oversight

Summary of the Legal Authority and Responsibility of Each Federal Agency Exercising Jurisdiction Over the Regulation and Monitoring of Private Pension Plans

Published by the Government Accountability Office on 1971-11-04.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

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                                                                                               WASHINGTON.                  D.



                                       *                                                                                                            NQ”4    4   597j
                                                                                   .
                                 B-164292
                                                                                                                                         ,'
                                                Cl 4
                                 Dear Mr. Chairman:
                                                                                                                                 ?.I /
                                                                                                                                              rll;il~~i~i~iii~~i
                                                                                                                                                 LM095485


                                          In your letter-of     July 19, 1971, you requested that we
                                 provide you with a&summary of the legal authority               and respon-
                                 sibility     of each Feder%il agency exercising      jursidictiop      over
                                 the regulation        and monitoring  of private pension plans,          You
                                 also asked that the summary include such information               as is
                                 readily     available    on the agencies'   implementation      of pertinent
                                 laws.      The enclosure to this letter      contains that summary.
                                          We queried the following     11 Federal departments and agen-
                                 .cies as to their authority       and responsibilities       over private
                                  pension plans, their administrative         procedures and requirements,
                                  and the availability      of other information       on their pension plan
                                  activities.
                                                                                 &[Q- &p ci
                                          Department of Labor      i
                                          Department of Justice    -j-                     b4d@%q-/Jp4/[4BLE
                                          Securities   and Exchange Commission
                                          Department of the Treasury      3:
                                          Equal Employment Opportunity      Commission 27.
                                       - Department of Housing and Urban Development
                                     . Department of Defense
                                          National Labor Relations Board        -
                                          Department of Health, Education,       and Welfare
                                          Department of Transportation
                                          General Services Administration
                                        From discussions   with Committee staff members and Depart-
                                 ment of Labor officials,      we noted indications       that these 11 de-
                                 partments and agencies might have some jurisdiction             over private
                                 pension plans.      Three of these departments and agencies--the
                                 Departments of Transportation       and Health, Education,        and Welfare
                                 and the General Services Administration--advised             us that they
                                 had no responsibility     or authority   whatever regarding private
                                 pension plans.      The Department of Labor's reply included an ex-
                                 planation   of the Cost of Living Council's        relationship     to pri-
                                 vate pension plans, and we have included that explanation              in our
                                 summary.
                                       Although we have verified        the accuracy of the legal and
                                 regulatory      authority   and responsibilities   cited by the various
                                 departments and agencies responding to our requests, we have
                                 not determined whether these are the only agencies having such
                                 responsibilities        or whether the cited legislative


                                                                                   50TH ANNIVERSARY                              1921- 1971
‘.
         B-164292

                                  .
         encompass all the legislation  relating to private  pension plans.
         We did not test the accuracy of the other information    provided
         to us and included in the enclosure.
                    We hope that the data which we have compiled                  will   be help-
         ful       to your Committee.
                                                  Sincerely 2r' . yours,
                                                          P
                                                    ,-y/ I /_ ':.,
                                                               ‘T^' / 9I ‘,P.f"
                                                   ' ,.(                 , 1
                                                  p ,I ,: ' ; :,* , L
                                           ~~e~n~Y~Comptroller General
                                                  of the United States
         Enclosure

          The Honorable Harrison A. Williams,
     u {khairman,     Committee on Labor
      /
        /    and Public Welfare
          United States Senate


