The Enduring Value of
Formation of the Private Pension
By Paul Johnson and Paul D . Sonkin
It is fair to say that value investor and professor Roger Murray contributed significantly to retirement income security for millions of Americans . Murray ’ s interest in pensions dates to the early 1950s , when he published his first journal article on pensions in 1952 entitled , “ Investment Aspects of the Accumulation of Pension Funds .” He made a significant and lasting contribution in the early research on the importance of pensions , persuaded pension fund managers to invest in common stocks ( advice he followed while managing pension fund assets at TIAA-CREF ), testified before Congress about the importance of pensions and consulted with the Pension Benefit Guaranty Corporation . In addition , he assisted Representative Eugene Keogh ’ s efforts to pass a retirement plan for selfemployed workers ( Keogh Plan ) and got the individual retirement account ( IRA ) into the Employee Retirement Income Security Act ( ERISA ) of 1974 .
One of the most important events in the history of private pension plans was passage of the Keogh bill ( HR 10 ), which became law as the Self-Employed Individuals Tax Retirement Act of 1962 , on October 10 , 1962 . The Keogh Plan , as it is commonly referred to , enabled self-employed individuals to create tax-deferred pension accounts , which extended the tax-deductibility of pension contributions beyond traditional private pension plans owned and funded by corporations . The journey to establish a retirement program for the self-employed was a long , drawn-out congressional battle . The first bill was introduced by Congressmen Eugene Keogh and Daniel Reed , both from New York State , in 1951 . Opposition to the bill was focused on its potential impact on tax revenues and worries about it increasing the federal deficit .
Representative Keogh was a senior member of the House Ways and Means Committee , and he recruited Murray to support his efforts in getting the bill passed . In Murray ’ s own words , “ I had been Gene Keogh ’ s expert for pension plans .”
Murray told the story many years later how he came to work with Representative Keogh : Because he [ Keogh ] was from Brooklyn and was a fairly senior guy on the Ways and Means Committee , he called the chairman of the Bankers Trust Company and said , “ I need an expert to support me , against the contention that the Keogh Act will be too expensive , too great a revenue loss .” The Bank ’ s chairman said , “ I know just the guy you want to recruit . His name is Roger Murray .”
And for 10 years , each year when the bill would come up , one year in the House Ways and Means , the next year in the Senate Finance Committee , Murray would travel to Washington “ and give my testimony that the Treasury ’ s estimates of revenue loss were absolutely unreal and outrageous .” When the final bill was enacted in 1962 , it “ marked the culmination of an 11-year effort ,” primarily driven by Representative Keogh . And , as Murray observed , “ I had worked for 10 years ” supporting its passage .
One of Murray ’ s most important research projects as a professor at Columbia Business School was to direct a major study of the effects of public and private pension plans on savings and investment for the National Bureau of Economic Research ( NBER ). The three-year report was sent to Congress in 1967 and published as a standalone report in 1968 entitled “ The Economic Aspects of Pensions : A Summary Report .” The 128-page report was the most comprehensive study of pension plans published to that date . The experience forged a lasting impression on Murray and was one of the most significant contributions in his careerlong interest in pensions .
When the report was submitted to the US Congress Joint Economic Committee , Geoffrey H . Moore , director of research for NBER , stated in a cover letter addressed to the chair of the committee , the Honorable William Proxmire , “ Dr . Murray ’ s work is the capstone in a series of studies upon which he and several members of the National Bureau have been engaged for some years . Fortunately , the completion of this series of studies coincided with the plans of the Joint Economic Committee for the Compendium on Old Age Income Assurance .”
While managing retirement portfolios at TIAA-CREF and dealing directly with individual pension benefits , Murray made an important observation . “ One of the
36 FINANCIAL HISTORY | Winter 2023 | www . MoAF . org