Among car enthusiasts, the Studebaker brand was revered for its stylish presentation values while also producing models that broke over 300 speed records. The company ceased production in 1966, but the cars still remain a hot item for collectors.
However, Studebaker is also closely tied to the origins of the Employee Retirement Income Security Act (ERISA) and the Pension Benefit Guaranty Corporation (PBGC). When the company closed its largest plant and terminated its pension plan in 1963, about 3,600 older, retired workers received their full benefits. However, roughly 4,000 active employees — many with decades of service — received only about 15 percent of the benefits they had expected, and thousands of workers under age 40 lost their benefits entirely.
The Studebaker pension plan collapse had a powerful impact on policymakers and public opinion. The late Senator Jacob Javits of New York recognized that pension plan defaults threatened the stability of the private pension system, and in 1967, he introduced pension reform legislation to protect the benefits of millions of workers covered by private pension plans.
After years of study, congressional hearings and debate, Congress responded by passing ERISA in 1974, which created PBGC. Now, if a plan terminates without sufficient assets to pay all promised benefits, PBGC's insurance programs step in to ensure participants receive the benefits they earned, subject to legal limits.
For more than 50 years, PBGC has been protecting the retirement security of American workers in private sector pension plans. Currently, the agency protects the retirement benefits of about 30 million American workers, retirees, and beneficiaries in both single-employer and multiemployer plans.
Studebaker’s legacy extends far beyond its automotive achievements; its pension plan collapse marked an important milestone in America’s pension history and helped pave the way for the creation of the nation’s pension insurer.