Most retirement benefits for American workers are built up through workplace savings plans where employers play a pivotal administrative and legal role as the Plan Sponsor. PGIM’s new podcast, The Accidental Plan Sponsor™, hosted by Josh Cohen, Head of Institutional Defined Contribution, explores the origins, evolution, and trends within the employer-based retirement system.

Most retirement benefits for American workers are built up through workplace savings plans where employers play a pivotal administrative and legal role as the Plan Sponsor. PGIM’s new podcast, The Accidental Plan Sponsor™, hosted by Josh Cohen, Head of Institutional Defined Contribution, explores the origins, evolution, and trends within the employer-based retirement system.

The next time you’re browsing through your 401(k) statement, consider this: If not for the collapse of a once-iconic car company in the 1960s, your retirement plan may look dramatically different. 

The history of pensions and retirement savings is a fascinating one. From the impact of world wars, the shift in workforce demographics to squabbling labor unions, organized crime, and, yes, even the demise of the Studebaker, how employers structure retirement plans for their workers is a complex and compelling story. In fact, it’s why we launched our new podcast, The Accidental Plan Sponsor, hosted by PGIM’s head of institutional defined contribution, Josh Cohen. 

In Part 1 of the premiere episode, Josh is joined by Professor James Wooten at the University at Buffalo School of Law. During their conversation, Professor Wooten explains a series of crucial events that led to the creation of the Employee Retirement Income Security Act (ERISA) and how employers ultimately became responsible for their employees’ retirement. 

In Part 1 of the premiere episode, we touched on one of the most important events in the history of retirement savings, the collapse of Studebaker in 1963. Today’s guest, Frank Cummings, was back then just beginning his 70-year law career with one of his very first clients…Studebaker. 

In Part 2 of this episode, Frank recounts his journey from New York to South Bend, Indiana, to Washington, DC as lead bargainer for the auto company. He recalls his meeting with Senator Jacob Javits, with whom he embarks on a series of ‘Road Shows’ centered on the tragic stories of people losing their pensions, all in the hopes of providing the public with better information around pension reform legislation.   

Listen in to this incredible account of policy reform, a journey that spanned four presidents, nearly 50 states, Watergate, and finally, a Rose Garden signing that helped pave the way for the modern retirement system and the regulations Plan Sponsors are still living with today. 

At 40 years old, the 401(k) has become part of the bedrock of the employer-based retirement system. Tens of millions of Americans have socked away trillions of dollars in a retirement investment vehicle that has fundamentally changed the dynamic of how employers provide a secure retirement for their workers. Today, the 401(k) makes up more than $6.5 of the $9.5 trillion in workplace defined contribution assets. But in 1981, this nascent idea was trying to find its place amongst pension and various savings plans, and it was finding an audience that would propel it to prominence. Host Josh Cohen talks with Ted Benna, father of the 401(k), and Richard Stanger, the author of the 869-word insert to the US tax code that changed retirement.

Key Takeaways:

[1:15] Josh Cohen picks up where we left off following the birth of ERISA and welcomes two key players in the creation of the 401k: Richard Stanger and Ted Benna.

[3:46] To better understand 401k’s Josh rounds up the history of profit-sharing plans — which is almost as long as the history of the United-States.

[6:27] Richard Stenger shares the story of how he came to write the Revenue Act add-on, from President Carter’s election to the entrance of Barber Conable on stage.

[11:46] “The beauty of it was that there wasn’t a lot of lobbying. Take a blank sheet of paper, forget the history of pension law: how do we create something that creates a fair distribution of contributions and benefits between rank-and-file employees and highly compensated employees?” — Richard Stanger

[13:24] Ted Banner is often referred to as the father of 401k’s, he shares how he came into this title starting with what was called “thrift plans”, Coda Plans and getting a green light on 401k plans in 1981.

[19:33] “They took us into a big auditorium and plopped me up in front of 25 of their top tax writers with their crossed arms like” what’s this country hick going to tell us? Less than an hour into the interview it switched over to how can we get that for us?” — Ted Benna

[22:10] Ted shares his take — both the good and the bad — on what the employer role is in pension plans, as well as the benefits of the 401k.

[24:56] Richard looks back with pride on the legacy of those 869 words he wrote.

[26:20] Josh thanks both of his guests and closes out episode 2 of the Accidental Plans Sponsor and shares a teaser on episode 3: looking ahead.

Thank you for tuning in. If you liked what you heard, please subscribe and leave us a review wherever you listen to your podcasts.

Links:

The Accidental Plan Sponsor

PGIM

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Mentioned in this episode:

Richard Stanger wrote the 869 word add-on to the Revenue Act of 1978. Find him on LinkedIn

Ted Benna took Richard Stanger’s idea and ran with it! Find him on LinkedIn

In the first two episodes of this series, we examined the history of the employer-based retirement system. But how is it working out today?

The success of the creation and implementation of the employer-based 401(k) and other defined contribution retirement plans is seen not only in its exponential growth in all measurable metrics but also in the fact that it has succeeded in helping millions of Americans retire well. That said, the system, as it’s designed and operating today, is far from perfect, stranding some without access to the tools of a comfortable retirement and discouraging attempts at innovation.

