Pension Funds

Your article on pension funds (Part A, June 21) inaccurately characterizes the General Motors plan of 1950 as “the first pension fund.” Pension plans arose in the United States in the 19th Century, notably on railroads. By the 1920s, several large firms and state and local governments had pension plans, although few workers ultimately qualified for benefits. Not all of these plans were backed by separate trust funds. But it was not unusual to create a trust or reserve account for them, especially when employees contributed to the program. Nonetheless, lack of adequate funding wiped out many plans during the Great Depression.

In the late 1940s, the modern era of pensions began. There was a rush by unions to negotiate pensions in heavy industry, thanks to a favorable Supreme Court ruling and changes in tax laws. The General Motors plan was one of several created at that time. I doubt anyone really knows what was the first American pension fund; the idea of pensions and pension funding evolved over a long period.

DANIEL J.B. MITCHELL, Professor, Anderson Graduate School of Management, UCLA