 and earned $ 4 , 000 yearly prior to retirem ent ______________
7.
E ffect of length of service on amount of life insurance provided
retired w orkers
_____________________________________________________________________
8.
Length of tim e benefits available to retired w o r k e r s ______________________________
9.
Relationship of hospital, surgical, and m edical benefits of retired
w orkers and their dependents _______________________________________________________
10. Method of financing benefits for retired w orkers and their dependents ________

Pension plans—
11. By industry division, worker coverage, and type of bargaining u n it ___ T
________
12. Types of benefits provided by number of plans and w orkers _____________________
13. M axim um ages before which w orkers must be hired to qualify for
benefits _________________________________________________________________________________
14. Minimum age and service requirem ents for n orm al, ea rly ,
and disability benefits ________________________________________________________________
15. Vested and nonvested plans by type of vesting and method
of financing ____________________________________________________________________________
16. Providing deferred full vesting by requirem ents for v e s tin g _____________________
17. With com pulsory and automatic retirem ent provisions by type
of em ployer u n it _______________________________________________________________________
18. With com pulsory retirem ent provisions by age specified and
provision for automatic r e tir e m e n t_______________________________________________ _
19. Distribution by specified norm al, com pulsory, and automatic retirem ent
ages and by amount of service credited after norm al retirem ent age ________
20 . Modifications in 61 selected plans, 1952 to late 1955 _____________________________




- v -

5
6
6
8
8
10
11
11
12
12

16
17
18
19
22
22
24
24
26
26




Older Workers Under Collective Bargaining

Introduction

During the past decade, probably no aspect of union-m anagem ent relations has
been of m ore direct concern to the older worker than the development of health and
insurance plans and pension plans. The number of w orkers covered by these employee
w elfare plans under collective bargaining which are financed in whole or in part by
the em ployer increased from le s s than 1 m illion under either type of plan in 1945 to
m ore than 12 m illion under health and insurance plans and m ore than l l! z m illion under
pension plans in late 1955.
The development of private pension plans represen ts a voluntary movement by
em ployers and unions to provide retirem ent annuities to supplement those available
under the F ed eral o ld -age and survivors insurance p rogram and, hence, to provide
greater economic security to w orkers upon retirem ent. The p rim ary purpose of health
and insurance plans is to furnish protection to w orkers and their dependents against
lo s s of income and expenses incurred as a result of o ff-th e -jo b in ju ries, illn e ss, or
death. Financial protection against o n -th e -jo b disabilities is available to virtually all
w orkers through workm en1s compensation legislation .

Although the benefits provided by health and insurance p ro gra m s and the s e ­
curity afforded by pension p rogram s are valued by w orkers of all a ges, they are of
m ajor importance to older w o rk ers. Pension plans by their nature take on additional
significance as w orkers grow older and approach retirem en t.
Health and insurance
p ro gra m s, although not related as directly to age as are pension plans, n everth eless,
provide valuable and perhaps otherwise unobtainable financial insurance against the
health hazards which frequently accompany advanced age.

These p rogram s are particularly beneficial to older w ork ers, but certain plan
ch ara cteristics may operate to their disadvantage. This study is directed to an exam ina­
tion of selected aspects of health and insurance plans and pension plans which are
either esp ecially favorable or unfavorable to the older w orker.

The meaning of the phrase "under collective bargaining" as used in this study
requires a b rie f examination. Many em ployers and unions independently sponsored and
financed insurance and pension plans for many years before they cam e under collective
bargaining and a large number of w orkers are now covered by plans that are not c o l­
lectively bargained. Many of the program s now under collective bargaining were o r ig ­
inally instituted by the em ployer and subsequently brought within the scope of the a g r e e ­
ment with or without change. S im ilarly, union sponsored and financed p rogram s have
been brought within the collective bargaining a rea, with the em ployer paying all or
part of the co st. 1 In contrast with the long history of union efforts to obtain job s e ­
curity for their m e m b e rs, as reflected in seniority and discharge p rovision s in union
contracts, 2 bargaining on health, insurance, and pension plans is relatively new. Many
p ro gra m s, particularly pensions, have been the subject of union-m anagem ent negotia­
tions only once or twice since their inception. M oreover, the technical p roblem s in­
herent in this development are new and form idable. It is important, th erefo re, to bear
in mind the fact that a study of how em ployee welfare plans now treat the older worker
may not reflect the lo n g -te rm objectives of either unions or m anagem ent.
1 F or the purpose of this study, plans under collective bargaining include:
( l ) Those established for the fir s t tim e as a result of collective bargaining; and (2) those
originally established by either em ployer or union but since brought within the scope
of the agreem ent, at le a st to the extent that the agreem ent establish es em ployer r e ­
sponsibility to continue or provide certain benefits.
2 See Older W orkers Under Collective Bargaining, Part I . — Hiring, Retention,
and Job Term ination, BLS B u ll. 1 1 9 9 -1 .




(i)




3
Part I .— Health and Insurance Plans

Summary
Trade union interest in health and insurance p rogram s has been a m ajor force
in the growth of voluntary insurance plans. Although unions have long been concerned
with the health and security of their m em b ers and have provided some insurance through
union-sponsored beneficial p ro gra m s, the past 10 y e ars have w itnessed a phenomenal
growth of prepaid group p rogram s established through collective bargaining. It is e s ti­
mated that over 12 m illion w orkers are now covered by health and insurance plans under
collective bargaining. 3
Health and insurance p rogram s are established on a group b a sis, applying to
all w orkers in the bargaining unit and frequently to em ployees not under the agreem ent.
These program s a ssu re all covered w orkers and, in many c a s e s , their dependents, at
least partial protection against the financial hazards of illn e ss and death. The scope of
coverage, coupled with the mandatory participation provisions in many of these p ro gra m s,
has made this protection available to many w orkers who could not have otherwise ob­
tained such insurance because of physical or financial reasons or who would not have
elected to do so.
Although the im portance of these p rogram s to younger w orkers should not be
undervalued, it is obvious that the plans have a special significance to older w ork ers,
not only to those in active em ploym ent, but to those who have r e tir e d .4
Group coverage under collectively bargained plans m akes available to the older
worker protection and benefits, the cost of which would be considerably g reater, and
alm ost prohibitive in som e c a se s, if he had to purchase them on an individual b a s is .
Older w orkers generally can expect to receive the same le v e l of benefits as younger
w orkers under these plans.
M o reover, eligibility requirem ents to participate in the
program s are typically the sam e for all w orkers reg ard less of age or physical con­
ditions.
M edical examinations are rarely a prerequisite to participation, a fact of
special significance to newly hired older w ork ers, although the practice of prehiring
physical examinations tends to weed out the poor insurance r is k s .
In a newly estab ­
lished health and insurance p rogram , older w orkers on the job are autom atically
covered.
Unlike the prevailing practice with regard to certain fringe benefits— e .g . , paid
vacations— lo n g -s e r v ic e em ployees can ra rely expect to receive m ore lib e ra l health and
insurance benefits on the strength of their longer se rv ic e . In som e plans, to be sure,
the amount of life insurance may be graduated according to length of se rv ic e , but gen­
erally the m axim um amount is reached after a relatively short period— usually 10 y ears
of service or le s s .
H ow ever, life insurance and accident and sick n ess benefits are

3 F or a description of the growth and extent of health and insurance plans under
collective bargaining, see Health, Insurance, and Pension Plans in Union Contracts,
BLS B u ll. 1187.
4 A lbert J. A b ra m s, D irector, New York State Joint L egislative Com m ittee on
P rob lem s of the Aging, cited the following reasons why these plans are important to
older p erson s: n( l ) Chronic d ise a ses strike p articularly, though not so lely , at the older
p erson s; (2) they generally attack when income is not at its peak, but has either tapered
off or is at an alltim e low, that is , in old age; (3) the cost of m edical and hospital
care is believed to be one of the m ajor factors in the im poverishm ent of older p erson s,
in thrusting them on old -age assista n ce r o lls ; (4) prepayment or em p loyer-paid in su r­
ance plans may encourage o ld sters to have m edical examinations and thereby prevent
m ore serious ailm ents fro m developing; and (5) such plans may speed up recovery by
easing the ailing worker *s w o rries about his being a burden to his f a m ily .“
Source:
New York State Joint L egislative Com m ittee on P rob lem s of the Aging, L egislative
Document N o. 12, 1951 (p. 136).




4
commonly graduated according to earnings. This practice would tend to favor the older
worker in those industries and occupations where peak skill and earnings le v e ls are
reached in later y e a r s . On the other hand, if earnings d e c re a se , the graduated-earn­
ings approach would be a disadvantage to the older w orker.
The growing m ovem ent to extend som e type of benefit protection to re tire e s
rep resen ts a m ost desirable aspect of collectively bargained p ro gra m s, fro m the older
w ork er1s viewpoint, and a practice that has no p arallel among other fringe benefits.
Benefits for retired em ployees are being made available on an increasingly com prehen­
sive b a sis, often including a ll types of benefits available to active w orkers with the
exception of those dependent upon an em p loyer-em ployee relationship, e . g . , com pen­
sation for wage lo s s due to sickn ess or accident. F u rth erm ore, the benefits available
to retired w orkers are frequently the same as those provided active w orkers prior to
retirem en t.
Although the treatm ent of w orkers under health and insurance plans is gener­
ally not differentiated on the b asis of age, some plans have ch ara cteristics which are
not favorable to active or retired older w ork ers. Em ployed older w orkers som etim es
face age restriction s which prohibit them fro m receiving benefits, or find that benefits
are discontinued at certain a g e s.
Benefits may also be reduced during the course of
their employm ent solely because of age.
A s this study shows, such restriction s a f­
fecting employed older w orkers are not com m on. On the other hand, many plans cease
to provide coverage to w orkers upon retirem ent, or reduce the level of benefits, or
discontinue dependents1 coverage, or shift the burden of cost fro m the em ployer to the
retired worker but perm it him to continue his group rate participation.
Scope of Study
To determ ine the extent and nature of these p ra ctic e s, the Bureau analyzed
300 selected health and insurance plans under collective bargaining.
A ll the plans
were in effect in late 1 9 5 5 .5 These program s included one or m ore of the following
types of health and insurance benefits: Life insurance, accidental death and d ism e m ­
berm ent benefits, accident and sickness benefits (excluding sick lea v e, State w o rk m en ^
compensation and tem porary disability paym ents), and cash or serv ice s covering h o s­
pital, su rgical, and m edical c a re . 6 A ll of these benefits may be insured with an under­
w riter or se lf-in su re d by the em ployer or fund to which he contributes.
The 300 plans studied covered 4, 981, 000 w orkers or over 40 percent of all
w orkers covered by health and insurance plans under collective bargaining (table l) .
T w o-th ird s of the plans covering the same proportion of w orkers were in m anufac­
turing in d ustries.
The plans varied in size from those applying to 1, 000 w orkers to
those covering well over 100, 000. One-third of the plans, covering over tw o-fifth s of
the w ork ers, were negotiated by m ultiem ployer groups. The plans included in the study
were selected to provide a broadly representative picture of health and insurance bene­
fits under collective bargaining covering 1, 000 w orkers or m o re . In the selection of
the plans, the factors given p rim ary consideration were industry, geographic location,
union, type of bargaining unit, and s iz e .
Life insurance benefits are of two m ajor types: A flat amount for all em p loyees,
or an amount graduated according to earnings, serv ice, occupation, etc.
Each type
provides a cash payment in the event of death and frequently in the event of permanent
and total d isability.
Accidental death and dism em berm ent benefits also provide cash
payments and are often linked to the amount of life insurance in effect for the indivi­
dual.
This form of insurance m ay cover occupational a n d /or nonoccupational c a s e s .
D ism em berm en t benefits vary with the extent of injury.

5 This study of p rovisions affecting older w orkers is part of a com prehensive
analysis of all aspects of health and insurance plans. A forthcoming BLS bulletin will
present the com plete resu lts, including additional data relating to older w o rk ers.
6 F or details of health and insurance plans, see Digest of 100 Selected Health
and Insurance Plans Under C ollective Bargaining, 1954, BLS B u ll. 1180.