               .     .
                                                                    ENCLOSURE

                   SUMMARYOF FEDERALJURISDICTION
                       OVERPRIVATE PENSION PLANS

DEPARTMENTOF LABOR
       Among the various agencies exercising            legal    authority     and
 responsibility     over private pension plans, the Department of
 Labor has the most significant       role.     Under the authority          of
 seven different     laws, Labor's responsibilities            in the private
pension plan area range from requiring            disclosure      of pertinent
 information     on plans to preventing     discrimination        against vari-
 ous classes     of workers.    The Secretary     of Labor does not have
 authority,     however, to prescribe    or interpret        plan provisions,
help collect      benefits,  or otherwise interfere          in the internal
management_ of any pension plan.
                                                 BEs7- D@uM~~~~ Al'AllABIE
‘Welfare and Pension Plans Disclosure          Act
      The law dealing most directly  with pension plans is the
Welfare and Pension Plans Disclosure    Act (WPPDA) of 1958 and
the amendments of 1962 (29 U.S.C. 301-309).     Its major provi-
sions are discussed below. -
       WPPDA(29 U.S.C. 304) 'requires the administrators         of wel-
 fare and pension benefit     plans to publish a description      of the
 plan and an annual report showing such information        as the
 amount-and type of the plan's income, benefits,       receipts,    and
 disbursements;    the plan's assets and liabilities;     and the
 number of employees covered.      Unless otherwise specified      by
 the Secretary,    the annual report is required only from plans
 covering more than 100 people.       In calendar year 1970, 7,420
.plan descriptions    and 124,430 annual reports were filed with
 Labor pursuant to this section.
       WPPDA(29 U.S.C. 308(d)) gives the Secretary             limited     in-
vestigatory    power to ensure the accuracy of the published               in-
formation.     He may investigate       the operations    of a plan only if
he has reasonable cause to believe          that investigation       may dis-
close violations     of the act, such as failure        to disclose plan
information     to participants    or failure    to comply with the
bonding requirements        of the act.    He has no authority        to per-
form an annual audit or to perform other reviews of plan activ-
ities   to routinely     check on the accuracy of published           informa-
tion.     In calendar year 1970, 785 investigations          were opened
and 619 were closed.
       Labor is responsible for enforcing the provisions   of
WPPDAexcept for three sections    added to title  18 of the United
States Code by the 1962 amendments. These sections are admin-
istered by the Department of Justice and deal with embezzlement

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                                                                                ENCLOSURE

      (18 U.S.C. 664), false          statements     and concealment        (18 U.S.C.
      1027), *and bribery      or kickbacks        (18 U.S.C.     1954).
             WPPDA (29 U.S.C.        308d) requires      administrators,       officers,
     and employees of plans subject              to the act, who handle funds or
     property     of the plans,       to be bonded up to a maximum of $500,000
     each.      The bonds are required         to protect     the plan against          loss
     resulting     from dishonest        or fraudulent     acts of the bonded per-
     sons.     A 1965 amendment (29 U.S.C.             441) to the Labor-Management
     Reporting      and Disclosure       Act (LMRDA) added a provision             requir-
     ing surety      companies     to file    with the Secretary         annual reports
     describing      their  premium and loss experience              on bonds required
     under LMRDA and WPPDA.
             For calendar    1969 data filed    by surety  companies   showed
     that 8 percent       of direct   premiums earned were allocated      to net
     losses.     In general     net losses refer   to the amount paid by a
    -surety    company resulting      from claims  against  the bonds.
           WPPDA (29 U.S.C.        308e(a))     provides   for an Advisory       Coun-
     cil on Employee -Welfare         and Pension Benefit        Plans to advise
     the Secretary    with respect        to the carrying      out of his functions
     under the act.      The Council        meets twice a year.        The act
      (29 U.S.C.   308e(b))    requires      the Secretary     to report   to the
     Congress,   at the beginning.of           each session,     on the activities
     of the Council     and his other activitie                  r the act during
     the preceding    year.
                                                         ~~~~~~~~~~~~       A VA/Q
     Labor-Management       Reporting     and Disclosure      Act
             LMRDA (29 U.S.C.       401 et seq.)        affects     private     pension    plans
      through    its provisions       reqcring       the reporting         of information
      and the bonding        of persons     handling      the plans’       assets.     The act
    . (29 U.S.C.     431(a))    requires     every labor        organization       to file    a
      copy of its constitution           and bylaws and a detailed              statement
       (or references     to specific       provisions       of other documents filed)
      showing the provisions          made and procedures           followed      with re-
      spect to participation          in insurance        or other benefit         plans.
            The act (29 U.S.C.      431(b))   requires    every labor organi-
     zation    to file  an annual report      with Labor.      The Secretary        re-
     quires    the labor organization       to indicate    in the report       whether
     it has a pension      trust.     If it has, the trust’s      administrator
     must file     an annual report     for the trust,     in accordance       with
     the provisions     of WPPDA. The trust’s          WPPDA file  identifica-
     tion number is required        to be included      in the annual report
     required     of the labor union under LMRDA.
             The bonding      requirements   (29 U.S.C.    502(a))  of LMRDA are
     satisfied    by the      bonds obtained    to satisfy   the requirements
     of WPPDA.


