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8 6 t h C o n g r e s s , 1 st S e s s io n
P a r t
I .
H o u se D ocum ent N o . 1 7 7
V e stin g
P r o v isio n s
fo r
P a rt
H .
E a rly
I n v o lu n ta r y
a n d
R e q u ir e m e n ts
R e tir e m e n t
R e tir e m e n t
P ro v isio n s
L a te
Bulletin No. 1259
U N ITED STA TES D EPA RTM EN T OF LA BO R
James P. Mitchell, Secretary
BUREAU
OF
LABOR
STATISTICS
E w a n Clagwe, Commissioner
1958
PENSION PLANS
UNDER COLLECTIVE BARGAINING
Part I. Vesting Provisions and Requirements
for Early Retirement
Part 1L Involuntary Retirement Provisions
Late 1958
Bulletin No. 1259
J u ly 1959
UN ITED STA TES DEPARTM ENT OF LABO R
James P. Mitchell, Secretary
BUREAU OF LABOR STATISTICS
Ewan Clague, Commissioner
For sale by tbe Superintendent of Documents, U.S. Government Printing Office, Washington 25, D.C. - Price 25 cents
Preface
The principal features of vesting, involuntary re
tirement, and related provisions of 300 selected pension
plans under collective bargaining are analyzed in this bul
letin— the first in a new series of pension plan studies.
Subsequent studies will cover the types and amounts of
benefits, survivor options, death benefits, and adminis
trative procedures.
The 300 plans studied ranged in coverage from
a thousand to several hundred thousand workers. In total,
approximately 4.9 million workers under collective bar
gaining were covered, or more than half of the estimated
number of workers covered by all pension plans under
collective bargaining in the United States.
The study was conducted and this bulletin was
prepared in the Bureau*s Division of Wages and Indus
trial Relations by Walter W. Kolodrubetz and Harry L.
Levin under the direction of Joseph W. Bloch.
iii
Contents
P age
P a rt I. V estin g p r o v is io n s and re q u irem en ts fo r e a rly r e t ir e m e n t ----------------1
Scope of study ___________________________________________________________________
2
P r e v a le n c e o f vestin g -----------------------------------------------------------------------------------------4
T ypes o f vestin g p r o v is io n s ------------------------------------------------------------------------------5
R eq u irem en ts fo r vestin g ______________________________________________________
6
P r e p a rticip a tio n s e r v ic e ____________________________________________________
6
M inim um req u ire m e n ts fo r d e fe r r e d fu ll vesting -------------------------------------7
M inim um req u ire m e n ts fo r d e fe r r e d graded v e s t i n g --------------------------------9
Other re q u ire m e n ts ___________________________________________________________
10
B en efits payable under vestin g p ro v is io n s ---------------------------------------------------------10
R eturn o f w o r k e r c o n t r ib u t io n s -----------------------4--------------------------------------------------12
P r e v a le n c e o f e a r ly re tire m e n t _________________________________________________
12
R e q u irem en ts fo r e a rly re tire m e n t _____________________________________________
13
15
P r o s p e c t s o f vestin g o r e a rly re tirem en t fo r the young w o rk e r -----------------P o r ta b ility under m u ltie m p lo y e r plans __________________________________________
17
T ypes of m u ltie m p lo y e r plans ________________________________________________
17
Chart: Earliest age at which a worker hired at age 25 can expect to be co me
fully vested or qualify for early retirement_______________________
16
Tables:
1.
2.
3.
4;
5.
6.
7.
8.
9p
10.
11.
12.
13.
Distribution of plans studied by workers covered and
method of financing _______________________________________________
Distribution of plans studied by industry group, method
of financing, and type of bargaining unit___________________________
Provisions for vesting in selected pension plans under
collective bargaining, by method of financing and type
of bargaining unit ________________________________________________
Preparticipation requirements not credited as service
for vesting________________________________________________________
M i n i m u m requirements for deferred full vesting ____________________
M i n i m u m age and service requirements for deferred
full vesting _______________________________________________________
Deferred graded vesting provisions in selected pension plans _______
Conditions under which vesting is permitted ________________________
Ag e at which benefits are payable under vesting provisions
by method of financing ____________________________________________
Benefit formulas applicable under vesting provisions
by method of financing ____________________________________________
Provisions for vesting and early retirement in selected pension
plans under collective bargaining, by method of financing and
type of bargaining unit ____________________________________________
M i n i m u m age and service requirements for early retirement _______
Consent necessary for early retirement by method
of financing_______________________________________________________
v
2
3
4
6
7
8
9
10
11
11
13
14
15
Contents— Continued
Page
Part II. Involuntary retirement provisions ________________________________
Scope of study __________________________________________________________
Prevalence of involuntary retirement provisions ________________________
Compulsory and automatic retirement ages _____________________________
Service credits after normal
retirement age ________________________________________________________
Prevalence of service crediting provisions __________________________
19
20
20
22
24
26
Tables:
14. Provisions for involuntary retirement in selected pension
plans under collective bargaining by industry group _______________
15. Provisions for involuntary retirement in selected pension
plans under collective bargaining, by method of financing
and type of bargaining unit________________________________________
16. Normal, compulsory, and automatic retirement ages in
selected pension plans under collective bargaining_________________
17. N o r m a l and involuntary retirement ages by service
credited after normal retirement age, in selected
pension plans under collective bargaining __________________________
21
22
23
27
Appendix:
Table:
Vesting and early retirement provisions in pension
plans studied by industry___________________________________________
vi
29
Pension Plans Under Collective Bargaining, Late 1958
Part I. Vesting Provisions and Requirements for Early Retirement
A worker w h o is building up pension credits under a private pension plan
need not, in all cases, wait until the normal retirement age (usually age 65) in
order to realize his equity in the plan. A pension plan m a y contain one or m o r e
of three methods of safeguarding the worker*s equity should he be unable, for
reasons other than total disability, 1 to continue in a particular employment until
he reaches the normal retirement age— vesting, early retirement, and portable
pension credits (as under multiemployer plans). In the absence of such provi
sions in the pension plan, or if the worker cannot qualify, he loses all of his
accumulated credits in a pension upon loss of his job. E a ch of these methods,
in different degrees, m a y have significant implications on the cost of pension
plans and the mobility of workers.
Vesting is defined as a guarantee to the worker of a right or equity in
a pension plan based on all or part of the employer*s contributions m a d e in the
worker*s behalf (in terms of accrued pension benefits), should his employment
be terminated before he attains eligibility for regular retirement benefits. 2 The
vested right typically assures the worker a future retirement benefit, to c o m
m e n c e w h e n he reaches retirement age, wherever he m a y be at that time.
In
s o m e instances, vesting provisions give the worker an option to receive an i m
mediate cash benefit. In order to qualify for vesting, the worker usually must
me et specific age and/or service requirements.
The primary purpose of an early retirement provision, an older and
m o r e c o m m o n practice than vesting, is to enable workers to withdraw f r om the
labor force before normal retirement age on an assured income.
However, such
provisions m a y also be available to the worker w h o leaves and goes to w o r k for
another employer. He m a y begin receiving monthly payments immediately (usu
ally in reduced amount), or may, in so me plans, defer receiving benefits until
the normal retirement age specified in the plan. Under these circumstances,
early retirement takes on aspects of a vesting vehicle, where vesting is not
provided. Ag e and/ or service requirements must be met, and, in s o m e cases,
the qualified worker can retire early only with the consent of his employer.
Vesting is often considered a fo rm of pension insurance for the relatively
young worker (who is not near to, nor thinking of retiring), for w h o m mobility
m a y still be an important asset.
O n the other hand, early retirement is c o m
mo nl y conceived as a device by which the worker, already thinking of retirement,
or ailing but not totally disabled, can hasten his departure fr om the labor force,
sometimes encouraged by his employer. In practice, however, vesting and early
retirement have m o r e in c o m m o n than these views imply. Under current plans,
as this study shows, vesting requirements are frequently such as to limit the
attainment of full vesting to middle-age workers with a substantial amount of
seniority, while early retirement m a y be available 10 or 15 years prior to normal
1 This study does not cover retirement caused by disability, which will
be discussed in a subsequent study, early I960.
2 Under contributory plans, the vested worker is invariably permitted to
withdraw his ow n contributions, with or without interest, w h e n terminated; h o w
ever, withdrawal of contributions usually entails loss of benefits purchased by
employer contributions.
2
retirement age at the worker*s option. Although the overlapping is relatively
small, in terms of m i n i m u m requirements, a description of equity safeguards
available to workers would be incomplete if it we re confined to an analysis of
vesting provisions and neglected corresponding requirements for early retirement.
The portability of pension credits, the third device for protecting the
worker*s equity in a pension plan, is virtually restricted to multiemployer plans.
Under these pooled arrangements, the worker carries his pension credits f r o m
employer to employer and accumulates his credits as long as he wo rk s for an
employer covered by the plan. However, vesting and early retirement provisions,
which are not incompatible with portability, are far less c o m m o n in mu lt ie m
ployer than in single employer plans. In their absence, the w o r k e r 1s equity is
not protected if he chooses, or is compelled to, seek employment outside the
shelter of the employer participants in the pension plan. In s o m e cases, a re
ciprocal arrangement a m o n g separate plans m a y extend this area of coverage.
Although not a substitute for early retirement privileges, portability of pension
credits probably accomplishes as m u c h as vesting, if the worker remains in the
labor market covered by the plan for his full working life.
Scope of Study
Fo r this study, 3 00 selected pension plans under collective bargaining,
in effect in late 1958 were analyzed. 3 All plans covered 1, 000 or m o r e workers.
Other considerations in the selection of the sample were union involved, type of
bargaining unit, industry representation, type of plan, and geographical location.
These plans ranged in coverage f r o m 1, 000 to 100, 000 or m o r e wo rkers— totaling
approximately 4. 9 million workers under collective bargaining ag reements4 or
m o r e than half of the estimated coverage of all pension plans under collective
bargaining in the United States (table 1).
T A B L E 1.
Distribution of plans studied by workers covered and met h o d of financing
,( W o r k e ^ £ ^ in J b h o u 8 ^ n d ^ )
All plans
Noncontributory
Contributory
W o r k e r s covered
N u m b e r Workers
Plans
Workers
Plans
Workers
All plans studied --- ----------------
300
4,909.8
249
4,122.7
51
787. 1
1,000 and under 2, 000 w o r k e r s ----2,000 and under 3, 000 w o r k e r s ----3, 000 and under 4, 000 w o r k e r s ----4, 000 and under 5, 000 w o r k e r s ----5, 000 and under 7, 500 w o r k e r s ----7, 500 and under 10, 000 w o r k e r s ---10,000 and under 15,000 w o r k e r s --15, 000 and under 25, 000 w o r k e r s --25,000 and under 50,000 w o r k e r s -- 50, 000 and under 100, 000 w o r k e r s -100,000 workers and o v e r -----------
52
35
45
17
28
24
30
27
22
8
12
73. 0
82.9
147. 1
74. 7
167.3
198.2
343. 7
488. 8
723.0
551. 1
2,060.0
41
27
40
14
23
21
25
20
20
8
10
58.2
63. 1
131.0
61.4
137. 7
173. 7
282.9
368.4
651.2
551.1
1,644.0
11
8
5
3
5
3
5
7
2
14.8
19. 8
16. 1
13.3
29.6
24.5
60. 8
120.4
71.8
416.0
-
2
3 These plans included those established for the first time as the result
of collective bargaining and plans established originally by the employer or the
union but since brought within the scope of the collective bargaining agreement,
at least to the extent that the agreement established employer responsibility to
continue or provide certain benefits.
4 M a n y plans were extended uniformly to cover workers outside the scope
of the collective bargaining agreement. However, the coverage used in this study
represents only the n u m b e r of workers under collective bargaining agreements
covered by the plans.
3
All major industries (excluding railroads and airlines) were represented
in the sample (table 2). About 3 out of 4 of the plans (229) were in manufacturing
industries and covered about 3.4 million workers.
Seventy-one plans were in
nonmanufacturing and covered approximately 1. 5 million workers. Sixty-nine
plans were established on a multiemployer basis; these plans covered m o r e than
a third of all workers in the study.
Fifty-one plans we re financed by both the
employer and the worker (contributory plans).
The remaining 249 plans were
financed entirely by the employer (noncontributory plans), 5 and covered almost
85 percent of all workers in the study.
TABLE 2.
D istr ib u tio n of p la n s stu d ie d b y in d u str y grou p , m eth o d of fin a n cin g ,
and typ e of b a r g a in in g u n it
(W o rk ers in th o u sa n d s)
All plans
Industry group
All industries — ----------------M a n u f a c t u r i n g ------- -------F o o d and kindred p r o d u c t s ------Tobacco m a n u f a c t u r e s -------- -Textile mill products----------- —
Apparel and other finished
p r o d u c t s ------------------- --L u m b e r and w o o d products,
except furniture — -------------Furniture and fixtures — ---------Pa p e r and allied products ------- ~
Printing, publishing, and
allied indust r i e s--------------Chemicals and allied products --Petroleum refining and related
industries------ ---------------Rubber and miscellaneous
elastics products — -------------Leather and leather p r o d u c t s ----Stone, clay, and glass products — r~
P r i m a r y metal industries -------Fabricated metal p r o d u c t s ------Machinery, except electrical----Electrical machinery, equipment,
and supp l i e s----- ---- -•-------Transportation e q u i p m e n t ------ —
Instruments and related
p r o d u c t s ------ --- -------------Miscellaneous manufacturing
industries ----------------------N o n m a n u f a c t u r i n g ----- ------Mining, crude petroleum, and
natural gas p r o d u c t i o n --------C o n s t r u c t i o n -------- -- --- ----Transportation1 ----------------Communications ---------- ------Utilities: Electric and gas — — --Wholesale and retail t r a d e ------Hotels and r estaurants----------Services --- - — ..— ■ ■■ .... ..
.
Miscellaneous nonmanufacturing
industries....... .... .........