5
Accident and sickness coverage generally provides payments in the event of
illn e ss to compensate for lo s s of wage income for a certain number of weeks per d is ­
ability or per y ear.
It applies to nonoccupational and, in an increasing number of
plans, occupational c a s e s .
This benefit is available only to active w orkers because
it is dependent upon an em ploym ent relationship. Paid sic k -le a v e plans and com pen­
sation allowable for occupational or nonoccupational ca se s under p rovision s of State
workmen*s compensation laws and tem porary disability legislation (effective in four
States) are not analyzed in this study, since they are norm ally not considered part
of health and insurance plans.
TAB I.K 1 .— Distribution of health and insurance plans studied
by industry division, worker coverage, and type
of bargaining unit 1
Workers
Plans

Item

(000*s)
Total plans studied

_______________

300

4 ,9 8 1

218
82

3, 397
1, 584

148
57
32
25
22
5
11

393
389
374
451
749
329
2 ,2 96

200
100

2, 822
2, 159

Industry division
M anufacturing--- ------ --------------Nonmanufacturing___________ _________
Worker coverage
1,000 - 4 ,9 9 9 ..................- ............ - —
5 ,0 0 0 - 9 ,9 9 9 __________ ______________
10, 000 - 14,999 ..................... - ----------15,000 - 24 ,999 --------------------------------25, 000 - 4 9 ,9 9 9 _______________________
50, 000 - 99, 999 __________ ____________
Over 100, 000 ______________________
Type of bargaining unit
Single company
Multiemployer

__ ----------------- -------___________ _________

1 A ll plans were in effect in late 1955.
NOTE: Due to rounding, sums of individual item s do not neces­
sarily equal totals.

Hospitalization, su rgical, and m edical benefits are provided by two m ajor types
of plans— cash or se r v ic e .
Cash plans provide stipulated amounts for hospital room
and board and extra allowances or se rv ic e s and, in the event surgical and m edical
benefits are provided, a schedule of payments for se rv ice s rendered.
S ervice-type
plans provide no cash payments to the individual, but pay for hospital, su rgical, and
m edical care for specified periods of tim e and in certain locations.
F or this study, attention was focused specifically on the following aspects of
health and insurance plans: (l) The availability of benefits to active and retired w ork­
ers and to dependents of both groups; (?) the effect of hiring age on the a va il­
ability of benefits; (3) changes in the level of benefits during active employment on
the b asis of age alone; and (4) the length of tim e benefits are provided to retired
w orkers and their dependents. In addition, certain ch aracteristics of individual bene­
fits of interest to older w orkers were analyzed.
P revalence of Benefits for A ctive W orkers
A ll but a few of the plans studied provided hospital and surgical benefits and
life insurance to active w orkers (table 2). Four out of 5 plans provided accident and
sickness coverage and 2 out of 3 provided m edical benefits.
About half of the plans
included accidental death and dism em berm ent benefits. Hospital and surgical benefits
were extended to dependents in the vast m ajority of plans; m edical benefits were le s s
commonly extended to dependents. A few plans covered dependents with life insurance
p o licie s. With the exceptions to be indicated la te r, all of these benefits were available
to all em ployees re g a rd le ss of age.




T A B L E 2 .— P r e v a le n c e o f b e n e fits u n d er h ea lth and in s u r a n c e plans b y g r o u p s c o v e r e d

L ife in s u r a n c e
G rou p c o v e r e d

W orkers
P la n s
(0 0 0 * s )

A ll p la n s

W ork ers

W orkers
P la n s

P la n s
(0 0 0 * s )

(0 0 0 * 8 )

300

4 ,9 8 1

300

4 ,9 8 1

284

..

4 , 352

1 154

2 ,2 5 0

2 239

3 ,6 9 5

293

4 ,9 0 8

294

7
146

215
3 ,1 0 8

5

58

_

278
67

4 ,2 7 9
1 ,7 8 4

263
58

-

-

-

-

-

56

1 ,7 2 9

48

1 ,6 9 0

P ro v is io n
P la n s

(0 0 0 * s )

M a in t a i n e d a t c o n s t a n t l e v e l
w it h o u t r e g a r d to a g e

300

4 ,9 8 1

(0 0 0 * s)

300

4 ,9 8 1

4 ,9 1 7

193

3 ,6 8 3

4 ,1 9 0
1 ,7 4 5

145
35

2 ,7 7 4

31

1 ,3 4 6

1 ,4 9 1

o n ly .

3 , — M a in te n a n c e o f b e n e f i t s f o r a c t iv e w o r k e r s u n d e r h e a lth a n d in s u r a n c e p la n s

W o rk e rs

..................

-

W orkers
P la n s

4 ,9 8 1

L if e in s u ra n c e

A c c id e n t a l d e a th
and d is m e m b e r ­
m e n t b e n e fit s
W o rk e rs
P la n s
(0 0 0 * s )

A c c id e n t a n d
s ic k n e s s
b e n e fit s
W o rk e rs
P la n s
(0 0 0 * s )

H o s p ita l
b e n e fit s

S u r g ic a l
b e n e fit s

W o rk e rs
P la n s

M e d ic a l
b e n e fits

W o rk e rs
P la n s

(0 0 0 * s )

W ork ers

P la n s
( 0 0 0 rs )

(0 0 0 *s)

284

4 ,3 5 2

154

2 ,2 5 0

2 23 7

3 ,6 7 5

29 3

4 ,9 0 8

294

4 ,9 1 7

193

3 ,6 8 3

153

2 ,2 4 3

18 2

3 ,2 5 7

287

4 ,6 6 5

290

4 , 711

184

3 ,5 2 0

_

414
40 1
13
_
_

6
1
2
_
3

243
1
200
_
_
42

3
1
2
_
_

201
1
200
_
_

9
8
1
_
_

163
43
120
_
-

264

3 ,5 8 8

R e d u c e d a t s p e c if ie d age
A g e 60
__
_ ........ . .
A g e 65 ________________________________________
A g e 66
A g e 68
_ _ _ _ _
____
A g e 70
.
_

19
17
1
1

761
752
2
7

-

-

D i s c o n t i n u e d a t s p e c i f i e d a g e . ...
A g e 65
A g e 68
_
_. ____
A g e 70 _ ---- __ _________________________

1
1
-

3
3
_

-

-

_

_
_

54
53
1
_
_

-

-

-

-

1
1

7
7

1
_
1

5
_
_
5

-

-

-

_
_

_
_
_

-

-

-

1
_

5
_

.

_

_
_

_

_

_

1

5

B a s e d o n a s tu d y o f 3 0 0 h e a lt h a n d i n s u r a n c e p la n s u n d e r c o l l e c t i v e b a r g a in in g c o v e r in g a p p r o x i m a t e ly 5 m i l l i o n w o r k e r s .
E x c lu d e s p la n s p r o v id in g o n ly f o r o c c u p a t io n a l d is a b ilit y b e n e f it s .




M e d ica l
b e n e fits

300

TABLE

1
2

S u r g ic a l
b e n e fits

H o s p it a l
b e n e fits

4 ,9 8 1

O n e p la n d id n o t p r o v i d e f o r a c c id e n t a l d e a th b e n e fit,,
T w o p la n s p r o v id e o c c u p a t io n a l a c c id e n t and s ic k n e s s b e n e fit s

A l l p la n s p r o v i d i n g b e n e f i t s

A c c id e n t and
s ic k n e s s
b e n e fits
W orkers
P la n s
( 0 0 0 *s)

300

s tu d ie d

W ith b e n e f i t s f o r :
A c tiv e w o rk e r
........ _
_
D e p e n d e n ts o f a c t iv e
w ork er
_ ........
R e tir e d w o r k e r
___
D ep en d en ts o f r e t ir e d
w ork er
„ __

1
2

A c c id e n ta l d ea th
and d is m e m b e r ­
m en t b e n e fits
W ork ers
P la n s
( 0 0 0 *s)

7

L o s s o r R e d u ctio n o f B e n e fits to O ld e r A c t iv e W o r k e r s
A n ou tsta n d in g c h a r a c t e r is t ic o f h e a lth and in s u r a n c e p la n s u n d e r c o l l e c t iv e
b a rg a in in g , in s o fa r a s the o ld e r w o r k e r is c o n c e r n e d , is th e g e n e r a l a b s e n c e o f p r o ­
v is io n s b a r r in g the p a r t ic ip a t io n o f o ld e r w o r k e r s , w h e th e r n e w ly h ir e d o r lo n g e m ­
p lo y e d .
O n ly 3 p la n s d is c o n tin u e d 1 o r m o r e b e n e fit s f o r th e e m p lo y e d w o r k e r at a
c e r t a in a g e and e a c h a p p lie d th e ban to w o r k e r s at 65 y e a r s o r o ld e r (ta b le 3).
A s lig h tly la r g e r n u m b e r o f p la n s ( l l ) w ith h e ld c o v e r a g e u n d e r 1 o r m o r e b e n e fit s
f r o m w o r k e r s h ir e d a ft e r a s p e c if ie d a g e (ta b le 4 ).

R e d u c tio n s in the le v e l o f b e n e fit s o r o th e r m o d ific a t io n s b a s e d on a g e a lo n e
w ere m o re com m on .
W h ere su ch lim it a tio n s o c c u r r e d , it w a s u s u a lly at a ge 60 o r
65 (ta b le 3).
F o r e x a m p le , 17 p la n s r e d u c e d the a m ou n t o f li f e in s u r a n c e in e ff e c t
f o r a c tiv e w o r k e r s at a g e 65. E ig h t p la n s r e d u c e d m e d ic a l b e n e fit s at a g e 60 b y s h ift­
ing the a llo w a n c e at that a g e f r o m a " p e r d is a b ilit y " b a s is to a " p e r y e a r " b a s is . F o r
e x a m p le , a p lan p r o v id in g $ 2 f o r e a ch o f f ic e v is it and $ 3 f o r h o s p ita l v is it s stip u la te d
a m a x im u m o f $ 150 f o r a ll v is it s d u rin g any one d is a b ilit y u ntil a g e 60, a ft e r w h ich
the to ta l o f su ch p a y m e n ts w a s lim it e d to $ 150 in any c a le n d a r y e a r .

R e d u ctio n o f b e n e fit s w a s m o s t fr e q u e n t f o r a c c id e n t and s ic k n e s s c o v e r a g e .
A bou t o n e -q u a r t e r o f th e p la n s c o v e r in g s lig h tly m o r e than o n e -te n th o f the w o r k e r s
r e c e iv in g a c c id e n t and s ic k n e s s b e n e fit s had a g e r e s t r i c t i o n s . With on e e x c e p tio n , the
p la n s w ith a g e r e s t r i c t io n s s p e c if ie d a g e 60 a s th e tim e w hen a c c id e n t and s ic k n e s s
b e n e fit s w e r e r e d u c e d .
L ik e m e d ic a l p la n s , th e ch a n ge c o n s is t e d p r im a r ily o f s h ift ­
ing the a llo w a n c e f r o m a " p e r d is a b ilit y " to a " p e r y e a r " b a s i s . F o r e x a m p le , 27 p la n s
w h ich p r o v id e d b e n e fit p a y m e n ts f o r 26 w e e k s p e r d is a b ilit y p r i o r t o a g e 60 p r o v id e d
p a y m e n ts f o r 26 w e e k s p e r y e a r a ft e r that a g e .

T he r e d u c tio n s o r lim it a tio n s a p p lic a b le to e m p lo y e d o ld e r w o r k e r s a ls o a p p lie d
to n ew ly h ir e d o ld e r w o r k e r s . In a d d itio n , s o m e p la n s r e d u c e d o r e lim in a te d c o v e r a g e
fo r n ew w o r k e r s o n ly .
T he c o m b in e d e ff e c t o f the tw o t y p e s o f r e s t r i c t i o n s is show n
in ta b le 4 .
C o n s id e r in g the n a tu re o f s o m e o f the r e d u c tio n s and the a g e s at w h ich
th ey w e r e e ff e c t iv e , the im p a c t o f a g e d iffe r e n tia tio n on th e n e w ly h ir e d w o r k e r s e e m s ,
on the w h o le , to b e r e la t iv e ly m in o r .

L o s s o r R e d u ctio n o f B e n e fits U pon R e tir e m e n t
W hen the w o r k e r r e t i r e s , he l o s e s m u ch o f the p r o t e c t io n a ffo r d e d by th e s e
p la n s w h ile he w a s a c t iv e (ta b le 2 ).
A p p r o x im a t e ly h a lf o f th e p la n s c o n tin u e d li f e
in s u r a n c e c o v e r a g e a ft e r r e t ir e m e n t , g e n e r a lly at a r e d u c e d le v e l .
A su b sta n tia lly
lo w e r p r o p o r t io n o f p la n s e x te n d e d h o s p ita l, s u r g ic a l, and m e d ic a l b e n e fit s to r e t i r e d
w o r k e r s , and on ly a fe w c o n tin u e d a c c id e n t a l d ea th and d is m e m b e r m e n t p r o v is i o n s .
H o w e v e r , w h e r e h o s p ita l, s u r g ic a l, and m e d ic a l b e n e fit s w e r e e x te n d e d , m o s t p la n s
a ls o c o v e r e d the r e t i r e d w o r k e r rs d e p e n d e n ts.

