Pending completion of the "White Paper", we believe additional incentives and improvements can and should be made in federal pension laws. However, we suggest that there should be a moratorium on additional legislative and administrative restrictions, which would reduce the incentive of employers to establish, maintain, and improve plans.

2. We recommend that remedial legislation should consider specifically the following policies:

the need of plan participants, beneficiaries

and the agencies for accurate and timely
information;

the adverse impact of unduly burdensome

paperwork requirements on plan sponsors,
administrators, and service providers;

the particular problems of smaller plans and
smaller employers;

whether ERISA compliance can be monitored by

sponsor recordkeeping and random audit as

opposed to comprehensive reporting;

the administrative problems of multi-agency

jurisdiction;

the need to encourage the viability and

growth of the private pension sector.

ERISA adopted a concept of "small employers" and "small plans" which originated in the Welfare and Pension Plans Disclosure Act (WPPDA). Under ERISA, an employer is considered "small" if his plan covers less than 100 participants. We believe that the definition is more convenient than realistic. The simple dichotomy of "under 100" and "100 or more" participants simply does not recognize the real differences between the many sizes and types of plans and plan sponsors. A very fundamental difference is that smaller plans and smaller businesses generally have less "in house" sophistication for dealing with plan administration and have less ability to pay for required administrative, accounting, legal, actuarial, and other support services. Every dollar that must be expended in a "support" capacity is one less dollar that could have been applied to benefits. The appropriate administrative agency should have the discretion to respond to these differences in sponsors and plans, and to adopt regulations and guidelines for smaller plans and smaller businesses which emphasize simplicity and reduced costs, and which encourage the continuation of existing plans and the installation of new plans. The starting point for this discretion could be in the definitional sections of ERISA.

Recommendation:

We believe it would be appropriate to expand the definition of "small plans" to include those plans sponsored by employers meeting the Small Business Administration definition of a small business. (See Section 446 of S.

3017.)

III. REPORTING AND DISCLOSURE.

The reporting and disclosure requirements of ERISA
However, when combined

are another carryover from the WPPDA.

with the other significant ERISA protections, including minimum standards, funding, fiduciary responsibility and prohibited transactions, they approach "over-kill." In fact, many of the reporting and disclosure provisions are an expensive burden, both in terms of time and cost, for employers, with questionable benefit to participants and beneficiaries and the administrative agencies.

The complexity of the reporting and disclosure requirements has had a particularly adverse impact on small employer plans. As various of the previously cited surveys reflect, the fixed dollar costs associated with the implementation of ERISA's reporting requirements is often a disproportionate percentage of pension costs for the small employer.

A. Every effort should be made to eliminate duplicative and complex reporting. Legislation should not be so specific or restrictive as to prevent the appropriate administrative agency from exercising reasonable discretion in favor of simplified, non-duplicative reporting requirements. Special consideration should be given to simplified reporting for small employers and small plans. (See S. 3193.)

B. Access to plan records and information is a necessary corollary to enforcement of rights of participants and beneficiaries. However, reporting and disclosure should be

viewed as a means to an end, and not the end itself. It is our view that the basic objectives could be accomplished more simply and less expensively by requiring employers to keep detailed records for audit by agencies and review by participants and beneficiaries, and by requiring only summary reports to the appropriate administrative agency.

sound sampling. It is not necessary for every plan to

A. Schedule A. Schedule A information should be limited to data that is meaningful, necessary, and not susceptible to misinterpretation by sponsors, participants or the agencies.

Specifically, we would urge that insurance

commissions disclosure be permitted in the form of percentage of premium on an initial and renewal basis, as opposed to dollar amounts.

B. The Summary Plan Description.

The Summary Plan Description has evolved from a

communication vehicle to a legal document.

Despite the

admonition that the Summary Plan Description be drafted with language calculated to be understood by the average participant, it of necessity will be complex, and invariably will refer to the plan document for further information.

Given that the purpose of the Summary Plan De

scription is to communicate important plan provisions to

participants, as opposed to serving as a legally binding prospectus, we would suggest that its form should not be

that of a legal document, but rather an easily-understood booklet which describes the plan provisions in question-andanswer form.

Should the plan participants feel the need for more detailed information, they should be encouraged to examine the actual plan document.

Plan sponsors should not be held liable for unintentional or technical discrepancies. Liability should follow only in cases of actual intent to mislead.

C. The Summary Annual Report.

Distribution to all plan participants of a Summary

Annual Report represents another costly procedure of questionable utility. Certainly this information could be made available to plan participants on request.

D. Notice to Interested Parties.

ERISA Section 2001 (a) and IRC Section 7476 require that each employee who qualifies as an "interested party" be notified that a plan has applied for a determination letter from the Internal Revenue Service. Although several methods are suggested for publication or distribution of this notice, it is to be written in terms that the average plan participant would be unable to understand.

We question whether the notice serves any useful purpose. If ignored by participants, it is indeed a needless and expensive procedure. Even if not ignored, the decision as to qualification is made by the Internal Revenue Service (or