HomeMy WebLinkAbout580001.tiff nwilika Mutual, Lts, ,e sry,
HOME OFFICE, LOB ANGELES.CALIFORNIA
ASA V. CALL. CHAIRMAN
T. S. BURNETT. PRESIDENT
DARWIN S. LIGGETT PACIFIC MUTUAL BUILDING
ASSISTANT VICE PRESIDENT LOS ANGELES 55. CALIFORNIA
GROUP DEPARTMENT
October 10, 1958
TO PACIFIC MUTUAL GROUP POLICYHOLDERS:
Gentlemen:
You are undoubtedly aware that President Eisenhower has signed Senate Bill S.2888,
which provides for a Federal Welfare and Pension Plan Disclosure Act to become
effective January 1, 1959. .
The Act provides for disclosure and reporting of the financial operations of all
types of Employee Welfare and Pension Benefit Plans covering more than 25 employees.
To accomplish this will require most of our Group policyholders to furnish rather
detailed reports concerning their benefit programs. While we suggest you consult
your own legal counsel with respect to compliance therewith, we are enclosing a
copy of the Acttfor your immediate information.
In essence, the law requires the preparation of two reports: (1) a "Description
of Plan" and (2) an "Annual Report." The first of these reports must be available
90 days from the effective date of the Act or the establishment of the plan, which-
ever is later. The "annual report" is required 120 days after the close of the
calendar year (or if the records of the plan are kept on a policy or other fiscal
year basis, within 120 days after the end of such policy or fiscal year).
The statement of President Eisenhower in conjunction with his signing of the Act
included the following:
"....but the annual financial reports will not have to be furnished until
as late as May, 19$0, if the plans are on a calendar year basis or for a
period of 120 days after the completion of the fiscal year if they operate
on a fiscal year basis."
There is, however, a question, if the policy year of an insured plan is not on a
calendar year basis, whether financial reports are due with respect to policy years
commencing in 1959 or ending in; 1959.
The Bill does not provide for an Administering Agency and it is unlikely that an
official interpretative ruling will be available with respect to the various
ambiguities in the language of the Act. In addition, although the Secretary of
Labor is charged with the responsibility for issuing reporting forms, the use of
these forms by the "Plan Administrator" is entirely optional. We believe that the
interests of all parties concerned will best be served if there is uniformity not
only of interpretation but also in the form in which the required data is made
available. To this end, meetings are currently being held within the insurance
SSctc I
Page 2.
Pacific Ittual Group Policyholders:
industry to attempt to arrive at an appropriate interpretation and one or more
proper reporting forms. At present, we recommend that beyond studying the law,
you take no positive action. We will acquaint you with any decisions reached
at a later date.
A great deal of the information which you are required to report will be avail-
able from your own records. However, certain data is generally obtainable only
from the insurerts Home Office records. The dissemination of this information
by Pacific Mutual to its thousands of policyholders will obviously impose a
severe burden upon administrative facilities. Your cooperation in the prompt
payment of premiums will greatly aid the preparation of the required data within
the time allowable. We assure you that you may expect our fullest copperation.
Sincerely yours,
Darwin S. Liggett
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WELFARE AND PENSION PLANS � ' b
DISCLOSURE ACT
(TITLE)
(Section 1) That this Act may be cited as the "Welfare and Pension Plans Disclosure Act".
TABLE OF CONTENTS
Sec. 2. Findings and policy.
Sec. 3. Definitions.
Sec. 4. Coverage.
Sec. 5. Duty of disclosure and reporting.
Sec. 6. Description of the plan.
Sec. 7. Annual reports.
Sec. 8. Publication.
Sec. 9. Enforcement.
Sec. 10. Effect of other laws.
Sec. 11. Separability of provisions.