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     .   -

                                                                                                              ENCLOSURE


                            LMRDA (29 U.S.C.     521(a)),   to enable   him to investigate
                   violatjons,     gives   the Secretary      power to enter      such places
                   and inspect      such records     and accounts    and question     such per-
                   sons as he may deem necessary.

                           Labor     was unable           to provide           us with     any investigation              or
                   enforcement        statistics            specifically          relevant     to pension          plan
                   administration           under        LMRDA.
                   Fair     Labor     Standards          Act                   BEST5ocuMENTAVAlbA
                             The Fair      Labor    Standards       Act    (FLSA)         (29 U. S.C.        201 c seq.)
                    has two significant             provisions       affecting            private       pension    plans.
                    The overtime         pay provision         provides        that       contributions         to
                    profit-sharing          plans     (29 U.S.C.        207(e)(3)(b))              and to plans        for
                    providing       old-age      benefits      for    employees            (29 U.S.C.        207(e)(4))
                    are not to be included                in the regular           rate       of   pay   on which         the
                  - overtime       pay is based.

                           The equal    pay provision       of FLSA prohibits         an employer
                   from paying      employees    of one sex at lower         rates      of pay than he
                   pays employees       of the opposite        sex for   equal     work     (29 U.S.C.
                   206 (d)) .    FLSA requires       that   the employer’s       contributions         to
                   pension    plans   be considered       in determining       rates     of pay.

                            The Wage and Hour Division               of the Department              of Labor
                   administers        FLSA, and its        authorized          representatives           may enter
                   establishments,         inspect     records,        interview         employees,       and in-
                   vestigate       any facts     necessary        to determine          whether       the law has
                   been violated.

                   Age    Discrimination            in    Employment           Act   of   1967

                          The Age Discrimination             in            Employment        Act of 1967 (ADEA)
                    (29 U.S.C.      621-634)    applies      to            private       pension      plans  insofar
                   as contributions          to such plans                 are part       of an employee’s           total
                   compensation.          ADEA (29 U.S.C.                  623(a)   (I))     prohibits      employers
                   from discriminating          against      any             employee       with    respect    to his
                   compensation,        terms,   conditions,                   or privileges          of employment
                   because     of his age.

                            The act provides,           however,      that     an employer     not be re-
                   .quired     to provide         older   workers     who are otherwise          protected
                    by the law with            the same pension         benefits     as he provides          to
                    younger      workers,        so long as any differential             between      them is
                    in accordance          with     the terms     of a bona fide       benefit      plan.       The
                    act    (29 U.S.C.        623(f)(2))      provides      also   that   no such benefit
                    plan    excuse     the failure        to hire     any person.        ADEA also        is
                    administered          by the Wage and Hour Division.




