from King World News
Ahead of the US election, this is the world’s biggest crowded trade.
November 2 (King World News) – Danielle DiMartino Booth at Quill Intelligence: It started with the end of the Studebaker. In December 1963, the failed U.S. carmaker closed its South Bend, Indiana plant, an event that heralded the implosion of its pension plan. Defaulting on its obligations left its former employees’ retirement safety nets in tatters. Incited, United Auto Workers’ president Walther Reuther led a movement to backstop pension assets that culminated in the Employee Retirement Income Security Act of 1974. Employers could now be sued for restitution if they failed to meet their fiduciary responsibilities. The reform crusade didn’t end there, though. In 1978, Congress passed the Revenue Act which included a provision, section 401(k), that allowed employees to defer taxes from bonuses and stock options. Three years later, the IRS ruled favorably on this new plan. With employers enticing workers with a match, adoption of the plans was rapid and widespread.