FINDINGS AND POLICY
Sea. 2. (a) The Congress finds that the growth in size, scope, and numbers of employee
welfare and pension benefit plans in recent years has been rapid and substantial; that the
continued well-being and security of millions of employees and their dependents are directly
affected by these plans; that they are affected with a national public interest; that they have
become an important factor affecting the stability of employment and the successful development
of industrial relations; that they have become an important factor in commerce because of the
interstate character of their activities, and of the activities of their participants, and the
employers, employee organizations, and other entities by which they are established or main-
tained; that owing to the lack of employee information concerning their operation, it is
desirable in the interests of employees and their beneficiaries, and to provide for the general
welfare and the free flow of commerce, that disclosure be made with respect to the operation
and administration of such plans.
(b) It is hereby declared to be the policy of this Act to protect interstate commerce and
the interests of participants in employee welfare and pension benefit plans and their benefi-
ciaries, by requiring the disclosure and reporting to participants and beneficiaries of
financial and other information with respect thereto.
DEFINITIONS
Sec. 3. (a) When used in this Act --
(1) The term "employee welfare benefit plan" means any plan, fund, or program which is
communicated to or its benefits described in writing to the employees, and which was heretofore
or is hereafter established by an employer or by an employee organization, or by both, for the
purpose of providing for its participants or their beneficiaries, through the purchase of
insurance or otherwise, medical, surgical, or hospital care or benefits, or benefits in the
event of sickness, accident, disability, death, or unemployment.
(2) The tens "employee pension benefit plan" means any plan, fund or program which is ,
communicated or its benefits described in writing to the employees, and which was heretofore or
is hereafter established by an employer or by an employee organization, or by both, for the
purpose of providing for its participants, or their beneficiaries, by the purchase of insurance
or annuity contracts or otherwise, retirement benefits, and includes any profit-sharing plan
which provides benefits at or after retirement.
(3) The term "employee organization" means any labor union or any organization of any kind,
or any agency or employee representation committee, association, group, or plan, in which
employees participate and which exists for the purpose, in whole or in part, of dealing with
employers concerning an employee welfare or pension benefit plan, or other matters incidental
to employment relationships; or any employees' beneficiary association organized for the purpose,
in whole or in part, of establishing such a plan.
(4) The term "employer" means any person acting directly as an employer or indirectly in
the interest of an employer in relation to an employee welfare or pension benefit plan, and
includes a group or association of employers acting for an employer in such capacity,
(5) The term "employee" means any individual employed by an employer,
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(6) The term "participant" means any employee or former employee of an employer or any
member of an employee organization who is or may become eligible to receive a benefit of any
type from an employee welfare or pension benefit plan, or whose beneficiaries may be eligible
to receive any such benefit.
(7) The term "beneficiary" means a person designated by a participant or by the terms of
an employee welfare or pension benefit plan who is or may become entitled to a benefit there-
under.
(8) The term "person" means an individual, partnership, corporation, mutual company,
Joint-stock company, trust, unincorporated organization, association, or employee organization.
(9) The term "State" means any State of the United States, the District of Columbia, the
Territories of Hawaii, Puerto Rico, the Virgin Islands, and the Canal Zone.
(10) The term "commerce" means trade, commerce, transportation, or communication among the
several States, or between any foreign country and any State, or between any State and any
place outside thereof.
(11) The term "affecting commerce" means in commerce, or burdening or obstructing commerce
or the free flow of commerce.
COVERAGE
Sec. 4. (a) Except as provided in subsection (b), this Act shall apply to any employee
welfare or pension benefit plan if it is established or maintained by any employer or employers
engaged in commerce or in any industry or activity affecting commerce or by any employee
organization or organizations representing employees engaged in commerce or in any industry or
activity affecting commerce or by both.
(b) This Act shall not apply to an employee welfare or pension benefit plan if --
(1) such plan is administered by the Federal Government or by the government of a State,
by a political subdivision of a State, or by an agency or instrumentality of any of the fore-
going;
(2) such plan was established and is maintained solely for the purpose of complying with
applicable workmen's compensation laws or unemployment compensation disability insurance laws;
(3) such plan is exempt from taxation under section 501 (a) of the Internal Revenue Code
of 1954 and is administered as a corollary to membership in a fraternal benefit society
described in section 501 (c) (8) of such Code or by organizations described in section 501
(c) (3) and 501 (c) (4) of such Code; or
(4) such plan covers twenty-five or less employees.