T he m a jo r it y o f p la n s e x ten d in g h o s p ita l, s u r g ic a l, and m e d ic a l b e n e fit s to
r e t i r e d w o r k e r s m a in ta in e d the sa m e p r o v is io n s that w e r e a v a ila b le to the w o r k e r
p r i o r to h is r e t ir e m e n t (ta b le 5 ). 7 T h u s, u n d e r su ch p la n s th e w o r k e r fa c e d n o r e ­
d u ctio n in p r o t e c t io n w hen he r e t i r e d at 65. M o st p la n s , h o w e v e r , r e d u c e d the a m ou n t
o f li f e in s u r a n c e f o r the r e t i r e d w o r k e r .

7
F o r th is a n a ly s is , b e n e fit s a v a ila b le to the w o r k e r r e t ir in g at a g e 65 w e r e
c o m p a r e d w ith th o s e a v a ila b le to h im im m e d ia te ly p r i o r to r e t ir e m e n t ( i . e . , at a g e 6 4 ).
It h as b e e n p r e v io u s ly n o te d (ta b le 3) that b e n e fit s f o r the a c t iv e w o r k e r m a y h ave
b e e n r e d u c e d a s he r e a c h e d a c e r t a in a d v a n c e d a g e .



OD

T A B L E 4 , — E ffe c t o f a g e at h ir in g on a v a ila b ilit y o r l e v e l o f b e n e fit s u n d e r h e a lth a n d in s u r a n c e p la n s 1

A c c id e n t a l death
and d i s m e m b e r ­
m en t b e n e fits
W ork ers
W o rk e r s
P la n s
(000*s)
(000*s)

L ife in s u ra n c e
P r o v is io n
Plans

A c c id e n t and.
H o sp ita l
s ic k n e s s
b e n e fits
b e n e fits
W ork ers
W ork ers
P la n s
P la n s
(000*s)
(000*s)

M e d ica l
b e n e fits

S u r g ic a l
b e n e fits

W o rk e rs

W ork ers
P la n s

P la n s

(000*s)

(000*s)

A ll p lan s p ro v id in g b e n e fits _ __________________________

284

4 ,3 5 2

154

2 ,2 5 0

z 237

3 ,6 7 5

293

4 ,9 0 8

294

4 ,9 1 7

193

3 ,6 8 3

A v a ila b ilit y o r le v e l o f b e n e fit not a ffe c t e d b y
a ge at h ir in g ____________________________________________

252

3* 330

148

1 ,8 0 3

179

2 ,7 7 0

286

4 ,6 2 8

288

4 ,6 7 3

182

3 ,4 8 2

R e d u c e d b e n e fit p r o v id e d i f h ir e d a fte r age _ ________
____________________ _____________________________
55' _
60
_ _ ________________________
6 5 _______________________________________________________
66
.... .... .
..
68 _______________________________________________________
70 ____
... ___________ _________________ ______

21
1
3
15
1
1
-

649
35
53
552
2
7
-

4
_
2
2
-

25
16
9
-

56
_
3 54
2
-

866
_
3 438
428
-

7
2
2
3

280
3 38
200
42

4
2
2
-

238
3 38
200
-

10
3 9
1
-

200
3 80
120
-

B e n e fit not a v a ila b le i f h ir e d a fte r a g e ________________
50
.
_______ ______________________________
55 ...
______ ___________________________
65 ^ ^ ^
)
_ __
»*„■, . .
68
” "Z ™
_ _
__________________ ______
70 .. ____

7
1
3
3
_
-

225
10
12
203
-

2
_
1
1
-

422
_
415
7
-

2
1
_
1

40
35
-

_

-

6
1
-

-

-

-

5

-

-

2
1
1

5

1
1
-

1
1
-

4

148

-

-

-

-

-

-

-

-

-

ZZZZZZ Z Z .

O t h e r _______________________________________________________

4

-

3

3

-

1 B a s e d o n a s tu d y o f 3 0 0 h e a lth a n d in s u r a n c e p la n s u n d e r c o l l e c t i v e b a r g a in in g c o v e r in g a p p r o x i m a t e ly 5 m il l io n w o r k e r s ,
2 E x c lu d e s p la n s p r o v id in g o n ly f o r o c c u p a t io n a l d is a b ilit y b e n e fits ,,
3 I n c lu d e s
1 p la n c o v e r i n g 3 7 ,0 0 0 w o r k e r s w h ic h p r o v i d e s a r e d u c e d a m o u n t o f i n s u r a n c e i f h i r e d a f t e r a g e 6 0 f o r f i r s t 36 m o n t h s o f e m p l o y m e n t .
T h e r e a f t e r , s a m e b e n e f it s a r e p r o v id e d a s f o r e r fip lo y e e h ir e d p r i o r to a g e 6 0 ,
4 I n c lu d e s 2 p la n s c o v e r i n g 1 3 5 , 0 0 0 w o r k e r s p r o v id in g a r e d u c e d a m o u n t o f in s u r a n c e to w o r k e r s b e c o m in g u n io n m e m b e r s a f t e r a g e 55 a n d 2 p la n s
c o v e r i n g 1 3 ,0 0 0 w o r k e r s th a t d o n o t p r o v i d e l i f e in s u r a n c e t o w o r k e r s b e c o m in g u n io n m e m b e r s a t a g e 56 o r la t e r .,
NOTE:

TABLE

D ue

to

r o u n d in g ,

s u m s o f in d iv id u a l i t e m s d o n o t n e c e s s a r i l y e q u a l t o t a l s .

5 , — B e n e fi t l e v e l s u n d e r h e a lt h a n d i n s u r a n c e p la n s f o r w o r k e r s r e t i r i n g a t a g e 65 c o m p a r e d w it h t h o s e p r o v i d e d i m m e d i a t e l y p r i o r t o r e t i r e m e n t 1

L ife in s u r a n c e
B e n e fit l e v e l f o r

H o s p it a l b e n e fit s

( 0 0 0 l 2)
s

( 0 0 0 *s)

B e n e fits fo r r e t ir e d w o r k e r :
S am e a s fo r a c tiv e w o r k e r b e fo r e
r e t i r e m e n t ___________________________________________________
L e s s t h a n f o r a c t iv e w o r k e r in o n e o r
m o r e r e s p e c t s ______________
______ ____________________

1

2

3 ,1 0 8

67

1 ,7 8 4

58

29

726

39

1 ,4 0 7

39

117

2, 383

28

377

sum s

o f in d iv id u a l i t e m s

d o not n e c e s s a r il y eq u a l t o t a ls .

(0 0 0 * 8 )

19

1 ,7 4 5

35

1 ,4 9 1

1 ,4 2 5

25

1 ,2 3 1

320

10

260

B a s e d o n a s tu d y o f 30 0 h e a lth a n d in s u r a n c e p la n s u n d e r c o l l e c t i v e b a r g a in in g c o v e r in g a p p r o x i m a t e ly 5 m i l l i o n w o r k e r s ,
m a in t a in e d s a m e l e v e l o f i n s u r a n c e o n r e t ir e m e n t f o r a s p e c i f i e d p e r i o d o n ly , e . g . , 1 y e a r ,

2 I n c lu d e s 6 p la n s w h ic h

N O T E : D ue t o r o u n d i n g ,


W orkers
P la n s

(0 0 0 * s )

146

A l l p l a n s e x t e n d i n g b e n e f i t s t o r e t i r e d w o r k e r s ______

M e d ica l b e n e fits

W orkers
P la n s

P la n s

P la n s

S u r g ic a l b e n e fits

W ork ers

W ork ers

r e tir e d w o rk e r

9
T he ty p e o f p r o t e c t io n a v a ila b le u n d e r in d iv id u a l b e n e fit s m a y b e r e d u c e d in a
n u m b e r o f w a y s . H o s p ita liz a tio n b e n e fit s a r e l e s s li b e r a l f o r r e t i r e d w o r k e r s than f o r
a c t iv e w o r k e r s w hen the s c h e d u le d b e n e fit s (d a ily r o o m and b o a r d , e x tr a a llo w a n c e , and
d u r a tio n ) a r e a v a ila b le to the a c t iv e w o r k e r f o r e a c h d is a b ilit y but r e p r e s e n t the m a x i­
m u m that th e r e t i r e d w o r k e r ca n r e c e iv e d u rin g h is e n tir e r e t ir e m e n t p e r io d . T o i l l u s ­
tr a t e , a p la n p r o v id e s a d a ily r o o m and b o a r d a llo w a n c e o f $ 10 a day f o r 70 d a y s w ith
an a llo w a n c e o f $ 2 0 0 f o r e x tr a h o s p ita l e x p e n s e s . T h e s e b e n e fit s w o u ld b e a v a ila b le to
the a c t iv e w o r k e r f o r e a c h s e p a r a te d is a b ilit y .
H o w e v e r , the r e t i r e d w o r k e r w ou ld
r e c e i v e th e s e b e n e fit s o n ly o n c e d u rin g h is e n tir e p e r io d o f r e t ir e m e n t .
S o m e tim e s
the d a ily r o o m and b o a r d a llo w a n c e is l e s s f o r r e t i r e d w o r k e r s than fo r a c tiv e w o r k ­
ers.
S im ila r ty p e s o f r e d u c tio n s m a y a ls o a p p ly to s u r g ic a l b e n e fit s .
W h e re a s
a c t iv e w o r k e r s m a y r e c e i v e b e n e fit s u n d er a p la n w h ich s e ts fo r t h a sc h e d u le o f m a x i­
m u m a llo w a n c e s f o r e a c h o p e r a tio n the w o r k e r u n d e r g o e s , a r e t i r e d w o r k e r m a y fin d
the sa m e m a x im u m a p p lic a b le not to e a c h o p e r a tio n but t o th e e n tir e p e r io d o f r e ­
t ir e m e n t .
One o p e r a tio n m a y ex h a u st th is c o v e r a g e .

O f the 146 p la n s e x ten d in g li f e in s u r a n c e to r e t i r e d w o r k e r s , o n ly 29 d id not
r e d u c e the am ou n t im m e d ia te ly u pon a w o r k e r * s r e t ir e m e n t at 65 and, o f th e s e , 6 m a in ­
ta in e d th e sa m e le v e l o f in s u r a n c e f o r a lim it e d p e r io d , e . g . , a y e a r .
T he r e s t o f
the p la n s (1 1 7 ) p r o v id e d f o r an im m e d ia te r e d u c tio n upon r e t ir e m e n t .
A bout th r e e fo u r th s o f th e s e p la n s im m e d ia te ly r e d u c e d the am ou n t o f in s u r a n c e in e f f e c t to a c o n ­
stant le v e l w h ich h e ld th ro u g h o u t the r e t ir e m e n t p e r io d .
F o r e x a m p le :

U pon n o r m a l r e t ir e m e n t o f any e m p lo y e e a ft e r 20 y e a r s o f c r e d it e d
s e r v i c e u n d e r th e p e n s io n p la n p r o v id e d f o r in th is c o n t r a c t , the
in s u r a n c e c o v e r a g e h e r e in a b o v e p r o v id e d f o r s h a ll b e te r m in a te d ,
and su ch e m p lo y e e s s h a ll, t h e r e a ft e r , be c o v e r e d f o r the su m o f
$ 5 0 0 in li f e in s u r a n c e , at the e x p e n s e o f the c o m p a n y .

S o m e p la n s r e d u c e d the a m ou n t o f life in s u r a n c e in e ff e c t im m e d ia t e ly u pon r e t ir e m e n t
and at s p e c if ie d in t e r v a ls t h e r e a ft e r .
A p r o v is i o n o f th is ty p e s ta te s :

If an in s u r e d e m p lo y e e is r e t i r e d by the c o m p a n y fr o m a c tiv e s e r v ­
ic e
a ft e r the e ff e c t iv e date o f th is p la n , th e a m ou n t o f h is in s u r ­
a n ce p r i o r t o r e t ir e m e n t , w ill b e r e d u c e d 10 p e r c e n t on the d ay o f
su ch r e t ir e m e n t , , and 10 p e r c e n t e a c h on the f i r s t , s e c o n d , th ir d ,
and fo u rth a n n iv e r s a r ie s t h e r e a ft e r ; th u s 4 y e a r s a ft e r r e t ir e m e n t ,
h is in s u r a n c e w i ll b e r e d u c e d to o n e -h a lf o f the a m ou n t w h ich w a s
in e ff e c t p r i o r t o r e t ir e m e n t , and w h ic h am ou n t w ill b e c o n tin u e d
t h e r e a ft e r .