                                                                           3
                                                                           ENCLOSURE


Militarv      Selective     Service    Act   of 1967
       The Military     Selective     Service        Act of 1967 (SO U.S.C.
451 et se .) protects         a returning         serviceman's     pension    rights
by provi a? ing that any person who is restored                  to a position       in
accordance     with the reemployment            rights     of the act is to be
considered     as having    continued       in such employment         during    his
period    of service    or training       in the Armed Forces.            He is en-
titled    to like seniority,       status,        and pay upon his return          to
employment     and to participation           in insurance       and other bene-
fits   offered    by the employer , provided             that his period      of
active    duty did not exceed 5 years.
       The protective         functions     assigned     to the Secretary         under
this act are performed            through     the Office     of Veterans       Reem-
ployment    Ri-ghts (OVRR).           Where disagreements        exist    as to the
existence     or extent       of a person's       rights   under the statute,
OVRR attempts        to-resolve       the differences      through     investiga-
tion,   negotiation,         and mediation.
        OVRR does not have power to issue rulings                or decisions
that are binding           upon either   the employee or the employer.
Instead,        it seeks to obtain      voluntary    compliance    with the
statute.          Where these procedures       fail,   the controversy,       at the
request       of the person claiming        rights   under the statute,        is
referred       to the Department       of Justice    for evaluation       and pos-
sible    litigation.         A pension   question    was involved      in only 32
of the almost          7,000 cases handled by OVRR in fiscal             year 1971.
Davis-Bacon        Act
       The Davis-Bacon      Act (40 U.S.C.     276a) affects      private     pen-
sion plans in that,        when the Secretary       determines    the prevail-
ing wage to be paid to employees working               under construction
contracts    in excess of $2,000 to which the United              States    or
the District      of Columbia   IS a party,      he must consider       payments
for pension     plans and other fringe        benefits     as well as the
basic hourly      rate of pay.     The Solicitor       of Labor provides
wage rate determinations        when requested        by Federal    agencies.
The contracting       Federal  agency is responsible         for ensuring
that these determinations         are complied      with.
       If a contractor violates    the act, the contract     can be
terminated,   payments can be made directly      to the workers    from
amounts due the contractor,     and the contractor     can be pre-
vented from receiving    Government   contracts    for 3 years.
Service.Contract          Act
       The Service Contract           Act of 1965 (41 U.S.C.   351 et seq.)
provides   that any contract           for services entered  into by the


                                             4
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              .        .                                                             ENCLOSURE
                   .
                       United States or the District     of Columbia shall contain,
                       among other things, a provision     specifying  the minimum wage
                       and the fringe benefits,    as determined by the Secretary,   to
                       be furnished   to various employees engaged in the performance
                       of the contract.    The act affects private pension plans in
                       that pension benefits    are a part of the fringe benefits   spec-
                       ified by the Secretary.
                             The Wage and Hour Division    investigates  for     compliance
                       with this act.     Any person can request assistance       if he thinks
                       a firm is violating    the act.
                       DEPARTMENTOF JUSTICE
                             The Department of Justice is involved in the area of pri-
                       vate pension plans through its investigations         and prosecutions
                       of violations       of the laws regulating  these plans.    The Depart-
                       ment exercises exclusive       jurisdiction   over the prosecution   of
                       criminal    violatipns    under the WPPDAAmendments of 1962
                       (29 U.S.C. 309).
                             The Department also investigates      violations    relating    to
                       theft or embezzlement from employee benefit plans (18 U.S.C.
                       664); false statements and concealment of facts in relation
                       to documents required by WPPDA(18 U.S.C. 1027); and offers,
                       acceptances,  or solicitions.to   influence      the operation     of an
                       employee benefit plan (18 U.S.C. 1954).
                             'Enforcement statistics   for fiscal    year 1971 show that
                       nin'e persons were indicted   and six were convicted     for viola-
                       tions of section 664 and that 10 persons were indicted         and
                       16 were convicted for violations       of section 1954. There were
                       neither    indictments nor convictions     under section 1027.
                               The Department further  prosecutes  reporting  and other
                       violations    connected with pension plans after such violations
                       have been investigated     by the Department of Labor.
                       SECURITIES AND EXCHANGECO~ISSION            BEST!xXlJMENTAVAILABLE
                             Although the Securities      and Exchange Commission (SEC)
                       does not have direct regulatory        authority    over private pension
                       plans, certain provisions       of the federal securities       laws which
                       it administers  do apply to such plans.           These provisions   re-
                       late primarily   to registration      of securities     and to annual and
                       other periodic  reports required to be filed with SEC.
                              Pension and profit-sharing      plans are exempt from cover-'
                       age under the Securities       Act of 1933 (15 U.S.C. 77 et seq.),
                       unless 'the plan is a voluntary       contributory pensionplan  and
                       invests in the securities       of the employer company an amount


