was sold at the time the Code was adopted, and commission levels paid by Executive Life Insurance Company of New York in connection with the severance programs are similar to commission levels paid in connection with group permanent ordinary life by other New York insurers. The Manhattan Life Insurance Company, for instance, pays up to 96 percent of first year's commissions on ordinary group life, and total commissions of about 165 percent over the first ten (10) years. There is nothing that would prevent the trustees of the severance fund in dealing directly with us. There is no need for the intervention of a broker and/or agent in an insurance matter, but it would be illegal for us to quote a lower rate in dealing directly. It would be technically and legally feasible to experience rate the ordinary life policies written in connection with severance programs, and give experience rating credits if justified by earnings. However, this would require a different premium rating structure similar to the rating structure for participating business, and with the bad mortality experience involved, I do not know whether it would have been advantageous for the trustees of Local 295. Such an experience rating approach would probably require approval of the New York Insurance Department, and in the past they have consistently exercised their power of approval to prevent the smaller New York life insurance companies from competing with the large eastern mutuals. A relatively new insurance company Congressional Life of California, has no agents, and conducts all its business by mail. Although I am not intimately acquainted with its operations. I don't believe that its product is any cheaper than products sold by companies which do business through agents.

Eighteenth, I have been deeply concerned about the aspects of the severance fund insurance currently being written, and believe the federal government should consider the passage of legislation which would permit insurance companies to deal competitively-with or without agents/brokers-for this new type of business. Possibly, the companies could be permitted to quote a standard rate and compete on the basis of an "experience refund" as the actuarial experience developed over the years. I strongly support the idea that qualified retirement plans should be changed to provide for earlier vesting and portability of benefits. A man should not be tied to a particular location or a particular company, and it is wrong for a substantial percentage of the people covered under pension plans to finish their careers with no pension benefits.

Nineteenth, in June, 1971, Ostrer requested that an additional loan of $20,000.00 be made to Seymour Greenfield. I agreed because premiums on the Local 295 case were coming in somewhat higher than expected originally.

OTTO FORST.

On this 31st May, 1972, before me, the undersigned, a Notary Public in and for Baden-Baden personally appeared Otto Forst, known to me to be the person whose name is subscribed to the within affidavit, and acknowledged to me that he executed the same.

Witness my hand and official seal:

Notariat II Baden-Baden.

APPENDIX V

REPORT TO THE PERMANENT

SUBCOMMITTEE ON INVESTIGATIONS,
COMMITTEE ON GOVERNMENT
OPERATIONS, UNITED STATES SENATE

Study Of The Local 295 Severance
Trust Fund Of The International
Brotherhood Of Teamsters,
Chauffeurs, Warehousemen

And Helpers Of America

B-175012

BY THE COMPTROLLER GENERAL
OF THE UNITED STATES

71-542 O - 76-5

In response to your request of December 28, 1971, this is our report on our study of the Local 295 Severance Trust Fund of the International Brotherhood of Teamsters (the Plan).

Please note that our study is not based on an audit of the financial records of the Fund but largely on information extracted from the minutes of the meetings of the Plan's board of trustees and on data furnished by the former Plan administrator and by representatives of the Executive Life Insurance Company of New York.

Also, the study is based on the Plan as it was structured during its first 2 years of operations. Substantial changes have been made in the Plan's provisions during the past 2 months, but we understand that you are primarily interested in the type of plan initially adopted by the trustees.

Supporting and supplementary data developed by our actuarial staff will be made available to your staff if you so desire.

As you requested, we have not obtained comments on the report from the former administrator or the trustees of the Fund, the union, employers, the insurance agent, or companies involved. Our findings have been discussed with representatives of the New York State Department of Insurance.

We will not distribute this report further unless you agree or publicly announce its contents.