pursuant to law. There is no objection to the distribution of your enclosed form of report in addition to that which is required by this Department. Very truly yours, LEFFERT HOLZ, Superintendent of Insurance. By: JAMES J. HIGGINS, Chief, Examination Section, Welfare Fund Bureau. Mr. WIER. We want to thank you for giving the committee your aid. Mr. PIPIN. I want to thank the members of the committee for taking the time to listen to me. Mr. WIER. The committee will stand adjourned subject to call of the Chair. (Whereupon, at 12:05 p. m. the committee was recessed subject to call.) WELFARE AND PENSION FUND LEGISLATION WEDNESDAY, JULY 24, 1957 HOUSE OF REPRESENTATIVES, Washington, D. C. The committee met at 10: 15 a. m., pursuant to recess, in room 429, Old House Office Building, Hon. Graham A. Barden (chairman) presiding. Present: Representatives Barden, Bailey, Wier, Landrum, Roosevelt, Zelenko, Holland, Holt, Wainwright, Frelinghuysen, Nicholson, Ayres, and Haskell. Chairman BARDEN. The committee will come to order. Gentlemen, we have with us this morning Mr. Robert C. Tyson, chairman of the finance committee of the United States Steel Corp. Mr. Tyson, if you will identify yourself with the reporter, we will be glad to hear your statement. STATEMENT OF ROBERT C. TYSON, CHAIRMAN OF THE FINANCE COMMITTEE OF THE UNITED STATES STEEL CORP.; ACCOMPANIED BY WILLIAM G. WHYTE, ASSISTANT VICE PRESIDENT; AND MARC M. FISHER, ASSISTANT COMPTROLLER, UNITED STATES STEEL CORP. Mr. TYSON. Mr. Chairman and members of the committee, I am Robert C. Tyson, chairman of the finance committee of United States Steel Corp., and on my right is Mr. W. G. Whyte, assistant vice president of our corporation, and on my left is Mr. Marc Fisher, assistant comptroller. I have a prepared statement which I would like to read for the record if I may do so. Chairman BARDEN. We will be glad to have you do so. Mr. TYSON. Gentlemen, this is the first appearance of United States Steel before a committee of the House on the subject of welfare and pension fund legislation. We have made two appearances before the Senate Subcommittee on Welfare and Pension Plans legislation, and I appreciate the opportunity of appearing here today to express our views on this important matter. Our first Senate appearance was in November 1955 and was for the purpose of informing the subcommittee of United States Steel's long experience dating back to 1911 with employee pensions and the means of providing for them. We also covered our long experience with. group insurance plans and their financing. I do not intend to repeat these descriptions here today because they are matters of record already available to you. I do wish, however, as I did in our recent Senate appearance, to state briefly our position, which is that we believe the great majority of employee benefit plans are operated quite successfully, and there is no evidence of any need for costly public supervision. There may be a small minority which do require some scrutiny. However, it seems to us that there is much merit in letting the matter of public supervision be developed and tested by the States through extension, if need be, of the substantial supervision that is already in existence. Mr. FRELINGHUYSEN. Mr. Chairman, might I ask Mr. Tyson whether he would mind interruption. I would like to ask a brief question, but I do not want to interrupt him if he would prefer to finish. Mr. TYSON. That is quite all right, as you wish. Mr. FRELINGHUYSEN. I wondered about the expression, "public supervision." Are you talking about a disclosure statute, and are you objecting to a Federal disclosure statute? Mr. TYSON. I believe that that will all come out in my statement. We have very definite feelings regarding disclosure as well as regulation, if you are differentiating between those two terms. Mr. FRELINGHUYSEN. Does supervision mean disclosure or does it mean something else? Mr. TYSON. It would mean either in the broad sense, but I do cover both of those points in my statement as I go along. Mr. FRELINGHUYSEN. In the sense you have just used it, are we talking about that you feel that the States should develop this matter of disclosure? Mr. TYSON. If disclosure is what is needed, then it can be developed on the basis of disclosure. Mr. FRELINGHUYSEN. At the State level, that is what I am asking. Mr. TYSON. At the State level, yes. If further things are needed in the development of this matter, as times goes along, then that likewise should come through the State in our opinion. Mr. FRELINGHUYSEN. If we had 48 disclosure statutes we might have considerably more costly public supervision than we would if we had a single Federal disclosure statute, if that is what we are talking about. Perhaps we ought to let you proceed. Mr. TYSON. I believe part of it will come out, but I will be glad to elaborate on it at a later time in the statement. Mr. FRELINGHUYSEN. I have no wish to interrupt, Mr. Tyson. Mr. TYSON. Since our initial Senate appearance, a number of bills relating to this subject matter have been introduced in the House1 and in the Senate. All of the Senate bills have had their counterparts introduced in the House except for S. 1813 and S. 2137 which I shall refer to as the Goldwater bill and as the Allott bill, respectively. There have been other developments along the lines of further dis 1 H. R. 487, H. R. 4653, H. R. 6513, H. R. 6650, H. R. 7607, H. R. 8004-introduced by Mr. Thompson, Mrs. Green, Messrs. Reuss, Ostertag, Price, and McGovern (the Douglas bill, S. 1122); H. R. 2437, H. R. 5994, H. R. 6014, H. R. 6649-introduced by Messrs. Frelinghuysen, McConnel, and Ostertag (the administration bill); H. R. 7030-introduced by Mr. Frelinghuysen; H. R. 7236-introduced by Mr. Landrum H. R. 7802, H. R. 7960introduced by Messrs. Frelinghuysen and Ostertag (revised administration bill); S. 1813 (the Goldwater bill) and S. 2137 (the Allott bill) have been introduced in the Senate but not in the House. closures of