                                                           5
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.    .                                                                  ENCLOSURE
              .

             greater than that paid into the plan by the employer.               A
             voluntgry     contributory     plan is one to which both the employee
             and employer contribute          and in which employees voluntarily
             participate.        If the-plan's    investment in the employer's se-
             curities     exceeds the employer's contribution,        both the em-
             ployer's     securities    and the interests     in the plan must be
             registered     under the Securities       Act with SEC.
                   Where interests in a private pension plan are registered
             under the Securities  Act, as indicated    above, the administra-
             tor of the plan must file annual and other periodic     reports
             with SEC pursuant to the Securities     Exchange Act of 1934
             (15 U.S.C. 780(d)), unless the plan covers fewer than 300
             persons.
                     Although private pension plans generally    fall under the
             definition     of investment companies under the Investment Com-
             pany Act of-1940 (15 U.S.C. 80a-3(a))       which subjects such
             companies to SEC.regulation,       sections 3(c)(3) and 3(c)(ll)  of
             the act generally      exempt pension plans from the act’s provi-
             sions.
                   Since 1955 SEC has been collecting    statistical     data with
             respect to pension funds.   Since  most   pension    plans  are exempt
             from coverage under the securities     laws, these data are gath-
             ered voluntarily  under the general statistical       program of the
             Government.
                  . -These data are published   as follows.
                   1. Assets of private pension funds not administered   by
                       insurance companies are published quarterly  in SEC's
                      -Statistical Bulletin.
                   2. Stock activity    of pension funds is summarized quar-
                      terly in SEC's releases entitled     "Stock Transactions
                      of Financial   Institutions."
                   3. A survey of pension funds' mortgage-lending activities
                      and commitments is conducted by SEC and the results
                      are published monthly by the Department of Housing and
                      Urban Development.
             DEPARTMENTOF THE TREASURY
                   The Internal    Revenue Service (IRS) is the Treasury Depart-
             ment agency having responsibility     in the area of private pen-
             sion funds.     IRS determines whether the sponsoring employer
             and theeparticipating     employees of a private pension or



                                                6
    . .
.         - .                                                                   ENCLOSURE

                profit-sharing     plan are entitled      to certain    tax benefits    be-
                cause their plan satisfies        -certain requirements       of the Inter-
                nal Revenue Code of 1954 (26 U.S.C. 72,101(b),381(c)(11),
                381(c)(20),401-407,.1379,2039(c),         and 2517).     These sections of
                the act deal with the requirements          for qualification       of a plan,
                the tax treatment of an employer who maintains a qualified
                plan, the tax treatment of participating            employees and other
                beneficiaries    of a qualified      plan, the tax status of a trust or
                other funding medium forming part of a qualified               plan, and pro-
                cedural matters.
                        Generally a plan qualifies   if it is exclusively   for the
                benefit    of employees and their beneficiaries,     if it benefits
                80 percent or more of the eligible       employees, and if the con-
                tributions     or benefits do not discriminate    in favor of certain
                high-level     employees.
                       IRS has conducted little      investigative     or audit activity
                -to ensure that-private      pension plans are operated in compli-
                ance with the tax laws or IRS regulations.             This has been due,
                in part, to the large number of requests for IRS to make ad-
                vance determinations       of the tax status of proposed pension
                plans.     According to an IRS official,        these determinations
                have taken so much time that they have prevented IRS from es-
                tablishing    an effective    audit program.       In 1969 a total of
                156,779 determinations       were made.
                          IRS no longer issues advance determination      letters  to self-
                 employed persons who adopt previously        approved master or proto-
                 type plans.      As a result of this policy change, the number of
                 determination      letters  issued by IRS dropped from 156,779 in 1969
                 to 55,050 in 1970. IRS is considering         increasing    its audit ac-
                 tivities     in the area of private pension plans.
                . EQUAL EMPLOYMENT
                                 OPPORTUNITYCOMMISSION
                        Title VII of the Civil Rights Act of 1964 (42 U.S.C.
                 2000e), which the Equal Employment Opportunity             Commission ad-
                 ministers,     prohibits  discrimination      by employers, employment
                 agencies, and unions based on race, color, religion,             sex, and
                 national    origin with regard to compensation,         terms, conditions,
                 or privileges      of employment.      Pension and retirement    plans avail-
                 able in connection with employment are privileges             and conditions
                 of employment.
                         Relief under title   VII can be sought through both the Com-
                 mission and the Department of Justice.        The Commission processes
                 charges through informal methods of conference,       conciliation,
                 and persuasion,      but the Attorney General is authorized     to in-
                 stiture     a lawsuit whenever he has reasonable cause to believe
        - .*
    -   l *
              .
                   .
                                                                                                         ENCLOSURE
l




