On March 1, 1971, by Senate Resolution 35, the U. S. Senate ordered the Senate Subcommittee on Labor to conduct a study of the private pension system in the United States with special emphasis upon the need for protection of employees covered by these funds. As you were advised on July 14, 1971 by a staff member of the Senate Subcommittee on Labor, Mr. Edmund McCarthy of Ozone Park, New York had informed the Subcommittee of alleged hardships resulting from inability to qualify for a pension under your pension plan. Those were discussed with you in order to ascertain appropriate explanation in response to the difficulties recited. The complainant has been invited to testify before the Subcommittee on Labor on or about July 27, 1971, on hearings to be held pursuant to the Senate study of private pension plans. It will be for the purpose of presenting the problem alleged. Accordingly, the Subcommittee on Labor similarly invites your organization to designate a representative to appear to testify with respect to your pension plan benefits relating to Mr. McCarthy, and matters alleged by the complainant. It would be appreciated if you would indicate expeditiously whether you will appear. In the interim, please forward a copy of the pension plan and such other publications which you issue. relating thereto. Your assistance is appreciated. Sincerely, Mario T. Noto Special Counsel Subcommittee on Labor We acknowledge receipt of your letter of July 16, 1971 wherein you invited a representative of Mallinckrodt Chemical Works to appear to testify with respect to the pension plan benefits relating to our former employee, Mr. Edmund McCarthy. Since Mr. McCarthy terminated employment with Mallinckrodt Chemical Works in 1957, the files relating to this particular case are not readily available. We have, however, instituted a search for all pertinent data including pension plan benefits, and we expect to furnish these to the Committee as soon as practical for its information and inclusion in its record. We will furnish the information as soon as possible, but we do not expect 'to send a representative to appear before the Committee. As promised in my letter to you of July 22, 1971, I have undertaken a review of our files in order to respond to the points raised in Mr. McCarthy's letter to Senator Javits. Since Mr. McCarthy left our employ in 1957, the search of our files necessarily was time consuming. Mr. McCarthy began working for Mallinckrodt at its New York location on December 21, 1931. During his entire career with the company, he worked as a chauffeur-truck driver. In 1957 it was decided to consolidate all Eastern warehousing and shipping activities at our Jersey City, New Jersey, plant. Part of this consolidation involved the closing of the New York shipping operation office. The employees there were given the option of continuing their employment in Jersey City or resigning. In the event an employee chose the latter option, he was paid a week's salary for each year of his employ as termination pay. Mr. McCarthy elected to take employment in Jersey City and was transferred on June 17, 1957, but thereafter, on September 6, 1957, he voluntarily left our employ. Since his decision to transfer to Jersey City was on a trial basis, Mr. McCarthy was paid the severance pay amounting to twenty-six weeks. Additionally, Mr. McCarthy was given a check on September 11, 1957 for $2,917.36 which represented the refund of pension deposits made by him from July, 1932 through August, 1957, plus interest. Our pension program was instituted in 1931. As Mr. McCarthy correctly pointed out in his letter to Senator Javits, the vesting provisions of our pension policy in effect in 1957 provided that an employee had to be in the company's employ for 25 years and also have reached the age of 50. Under our current plan, the employer's contributions vest when any of three events occur; when he has 20 years of continuous service regardless of age, or 15 years of continuous service and have reached the age of 50, or simply when he has reached the age of 60 years regardless of length of service. MALLINCKRODT CHEMICAL WORKS Mario T. Noto, Esq. 2: August 11, 1971 In October, 1957 Mr. Bernard H. Fitzpatrick, an attorney and a member of Butler, Bennett, Fitzpatrick & DeSio, 37 Wall Street, New York, New York 10005, attorney for Mr. McCarthy, wrote to Sun Life Insurance Company of Montreal, Canada, the insurer of our pension plan, requesting an application permitting the conversion of Mr. McCarthy's contributions into a paid-up annuity policy. Sun Life originally indicated that Mr. McCarthy was required to have made the election prior to terminating his employment, but since he had not cashed the check given to him immediately after his termination representing his contributions to the plan, Sun Life offered to extend the option. After some correspondence between Mr. Fitzpatrick and Sun Life as to the interpretation of the insurance contract, Mr. Fitzpatrick concluded that the insurer was correct in its interpretation that Mr. McCarthy necessarily must have reached the age of 50 years before being entitled to any of the employer's contributions. At that time, August, 1961, Mr. McCarthy finally cashed the check that had been given to him back in 1957. We find no record of any offer by Mr. McCarthy to continue to make contributions to the plan to age 50. From his letter to Senator Javits, it would appear that Mr. McCarthy is still somewhat bitter concerning this matter. While I can understand his feelings, I would like to reiterate that under current plan he would be covered. I am sure you appreciate that the history of pension plans is marked by vitality and growth. What was an acceptable plan in 1957 is not acceptable now, and what is acceptable now may not be acceptable ten years from now. I hope that the above will be of some assistance to you. The CHAIRMAN. Where are you working now? Mr. MCCARTHY. Down at Kennedy Airport in New York. The CHAIRMAN. What does that vest? How long do you have to work at this? Mr. MCCARTHY. After 8 years you have some rights in it, but 15 years to make it worthwhile. The CHAIRMAN. By then you would certainly have reached the proper age: wouldn't you? Mr. MCCARTHY. I hope so. To get 15 years in the plan now I will have to be 67 before I can retire. The CHAIRMAN. It seems that once you are at that age the likelihood of being employed in any kind of manual work is rather negligible. Mr. MCCARTHY. I was lucky in that respect. I got this job the week following when I left Mallinckrodt. It is quite close to home. I am still driving trucks, naturally. The CHAIRMAN. You look to be a very healthy fellow, notwithstanding the traffic you have to put up with every day. That is some of the heaviest traffic in the country, isn't it, around Kennedy Airport? Mr. MCCARTHY. Yes. The CHAIRMAN. How do you keep so calm? Mr. MCCARTHY. It is not much of a problem. On the airport we have private roads. The CHAIRMAN. That must be the answer. It is all within the limits of the airport? Mr. McCARTHY. Out on the ramps and so on. The CHAIRMAN. Thank you very much. We are most appreciative, Mr. McCarthy. Mr. Lester Fox. Mr. Fox, my notes tell me that your former employer is now known as the Studebaker Worthington Corp. You are living in Indiana? Mr. Fox. Yes, sir. The CHAIRMAN. Very good. We appreciate your coming here to be with us. This is one of the problems of pensions that many talk about and that has been given a great deal of national publicity. You are one of the employees and we are most grateful to have an opportunity to hear your story. STATEMENT OF LESTER FOX OF SOUTH BEND, IND., FORMER EMPLOYEE OF THE STUDEBAKER WORTHINGTON CORP. Mr. Fox. My name is Lester Fox, 443 South Van Hoyt Street, South Bend, Ind. I would like to express to the committee my appreciation for the opportunity to be here and also to comemnd the committee for continued hearings on what I consider to be a very vital subject in this present day. I am a former member of the bargaining committee and the former vice president of Studebaker Local No. 5, United Automobile Workers, but I am here today as an individual. At Studebaker there was established a pension plan in 1950 that, like many other plans, contained a 30-year provision over which to fund or amortize the past service credits. Subsequent negotiations. between Local 5 of the United Auto Workers and the corporation |