Nurtiber
Workers
Single
employer
WorkPlans
ers
---- ftm ~ —
e m ployer
WorkPlans
ers
300
4,909. 8
231
3,048.9
69
1,860.9
229
3,393.8
197 2,723.6
32
670.2
17
3
8
194.9
27. 5
40. 3
12
3
6
80. 1
27. 5
17. 7
5
114. 8
-
-
2
9
431. 7
1
1.5
3
4
9
25.3
39. 0
50.3
2
1
8
5
13
15.2
131. 1
9
Non
Contributory
contributory
WorkWorkPlans
Plans
ers
ers
4,122.7
51
787. 1
194 2,991.7
35
402. 1
6
27.2
249
167. 7
27. 5
31.3
-
22. 6
11
3
7
8
430.2
9
431. 7
-
14. 3
2. 0
45. 8
1
3
1
11.0
37. 0
4.5
3
4
5
25.3
39. 0
19. 7
-
-
-
-
4
30. 6
1
13
3.9
131. 1
4
-
11.3
-
5
12
15.2
127. 7
1
3.4
83.9
9
83.9
-
-
1
1. 1
8
82.8
8
4
10
33
13
28
107. 7
40. 8
73. 8
592. 7
115.3
187. 5
8
3
10
33
13
27
107. 7
33.5
73. 8
592. 7
115. 3
181.0
1
-
7. 3
6.5
8
4
10
31
13
26
107. 7
40. 8
73.8
564. 8
115. 3
168.9
2
2
27.9
18.6
16
24
319. 3
862.3
14
24
312. 4
862.3
2
-
6.9
-
11
20
166.3
816. 3
5
4
153.0
46.0
4
20.3
4
20. 3
-
-
2
16. 7
2
3.6
-
1
1
-
9.0
-
-
9
34.9
5
16. 8
4
18. 1
9
34.9
-
71
1,516.0
34
325. 3
37
1,190.7
55
1,131.0
16
385.0
6
12
17
4
14
8
2
4
231.6
416. 8
470. 8
171.6
62. 0
56. 7
43.9
33.6
4
10
4
14
21.6
49. 1
171.6
62.0
2
12
7
210.0
416.8
421.7
228.0
116. 8
437.4
171. 6
35.0
56. 7
43.9
33. 6
1
1
6
3.6
300. 0
33.4
4
29.0
2
8. 0
-
-
-
-
-
-
21.0
-
-
8
2
4
56. 7
43.9
33. 6
5
11
11
4
8
8
2
4
2
8.0
2
-
6
-
-
27.0
-
-
-
-
-
2
-
21.0
1 E x c lu d e s r a ilr o a d and a ir lin e in d u s t r ie s ,
* S o m e plans gave the worker an option to contribute to a supplementary
plan to build up additional pension benefits. In these cases, only the basic non
contributory plan w a s analyzed.
4
T h e v e s tin g p r o v i s io n s o f the s e le c t e d p e n s io n p la n s w e r e a n a ly z e d in
d e t a il, in c lu d in g t y p e s o f p r o v i s i o n s , m in im u m r e q u ir e m e n t s f o r b e n e f it s , and
the b e n e fit f o r m u la s a p p li c a b l e .
M in im u m r e q u ir e m e n t s f o r e a r l y r e t ir e m e n t
w e r e a l s o a n a l y z e d .6 In a d d itio n , the s ig n ific a n c e o f t r a n s fe r a b il it y o f p e n s io n
c r e d i t s u n d er m u lt ie m p lo y e r p la n s and its r e la t io n to v e s tin g p r o v i s i o n s w e r e
e x a m in e d .
A n e a r l i e r B u r e a u stu dy o f 300 p e n s io n p la n s in e f f e c t in 1952 7 p r o
v id e d a b a s is f o r a lim it e d e v a lu a tio n o f m a jo r t r e n d s o v e r the p a s t 6 y e a r s .
O f th e s e p la n s , 219 w e r e in c lu d e d in the p r e s e n t stu d y .
T h e s u b s titu tio n o f
81 p la n s w a s o c c a s i o n e d b y ( l ) e lim in a t io n o f p la n s c o v e r i n g f e w e r than a th o u sa n d
w o r k e r s ; (2 ) m e r g e r s , c o m p a n ie s g o in g out o f b u s i n e s s , o r p la n s t e r m in a t e d ; and
(3 ) la c k o f c u r r e n t in fo r m a t io n in s o m e c a s e s .
P r e v a le n c e o f V e s t in g
V e s t in g p r o v i s io n s w e r e in c lu d e d in 174, o r a lm o s t 3 out o f 5 plains
(ta b le 3 ).
O f the 231 s in g le e m p lo y e r p la n s s tu d ie d , m o r e than t w o - t h i r d s (1 6 2 )
c o n ta in e d v e s t in g p r o v i s i o n s , c o m p a r e d w ith 12 o f the 69 m u lt ie m p lo y e r p la n s .
A b o u t 4 out o f 5 c o n t r ib u t o r y p la n s v e s te d in the q u a lifie d w o r k e r a ll o r p a r t
o f the e m p l o y e e s c o n tr ib u tio n , 8 and s lig h tly m o r e than h a lf o f the 249 n o n c o n
t r ib u t o r y p la n s c o n ta in e d s u ch p r o v i s i o n s . 9
T A B L E 3.
P r o v i s i o n s f o r v e s t i n g in s e l e c t e d p e n sio n plans under c o l l e c t i v e b arg a in in g ,
by m eth o d of fina n cin g and type of b a rg a in in g unit
( W o r k e r s in thousands)
Nonc o n t r ib u t o r v
N u m W o r k P la n s W orkb er
ers
ers
A l l plans
V esting p rovisions
C ontr ibutory
P la n s
Work
ers
Sixig le
Mu:Itiemp] o v e r
emp ilover
W ork
Work
P lans
P lan s
ers
ers
A l l plan s stu d ied _________________
300
4,909.8
249
4, 1 2 2 . 7
51
787. 1
2 3 1 3, 0 4 8 . 9
69 1, 8 6 0 . 9
With v e s t i n g p r o v i s i o n s _________
D e f e r r e d full _________________
D e f e r r e d g r a d e d ______________
I m m e d i a t e full ________________
174
154
19
1
?, 7 8 0 . 9
2,335.8
441. 7
3. 4
131 2, 3 2 1 . 7
118 1 ,9 4 5 . 5
13
376. 2
-
43
36
6
1
459.
390.
65.
3.
162 2 , 5 2 5 . 3
1 4 4 2, 2 6 6 . 3
17
255. 6
3. 4
1
12
10
2
-
Without v e s t i n g p r o v i s i o n s ______
1 126
2, 1 2 8 . 9
118
1,801. 0
8
2
3
5
4
327. 9
69
523. 6
255. 6
69. 5
1 86. 1
-
57 1 , 6 0 5 . 3
1 In clu d es 3 p lan s, c o v e r i n g 15, 3 0 0 w o r k e r s , in w h ich the w o r k e r w a s gran ted only a c a s h b en efit upon
t e r m in a t i o n a f te r fu l f i l l i n g s p e c i f i e d r e q u i r e m e n t s . S ee p. 5 for d i s c u s s i o n of t h e s e p la n s.
A s ig n ific a n t i n c r e a s e in the p r e v a le n c e o f v e s tin g p r o v i s io n s in c o l
l e c t i v e l y b a r g a in e d p la n s w a s r e v e a le d b y th e s e f i g u r e s .
In th e 1952 stu d y ,
o n ly 25 p e r c e n t o f 300 p la n s s tu d ie d c o n ta in e d v e s tin g p r o v i s i o n s ; and l e s s than
10 p e r c e n t o f the n o n c o n t r ib u t o r y p la n s p r o v id e d f o r v e s t in g . P r o m in e n t a m o n g
6 S u b seq u en t s tu d ie s w i ll d e a l w ith b e n e fit s p a y a b le u n d er e a r l y r e t ir e m e n t
p r o v i s i o n s and w ith d is a b ilit y r e t ir e m e n t , w h ic h a r e n ot c o v e r e d in th is stu d y .
7 P e n s io n P la n s U n d er C o ll e c t i v e B a r g a in in g , BL.S B u ll. 1147 (1 9 5 3 ).
8 R e tu r n o f th e w o r k e r 1s c o n t r ib u t io n s is d is c u s s e d on p. 12.
9 A ta b le w ith th e d is t r ib u t io n o f v e s tin g and e a r l y r e t ir e m e n t p r o v i s io n s
b y in d u s tr y g r o u p in the 300 p la n s s tu d ie d is sh ow n in th e a p p e n d ix .
5
th o s e a d o p tin g v e s tin g s in c e
a g r e e m e n t s w ith the U n ited
r e s p e c t i v e l y . 10
1952 w e r e a u t o m o b ile and b a s i c s t e e l c o m p a n ie s , in
A u t o m o b ile W o r k e r s and the U n ite d S t e e lw o r k e r s ,
T y p e s o f V e s t in g P r o v i s i o n s
O f the 174
v id e d f o r d e f e r r e d
v e s tin g (ta b le 3 ).
tio n o f th e to ta l in
p la n s in the p r e s e n t stu dy w ith v e s tin g p r o v i s i o n s , 154 p r o
fu ll v e s t in g , 19 d e f e r r e d g r a d e d v e s t in g , and 1 im m e d ia t e fu ll
D e f e r r e d fu ll v e s tin g c o n s titu te d a s o m e w h a t l a r g e r p r o p o r
th is stu d y than in the 1952 stu d y .
U n d er d e f e r r e d fu ll v e s tin g , the w o r k e r r e t a in s a rig h t to a ll a c c r u e d
b e n e fit s i f he i s t e r m in a t e d a ft e r he a tta in s a s p e c if ie d a g e a n d /o r a f t e r he c o m
p le t e s a d e s ig n a te d p e r i o d o f s e r v i c e o r p a r t ic ip a t io n in the p la n . F o r e x a m p le ,
on e p la n state s th at:
A n e m p lo y e e . . . w h o , upon t e r m in a t io n o f e m p lo y m e n t h a s
a tta in e d the a g e o f 40 and h a s 10 y e a r s o r m o r e o f c o m p a n y
s e r v i c e c r e d i t , i s e lig ib le f o r a p e n s io n b e n e fit . . . w ith p a y
m e n ts s ta r tin g upon r e c e ip t o f w r itt e n r e q u e s t o f s a id e m p lo y e e
to the c o m p a n y a t o r a ft e r he a tta in s a g e 6 5.
U n d er d e f e r r e d g r a d e d v e s t in g , the w o r k e r a c q u i r e s a r ig h t to a c e r t a in
p e r c e n t a g e o f a c c r u e d b e n e fit s w h en he m e e t s s p e c if ie d r e q u ir e m e n t s . T h is p e r
ce n ta g e i n c r e a s e s a s a d d itio n a l r e q u ir e m e n t s a r e f u l f il le d , u n til the w o r k e r b e
c o m e s fu lly v e s t e d .
T o i ll u s t r a t e , a p la n m a y r e q u ir e 10 y e a r s o f s e r v i c e f o r
the w o r k e r to g a in v e s t e d r ig h ts to 50 p e r c e n t o f a c c r u e d b e n e f it s ; an a d d itio n a l
10 p e r c e n t i s v e s t e d f o r e a c h y e a r o f s e r v i c e t h e r e a f t e r , u ntil the w o r k e r is
fu lly v e s t e d a ft e r 15 y e a r s o f s e r v i c e .
In c o n t r a s t w ith th e s e m e th o d s o f d e f e r r i n g an e q u ity o r rig h t in e m p lo y e r
c o n t r ib u t io n s u n til m in im u m a g e a n d /o r s e r v i c e r e q u ir e m e n t s h a v e b e e n f u l f il le d ,
u n d er im m e d ia t e fu ll v e s tin g the w o r k e r s e c u r e s a v e s t e d rig h t a s s o o n a s he is
c o v e r e d b y the p e n s io n p la n . A p r e p a r t ic ip a t io n p e r io d o f e m p lo y m e n t m a y , h o w
e v e r , be r e q u ir e d b e f o r e the w o r k e r i s c o v e r e d b y the p e n s io n p la n ; in the one
p la n p r o v id in g im m e d ia te fu ll v e s tin g fou n d in th is stu d y , t h e r e w a s no su ch
r e q u ir e m e n t .
T h r e e p la n s c o v e r i n g 15, 300 w o r k e r s p r o v id e d o n ly f o r the p a y m e n t o f
im m e d ia te c a s h b e n e f it s to w o r k e r s w h o a r e t e r m in a t e d a ft e r h a v in g m e t s p e c if ie d
r e q u ir e m e n t s .
F o r p u r p o s e s o f th is stu d y , th e s e p la n s w e r e n ot c o n s i d e r e d a s
h a v in g v e s tin g p r o v i s i o n s , s in c e th e r e w e r e n o p r o v i s i o n s f o r e v e n tu a l r e t ir e m e n t
b e n e fit s f o r the d is p la c e d w o r k e r . E x c e p t f o r the fa c t that th e s e p r o v i s i o n s w e r e
i n c o r p o r a t e d in to p e n s io n p la n s , th e y r e s e m b l e , b o th in t e r m s o f r e q u ir e m e n t s and
in l e v e l o f b e n e fit s p a id , d i s m i s s a l o r s e v e r a n c e a llo w a n c e s o f the ty p e stip u la te d
in c o l l e c t i v e b a r g a in in g a g r e e m e n t s . 11 In the s t e e l in d u s tr y , f o r e x a m p le , b o th
v e s tin g and s e v e r a n c e a llo w a n c e s a r e p r o v id e d u n d e r u n ion a g r e e m e n t s .
10 F o r d e t a ils o f in d iv id u a l p la n s , s e e D ig e s t o f O n e -H u n d r e d S e le c t e d P e n
s io n 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 , W in te r 1 9 5 7 -5 8 , B L S B u ll. 1232 (1 9 5 8 ).
11 See C o l l e c t i v e B a r g a in in g C la u s e s :
D i s m i s s a l P a y , BL.S B u ll. 1216
(1 9 5 7 ).
6
R e q u ir e m e n t s f o r V e s tin g
T h e e m p h a s is on a g e and s e r v i c e , w h ic h a r e t y p i c a ll y k e y e le m e n t s in
p e n s io n p la n s , is q u ite a p p a r e n t in v e s tin g p r o v i s i o n s . A g e a n d , m o r e p a r t ic u
l a r l y , s e r v i c e r e q u ir e m e n t s a r e r e s t r i c t i v e d e v ic e s d e s ig n e d to s e r v e s e v e r a l
p u r p o s e s , not the le a s t o f w h ic h is r e d u c in g the c o s t o f v e s t in g .
