EMPLOYEE BENEFIT FUNDS
FIRST – THANKS FOR 2021 AND A WISH FOR 2022
Thanks to all the readers of my book and posts. In this first year, many new friends have joined me on Tobacco Road. Please continue to follow my writing and share it with others. I wish for each of you a Happy New Year. May 2022 bring you joy and success in whatever you do.
HOW DO YOU BENEFIT FROM A “BENEFIT PLAN”?
Most people have no idea of the work required to assure that their retirement check will arrive. But a great deal of planning and investing make it happen.
In Going Down Tobacco Road, I wrote little about the RJR pension plan. As in most large companies, the plan was almost a separate business. Its mission was to assure that an independent pension trust had enough assets (“fully funded” is the industry term) to cover the pensions promised to the workers, even if something bad happened to the company – bankruptcy or declining business. The pension officer’s job is to assure that the investments earned enough money to meet that objective.
The people who run pension funds have more in common with their peers at other funds and endowments than with their employer. An informal network of people who all had the same job, no matter what their employer did, led to close friendships across industry lines. Associating with them – investment advisors, actuaries, consultants, and benefit fund managers was one of the finest and most educational experiences of my life.
RJR DRAFTS A ‘ROOKIE’
A post reader asks, “Just how did you go from being a mechanical engineer to running employee benefit investments? That seems quite a stretch.”
To satisfy those who might be curious – Immediately after undergraduate school at NC State, I enrolled at UNC-Chapel Hill in the MBA program. (In 1961-63, this was the ONLY school in the state that offered an MBA degree.) After graduation, I joined the DuPont Company at its Delaware headquarters as a market research analyst covering the industrial uses for the fluorocarbon, Teflon. My manager, William Ryan, a savvy investor, encouraged me to learn more about the market. [The subject of a future post, he pointed me down a new career path.]
In 1965, I accepted a market research position at the Archer Aluminum Division of R.J. Reynolds in Winston-Salem. After five years, I transferred to the Business Planning Department of the parent company – the group that analyzed mergers and acquisitions.
There, I accidentally got into pension management. After working on the Burmah Oil acquisition in 1976, I had no assignment. In early 1977, RJR Treasurer John Dowdle gave me a job working on pension and profit-sharing investments. My knowledge was limited, and my experience was nonexistent. But an old Greek Proverb applied: “Among the blind, the one-eyed is king,” so, I got the job. The pension plan had received little attention at the tobacco company. But outside events soon changed that. And in fact, changed my life forever. Unknowingly, I was embarking on a great personal adventure that has lasted 45 years.
We will continue to share tobacco stories. But also, in a series of posts, we will drill into the employee benefit business, using the history of RJR’s pension and savings plans to explain how the industry developed over the last 70 years. We will discuss the serious work in investing and some of the not-so-serious things that happened along the way. And we will introduce some bright and interesting people on this stretch of Tobacco Road. Finally, we will discuss what retirement plans might look like in the future. Hopefully, this series will make you better-informed as you plan your retirement.
As announcers used to say, in the golden days of radio, “Stay tuned.”