bad practices and wrongdoings in connection with the handling of welfare and pension moneys of a certain type of plan. The area of abuse has been in connection with plans to which employers have agreed to pay certain stated amounts of money and under which the program of benefits is not negotiated but determined by trustees on the basis of moneys available in the fund to which the employers' contributions are paid, the so-called jointly administered type of plan. I think it important to note that no abuses have been disclosed with respect to any other type of plan. This does not necessarily mean that there are nowhere any abuses of any kind whatsoever in any other type of plan. But, as far as the actual information available is concerned, the presence of any abuses in other types of plans must remain a matter of conjecture or assumption. I believe this would not be generally accepted as a sound basis for legislation covering all pension and welfare plans, which would certainly be very burdensome to such plans and exceedingly costly for any Government agency to administer, and which might well result in forcing or inducing changes in sound business practices and in improper interference with labor-management relations. I note that the Goldwater bill is limited in its application to the Taft-Hartley type of plan. There is much to be said for this approach. As I have stated, I have felt that supervision of pension and welfare funds should be at the State level. I recognize, however, that there may be Federal legislation because certain disclosures have created some problems, not the least of which is the finding of a means whereby proper safeguards may be placed upon the small minority of badly administered plans without improper hardships being put upon the vast majority of well-administered plans. Mr. FRELINGHUYSEN. If I may interrupt again, I do not understand the statement that there may be Federal regulations. You mean there may be need for Federal legislation? Mr. TYSON. I am admitting in my opinion, because of the disclosures, sir, there may be felt a need and as such Federal legislation may result. Mr. FRELINGHUYSEN. But you did not say "need," and I wondered if you meant there may be need for Federal legislation. Mr. TYSON. I did not, sir. There may be because the Congress may decide that there has to be. I cannot determine that, but I say that that is a possibility. That is my intention. Mr. FRELINGHUYSEN. Yes. Mr. HASKELL. You did not mean to say that the disclosures had created the problem? Mr. TYSON. No, I said the disclosures have created many problems. Mr. HASKELL. The disclosures? Mr. TYSON. The disclosures Mr. HASKELL. The problems are there, and they have been disclosed. Mr. TYSON. That is correct. I do not mean the problems came about as a result of these disclosures. Chairman BARDEN. They created a problem to us after we found it out, I might say. Mr. TYSON. So if there is to be Federal legislation in this field, I do have some suggestions to make to the committee. They are directed toward imposing the minimum burden and expense on employee-benefit plans in general and the minimum burden and expense upon any governmental agency responsible for administering the legislation. First of all, I would like to suggest that any legislation enacted deal with reporting and disclosure rather than regulation. The latter would involve a most costly creation and enforcement of standards for matters which are inherently not susceptible of rigid standardization. For example, testimony has been submitted to the Senate subcommittee which indicates that there are a half million or more different plans which would be covered by some of the proposed legislation. It is more reasonable to suppose that each one differs in some respect from all others than to suppose they all resemble each other. At the same time, it is wholly unreasonable to suppose that the differences represent evil deviations from some theoretical ideal rather than good adaptation to particular circumstances. Mr. ROOSEVELT. Could I ask at that point, You do not mean that you would be against State regulations? Mr. TYSON. Mr. Roosevelt, I am against regulations. When I say I am against it, I mean in the sense that I see no need for regulation of these plans. Now, I feel, and I am offering a suggestion in my paper, with regard to disclosure in connection with these plans Mr. ROOSEVELT. On tax-exempt plans, would you go so far as to say that the existing regulations would be included in your definition of disclosure, or would you think it already goes too far? Mr. TYSON. The existing tax regulations, you mean? Mr. ROOSEVELT. Yes. Mr. TYSON. I do not think necessarily that the tax regulation, as it exists today, has a particular bearing on the problem that is being considered by this committee. Mr. ZELENKO. If you will yield? Mr. Tyson, when you say that you do not favor regulation of any kind in response to Mr. Roosevelt's inquiry, whether or not that would go to State regulations, do you mean regulation of any kind including State insurance departments or laws relating to trusts in the local States? Mr. TYSON. I think, Mr. Zelenko, that my reference to no need for regulation is based on the fact that I believe there is existing legislation covering the abuses that have been found. These abuses have been confined to restricted areas in a certain type of plan, and it is my opinion that extensive regulation of all welfare plans because of this limited abuse that has been found, is not necessary at this time. Mr. ZELENKO. In answer to my inquiry, you mean that there is no additional regulation needed, but that which exists now is sufficient in your opinion? Mr. TYSON. That is correct, sir. Gentlemen, I assure you that this is an extremely complicated matter. It would seem prudent to know a great deal more about these matters before concluding that regulatory standards are either devisable or desirable. Perhaps nothing more need be said on this point |