Long before the Variable Annuity Life Insurance Company of America (VALIC) became an AIG company, it took to the halls of statehouses in the early 1960s to lobby for the right of workers at public K-12 schools to supplement their retirement savings with 403(b) annuities.
At the time, teachers largely relied on pensions as a retirement savings tool. Section 403(b)(7) accounts offering mutual funds were not yet in existence, so annuities provided a tax-deferred supplemental savings option—one that was portable and already available to employees at state colleges, public hospitals and other nonprofits.
By 1964 VALIC gained the legislative go-ahead to become the first retirement solutions provider in the United States to enroll a public school district—Florida’s Dade County Public School district—in a 403(b) retirement program. The 403(b) tax-deferred annuity retirement savings device had been created six years earlier by the federal government to encourage employees of certain nonprofit organizations to save more.
American General Corp. acquired a majority stake in VALIC in 1967 and moved its headquarters from Washington, D.C., to Houston. In 1977, VALIC was named the preferred retirement plan provider for members of the American Association for School Administrators (now called the School Superintendents Association). As VALIC grew, it introduced more products and services, including a series of annuitization options and full-service pension plan administration services in 1987, and four years later, a variety of index fund options.
The 1990s brought explosive growth, with sales roughly doubling to $1.7 billion between 1994 and 1997. This level of success proved too good of an opportunity for AIG to pass up, and in 2001 it acquired American General (and, by extension, VALIC) to boost AIG’s domestic life insurance business and complement AIG’s existing business offered through SunAmerica.
2014 marked the 50th anniversary of VALIC’s historic moment with what is now Miami-Dade County Public Schools. Similar milestones have followed with other school districts, including Broward County and Palm Beach County.
Today, VALIC is an AIG company, and known as a premier retirement plan provider for nonprofits. It manages plan assets for nearly 23,000 groups, with roughly 1.8 million total participants and over $100 billion in total assets under administration as of the end of the second quarter of 2018. But it has never forgotten its long history with serving educators, and how that relationship has helped to transform retirement planning.