DUTY OF DISCLOSURE AND REPORTING
Sec. 5. (a) The administrator of an employee welfare benefit plan or an employee pension
benefit plan shall publish in accordance with section 8 to each participant or beneficiary
covered thereunder (1) a description of the plan and (2) an annual financial report. Such
description and such report shall contain information required by sections 6 and 7 of this Act
and shall be published in accordance with the provisions of this Act.
(b) The term "administrator" whenever used in this Act, refers to --
(1) the person or persons designated by the terms of the plan or the collective bargaining
agreement with responsibility for the ultimate control, disposition, or management of the money
received or contributed; or
(2) in the absence of such designation, the person or persons actually responsible for the
control, disposition, or management of the money received or contributed, irrespective of
whether such control, disposition, or management is exercised directly or through an agent or
trustee designated by such person or persons.
DESCRIPTION OF THE PLAN
Sec. 6. (a) Except as provided in section 4, the description of any employee welfare or
pension benefit plan shall be published as required herein within ninety days of the effective
date of this Act or within ninety days after the establishment of such plan, whichever is
later.
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(b) The description of the plan shall be published, signed, and sworn to by the person
or persons defined as the "administrator" in section 5, and shall include their names and
addresses, their official positions with respect to the plan, and their relationship, if any,
to the employer or to any employee organizations, and any other offices, positions, or employ-
ment held by them; the name, address, and description of the plan and the type of administra-
tion; the schedule of benefits; the names, titles, and addresses of any trustee or trustees
(if such persons are different from those persons defined as the "administrator"); whether the
plan is mentioned in a collective bargaining agreement; copies of the plan or of the bargaining
agreement, trust agreement, contract, or other instrument, if any, under which the plan was
established and is operated; the source of the financing of the plan and the identity of any
organization through which benefits are provided; whether the records of the plan are kept on
a calendar year basis, or on a policy or other fiscal year basis, and if on the latter basis,
the date of the end of such policy or fiscal year; the procedure to be followed in presenting
claims for benefits under the plan and the remedies available under the plan for the redress of
claims which are denied in whole or in part. Amendments to the plan reflecting changes in the
data and information included in the original plan, other than data and information also
required to be included in annual reports under section 7, shall be included in the description
on and after the effective date of such amendments.
ANNUAL REPORTS
Sec. 7. (a) The administrator of any employee welfare or pension benefit plan, a descrip-
tion of which is required to be published under section 6, shall also publish an annual report
with respect to such plan. Such report shall be published as required under section 8, within
one hundred and twenty days after the end of the calendar year (or, if the records of the plan
are kept on a policy or other fiscal year basis, within one hundred and twenty days after the
end of such policy or fiscal year).
(b) A report under this section shall be signed by the administrator and such report shall
include the following:
(1) The amount contributed by the employer or employers; the amount contributed by the
employees; the amount of benefits paid or otherwise furnished; the number of employees covered;
a summary statement of assets, liabilities, receipts and disbursements of the plan; a detailed
statement of the salaries and fees and commissions charged to the plan, to whom paid, in what
amount, and for what purposes. The information required by this section shall be sworn to by
the administrator, or certified to by an independent certified or licensed public accountant,
based upon a comprehensive audit conducted in accordance with accepted standards of auditing,
but nothing herein shall be construed to require such an audit of the books or records of any
bank, insurance company, or other institution providing an insurance, investment, or related
function for the plan, if such books or records are subject to examination by any agency of the
Federal Government or the government of any State.
(c) If the plan is unfunded, the report shall include only the total benefits paid, and
the average number of employees eligible for participation during the past five years, broken
down by years; and a statement, if applicable, that the only assets from which claims against
the plan may be paid are the general assets of the employer.
