It’s common for people to spend a portion of their time off during the holidays watching old movie classics on television. The re-runs are all over the listings, and a few hours on the couch is just what we need. For me, my favorite has always been “It’s a Wonderful Life.” I love the nostalgia, the small-town charm and the reminder of the good things in life.
I bet you have an old favorite or two. But I doubt “Pensions – The Broken Promise” is one of them. If you are involved in managing or overseeing an employer-sponsored retirement plan, it should be. Grab a seat, veg out, and re-live its lessons because few television programs have had the public policy impact that this show did. Quite simply, it changed our (retirement) world.
The show aired on September 12, 1972 on NBC and was anchored by the late Edwin Newman. At the time, political momentum had been gathering for defined benefit pension reform for a decade or so. “Pensions – The Broken Promise” is generally credited with galvanizing public support. It led two years later to the passage of the single biggest event in retirement plan history – the Employee Retirement Income Security Act (ERISA) of 1974.
I recently watched the show again on YouTube to remind me what things were like prior to ERISA’s passage. In today’s retirement plan world, it’s popular to long for the days of defined benefit pension plans. History is like that. With a thirty-thousand-foot view, and the details removed, it is easy to romanticize the past. That’s how it feels to me when people rail against the prominence of defined contribution plans, like 401(k)s, and lament the decline of traditional pension plans.
The hour-long NBC Report makes it startlingly clear that that perception is wrong. In fact, the “good ol’ days” of pensions weren’t that good at all. Here are a few excerpts from the broadcast:
· At the 6:57 minute mark, an unnamed expert states that “over half the people 65 or older get nothing from a pension plan. Those that do, average a thousand dollars a year.”
· At 9:55, another says, “…you have to go to work for an employer, you have to stay with them, you have to stay in good health, you have to avoid layoffs, you have to take your money and turn it over to the employer, hope that he invests it safely and soundly, you have to hope when you’re age 65 that the employer is still around…”
· At 19:08, a former employee of the Kelly Nut Company recounts that his pension plan required 20 years of service and 60 years of age to become vested. This worker had worked for the company 24 years and was six months away from turning 60 when he was fired. He didn’t receive anything from the pension plan.
· At 26:39, another expert states, “People don’t get the pensions they expect for many reasons. One is that most plans require you to work in the same place for 25 or 30 years, or more.”
Over and over, “Pensions – The Broken Promise” confronts the viewer with real life examples of the injustice in the system at the time. The broadcast journalism of NBC shook the public and created an outcry for reform. As a result, ERISA ended up reforming fiduciary duties, vesting length, funding requirements, and created the Pension Benefit Guaranty Corporation (PBGC) to insure plans against corporate bankruptcy, among other things. The law’s impact was broad and sweeping.
ERISA is the foundation for the retirement security we now enjoy. And though there are, no doubt, many improvements still needed, without it our country might more closely resemble Pottersville than Bedford Falls.
The NBC Report, “Pensions – The Broken Promise,” is a classic to be watched and rewatched. It is a helpful reminder of the good things we now have in (ERISA) life.