When the “father of 401(k)s” talks about changes that are needed to these retirement programs that 54 million people in United States use, the industry should listen.
“[I want] to challenge you to think more deeply about the future of this business and your role in it than you ever have thought of before,” Ted Benna, who received the first approval for a 401(k) defined contribution plan, told the audience as he gave a closing talk at the Envestnet Advisor Summit 2018.
With the 40th anniversary of 401(k)s coming up, Benna went over some of the history of how these retirement plans were developed. They began, he said, as a page-and-a-half addition to the Revenue Act of 1978, and from that a $5.3 trillion savings and retirement business has developed.
“It was a most significant thing that has transformed what’s happening with retirement, good or bad … but it wasn’t intended, it was a fluke,” he said.
He pointed out the three key areas that have shaped the 401(k) business, and will continue to shape it going forward: 1) legislation and regulation, 2) marketplace pressure and 3) technology.
Benna has been instrumental in other major financial developments, including helping the Labor Department with developing fee disclosure and launching target maturity funds. With that vast experience in working with the Legislature, he warned the audience that legislation is very unpredictable because typically it is written by staffers who may or may not have an agenda, and members of Congress usually don’t know what they are voting on.