                  that     any person     or group   of persons                 is engaged   in a pattern                 or
                  practice      or resistance      to the full                 enjoyment   of any of the                rights
                  secure’d    by title     VII,

                           The Commission           has decided       (29 CFR 1604.31),      with  regard     to
                  pension       and retirement          plans,   that    a difference    in optional       or
                  compulsory         retirement        ages based on sex violates          title   VII    and
                  that     other     differences        based   on sex,    such as differences         in
                  benefits       for     survivors,       will  be decided       by the Commission       as such
                  differences          arise.

                  DEPARTMENT        OF HOUSING        AND URBAN DEVELOPMENT

                          The regulations            of the Department              of Housing         and Urban         De-
                  velopment       (HUD) affect          private      pension        plans      by specifying           the
                  costs    for which         local     housing      authorities,           local     planning         agen-
                  ties,    model-cities,           and community           development           agencies         may re-
                  ceive    Federal       assistance.            HUD provides          Federal       assistance         to
                  the various         local     housing       agencies       under     provisions          of the United
                  States     Housing        Act of 1937 (42 U.S.C.                 1401 et seq.),            title      I of
                  the Housing        Act of 1949 (42 U.S.C.                  1450 et zqr1468,                     and
                  1468a),     and the Demonstration                 Cities       and?letropolitan               Develop-
                  ment Act of 1966 (42 U.S.C.                    3301 --et seq.).

                          Contributions            to private      pension      plans    are acceptable          costs
                  under     the provisions             of these     acts   if certain       criteria      are met.
                  For example,            local    housing     agencies      may not participate            in a
                  plan    until       there     is assurance        that   the HUD-aided          program     can be
                  expected        to continue          on an active      basis.       For low-rent        public
                  housing       activities,          this   expectation       is met when the initial               an-
                  nual    contributions            contract     is executed        by the parties.

                          After       a local     agency      is authorized            to participate        in a pen-
                  sion plan,          it must enter         a plan       chosen      from among the various
                  public      and private         plans     available.            If the agency        chooses    a
                  public      plan,      it must accept          the provisions              of the plan     as estab-
                  lished      by the State          or city      which       created      it.      Some States    re-
                  quire     the selection           of a public         plan.        If the agency        selects     a
                  private       plan,      the agency       can specify           the provisons        of the plan
                  but the provisions              must comply          with     HUD guidelines         on private
                  pension       plans.        These guidelines             are very       detailed     and cover
                  nearly      every      aspect     of a pension           plan’s      operation.
                                                                                BEST DO~G~JE~T          AVAILA
                  DEPARTMENT OF DEFENSE

                          The    scope     of   the    Department        of     Defense     (DOD)     responsibility
                  in   the   private       pension       fund    area     is    limited     to determining
                  whether      DOD contractors’             contributions     to private        pension                plans
                  are allottable      costs     under         the DOD procurement        regulations.                     The
                  allowability      of employer             contributions     to private        pension                plans



