Retirement Timeline: From Pilgrims to PPA

More than 300 years before ERISA, Americans enacted the nation’s first pension law.

Here are a few interesting points on the timeline of retirement plans in the U.S.:

1636 – Pensions begin in the military when the pilgrims of Plymouth Colony were at war with Native Americans. The Pilgrims pass a law that stated that disabled soldiers would be supported by the colony. The law still forms the basis of the veterans benefit program in Massachusetts.

1875 – Long before it introduced its first credit card, The American Express Company introduced the nation’s first private pension plan.

1929 – By this time, 397 private-sector plans were in operation in the United States and Canada (28 others had been started and discontinued), according to the Employee Benefit Research Institute (EBRI).

1935 – President Franklin D. Roosevelt signs the Social Security Act.

1940 – Fifteen percent of all private-sector workers are covered by a pension plan, according to EBRI. Also this year, among other things, The Investment Advisors Act of 1940 required that investment responsibilities for pensions be handled by an adviser registered under the act, a bank, or an insurance company.

1950 – The number of private-sector workers covered by a pension plan is up to 25%. Also this year, General Motors (GM) established a pension plan for its employees. The automaker opted to self-fund its plan in order to invest in stocks.

1958-1962 – The Welfare and Pension Plan Disclosure Act establishes disclosure requirements to limit fiduciary abuse, and is then amended to give the federal government responsibility for protection of plan assets.

1974 – The Employee Retirement Income Security Act (ERISA) is born.

1978 – Congress adds a section to the tax code that decades later will be synonymous with savings: 401(k).

1990 – Forty-three percent of all private-sector workers are covered by a pension plan, according to EBRI.

2006 – President George W. Bush signs the Pension Protection Act.

2008 – The U.S. Supreme Court rules that defined contribution participants can bring fiduciary breach suits to recover individual losses in Larue v. DeWolff (see “Supreme Court Allows Individual ERISA Suits in Landmark Ruling).

2009 – The U.S. Census data show that almost two-thirds of workers identified a defined contribution plan as the most important component of their retirement savings. Overall, less than half (44%) of all workers participate in a retirement plan (see “Census Data Show Strengthening DB to DC Trends“).

What else will the last year be known for on the timeline? A few more notable events: As the financial crisis takes hold, retirement plan assets lost trillions and some employers cut their 401(k) match to save money (see “ICI Puts Stats to Downturn’s Impact on Retirement Assets and “Plan Sponsors Make More Changes“). Congress and regulators discuss many retirement regulations (see “Fees Are the Word and “EBSA/SEC to Hold Target-Date Hearing“). An annual report by the Social Security and Medicare Board of Trustees said the trust funds will be exhausted in 2037 (see “Social Security Outlook Dims“). General Motors files for bankruptcy, but says its two pension plans remain ongoing, insured by the Pension Benefit Guaranty Corporation (see “Pension Plans to Remain under GM Sponsorship during Bankruptcy“).

Or, maybe the question will be, what won’t 2008-09 be known for on the timeline?