401(k) Creators Lament Creation

A most interesting regret highlighted in the Wall Street Journal on Monday! (Subscription required.) Seems the handful of champions of the 401(k) retirement-savings vehicle now see the errors of their ways. Or the vehicle’s ways, anyway.

None of those mentioned and quoted in the compelling piece foresaw that the 401(k) would essentially replace pensions. And they see this as quintessential to the demise of the overall retirement picture in this country, and employees’ inabilities to save what they need.

We’ve certainly written our fair share of stories raising major red flags about the state of retirement and workers’ diminishing abilities to retire at all — both here on this HRE Daily site and in our magazine and on its website, HREOnline.com. But this is the first time any of us have heard from the horses’ mouths — the authors and early promoters of the savings vehicle — that they had no intention to launch and herald it as the nation’s sole retirement receptacle, if you will.

Ted Benna, a benefits consultant with the Johnson Cos. and one of the first to propose the vehicle back in 1980 — ergo his nickname, the father of the 401(k) — puts it this way in the piece:

“I helped open the door for Wall Street to make even more money than they were already making. That is one thing I do regret.”

Herbert Whitehouse, a former human resource executive for Johnson & Johnson and one of the earliest proponents of the 401(k) for employees, tells the WSJ that he and others were hoping and assuming back in 1981 that the savings approach would be a kind of supplement to company pensions.

What he and his co-horts didn’t imagine, he says, is that the idea would actually replace pensions as employers looked to cut costs and survive during subsequent downturns. As he puts it in the story:

“We weren’t social visionaries.”

The story is also rife with recommendations from today’s experts on how best to fix the problem and help employees save for retirement according to what they will actually need.

But as Benna tells WSJ,  he doubts “any system currently in existence” will be effectual for the majority of Americans.

A sad treatise, and no sadder than for those millions of Americans still in the workforce who can’t retire.