                                                                     8
                                                                        ENCLOSURE
I




    and the criteria  which these contributions      and plans must meet
    are provided for in the Armed Services Procurement Regulation
     (ASPR] 15-205.6.  The general criteria     provide that the contri-
    butions to the plan must be part of a compensation package which
    has reasonable total value compared with the service rendered,
    the contribution  be made pursuant to a plan or an agreement, and
    the contributions  be tax deductible    under the Internal   Revenue
    Code of 1954 (26 U.S.C. 404).
          The specific    criteria    provided in other sections of ASPR
    cover the allowability        of a plan's particular   costs,  as well as
    the costs of specific       types of plans.     For example, ASPR
    15.205.6(f)(2)     covers the cost of contributions       for past service
    and ASPR 15-711.13(b)       covers contracts with State and local gov-
    ernments.
              Following is a list of all           ASPRs which govern the allow-
    ability       of *employer contributions         to private pension plans.
                15-205.6                    15-309.7             15-711-13
                15-205.42(f)(3)             15-309.23            W-804.1
             Although we did not solicit      formal comments from the Na-
    tional Aeronautics         and Space.Administration,      our review of the
    Administration's        procurement regulations      showed that its respon-
    sibilities      for private pension plans were similar          to those of
    DODunder ASPR. The Federal Procurement Regulations,                 which af-
    fect-most      Federal procurement by civil        agencies, also contain
    provisions      regarding pension plans that are similar          to those in
    ASPR.
    NATIONAL LABOR RELATIONS BOARD
            The National Labor Relations    Board has no specific    statu-
    'tory authority     or responsibility  with respect to private pension
     plans.     The Board is empowered to prevent any person from en-
     gaging in any unfair labor practice       affecting  commerce. The
     Board becomes involved in pension plan questions when hearing
    unfair    labor practice    cases which require determinations     as to
    whether pension plans are appropriate         or mandatory subjects of
     bargaining.
          The following two leading decisions of the Board illustrate
    the extent to which pension plans are appropriate  subjects of
    bargaining.
         In the Inland            Steel Company case (77 NLRB 1, enfd. 170
    F.2d 247 (C.A. 7)             Cert. denied   336 U.S. 960), the Board de-
    cided that pensio;            and retiremeAt  programs were included in the



                                               9
                                                             ENCLOSURE


board interpretation of “wages”, and “conditions  of employment”
under the National Labor Relations   Act and are therefore man-
datory subjects of co;9%ective bargaining.
      In the recent Pittsburgh    Plate Glass Company case (177 NLRB
114, 427’ F.Zd 936) p the Board held that retired    employees were
“employees’: within the meaning of the Nation-al Labor Relations
Act and that changes in their benefits     were encompassed within
the bargaining   obligations   of the act.   On June 10, 1970) the
United States Court of Appeals for the Sixth Circuit       disagreed
and denied enforcement of the BoardPs order.       Because of the im-
portance of the issue, the Board asked the Supreme Court of the
United States to consider the case, and the request was granted
 (401 U.S. 907) on February 22, 197%. The case was argued before
the Supreme Court on October 20, 1971, but a decision is not ex-
pected until January 1972.
COST QF LIVI&    COUNCIL
       The Economic Stabilization       Act of 1970 (I.2 U.S.C. 1904
note) as amended by the act of March 31, 31971 (85 Stat. 13) p
and the act of May 18, 1971 (85 Stat. 38) B authorizes          the Pres-
ident to issue such orders and regulations         as he may deem ap-
propriate   to stabilize   prices;    rents) wages, and salaries    at
levels not less than‘those       prevailing   on May 25, 1970. Execu-
tive Order No. 1196%5of August 15, 1971, provides for a freeze
on prices,    rents 9 wages o and salapies.
    ‘The -act and Executive order apply to pension funds in that
the freeze includes employers o contribufzions to fringe benefits
as a part of wages. The freeze has been interpreted     by the Cost
of Living Council as affecting   pension plans in some respects.
       The freeze is under the overall    guidance of the Cost of
Living Counc%l. in the Executive Office of the President.       The
Council can enforce the provisions     of the freeze by obtaining
injunctions    from the courts. Violators     of the freeze are sub-
ject to fines as much as $S,OOO each.




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