26
Public Employees Retirement Plan
(Continued from page 5)
“Industry has demonstrated beyond a
shadow of a doubt that other retirement
systems and broader employee benefit
plans can be coordinated with the Social
Security coverage to the advantage of
all concerned.”
Mr. Robbins points out in his paper
that congressional committees took
more than 2000 pages of testimony as
to its merits before the Social Security
A ct became a law. Hardly anyone op
posed the social benefits suggested, but
some forward looking employers had
established financially sound and elab
orate plans of their own. When the
Act was passed there was considerable
confusion of thought and resistance to
obligatory participation in a plan which
appeared would curtail the operation of
these well thought out private plans.
The Clark amendment was proposed
to permit the employer to substitute
his own plan for Social Security cov
erage. For a time the battle raged fu r
iously in Washington but gradually
tempers cooled, and to the credit of the
progressive employers w ith well con
structed plans it was recognized that
after all they could adjust their retire
ment plans to supplement the Old Age
and Survivors provisions of the Social
Security A ct in such a way as to re
sult in a combined arrangement su
perior in many respects to what they
had been able to establish alone, and
that their long range, best interests
were inseperably linked with the social
welfare of the community as a whole.
In industry there was never any serious
question as to the feasibility of coordin
ating private plans w ith the Social Se
curity Act, the real contest being over
the desirability of doing so. A fter the
question was settled those same forward
looking employers were prompt in find
ing methods of adjusting their plans,
and the progress of industry in estab
lishing and adjusting retirement plans
to supplement social security benefits
has outdistanced, many times over, all
that had been done along this line
prior to the Social Security legislation.
Mr. Robbins states:
“Not all industrial retirement plans
applied the same philosophy in making
adjustments. Some plans which fix con
tributions and allow the benefits to be
whatever the contributions will provide,
reduced contributions by the amount of
the taxes required under the Social Se
curity Act; others made related reduc
tions by fixing the contribution rate for
that part of compensation below $3,000
per year at from 54% to 2% lower than
for the compensation in excess of $3,000.
A large group of conrtibutory plans fix
the benefits and the contributions of the
employee and provide that the employer
shall pay the balance necessary to pro
vide the benefits. In this type of plan,
both the employees’ contributions and the
benefits have usually been modified,
usually both are. related to compensation
and the modifications relate to the first
$3,000 a year of compensation.
“ Surely industry has answered beyond
possible doubt any questions as to the
feasibility of coordinating retirement
plans with the Social Security Act. Plans
of about every conceivable kind have
been adjusted to supplement the national
plan, with sufficient success that I can
scarcely imagine anyone holds the view
that it would be impractical to adjust
public retirement plans in a satisfactory
manner.”
Henry G. Geilen, President, Chicago
Teachers’ Pension and Retirement Fund
at the 1944 conference of the Muni
cipal Finance Officers Association dis
cussed the purposes of the two types
of plans in a paper from which we
quote as follows:
“ The prime purpose of the state and
municipal retirement funds is to insure
an efficient administration of state and
municipal affairs by assuring their em
ployees a comfortable standard of living
upon retirement. They are able to secure
and retain the services of a competent
personnel which might otherwise be at
tracted by the speculative opportunity of
the business world, and an adequate re
tirement benefit also makes it possible
to retire an employee when his work is
no longer efficient. These items are in-
seperable from the principle of state
rights for they enable a state to operate
efficiently in the special sphere of its
autonomy. On the other hand, the retire
ment income from Social Security, is as
the name implies, merely a “ subsistance”
measure—nor should it be anything more
—while that of the state and municipal
retirement funds is a “ compensation re
turn” for services rendered, and to
achieve its objective should be consider
ably larger than the benefits of the
Federal pension plan.”
(Continued on page 27)