Our long, national nightmare is over. Well, for NFL fans at least. After a protracted negotiation, NFL referees will maintain access to their defined pension plans...for a few more years. When a union wins the support of noted laborphobe Scott Walker, you'd think they'd be on their way. Alas:
The pension proved more complicated. Officials had hoped to retain a traditional pension while the league wanted to eliminate it in favor of 401Ks. On Tuesday night, owners were said to have dug in and were unwilling to make any more concessions. But on Wednesday, they were believed to have agreed to a short period of several years in which current officials would retain their pensions before they are converted to a 401K.”
This scenario has been hitting workers across America for decades. Companies have been very successful at moving employees from pension plans to 401ks and other plans that are cheaper and less secure.
From GM to Con-Ed, corporations have steadily eliminated defined pension plans. The incredibly profitable NFL could easily have paid for the smarter plans. But NFL Commissioner Roger Goodell sensed an opportunity:
About ten percent of the country has that. Yours truly doesn't have that. It's something that doesn’t really exist anymore and that I think is going away steadily.
What we agreed to do and offer as ownership, is that they would have a defined contribution plan, in the form of 401(k), so they'll still have a pension plan but the risk, like [for] most of us, would be on individuals.
Goodell is right that corporations have steadily moved towards a demonstrably broken 401(k) system. But that doesn’t make it inevitable.
The NFL referees were fighting for their pension accounts for a reason. They're far superior to the 401(k) alternative. In the “Retirement Savings Drain,” Robbie Hiltonsmith showed just how bad a deal 401(k)s are, with a worker making a median income shelling out almost $150,000 in fees over their lifetime. NFL referrees have picked their battle over pensions for a reason: the 401(k) system is badly broken.
Demos has proposed a solution: American Retirement Accounts. Such accounts would be national, government-backed, and give workers real retirement security. Seventy five percent of Americans think that replacing such retirement accounts with 401(k)s has put the American dream further out of reach. That's a national consensus. We should act on it.
If the NFL referees can't negotiate a real retirement plan, what chance does the average worker have?