This decade is a big one for 50th anniversaries and celebrations. In 2015, the Grateful Dead celebrated their 50th anniversary with concerts in California and Chicago. In 2017, my high school classmates will celebrate their 50th birthdays (Go Ward Melville Patriots!). But 2016’s biggest 50th anniversary belongs to ASPPA.
As actuaries and members of ACOPA, we take a special pride in ASPPA’s birth and development. After all, it was a group of pension actuaries that founded ASPA in 1966.
This group was formed just a few years after the closing of the last Studebaker plant in South Bend, Ind. in December 1963. The carmaker terminated its underfunded pension plan and many participants received greatly reduced pension benefits, if any at all.
Carmakers have an interesting history with pension plans. The United Automobile Workers (UAW) had successfully negotiated for increased pension benefits in 1949 and 1950 with Ford, Chrysler and GM. Though Chrysler first endured a 104-day strike and $1 billion in lost sales before capitulating to the main demand of the UAW — a fully funded and actuarially sound pension plan.
Unfortunately for the hourly workers of Studebaker, their pension plan was not so well funded. Negotiations over the years with the UAW would often result in increased pension benefits, applicable to years of service in both future years and retroactively. The funding of these benefits was spread out over future years. But there was to be no future years by 1963. As a result of underfunding and the closing of the factories, reductions in pensions of 85% to 100% were not uncommon for those Studebaker plan participants.
The Studebaker failure was a “teachable moment” as they say these days. We think of the 1960s as the time of social change. The era of Vietnam, civil rights and gender equality were of course difficult and tumultuous times for the nation. Similar change was called for in the pension world. The UAW wanted the government to take on some responsibility for lost pensions, and the nation also demanded pension benefit protection. This required better funding principles as well as more actuaries to review the influx of pension plans that were becoming a more common feature of the corporate world. The nation could not bear more pension failures like Studebaker’s.
So we have this time period from 1964 to 1974 where the government studied potential changes to the existing pension laws. Actuaries were needed to lobby before Congress and to provide the government with their input, experience, ideas and solutions to the pension issues affecting the nation.
Being a member of a recognized and renowned actuarial organization would be a minimum requirement to be recognized by Congress as a worthy contributor to change. While there were actuarial organizations that existed at the time, they were directed toward the “in-house” actuary, the company actuary at large companies and working on large plans. The actuary who worked for himself, and who worked with many smaller companies (with smaller plans) was not welcome at the large plan organizations.
It is not a stretch to say the small plan actuaries of the 1960s were not respected by the large plan organizations. Members of the other organizations might now admit that the ASPA actuaries were better organized and better lobbyists when ERISA was being developed. But it was only over the protests of FSAs that ASPA was created and that the Enrolled Actuary designation would be created in 1974.
So in 1966, when the small plan actuaries were not welcome at the other organizations despite their expertise in pension matters, three actuaries from Fort Worth, Texas realized their future was at stake. An organization that helped serve the needs and the growth of the small plan actuary was needed… and created.
The three recognized founders of ASPA are Harry T. Eidson, Carl I. Duncan and William F. White. Despite the other actuarial organizations objections, ASPA was created. ASPA’s membership grew from the start, reputations emerged and expertise became recognized. Congress worked with ASPA, listened to their testimony, and included them in the discussion of what was to eventually become ERISA.
September 1974’s ERISA not only rewrote pension law and created the PBGC (score one for the UAW!), but most importantly for ASPA, created the Enrolled Actuary designation. This educational requirement breathed new life into ASPA. ASPA’s actuaries now had an independent way to receive credentials that did not involve membership in the other actuarial organizations. They truly broke free from the confines of not being a part of the large plan organizations.
Today ACOPA is on the front lines in shaping retirement policies dealing with small plans and small businesses. The ASPPA PAC and GAC work hard to keep retirement plans a vibrant part of employer benefits (and essentially keep us employed).
Education became an important part of ASPA’s agenda in their early days. That legacy shines today as the actuaries of ASPPA and ACOPA are the technical experts of the defined benefit world. They are the premier provider of the most technically rich educational programs, whether through conference or webcast.
ACOPA continues to advance our profession, to maintain its standing with Congress, to help shape funding policy (and to minimize damage when Congress threatens the small plan employer).
Volunteers along with a hard-working and brilliant staff have made ACOPA and ASPPA the successes they are today. Our volunteer members are working to comment on proposed regulations, teach classes, organize workshops, protect our profession and clients from what threatens our profession and our clients, and expand coverage to millions of Americans.
I hope to see many of you at the ASPPA annual conference in October 2016. Besides the regular slate of classes, the ASPPA staff and volunteers are planning a big celebration of the 50th anniversary where we will revisit what has made ASPPA what it is today. From the three Fort Worth actuaries, to the inclusion of other pension professionals in the 1990s, to the name changes of the 2000s and to the challenges that lie ahead.
The ASPPA conference will be an opportunity to learn what — to quote the Grateful Dead — a long, strange trip it’s been!
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