T h e a m ou n ts o f in s u r a n c e a v a ila b le u n d e r the 146 p la n s to m e n a ft e r r e t i r e ­
m en t at 65 and the a m o u n ts s t ill in e ff e c t f o r th e s e m e n at 70 a r e sh ow n in ta b le 6,
co m p u te d f o r a m an e a rn in g $ 4 , 000 p r i o r to r e t ir e m e n t — an a r b it r a r ily s e le c t e d e a r n ­
in g s le v e l .
O n ly tw o p la n s d is c o n tin u e d in s u r a n c e p r o t e c t io n b e tw e e n the a g e s o f 65
and 7 0 .
F o r a ll p la n s f o r w h ich the a m ou n t o f in s u r a n c e c o u ld be c o m p u te d , the
am ou n t a v a ila b le to th e n e w ly r e t ir e d w o r k e r at 65 w a s $ 1 ,6 8 4 , on the a v e r a g e .
B y 70, th is a v e r a g e l e v e l had d r o p p e d to $ 1, 2 67, a 2 5 -p e r c e n t r e d u c t io n .

U n lik e p e n s io n a n n u itie s , le n g th o f s e r v i c e is not an im p o r ta n t f a c t o r in d e ­
te r m in in g th e am ou n t o f li f e in s u r a n c e a r e t ir e d w o r k e r m a y r e c e i v e (ta b le 7 ).
T h is
p r a c t i c e h a s p a r t ic u la r s ig n ific a n c e f o r w o r k e r s h ir e d at an a d v a n c e d a g e an d u n a b le
t o a c c u m u la te m a n y s e r v i c e c r e d it s .




10

T h e p r e v a le n c e o f th e p r a c t i c e o f r e d u c in g th e a m ou n t o f life in s u r a n c e f o r
r e t ir e d w o r k e r s m a y b e a ttr ib u te d to s e v e r a l f a c t o r s . T he c o s t o f p r o v id in g fu ll c o v ­
e r a g e w hen p a y m e n t is a c e r ta in t y , a s it w o u ld b e in the c a s e o f li f e in s u r a n c e , m a y
be e x c e s s i v e in c o m p a r is o n w ith the c o s t o f o th e r b e n e fit s that m ig h t b e o b ta in e d .
T h e r e m a y b e l e s s n e e d to p r o v id e in c o m e f o r a s u r v iv in g d e p e n d e n t.
F in a lly , su ch

T A B L E 6 . — Amount of life insurance provided m e n 1 at ages 65 and 70 who re tire d
at age 65 and earned $ 4 ,0 0 0 yearly prior to re tire m e n t 2

Amount of insurance for man
earning $ 4 ,0 0 0 a year

A ll plans extending life insurance to retired w orkers
at sp ecified age
Amount of insurance based on factors other than
earnings alone
Am ount of insurance based on earnings alone ______________
Under $50 0 insurance
_ _
$ 5 0 0 and le s s than $ 1 ,0 0 0
_
_
_ ............... .
$ 1 ,0 0 0 and le s s than $ 1 ,5 0 0 ___
. _
_
..
.. _ _
$ 1 ,5 0 0 and le s s than $ 2 ,0 0 0 ......
..... _ _ . _
..
$ 2 ,0 0 0 and le s s than $ 2 ,5 0 0
__ _ .... _ _ ___
.. .
$ 2 ,5 0 0 and le s s than $ 3, 000
__
_ _
..............
... . _ . _
$ 3 ,0 0 0 and le s s than $ 3 ,5 0 0 _
_
...
$ 3 ,5 0 0 and le s s than $ 4 ,0 0 0 ______________________________
$ 4 ,0 0 0 and le s s than $ 4 ,5 0 0
................................ . .
$ 4 , 500 and le s s than $ 5 ,0 0 0 . . _ _ _ _
_
_ _ ..
.
$ 5 ,0 0 0 and le s s than $ 7 ,5 0 0 ______________________________
. ___ _ ___
__
_
$ 7 , 500 and over __ ____
A v e ra g e insurance for $ 4 , 0 0 0 -a -y e a r -m a n
at sp ecified age 3 _______________________________________________

Im m ediately after
retiring at
age 65
W o rk e rs
Plans
(000»s)

R etired w orker at
age 70
W ork ers
Plans
(000 *s)

146

3 ,1 0 8

144

3 ,0 7 9

29
117
1
17
50
7
17
2
2
6
3
1
7
4

1 ,0 2 0
2 ,0 9 0
7
541
992
80
185
6
4
80
13
3
141
38

29
115
1
18
54
8
15
2
3
4
5
2
3

1 ,0 2 0
2 ,0 6 1
7
548
1 ,0 0 3
160
219
6
16
40
39
8
15

$1 ,6 8 4

-

-

$1, ,2 6 7

1 F ive plans covering 5 3, 000 w ork ers provided lower benefits for w om en.
2 B ased on a study of 300 health and insurance plans under co lle ctiv e bargaining covering approxi­
m ately 5 m illion w o rk e rs.
A rith m etica l av erag e; amount of insurance provided to a $ 4 , 0 0 0 -a -y e a r -m a n by each plan was
weighted by total number of w ork ers covered by that insurance plan.
NOTE:

Due to rounding, sums of individual item s do not n e c e ssa r ily equal to ta ls.

L en g th o f T im e R e t ir e d W o r k e r s R e c e iv e B e n e fits
A lth ou g h m an y w o r k e r s stan d to lo s e a ll h e a lth and in s u r a n c e p r o t e c t io n upon
r e t ir e m e n t and o t h e r s a r e s u b je c t to r e d u c e d p r o t e c t io n upon r e t ir e m e n t , r a r e ly d o e s
a p la n e x te n d e d to r e t ir e d w o r k e r s d is c o n tin u e a b e n e fit d u rin g th e r e t ir e m e n t p e r io d
(ta b le 8 ).
T h u s, a s lo n g a s a w o r k e r so c o v e r e d is in a r e t i r e d sta tu s, w h ich g e n ­
e r a ll y m e a n s a s lo n g a s he li v e s , he n e e d n ot fe a r l o s s o f a b e n e fit b e c a u s e o f h is a g e .

B e n e fit L e v e ls f o r R e t ir e d W o r k e r s 1 D e p e n d e n ts
In a lm o s t a ll p la n s e x te n d in g c o v e r a g e to the d e p e n d e n ts o f r e t i r e d w o r k e r s ,
the le v e l o f a llo w a n c e s p r o v id e d f o r d e p e n d e n ts w a s the s a m e a s that f o r r e t i r e d w o r ­
k e r s (ta b le 9 ).
T h e fe w p la n s w h ich p r o v id e d lo w e r b e n e fit s f o r r e t ir e e s * d e p e n d e n ts
a ls o p r o v id e d lo w e r b e n e fit s f o r the d e p e n d e n ts o f a c tiv e w o r k e r s .
T he o n ly b e n e f i­
c ia r y o f d ep en d en ts* c o v e r a g e f o r a r e t i r e d w o r k e r w o u ld n o r m a lly b e h is w ife s in c e
c h ild r e n a r e g e n e r a lly c l a s s i f i e d a s d e p e n d e n ts u n d e r h ea lth and in s u r a n c e p la n s up to
th e a g e o f 18.




T A B L E 7 . — E ffe c t o f le n g th o f s e r v ic e on a m o u n t o f lif e in s u r a n c e
p r o v id e d r e t ir e d w o r k e r s 1
W orkers
P r o v is io n

P la n s
(0 0 0 ‘ s)

A l l p la n s e x t e n d in g l if e in s u r a n c e
to r e t ir e d w o r k e r s
................ .
_

A m o u n t n o t a f f e c t e d b y s e r v i c e _______
G r a d u a t e d b y s e r v i c e (tw o o r
m o r e g r a d u a tio n s )
_ ._ _
S m a l l e r a m o u n t i f s e r v i c e l e s s th a n
s p e c i f i e d p e r i o d __________________________
O th e r
_______
_
...
__ „

146

3, 108

119

2, 097

14

872

4

12
127

9

1 B a s e d o n a s tu d y o f 3 0 0 h e a lth a n d in s u r a n c e p la n s u n d e r
le c t iv e b a r g a in in g c o v e r in g a p p r o x im a t e ly 5 m illio n w o r k e r s .

TABLE

8 . — L e n g th o f t im e b e n e fits a v a ila b le to r e t ir e d w o r k e r s 1 u n d e r h e a lth
a n d in s u r a n c e p la n s

L ife

in s u r a n c e

H o s p it a l b e n e fits

W orkers

B e n e fits a v a ila b le
P la n s

S u r g ic a l b e n e fits

W ork ers
P la n s

M e d ic a l b e n e fits

W ork ers
P la n s

( 0 0 0 ‘ s)

( 0 0 0 * s)

A ll p la n s e x te n d in g b e n e fits to
r e t ir e d w o r k e r s _
__

c o l­

W orkers
P la n s

(0 0 0 * s )

(0 0 0 *-s)

________

146

3, 1 0 8

67

1, 7 8 4

58

1 ,7 4 5

35

1, 4 9 1

F o r d u r a t i o n o f r e t i r e m e n t _________________
F o r s p e c i f i e d p e r i o d __________________________

144
2

3, 079
29

63
4

1 ,7 4 7
37

54
4

1, 7 0 8
37

32
3

1, 4 5 7
34




1

B a s e d o n a s tu d y o f 300 h e a lth a n d in s u r a n c e p la n s u n d e r c o l l e c t i v e b a r g a in in g c o v e r i n g a p p r o x i m a t e ly 5 m il l io n w o r k e r s .

T A B L E 9 . — R e la tio n s h ip o f h o s p ita l,

s u r g ic a l, and m e d ic a l b e n e fits o f r e t ir e d w o r k e r s and th e ir d ep en d en ts 1
M e d ic a l b e n e fits

S u r g ic a l b e n e fits

H o s p it a l b e n e fit s

W ork ers

W ork ers

W ork ers

P r o v is io n

P la n s

P la n s

P la n s

(0 0 0 * s )

(0 0 0 * s )

(0 0 0 * s )

A ll p la n s e x te n d in g b e n e fits to r e t ir e d w o r k e r s
a n d d e p e n d e n t s ________________________________________________

56

1 ,7 2 9

48

1 ,6 9 0

31

1 ,3 4 6

S a m e D e n e fits p r o v i d e d r e t i r e d w o r k e r
a n d d e p e n d e n t s ________________________________________________

52

1 ,7 0 2

47

1 ,6 8 7

28

1 ,3 2 3

4

27

1

3

23

D iffe r e n t b e n e fits p r o v id e d ^ e tir e d w o r k e r an d
d e p e n d e n t s _________________________________________________

1

B ased

on

a stu d y

of

300

h e a lth an d

—

in s u r a n c e p la n s

under

3

c o lle c t iv e b a r g a in in g

c o v e r in g a p p r o x im a t e ly

5

m illio n

w ork ers.

TABLE

1 0 .— M e th o d o f fin a n c in g b e n e fits f o r r e t i r e d w o r k e r s a n d t h e ir d e p e n d e n ts u n d e r h e a lth a n d i n s u r a n c e p la n s 1
D e p e n d e n t s o f i• e t i r e d w o r k e r s

R e tir e d w o r k e r s

E m p l o y e r o n l y _____________________
E m p lo y e r an d r e t ir e d
w o r k e r _____________________________
E m p lo y e r a n d a c t iv e
w o r k e r _______________________________
R e t i r e d w o r k e r o n l y _____________
O t h e r _________________________________

146

3 , 108

67

1 ,7 8 4

58

1 ,7 4 5

35

1 ,4 9 1

56

1 ,7 2 9

48

1 ,6 9 0

31

1 ,3 4 6

97

2 ,2 9 5

29

746

22

713

16

744

18

657

15

647

11

559

16

128

14

11 9

13

1 18

6

52

11

104

11

104

6

52

17
896

1
12

17
678

1
26

17
950

1
21

17
922

1
13

17
717

16
7
10

495
94
96

1
23

17
901

1
22

B a s e d o n a s tu d y o f 3 0 0 h e a lth a n d in s u r a n c e p la n s u n d e r c o l l e c t i v e b a r g a in in g c o v e r i n g a p p r o x i m a t e ly 5 m il l io n w o r k e r s .

