Pension

A pension (also known as superannuation) is a retirement plan intended to provide a person with a secure income for life. Although a lottery may provide a pension, the common use of the term is to describe the payments a person receives upon retirement.

History of pensions 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 minister of the Anglican Church in the United States.
• 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: Employee Retirement Income Security Act (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 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.
• Today: 40% of American common stock is owned by pension funds and retirement funds.
• 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.