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more information is available on this aspect of investment from the table presented below. This distribution for selected industries is based on sample data. It shows that for all funds sampled, 17 percent owned no common stock, 53 percent had up to 25 percent of their assets in common stock, 28 percent had between 25 and 50 percent, and 2 percent had more than 50 percent of their funds in these securities. In the trade group almost one-third had no common stock investments.

Investment in Common Stock
Other than Own Company, Selected Indus tries

(Sample Data)

Percent of Total Number of Funds
Percent of

Electric
Total All

and
Assets Industries

Trade Gas

Mfg.

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Another classification oỉ the assets by size of fund for companies in the sample (Table 4) indicated that there was not much variation by size in percentage of total assets invested in common stock except for very small funds and for the largest funds. While for the largest size group, funds with assets over $100 million, the table indicates only ll percent of assets invested in common stock, the elimination of one large fund changes this average to 18 percent.

There is a fairly high concentration of ownership of common stock by large pension funds. Of the companies sampled, for instance, 45 percent of total common stock (of other companies) was owned by funds over $100 million in size. More information on the concentration of ownership of common stock and other assets is given in the next section.

Common stock of employer company

The S.E.C. questionnaire form called for a separation of assets invested in own common stock, but information on amounts invested in other assets of the employer company was not requested, although it has been indicated in some recent surveys 1/ that fairly large amounts of employer company bonds, real estate and promissory notes are held by pension funds.

1/ See New York Bank ing Department report and also report of the Committee

on Labor and Public Welfare, 83rd Congress.

At the end of 1954, investments in own company stock amounted to $321 million (book value), representing 2.7 percent of total assets of all funds. Of this amount $271 million, or about 85 percent, was held by trade companies, almost all of which was accounted for by the holdings of the Savings and Profit Sharing Pension Fund of Sears, Roebuck & Co. employees. If the Sears fund is excluded, then the percentage of total assets invested in own company stock drops to one-half of one percent.

of the 695 trusteed plans included in the sample data, 119 funds (or 17 percent) indicated some investments in own company stock. However, there is a high concentration of ownership of such stock as shown in Chart 4, which is based on these 119 funds. The ranking of the funds by book value of holdings showed that Sears al one accounted for approximately 85 percent of total own company stock holdings, and 13 funds, or ll per cent of the total number (including Sears), accounted for 95 percent of total holdings.

CHART 4
CORPORATE PENSION FUNDS
CONCENTRATION OF COMMON STOCK OWNERSHIP IN 1954
STOCK OF OW CO.

STOCK OF OTHER COS.

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Another view of the extent to which pension funds are invested in own company stock can be seen in a distribution of the 695 funds according to the percentage of total assets so invested by each fund. This distribution shows the following:

Percent of Total Assets Invosted
Percont of Total Plans in Samplo

in Own Company Common Stock

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Concentration of Ownership of Assets

A relatively small number of pension funds accounted for a sizeable part of the assets and securities held by all pension funds. Assets of the five largest funds at the end of 1954 made up 34 percent of all corporate pension funds and assets of the ten largest funds made up 42 percent of the total. Similar concentration was shown from a distribution of the sample data given in Table 7. Funds over $100 million in size comprised less than two percent of the number of funds, but accounted for almost 60 percent of the assets of all funds. At the other end of the scale, it is observed that funds under one million dollars in size made up close to 40 percent of the number of funds but owned approximately one percent of total assets.

In the case of corporate bond holdings less than two percent of the funds held 65 percent of the total, and 17 percent of the number held 90 percent of the total. In contrast, 40 percent of the funds of less than one million dollars in size owned less than one percent of total corporate bond investments,

For U. S. Government issues, there was slightly less concentratia of ownership, two percent of the funds having 53 percent of the total, and 17 percent of the number owning 83 percent. The smaller-sized funds, held two percent of the total amount of Government bands.