NOTE:



D ue to r o u n d in g ,

(0 0 0 »s )

(0 0 0 * s )

( 0 0 0 *s j

(0 0 0 * s )

(0 0 0 * s )

(0 0 0 * s )

W ork ers
P la n s

P la n s

P la n s

P la n s

P la n s

P la n s
(0 0 0 * s )

A l l p la n s e x t e n d in g b e n e f i t s to
r e t i r e d w o r k e r s _____________________

W ork er s

W orkers

W orker s
P la n s

W ork ers

W ork ers

W orkers

M e d ica l

S u r g ic a l

H o s p it a l

M e d ica l

S u r g ic a l

H o s p it a l

L ife

M e th o d o f fin a n c in g b e n e fit s

s u m s o f in d iv id u a l i t e m s d o n o t n e c e s s a r i l y e q u a l t o t a l s .

1
3
F in a n cin g R e t ir e d W o r k e r s 1 B e n e fits
U n d er m o s t p la n s e x te n d in g c o v e r a g e to r e t ir e d w o r k e r s , the e m p lo y e r c a r r i e d
a ll o r p a rt o f the c o s t o f p r o v id in g th e s e b e n e fit s to the r e t i r e d w o r k e r and h is d e p e n ­
d en ts (ta b le 10).
W ith the e x c e p tio n o f li f e in s u r a n c e , h o w e v e r , l e s s than h a lf o f the
p la n s r e q u ir e d the e m p lo y e r to b e a r the e n tir e c o s t o f the in d iv id u a l b e n e fit s . A lth o u g h
a su b sta n tia l p r o p o r t io n o f p la n s r e q u ir e d the r e t i r e d w o r k e r to p ay the p r e m iu m s f o r
h o s p ita l, s u r g ic a l, and m e d ic a l b e n e fit s i f he w is h e d to co n tin u e h is c o v e r a g e f o r h im ­
s e lf and h is d e p e n d e n ts , the r e t i r e e g a in e d the a d v a n ta g e o f g r o u p -r a t e p a r tic ip a tio n
w h ich o th e r w is e m ig h t not h ave b e e n a v a ila b le to h im b e c a u s e o f h is a g e .
T he e x ­
te n s io n o f li f e in s u r a n c e w a s , in m o s t c a s e s , an e m p lo y e r - fin a n c e d b e n e fit.

S ig n ific a n tly , u n d e r 16 life in s u r a n c e p la n s c o v e r in g a lm o s t o n e -h a lf m illio n
w o r k e r s , the e m p lo y e r and the a c t iv e w o r k e r s h a r e d the c o s t o f the in s u r a n c e w h ich
b e c a m e a v a ila b le to the w o r k e r on r e t ir e m e n t w ith ou t a d d itio n a l p r e m iu m . T h is p r o v i ­
sio n m a y r e f l e c t an a w a r e n e s s o f w o r k e r s that, if th ey a r e to c o n tr ib u te to the c o s t o f
h ea lth and in s u r a n c e b e n e fit s , it is e a s ie r to pay w h ile th ey a r e a c t iv e ly e m p lo y e d f o r
the b e n e fit s th ey w is h to r e c e iv e in a r e t i r e d sta tu s.







1
5
Part I I .— Pension Plans

S u m m a ry
M o re than 13 m illio n w o r k e r s a r e c o v e r e d b y p r iv a te p e n s io n p la n s that su p ­
p le m e n t the F e d e r a l o ld - a g e and s u r v i v o r s 1 in s u r a n c e p r o g r a m 0 O f th e se w o r k e r s ,
a p p r o x im a t e ly 60 p e r c e n t a r e p a r tic ip a n ts in p la n s u n d er c o l l e c t iv e b a rg a in in g *
The
s p r e a d o f su ch p la n s d u rin g the p a s t d e c a d e u n d ou b ted ly h as c o n s titu te d the m o s t s ig ­
n ifica n t a c tio n o f th is p e r io d on the p a r t o f u n ion s and e m p lo y e r s d ir e c t e d s p e c if ic a ll y
to the p r o b le m s o f agin g w o r k e r s o T h is d e v e lo p m e n t is im p o r ta n t not o n ly b e c a u s e it
p r o m i s e s to p r o v id e an in c r e a s in g n u m b e r o f o ld e r p e o p le w ith g r e a t e r e c o n o m ic s e ­
c u r ity on r e t ir e m e n t , but b e c a u s e it m a y p r o v id e , fo r the e m p lo y e r and the u n io n , an
eq u ita b le s o lu tio n to the o n - t h e - jo b d iffic u lt ie s e n c o u n te r e d b y the su p e ra n n u a te d o r
d is a b le d w o rk e r ,.
The p r im a r y p u r p o s e o f a p e n s io n plan is to p r o v id e an in c o m e fo r life to the
e m p lo y e e on re tir e m e n t,, U nder m o s t p la n s , the w o r k e r r e a c h in g r e t ir e m e n t a g e q u a l­
if ie s fo r an annuity i f he h as fu lfille d the stip u la te d l e n g t h - o f - s e r v i c e r e q u ir e m e n t s „
T he am ou n t o f m o n e y he is to r e c e iv e m o n th ly g e n e r a lly d e p e n d s on h is len gth o f s e r v ic e
an d , u n d er m an y p la n s , h is le v e l o f e a rn in g s*
O r d in a r ily , the r e t i r e d w o r k e r g e ts
the m a x im u m r e tu r n w hen he q u a lifie s fo r n o r m a l r e t ir e m e n t b e n e fit s , that i s , he has
r e a c h e d the d e s ig n a te d n o r m a l r e t ir e m e n t a g e an d , i f r e q u ir e d b y the p la n , h as c o m ­
p le te d the m in im u m s e r v ic e r e q u ir e m e n t s „
A lth ou g h a b o o n to the w o r k e r w ho r e a c h e s r e t ir e m e n t a g e with the n e c e s s a r y
q u a lific a tio n s and w h o w an ts to r e t i r e , a p e n s io n p lan m a y p r e s e n t o r con tin u e s o m e
p r o b le m s fo r the o ld e r w o r k e r w ho is s e e k in g a jo b , fo r the w o r k e r w h o can n ot q u a lify
fo r r e t ir e m e n t p a y , and fo r the w o r k e r who d o e s not w ant to r e tir e ,,
F o r e x a m p le ,
an o ld e r jo b a p p lica n t m a y b e fa c e d b y a h ir in g -a g e lim it a tio n b a s e d on p e n s io n c o s t
c o n s id e r a t io n s , w h e th e r r e a l o r fa n cied ,,
The n e w ly h ir e d w o r k e r m a y fin d that he
can n ot p a r tic ip a te in a p e n s io n p la n b e c a u s e o f h is age o r he m a y not be a b le to w o r k
lon g en ou g h to q u a lify fo r b e n e fit s *
The e m p lo y e d o ld e r w o r k e r m a y be s e p a r a te d
fr o m h is jo b th ro u g h n o fa u lt o f h is own and lo s e a ll o f h is a c c r u e d eq u ity in the
p e n s io n p r o g r a m *
F in a lly , upon r e a c h in g a c e r ta in a g e , a w o r k e r m a y be c o m p e lle d
to r e t ir e u n d er p la n p r o v is io n s although he m a y b e e c o n o m ic a l ly o r p s y c h o lo g ic a l ly n ot
r e a d y fo r r e tir e m e n t*
S cop e o f Study
A ll a s p e c t s o f a p e n s io n p la n a r e r e le v a n t to a d is c u s s i o n o f the statu s o f
o ld e r w o r k e r s , T h r e e a s p e c t s , h o w e v e r , w e r e s e le c t e d f o r e x a m in a tio n in th is r e p o r t :
(1) H ow the w o r k e r q u a lifie s fo r p e n s io n b e n e fits u n d er c o l l e c t i v e l y b a r g a in e d p la n s ;
(2) c e r ta in p r o v is io n s o f th e s e p la n s w h ich a ffe c t the o ld e r w o r k e r b e fo r e h is r e t i r e ­
m en t; and (3) in v o lu n ta ry r e tir e m e n t*
A tte n tio n is d ir e c t e d , a m on g o th e r m a t t e r s , to
the ty p e s o f r e t ir e m e n t b e n e fit s a v a ila b le to o ld e r w o r k e r s and the c o n d itio n s w h ich
m u st be m e t in o r d e r to q u a lify fo r b e n e fit s ; the ex ten t o f and q u a lific a tio n s fo r v e stin g
b e n e fit s ; and c o m p u ls o r y and a u to m a tic r e t ir e m e n t p r o v is io n s „ The p r o b le m o f p e n s io n
c o s t s a ctin g as a d e te r r e n t to the h ir in g o f o ld e r w o r k e r s is d is c u s s e d in a n oth er
U . So D ep a rtm e n t o f L a b o r r e p o r t * 8
F o r th is stu d y , the B u re a u a n a ly z e d 75 s e le c t e d p e n s io n p la n s u n d er c o ll e c t iv e
b a r g a in in g , in e f f e c t in 1 9 5 5 *9
T h e s e p la n s c o v e r e d a lm o s t 3 m illio n w o r k e r s , 10 o r

See P e n s io n C o s ts in R e la tio n to the H irin g o f O ld e r W o r k e r s , D e p a rtm e n t o f
L a b o r , B u rea u o f E m p lo y m e n t S e cu rity *
9 . F o r p r e v io u s stu d ie s in th is f i e ld , se e P e n s io n P la n s U n der C o lle c t iv e B a r g a in m B L S Bull* 1147; and H e a lth , In s u r a n c e , and P e n s io n P la n s in U nion C o n t r a c t s , B LS
g,
B ull
1187*
10 In m an y c a s e s , the p la n s a r e e x te n d e d u n ifo r m ly to c o v e r w o r k e r s o u tsid e the
s c o p e o f the co n tr a c t* In e v e r y in s t a n c e , h o w e v e r , the fig u r e s r e p r e s e n t o n ly the total
n u m b er o f w o r k e r s u n d er c o ll e c t iv e b a rg a in in g a g r e e m e n ts c o v e r e d b y the plan*




16
somewhat le s s than 40 percent of the total coverage of pension plans under collective
bargaining (table ll)o
Of the 75 p lans, 55 were in effect in manufacturing industries
(covering 2 , 158, 000 w orkers) and 2 0 in nonmanufacturing industries (7 7 5 ,0 0 0 workers)»
They varied in size from plans covering well over 1 0 0 ,0 0 0 w orkers to plans applying
to a m inim um of l , 0 0 0 o N early a third of the plans involved m ultiem ployer groupSo
F ou r-fifth s of the plans, covering alm ost the same proportion of w o rk e rs, were financed
solely by em ployer contributions (noncontributory p la n s)0 The rem ainder were con­
tributory, usually with the em ployer paying the greater share of the co sto 1
1
TABLE 11.— D istribution of pension plans studied by industry division,
w orker cov era g e, and type of bargaining unit
W orkers
Item
A ll plans stu d ie d ____________________

Plans
(000*s)
75

2,932

55
20

2,158
775

22
30
10
4
9

66
394
380
269
1,823

51
24

1,726
1,206

Industry division
M anufacturing________________________
N onm anufacturing____________________
W orker coverage
1,000 - 4,999 ................................ -..........
5, 000 - 24,999 ..........................................
25,000 - 4 9 ,9 9 9 .........................................
50,000 - 9 9 ,9 9 9 ................. ....................
Over 100,000 _ __ __________________
Type of bargaining unit
Single e m p lo y e r---------------------------------Multi e mpl o y e r . _____________________

NOTE: Due to rounding, sums of individual item s do not n e c e s ­
sa rily equal totals*

The 75 plans were so selected as to yield Insight into collectively bargained
pension arrangem ents in broad segm ents of industry.
In their selection , the factors
given p rim ary consideration were industry, geographic location,
union, type of b a r­
gaining unit, and s iz e . Since the sample is com paratively s m a ll, how ever, the results
should be viewed as indicative rather than conclusive0
Types of Benefits
Under pension p lans, w orkers may qualify for benefits under three types of
provisions— n orm al, e a rly , and disability retirem en t.
Virtually every pension- plan
contains a norm al retirem ent provision under which the worker becom es entitled to a
benefit, having otherwise qualified, upon reaching the normal retirem ent age specified
in the plan.
In gen eral, this age is defined as the e a rliest age at which a w ork er,
having qualified for b en efits, may choose to retire and receive the maxim um monthly
payment to which his length of service or amount of earnings, or both, entitles him
under the norm al retirem ent provisions of the plan.
Under an early retirem ent provision a worker can retire prior to the specified
norm al retirem ent age and receive a reduced annuity, since, among other re a son s, he
would be expected to receive an annuity for a longer period of tim e .
In contrast to
norm al retirem en t, how ever, the right to early retirem ent m ay be contingent upon the
e m p lo y e r ^ consent.

