cuts across state lines. A strengthening of Section 514, or at a minimum, language in the Committee Report clarifying Congressional intent in this matter, would be desirable. Reporting and Disclosure The cost to industry, both small and large, of compliance with ERISA reporting and disclosure requirements is enormous. The information required in the 5500 Series is far too comprehensive, and we must assume that, on an annual basis, only a miniscule part of that information will ever be used by the government agencies collecting it. We recommend that exception reporting along the lines of reportable events under Title IV be used with full financial reports being required every third or fifth year, instead of annually. This would ease the burden on government employees monitoring the reporting and ease the paperwork and financial burden on employers to provide the information, while at the same time maintain adequate reporting of information. It is the consensus of our group that much of the reporting to participants required by the law is counter-productive. Every company has received disturbed and confused responses to these reports from retirees and others not affected by the ERISA changes, fearful that their benefits were being cut. Conversely, the number of inquiries from active participants is statistically insignificant. The Summary Plan Description, we agree, is something that should be distributed to the 30-779 - 78-70 participants, but some of the detail required by regulations is confusing and counter-productive. Additionally, distribu tion to retirees, inactive participants, and others not affected, serves no purpose except to increase concern and confusion unnecessarily. The Summary Annual Report, on the other hand, seems to serve no useful purpose. Financial information on hand in the Administrator's office or on request would provide a much clearer picture of the plan's financial situation and cause less confusion and concern. A personalized statement of benefits is much more important to the individual participant, and much more truly a picture of the financial circumstances of significance to him. Seasonal Industries The definition of what constitutes a seasonal industry is of major concern to our members. This is such a complex and difficult issue that it is understandable that the Department of Labor has not been able to issue regulations in this area. We agree that the real objective should be to find a way to provide benefits to regular part-time employees, regardless of the industry in which they work. Perhaps the issue should be addressed in the statute, or at least in the Committee Report, to clarify Congressional intent in this area. We would be pleased to provide more details on seasonal definition at your request. Independent Audit We hope amendments to ERISA will require accountants to accept findings of an independent audit of bank or insurance company records. We would be glad to provide details as to how this has caused problems, at your request. Merger Requirements Benefit accruals should, of course, be protected, but the current requirements have proven to be difficult or impossible to meet. They are largely unnecessary and unduly burdensome since termination is unlikely to occur shortly after a merger and further accruals increase benefits. We recommend elimination of the language which requires that each pension plan participant be as well off the day after the merger as he or she would have been the day before the merger, had the plan then terminated. The same protection could be afforded by a provision requiring that upon subsequent retirement or plan termination, each participant shall, for the period prior to the initial merger, receive no less than he or she would have received under the prior plan. Perhaps additional language which retains prior plan sponsor responsibilities for termination within a five-year period following merger would be beneficial. SEC Involvement We encourage you to incorporate language which would make Congressional intent clear in the area of SEC involvement, i.e., that an interest in a pension benefit is not an investment subject to securities laws and regulations, contrary to the ruling in the Daniel case. This would also serve to avoid other potential problems with respect to preemption of state regulation under Section 514. Vesting We do not believe it is consistent with Congressional intent for IRS to require a more liberal vesting schedule than those in the Act. We encourage you to clarify this in some way. Investment of Pension Funds We do not believe that funds from private pensions should be required to be invested in specific vehicles for any social purpose. Likewise, we support PBGC's having latitude to invest its assets in any appropriate investment vehicle and hope you can clarify this. I hope these suggestions have been useful. We would be glad to have a group of our members meet with you to discuss any ERISA issues further, respond in writing to any questions you might have, provide draft language or further ideas, or testify at any committee hearings which may be scheduled. certainly appreciate your considering our comments on this important issue. We The enclosed statement was presented to the Secretary of Labor, the Honorable Ray Marshall, and the statement is an expression of the National Food Processors Association's position on the inclusion of seasonal workers in ERISA. We would like this statement to be entered in the record on June 2nd, 1978. And we would welcome the opportunity to testify before you when you conduct hearings on the matter. Sincerely, Daviel T. Car David T. Crow Legislative Representative Enclosure (1) DTC/ep |