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CONTENTS

Griffiths, Hon. Martha W., chairman of the Subcommittee on Fiscal
Policy: Opening statement..

White, William L., professor, Graduate School of Business Administration,
Harvard University_

Murray, Roger F., executive vice president and chairman, CREF Finance

Committee, Teachers Insurance and Annuity Association and College

Retirement Equities Fund..

Cohen, Manuel F., attorney, Wilmer, Cutler & Pickering, and former

Chairman, Securities and Exchange Commission_.

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Levitt, Arthur, comptroller, State of New York.

Dietz, Peter O., professor of finance, Graduate School of Management and
Business Administration, University of Oregon..

Harbrecht, Paul P., professor of law, York University, Toronto, Canada_

Lerner, Eugene M., professor of finance, Graduate School of Management,

Northwestern University -

Babson, David L., president, David L. Babson & Co., Inc., Boston, Mass__

SUBMISSIONS

MONDAY, APRIL 27, 1970

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Javits, Hon. Jacob K.:
Bills:

"S. 2167-Introduction of the Pension and Employee Benefit Page
Act of 1969," from the Congressional Record, May 14, 1969. 40
"S. 3589 Introduction of Employee Benefits Protection Act-
Administration Bill To Amend the Welfare and Pensions
Plans Disclosure Act," from the Congressional Record,
March 13, 1970, with explanatory statement and section-by-
section analysis of amendments.--

Murray, Robert F.:

Response to Chairman Griffiths' query relative to the largest block of stock that the College Retirement Equities Fund has bought or sold in the past 5 years and what happened to that stock within the next 72 hours after the purchase or did the market go up or down and by how much after a large sale or a large purchase..

White, William L.:

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Prepared statement...

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Babson, David L.:

Article entitled "The Investment Management 'Industry' and Its
Problems".

Griffiths, Hon. Martha W.:

Correspondence with Chairman Budge of the Securities and Exchange Commission relative to appearing before the subcommittee____ Keenan, Joseph D.:

Response to Chairman Griffiths' request to supply for the record a response to Mr. Babson's observation that competition between unions is not comparable to the competition between Chrysler, Ford, and General Motors, and his indictment of organized labor being a cartel and/or monopoly primarily responsible for inflation...............

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INVESTMENT POLICIES OF PENSION FUNDS

MONDAY, APRIL 27, 1970

CONGRESS OF THE UNITED STATES,
SUBCOMMITTEE ON FISCAL POLICY,
JOINT ECONOMIC COMMITTEE,
Washington, D.C.

The Subcommittee on Fiscal Policy met, pursuant to recess, at 10 a.m., in room S-407, the Capitol Building, Hon. Martha W. Griffiths (chairman of the subcommittee) presiding.

Present: Representatives Griffiths, Widnall, and Conable; and Senator Javits.

Also present: John R. Stark, executive director; James W. Knowles, director of research; Loughlin F. McHugh, senior economist; and Douglas C. Frechtling, economist for the minority.

Chairman GRIFFITHS. The Subcommittee on Fiscal Policy will come to order.

Pension funds-both private and public-are one of the major avenues through which savings of our people are channeled to investment-both public and private. As one of our witnesses today suggests, this institutional intermediary is a source of added investment funds because it gives our citizens an incentive-which might not otherwise be present-to continue to put their private and individual resources into regular savings rather than into consumption, while the pension funds provide a base for their oldage living requirements. In other words, total savings of the people are increased, and therefore, hopefully, total investment can be increased, contributing to the strength of the economy.

I need not dwell on the facts, but I would like to bring out the importance of this subject as critical to the overall savings-investment process and hence to the potential improvement of our domestic well-being. Today, public and private pension funds own $240 billion of assets, well over double the book value of assets owned less than a decade ago. Private funds, insured and uninsuredbut not counting regular life insurance-now account for roughly $130 billion, compared with $50 billion at the start of the 1960's. Public funds-Federal and those for State and local employeescurrently amount to over $112 billion, just about double that of a decade ago.

For the record I should like to include two tables from the SEC release of April 20, 1970, showing (table 1) the assets of private noninsured pension funds, and (table 2) the assets of all private and public pension funds.

(Tables 1 and 2 referred to by Chairman Griffiths for inclusion. in the record follow:)

(1)

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TABLE 1.-ASSETS OF PRIVATE NONINSURED PENSION FUNDS

[Book value, in millions of dollars; figures may not add to totals due to rounding; includes funds of corporations, nonprofit organizations and multiemployer and union plans]

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Corporate and other bonds.

15,700

16,880

2,920 18, 100

3,050

3,070

3,100

2,610

2, 170

2,540

2,590

19,560

Preferred stock.

21, 210

22,700

24, 580

780

25, 500

26, 160

760

750

26,640

710

650

Common stock.

750

790

10,730

980

13,340

1,320

1,740

15,730

18, 120

20,840

Mortgages.

24,450

1,300

28,340

33,830

40,260

1,560

1,880

45,960

2,220

Other assets.

2,750

3,320

3,810

1,400

3,940

1,590

3,910

1,800

4,010

2, 120

2,510

2,820

3,430

4,110

4,450

4,740

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Source: U.S. Securities and Exchange Commission, release No. 2437, "Private Noninsured Pension Funds 1969," April 20, 1970.

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TABLE 2.-ASSETS OF ALL PRIVATE AND PUBLIC PENSION FUNDS

[Book value, in billions of dollars; figures may not add to totals due to rounding]

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2 Estimated.

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+ Not available. $ Separate accounts of life insurance companies, set up for specific pension plans, allow greater investment latitute than is permissible under state laws for general life insurance assets. Includes funds of nonprofit organizations and multiemployer plans.

Includes foreign service retirement and disability trust fund.

Source: SEC, Apr. 20, 1970, release.

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