The 401(k) Killed Off Pensions

President Jimmy Carter talks to onlookers before signing his economic, tax, and budget messages at a ceremony at the White House in Washington on Jan. 20, 1978Photograph by John Duricka/AP Photo

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By Evan Applegate

December 5, 2014 at 12:58 AM UTC

This article is for subscribers only.

This article is part of the December 8, 2014 issue of businessweek.

1978 President Jimmy Carter signs a revision to the tax code allowing workers to contribute part of their pay to tax-sheltered accounts.

“There was absolutely no discussion in ’78 that if you do this, the world is going to change,” recalls Carter-era Treasury official Daniel Halperin of the 869-word provision in the tax code that created a $4.4 trillion pool of retirement savings. According to the Investment Company Institute, 18 percent of all retirement assets are held in 401(k)s, the third-largest stash behind IRAs and government pensions.