In s o m e p e n s io n p la n s , the c o n c e p t o f le n g th o f p la n m e m b e r s h ip r a th e r
than le n g th o f s e r v i c e is u s e d . T h is s u b s titu tio n h a s s ig n if ic a n c e f o r the p r e s e n t
stu dy w h en the w o r k e r is not c o v e r e d b y the p la n im m e d ia t e ly u pon h ir e o r
s h o r t ly t h e r e a f t e r , but m u s t s e r v e a p r e p a r t ic ip a t io n p e r i o d w h ich m a y ra n g e up
to 5 y e a r s .
T h is p r e p a r t ic ip a t io n p e r io d , w h e r e r e q u ir e d , m u s t b e ta k e n in to
a c c o u n t in e v a lu a tin g s e r v i c e r e q u ir e m e n t s o f v e s tin g p r o v i s i o n s . 12
P r e p a r t ic ip a t i o n S e r v i c e . — O f the 300 p la n s s tu d ie d , 73 e s t a b lis h e d p r e
p a r t ic ip a t io n r e q u ir e m e n t s w h ic h in m o s t c a s e s
w ith h e ld p e n s io n c o v e r a g e f r o m
n e w ly h ir e d w o r k e r s . O f th e s e 73 p la n s , 61 had v e s tin g p r o v i s i o n s .
In 26 o f the
61 p la n s , th e p r e p a r t ic ip a t io n s e r v i c e c o u ld be co u n te d in d e t e r m in in g e l ig i b i l it y
f o r v e s t in g , b u t in 35 p la n s o n ly p la n m e m b e r s h ip s e r v i c e c o u ld be c r e d it e d .
T h e p r e p a r t ic ip a t io n r e q u ir e m e n t s o f th e s e 35 p la n s a r e sh ow n in ta b le 4 .
O f the 35 p la n s , 16 e s t a b lis h e d a m in im u m a g e r e q u ir e m e n t f o r p a r
t ic ip a t io n , o n ly 2 o f w h ic h e x c e e d e d a g e 3 0 .
A l l but th r e e s p e c if ie d s e r v i c e
r e q u ir e m e n t s , o f f r o m 1 to 5 y e a r s .
S e v e n o f the 35 p la n s p r o v id e d d e f e r r e d
TA BLE 4.
Preparticipation requirem ents not credited as service for v e stin g 1
(W orkers in thousands)
Minimum age requirem ents
Minimum service
requirem ents
Plans with preparticipation
requirem ents not credited
for ve s ting * ------------------------N o n e -----------------------------------1 year of s e r v i c e --------------------2 y ears of s e r v ic e -------------------3 y ears of service ------------------5 y ears of s e r v i c e ------ -------- ---
All plans
Num Worke rs
ber
35
3
14
4
7
7
Age 35
Age 25
Age 30
None
Work-! Plans W ork-1 Plans Work-" Plans Work
Plans e rs ;
ers
ers
e rs
284 .4
19
12.5
73.4
43. 8
103.9
50.8
_
11
1
5
2
135.2
63.6
16.4
45. 7
9 .5
6
32
1
-
1
4Z
36.2
6.0
5.8
•5 .4
19.0
8
1
2
2
1
2
101.2
2
6.5
4 .0
17.4
52. 8
2 0 .5
_
-
11.8
-
1
10.0
1
1.8
-
-
1 B ased on a study of 300 selected pension plans under collective bargaining covering approxim ately
4,910,000 w orkers.
* Preparticipation requirem ents were found in 73 of the plans studied, covering 634, 700 w orkers.
Of these, 12 plans covering 38,400 w orkers did not provide for vesting; 26 plans covering 311,900 w orkers
provided vesting but credited the worker with preparticipation years of service for purposes of determining
eligibility; and the remaining 35 plans are analyzed in this table. Of these 35 plans, 28 provided deferred
full and 7 deferred graded vesting.
3 1 plan provided a minimum requirem ent of age 21.
4 1 plan provided an alternative requirem ent of age 35 and 1 year of se rv ice .
12
In p la n s w ith p r e p a r t ic ip a t io n r e q u ir e m e n t s , su ch s e r v i c e i s not u s u
a lly u s e d f o r c o m p u tin g a c c r u e d b e n e f i t s , w h e th e r o r n ot it co u n ts t o w a r d d e t e r
m in in g e l ig i b i l it y f o r b e n e f i t s .
7
g r a d e d v e s t in g ; and 2 8 p la n s p r o v id e d d e f e r r e d fu ll v e s t in g .
T o r e f l e c t to ta l
e m p lo y m e n t r e q u ir e d f o r v e s tin g u n d er th e s e 35 p la n s , t h e ir m in im u m s e r v i c e
r e q u ir e m e n t s a s p r e s e n t e d h e r e ( e x c e p t in ta b le 5 ), in c lu d e b o th the p r e p a r
t ic ip a t io n s e r v i c e and the p la n m e m b e r s h ip s e r v i c e .
M in im u m R e q u ir e m e n t s f o r D e f e r r e d F u ll V e s t in g . — T h e m in im u m r e q u ir e m e n t s s tip u la te d in th e 154 p la n s p r o v id in g d e f e r r e d fu ll v e s tin g a r e sh ow n
in ta b le 5, a s th e y w e r e e x p r e s s e d in th e p la n s — that i s , w ith o u t a d ju s tm e n ts in
the 2 8 p la n s w h ic h e x c lu d e d p r e p a r t ic ip a t io n s e r v i c e . A s w i ll b e s e e n l a t e r , the
w id e v a r ie t y o f p r o v i s i o n s , a fe a tu r e a l s o fou n d in the 1952 stu d y , r e f l e c t s , in
p a r t a t l e a s t , the w a y s in w h ic h v e s tin g r e q u ir e m e n t s m e r g e in to e a r ly r e t ir e m e n t
r e q u ir e m e n t s . T h e c o n c e n t r a t io n o f p la n s and w o r k e r s c o v e r e d in tw o c a t e g o r i e s —
a g e 4 0 a n d 10 y e a r s * s e r v i c e , and a g e 4 0 and 15 y e a r s * s e r v i c e — i s a ttr ib u ta b le
to th e in flu e n c e o f p la n s in th e a u t o m o b ile and s t e e l i n d u s t r ie s , r e s p e c t i v e l y .
TA BLE 5. Minimum requirem ents for -deferred full vesting 1
Minimum requirem ents 2
(Workers in thousands)
Plans Workers
Minimum requirem ents 2
A ll plans with deferred full vesting
154
S e r v i c e --------- ----------- ——--------5 y e a r s ------ ------------- ——-----10 y ears —------ --- --- —----------15 y e a r s ----------------------------20 y ears ---------------------------25 y ears ----------------------------
21
1
12
P a r tic ip a tio n --------------------------5 y e a r s --------- --- ----------------10 y ears —--------- ----------------15 y ears -----------------------------
13
A g e ----------------------------------- —•
Age 5 5 ---------------------------- —
1
1
5
2
1
6
4
3
Age and s e r v i c e ------------- ---------Age 40 and 10 y e a r s --------- ----Age 40 and 15 y e a r s -------------Age 45 and 10 y e a r s -------------- Age 45 and 15 y e a r s -------------Age 50 and 15 y e a r s -------------Age 50 and 20 y e a r s -------------Age 50 and 25 y e a r s -------------Age 55 and 10 y e a r s -------------Age 55 and 15 y e a r s -------------Age 55 and 25 y e a r s -------------Age 60 and 15 y ears —------------
101
Age and p a r tic ip a tio n ---- --- --- ---Age 45 and 5 y e a r s ---------------Age 45 and 10 y e a r s --------------Age 45 and 15 y e a r s -------------Age 50 and 10 years --------------Age 50 and 15 y e a r s --------------Age 50 and 20 y e a r s ---------------
8
1
2
1
2
1
1
28
49
1
5
2
5
2
1
3
3
2
2 .3 3 5 .8 Service or participation -------------25 y ears of service or 10 y ears
p a r tic ip a tio n ----------------------189. 1
7.5
125.8
42.0 Service and participation ------3.8
10 y ears of service including
10.0
5 y ears of p a r tic ip a tio n ---15 y ears of service including
9 4 .4
5 years of participation ----
66.6
18.8
9.0 A lte r n a tiv e s-----------------------------Age 45 and 10 y ears of serv ice,
6.5
or 15 y ears of s e r v i c e -----------6. 5
Age 45 and 10 y ears of serv ice,
or 20 y ears of s e r v i c e -----------1,8 3 6 .4
Age 50 and 15 y ears of service,
864. 7
or 20 y ears of s e r v i c e -----------828.0
Age 50 and 20 y ears of serv ice,
5.0
or 15 y ears of p articip atio n ----11.0
Age 45 and 5 years of p artici
4.9
pation or 10 y ears of
36. 7
p a r tic ip a tio n ----------------------23.2
Age
50 and 5 y ears of p artici
1.5
pation,
or later of age 55 or
9.3
10 years of service (age plus
47.2
service m ust equal 6 5 ) ----------4.9
37.5 O t h e r --------------------------------------15 y ears of vesting serv ice,
4 .4
where 1 year is given for each
3.8
year of service to age 40,
3.0
2 y ears for each year between
16.5
age 40 and 50, and 3 years for
4 .0
each year over age 5 0 ---- — ■■ —5.8
Plans Workers
1
3.0
1
3 .0
2
1
17. 8
16.4
1
1.4
6
148.0
1
2 .5
1
116.0
1
1.5
1
9.0
1
9.0
1
10.0
1
3.1
1
3.1
1 B ased on a study of 300 pension plans under collective bargaining covering approxim ately 4, 910,000
w orkers.
2 Service re fe rs to the period of employment, whereas participation includes period of plan m em ber
ship only. P eriods may be identical or may vary if eligibility requirem ents p rior to mem bership in the plan
are specified. (See table 4 .)
W ith the n e c e s s a r y a d ju s tm e n ts in 28 p la n s to take a c c o u n t o f p r e p a r
t ic ip a t io n r e q u ir e m e n t s , 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 f o r d e f e r r e d fu ll v e s tin g
8
r a n g e d f r o m 5 to 25 y e a r s (ta b le 6 ).
A p p r o x im a t e ly 75 p e r c e n t o f the p la n s
s p e c if ie d e it h e r 10 o r 15 y e a r s o f s e r v i c e . O n ly 6 p e r c e n t o f th e p la n s r e q u ir e d
l e s s than 10 y e a r s , w h e r e a s 14 p e r c e n t r e q u ir e d m o r e than 15 y e a r s .
TA BLE 6.
Minimum service
requirem ents a
Minimum age and service requirem ents for deferred full v e stin g 1
All plans
Minimum age requirem ents 3
None
WorkPlans
ers
Age 40
WorkPlans
ers
Num
ber
Work
ers
154
2 ,3 3 5 .8
43
445.4
77
5 y ears of service -
2
2
2
1
2
1
2
7. 5
9 .8
12.4
32.9
-
7 y ears of service 8 y ears of service 10 years of service
11 y ears of service
12 y ears of service
13 y ears of service
15 years of service
16 years of service
18 years of service
20 y ears of serv ice ■
21 y ears of service <
25 y ears of service
-
1
1
14.0
14.2
22.4
32.9
1,035.2
25.3
5.0
1.5
1
10
1
6
9.1'
2.9
167.0
5.8
80.4
All plans with deferred full
v e s t i n g --------- ----- --- ——
6 y ears of serv ice -
3
47
4
71
3
920.1
15
3
160.2
10.3
5.0
58.0
1
-
9
2
1
5
-
1
6.1
2 .9
130.3
-
10.0
Age 50
All plans with deferred full
v e s t i n g ---------- -----------5 y ears of service 6 y ears of se rv ice 7 y ears of se rv ice ~
8 y ears of se rv ice 10 y ears of service •
11 y ears of service
12 years of service
13 years of service ■
15 years of service ■
16 years of service ■
18 years of service ■
20 years of service •
21 years of service ■
25 years of service •
14
-
28
-
1,6 9 2 .7
49
-
10
27.2
-
1
4 .4
-
-
-
3
-
-
864. 7
-
-
-
828.0
-
-
Age 55
101.1
Age 45
WorkPlans
ers
8.8
-
-
-
5
-
11.0
-
-
1
3 .0
-
Age 60
64. 5
4.9
6.5
10.0
15. 0
1.5
1.5
8.9
9.3
36. 7
5.8
23.2
47.2
4.9
1
B ased on a study of 300 selected pension plans under collective bargaining covering approximately
4,910,000 w orkers.
1 For those plans which specified a period of employment to be served before participation in the plan
could begin, the minimum service requirem ent includes the preparticipation service and the required plan
m em bership serv ice. (See table 4. )
3
In a few c a se s, alternative requirem ents were specified. In each case, the one with the ea rlie st
age or no age requirement was selected.
M in im u m a g e r e q u ir e m e n t s f o r d e f e r r e d fu ll v e s tin g w e r e a ls o stip u la te d
in a lm o s t t h r e e out o f fo u r p la n s . A g e 4 0 w a s b y fa r the m o s t c o m m o n a g e at
w h ich the w o r k e r w ith the r e q u ir e d s e r v i c e b e c a m e v e s t e d .
In 24 p la n s , the
m in im u m w a s a g e 50 o r o v e r — the a g e , a s d is c u s s e d la t e r , at w h ic h e a r l y r e
t ir e m e n t p r o v i s io n s m a y a p p ly .
9
Minimum Requirements for Deferred Graded Vesting. —Amongthe 19 plans
providing deferred graded vesting, minimum age and service requirements also
varied considerably (table 7). The minimum service necessary before any part
of the employer*s contribution was vested ranged from 5 to 15 years (including
preparticipation service in seven plans which required plan membership service
for deferred graded vesting). Fifteen plans conditioned partial vesting on meeting
a requirement of 10 or more years of service. Six of the plans provided that a
specified age also must be attained.
T A B L E 7.
D e fe r r e d g ra d ed v e s tin g p r o v is io n s in s e le c t e d p e n s io n p lan s
Minimum
age
1
1
1
1
1
1
1
1
1
1
2
1
2
1
1
1
1
-
40
40
45
50
52
Minimum
y ears of
se rv ic e 2
5
Initial
percent
vested
6
8
10
10
10
25
5
45
, 25
25
5
11
25
11
13
13
15
15
10
10
5
10
15
50
50
25
50
50
50
33V3
10
50
50
Grading
Service steps
( y ea rs)
5 ....................1 ..........................
