History of pensions in the United States




  • 1717: The Presbyterian Church creates a Fund for Pious Uses to provide for retired ministers.
  • 1884: Baltimore and Ohio Railroad establishes the first pension plan by a major employer, allowing workers at age 65 who had worked for the railroad for at least 10 years to retire and receive benefits ranging from 20 to 35% of wages.
  • 1889: The American Express Company creates the first pension plan in the United States.
  • The Revenue Act of 1913, passed following the passage of the 16th amendment to the constitution which permitted income taxation, recognized the tax exempt nature of pension trusts. At the time, several large pension trusts were already in existence- including the pension trust for ministers of the Anglican Church in the United States.
  • 1924: The Presbyterian Church, USA, creates its current pension program
  • 1940s: General Motors chairman Charles Erwin Wilson designed GM's first modern pension fund. He said that it should invest in all stocks, not just GM.
  • 1963: Studebaker terminated its underfunded pension plan, leaving employees with no legal recourse for their pension promises.
  • 1974: ERISA – imposed reporting and disclosure obligations and minimum standards for participation, vesting, accrual and funding on U.S. plan sponsors, established fiduciary standards applicable to plan administrators and asset managers, established the Pension Benefit Guaranty Corporation (PBGC) to ensure benefits for participants in terminated defined benefit plans, updated the Internal Revenue Code rules for tax qualification, and authorized Employee Stock Ownership Plans ("ESOPs") and Individual Retirement Accounts ("IRAs"). Championed by Senators Jacob K. Javits, Harrison A. Williams, Russell Long, and Gaylord Nelson, and by Representatives John Dent and John Erlenborn.
  • 1985: The First Cash Balance Plan - Kwasha Lipton creates it by amending the plan document of Bank of America pension plan. The linguistic move was to avoid mentioning actual individual accounts but using the words hypothetical account or notional account.
  • 1991: A Magazine article claims that pension- and retirement funds own 40% of American common stock and represent $2.5 trillion in assets.
  • Growth and Decline of Defined Benefit Pension Plans in the United States. In 1980 there were approximately 250,000 qualified defined benefit pension plans covered by the Pension Benefit Guaranty Corporation. By 2005, there are less than 80,000 qualified plans.
  • Fewer and Fewer: Defined benefit plans continue to dwindle, becoming exception rather than rule. As of 2011, only 10% of private employers offered pension plans, accounting for 18% of the private workforce.

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