1918 Andrew Carnegie Popularizes Pensions
With the aim of improving the financial security of instructors, and with direct prodding and involvement from Andrew Carnegie, the Carnegie Foundation for the Advancement of Teaching researched, planned, and opened for operation a new Teachers Insurance and Annuity Association in 1918. The foundation seeded the new entity with a $1 million grant. In the years following, TIAA received an additional $7 million of donations from Carnegie, and during its first two decades the fund was given free office space, and had all of its administrative expenses paid by Carnegie. TIAA-CREF grew so large by 1937 that the foundation spun it off as an independent, self-supporting company. A conservative investment strategy allowed it to not only survive but flourish during the Great Depression. Then when inflation made traditional annuities less attractive during the 1950s, the organization created innovative stock-savings accounts under its College Retirement Equities Fund umbrella.
TIAA-CREF’s success and rapid growth allowed academics access to some of the best and most affordable financial services in the U.S. Carnegie’s example helped make retirement saving a common expectation among millions of middle-class workers in professions of all sorts. And the company itself became a model for other low-cost, high-quality, low-risk retirement and investment firms. By 2017, TIAA-CREF managed more than $907 billion of assets, and served more than five million individuals. Not only colleges but also many think tanks, community foundations, and other nonprofits rely on the company to manage the retirement plans of their employees.
- Duke University case study, cspcs.sanford.duke.edu/sites/default/files/descriptive/tiaa-cref.pdf