1- - ..................
/F irst 5 -------[Next 5 ---------5 ----------------1 ........... — ---'For each of
fir s t 5
F o r each of
next 5
1 — ..................
1 .........................
5 ----1 ------------ 5 ----- 1 ----- 5 ..........................
1------- - 1 _____________
(5)
Y ears of
service
for full
vesting
Additional
percent
vested
25
5
15
25
50
25
5
20
25
12
]
J
\
5
10
5
10
25
5
25
10
33V3
10
10
5
20
25
29
21
J
21
18
28
25
25
15
20
314
4 15
515
1 B a s e d on a stu d y of 3 0 0 s e le c t e d p e n sio n p la n s u n d er c o lle c t iv e b a rg a in in g c o v e r in g
a p p r o x im a te ly 4 , 9 1 0 , 0 0 0 w o r k e r s .
2 F o r th o s e p la n s w h ich s p e c ifie d a p e r io d of e m p lo y m e n t to b e s e r v e d b e fo r e p a r t i c i
p a tio n in the p lan cou ld b eg in ^th e m in im u m s e r v i c e r e q u ir e m e n t in c lu d e s the p r e p a r tic ip a tio n
s e r v i c e and the r e q u ir e d p la n m e m b e r s h ip s e r v i c e . ( S e e ta b le 4 . )
3 In th is p la n , the w o r k e r w a s 10 p e r c e n t v e s te d a t a g e 4 5 w ith 5 or m o r e y e a r s of
s e r v i c e , p lu s 10 p e r c e n t fo r e a c h a d d itio n a l y e a r of s e r v i c e t h e r e a f te r u n til
age 54.
4 In th is p la n , the w o r k e r w a s 5 0 p e r c e n t v e s te d at a g e 50 w ith
10 or m o r e
of s e r v i c e , p lu s 10 p e r c e n t fo r e a c h a d d itio n a l y e a r of s e r v i c e th e r e a f te r u n til f u lly v e s te d .
5 In th is p la n , the w o r k e r w a s 5 0 p e r c e n t v e s te d at a g e 52 w ith 15 o r m o r e y e a r s of
s e r v i c e , p lu s 5 p e r c e n t fo r e a c h y e a r h is a g e w a s o v e r 5 2 .
A w orker
a g e 62 w ith
m o r e y e a r s of s e r v i c e w a s fu lly v e s te d .
years
15 or
The methods of grading also varied widely. Among these 19 plans, the
most common types of grading were 25 or 50 percent vesting after minimum
service requirements had been fulfilled, with an additional 5 or 10 percent vested
for each subsequent year of service. Other methods were to vest accrued benefits
by more substantial increases over longer intervals.
In some plans, 'service
was not the only determinant for additional vesting. For example, in one plan,
the worker was 10 percent vested if he had 5 or more years of service at age 45.
Additional vesting was on the basis of 10 percent for each year of service after
first vesting until age 54.
No further vesting was possible after that age.
10
In 12 of the 19 plans, 20 or more years of service were required before
the worker was fully vested. In the remaining plans, the service needed for full
benefits ranged from 12 to 18 years.
Other Requirements. — In some plans, the nature of the termination or
separation was a factor in determining eligibility for vesting rights.
The pre
dominant standard in the plans studied was to permit retention of vested pension
credits in case of termination for any reason if the worker were otherwise quali
fied (table 8). However, slightly more than a fourth of the programs stipulated
conditions under which vesting would be conferred.
For example, one plan
stated that:
Any employee who shall be laid off and not recalled within
2 years, or whose employment is terminated as a result of a per
manent shutdown of a plant, department, or subdivision thereof,
and who at the end of such 2 years or the date of his termi
nation shall have reached his fortieth birthday and at such time
shall have 15 or more years of continuous service, shall be
eligible, upon making application therefor as specified herein,
to receive a deferred vested retirement pension.
T A B L E 8.
C o n d itio n s u n d er w h ic h v e s t in g is p e r m i t t e d 1
(W o r k e r s in th o u s a n d s)
P r o v is io n
P la n s
—
ers
A ll p la n s w ith v e s t i n g -----------------—----------
174
2 ,7 8 0 .9
T e r m in a te d fo r a n y r e a s o n ---------------------L a id o ff and n o t r e c a l l e d -------------------------T e r m in a te d a s r e s u l t o f p e r m a n e n t
sh u td ow n or t e c h n o lo g ic a l c h a n g e ---- -------T e r m in a te d a s r e s u l t o f p e r m a n e n t
sh u td ow n or t e c h n o lo g ic a l ch a n g e or
la id o ff and n o t r e c a l l e d ---- -------------------T e r m in a te d f o r a n y r e a s o n e x c e p t
d i s h o n e s t y ---------------—---- -------------------
125
2
2 ,0 5 2 .7
1 8 .0
1
35. 0
45
6 6 6 .8
1
8 .4
1 B a s e d on a stu d y of 3 0 0 s e l e c t e d p e n s io n p la n s u n d er 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 im a t e ly 4 , 9 1 0 , 0 0 0 w o r k e r s .
Benefits Payable Under Vesting Provisions
The vested benefit in the plans in this study was usually in the form of
an assured retirement benefit commencing at or after normal retirement age
(table 9). In the great majority of .plans in this study, normal retirement age
was 65. Thus, a substantial time interval— up to 25 years in some plans— was
possible between separation and the time the worker could begin receiving his
vested retirement benefit. However, a number of plans (almost one out of four
plans providing vesting) offered the worker a choice of either receiving the vested
benefit at an earlier age (usually early retirement age) in a reduced amount, or
11
at normal retirement age in the full amount.
This choice was most commonly
offered by contributory plans; about half of such plans provided an option. For
example, one plan provided that the worker shall:
. . . receive a deferred pension commencing at age 65 and
equal to the normal pension to which he would have been en
titled on the basis of his credited service and contributions to
the date he ceased to be a member, or a pension of the same
actuarial value, commencing at such earlier date as the mem
ber may designate, provided such date be not prior to his 55th
birthday and not less than 1 year after the date on which such
designation was made.
TABLE 9.
Age at which b en efits are payable under v estin g p ro v isio n s
by m ethod of financing 1
(W orkers in thousands)
Non
contributory
A ll plans
P ro v isio n
C ontributory
P lans
Workers
131 2 , 3 2 1 . 7
43
4 5 9 .2
1 ,9 1 6 . 8
21
124. 1
Num
b er
W orkers
A ll plans w ith v e s t i n g --------------- ------------
174
2 ,7 8 0 .9
B en efits payable at n orm al retirem en t a g e --B en efits payable at n orm al retirem en t age,
or in p rior 5-y ea r p eriod -------------------B en efits payable at n orm al retirem en t age,
or in p rior 10-y ea r p e r i o d -------------------B en efits payable at n orm al retirem en t age,
or in p rior 15-y ea r period -------------------B en efits payable at n orm al retirem en t age,
or any tim e p r i o r -----------------------------B en efits payable at n orm al retirem en t age,
or im m e d ia t e ly ---------------------------------
133
2 ,0 4 0 .9
112
P lan s
ers
5
1 8 0 .9
4
6 4 .9
1
1 1 6 .0
26
3 0 3 .4
10
1 2 8 .9
16
174. 5
2
4. 0
-
2
4 .0
3
4 0. 6
-
3
4 0 .6
5
211. 1
5
211. 1
“
"
1
B ased on a study of 300 se le c te d p en sion plans under c o lle c tiv e bargaining coverin g
ap p roxim ately 4 , 9 1 0 , 0 0 0 w o rk ers.
TABLE 10.
B en efit form u las applicable under v estin g p ro v isio n s
by m ethod of fin a n cin g 1
(W orkers in thousands)
B enefit form ula
A ll plans
Num Workb er
er s
N o n
C ontributory
contributory
Work
P lan s WorkP lans
ers
e rs
A ll plans with v e s t i n g ----------------------------
174
2 ,7 8 0 .9
131
2 ,3 2 1 .7
43
4 5 9 .2
N orm al b en efit f o r m u l a ------------------------N orm al b en efit form u la (m inim um
not a p p lic a b le ) ---------------------------------N orm al b en efit form ula (only yea rs after
age 30 u sed to c o m p u t e ) ---------------------N orm al b en efit form ula (m inim um and
supplem ent not a p p lic a b le ) -------------------N orm al b en efit form ula (only y ea rs after
age 30 u sed to com pute and m inim um
not a p p lic a b le ) ---------------------------------N orm al b en efit form ula or c a s h --------------N orm al b en efit form ula (future se r v ic e
o n ly )---------------------------------------------N orm al b en efit form ula (m inim um o n l y ) -----D ifferen t than n orm al b e n e f i t ------------------D ifferen t than n orm al b en efit or c a s h --------N orm al b en efit form ula (only y ea rs of
se r v ic e after age 2 5 ) --------------------------
129
1 ,5 1 2 .7
95
1 ,2 5 6 .2
34
2 5 6 .5
13
120. 7
6
44. 0
7
76. 7
17
744. 3
17
744. 3
-
-
2
126. 0
-
4
4
3 4 .2
191. 1
4
4
3 4 .2
1 9 1 .1
-
-
1
1
1
1
9 .0
4 .9
3. 0
2 0. 0
1
1
1
1
9 .0
4 .9
3. 0
2 0 .0
-
-
1
15. 0
1
1 5 .0
-
2
1 2 6 .0
“
1
B ased on a study of 300 s e le c te d pen sion plans under c o lle c tiv e b argaining coverin g
ap p roxim ately 4 , 9 1 0 , 000 w o rk ers.
12
The benefits ultimately payable to the terminated vested worker were to
be computed by using the normal retirement benefit formula, without modification,
by about three-fourths of the plans providing vesting (table 10). In the remaining
plans, the computation was based on a different formula or, more commonly, re
strictions were placed von the use of the normal benefit formula. For example,
in some plans, the vested pension was to be determined by the minimum benefit
formula only; in other plans, only the basic benefit formula was to be used, that
is, the minimum was not applicable. In five plans, the vested worker was offered
the choice of receiving either a deferred retirement benefit or an immediate cash
benefit. In three of these plans, separated workers who did not qualify for vesting
were paid an immediate cash benefit.
Return of Worker Contributions
In all but 1of the 51 contributory plans in this study the nonvested worker,
if separated, received his own contributions, with or without interest. In 32 of
these plans, the terminated nonvested worker had a choice of taking either his
contributions in cash or a retirement benefit that could be purchased with this
money.
Under all the contributory plans in this study with vesting (43 of the
51), the vested worker had the option of withdrawing his own contributions, with
or without interest, when terminated.
However, in all cases, withdrawal of
contributions meant loss of the benefits purchased by employer contributions.
Prevalence of Early Retirement
Among the 300 plans studied, early retirement provisions were found to
be much more prevalent than vesting provisions— 218 plans as against 174 plans.
Type of plan
Plans
W orke r s
A ll plans studied________________
300
4,909.8
All plans with early
retirement provisions
218
3, 071. 0
170
48
201
17
2, 587.0
484. 0
2, 848.7
222.3
Noncontributory plans
Contributory plans
Single employer p la n s_______
Multiemployer plans
Almost 9 out of 10 single employer plans studied contained early retire
ment provisions, whereas only a fourth of the multiemployer plans had such pro
visions. Early retirement was available under almost all contributory plans and
about two-thirds of the noncontributory plans.
Early retirement and vesting provisions were most commonly found a s
sociated with each other in the plans, with 163 plans covering about 2. 5 million
workers containing both provisions (table 11). About one out of four plans in
the study had no provision either for early retirement or vesting.
More than
two-thirds of these were multiemployer plans.
13
T A B L E 1 1 . P r o v is io n s fo r v e s tin g and e a r ly r e t ir e m e n t in s e le c t e d p e n s io n p la n s u n d er
c o lle c t iv e b a r g a in in g , b y m eth o d of fin a n c in g and type of b a r g a in in g u n i t 1
(W o rk ers in th o u sa n d s)
N on
C o n tr ib u to r y
c o n tr ib u to r y
W orkW orkN u m W orkP la n s
P la n s
ers
ers
ber
ers
A il p la n s
P r o v is io n
A ll p la n s stu d ied ----------------- -
S in g le
M u lti
e m p lo y e r
e m p lo y e r
W ork
P la n s
P la n s
ers
ers
300
4 ,9 0 9 .8
249
4 ,1 2 2 .7
51
787. 1
231
3 ,0 4 8 .9
69
1 ,8 6 0 .9
W ith p r o v is io n s fo r v e s tin g or
e a r ly r e t i r e m e n t ---------------V e s tin g and e a r ly
r e t ir e m e n t ——---------------V e s tin g o n l y -------------- ----E a r ly r e t ir e m e n t o n ly --------
229
3 ,3 4 5 . 1
181
2 ,8 6 1 . 1
48
4 8 4 .0
208
2 ,9 2 2 .9
21
4 2 2 .2
163
11
1 55
2 ,5 0 6 .8
274. 1
5 6 4 .2
120
11
50
2 ,0 4 7 . 6
274. 1
5 3 9 .4
43
5
4 5 9 .2
2 4 .8
156 2 ,4 5 4 . 1
7
7 4 .2
45
394. 6
7
4
10
52. 7
1 9 9 .9
1 6 9 .6
No p r o v is io n fo r v e s tin g or
e a r ly r e t i r e m e n t ----------------
2 71
1 ,5 6 4 . 7
68
1 ,2 6 1 .6
3
303. 1
48
1 ,4 3 8 . 7
23
126. 0
1 In clu d es 1 p la n c o v e r in g 4 , 3 0 0 w o r k e r s in w h ich the w o r k e r in a d d itio n to an e a r ly r e t ir e m e n t ,
a ls o had a v a ila b le a c a s h b e n e fit upon te r m in a tio n a fte r m e e tin g s p e c ifie d r e q u ir e m e n ts .
2 In clu d es 8 p la n s c o v e r in g 3 2 8 , 0 0 0 w o r k e r s u n d er w h ic h w o m e n cou ld r e t ir e e a r ly , and 2 p la n s c o v
e r in g 1 1 , 0 0 0 w o r k e r s u n d er w h ich the w o r k e r w a s g iv e n a c a s h b e n e fit a fte r m e e tin g s p e c ifie d r e q u ir e m e n ts .
