Alumni Public Service Award.

A UNIQUELY POWERFUL Washington wonk. A hero of our retirement system. A pension rock star. One of the world’s 30 top financial players. A legend. An inspiration.

Mark Iwry has received plaudits like these from a variety of publications and people, along with awards for leadership, achievement, and innovation from organizations that typically don’t agree on much: workers’ rights groups, the payroll industry, the financial services industry, the IRS, the small business community, investment advisors, pension professionals, and others. To his acclamations, Harvard Kennedy School is adding its Alumni Public Service Award for Iwry’s work to strengthen the economic security of working families.

Iwry (pronounced “Eevry”) has always wanted to channel his idealism into achieving public good “in the tradition of my forefathers, ‘tikkun olam’—repairing the world,” says Iwry, whose father was a Biblical archaeologist and Ancient Near East scholar active in the underground in World War II and who is descended from the legendary 18th-century rabbi who founded the Hasidic movement in Judaism.

After studying history and literature at Harvard College, he sought out advice about the then relatively new Master of Public Policy program at HKS. “My old and dear friend Mark Kleiman [MPP 1977, PhD 1985] was a student in the program, and promised I’d find it a great experiment and adventure. As he put it, ‘Heck, it’s worth spending at least a year here if only just to watch [Professor] Tom Schelling think.’ So I signed up, and of course Mark was right.”

“I was drawn to the idea that Harvard was a place where intellect was being applied to improve the world.”

Mark Iwry MPP/JD 1976

His first-year public policy class numbered 26 students. “We felt like the batboys for the 1927 world champion New York Yankees,” he says, remembering established and rising stars in the faculty including Richard Neustadt (who would become his mentor and friend), Tom Schelling, Graham Allison, Richard Zeckhauser, Francis Bator, Jonathan Moore, John Steinbruner, David Wise, Will Fairley, and Mark Moore. Describing Neustadt, Iwry’s friend and HKS classmate Hank Levine JD 1975, MPP 1976 said, “He knew everything there was to know and shared it with verve and style.”

Once Iwry graduated from HKS and Harvard Law School, Neustadt gave him the opportunity to serve as staff director for Harvard’s Presidential Transition Study Group. In this project, Harvard faculty offered extensive advice to presidents-elect on how to set up their new administrations. Says Iwry, “It was a privilege to assist with this and to learn from Professor Ernest May, who chaired it. Four years later, when I was invited to serve as a member of the group, I had the pleasure of working with Jonathan Moore, the director of the Institute of Politics, who memorably told me that he’d learned it wasn’t always as important to be the smartest person in the room as it was to be the most resourceful.”


From private to public sector

On Neustadt’s advice, Iwry joined the Washington law firm Covington & Burling to gain experience at the intersection of the private and public sectors. He eventually became a partner and several years later, during the Bush administration, the Treasury Department invited him to play a lead role in regulating the nation’s private pension and health care systems and formulating national retirement and health policy. He took the job.

Soon after Iwry started at Treasury, Bill Clinton was elected president. “Clinton announced that his top three domestic priorities were health reform, health reform, and health reform,” says Iwry, who joined the White House Task Force on Health Reform. “The task force was responsible for designing what was widely expected to be the most important policy reform of our generation.”

“We worked our hearts out for two years,” says Iwry, “only to see it all go down in flames due to politics and gridlock. Incidentally, we’ve seen that gridlock seems to be an unavoidable hazard of our constitutional separation of powers. But even when the three branches of government, two chambers of Congress, or political parties are not at loggerheads, the upper reaches of government, especially early in a new administration, seem to be populated largely by two classic personality types: those who want to run the world, and those who want to save the world—both, of course, well represented in the HKS student body and faculty. Unfortunately, once these two personality types have had the opportunity to work together in government, those who want to save the world often come to realize that they want to save it mainly from those who want to run it.”

Later, in the Obama administration, Iwry would play a key role implementing health reform through the Affordable Care Act (ACA or Obamacare). Because much of the ACA, including its employer and individual mandates and associated taxes and credits, resided in the tax code, it came within the purview of IRS and the Treasury Department, where Iwry served as senior advisor to the secretary.


Finding common ground

The ACA, however, was opposed by much of the business community, especially small business and the retail and restaurant industries. Their predictions were dire: ACA’s effort to restructure one-sixth of the world’s largest economy and especially its attempt to impose an employer mandate would fail, precipitating major job losses and reducing millions of employees from full-time to part-time; employers would drop health plans, shifting costs to taxpayers and leaving employees to seek coverage in the individual market; and health reform would wreak havoc with the employer plans that successfully covered most Americans.

Iwry took inspiration from Neustadt’s teachings that the effective exercise of executive power relies more on persuasion and negotiation than command and control. Departing from the standard two-step regulatory procedure—proposed regulation followed by final regulation—Iwry orchestrated an intensive stakeholder consultative process to develop rules implementing ACA’s employer mandate and related provisions. “We reached out, listened, and seriously engaged with stakeholders,” he says.

