The Retirement Plan Solution: The Reinvention of Defined Contribution

Chapter 1. Dc Version 2.0

The earliest versions of computer spreadsheet programs—from VisiCalc in the late 1970s on—were designed for experts: academics, accountants, and computer geeks.^[6] Built by guys with beards and sandals for guys with beards and sandals. Functionality was very limited indeed by today's standards. Interest was low initially. Fast-forward 30 years and Microsoft Excel is everywhere. It is enormously superior to early spreadsheets. It can calculate the inverse matrix for a matrix stored in an array or the probability density function of a Weibull distribution, which is nice if that's what you want it to do. However, most of you don't want it to do that. While improved functionality in a spreadsheet program is important, what matters even more is that it is easy for a book club secretary to type a list of members' names and telephone numbers and distribute that list to the others. Yes, the software needs the power behind it to do an awesome range of complex things for the few, but that ability cannot be at the expense of how well the far simpler needs of the many are met.

DC plans (the most popular type in the United States are called 401(k) plans, because that's the section of the Internal Revenue Code under which their tax-favored status arises^[7]) are almost as old as VisiCalc. They, too, have moved on. And the developments currently under way are so fundamental that we refer to the new breed of 401(k) plan as version 2.0.

The lesson of Microsoft Excel applies ...