11
Some plans provided for a basic noncontributory pension and w orkers were
given an opportunity to contribute to a supplementary annuity.
In these c a s e s , only
the noncontributory plan was analyzed. A few plans were noncontributory for w orkers
earning le s s than a specified amount, e . g . , $ 3 ,0 0 0 a y e a r, and contributions were
required from those earning over that amount.
These plans were cla ssified as con­
tributory p ro gra m s.



17

The p rim ary purpose of a disability provision is to perm it those w orkers who
becom e permanently and totally disabled and who do not qualify for benefits under other
pension plan provisions to retire on an im mediate benefit,.
Each of the 75 plans studied made provision for norm al retirem ent (table 12).
E arly retirem ent was provided for in nearly tw o-thirds of the p la n s. A sim ila r p ro ­
portion provided for disability benefitsTA B LE 12o— T ypes o f pen sion ben efits p ro v id e d by n um ber o f plans
and w o rk e rs
T ypes of re tire m e n t ben efits

W o rk e rs
Plans

E a rly

N orm a l

X

X

X

X

X

_

_

X

X

-

X

-

A ll plans studied

N O TE:

(000*s)

D isa b ility
28
19
20
8

1,173
159
972
628

75

2 ,9 3 2

x denotes b en efits provided,.

Both early and disability provisions are of particular significance to older
w orkers who desire to retire before norm al retirem ent age, or who may lose their
jobs at an advanced age for reasons beyond their control, or who become totally d is­
abled,, Under these alternative retirem ent p ro v isio n s, w orkers are assured of an im ­
mediate income which otherwise would have been deferred until norm al retirem ent or
lo st entirely.
For exam ple, the health of an older worker may be poor but not bad
enough to be cla ssified as disabling„ An early retirem ent provision would enable this
worker to retire and receive an im m ediate benefit.

Participation Requirem ents
Participation in a pension plan m ay be a condition of employm ent or a m atter
of choice for newly hired w o rk ers.
H ow ever, under som e plans participation may
depend upon the worker having completed a specified period of em ploym ent, or having
reached a certain m inim um age, or being below a specified age.
W here minimum
participation age requirem ents e x ist, they generally range from ages 25 to 35 , and,
th erefore, are not of prim ary concern to older w o rk ers. On the other hand, if a plan
stipulates that a worker cannot becom e a plan m em ber unless hired before a specified
age , e . g „ , 55 y e a r s , the older worker is directly affected, since a worker hired after
the age specified would be permanently excluded from plan b en efits. The effects such
a provision may have on e m p lo y e rs1 hiring practices may differ considerably. It has
been claim ed by some that the exclusion of older workers from the pension plan m a y
facilitate their hiring since the higher pension cost often attributed to this group would
be elim inated. Some e m p lo y e rs, in contrast, have indicated a reluctance to hire older
w orkers who cannot qualify for plan benefits upon r e tir e m e n t.12
In addition to disqualifying a newly hired older worker through the inclusion
of a stipulated m axim um participation age, plans may exclude the older worker through
the requirem ents to qualify for benefits.
For exam ple, a plan may require that a
worker have at lea st 15 years of service upon retirem en t, with a further requirement
that retirem ent is automatic at a specified age or that service cannot be credited b e­
yond a specified age.
For exam ple:

12
For an analysis of these points of view , see Pension Costs in Relation to the
Hiring of Older W o rk e rs, op. cit.




18
On and after the effective date of the plan
from the service of the employing company
date, which shall be the fir st day of the
birthdayo » 0 .
No em ployee who retires
pensioner unless he has completed fifteen or
service to his normal retirem ent date.

an employee shall retire
on his normal retirem ent
month following his 65th
for age shall become a
m ore years of continuous

Under this plan a worker would have to be hired not later than age 50 in order to
qualify for any benefits whatsoever 01
3 If, in addition, this plan required the worker
to be employed for a period of tim e in order to participate, the age before which he
m ust be hired in order to qualify for benefits would be even lo w e r0 For exam ple, if
the w orker had to be employed 2 years before participating in the plan cited above
and service was credited only from the date of participation, he would have to be hired
not later than age 48 in order to qualify for benefits,,
More than half of the 75 plans studied (41) had a maxim um hiring age above
which w orkers cannot qualify for pensions (table 13),
Of th ese, about a third estab­
lished a definite age for participation and the remaining included benefit eligibility r e ­
quirements which operated to establish maxim um ages in the manner described above.
These ages ranged from below 50 under 2 plans to age 65 in 1 plan. The significance
of these data lies in their disclosu re of the fact that plans covering about 30 percent
of all w orkers in the study established a maxim um qualifying age below 60 y e a r s „
TABLE 13o— Maximum ages b efore which w orkers must be hired
to qualify for pension benefits 1
W orkers
Maximum age

Plans
(000ls)

A ll p la n s _______________________________

41

1,219

Age:
L ess than 50
50 but le s s than 5 5 _________________
55 but le s s than 60
........ _
60 but le s s than 6 5 _________________
6 5 -----------------------------------------------------

2
8
14
16
1

59
119
728
301
12

1 Based on a study of 75 pension plans under collectiv e bargaining
covering approxim ately 3 m illion w ork ers.

Minimum Qualifications for Benefits
Virtually every pension plan has m inimum requirem ents which the worker must
m eet in order to qualify for retirem ent b en efits. These are usually expressed in term s
of age or age and years of s e r v ic e . These qualifications are important to older w ork­
ers who have been with their em ployer for a long period of time as well as to those
who are seeking employment or have recently changed jo b s. In the case of lo n g -se r v ic e
w o rk e rs, the ea rlie st age at which they may retire and the conditions under which
retirem ent is perm itted would be of p rim ary concern since ^presumably they would
have met the minimum service requirem ents of the plan. The newly hired older workers
and those seeking work would be particularly concerned as to whether they would be
able to m eet the minim um qualifications to receive benefits in the event of voluntary
or forced retirem en t.

1
3
It should be em phasized that the operation of these features relate p rim arily
to a newly hired w orker.
Where such provisions are included in newly established
plans, older w orkers are usually protected in a number of w ays.
Credit may be a l­
lowed for all or a specified amount of past service credit (that service perform ed
prior to establishm ent of plan) thus making qualification p o ssib le .
Special provisions
may be made exempting older w orkers from the minimum service requirem ents to
qualify for benefits.
Exceptions to the age lim itations on accruing service may be
provided thus enabling older w orkers to qualify.



TABLE

1 4 . — M in im u m a g e a n d s e r v i c e r e q u i r e m e n t s f o r n o r m a l , e a r l y , a n d d i s a b i l i t y p e n s i o n b e n e f i t s

Minimum age at which workers can qualify for benefits 2
All plans

(000 *s)

(000*s)

(000*s)

(000*s)

Age 60

Workers

Workers

Workers
Plans

Plans
(000*s)

(000*s)

Age 70

Age 65

Workers
Plans

Plans

Plans

Plans

Plans

Number

Age 55

Workers

Workers

Workers

Workers

Age 50

Age 45

None

Minimum service needed
to qualify for benefits 1

(000*s)

(000*s)

Normal retirement 3
All plans ________________
None specified
1 - 4® 9 years _ _________
5 - 9.9 years
10 - 14.9 y e a r s _________
15 - 19.9 years _________
20 - 24.9 years __ ______
25 - 29 o9 year s _________
30 years and o v e r ________

75
22
2
19
19
9
3
1

2,932
518
10
686
660
976
79
4

.

.

_

_

_

_

_

_

4

259

"

_
■

_
"

_
-

_
-

_
-

_

_
-

2
2
“

7
252
-

70

2,670

1

5

22
2
17
19
6
3
1

518
10
680
660
719
79
4

“
1
-

■
5
-

“

Early retirement 3
All plans

47

1,332

5

168

1

4

1

45

22

271

18

844

_

_

_

_

None sp ecified ____________
1 - 4 , 9 years ____________
5 - 9.9 years ......................
10 - 14.9 years _________
15 - 19o9 years _ _ ___
20 - 2 4 . 9 years _________
25 - 29.9 years _________
30 years and over

14
16
6
9
1
1

137
784
260
146
2
3

2
1
1
1

22
23
120
-

_
1
-

_
4
“

1
-

_
45
-

12
4
6

-

-

-

“

_

_
10
4
3
1
”

_
693
136
13
2
-

_
~

_
“

_
-

■

115
23
133
“

_
“

-

-

3

"

Disability retirement
A ll plans _________________

48

2, 145

29

923

2

43

6

601

3

83

8

497

_

_

_

_

None specified____________
1 - 4.9 years
5 - 9.9 years _
10 - 14.9 years
15 - 19.9 years .............
20 - 24.9 years
__
25 - 29.9 years

1
2
7
29
7
2

4
7
105
1,502
476
53

_
2
5
19
2
1

_
7
42
739
117
18

_
2

_
-

_
-

_
-

_
1
1

_
13
35

1
1
1
5
~

4
50
84
359

_
-

_
-

_
-

_
-

-

-

43
-

_

6
-

~

-

601
-

-

~

1

-

35

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

■

"

1 F o r t h o s e p la n s w h ic h s p e c if ie d a p e r i o d of e m p lo y m e n t to b e s e r v e d b e f o r e p a r t i c i p a t i o n i n th e p la n c o u ld b e g i n , th e s e r v i c e r e q u ir e m e n t i n c lu d e s
b o th th e p r e p a r t i c i p a t i o n p e r i o d a n d th e r e q u i r e d m in im u m p la n m e m b e r s h i p p e r io d ,,
2 I n a f e w p l a n s , a l t e r n a t i v e a g e a n d s e r v i c e r e q u i r e m e n t s w e r e s p e c i f i e d ; i n e a c h c a s e , t h a t w i t h th e l o w e r a g e w a s s e le c t e d ,,
3 A g e r e q u i r e m e n t s to q u a l if y f o r b e n e f i t s w e r e l o w e r f o r w o m e n t h a n f o r m e n i n a n u m b e r o f p l a n s „ F i v e p la n s s p e c i f i e d a d i f f e r e n t i a l f o r n o r m a l
r e t i r e m e n t — 5 y e a r s i n a l l e x c e p t 1 p la n
w h ic h s t i p u la t e d 10 y e a r s ; 3 p la n s s p e c i f i e d a d i f f e r e n t i a l o f 5 y e a r s f o r e a r l y r e t i r e m e n t , ,
N O TE:




D u e to r o u n d in g , s u m s o f i n d iv i d u a l it e m s do n o t n e c e s s a r i l y e q u a l to ta ls®

20

With few exceptions, the plans studied provided that a worker must reach age
65 in order to qualify for normal retirement benefits (table 14)c For workers other­
wise qualified, this means that in order to realize the maximum benefit to which their
service or earnings entitles them they must continue in employment until age 65c In
the absence of vesting, early retirement, or disability provisions (discussed below),
this also means that workers would lose all of their pension rights should their em ­
ployment be terminated before age 650
In addition to age requirem en ts, specific service requirem ents also had to be
m et under m ore than tw o-thirds (53) of the plans studied in order to qualify for norm al
pensions o Ten and 15 years of service were the m ost common requirem ents* In 51
of the 75 p lans, a worker m ust have been employed for 10 or m ore years to m eet
the minim um eligibility requirem ents for normal retirem ent benefits®
On the other
hand, 22 plans did not specify a minimum service requirem ent.
H ow ever, maxim um
age participation requirem ents under some of these plans had the sam e effect as the
establishm ent of minimum service requirem ents®14
E a rly and disability retirem ent p ro vision s, as pointed out above, are of p a r ­
ticular im portance to older w orkers who may desire to retire prior to norm al r e tir e ­
ment age on a reduced annuity or are com pelled to retire because of physical reasons®
A s in norm al retirem en t, 10 and 15 y e a r s 1 service were common requirem ents for
early retirement® Although the qualifying age m ost frequently specified was 55 (in 22
out of 47 plans providing for early retirem en t), m ore than 60 percent of the w orkers
were under plans which perm itted retirem ent at age 60 at the earliest®
An example
of an early retirem ent clause follow s:
On or after June 1, 1955, any employee (not retired
date) who shall make due application therefor after (i)
his 60th birthday but not his norm al retirem ent age,
10 or m ore years of creditable s e r v ic e , m ay retire
and shall be eligible for an early retirem ent benefit
A rticle V , Section 2, of the Plan®

prior to such
having reached
and (ii) having
at his option,
as provided in

Unlike norm al and early retirem ent p ro vision s, a large proportion (29) of the
48 plans which provided for disability pensions did not establish any age as a basis
for qualification.
The absence of such a requirement is undoubtedly attributable, in
large part, to the fact that total and permanent disability is not a voluntary action on
the part of the w ork er.
F u rth erm ore, where the attainment of a specific age was
required for disability p ensions, it was generally lower than that for early retirement®
H ow ever, minimum service requirem ents were m ore prevalent for disability r e tir e ­
ment than for norm al and early retirements®
A ll plans except 1 of the 48 with d is­
ability provisions made service a prerequisite to qualification for benefits whereas
about a third of the plans contained no such requirem ent for norm al or early benefits®
Age requirem ents to qualify for benefits were lower for women than for men
in a number of plans®
Five plans specified a differential for norm al retirem ent—
5 years in all except for 1 plan which stipulated 10 y e a rs; 3 plans specified a dif­
ferential of 5 years for early retirement®