In this episode, host Josh Cohen asks respected industry leaders to grade the system on four crucial factors of success: Access, Adequacy, Alignment, and Innovation.

 Featured Guests:

• Lori Lucas, President & CEO of the Employee Benefit Research Institute (EBRI)

• Lew Minsky, President & CEO of the Defined Contribution Institutional Investment Association (DCIIA)

Key Takeaways:

[:34] How is the retirement system doing today? To answer this question, your host Josh Cohen recruited some of his long-time friends, who happen to be industry experts.

[2:27] Lori Lucas is the President and CEO of the Employee Benefit Research Institute (EBRI). She shares what they do and how she came to be in this position.

[5:04] Lew Minsky is the President and Chief Executive Officer of the Defined Contribution Institutional Investment Association (DCIIA). He talks about getting bit by the public policy bug and his journey to co-founding the DCIIA.

[8:27] With the help of our experts we’re going to be grading the system according to 4 aspects, red pens out everyone.

[9:24] Grade 1: Access. Lori weighs in with the ERBI research on 401k’s and grades according to organization size. Lew adds a caveat before handing out easy grades here.

[13:29] Grade 2: Adequacy. Lew feels adequacy scores higher than access if one important condition is met, however Lori’s enthusiasm wavers.

[18:00] Grade 3: Alignment. This relates to the sponsor entity’s interest being aligned with the successful retirement of employees. Lori’s grade is linked to the importance of promoting overall employee financial wellness. Lew offers that theory and practice diverge on this front and that there is an elephant in the room...

[24:20] Grade 4: Innovation. DCIIA has been hosting an annual excellence and innovation award, Lew mentions that efforts will need to continue. Both Lew and Lori speak to the elephant of litigation coming back into the room.

[27:48] Lori and Lew weigh in on the podcast name: The Accidental Plan Sponsor!

[29:30] Josh offers a summary of the system, thanks Lew and Lori for their contribution to this episode, and opens up the discussion for episode 4 on how certain plan sponsors challenged the status quo and innovated in the retirement savings space.

Thank you for tuning in. If you liked what you heard, please subscribe and leave us a review wherever you listen to your podcasts.

Links:

The Accidental Plan Sponsor

Mentioned in this episode:

More about Lori Lucas, President and CEO of the Employee Benefit Research Institute.

More about Lew Minsky, President and CEO of the Defined Contribution Institutional Investment Association.

If innovating was easy, we would all be Steve Jobs. But it’s not. It disrupts lives, it forces us out of comfort zones, and it requires both inspired vision and a lot of work. No wonder we prize the innovators amongst us. In this episode, we talk with two plan sponsors who embraced innovation in the defined contribution space, Stuart Odell, formerly of Intel, and Bob Hunkeler from International Paper Company. We discuss their work, the challenges they faced, and how they view the future of retirement.

Key Takeaways:

[:34] Josh opens up today’s episode with a quick recap of episode three which graded the system and found the innovation lacking. In order to find a way forward, he welcomes 2 plan sponsors who have found bold new solutions to obstacles.

[3:39] Stuart Odell shares a bit about his journey from engineering to getting invested as a Plan Sponsor manager — and talks about the precarious state of the retirement plan as he started looking into it at Intel.

[8:00] Having no preconceived notions about the defined contribution space may have helped Stuart think outside the box. He explains some of the changes he made to the existing structure to align it with the goals and values of the company as a way to gain more flexibility for innovation.

[11:00] Stuart shares his take on why innovation is critical in the retirement space, despite litigation being a huge deterrent. He opens up about the class action lawsuit Intel was served following his changes.

[14:45] Bob Hunkeler has a background in science and had never planned on managing corporate retirement plans. He shares the journey that took him to Switzerland and back to the States with an opening in the pensions department.

[17:40] Bob touches on how the company philosophy has affected the roughly 18 billion dollars in retirement assets he manages. International Paper has both an IP savings plan and a 401k. Bob explains how they construct their portfolios as well as his take on decumulation.

[21:35] Because there was a kind of vacuum in the retirement planning space and as such, Bob’s ideas and innovations were an encouraging way of filling this space. He speaks to his motivation for making headway in this space.

[23:55] Putting their money where their mouth is, International paper provides a complete suite of retirement planning services to its employees. Bob speaks to the continued innovation he tries to drive in the company by building bridges.

[25:44] Bob and Stuart share their takes on the title of the podcast!

[28:46] Josh thanks his guests for sharing their stories and opens up the discussion for further innovation on the corporate side of the retirement planning space.

The Accidental Plan Sponsor will be back this summer! Thank you for tuning in. If you liked what you heard, please subscribe and leave us a review wherever you listen to your podcasts.

Links:

The Accidental Plan Sponsor

Mentioned in this episode:

More about Stuart Odell on LinkedIn.

More about Robert Hunkeler on LinkedIn.

In this bonus episode, Frank Cummings (Guest from Ep.1) shares some key moments from his time on Capitol Hill working closely with the late Senator Jacob Javits. Here, Frank describes how he convinced Senator Javits to push for equal access for women in some crucial areas. He also shared a humorous story about former President Lyndon Johnson following the signing of ERISA.