Requirements for Early Retirement
In order to retire before the normal retirement age, the worker was
required to meet specified age and/or service requirements, as in the case of
vesting. On the whole, length-of-service requirements for early retirement were
not significantly different from those for vesting.
Fifteen years of service13
was the most common specification, and 10 and 20 years were also frequently
required (table 12). Thirty-seven plans required less than 5 years of service and
10 required none— only 1 of the plans providing vesting (that with immediate full
vesting) fell in this latter category.
On the other hand, minimum age requirements for early retirement were
generally substantially higher than for vesting (as would be expected). A ll but
17 plans stipulated age 55 or over; age 60 was established as the minimum age
for early retirement in more than half of the plans.
A requirement not found in vesting provisions was specified in 68 early
retirement plans— the worker could retire early only with the consent of, or at
the request of, his employer (table 13). Provisions of this type were presumably
designed to Reduce or control early retirement, not to bar it. What such pro
visions mean in actual practice undoubtedly varies widely among companies,
and within the same company at different times; the wording of pension plans
offers no measure of practice in this regard.
13
In plans which specified plan membership requirements in order to re
tire early, the preparticipation period has been added to plan membership service
for purposes of this analysis.
14
TA BLE 12.
Minimum age and se rv ice requirem ents for early re tire m e n t 1
(W orkers in thousands)
M i n i m u m age requirements ,3
All plans
Minimum se rv ice req u irem en ts*
A ll plans with early r e t ir e m e n t ----N one----------------------1 year of se rv ice ------2 y ears of s e r v ic e -----3 y ears of serv ice ----5 y ears of s e r v ic e -----6 y ears of s e r v ic e -----7 y ears of se rv ice -----1 0 y ears of se rv ic e ----1 1 y ears of s e r v i c e ---15 y ears of s e r v i c e ---18 y ears of s e r v i c e ---2 0 y ears of s e r v i c e ---2 1 y ears of s e r v i c e ---25 y ears of se rv ice ---30 y ears of s e r v i c e ---35 y ears of se rv ice ----
None
A g e 50
Number
Work
ers
4 218
3,071.0
10
200. 6
10
16
2
9
10
1
1
43
3
74
1
31
3
8
5
1
28.9
211.9
21.4
85. 2
107. 8
8. 8
12.4
1, 157.4
19. 7
929.5
31.8
219. 6
9.2
66. 1
153. 8
7. 5
_
1
1
1
2
4
1
5.0
3. 6
15.8
24.2
144. 5
7. 5
Plans
Workers
_
Plans
Workers
6
14. 8
1
2
1
2
-
1.0
4. 0
-
2.6
7.2
-
M i n i m u m age requirements 3
A g e 55
A g e 60
Other*
A ll plans with early retirem ent -----
79
774.8
120
2,059.7
3
21. 1
N o n e ---------------------------------------1 y ear of s e r v i c e ------------------------2 y ears of s e r v ic e -----------------------3 y ears of s e r v ic e -----------------------5 y ears of s e r v ic e -----------------------6 y ears of s e r v ic e -----------------------7 y ears of s e r v ic e -----------------------1 0 y ears of se rv ice ---------------------1 1 y ears of s e r v i c e ---------------------15 y ears of s e r v i c e ---------------------18 y ears of s e r v i c e ---------------------2 0 y ears of se rv ice ---------------------2 1 y ears of s e r v i c e ---------------------2 5 y ears of s e r v i c e -------------------30 y ears of se rv ice ---------------------35 y ears of se rv ice ------ ----------------
6
13
1
7
8
1
1
10
1
9
17
1
3
1
18. 6
91.9
16.4
67. 7
95. 6
8. 8
12.4
122. 8
1.3
123. 1
173. 6
2. 5
30. 8
9.3
2
1
1
2
32
64
1
12
2
3
-
6.6
116. 0
3.5
12.2
1,031.0
802. 0
31.8
38. 8
6. 7
11.1
-
1
1
1
-
2. 7
14.0
-
-
-
-
4.4
-
1
B ased on a study of 300 selected pension plans under collective bargaining covering approxim ately
4 ,9 1 0 ,0 0 0 w orkers.
2 F o r those plans which specified a period of employment to be served before participation in the
plan
could begin, the minimum se rv ice requirem ent includes the preparticipation se rv ice and the required plan
m em bership se rv ice .
3 In som e p lan s, alternative requirem ents were specified for each c a se , the one with the e a r lie st
age or no age requirem ent was selected. Age requirem ents were lower for women in a number of plans:
5 y ears in 6 plans covering 60,800 w o rk ers, and 1 0 y ears in 1 plan covering 2 , 9 0 0 w orkers.
4
Excludes 8 p lan s, covering 328,000 w o rk ers, in which women could re tire early . In 6 p lan s,
covering 313,500 w o rk ers, the minimum requirem ents were age 62 and 2 0 y ears of serv ice; in 1 plan,
covering 2,700 w o rk ers, the requirem ent was age 6 2 ; in the rem aining plan with 1 0 , 0 0 0 w o rk ers, the r e
quirem ents were age 62 and 5 y ears of se rv ice .
5
In these plans the minimum requirem ents were age 62, age 58 and 3 y ears of se rv ice , and age 45
and 15 y ears of se rv ice .
15
T A B L E 13.
Consent n e c e ssa r y for early retirem ent by method of fin ancin g 1
P rovision
(W orkers in thousands)
A ll plans
Noncontributory
Number W orkers Plans
Contributory
W orkers Plans
W orkers
P lan s with early r e t ir e m e n t -----------
218
3 ,0 7 1 .0
170
2, 587. 0
48
484.0
With em ployer's consent ----------- --With em ployer's consent or
r e q u e s t ------------------- ---------------At em ployer's r e q u e s t ----- ------------Mutual consent ---------------------------At w o rk e r's or em ployer's
r e q u e s t --- -------- ----- — -------------At w o rk er's r e q u e s t --------------- --------
58
522.3
34
398.3
24
124.0
9
186. 7
2 .9
5
144. 6
2 .9
4
42. 1
2
120. 7
197.2
1
1
7
142
1.2
150.4
2 ,207. 5
1
1
5
124
1.2
29. 7
2 ,0 1 0 .3
18
1
B ased on a study of 300 selected pension plans under collective bargaining co ver
ing approxim ately 4, 910, 000 w o rkers.
Prospects of Vesting or Early Retirement for the Young Worker
Age and service requirements were basic to the vesting provisions
studied; in most cases, different age and service requirements were stipulated
for early retirement.
With all these variables, it is difficult to evaluate the
significance of these provisions to the workers covered by pension plans. Yet,
under certain assumptions, a unified picture can be obtained. For this purpose,
the prospects for full vesting or early retirement, or neither, for a worker hired
at age 25 were computed for each of the 300 plans studied. All measurable
factors such as minimum age, length of service, plan membership, and pre
participation requirements were taken into account.
It was assumed that the
worker would remain in the same employment for all of his working life. The
results (purely hypothetical, it must be emphasized) are presented in the ac
companying chart.
The earliest age at which the newly hired 25-year-old worker could ex
pect to become fully vested ranged up to 62 years. In 40 percent of the 300 plans,
the worker would be fully vested by the time he reached age 45.
Before he
reached his 60th birthday, the possibility of early retirement would be available
to the worker under 32 percent of the plans.
The integration of vesting and early retirement indicated in the chart
reveals the prospects which face a 25-year-old worker in eventually realizing
the pension credits he is beginning to accumulate.
In 24 percent of the plans,
he will have to reach normal retirement age, typically 65, in the same employ
ment (or under the coverage of a multiemployer plan) to secure any return.
Prior to reaching age 55, he will have become fully vested or will have met the
requirements for early retirement in a little more than half of the plans.
16
Earliest Age at Which a Worker Hired at Age 25 Can Expect
To Become Fully Vested or Qualify for Early Retirement1
Percent of Plans Studied
Percent of Plans Studied
75
50
25
Under
Age 35
3 5 -3 9
4 0 -4 4
4 5 -4 9
5 0 -5 4
5 5 -5 9
6 0 -6 2
No
V e stin g
75
50
25
0
Age 35
Under
Age 35
R e tire m e n t
3 5 .3 9
4 0 -4 4
4 5 -4 9
5 0 -5 4
5 5 -5 9
6 0 - 6 2 N o V e stin g
o r E a rly
R e tire m e n t
Based on a study of 300 selected pension plans under collective bargaining covering
approximately 4.910,000 workers.
UNITED STATES DEPARTMENT OF LABOR
bureau o f la bo r
st a t ist ic s
2*n ^ Plans, women can expect to qualify for benefit 5 years earlier than men
Less than 1.0 percent.
^Nonje.
3
17
Portability Under Multiemployer Plans
Perhaps the ideal method of protecting pension rights of workers who
transfer from one employer to any other employer with a pension plan is to allow
them to carry their previously earned pension credits as under the Federal Social
Security program. Problems of great magnitude are posed by such an approach,
and proposals along these lines have been thus far confined chiefly to theoretical
discussions.
Yet, a limited portability of pension credits is implicit in multi
employer plans which may provide all the protection most workers under these
plans need during their working life.
parallel
ployers
number
amounts
payment
The scope of multiemployer plans tends to, but need not necessarily,
the scope of the collective bargaining agreement.
A number of em
(e. g., an association) under a single agreement with a union, or a
of employers under separate contracts, agree to contribute specified
to a pooled central fund.
For example, one agreement calls for the
of a specified percent of payroll into a pension fund:
The employer shall . . . pay . . . to the trustees . . . a sum
of money equal to 2 percent of the wages payable to the employ
ees of the employer for the preceding pay period, to be ad
ministered and expended by the trustees . . . for the purpose of
providing pensions to the members of the union employed by the
employer.
Many of these plans are in industries characterized by seasonal or irregular em
ployment, or frequent job changes, making it difficult for the worker to remain
with a single employer long enough to qualify for a pension. The multiemployer
plan provides a solution to this problem— as long as the worker remains employed
by one of the employer members, his coverage under the pension plan continues.
In addition, the only way small employers may be able to provide pensions is to
combine their resources with others.
As previously indicated, only 12 of the 69 multiemployer plans provided
for full vesting, and 17 plans provided for early retirement. Workers covered by
multiemployer plans may not have the complete protection offered by formal
vesting, nor an equal opportunity to retire early, but they do have what workers
under single employer plans lack— as long as they remain within the scope of the
pension plan they may move from one employer to another and continuously build
up credits toward retirement.
Types of Multiemployer Plans. —The scope and coverage of multiemployer
pension plans determine the latitude the worker has in changing employers and
retaining pension credits previously earned.
The plans may vary in coverage
by industry, area, and occupational group.
In the limited case, a plan may cover a specific occupational group
(craft) in a metropolitan area.
Typically, multiemployer pension plans in the
construction and printing and publishing industries cover only workers in a specific
craft in an area.
For example, in the construction industry in the New York
City area, separate pension plans have been established by the painters, car
penters, sheet-metal workers, etc., and the worker must remain in the same
craft in that area in order to retain pension credits.
18
Multiemployer pension programs have expanded in some industries beyond
the metropolitan area. In the longshore industry on the West Coast, a pension fund
has been established under a coastwide agreement between the Pacific Maritime
Association and the International Long shore me n*s and Warehousemen^ Union (ind.).
Plans have also been negotiated on a national basis covering almost all
workers in an industry. A well-known plan of this type is the United Mine
Workers Welfare and Retirement Fund in the bituminous coal industry. A similar
type of plan exists in the anthracite coal industry.
Some plans have developed which are not restricted by industry or oc
cupation. An interesting illustration is the Northwest Ohio Area Industrie sUAW Retirement Income Plan.
Negotiated by the United Automobile Workers,
the plan covers about 2, 000 workers employed by about 40 companies in a num
ber of different industries.
An even broader approach is found in the Western
Conference of Teamsters Pension Plan.
Not only can the worker move from
employer to employer in the trucking industry in an 11-State area, but he can
also move to other industries in the area where employers have agreed to con
tribute to the fund.
The right to move from one multiemployer pension plan to another en
hances the mobility of the worker and provides additional protection.
For ex
ample, reciprocity arrangements have been established among the different plans
negotiated by the Ladies1 Garment Workers (A F L -C IO ) in women’ s apparel indus
tries.
Thus, the worker who does not qualify under the requirements of one
fund can use service accumulated in the other programs to attain eligibility for
retirement benefits.
Reciprocal arrangements of this type are still uncommon.
This approach has seldom been used between pension plans established by dif
ferent unions, but one multiemployer plan negotiated by the carpenters states that:
It is understood that occasionally and from time to time, em
ployees may transfer from employment covered by this plan
to employment covered by the Teamsters Retirement Plan or
by a plan established for contributing employers to provide re
tirement benefits to supervisors, office employees and man
agement employees. It is also understood that occasionally and
from'time to time employees may transfer employment from
either of the above outlined plans to this plan, providing these
other funds agree and provide for a similar reciprocal arrange
ment with this fund, then . . . the committee shall authorize
and direct the trustee in conformity with whichever reciprocal
arrangement may exist with the applicable other fund either
to (l) transfer to the designated fund all moneys (less 4 percent for
administrative costs incurred) contributed and accumulated to
the credit of such employee, or (2) retain in the fund all moneys
contributed and accumulated to the credit of such employee, but
without loss of rights thereto so far as the payment of future
benefits to said employee as such rights accrue.
19
P ar t II.
Involuntary Retirement P r o v i s i o n s
Im p o r ta n t m ile p o s t s to w o r k e r s c o v e r e d b y p r iv a t e p e n s io n p la n s , d e p e n d
in g u p on p la n p r o v i s i o n s , a r e the a g e s at w h ich th e y m a y q u a lify f o r v e s t in g f o r
e a r l y r e t ir e m e n t and f o r n o r m a l r e t ir e m e n t ; the a g e at w h ich th ey m a y b e r e
t i r e d at the d i s c r e t i o n o f the e m p lo y e r ; and the a g e w h ich the p la n e s t a b lis h e d as
the m a x im u m l im i t to e m p lo y m e n t in the c o m p a n y . T h is stu d y d e a ls w ith the sta tu s
o f w o r k e r s at the n o r m a l r e t ir e m e n t age w h o do n o t s e e k r e t ir e m e n t — t h e ir p r o s
p e c t s f o r in v o lu n ta r y r e t ir e m e n t and a c c u m u la t io n o f a d d itio n a l p e n s io n c r e d i t s .