Joint Survivor b e n e fits
Pension payments under collectively bargained plans generally cease upon the
death of the retired worker® In recent y e a r s , how ever, a number of program s under
collective bargaining have been amended to include a provision allowing the w ork er,
before retirem en t, to choose to have payments continued to a designated beneficiary—
usually the surviving spouse.
This provision is known as a joint survivor option®

14
It is possible that the hiring practices of the companies involved may
likew ise made unnecessary a minimum service period in order to qualify for benefits
in that w orkers were not hired above a certain age®




have

21

To select this option, the worker is generally required to accept a lower
amount than he norm ally would have been entitled to in order to provide for his su r­
viving b en eficiary.
The worker must make such a choice usually not later than 5
years prior to r e tir e m e n t Exception to this preretirem ent period is som etim es m ade,
but is conditioned upon proof of good health,,
The value of this provision to the older worker would, of co u rse , depend upon
individual circum stances* A worker in good health with little or no financial re sp on si­
b ilities presum ably would not select such an option, preferring rather to obtain the
m axim um benefit for which he is qualified under the plan.
On the other hand* the
value of this provision is enhanced to a m arried worker who is approaching retirem ent
age in poor health,, The right to provide an income for his wife would receive serious
consideration in view of the p ossibility that he may live but a few years upon retirem ent*
Of the 75 plans studied, 3 2 contained survivor option p ro v isio n s. The clauses
varied considerably, and it was not uncommon to find alternatives presented to plan
m em bers* For exam ple, one plan offered the following choice: (l) A reduced pension
payable without change in amount during the retired em p loyeers lifetim e and, after his
death, during the lifetim e of his ben eficiary, if surviving or (2) a la rg er pension payable
during the retired e m p lo y e e ^ lifetim e and, after his death, payable at the rate of
on e-h alf during the lifetim e of his b eneficiary, if surviving.
Vesting
M anagem ent and unions have recently been giving increasing attention to vestingo
Vesting m ay be defined as the guarantee to a worker of an equity in a pension plan
(based on the e m p lo yerrs contribution) 15 should his employment be terminated before
he becom es eligible for retirem en t. This equity, of cou rse, would not be as large as
if he had worked until his norm al retirem ent age.
Vesting is a valued practice to all w ork ers, but is of special significance to
older w o rk e rs.
If w orkers have vested pension rights and should lose their jobs for
any reason after qualifying for vestin g, they are guaranteed at le a st a partial pension,
usually deferred until norm al retirem ent age.
When seeking employment elsew h ere,
an older worker may find an em ployer m ore favorably inclined to hire him if the e m ­
ployer knows that the applicant already has vested pension rights with another firm *
The inclusion of vesting provisions in pension agreem ents has becom e an im ­
portant issue for collective bargaining. Cost is one of the reasons given against adopting
vesting p ro vision s. In addition, vesting privileges may cause greater labor turnover,
thus increasing em ployer costs in other ways* It is also argued that the inclusion of
vesting provisions tends to m inim ize the reasons em ployers frequently give for estab ­
lishing pensions— that i s , rewards to long service w orkers and the desire to retain
experienced w o rk e rs. Because of the cost factor, and p ossibly a preference for other
p ro vision s, e . g * , higher benefit le v e ls , many unions which m ay have desired vesting
were unable to secure it when they fir st negotiated pension p r o g r a m s.
Yet it is ap­
parent from recent collective bargaining developments that the obtaining of vested
rights for their m em bership is a m ajor goal of many u n io n s .1
*
Over tw o-fifths of the plans studied provided for vesting (table 15). With one
exception, these plans provided for deferred full vesting— a provision under which all
rights to future pension payments are deferred until a Worker attains a certain age
a n d /or has completed a specified period of employment or participation in the plan.

15
Contributions made by an employee under a plan financed by both the company
and the employee are alm ost invariably returned to the w ork er, with or without in terest,
should his employm ent be term inated prior to retirem ent,
x Among the unions which have negotiated vesting provisions during the past
*
2 or 3 years are the United Steelworkers of A m e ric a ; United A u tom obile, A irc ra ft and
Agricultural Implem ent W orkers of A m e ric a ; International Union of E le c tr ic a l, Radio
and Machine W o rk ers; and the United Rubber, Cork, Linoleum and P lastic W orkers of
A m e r ic a .
See page 27.




22
The one exception provided for deferred graded vesting; that i s , the em ployer *s con­
tributions were vested on a graduated b a s is , depending on length of s e r v ic e . A p p roxi­
m ately a third of the noncontributory plans were vested; all but one contributory plan
w as

T A B L E 1 5 .— V ested and n on vested pen sion plans b y type o f vestin g and m ethod o f financing
N on con trib u tory plans

A ll plans
W ork ers

V esting p r o v is io n

C on trib u tory plans

W ork ers

W ork ers

Plans

Plans
(000*s)

Plans
(000*s)

(000*s)

A ll plans s tu d ie d ____________________

75

2 ,9 3 2

59

2 ,2 9 0

16

642

With vestin g p r o v is io n s ____________

33

1,143

18

801

15

342

D e fe r r e d full vesting
D e fe rre d gra d ed v e s t in g ________

32
1

1,111
32

18
-

801
-

14
1

310
32

Without vestin g p r o v is io n s _____ ___

42

1 ,7 90

41

1 ,4 90

1

300

N O TE:

Due to rou nding, sums of individual item s do not n e c e s s a r ily equal to ta ls .

Both age and service requirem ents were specified in 19 of the 32 plans with
deferred full vesting (table 16). Age 40 and 10 y e a r s 1 service was the provision cov­
ering the la rg e st proportion of w o rk e rs.
For exam ple:




An em ployee who, on or after August 1, 1955, and on or after his
40th birthday and before his 60th birthday shall have lost his credited
service under A rticle II and who at the time of such lo s s shall have
had 10 or m ore years of credited service and who not e a rlie r than
90 days prior to his 65th birthday nor later than his 70th birthday
shall have filed application therefor with the Board, shall be eligible
for a deferred vested retirem ent benefit; . . .
TA B LE 16.

-P e n sio n plans providin g d e fe r r e d full vestin g
by req u irem en ts fo r vestin g 1
W ork ers
Plans

R eq u irem en ts fo r vesting

(000*s)
A ll plans with d e fe r r e d full
v e s tin g . __ _____ __ __ _____ __

__

32

1,111

S e rv ice only
_
_
____
5 y e a r s _ ___
________________
10 y e a r s _ ____________ ___ ______
15 y e a r s _ _____ _
_____ __

13
4
8
1

265

A ge and s e r v i c e . . ___
_ ___________
A g e 40 and 10 y e a rs* s e r v i c e _____
A ge 40 and 15 y ea rs* s e r v i c e ____
A ge 45 and 5 y e a rs* s e r v ic e _____
A ge 45 and 10 y ea rs* s e r v i c e _____
A ge 45 and 15 y e a rs* s e r v ic e
A ge 50 and 15 y e a rs * s e r v ic e
A ge 50 and 20 y e a rs * s e r v i c e _____
A ge 50 and 25 y e a rs * s e r v i c e __ _
A ge 52 and 15 y ea rs* s e r v ic e

19
6
3
1
1
2
1
3
1
1

846
642
52
5
5
4
15
94
19
10

1 B a sed on a study of 75 p en sion plans under
gaining cov erin g a p p rox im a tely 3 m illio n w o rk e r s .

77

185
3

c o lle c t iv e

bar­

23

A ls o protecting the accrued rights of workers are industry or areawide plans
under collective bargaining. These plans generally involve a fund to which a number
of em ployers under contract with a union contribute a specified amount.
A s long as
the worker is em ployed by one of these e m p lo ye rs, he continues to build up credit
under the plan. The distinction between this type of pension right protection and that
provided by vesting is that under the latter the equity once vested is never lo s t. The
worker can move to another em ployer not covered by the plan or quit work and still
be assu red of an eventual benefit. Under a m ultiem ployer plan without a vesting p ro ­
v isio n , the worker generally m ust continue in employm ent with one of the participating
em ployers until he qualifies for retirem ent b en efits.
Although the large m ajority of m ultiem ployer plans cover only em ployers within
a particular industry a re a , thus restricting to a degree the movem ent of w o rk ers, a
number of program s have been extended a c ro ss industry lin e s . A recently established
plan of this type is that of the W estern Conference of T e a m s te r s . Not only can w ork­
ers under this plan move from em ployer to em ployer within a particular industry
without losing their pension righ ts, but they can also move to em ployers under con­
tract with the International Brotherhood of T ea m sters in many other industries in the
W est Coast a re a .
Other unions, such as the International L a d ie s 1 Garment W o rk e rs,
have developed reciprocity arrangem ents between the various segm ents of the w om enIs
and childrenT apparel industry so that a worker in the cloak and suit branch, for
S
exam p le, may be able to secure em ploym ent in the dress segm ent and not lose his
pension righ ts.
Variations such as these have been increasing in num ber, thus p ro ­
viding greater pension right protection to w orkers and affording older w orkers the op­
portunity to accru e, in effect, a vested right which may facilitate their reem ploym ent.

Com pulsory and Autom atic Retirem ent
Com pulsory and automatic retirem ent are two form s of involuntary retirem ent
based on age alone. A com pulsory retirem ent provision stipulates an age at which the
worker lo se s the privilege of deciding whether he should retire or continue on his jo b .
He m ay, how ever, be perm itted to continue in employment on a y e a r -to -y e a r b asis in
some c a s e s , subject to passing annual physical examinations or meeting standards of
job perform an ce.
For exam ple:

Any m em ber in service who shall have attained age 65 prior to
January 1, 1946, shall be retired on a normal retirem ent allowance
on February 1, 1946, and any m em ber in service who shall attain
age 65 on or after January 1, 1946, shall be retired on a normal
retirem ent allowance on the fir st day of the calendar month next
following; provided, how ever, that any m em ber m ay, upon the request
of the company and with the assent of the employee filed with the
retirem ent board, be continued in service after the norm al r e tir e ­
ment date for a period of 1 y e a r , and upon like request and assent
filed as a fo resaid , for su ccessive 1 -y e a r p erio d s.
Notwithstanding
the continuation of a m em ber !s service after he shall have attained
age 65, the m em ber shall be retired during any such continuation on
a norm al retirem ent allowance on a date to be fixed by the retirem ent
board not le s s than 30 nor m ore than 90 days following receipt by
the retirem ent board of written application therefor by the m em ber
or by the company.

