r type of coverage. We believe it is the function of an insurance derwrite the risk on a sound basis, but we do not see why it is he insurance company to spread its risk on unlike coverages. * * * policies for experience and dividend purposes should in no way eral recommendations of the pooling of policies for commission

type of pooling is definitely desirable, in Mr. Segal's opinng for experience purposes is undesirable.

rfield Hobbs, vice president, National City Bank of New d the importance of welfare and pension plans in our olving many billions of dollars a year. He added:

report is an exceptionally fine job, but it should have concluded art, it was the first half of the first inning, and we should all get e proper investigation over a long term, if necessary, before even empt at legislation is made.

WELFARE AND PENSION PLANS IN COLLECTIVE BARGAINING

ly universally agreed that welfare and pension plans are ntegral, but an exceedingly important, part of collective Employer and employee contributions amount to bily, and are constantly increasing. Perhaps a third or a t collective bargaining settlements involve increases in ished health, welfare, and pension programs. Also, welssues are just as likely to cause a strike as wages, seniorng else.

h asserted that the term "fringe benefits" does not deority standing of welfare and pension plans. They affect most as intimately as any other provisions of collective reements. Both Messrs. Barbash and Cruikshank made t an important factor in the development of private welsion plans has been the inadequacy of social security at this development does not remove the need for getting lation; nor does it mean that there is no room for volunand health and welfare funds. The problem, according h, is merely "underscored and accentuated by the absence gislation in this field."

S OF SECTION 302 OF THE LABOR MANAGEMENT RELATIONS ACT OF 1947

sus was that section 302 of the Labor Management Rela1947 has proved an inadequate safeguard. The intent s expressed in the pertinent provisions of section 302 it unilateral control by unions of welfare funds, when hole or in part by employers, but the mere fact that emlaced on joint welfare plan boards did not prevent them ng their responsibilities in many cases. Also, the pront control has not prevented the funds from being dicases for the interests of selfish individuals.

asserted that the real problem is not whether a fund nilaterally controlled but whether it is honestly adminnt administration is not the complete answer to honesty," In his opinion the problem of whether or not there nt control of a fund is "best resolved by the parties

through free collective bargaining." If there is legislation requir joint administration it should work both ways, according to Barbash:

If you are going to say that unions cannot administer a fund unilaterally r also ought to say that employers cannot administer a fund unilaterally, bes otherwise the inference that you have to draw is that one section of our p tion *** is inherently more susceptible to chicanery and dishonesty than other section.

Mr. Lane Kirkland, assistant director, social security activities. Af of L., and Mr. Barbash pointed out that a great many welfare ps are customarily negotiated on the basis of benefits to be paid, with method of financing and administration left to the employer with c some provision for a grievance procedure. They indicated th some of the standards which are applied to the case studies in interim report are measured against many of the plans unilatera managed by employers, the conclusion would be inescapable that they are grossly mismanaged because there is no joint administration. Both representatives of the labor organizations emphasized th they were not asking for legislation to require bilateral administrati because "in the last analysis, it should be determined through collecti bargaining rather than by any arbitrary rule." Furthermore, "jcz control gives you assurance of precisely nothing with respect to honesty with which these funds are administered," according to M Barbash. In fact, he went on to say that

Section 302 as a part of the Taft-Hartley law, I think, should be abandone The Taft-Hartley law is a labor relations statute. It is a serious mistake t attempt to regulate under one heading labor relations, subversive activities, hes and welfare funds.

Mr. Cruikshank concurred in the view that if there is Federal legs lation there should be a separate comprehensive statute on welfa and pension funds.

On the other hand, Mr. Horace E. Sheldon, director, industrial res tions department, Commerce and Industry Association of New York. stated that the report of his association calls for greater specificity section 302 as to what information annual audits shall contain. In our view

he said, quoting from this report

it should also require that annual reports in an appropriate form, including 11 pertinent information on fund operations, be sent to all participating units contributing employers, and covered employees.

Mr. Sheldon also pointed out that there are situations where it is difficult, if not impossible, for employers to participate in the effective control of welfare funds.

There are cases where there are a large number of small employers in an ind try, and a union has one fund; just by the very nature of things the power there tends to gravitate into the hands of the union people. The individual employers have neither sufficient bargaining power nor sufficient interest ** and the balance of the bargaining power is not such that they can do anything really meaningful.