In v o lu n ta r y r e t ir e m e n t , as the t e r m is u s e d in th is stu d y , is r e t i r e
m e n t, w ith an an n u ity, im p o s e d u p on the w o r k e r a g a in s t h is v o lit io n , u n d e r p r o
v i s io n s o f a p e n s io n p la n . T h e c o n n o ta tio n o f c o m p u ls io n a p p lie s to the w o r k e r s
a ff e c t e d , n ot n e c e s s a r i l y to the g e n e r a l p u r p o s e o f the e m p lo y e r , o r o f the u n io n .
T h e in v o lu n ta r y a s p e c t b e a r s m o s t h e a v ily u p on the w o r k e r w h o is fu lly c a p a b le
and w illin g to w o r k , w h o is n ot p s y c h o lo g ic a l ly r e a d y f o r r e t ir e m e n t , o r w ho
n e e d s h is w a g e i n c o m e .
On the o th e r h an d , s u c h p r o v i s io n s m a y b e c o n c e iv e d
b y the e m p lo y e r as an e q u ita b le d e v ic e f o r d e a lin g w ith the p r o b le m o f s u p e r
an n u a ted w o r k e r s and f o r o r d e r l y r e p la c e m e n t o f o l d e r w o r k e r s b y y o u n g e r w o r k
ers.
In v o lu n ta r y r e t ir e m e n t , as d e fin e d in th is stu d y , a p p lie s o n ly to w o r k e r s
e l i g i b l e f o r p e n s io n b e n e f i t s , and is n ot in te n d e d to c o v e r d is c h a r g e f o r r e a s o n
o f a g e . S e v e r a l o f the p la n s s tu d ie d e x p r e s s l y w a iv e d in v o lu n ta r y r e t ir e m e n t p r o
v i s io n s f o r w o r k e r s w h o w e r e n o t q u a lifie d to r e c e i v e p e n s io n b e n e f i t s . It is p o s
s ib le th at c o m p a n ie s w h o s e p e n s io n p la n s d id n o t s p e c i f i c a l l y e x e m p t s u ch w o r k e r s
f r o m in v o lu n ta r y r e t ir e m e n t p r o v i s io n s n e v e r t h e le s s f o ll o w e d s u c h p r a c t i c e s .
T w o ty p e s o f in v o lu n ta r y r e t ir e m e n t p r o v i s i o n s , c o m p u l s o r y and a u t o
m a t ic , w e r e a n a ly z e d in th is s tu d y .
A c o m p u l s o r y r e t ir e m e n t p r o v i s io n is on e
w h ic h r e q u ir e s r e t ir e m e n t , s u b ie c t , h o w e v e r , to the c o n s e n t o r a p p r o v a l o f the
e m p lo y e r o r a d e s ig n a te d b o d y 14 f o r the c o n tin u e d e m p lo y m e n t o f w o r k e r s u n
w illin g to r e t i r e . T h e c o m p u l s o r y r e t ir e m e n t a ge is th at a ge at w h ich the w o r k e r
l o s e s the p r i v il e g e o f d e c id in g w h e th e r he s h o u ld r e t i r e , w h ich he h as the r ig h t
to d o , o r to c o n tin u e w o r k . A t the d i s c r e t i o n o f the e m p lo y e r , the w o r k e r m a y
co n tin u e in h is j o b , s u b je c t to h is m e e tin g jo b r e q u ir e m e n t s , h e a lth r e q u ir e m e n t s ,
o r s u ch o th e r s ta n d a r d s as m a y b e im p o s e d . F o r e x a m p le , o n e p la n p r o v id e d that:
. . . an e m p lo y e e s h a ll b e r e t i r e d o n the la s t d a y o f the m o n th
in w h ich he a tta in s a ge 70, p r o v id e d that the a d m in is t r a t iv e b o d y
m a y d e f e r a ny s u ch r e q u ir e d r e t ir e m e n t f o r s u ch p e r io d o r
p e r i o d s as it d e t e r m in e s to b e r e a s o n a b le and a p p r o p r ia t e , u p on
fin d in g th at s u c h e m p lo y e e is a b le to p e r f o r m p r o p e r l y h is r e g u
l a r w o r k a s s ig n m e n t . . . .
U n d e r an a u to m a tic r e t ir e m e n t p r o v i s io n , the d o o r is c l o s e d to e x p e c t a
tio n s o f c o n tin u in g e m p lo y m e n t .
R e t ir e m e n t is m a n d a to r y at the m a x im u m a ge
f ix e d b y the p la n ," as in the f o llo w in g e x a m p le :
. . . A n e m p lo y e e w h o a tta in s o r h a s a tta in e d a ge 67 w i ll n o t
b e p e r m it t e d to r e m a in in the s e r v i c e o f the c o m p a n y b e y o n d
the f i r s t d a y o f the c a le n d a r m o n th c o in c id in g w ith o r n e x t f o l
lo w in g h is b ir t h d a y . . . .
T h is d ate s h a ll b e h is a u to m a tic
r e t ir e m e n t d a te .
U
In
som e
ca ses,
a jo in t
m a n a g e m e n t -u n io n
board
m akes
th e d e c i s i o n .
2 0
In a p la n w h ich c o m b in e s c o m p u l s o r y and a u to m a tic r e t ir e m e n t p r o v i
s i o n s , the w o r k e r m u s t r e t i r e u p on r e a c h in g the s p e c i f i e d c o m p u l s o r y r e t ir e m e n t
a g e , u n le s s the e m p lo y e r c o n s e n t s to h is co n tin u in g o n the jo b ; h o w e v e r , a la t e r
a u to m a tic r e t ir e m e n t a g e p la c e s a lim i t o n e m p lo y m e n t e x t e n s io n . T h e f o llo w in g
c la u s e i ll u s t r a t e s a c o m b in e d c o m p u l s o r y and a u to m a tic r e t ir e m e n t p r o v i s io n :
. . . O n ly o n a s p e c i f i c y e a r - t o - y e a r a p p r o v a l o f the c o m p a n y
w ill an e m p lo y e e b e c o n tin u e d in a c t iv e s e r v i c e a ft e r a ge 65,
and in n o c a s e b e y o n d a g e 70.
A l s o o f p a r t ic u la r c o n c e r n to w o r k e r s w h o h av e r e a c h e d the n o r m a l r e
t ir e m e n t a ge 15 s tip u la te d in p e n s io n p la n s a r e s e r v i c e c r e d it i n g p r o v i s i o n s , d i s
c u s s e d in th is r e p o r t , w h ich p e r m i t o r b a r the a c c r u a l o f a d d itio n a l p e n s io n c r e d it s
s h o u ld e m p lo y m e n t b e c o n tin u e d .
S c o p e o f Study
F o r th is stu d y , 300 s e l e c t e d p e n s io n 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
in e f f e c t in la te 1 95 8, e a c h c o v e r i n g 1 ,0 0 0 o r m o r e w o r k e r s , w e r e a n a l y z e d .1®
T h e p la n s c o v e r e d a p p r o x im a t e ly 4 . 9 m i ll io n w o r k e r s u n d e r c o l l e c t i v e b a r g a i n
in g , o r m o r e than h a lf o f the e s t im a t e d c o v e r a g e o f a ll p e n s io n 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 .
A n e a r l i e r B u r e a u stu d y o f 300 p e n s io n p la n s in e f f e c t in 1952 17 p e r m it t e d
a lim it e d r e v ie w o f tr e n d s o v e r a 6 - y e a r in t e r v a l. O f th e s e p la n s , 219 w e r e a ls o
in c lu d e d in the p r e s e n t stu d y .
P r e v a le n c e o f In v o lu n ta r y R e t ir e m e n t P r o v i s i o n s
In v o lu n ta r y r e t ir e m e n t w a s p r o v id e d f o r in 179 p la n s , o r a b o u t 3 o u t o f
5 p la n s s tu d ie d (ta b le 1 4 ). A m o n g the s e le c t e d p la n s , w id e v a r ia t io n s in in d u s tr y
p r a c t i c e s w e r e fo u n d . F o r e x a m p le , n on e o f the a p p a r e l and c o n s t r u c t io n in d u s
t r y p la n s s tu d ie d c o n ta in e d in v o lu n ta r y r e t ir e m e n t p r o v i s io n s ; b u t a ll o f the p la n s
in the c h e m i c a l ; p r o d u c t s o f p e t r o le u m ; r u b b e r ; s to n e , c l a y , and g la s s in d u s t r ie s ;
and e l e c t r i c and ga s u t ilit ie s h ad s u ch p r o v i s i o n s . O n ly 5 r e l a t iv e ly s m a ll p la n s
a m o n g the 33 in the p r im a r y m e t a l in d u s t r ie s p r o v id e d f o r in v o lu n ta r y r e t ir e m e n t ;
o n the o t h e r h an d , in the t r a n s p o r t a t io n e q u ip m e n t in d u s t r y , o n ly 5 s m a ll p la n s
o f the 24 s tu d ie d d id n ot c o n ta in s u ch p r o v i s i o n s .
O f the 179 p la n s w ith in v o lu n ta r y r e t ir e m e n t p r o v i s i o n s , 109 p r o v id e d
f o r c o m p u l s o r y r e t ir e m e n t , w ith n o a u to m a tic fe a t u r e ; 52 p r o v id e d f o r a u to m a tic
r e t ir e m e n t , w ith n o e a r l i e r r e q u ir e m e n t f o r c o m p u l s o r y r e t ir e m e n t ; and 18 p la n s
p r o v id e d f o r a c o m b in a t io n o f b oth at d iffe r e n t a g e s . 18
15 T h e n o r m a l r e t ir e m e n t a g e , a fe a tu r e o f v ir t u a lly a ll p r iv a t e p e n s io n
p la n s , m a y b e d e fin e d as the e a r l i e s t a ge (u s u a lly 65 y e a r s ) at w h ich a w o r k e r ,
h a v in g q u a lifie d f o r b e n e f i t s , m a y r e t i r e at h is o w n v o lit io n and r e c e i v e the fu ll
a m o u n t o f b e n e fit s to w h ic h h is le n g th o f s e r v i c e o r a m o u n t o f e a r n in g s , o r b o th ,
e n t it le s h im u n d e r the n o r m a l r e t ir e m e n t f o r m u l a o f the p la n . I n fe r e n c e that th is
a g e is the “ r i g h t ” a ge at w h ich to r e t i r e , the “ a v e r a g e ” a g e , o r s i m i l a r g e n e r
a l i t i e s , sh o u ld n ot b e r e a d in to the w o r d “ n o r m a l . “
16 F o r d e ta ils o f th e s c o p e and c o v e r a g e o f the 300 p la n s s tu d ie d , s e e p . 2 .
17 O p . c i t . , fo o tn o te 7, p . 4 .
18 T h r e e o f the 127 p la n s w ith c o m p u l s o r y r e t ir e m e n t f e a t u r e s r e q u ir e d
jo in t e m p lo y e r and u n io n a p p r o v a l f o r w o r k in g bfeyond the c o m p u l s o r y r e t ir e m e n t
a g e , w ith a la t e r a g e s tip u la te d that r e q u ir e d o n ly e m p lo y e r c o n s e n t f o r w o r k e r s
to r e m a in e m p lo y e d . A n o th e r p la n r e q u ir e d the c o n s e n t o f a b ip a r t it e b o a r d f o r
fu r t h e r e m p lo y m e n t .
T h e r e m a in d e r o f the p la n s (1 2 3 ) r e q u ir e d o n ly the e m
p lo y e r ' s c o n s e n t .
T A B L E 14.
Provisions for involuntary retirement in selected pension plans under collective bargaining by industry group
(Workers in thousands)
Involuntary retirem ent provisions
No involuntary
Com pulsory and
retirem ent
automatic at
different ages
Work
Work
Plans
Plans
ers
ers
Num
ber
Work
ers
P lan s with
involuntary
retirem ent
provisions
Plans Work
ers
300
4, 909.8
179 2 ,7 4 3 .5
109
1 ,8 2 3 .7
52
815.6
18
104.2
121
Manufacturing ___________________________
229
3 ,3 9 3 .8
143 2 ,0 7 3 .5
90
1, 593.8
40
391.8
13
87. 9
86
1, 320.3
Food and kindred products __________________
Tobacco manufac tur e s ______________________
Textile m ill products _ _______ ______ __
A pparel and other finished p ro d u c ts_________
Lum ber and wood products,
except furniture ____ __ _________________
Furniture and fixtu res _____ ______________
P ap er and allied products ___________________
Printing, publishing, and allied in d u s tr ie s___
C hem icals and allied p r o d u c t s ______________
Petroleum refining and related in d u s tr ie s____
Rubber and m iscellaneous p la stics
p ro d u cts____________ ___ _______________
Leath er and leather products _ __ _:_______
Stone, clay , and g la ss products _____________
P rim ary m etal ind ustries ___________________
F ab ricated m etal products ________
__ _ __
M achinery, except ele ctrica l _______________
E le c tric a l m achinery, equipment,
and supplies ______________________________
Transportation equipment ___________________
Instrum ents and related products ____________
M iscellaneous m anufacturing industries _____
17
3
12
6
-
113.7
-
3
5
-
9
194.9
2 7.5
4 0.3
431.7
9
60.1
22. 6
431.7
3
4
9
5
13
9
25.3
39.0
50.3
15.2
131. 1
83. 9
2
1
11.0
8
107.7
4 0 .8
73.8
592.7
115.3
187.5
Industry group
All in d ustries _ ------- --------------------------
Nonmanufacturing ___ __________________
Mining, crude petroleum , and
natural gas production ____________________
Construction ____________________ _________
T r ans po rtatio n 1 ____________________________
Communications _ __ __________________ __
U tilitie s: E le ctric and gas _________________
R etail and wholesale trade _______ _________
Hotels and restauran ts _____ — _________
S e rv ice s
M iscellaneous nonmanufacturing in d u s tr ie s__
1 Excludes railroad and airline industries.
All plans
8
4
10
33
13
28
3
6
-
1
8
1
13
9
8
1
10
5
4
22
14.4
-
1
2.0
1
-
-
-
1
5.0
37. 1
3 .9
96.4
2 7 .7
-
33.0
8. 7
5
1
9
5
3
1
1
3
-
-
3
14. 7
2 5 .4
2
37. 5
3 .5
68. 1
3 3 .4
5
-
70.2
1.4
5.0
3 .5
35.7
1
9.3
-
3
-
-
1
-
4
-
-
30.8
-
4 .3
-
3
28
9
6
20
5
5
4
20.3
18. 5
12.4
18. 1
35
846.0
3
213.3
416.8
83. 7
46 .7
43. 9
33. 6
1
131.2
8
9
14
281.9
784.4
1
16.0
1
5
59.4
-
2
-
1
1.5
-
36
670.0
19
229. 9
12
423.8
5
16.3
3
-
18.3
_
387.1
171.6
2
62.0
8
2
11
2
_
10.0
.
21.0
6
2
_
1
14.7
-
4 0 .6
133.3
35.3
-
-
1
-
-
-
4
2
4
1
-
-
6.0
1
-
345.0
38.3
16.5
9.0
_
15.0
6.0
4. 5
11.3
-
2
1.6
19
3
5
, 166.3
20.0
20.2
1
2
1
7
4
3
14
1
2
-
1
29.0
2
4
-
10.3
6. 5
1.3
-
1
1
4
14
4
4
10.8
21.0
2.0
231.6
416.8
470.8
171*6
62.0
56. 7
4 3 .9
33. 6
8
3
2
15.3
1 ,5 1 6 .0
17
4
14
Work
ers
1
11
299.0
843.8
7.9
Plans
4
71
6
107.7
3 .5
73.8
38.4
2 3 .7
166.9
Work
ers
16.8
319.3
862.3
20.3
34. 9
12
14.3
33.0
4 5 .8
3 .9
131. 1
83.9
Plans
.1
4 .3
-
24
4
9
16
134.8
27.5
17. 7
-
Automatic
only
Com pulsory
only
1
-
1
3. 6
1.5
_
1
12
6
_
2
10.2
1
1.0
6
~
4
-
-
-
2
2
37.3
554,3
91.6
.6
8.0
to
2 2
TA BLE 15. P rovision s for involuntary retirem ent in selected pension plans under collective bargaining,
by method of financing and type of bargaining unit
(Workers in thousands)
Single
Non
MultiContributory
All plans
contributory
employer
employer
Type of provision
Num Work Plans Work Plans Work Plans Work Plans Work
ers
e rs
ers
ers
ber
ers
All plans studied _ -----------------With involuntary retirem ent
provisions ____________________
Compulsory only ----------------Automatic only ______________
Com pulsory and automatic at
different ages ______________
No involuntary retirem ent
provisions ______________ ____
300 4,909.8
249 4 ,1 2 2 .7
51
787. 1
231 3 ,0 4 8 .9
69 1 ,8 6 0 .9
179 2,743.5
109 1,823.7
815.6
52
133 2 ,2 8 4 .1
79 1 ,4 6 3 .5
43
760.8
46
30
9
459.4
360.2
54.8
169 2 ,2 5 1 .0
108 1,817.2
45
333. 9
10
2
18
121
104.2
11
59.8
7
4 4.4
16
99.9
2,166.3
116
1 ,8 3 8 .6
5
327. 7
62
797. 9
1
7
492. 5
6. 5
481. 7
4 .3
59 1 ,3 6 8 .4
A lm o s t t h r e e - f o u r t h s (1 6 9 ) o f the 231 s in g le e m p lo y e r p la n s s tu d ie d c o n
ta in e d in v o lu n ta r y r e t ir e m e n t p r o v i s i o n s , c o m p a r e d w ith o n ly 10 o u t o f 69 m u lti e m p lo y e r p la n s (ta b le 1 5 ). O n ly 1 o f the 10 m u lt ie m p lo y e r p la n s w ith in v o lu n ta r y
r e t ir e m e n t p r o v i s io n s h ad n o p r o v i s io n f o r a u to m a tic r e t ir e m e n t .
A ll b u t 5 o f
the 51 c o n t r ib u t o r y p la n s , b u t s lig h t ly m o r e than h a lf o f the 249 n o n c o n t r ib u t o r y
p la n s , p r o v id e d f o r in v o lu n ta r y r e t ir e m e n t .
In the 1952 stu d y , 175 p la n s h ad in v o lu n ta r y r e t ir e m e n t p r o v i s i o n s . A l
th ou gh the 1952 and 1958 s a m p le s o f 300 p la n s w e r e n ot id e n t ic a l, it w o u ld a p
p e a r th a t n o s ig n if ic a n t ch a n g e in the p r e v a le n c e o f in v o lu n ta r y r e t ir e m e n t p r o v i
s io n s h a s o c c u r r e d o v e r the 6 - y e a r in t e r v a l.
C o m p u ls o r y and A u to m a t ic R e t ir e m e n t A g e s
In 82 p la n s o r a lm o s t t w o - t h ir d s o f the 127 p la n s s tip u la tin g a c o m p t ils o r y r e t ir e m e n t age (in clu d in g 18 p la n s w h ich a ls o p r o v id e d f o r a u to m a tic r e t i r e
m e n t at a la t e r a g e ), the d e s ig n a te d a ge w a s 65 (ta b le 1 6).
T h i r t y - f i v e p la n s
s e t a ge 68 as the c o m p u l s o r y r e t ir e m e n t a g e ; 8 o f the r e m a in in g 10 p la n s s p e
c i f i e d a ge 70.
S ig n ific a n t ly , in a ll b u t 6 o f the 82 p la n s w h ich d e s ig n a te d 65 a s the
c o m p u l s o r y r e t ir e m e n t a g e , 65 w a s a ls o the n o rm a l, r e t ir e m e n t a g e . In the s i x
e x c e p t io n s , a n o r m a l r e t ir e m e n t a g e o f 60 w a s s p e c i f i e d .
A ll o f the 35 p la n s
w ith c o m p u l s o r y r e t ir e m e n t at a g e 68 p r o v id e d f o r n o r m a l r e t ir e m e n t at a ge 65.
In the r e m a in in g 10 p la n s , the c o m p u l s o r y r e t ir e m e n t a g e w a s 4 o r m o r e y e a r s
la t e r than the n o r m a l r e t ir e m e n t a g e .
A m o n g the 70 p la n s co n ta in in g a u to m a tic r e t ir e m e n t p r o v i s io n s (in clu d in g
18 p la n s w h ich s p e c i f i e d an e a r l i e r c o m p u l s o r y a g e ), 24 s tip u la te d a g e 65, 17 a ge
68, and 22 a g e 70 (ta b le 1 6). S ix o f the r e m a in in g s e v e n a u to m a tic r e t ir e m e n t
a g e s f e l l b e tw e e n 65 and 6 8.
In the 24 p la n s w h ich s p e c i f i e d a ge 65 f o r a u to
m a t ic r e t ir e m e n t , a ll b u t 1 a ls o s e t 65 as the n o r m a l r e t ir e m e n t a g e . A ll p la n s
w ith a u to m a tic r e t ir e m e n t at a ge 68, and 19 o f the 22 w ith a u to m a tic a ge at 7 0,
a ls o d e s ig n a te d 65 as the n o r m a l r e t ir e m e n t a g e .
In the 18 p la n s p r o v id in g f o r a c o m p u l s o r y a ge w ith a la t e r
a u to m a tic a g e , 13 p r o v i d e d f o r c o m p u l s o r y r e t ir e m e n t at a ge 65 and
r e t ir e m e n t at a g e 70. In tw o p la n s , the r e s p e c t i v e a g e s w e r e 68 and
r e m a in in g th r e e p la n s p r o v id e d f o r c o m p u l s o r y r e t ir e m e n t at 65 and
r e t ir e m e n t at 66 o r 67.
s tip u la te d
a u to m a tic
70.
The
a u to m a tic
23
T A B L E 16.
N o r m a l , compulsory, and automatic retirement ages in selected
pension plans under collective bargaining
Age
1
All plans with retirem en t
p rovision s ------- ------Age 55
Age 60
Age 65
Age 6 6
Age 67
Age 6 8
Age 69
Age 70
Age 74
Age 75
O th e r 2
(W orkers ir thousands)
N orm al
retirem ent
Work
Plans
ers
------------------------
------------- ----- -------------------------_____________________________________
___________________________________
________________ ___________________
_____________________________________
_____________________________________
----------------------------------------------- —
________________ ___________________
_______ ____ ______________________
_____________________________________
________________ __________ ________
300
1
15
282
8
127
1, 927. 9
70
.
.
1 ,0 0 6 .9
.
1
-
82
-
-
-
-
-
-
7. 8
-
1
Automatic
retirem ent
Work
Plans
ers
3.0
579. 6
4 ,2 8 9 .2
4, 909.
-
-
Com pulsory
retirem ent
Work
Plans
ers
-
30.2
35
888
.1
1
1.0
8
28.0
_
3 .9
1
919-8
170.0
19- 7
-
24
2
4
17
-
21.8
169.9
453 .4
85.0
-
22
1
-
1 A n earlier normal, compulsory, or automatic retirement age for w o m e n w a s provided
in s o m e plans.
See tabulation below.
2 N o r m a l retirement benefit provided w h e n age plus years of service equal 80.
O f the 300 p la n s s tu d ie d , 21 p r o v id e d a l o w e r n o r m a l r e t ir e m e n t a ge
f o r w o m e n than f o r m e n . T e n c o m p u l s o r y r e t ir e m e n t p r o v i s io n s and fo u r a u t o
m a t ic r e t ir e m e n t p r o v i s io n s a ls o s tip u la te d a lo w e r a ge f o r w o m e n .
The ages
thus s p e c if ie d a r e s h ow n b e lo w .
T y p e o f p r o v i s io n
Age
N orm a l
r e t ir e m e n t
C o m p u ls o r y
r e t ir e m e n t
A l l p la n s w ith e a r l i e r r e t i r e
m e n t a ge f o r w o m e n _______
21
10
M en
60
65
65
65
68
68
70
A u to m a t ic
r e t ir e m e n t
W om en
55
60
62
58
65
65
__——___________
________________ _ ~
...................... ........
___ _______________
___________________
__________________
3
3
12
3
.
-
_
5
1
2
2
1
*
•
2
1
T h e p r o s p e c t s f o r in v o lu n ta r y r e t ir e m e n t f a c in g a m a le w o r k e r o n h is
65th b ir th d a y c a n b e c o m p u t e d b y c o n s i d e r in g the c o m p u l s o r y r e t ir e m e n t a g e s ,
o r a u to m a tic r e t ir e m e n t a g e s i f n o p r i o r c o m p u l s o r y r e t ir e m e n t a g e w a s s t ip u
la te d in the 300 p la n s s tu d ie d .
B a s e d o n th e s e p la n s , the n u m b e r o f y e a r s o f
24
work which lie ahead of the 65 -y ea r-o ld worker (if he chooses to work) before
he faces the possibility that a company decision can force him to retire are as
follows:
Plans
Years
Number
Percent
A ll plans s tu d ie d ---------------- ----------- —
300
100.0
106
194
193
191
139
138
123
122
3 5 .3
6 4 .7
64 .3
6 3 .7
4 6 .3
4 6 .0
4 1 .0
4 0 .7
121
4 0 .3
None (involuntary retirement
at age 6 5 ) ___________________________
At least 1 year ______________________
At least 2 years _____________
At least 3 years _____________________
At least 4 years ____
At least 5 years -------------------------------At least 6 years -----------------At least 10 years ____________
No lim it (no involuntary
retirement) _______________________
Based on the 300 plans studied, the number of years before automatic
retirement would occur for a 65-y e a r-o ld male worker can be sim ilarly illustrated
as follow s:
Plans
Years
A ll plans studied _______________ ____
None (automatic retirement
at age 65) _ _____________________ _
At least 1 year -------------------------------At least 2 years __ —---------- -------------At least 3 years ------------------------------At least 4 years
A t least 6 years
___ — -______ —
No lim it (no automatic
retirement)
______ ________ ___
Number
300
Percent
100.0
24
276
274
270
253
231
9 1 .3
90 .0
8 4 .3
77 .0
230
76. 7
8 .0
92.0
Service Credits After Normal Retirement Age
An important consideration for the worker covered by a plan permitting
extension of employment beyond the normal retirem ent age is whether such e m
ployment can be counted to build up credits for pension benefits. Some workers
may be able to qualify for a pension only by working additional years of credited
service beyond the normal retirement age stipulated in the plan. For example, a
plan may require the worker to have at least 15 years of credited service in
order to qualify for benefits; hence, workers reaching age 65 (normal retirement
age) with less than 15 years of service would never be able to qualify if no s e r v
ice after age 65 is credited.
25
Furtherm ore, the worker who meets minimum service requirements for
benefits at the normal retirement age may materially raise his future pension
level if he is allowed to accrue credited service beyond the normal retirement
age.
This is of less concern under plans which provide maximum benefits for
a specified number of years of service (e. g. , 25 or 30 years).
Workers who
have fulfilled those requirements prior to normal retirement age would have no
need for additional service credits.
The three principal methods of dealing with service after normal re tire
ment age are: (1) No service is credited, (2) all service is credited, or (3) se rv
ice is credited up to a specified age.
Following are examples of each type:
. . . In no event shall a member receive credit for service
after the year in which he reaches age 65.
?Jc sje >{e
. . . An employee who ^continues to work after age 65^ . . .
shall be credited with his continuous service . . . for the pur
pose of calculating any subsequent benefits to which he may
become entitled.
*
*
*
. . . The normal retirement age under this plan shall be the
65th birthday of an employee. . . . No service shall be credited
after an em p loyee's 70th birthday. . . .
Whereas the previous clauses pertained to plans without involuntary r e
tirement provisions, the following examples are taken from plans with such
provisions:
. . . An ertiployee
he attains 65 years
clude service with
65 years of age. .
shall retire at the end of the month in which
of age . . . credited service shall not in
the employer after the employee attains
. .
*
*
*
. . . A member may continue in active service beyond the nor
mal retirement age j[ j5 s j with the consent of the em ployer. . . .
For computing benefits with respect to service, a m em ber1s
total ^jcontinuous^ years of service after attaining age 65 and
completing 2 years of service . . . will be credited.
*
*
aje
At the option of an employee who attains the age of 65 or m ore,
and who is physically and mentally able . . . may continue in
employment up to age 68.