To that end, Iwry took another of Neustadt’s teachings—“where you stand depends on where you sit”—literally as well as figuratively. As a token of openness and partnership, Iwry avoided the conventional seating arrangements at government meetings with outside organizations—instead of all of the government officials sitting together on one side of the table, with the private-sector stakeholders on the opposite side, he insisted that Treasury and IRS staff spread out among the outside stakeholders, explaining, “We’re all on the same side.”

To develop the ACA rules, Iwry held numerous meetings and briefings with employers, organized labor, insurers, and consumer groups, including four rounds of exploratory draft guidance, each eliciting extensive oral and written public comments. The result: The dire predictions did not materialize, former opponents praised the Treasury’s and IRS’s regulatory process, and most made peace with the rules. At least one congressional hearing designed to be a political attack on the ACA rules was canceled for lack of interest: business was appreciative of Treasury’s process and good faith, and unwilling to provide negative testimony. The White House credited Iwry with having reversed initially hostile attitudes in the restaurant and retail industries, earning employers’ trust and cooperation.

Upon entering government in the early 1990s, Iwry proposed to simplify pensions for small businesses and their employees by creating a new, highly simplified, user-friendly 401(k)-IRA hybrid plan for small employers. After prolonged internal resistance, the idea was approved by Vice President Al Gore and announced by President Clinton as the centerpiece of their administration’s pension simplification proposals. Seeking to avoid partisan opposition during the 1996 presidential campaign pitting Clinton against Dole, Iwry quietly reached out to Dole’s staff, whom he knew, to encourage them to adopt, rename, and assume ownership of the idea. They agreed, bipartisan legislation was enacted, and today 3 to 4 million Americans use the “SIMPLE” plan as an easy way to save.

By the later 1990s and early 2000s, corporate America was rapidly converting traditional pension plans to “cash balance” pensions, often to the detriment of older workers. This prompted congressional hearings, lawsuits, and front-page coverage in the Wall Street Journal. While out of government, Iwry organized and led a highly confidential, behind-the-scenes, consensus-building process, bringing together opposing organizations from the corporate community, organized labor, leading advocacy groups for retirees and older workers, and professional advisors. Meeting at the Brookings Institution over several months, the informal group narrowed differences and converged around a general consensus that helped provide a blueprint for the ultimate legislative solution enacted by Congress.

Don Wellington, who worked with Iwry at Treasury, notes that “most [people] have no idea how much they owe the stability of the private pension system to Mark. There aren’t many heroes in the world today, but I’ve seen this guy pour his soul into something he believes in.”

Mark Iwry speaking at the Latinos for a Secure Retirement Summit at the National Press Club in Washington, D.C. in 2012.
In this 2012 file photo, Mark Iwry speaks at the National Press Club in Washington, D.C. Photo by Kevin Wolf /AP Images for Prudential.

Fighting for inclusiveness: expanding health and retirement coverage

In addition to his natural inclination to pursue consensus and bring opposing sides together, Iwry has fought for what he believes in. While in the Obama administration, he mounted a sustained effort to persuade IRS to reverse a deeply entrenched position it had maintained for 30 years—the famously unpopular “use it or lose it” rule for tax-favored health flexible spending accounts (“FSAs”) used by 14 million Americans. The rule required the annual forfeiture of all amounts remaining in FSAs at year-end because they hadn’t been used during the year to pay medical expenses. “Use it or lose it” forced millions of households to forfeit unused FSA salary reduction contributions, often losing hundreds of dollars. Iwry recognized that IRS had some cogent reasons justifying its position, but was concerned that it contributed to a public image of IRS as incomprehensible and punitive while discouraging use of FSAs by millions of lower- to moderate-income households for whom several hundred dollars was a significant amount. After three years of vigorous internal debate, Treasury and IRS largely reversed IRS’s health FSA “use it or lose it" rule, allowing the majority of unused year-end salary reduction contributions to be carried forward and used in the following year.

Iwry has also had a profound influence on the way Americans save for retirement. As 401(k) retirement saving plans have increasingly displaced traditional defined benefit pensions, his vision has been to “restore the pension to the private pension system” by seeking to preserve and transplant to the 401(k) the most valuable attributes of traditional pensions: universal participation by eligible employees; employer funding; institutional, professional investment; risk pooling; and reliable lifetime retirement income.

Accordingly, at Treasury in 1998, he formulated and directed a strategy to expand private-sector 401(k) participation by defining, approving, and promoting “automatic enrollment.” As behavioral economists such as then-HKS Professor Brigitte Madrian later confirmed, automatically enrolling employees in a savings plan unless they choose to opt out, harnesses inertia to promote saving. Treasury and IRS rulings in 1998 and 2000 approved auto-enrollment paired with automatic (i.e., default) investment in a balanced fund of diversified stocks and bonds (thereby incorporating the expert advice of investment professionals). Per Iwry’s recommendation, President Clinton highlighted the guidance in a speech, and IRS, at Iwry’s request in 2004, clarified that 401(k)s can automatically enroll employees at high and increasing contribution levels. As auto-enrollment spread to about one-third of the larger 401(k)s, Iwry—then a co-founder of the Brookings Institution’s Retirement Security Project and a research professor at Georgetown University—was instrumental in drafting and advocating the 2006 Pension Protection Act, which gave auto-enrollment a further boost.

Now used in more than 70 percent of larger 401(k)s, auto-enrollment has extended participation to millions of women, lower-income, African American, and Latinx workers. Auto-enrollment (including auto-contribution-increases) and the resulting auto-investment in diversified funds is widely considered the most transformative 401(k) reform of the last 40 years.

Former colleague Tom Reeder, who noted that Iwry is sometimes called the “godfather of auto-enrollment,” says Iwry “is very creative and people trust him.”  He “finds out not only what’s a good idea but what will work. … He’s a master of the practical.”

“His work ethic is more than unusual—it’s almost challenging,” adds Bill Bortz, who served under Iwry at Treasury. “You can’t outlast him. It’s a strategy that lawyers use with one another: outlast the other person. This won’t work with Mark.”

This combination of practical mastery, resolve, and a larger vision causes him to be very effective in crafting policy. “Mark is an indispensable figure in the retirement policy arena not only for his substantive expertise but also his ability to get things done,” says Alicia Munnell, who worked with Iwry at Treasury. “And he is always there not only for policymakers of all stripes and industry leaders, but also for us less famous people when we call for help.”


Toward universal saving

Building on auto-enrollment’s success and hoping to bridge the ideological divide, Iwry reached out to a senior fellow at the conservative Heritage Foundation, David John, to co-author a sweeping solution to the greatest unfinished business of our private pension system: covering the one-third of the workforce lacking access to a workplace plan. Their 2006 “auto-IRA” proposal to automatically enroll some 40 million uncovered workers in private-sector IRAs has been endorsed by experts (including the former chairs of both the Reagan and the Clinton Council of Economic Advisors) and by both 2008 presidential candidates (Obama and McCain), praised in the media (including endorsements in New York Times editorials as well as by conservative commentators), and introduced as bipartisan legislation in Congress—but has yet to be enacted.

However, the states are providing proof of concept. Starting in 2002, Iwry launched and developed a state-level pilot of the nationwide auto-IRA initiative to expand private-sector retirement coverage. Seven states thus far are implementing his auto-IRA legislation, and many others are considering doing so. California’s treasurer described this initiative as “the most significant expansion of retirement security since . . . Social Security in 1935.” Together, the seven states are expected, by some estimates, to soon auto-enroll more than 10 million uncovered workers in IRAs. If Congress enacts the proposed nationwide auto-IRA program, it is expected to incorporate and build on the programs the states have adopted. 

Cass Sunstein, Robert Walmsley University Professor at Harvard Law School, worked with Iwry on health reform (ACA) as well as retirement policy in the Obama administration. Says Sunstein, “Mark is one of the most constructive public servants in the United States. Among other things, he has been the most important force behind massive improvements in U.S. retirement policy, including the rise of automatic enrollment in pension plans.”

In 2001, on the occasion of Iwry’s departure from government service to return to the private sector, Lawrence Summers, having recently served as secretary of the Treasury and about to take office as president of Harvard University, said, “Millions of Americans will enjoy more secure retirement … because of your efforts. Your country should be grateful for what you did; I know I am proud to have served with you.”

A common thread in much of Iwry’s work has been the role of tax law and policy. Although he declined to be nominated to serve as Treasury’s assistant secretary for tax policy so he could devote his attention to health care reform and retirement policy, Iwry has made observations on taxation and the tax system that are quoted more frequently than those of nearly any other individual in the anthology As Certain as Death: Quotations About Taxes, where they appear along with quotes from Adam Smith, Voltaire, Franklin, Jefferson, de Tocqueville, the Old Testament, and Mark Twain.

While in government, Iwry periodically held “town hall meetings” or “fireside chats” with groups of retirement and health care professionals and practitioners around the country to solicit feedback and new ideas, and to keep current on developments in the market. In addition, he has authored, co-authored, or been the driving force behind many other policy initiatives and reforms: the saver’s tax credit (encouraging 401(k) and IRA saving by some 8 million lower-income households annually); a “start-up” tax credit for small businesses adopting new retirement plans; the “myRA” (a simple, safe, no-fee starter account for new savers, combining Roth IRAs and U.S. savings bonds); automatic rollovers to limit leakage; direct deposit saving of tax refunds in IRAs and U.S. savings bonds; annuities embedded in 401(k) target date funds; and the new “QLAC” 401(k)/IRA longevity annuity providing lifelong retirement income in an efficient and behaviorally strategic manner.

In 2011, The Wall Street Journal’s magazine, Smart Money, recognized Iwry as one of the world’s 30 “top financial players” (along with German Chancellor Merkel, Federal Reserve Chair Ben Bernanke, and the CEOs of BlackRock, Vanguard, JPMorgan Chase, Apple, Google, and AARP), concluding their profile of Iwry with, “Who says nice guys finish last?”

Since leaving government at the close of the Obama administration, Iwry, currently a nonresident senior fellow at the Brookings Institution and visiting scholar at the Wharton School, continues to pursue these and other policy reforms and market innovations, confident that the best is yet to come.

Photos courtesy of Mark Iwry