Global Markets
Home›Global Markets›Trade & Tariffs›401(k) inventor Ted Benna says plans fail lower-income…
401(k) inventor Ted Benna says plans fail lower-income workers
Benna, now 84, argues the 401(k) model is too costly and complex, and cites research that employer matching subsidies skew toward higher earners.
Ted Benna, credited as the father of the 401(k), says the retirement plan he helped create is not working well for middle- and lower-income employees, and is pushing for a simpler alternative. Benna, now 84, told Bloomberg that 401(k) plans have become too costly and complex, and that many workers cannot afford paycheck deductions even when they want to save.
The article says research has shown 401(k)s disproportionately benefit higher-income workers, in part because larger paychecks typically enable more savings, and employer matching is tied to employee contributions. It cites an estimate that 44% of employer subsidies go to workers whose wages are in the top 20% of their workforces, according to a report published by the Harvard Law School Forum on Corporate Governance.
Access and participation also appear uneven, with 70% of private-sector workers having access to a defined contribution plan such as a 401(k), while only half have chosen to participate, based on 2025 data from the U.S. Bureau of Labor Statistics. The article also references a 2019 Economic Policy Institute report that called the system broken, arguing the shift from pensions to 401(k)-style plans widened the retirement gap.