Subject to consent of the company,
an employee who has attained the age of 68 may continue in e m
ployment but not beyond age 70. No service beyond age 68 shall
be credited in determining the amount of an em ployee's pension.
*
afic aje
2 6
Prevalence of Service Crediting Provisions. —Slightly less than two-thirds
(195) of the 300 plans studied allowed the worker to continue to accumulate credit
for all or part of his employment after normal retirement age (table 17). Of the
plans that permitted further crediting of service, approximately 3 out of 5 (120)
counted all employment after normal retirement age.
The remaining 75 plans
credited service to a specified age, m ost commonly age 68.
Plans without involuntary retirement provisions were more likely to
count service after normal retirement age for pension benefit purposes. Of the
121 plans with no involuntary retirement provisions, more than 4 out of 5 (102)
permitted all service beyond the normal retirement age to be credited.
Only
11 plans did not allow additional service credit. The remaining eight plans credited
service to a stipulated age of 68, 70, or 72.
On the other hand, only 18 of the 179 plans with involuntary retirement
provisions allowed unlimited service credit for employment after the normal r e
tirement age. About half of the plans (94) with involuntary retirement provisions
(including 23 plans in which retirement at the normal age was mandatory) did not
permit any further crediting of service. The remaining 67 plans allowed se rv
ice credit up to a certain age, including 28 plans with automatic retirement pro
visions. In m ost of the other 39 plans, service crediting was allowed up to the
compulsory retirement age.
Age 68 was the m ost common age when service
crediting stopped.
In the 300 plans studied, the number of years a plan will allow a 6 5 -y e a rold male worker to continue to accumulate credited service are as follows:
Plans
Years
Number
Percent
A ll plans studied _____________________
300
100.0
None ___________________________________
At least 1 y e a r ______ ________________
At least 2 years _____________________
At least 3 years _____________________
At least 4 years _____________________
At least 5 years _____________________
At least 6 years _____________________
At least 8 years _____________________
No lim it ______________________________
111
189
187
186
142
141
126
121
120
3 7 .0
6 3 .0
62 .3
6 2 .0
4 7 .3
4 7 .0
4 2 .0
4 0 .3
4 0 .0
Of the 111 plans which permitted no further service credit accumulation
to the 65 -y ea r-o ld worker, about 90 percent contained involuntary retirement pro
visions. Conversely, of the 120 plans which permitted unlimited service crediting,
about 90 percent had no involuntary retirement provisions.
T A B L E 17.
N o rm a l and in v o lu n ta ry r e ti r e m e n t a g e s by s e rv ic e c re d ite d a f te r n o rm a l r e ti r e m e n t age,
in s e le c te d p e n sio n p la n s u n d e r c o lle c tiv e b a rg a in in g
(W o rk e rs in th o u sa n d s)
S e r v ic e c r e d it e d a ft e r n o r m a l r e t ir e m e n t a g e 1:o—
S p e c ifie d r e tir e m e n t
ag e
N orm a l
A ll plans
N one
C u m - A u to
p u ls o r y m a tic
A l l p lans stuid ied .___
A g e 5 5 ____
A g e 6 0 -----A g e 6 0 ____
A g e 6 0 ____
A g e 6 0 ____
A g e 6 0 ____ ,
A g e 6 5 ____
A g e 6 5 ____
A g e 65
A g e 6 5 ____
A g e 6 5 _____
A g e 6 5 ____
A g e 6 5 ____
A g e 6 5 ____
A g e 6 5 _____
A g e 6 5 _____
A g e 6 5 _____
A g e 6 5 _____
A g e o 5 ____
A g e 6 5 _____
A g e 6 5 _____
A g e 6 5 _____
A g e 7 0 ____
Othe r 1 1 ___
N um
ber
W ork
ers
300
4 ,9 0 9 . 8
105
3. 0
230. 7
194. 3
8. 1
1. 5
145. 0
1 ,9 2 4 . 8
7 1 2 .7
1 6 1 .9
4. 7
18. 3
7 5 .4
15. 0
3. 5
883. 8
1 6 9 .9
4. 3
_
_
65
70
70
65
66
67
70
66
67
1
7
5
1
1
1
112
61
23
1
2
12
1
2
68
-
33
-
68
70
17
2
-
1
1. 0
8
28. 0
197. 0
8 5 .0
3 .9
7. 8
30. 2
_
65
65
65
-
65
65
65
-
68
69
70
-
70
74
75
-
-
-
"
70
5
1
1
1
1
P la n s
11
49
23
-
2
10
-
1
P la n s
W ork er s
6
1 8 2 .9
9 1 6 .9
_
62. 4
5 3 3 .4
161. 9
18. 3
70. 1
1. 5
5 0 .4
9 .0
_
4
1
1
-
-
-
-
-
-
■
5
1
-
-
1
3. 0
6 .9
2
-
A g e 68
A g e 65
W ork er s
_
173. 3
8. 1
1. 5
-
-
P la n s
44
_
99 6. 3
_
33
71
-
3 1 .5
1. 2
-
-
-
9 20
10 16
2
A g e 72
A g e 70
W ork
ers
-
-
7 9 2 .5
1 6 0 .9
4. 3
-
-
2
5 .9
-
-
“
P la n s
15
..
1
43
1
-
82
3
W ork
ers
P la n s
5
6 1 .4
44 0. 6
_
145. 0
51. 2
1. 8
5. 3
-
_
*52
-
-
-
-
-
A ll
P la n s
W ork
ers
5
107. 7
_
_
1
-
4. 7
-
-
-
-
-
1
1
15. 0
2. 0
3
5 .4
-
1
-
1. 0
-
1
-
85. 0
-
-
1
-
3 .9
-
-
1
30. 2
13. 1
190. 1
_
56. 0
-
-
-
3
-
O th er 2
W ork
ers
"
P la n s
W ork ers
120
2, 2 0 4 .0
1
7
1
*93
10
-
3. 0
230. 7
21. 0
1, 723. 7
176. 3
-
-
-
5
35. 5
-
-
2
6 .0
-
-
-
-
1
7. 8
~
-
'
1 An e a r l i e r n o rm a l, c o m p u lso ry , o r au to m atic r e ti r e m e n t age fo r w om en w as p ro v id e d in som e p la n s . See ta b u la tio n on p. 2 3 .
2 In clu d es 4 p lan s u n d er w hich s e rv ic e is c re d ite d to the a u to m a tic r e ti r e m e n t ag e, and 1 plan w ith c o m p u lso ry r e ti r e m e n t, u n d e r w hich s e r v ic e
is c re d ite d until the e a r l i e r of age 69 o r d ate eligible fo r a b e n efit.
3 In c lu d e s 2 p lan s in w hich s e rv ic e is c re d ite d until the l a t e r of age 68 o r d a te e lig ib le fo r a b e n e fit.
4 In c lu d e s 1 plan in w hich s e rv ic e is c re d ite d u n til the l a t e r of age 70 o r d a te e lig ib le fo r a b e n e fit.
5 S e rv ic e c r e d ite d until the l a t e r of age 72 o r d a te e lig ib le fo r a b e n e fit.
6 In c lu d e s 1 p lan in w hich a ll s e rv ic e is c re d ite d a f te r n o rm a l age u n til e lig ib le fo r a b e n efit.
7 S e rv ic e c re d ite d until the e a r l i e r of age 68, o r a tta in m e n t of 25 y e a r s of s e rv ic e .
8 In c lu d e s 1 plan in w hich se rv ic e is c re d ite d until the e a r l i e r of age 70 o r a tta in m e n t of 25 y e a rs of s e rv ic e .
9 In c lu d e s 1 p lan in w hich s^e^vice is c re d ite d until the e a r l i e r of age 68 o r a tta in m e n t of 25 y e a rs of s e r v ic e .
10 In c lu d e s 1 plan in w hich s e rv ic e is c re d ite d until the e a r l i e r of age 68 o r date e lig ib le fo r a b e n e fit.
11 N o rm a l r e tir e m e n t p ro v id ed when age plus s e rv ic e e q u als 80.
NS
<1
A p p e n d ix
V esting and e a r ly r e tir e m e n t p r o v is io n s in p en sion plans studied b y in d u stry
(W ork ers in thousands)
Industry group
A ll plans
studied
Num
ber
☆ U .S . GOVERNMENT PRINTING O F F IC E : 1959 O - 516989
W o rk
ers
P lans with
v estin g
N um
ber
W o rk
ers
Type of v estin g
D e fe r r e d fu ll
P lans
W o rk
ers
D e fe r r e d graded
Plans
W o rk
e rs
P lan s with
e a r ly
retire m e n t
Num
ber
W ork
e rs
P lans w ithout
v estin g or
ea r ly
r e t ir em ent
N um W ork
b er
e rs
A ll in d u s t r ie s ---------------------------------------------------
300
4 ,9 0 9 .8
1 174
2 ,7 8 0 .9
154
2 ,3 3 5 .8
19
441. 7
218
3 ,0 7 1 .0
71
1 ,5 6 4 .7
M a n u fa c t u r in g ------------- ------------------------------
229
3 ,3 9 3 .8
156
2 ,4 8 5 .2
140
2 ,2 4 3 .6
15
2 3 8 .2
183
2 ,6 9 8 . 1
37
607. 7
F ood and kindred p r o d u c t s ---------------------------T o b a c c o m a n u fa c t u r e s -----------------------------------T e x tile m ill p r o d u c t s ------- —--------------------------A p p a re l and other fin ished p r o d u c t s ------------L u m ber and w ood p ro d u cts,
e x ce p t fu rn itu re ------------------------------------------F u rn itu re and f i x t u r e s ----------------------------------P a p e r and a llie d p r o d u c t s -------- --------------------P rin tin g , p u blish in g, and allied industries —
C h e m ica ls and a llie d p r o d u c t s ------- — --------- P e tro le u m refin in g and related in d u s tr ie s ---R ubber and m is ce lla n e o u s p la stics
p ro d u cts -------------------------------------------------------L eath er and leath er p r o d u c t s ------------------------S tone, clay,an d g la ss p r o d u c t s ---------------------P r im a r y m e ta l i n d u s t r i e s -----------------------------F a b rica te d m e ta l p rod u cts — — --------------------M a ch in ery , e x ce p t e l e c t r i c a l ------------------------E le c tr ic a l m a ch in e ry , equipm ent,
and s u p p l i e s -------------------------------------------------T ra n sp orta tion e q u ip m e n t ---------------------------- Instrum ents and related p r o d u c t s ----------- -----M isce lla n e o u s m anu facturing in d u s tr ie s -------
17
3
8
9
19 4.9
27. 5
40. 3
4 3 1 .7
11
2
2
-
83. 6
22. 5
19. 0
-
10
2
2
-
78 .9
2 2 .5
19. 0
-
1
-
4. 7
-
14
2
6
-
17 1.9
2 2 .5
17. 7
-
2
1
1
9
19. 7
5 .0
12. 6
431. 7
3
4
9
5
13
9
2 5 .3
3 9 .0
5 0 .3
15.2
131. 1
8 3 .9
1
1
5
2
18
8
5 .0
2. 0
3 5 .7
5 .2
76 .2
8 2 .8
1
1
4
2
6
4
5 .0
2 .0
3 4 .2
5 .2
5 2 .8
3 4 .0
1
1
4
1 .5
20. 0
48. 8
3
2
7
2
9
8
2 5 .3
3 .5
4 3 .5
5 .2
5 9 .9
82. 8
2
2
3
2
1
35. 5
6. 8
10. 0
4 0 .2
1. 1
8
4
10
33
13
28
107. 7
40. 8
73. 8
592. 7
11 5.3
1 8 7 .5
2
2
7
31
13
20
2 0 .9
3 0 .0
4 0 .2
5 8 4 .3
11 5.3
16 4.3
2
2
5
31
12
19
2 0 .9
30. 0
29. 8
5 8 4 .3
11 2.3
16 0.9
2
1
1
1 0 .4
3 .0
3 .4
7
1
7
33
13
25
1 0 6 .4
3. 5
54. 1
592. 7
115. 3
181.2
1
1
2
3
1. 3
7. 3
11. 3
6 .3
16
24
4
9
3 1 9 .3
862. 3
2 0 .3
3 4 .9
12
23
3
11
20
3
3
308. 5
8 5 9 .3
16. 0
1 4 .4
3 0 7 .3
714. 1
16. 0
1 4 .4
1
3
-
1.2
145.2
-
14
22
4
4
3 1 2 .4
857. 5
20. 3
2 2 .4
2
1
4
6 .9
3 .0
9 .0
N o n m a n u fa ctu rin g --------------------------- -----------
71
1 ,5 1 6 .0
18
295. 7
14
9 2 .2
4
203. 5
35
37 2 .9
34
9 5 7 .0
6
12
17
4
14
8
2
2
1
1
2
1
-
6.1
192. 0
5 .4
-
1
2 1 .6
1 .4
79. 0
1 4 1 .4
60. 5
4 1 .0
7 .0
2
10
-
6 .9
1 .5
2 6 .8
3 6 .0
-
4
1
-
6 .9
6. 1
193. 5
3 2 .2
36. 0
-
2
1
6
4
2 3 1 .6
4 1 6 .8
470. 8
171. 6
6 2 .0
56. 7
4 3 .9
33. 6
2 1 0 .0
409. 3
2 1 1 .8
3 0 .2
1. 5
15. 7
4 3 .9
2 6 .6
4
2 9 .0
2
2 1 .0
2
2 1 .0
-
2
2 1 .0
2
M ining, cru de p e tr o le u m , and
natural gas p r o d u c t i o n --------------------------- ----C on stru ction —;-------------------- —----------------- —-----T ra n sp o r ta tio n 2 ---------------------------------------------C o m m u n ic a tio n s ---------------------------------------------U tilitie s: E le c t r ic and g a s --------- -----------------R e ta il and w h o le sa le t r a d e -----------------------------H otels and r e s t a u r a n t s ----------------------------------S e r v ic e s — ------------------------------------------------------M isc e lla n e o u s nonm anufacturing
i n d u s t r i e s -------- -------------------------- -------------- —
3
-
7
3
1 Includes 1 plan with 3 ,4 0 0 w ork ers w hich p rov id ed im m ed iate fu ll v estin g .
2 E x clu des r a ilro a d and a irlin e in d u stries.
3
3
-
7
3
13
4
9
1
1
4
2
3
8 .0
to
VO
@FedFRASER