Compared with bonds there was not as much concentration of ownership of common stock, although it was still fairly high as can be seen in Chart 4. This statement refers to common stock of other companies, and does not include own company stock where there is a very high degree of concentration. In addition to the data given in Table 7, the amounts of common stock investments were ranked by size for each fund. For common stock investments in other companies, this ranking showed that two percent of the funds owned almost half of the total common stock held by all funds, while 20 percent of the funds held around 85 percent,

The charts on page 13 show the concentration of ownership of common stock of other companies and of own company. In these charts the degree of departo ure of the curve from the straight line (the line of equal distributia) indicates the extent of concentration. The data from which the curves were constructed were based on the holdings by companies covered in the sample data which at the end of 1954 owned $1.4 billion common stock of other companies and $300 million of own company stock. This is estimated to be about three-fourths of the common stock held by all funds,

Receipts and Expenditures

The net receipts of pension funds, of course, closely approximate the increase in total assets each year. Some minor differences shown in the overall data, and in the ingustry groupings, result mainly from

gains or losses from the sale of assets, or from write-ups or write-downs in securities valued on a market basis. Relatively few funds value assets on a market basis so that the discrepancy between change in assets and net income even in a year of sharply rising stock prices such as 1954, is not very important. For this reason, a discussion of the net inflow into pension funds seems innecessary, not only for all funds, but also for the various industry groups. It would be repetitious, for the most part, of the discussion of growth in assets given on pages 4 and 5 . This section, therefore, is concerned with the composition of total receipts and disbursements, the relationship between various income and disbursement items, and variation between industries and sizes of funds. Data on receipts and expenditures for all funds for the years 1951-1954 and by industries for the year 1954 are given in Tables 8 and 9. In Tables 10 and 11, data on employer contributions and benefit payments, classified by industry are presented for the years 1951-1954, inclusive.

Composition of receipts and disbursements

Total receipts of corporate pension funds including contributions from employers and employees and income from interest and dividends amounted to $1.6 billion in 1951, $1.7 billion in 1952, $2.1 billion in 1953, and $2.2 billion in 1954. The rise in total receipts is pictured in Chart 5.

CHART 5
CORPORATE PENSION FUNDS
RECEIPTS AND EXPENSES COMPOSITION OF RECEIPTS
(DOLLARS BILLIONS)

( DOLLARS BILLIONS)
2.4

2.4

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DS. 3685

The main part of pension fund receipts consists of contributions by employers. In 1954, this source of income comprised 73 percent of total receipts, Employee contributions made up 9 percent of the 1954 receipts while the remaining 18 percent came from interest and dividends on investments. In 1951, the first year covered by this survey, 80 percent of total receipts consisted of employers contributions, 8 percent employee contributions, and 12 percent interest and dividend income. The increasing importance of investment income as a source of funds results from the tremendous growth of receipts in excess of disbursements and the investment of funds in higher-yielding securities, i, e., common stock issues. Reference is made here to the investment practices of pension funds, discussed on pages 8 through 13 , and to information on the flow of funds into common stock in the next section.

Employee contributions

The sample data indicated that less than one-third of the plans were contributory, and of these the contributions were relatively minor as compared with those of employers. For instance, it was indicated that in more than half of the contributory plans, employee contributions made up less than 25 percent of total contributions; in about 40 percent their contributions ranged from 25 to 50 percent of the total. In less than 10 percent of the contributory plans were employee contributions more than 50 percent of total contributions. The proportion of contributory plans was about the same in the manufacturing and non-manufacturing groups. Within these broad groups a higher proportion of contributory plans was found in the following industries: paper, petroleum and coal products, stone, clay and glass, electrical machinery and transportation (other than rail).

Disbursements

Benefits paid to pensioners amounted to $221 million in 1951, $263 million in 1952, $313 million in 1953, and $363 million in 1954. Thus, benefits paid in 1954 were 64 percent more than in 1951. Expenses for administering the funds are nominal, and in the highest year, 1953, amounted to $12 million. It should be noted, however, that expenses often are borne by the company itself, and therefore the amounts given in Table 8 are an understatement of actual expenses entailed,

The same table shows that total disbursements of all funds, including benefit payments and reported expenses, a mounted to $371 million in 1954, which was 17 percent of total receipts during that year. Table 9 indicates that disbursements for the manufacturing group were much lower in relation to receipts than in industries where pension plans have a longer history, and therefore have relatively larger numbers of pensioners presently on their rolls.

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