Mr. George Faunce, Jr., vice president, Continental Baking Coand Mr. Segal also pointed out that

If the joint control concept of 302 is really carried out by both parties, it has very real effect and a good effect on labor relations.

mong other beneficial effects, Mr. Segal went on to say that

me union leaders say that it has been easier to negotiate improvements in nsion and welfare plans when employer trustees have been participants in the eexisting program than when the employers were not participants.

BARGAINING ON BASIS OF LEVEL OF BENEFITS VERSUS CENTS PER HOUR

Mr. Barbash stressed the necessity of preserving "as much flexibility d fluidity" as possible with the decision left to particular unions and anagements as to whether bargaining should be on a level-of-benefits sis or on a cents-per-hour or percentage-of-payroll basis. Mr. Cliffe ggested that "this is probably not a subject for legislation of adoptgone versus the other," and there was general agreement therewith ong panel members.

Mr. Segal favored bargaining on the cents-per-hour basis because ch employees and employers

**

*The employer group

e an equal stake in what is done with the money. uld be sympathetic to a more comprehensive plan if they knew they had a ited dollar liability, having bargained on cents per hour.

While stressing that "you must cut the cloth to fit each case," Mr. bbs leaned toward the cents-per-hour basis for another reason. He nted out that in multiemployer plans

age of the employees has a great deal to do with the cost. If you are one of y employers and you agree to a set industrywide benefit, and you have an r average age group of employees, it is going to cost you considerably more petitively than another company in the same industry with younger people. the other hand, if you merely agree to pay 5 cents an hour for every hour ked, you not only do not care about the age of the employees that you have, there will not be a roadblock thrown against hiring people in their forties fifties.

Ir. Cliffe held the view, however, that employer participation is re likely to be encouraged "under a program that provides for a edule of benefits as negotiated," with the employer carrying the cost of whatever benefits are agreed upon. A cents-per-hour gram, on the other hand, has caused employers to feel that their onsibilities have been discharged upon agreeing to turn over "so y cents per hour or per ton or whatever the unit of production be." [r. Eddy cited cases where bargaining was for both benefits and s per hour and while the contributions supported the benefits iniy, they were not sufficient over the entire period of collective baring. In other words, bargaining should be on one basis or the r but not on both. Particularly is this true for industries characted by unpredictable employment, he stated.

your industry is subject to sharp declines

Barbash pointed out

ppens not infrequently that the employee must supplement the contractual int to provide a given level of benefits because the amount going into the has fallen short of the amount required to purchase the benefits.

at problem "has been met very successfully in many funds," ding to Mr. Segal.

en a multiemployer fund gets started where the employer is obligated to a specific cents-per-hour contribution, the trustees do not generally spend that money in industries that are subject to fluctuation, like building or the distributive industries. What they normally do is set aside part

ho would "charge an artifically low rate to get the initial h the idea of jacking up the price at a later date." He the chairman, however, that "competitive bidding would it in the wise placing of insurance policies," but that other such as the service programs (Blue Cross, Blue Shield, -insurance should also be explored.

ated Mr. Kirkland:

ook at the price alone. You have to look at the price in relation y and the character of the benefits you are going to get from the

lott pointed out that a particular company's policy with payment of claims-whether it cuts corners, fights claims em unduly-and its financial responsibility should also be gh stressed the importance of so-called retentions-what company keeps over and above what it gives back either lividends rather than competition on premiums. Variin the retentions include (a) expenses of administration ndling, (b) commissions, (c) taxes, and (d) contingency

company A has a higher rate of expense than insurance company

continued

gone down the drain. But insurance company B might have gency reserve charge than insurance company A, which might Ivantageous, even though it did increase the retention.

important considerations in determining the worth of an gram, according to Mr. Fitzhugh, are the services an pany renders in correctly designing the plan by providing, actuarial and legal advice; whether it is financially ntee that claims will be paid "whether there is an epiher there isn't an epidemic," etc.

nearned commissions

of the whole subject of price competition, there was a ission of the "compulsory payment of commissions," ed or not. This has increased costs in some cases and ption in others. Messrs. Barbash and Cruikshank cited the services of an agent were not required because in bargaining process the company and the union furnished echnical services and all that remained was the purchasup insurance without benefit or need of salesmanship. stated that the CIO had conducted a survey of the inissioners in the 48 States in an effort to determine ent of commissions is actually required where no ser›rmed by an agent or broker in planning or selling emprograms. While some replied that "no compulsory mmissions is required," they cited antirebate and antiprovisions of their statutes which in the final analysis mmissions be charged even if not paid.

nt Mr. Fitzhugh quoted the ruling of the New York endent of insurance as follows: