Welcome Ted Benna, “Father of the 401(k),” Strategic Advisor to Salt Labs

Welcome Ted Benna, “Father of the 401(k),” Strategic Advisor to Salt Labs


Ted Benna recently agreed to join our Salt Labs team as Strategic Advisor to our solution, the first-of-its-kind employee rewards and incentives platform specifically designed for frontline workers.

Ted invented the 401(k) to be used as a savings tool by employees, and it has become the industry standard for financial wellness offerings among employers. However, Ted readily admits that the 401(k) has shortcomings when it comes to frontline workers who find it challenging to invest any part of their paycheck — an already scarce resource.

After meeting with our founder and CEO, Jason Lee, Ted wanted to offer his expertise in developing financial savings solutions to Salt Labs as Strategic Advisor. He is firmly aligned with Salt’s mission to build long-term employee wealth through an earned loyalty asset that helps frontline workers build savings momentum, which leads to higher retention and productivity.

Ted will be invested in Salt’s go-to-market strategy, aimed at employers who want to help their frontline workers with a rewards and incentives platform specifically designed for their needs.

An Interview with Jason & Ted Benna: Why Traditional 401(k) Plans Don’t Work for Frontline Employees

Ted and Jason recently sat down to share why Salt is clearing the way for frontline workers to build a new store of value, earned on top of their paychecks, that benefits employers and workers alike. Ilya Aspis, former Sr. Advisor to President Bill Clinton, conducted the interview.

Here are some key snippets from their discussion.

Ilya: Ted, you were the first to see that the 401(k) could significantly impact workers’ lives. What do you see now as the shortcomings of the 401(k) as it was written?

Ted: Well, 50% of people have nothing, so that’s one thing. When employees change jobs, there’s too much leakage, and we must close that door. When a 30-year-old leaves their job, they take their 401(k) money, and instead of rolling it over, they use it for something they want. Then, when they retire, they can’t maintain a stream of guaranteed income, and that’s an issue.

Ilya: What do you see as the next step in the evolution to help workers save for retirement?

Ted: Almost 50% of American workers still don’t have access to a savings program. This gap needs to be closed so that this population can access some kind of savings tool.

Employers play a role in this because most workers need help saving on a regular basis, regardless of their earnings. The 401(k) changed millions of Americans from spenders to savers by prioritizing saving. However, lower-income workers, who live paycheck to paycheck, still can’t afford to participate even if they have the opportunity to do so.

Ilya: How is Salt Labs, a new form of savings, helping a single mom making $25-30k/year and having difficulty saving anything from her paycheck?

Jason: It’s tough to get someone who feels paycheck-constrained to take an already limited resource and ask her to put something away.  

At Salt, we turn the savings mechanic on its head with “Earn to Save.” We offer a different type of asset — a non-cash, non-spendable source of value for these employees — which encourages people to continually add to their balance. Employees earn one Salt for each hour they work; at the end of their shift, they have eight Salt. They like to keep building their balance to exchange it for something they have wanted to save for in the first place but couldn’t — like a first payment on their child’s 529 plan or a family trip.

This is how Salt is addressing the savings problem. We’re building something fresh and new that’s changing people’s behavior because people naturally want to keep building up their balance.

Ilya: Ted, why did you join Salt Labs as Strategic Advisor?

Ted: When Jason approached me with his goals, I readily embraced them because I have similar concerns for this group of people. I get approached by many people with the “next greatest innovation.” Many of them have a dream but haven’t done anything that proves they’re successful. Jason has been successful. What he did with on-demand pay was desperately needed, and he has a track record that speaks for itself.

Ilya: Jason, Salt Labs is approaching 18-months-old. Can you speak to some findings you’ve noticed since starting the company?

Jason: We thought of Salt as an employee reward on top of their paycheck, something akin to frequent flyer miles. We wanted to bind the employee to the employer. We thought people would save their Salt and exchange it for cool things like discretionary items or something they always wanted. Then we found out that workers were more interested in the longer-term store of value — they don’t want to spend it; they want to save it.

This is a unique kind of saving. Employees can see their Salt Balance increase, and it’s incredibly novel and motivating in a way we’ve never seen before. Right now, 80% of Salt that has been earned hasn’t been redeemed. It’s still sitting in their accounts! The employee validation isn’t in the redemption; it’s tied to the fact that the worker can earn and save it.

For the first time, this demographic has displayed a willingness to save — a group with a -2% savings rate is saving 60-80% of their Salt. By changing the way they save, we’ve created a massive difference in savings.

Ilya: What role should employers play in all of this?

Jason: Employers are at the nexus of employee financial health because 90% of our money comes from work. Employers have found that when employees are financially healthy, secure and able to meet their financial goals, it’s good for business. More and more employers understand this and see that it lowers turnover, increases engagement and retention, and benefits business operations.

Ilya: What do you hope to accomplish with Salt Labs?

Jason: I’d like to make money — but not for ourselves. Low-income workers don’t have any savings. Salt gives them an individual store of value that creates new value and new money. If a low-income worker saves their Salt for a couple of years, they could save up to 10,000 Salt, and that’s real value.

With DailyPay, we saw significant progress. Banks had been getting 3-20% of their revenue from overdrafts. Today, overdraft revenue is down about 68%, and on-demand pay has much to do with that. That’s real progress. It changed people’s financial lives, and that’s what we want to do at Salt.

Seven years from now, I’d like to see 10 million Americans walking around with thousands of dollars in their Salt accounts. This will be the measure of our success.

Ilya: Ted, in 2018, Politico interviewed you, and you controversially stated, “I am unhappy with my invention.” As the inventor of something that’s crucial to so many Americans, can you speak to the challenges one faces when creating a new industry or product that’s never existed before?

Ted: The 401(k) wasn’t easy to get off the ground. It involved a lot of time and effort, and it didn’t take off until the NY Times wrote an article about it. Then, it started to gain traction and grow.

What happens with these things is that larger companies need to embrace them. Mainline businesses, such as Fortune 500 companies, need to adopt this new idea. These companies don’t mind being out in front and getting good PR for helping employees do something they can’t do on their own. It’s like a herd instinct. CEOs sit on multiple boards and talk about this new thing, and then it becomes mainstream.

Ilya: What are your reasons for optimism? The 401(k) has been around for a half-century and has transformed America. Can you make a case for optimism for the next decade?

Jason: I think there is something unique about America and America’s culture that you don’t find anywhere else in the world, and that’s America’s entrepreneurial spirit.

We were founded as “One Nation Under God,” and America has a special place in history. Something about our resilience and our desire to create something better for ourselves is in our DNA.

So, I am long-term optimistic about American dynamism. While I always worry about impacts, American entrepreneurialism drives my optimism.

If you want to hear more about how you can partner with Salt Labs, please email partnerships@saltlabs.com.