(d) If some or all of the benefits under the plan are provided by an insurance carrier or
service or other organization such report shall include with respect to such plan (in addition
to the information required by subsection (b)) the following:
(1) The premium rate or subscription charge and the total premium or subscription charges
paid to each such carrier or organization and the approximate number of persons covered by each
class of such benefits.
(2) The total amount of premiums received, the approximate number of persons covered by
each class of benefits, and the total claims paid by such carrier or other organization; divi-
dends or retroactive rate adjustments, commissions, and administrative service or other fees
or other specific acquisition costs, paid by such carrier or other organization; any amounts
held to provide benefits after retirement; the remainder held of such premiums; and the names
and addresses of the brokers, agents or other persons to whom commissions or fees were paid,
the amount paid to each, and for what purpose: Provided, that if any such carrier or other
organization does not maintain separate experience records covering the specific groups it
serves, the report shall include in lieu of the information required by the foregoing provi-
sions of this paragraph (A) a statement as to the basis of its premium rate or subscription
charge, the total amount of premiums or subscription charges received from the plan, and a
copy of the financial report of the carrier or other organization and (S), if such carrier or
organization incurs specific costs in connection with the acquisition or retention of any
particular plan or plans, a detailed statement of such costs.
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(e) Details relative to the manner in which any funds held by an employee welfare bene-
fit plan are held or invested shall be reported as provided under paragraph (B), (C), and (D)
of subsection (e) (1),
(f) Reports on erployee pension benefit plans shall include, in addition to the applicable
information required by the foregoing provisions of this section, the following:
(1) If the plan is funded through the medium of a trust, the report shall include --
(A) the type and basis of funding, actuarial assumptions used, the amount of current
and past service liabilities, and the number of employees, both retired and non-retired
covered by the plan;
(B) a summary statement showing the assets of the fund broken down by types, such as
cash investments in governmental obligations, investments in non-governmental bonds, and
investments in corporate stocks. Such assets shall be valued on the basis regularly
used in valuing investments held in the fund and reported to the United States Treasury
Department, or shall be valued at their aggregate cost or present value, whichever is
lower, if such a statement is not so required to be filed with the United States Treasury
Department;
(C) a detailed list, including information as to cost, present value, and percentage
of total fund, of all investments in securities or properties of the employer or employee
organization, or any other party in interest by reason of being an officer, trustee, or
employee of such fund, but the identity of all securities and the detail of brokerage
fees and commissions incidental to the purchase or sale of such securities need not be
revealed if such securities are listed and traded on an exchange subject to regulation
by the Securities and Exchange Commission or securities in an investment company regis-
tered under the Investment Company Act of 1940, or securities of a public utility holding
company registered under the Public Utility Holding Company Act of 1935, and the state-
ment of assets contains a statement of the total investments in common stock, preferred
stock, bonds and debentures, respectively, listed at their aggregate cost or present
value, whichever is lower;
(D) a detailed list of all loans made to the employer, employee organization or other
party in interest by reason of being an officer, trustee, or employee of such fund,
including the terms and conditions of the loan and the name and address of the borrower.
Provided, that if the plan is funded through the medium of a trust invested, in whole or
in part, in one or more insurance or annuity contracts with an insurance carrier, the
report shall include, as to the portion of the funds so invested, only the information
required by paragraph (2) below.
(2) If the plan is funded through the medium of a contract with an insurance carrier, the
report shall include --
(A) the type and basis of funding, actuarial assumptions used in determining the
payments under the contract, and the number of employees, both retired and non retired,
covered by the contract; and
(B) except for benefits completely guaranteed by the carrier, the amount of current
and past service liabilities based on these assumptions, and the amount of all
reserves accumulated under the plan.
(3) If the plan is unfunded, the report shall include the total benefits paid to retired
employees for the past five years, broken down by year.
