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the large-scale commissions of individual whole
--The proceeds of the insurance will go directly to
the deceased member's beneficiary without discounting.
We believe that these changes improve the Plan. Although we have not made financial projections of the effects of these recent changes, we believe that they will improve the soundness of the fund and, in the long run, will result in greater benefits to the total membership of the Plan.
Our study included an evaluation of the actuarial soundness of the Plan and of the appropriateness of the funding media used. It was directed primarily to de termining if the Plan's funding and benefit provisions were structured in the best interest of the Plan members.
We reviewed available documentation on the Plan and its administration, including:
--The collective bargaining agreement between Local 295
and the several employers of Local 295 members.
--Plan rules and regulations.
--Agreement and declaration of trust establishing the
--A copy of a booklet describing the Plan and a copy
of a leaflet listing questions and answers about the Plan.
--Copies of the minutes of trustees meetings for the
period January 1971 to February 1973.
--A report prepared by Lawrence R. Schiff, Associate
of the Society of Actuaries, dated June 11, 1971, on the projected cash flow of the Plan's operations for each of the first 11 years from December 1, 1970, to
December 1, 1981.
We also interviewed representatives of the former Plan administrator and the New York State Department of Insurance.
Our projections were based on (1) techniques common ly used by actuaries for such projections and (2) the assumptions and data indicated in the appropriate sections of
The Permanent Subcomittee on Investigations is presently conducting & preliminary investigation into labor-management activities with particular regard to a recent concept in employee benefit plans: namely, severance trust plans which are assumed to supplement existing employer group pension plans.
The investigation is presently centered on Tearster Local 295 of New York City, whose 1,300 membership is engaged in the trucking of air freight at John F. Kennedy Airport. We are also concerned in the instant case with the propriety of some of the insurance practices within the severance trust plan.
The inquiry necessarily requires an actuarial study of the Local's severance trust plan to determine whether the plan is properly funded and whether, in fact, the plan adequately inures to the benefit of the rank and file members. The se studies require an expertise not available within the Subcommittee staff but which I understand is within the capability of your office.
Accordingly, it is requested that the General Accounting Office assist in this investigation by making such studies and reporting their findings to the Subcommittee. A more detailed description of the Subcommittee's requirements and access to the material upon which they would be predicated will be made available to your representatives by Subcoziittee staff members.
In the event the matter is brought to hearings at some future date, it is likely that you would be requested to present testimony of those findings to the Subconmittee.
Honorable Elmer B. Staats
December 28, 1971
My since rest thanks to you for your cooperation not only in this request but also for all the past help and cooperation to this Subcommittee.
John L. McClellan
Honorable Elmer B. Staats
of the United States