An automatic retirem ent provision, on the other hand, stipulates an age at
which a worker m ust cease his employment with a fir m , the plan having irrevocably
established this age as a m axim um .
Attitudes toward involuntary retirem ent based on age alone are currently being
reexamined in view of changing p hysical, econom ic, and social fa c to r s .
In general,
unions presently view the practice of com pulsory retirem ent as one to be discouraged.
They cite the im proved health of older w orkers as evidenced by an increasing life



24

expectancy. In addition* unions believe that the right of a man to a job should be p ro ­
tected against b a rr ie rs such as an arbitrary retirem ent a ge . F urth erm ore, they claim
that many w orkers are not financially able to retire at age 65 even with the benefits
of private pension plans and in creased social security b en efits. The continued em ploy­
ment of older w o rk e rs, it is m aintained, would have certain additional advantages to
the econom y in general.
Many em p lo y e rs, on the other hand, believe that com pulsory retirem ent p ro ­
visions are desirable for the following re a so n s, among others:
M ost business firm s
need turnover to encourage the advancement of younger e m p lo yees.
Productivity in­
cre a se s frequently reduce the need for manpower in individual establish m ents.
An
inflexible retirem ent age provision d ecreases problem s presented when there is an
e x cess supply of la b o r . A com pulsory or automatic retirem ent age, m o re o v e r, provides
an objective standard which is not subject to favoritism and does not reflect upon the
capabilities of the individuals involved.
Of the 75 pension plans analyzed, 43 included com pulsory retirem ent p ro vi­
sions (table 17).
Of these 43 p lans, 20 also provided for automatic retirem ent at
specified a g e s . M ost m ultiem ployer plans had no com pulsory or automatic retirem ent
p ro vision s.
Age 65 was the m ost common com pulsory retirem ent age, followed by
age 68 (table 18).
The retirem ent ages specified in all 75 plans studied are shown
in table 19.
TA B L E 17 o— P en sion plans with co m p u lso r y and autom atic re tire m e n t p r o v is io n s
by type o f e m p lo y e r unit
S in g le -e m p lo y e r plans

A ll plans
W ork ers

P r o v is io n

Plans

Plans

M u ltiem p loyer plans

W ork ers

W ork ers
Plans
(000*s)

(000*s)

(000*s)
A ll plans studied __________________

75

2 ,9 3 2

51

1 ,7 26

24

1,2 06

With co m p u lso r y r e t ir e m e n t _____

43

1,4 13

39

1,331

4

82

With autom atic r e t ir e m e n t ____
Without autom atic
re tire m e n t _ _________________

20

460

16

379

4

82

23

952

23

952

-

-

Without co m p u lso r y r e t ir e m e n t __

32

1 ,5 20

12

396

20

1 ,1 2 4

NOTE:

Due to rounding, sums of individual item s do not n e c e s s a r ily equal to ta ls .

TA B LE 1 8 .— P en sion plans with co m p u lso ry re tire m e n t p r o v is io n s by age s p e c ifie d
and p r o v is io n fo r a u tom atic re tire m e n t 1
Without autom atic
retirem en t

A ll plans
C o m p u lsory R etirem ent age

W ork ers
Plans

With autom atic
re tire m e n t

W ork ers
Plans

(000 *s)

W ork ers
Plans

(0 0 0 T
s)

(000 *s)

A ll plans with co m p u lso ry
re tire m e n t

43

1,413

23

952

20

460

65
66
67
68
70

25
1
1
15
1

660
21
5
717
10

17

511

8
1
1
9
1

149
21
5
275
10

y e a rs
;ars
y e a rs ... ..........
y e a rs
years
.

_ _ ___
.

.

.. _

-

6

-

442
-

1 B ased on a study of 75 pen sion plans under c o lle c t iv e b a rg a in in g , co v e rin g a p p rox im a tely 3 m illio n
w ork ers.
N OTE: Due to rou nding, sum s o f individual item s do not n e c e s s a r ily equal to ta ls .



25

Service After N orm al Retirem ent Age
To an older worker approaching norm al retirem ent age and covered by a plan
which perm its him to continue working beyond that age, the question of whether his
service will be credited during the extended period may be extrem ely important.,
He
m ay be able to
qualify for pension benefits only by being able to receive credit for
these y e a rs. For exam ple, a plan may require that a worker have 20 years of service
upon reaching norm al retirem ent age in order to qualify for b e n e fits. If this worker
reaches age 65 (the norm al retirem ent age) with le s s than 20 years * s e r v ic e , and
service cannot be credited beyond that age, he would never qualify for a benefit., On
the other hand, the worker may be able to qualify for benefits at a later age if the
plan allows him to accumulate service credits beyond age 65 .
Although the worker
who m eets the m inim um requirem ents upon reaching norm al retirem ent age is not
faced with a problem of qualifying, the ability to accrue additional credit will add to
his future pension in com e, which is also an important co n sid e ra tio n .17
Full credit for all service beyond normal retirem ent age was provided in 48
p lans, but 23 allowed no credit at all (table 19). Significantly, of the 48 crediting all
se rv ic e , 26 did not have com pulsory retirem ent p ro v isio n s. Thus, it would be possible
for nearly half of the w orkers covered by this study to rem ain at work as long as
they d esired , or were able to, with the assurance that their additional s e r v ic e , if
needed, would be credited.

Recent Modifications
Of the 75 plans included in this study, 61 were also analyzed by the Bureau
of Labor Statistics in 1952 as part of a larger study of pension plans under collective
bargaining. 18 A com parison of these 61 p lans, covering 2 ,7 3 0 ,0 0 0 w o rk e rs, between
1952 and late 1955 gives some indication of the changes companies and unions have
made in their pension a greem en ts in recent years which are of special significance to
older w orkers (table 20).
E a rly retirem ent provisions were added to 4 plans covering 5 8 ,0 0 0 w o rk e rs,
and 8 plans covering 2 8 5 ,0 0 0 w orkers were amended by making m ore liberal the early
retirem ent provisions which were in effect in 1952. Of the changes which were made
in early retirem ent provisions already in effect, alm ost all related to lowering the
service requirem ent for eligib ility. Six plans established 60 years of age and 10 years
of service as the eligibility requirem ent; fo r m e r ly , 1 plan required 30 years of s e r v ­
ic e , 3 required 25 y e a r s , and 2 required 15 years at age 60.
Concerning disability retirem ent b en efits, 6 plans covering 1 9 9 ,0 0 0 workers
added such cla u se s, and 8 plans covering 233, 000 w orkers amended existing p ro vision s.
Most plan amendments rem oved a rigid age requirement below which a worker was
ineligible to receive disability benefits.
Since 1952, vesting provisions were added to 11 plans covering 7 7 3 ,0 0 0 w orkers
and amended in 2 p lans, covering 1 2 5 ,0 0 0 w o rk e rs, to libera lize p ro v isio n s. Of those
plans which had vesting added to the agreem ent, 40 years of age with 10 years of
service was the m ost common requirem ent for achieving vesting rig h ts.
Fewer changes were made in provisions for com pulsory retirem ent than in
other benefits affecting older w o rk e rs.
Under two plans, provisions for com pulsory
retirem ent were added; under one plan this provision was deleted. One plan increased
the compulsory retirem ent age from 65 to 67.

17 Under som e plans, the m inim um requirem ents to qualify for benefits entitle
the worker to the m axim um benefits p o ssib le . A ls o , some plans s e t a m axim um s e r v ­
ice requirement for m axim um benefits.
Any service beyond the stipulated m aximum
would not increase the w o r k e r ^ pension.
18 Health, Insurance, and Pension Plans in Union Contracts, op. cit.




to

On

TABLE

19o— D is t r ib u t io n o f p e n s io n p la n s b y s p e c i f i e d n o r m a l, c o m p u l s o r y , a n d a u t o m a t ic r e t ir e m e n t a g e s a n d
b y am ou n t o f s e r v ic e c r e d it e d a fte r n o r m a l r e tir e m e n t a g e

S e r v ic e

S p e c ifie d r e tir e m e n t a g e 1
N one
N orm al

C o m p u ls o r y

W ork ers

W ork ers
( 0 0 0 *s)

(0 0 0 * s)

_
_

_
_

75
-

_

65
68
65
65
65
65
66
67
68
68
70

5
_
10
_

257
_

4
1
_

95
32
_

1

18
21
5

_
65
67
68
70
66
70
68
72
70

1
1

_

1

_

_
_

-

8
1
1

271
4
10

20

48

1 ,9 9 4

75

_

_

_

_

414
.
_
_

_
_
_

_
_
_
_
_

_

_

_

_

_

3
4

-

_

259
1 ,1 6 1
5
253
27
_
_

-

1
1

3
1

_

_

_

_

_

_

_

_

_

_

_

_

-

_

-

-

-

-

-

-

-

-

-

503

3

414

1

4
21
1
7
3

4
27
1
17
6
4
1
1
2
1
1
8
1
1

23

A l l p l a n s ___

(0 0 0 * s)
( 0 0 0 *s)

20

3
_
_
_

_

N um ber

P la n s
(0 0 0 * s)
2

60
65
70
65
65
65
65
65
65
65
65
65
65
65

W orkers

W orkers

P la n s

P la n s

P la n s

A ll s e r v ic e

U n t il a g e 7 2

U n t il a g e 6 8
W ork ers

A u to m a tic

A l l p la n s s tu d ie d

c r e d it e d a fte r n o r m a l r e t ir e m e n t a g e

_

5

_

1

259
1 ,2 5 6
5
510
441
95
32
3
19
21
5
27 1
4
10
2 ,9 3 2

F iv e
p la n s s p e c i f i e d a l o w e r n o r m a l r e t ir e m e n t a g e f o r w o m e n th a n f o r m e n .
T h is d i f f e r e n t i a l w a s 5 y e a r s in 4 c a s e s , a n d 10 y e a r s in th e o t h e r .
O n e o f t h e s e p la n s
p e r m it t e d s e r v i c e to b e a c c r u e d a f t e r a g e 60 u n til a t o t a l o f 20 y e a r s w a s a c c u m u l a t e d .
3 O n e o f th e s e p la n s
p e r m it t e d s e r v i c e t o b e a c c r u e d a f t e r n o r m a l r e t ir e m e n t u n til a to t a l o f 30 y e a r s w a s a c c u m u la t e d .
4 T w o o f th e s e p la n s
p e r m it t e d s e r v i c e t o b e c r e d it e d a f t e r n o r m a l r e t ir e m e n t u n til a to ta l o f 30 y e a r s w a s a c c u m u l a t e d .
8 T h r e e o f t h e s e p la n s p r o v i d e d th a t w o r k e r s m a y a c c u m u la t e c r e d i t e d s e r v i c e u n til a g e 6 8 o r a s t ip u la t e d n u m b e r o f y e a r s o f c r e d it e d s e r v i c e .
The
a m o u n t s o f c r e d i t e d s e r v i c e w e r e 15 y e a r s i n 1 c a s e , 2 5 y e a r s * s e r v i c e i n t h e o t h e r 2 c a s e s .
NOTE:




D ue to r o u n d in g ,

s u m s o f in d iv id u a l ite m s d o n o t n e c e s s a r i l y e q u a l t o t a l s .

TABLE

2 0 . — M o d i f i c a t i o n s in 6 l

M o d i f i c a t io n
A l l p l a n s __________________________________________________________
E a r l y re tire m e n t:
E a r l y r e t ir e m e n t ad d ed
Q u a l if y i n g a g e r e d u c e d .....
Q u a l if y i n g s e r v i c e r e d u c e d ________________________
No chang e
_ ___ _
D is a b ilit y r e t ir e m e n t : 1
D i s a b i l i t y r e t i r e m e n t a d d e d ____
Q u a l if y i n g a g e r e d u c e d
Q u a l if y i n g s e r v i c e r e d u c e d
. ..............
N o chang e
__
_ ___________

F i g u r e s a r e n o n a d d itiv e ; 2 p la n s m a d e

s e le c t e d p e n s io n p la n s ,

195 2 to la te

1955

M o d i f i c a t io n

P la n s

P la n s

61
4
2

6
49

6
6
4
47

V e s t in g :
V e s t in g p r o v i s i o n a d d e d
V e s t in g p r o v i s i o n l i b e r a l i z e d ............................. .
N o c h a n g e ______________________ _________________________
C o m p u ls o ry r e t ir e m e n t :
C o m p u l s o r y r e t i r e m e n t p r o v i s i o n a d d e d ___
C o m p u ls o ry r e t ir e m e n t p r o v is io n
e li m in a t e d
....... ..........................
A g e o f c o m p u ls o ry r e t ir e m e n t r a is e d
N o chang e

2 changes each

11
2
48
2

1
1
57

27

Three plans in the current study which provided different retirem ent ages for
men and women in 1952 were amended to provide one normal retirem ent age common
to all employee So
This com parison of 1952 and 1955 plans does not, of co u rse , take into account
the introduction of vesting and early retirem ent in the steel industry in August 1 9 5 6 „1
9
The U , S. Steel C orp 0 and the United Steelworkers of A m erica agreed to the inclusion
of a vesting provision which enables w orkers age 40 or over with 15 years of service
to qualify for a deferred pension if their service is broken by layoff or permanent
shutdown.
The early retirem ent provision p erm its a w ork er, at his own volition, to
retire at age 60 with 15 years of service and receive either an im m ediate reduced
annuity or a deferred pension at age 65 in the full amount based on his service to date
of actual retirem en t.
The Uo S. Steel plan has no provision for com pulsory or automatic retirem en t.

19 This sum m ary is based on the text of the U . S, Steel agreem ent as published
by the Bureau of National A ffa ir s , I n c ,, August 6 , 1956,




☆ U. S. GOVERNMENT PRINTING OFFICE : 1956 O - 404264


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102