PUBLICATION
Sec. 8. (a) Publication of the description of the plan and the latest annual report required
under this Act shall be made to the participants and to the beneficiaries covered by the
particular plan as follows:
(1) The administrator shall mike copies of such description of the plan (including all
amendments or modifications thereto upon their effective date) and of the latest annual report
available for examination by any participant or beneficiary in the principal office of the plan.
(2) The administrator shall deliver upon written request to such participant or beneficiary
a copy of the description of the plan (including all amendments or modifications thereto upon
their effective date) and the latest annual report, by mailing such documents to the last known
address of the participant or beneficiary making such request.
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(3) The Secretary of Labor shall prepare and provide forms for the description of plan
and the annual report required by the provisions of this Act, and shall make such forms avail-
able to the Administrator of any plan on request.
(b) The administrator of any plan subject to the provisions of this Act shall file with
the Secretary of Labor two copies of the description of the plan and each annual report thereon.
The Secretary of Labor shall make available for examination in the public document room of the
Department of Labor copies of descriptions of plans and annual reports filed under this subsec-
tion.
ENFORCEMENT
Sec. 9. (a) Any person who willfully violates any provision of sections 5 or 8 of this Act
shall be fined not more than $1,000, or imprisoned not more than siX months.
(b) Any administrator of a plan who fails or refuses, upon the written request of a
participant or beneficiary covered by such plan, to make publication to him within thirty days
of such request, in accordance with the provisions of section 8, of a description of the plan
or an annual report containing the information required by sections 6 and 7, may in the court's
discretion become liable to any such participant or beneficiary making such request in the
amount of $50 a day from the date of such failure or refusal.
(c) Action to recover such liability may be maintained in any court of competent jurisdic-
tion by any participant or beneficiary. The court in such action may in its discretion, in
addition to any judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorney's
fee to be paid by the defendant,'and costs of the action.
(d) The district courts of the United States and the United States courts of the
Territories and possessions shall have jurisdiction, for cause shown, and subject to the
provisions of Rule 65 (relating to notice to adverse party) of the rules of civil procedure
for the United States district courts, as amended (U.S.C. 1952 edition, Title 28, section 2072),
to restrain violations of section 8.
(e) The provisions of section 1001 of Title 18 U.S.C. shall be applicable to any descrip-
tions of the plan or annual report which is sworn to under this Act.
EFFECT OF OTHER LAWS
Sec. 10. (a) In the case of an employee welfare or pension benefit plan providing benefits
to employees employed in two or more States, no person shall be required by reason of any law
of any such State to file with any State agency (other than an agency of the State in which
such plan has its principal office) any information included within a description of the plan
or an annual report published and filed pursuant to the provisions of this Act if copies of
such description of the plan and of such annual report are filed with the State agency, and if
such portion of the description of the plan and annual report, as may be required by the State
agency, are distributed to participants and beneficiaries in accordance with the requirement
of such State law with respect to scope of distribution. Nothing contained in the subsection
shall be construed to prevent any State from obtaining such additional information relating to
any such plan as it may desire, or from otherwise regulating such plan.
(b) The provisions of this Act, and any action taken thereunder, shall not be held to
exempt or relieve any person from any liability, duty, penalty, or punishment provided by any
present or future law of the United States or of any State affecting the operation or adminis-
tration of employee welfare or pension benefit plans, or in any manner to authorize the opera-
tion or administration of any such plan contrary to any such law.
SEPARABILITY OF PROVISIONS
Sec. 11. If any provision of this Act or the application of such provision to any person
or circumstance is held invalid, the remainder of this Act and the application of such provision
to other persons or circumstances shall not be affected.
EFFECTIVE DATE
Sec. 12. The provisions of this Act shall become effective January 1, 1959.
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PACIFIC MUTUAL LIFE INSURANCE CO.
IN THE MATTER OF A FEDERAL WELFARE
AND PENSION PLAN DISCLOSURE ACT TO
- BECOME EFFECTIVE JANUARY 1, 1959.
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