Summary of 2017 Crystal Globe Awards & Summit

Inventor of 401(k) tells CORPaTH he never intended to replace pensions

The financial analyst credited with inventing the 401(k) retirement plan says he never intended to replace traditional pensions.

“The defined-benefit pension and the defined-contribution 401(k) plan both have value in recruiting and retaining employees,” Herb Whitehouse told attendees at the 2017 CORPaTH Summit on Dec. 13.

The annual event, which gathers pension analysts, administrators, consultants, investors, legislators, union leaders and others in the global pension community, focuses on protecting and promoting guaranteed pension incomes for retired people for as long as they live.

The program began on Dec. 12, when CORPaTH’s prestigious Crystal Globe Awards were presented to three respected leaders in the worldwide fight to preserve pensions: Hugh O’Reilly, president and CEO of Canada’s OPSEU Trust; Jack Marco, chairman of the Marco Consulting Group; and James Meketa, chairman and managing principal of Meketa Investment Group. John Elliot, partner at NEPC, served as master of ceremonies.

“A 401(k) plan can be attractive as a supplement to a defined-benefit pension for mid-career hires at a company,” Whitehouse said during the Summit portion of the event the next day.

He added, because they are transferable, 401(k)s are also attractive to young workers who expect to leave after a few years.

Nevertheless, defined-benefit pensions are more effective for replacing pre-retirement income, especially for those who leave the work force after 30 years or more on the job, he said.

“As employees get closer to mid-career, a company’s defined-benefit plan can play an important role in retaining them,” Whitehouse said.

Other highlights of the CORPaTH Summit featured:

  • Jacques Loveall, president of UFCW 8-Golden State and chairman of UFCW Trust, who brought active and retired union members to the stage to express their gratitude and appreciation for their reliable pension plans.
  • Michael Kahn, Ph.D., director of research at NCPERS and president of the Institute on Public Pension Solutions, who presented data showing how defined-benefit pensions are more than twice as effective as defined-contribution plans like 401(k)s in generating retirement savings. He also demonstrated how the decline of defined-benefit pensions has increased income inequality, which in turn inhibits economic growth throughout the entire economy. Kahn concluded by debunking common beliefs taxpayers can’t afford pensions for public-sector workers, even when they are underfunded.
  • James Hynes, executive director of Pipe Trades Services of MN, who described the pension fund’s success in providing secure and reliable benefits about 4,800 active employees and 2,000 retirees working for more than 300 employers in Minnesota.

In addition, CORPaTH Executive Director Ron Auer moderated panel discussions featuring pension fund trustees and consultants.

The trustees panel included presentations by Max Carter II of IBEW Local 357 in Las Vegas; Ron Lind, public member of the Board of Administration for CalPERS; and Hugh O’Reilly of OPSEU Pension Trust.

The consultants panel featured Ted Benedict of Meketa Investment Group, Russ Kamp of Kamp Consulting Solutions, LLC; Michael Manning of NEPC; and John Marco of Segal Marco Advisors.