David Wray, president of the Plan Sponsor Council of America, will retire from his post as president of the PSCA at the end of September.
In leading the national, non-profit watchdog association of 1,200 companies since 1987, Wray has championed wide-ranging 401(k) reforms and initiatives such as joining a large group of organizations urging pension bill conferees to include in the conference report the provision in the House legislation that made the pension and savings provisions permanent in the Economic Growth and Tax Relief ReconciliationAct of 2001.
He will continue to advise and consult PSCA staff on public policy issues, research, and programs from his mile-high vantage point in Denver as an honorary member of the board .
Why are you retiring and what will you be doing with your free time?
I have been engaged in this system for over 30 years and my family has been extraordinarily supportive of this effort with a lot of traveling and weekend work. It's time for me to give back. After I retire, I'm definitely taking a sabbatical and that sabbatical is called "My Wife Decides..." So she gets several months where everything we do is definitely her decision.
What qualities do you wish for in the next president of PSCA?
I'm probably well known within the organization, but I'm a visible expression of the community, which is a community of organizations that walk the walk when they talk about the partnership in the work place and designing retirement plans that build on that partnership. That community will decide the next president and what kind of person they should be. I intentionally am having as little input as possible in picking the next president.
What grade would you give yourself as president of PSCA?
I have been fortunate to be on the right side of history. The grade should not be for me but what the organization has accomplished. In that regard, I'll give us an A+. The organization has been extraordinarily effective at generating both important public policy changes, changes in attitudes in the workplace and changes in the public perception about retirement.
What accomplishments are you most proud of?
I'm probably most proud of the retirement changes that were in the Economic Growth and Tax Relief Reconciliation Act of 2001, which were made permanent in 2006. Public policy makers have a love-hate relationship with retirement accumulation. From a public policy perspective, it's really critical that we prefund retirement to the maximum level possible.
On the other hand, incentives to increase that from the government cost a lot of money.
Periodically, the government has addressed its revenue needs by reducing the attractiveness and the amount of money that goes into retirement savings. The Tax Reform Act of 1986 imposed a whole range of changes on the defined contribution system, which reduced substantially it attractiveness. The government had an order to suppress DC retirement savings and in order to raise revenue it had imposed all of these changes.
We began working in the late 1980s on a package that would basically unwind a lot of those tax law provisions. We worked hard on those and brought them up over and over again. We refined them over the years and built coalitions and we were extremely happy to see those go into the 2001 tax act. We then worked to make these permanent and we were fortunate after much work that we got those made permanent in 2006. There is nothing you can't accomplish if you let other people take a lot of the credit.
What changes have you seen both within the PSCA during your time there?
You have to be more than mission-based and deliver more bottom line benefits to members. The [retirement] system is far too complex for a lot of small plan sponsors and not financially attractive enough to small business owners. It does cost a significant amount to set up and run a plan. That's clearly not going to happen today because a solution that dramatically increases small-plan implementation would cost a really significant amount of federal revenue and this is not a time when policy makers are interested in how to defer current revenue into the future somewhere.
Our goal right now is to hold the line and the system in place that we got in 2006, and our future focus is to come up with programs that help small companies get plans in place. We started a project where we would set up a non-profit that would subsidize the cost of these new small employer plans. Ideas like these are fun to pursue in the future but this is not the time.
And what changes have you been witness to first-hand in the 401(k) space?
If you go back and look at the system, you see enormous changes in everything. One of the big ones is that people have gone from being savers to investors. In the 1970s, the money was very conservatively invested. People saved for retirement and did not invest for retirement.
Today, the record-keeping systems are light years away of where they were 20 years ago. Without technology, you would have half as many small plans as you have now. That technology has not only permitted the administration of these plans, but it has been a phenomenal benefit to the participants in terms of delivering modeling program, online advice and email communications.
Social media has definitely picked up and PSCA certainly has a web page and we have Twitter and Facebook. Companies are beginning to tap into this but they are cautious about this. I know of one organization that tweets the person's account balance to them. They're moving very slowly though understanding that anything you do in this area subjects the employer to liability.
The new fee disclosure rules make it easier to figure out the total fees that a person or a plan is paying. Fees cannot be a mystery in this time of suspicion of all things institutional. The 401(k) system lives on credibility. The fee disclosure regimen that has been implemented, as difficult as it has been to get in place, will have long-term benefits in that we're going to see less articles about 401(k)s being a fee ripoff.