Although information on early corporate plan formation is scarce, one of the most widely quoted sources is a two-volume corporate pension study by Murray Webb Latimer, published in 1932.
According to him, the first corporate pension plan in America was created by the Grand Trunk Railway of Canada in 1874. American Express Co. set up the next pension scheme in 1875.
By 1929, Mr. Latimer found 397 corporate pension plans operating in the United States or Canada. Of those, 266 companies had non-contributory schemes.
Among the companies the Latimer study cites as having pension plans before 1930 were American Can Co., established in 1924; Bethlehem Steel Co., 1923; U.S. Steel Corp., 1911; Goodyear Tire & Rubber Co., 1915; General Electric Co., 1912; Eastman Kodak Co., 1929; and American Telephone & Telegraph Co., 1913. Many railroads and utilities also had pension plans, the study notes.
Standard Oil Co. of New Jersey, one of the earliest pension sponsors, established a plan in 1903. But as with many of the few pension plans of that, era there was a catch.
"The plan was never formally announced to the employees," according to the Latimer study, indicating the company wanted to retain discretion on which employees received pensions.
By 1940, "certain industries were more 'pensioned' than others," said Samuel H. Williamson, director, Center for Pension and Retirement Research, Miami University, Oxford, Ohio. He cited railroads as one example.
There were no vesting rules. "So you had to retire with the company," he said. "There were some legitimate claims of people fired just before receiving pensions."
Employees often had few rights in early pension plans in terms of vesting and eligibility. Employees had no right to negotiate terms of pensions. Pensions were not guaranteed, and companies typically didn't fund liabilities into a separate trust fund.
"In the beginning, private pension benefits were universally regarded as gratuities from a grateful employer," notes Dan M. McGill, professor emeritus, the Wharton School of the University of Pennsylvania, Philadelphia, in his book, "Fundamentals of Private Pensions."
"The payments were usually discretionary.
"In fact, most plans stated in specific terms that no employee rights were being created."
The Great Depression of the 1930s curtailed pension plan formation, although it didn't kill it.