Hello everyone and good morning!
I am so happy to be here on the opening day of “Breaking Through Power.” What an amazing event! First, I want to thank Ralph Nader and all the hard-working staff at the Center for the Study of Responsive Law who put this together.
I’m here today to tell you about how the Pension Rights Center has been breaking through power for 40 years. And how it has paid off.
So what is the Pension Rights Center?
We’re a national consumer rights group that has been working since 1976 to promote and protect retirement security for workers, retirees and their families. We make sure when people leave the workforce, they have enough to pay their bills, pay their medical expenses – and continue to be productive citizens. And if people have adequate income, they’re more likely to be able to continue fighting for justice their whole lives.
The Pension Rights Center’s mission hasn’t changed in 40 years – but the challenges and some of our strategies have. This is what I’m talking about today.
The Pension Rights Center was started 40 years ago by Karen Ferguson when Ralph Nader said to her, “go make pensions an issue. Here’s a check to help you do it.” Forty years later, Karen Ferguson hasn’t stopped. She’s still the director the Pension Rights Center.
I’m Karen Friedman and I’m known as Karen 2. When people talk about the Center they typically talk about the Karens. We’ve been working together roughly about 25 of the 40 years the Center has been existence. I have a passion for making sure people receive the pensions they have earned, and I hope that at end of this speech you will, too.
Now, many of you have probably seen the new movie, Superman Batman: Dawn of Justice. It’s actually a pretty awful film. The reason I bring it up is because we in this country are obsessed with superheroes that fly in to conquer evil and solve our problems, but here’s the truth, folks: There’s never one person who does everything.
Leaders inspire, but everyone is needed in the fight.
I am here to say that we are the superwomen and super men who together can solve this country’s problems.
So, after this conference, I propose that we write and produce our own movie: “Super Activists: Dawn of justice, How Ordinary People Saved the World.” That’s what this conference is about.
The Pension Rights Center has a strong mission and a small budget, but lots of passion. Passion that has helped change laws and regulations, and in some cases, we’ve been able to change how companies and pension plans operate.
Why was the Pension Rights Center created?
To answer that question, we’ll have to go back to the year 1976 when disco music was filling the airwaves and Jimmy Carter had just been elected president. To put it in perspective, Angela Jolie was still in diapers.
But, most importantly, it was also two years after the passage of the new federal private pension law, the Employee Retirement Income Security Act of 1974, or ERISA, which was intended to protect the reasonable pension expectations of workers and retirees.
This landmark law was developed by a bipartisan Congress, signed into law by Republican President Gerald Ford, and called the most important social legislation since Social Security by Republican Senator Jacob Javits.
Before ERISA, tens of thousands of people were losing their pensions because there were few laws regulating pension plans, meaning that companies pretty much could do what they wanted.
Companies could require people work until retirement age to get their pensions and then fire them two days before their 65th birthday. Bye bye, pensions. Employers could invest the plan’s money in bogus casinos in Vegas without facing consequences. And, if a company went bankrupt, workers could lose everything.
ERISA created basic standards to protect pension promises by creating a pension insurance program to protect people in bankruptcy, developing investment and funding rules, and setting minimum rules on how long people needed to work to earn a pension.
But like all laws that were duked out between different parties and stakeholders… ERISA wasn’t perfect.
There were many gaps in the law. Congress couldn’t envision all the problems that might occur. And this is where the Pension Rights Center stepped in.
From its earliest days, the Pension Rights Center helped people understand their rights under the law. We began hearing from people who had been left out of the law, and we documented those issues. There were widows and divorced spouses who learned they weren’t eligible to get their husbands’ pensions – even if they had been married for decades. There were corporate raiders, like Carl Icahn who rose to fame in the 1980s by finding ways of looting so-called “surplus” pension assets to finance his takeover schemes. There were folks who worked Nine years and 8 months but lost their jobs before the 10 years they needed to earn the right to a pension.
To solve these and other problems, the Pension Rights Center did what it now considers to be its stock and trade. We identified and documented problems; we used our technical know-how to develop workable solutions; and we mobilized affected citizens and women’s organizations, labor unions, retiree groups in a coalition for passage of laws.
We were then, and consider ourselves now, to be the great catalysts for retirement income reform.
Throughout the Pension Rights Center’s history, we have been instrumental in the passage of six federal laws and the implementation of numerous regulations that have expanded benefits and rights for widows, former spouses, low-income wage earners, short-service workers, and in the creation of a legal network of pension counseling projects that provide free legal assistance to 30 states.
But what were are the strategies to get these laws passed? What we did then is still relevant now. We at the Pension Rights Center have learned that it takes more than facts and know-how. You also need to get creative, especially when your organization is small and under-resourced.
To explain, I want to share a few stories of how the Pension Rights Center has gotten laws passed in our first decades:
Back in the 1980s, our persistence was able to secure a slot on The Phil Donahue Show for some of the widows and former spouses who had been left out of ERISA. At the time, The Phil Donahue Show was the hottest talk show host in the country meaning that this appearance generated tons of public buzz.
We used the power of these stories in Congress. For instance, we arranged for Pat Tice, 54, to testify before the Ways and Means Committee about how women would lose survivors’ pensions if their husbands died before early retirement age. She said “I came today because I thought I could be helped by the new law to protect widows, but it’s too late for me. My husband died this morning. I showed up today help others.” You could have heard a pin drop. Suffice to say, Congress soon passed the Retirement Equity Act.
To draw attention to pension looting, we delivered cookies to key members of Congress with the following message: “Stop companies from stealing from the pension cookie jar.”
In the late 1990s, when IBM tried to cut its workers’ benefits, employees flew a blimp over football field with the message, “IBM stole my pension. Is yours safe?” Faced with a public relations nightmare, IBM stopped its cuts for certain employees. And then Congress changed the law to address the worst abuses.
So when you think about social change, think facts, think solutions. But also think creativity. In this media-saturated market, that’s even more important today.
Now, let’s move to the present:
As you can imagine, 40 years later, the retirement landscape has changed and there are more challenges than ever. But as you’ll hear, the Pension Rights Center’s strategies and tactics, while updated, are fundamentally the same.
Let’s talk about the importance of Pensions.
At $16.5 trillion, pensions are one of the world’s largest sources of private capital.
And we as taxpayers subsidize the private system of pensions and 401(k)s to the tune of $132 billion.
So for that much money, the pension system should be doing a good job right?
While policymakers talk incessantly about the budget deficit in this country there is little talk about the huge and growing Retirement Income Deficit which is now standing at $7.7 trillion. The Retirement Income Deficit, which was calculated by the Center for Retirement Research at Boston College, is the gap between what people have saved as of today and what they should have saved to meet their basic retirement needs.
So, what has caused this Retirement Income Deficit?
About half the private workforce has no pensions or savings to supplement Social Security, which provides only about $16,000 a year for the average retiree – and even less for women and low-income workers.
Employers are dropping, cutting back or freezing good old-fashioned pension plans, which promise a specific benefit at retirement, in favor of 401(k) plans, which do not provide adequate retirement income for most Americans.
In fact, half of all households with 401(k) plans have only $59,000 accumulated in their accounts. For people approaching retirement, it’s about $103,000 – not enough to make it through retirement. Consider this: for all households, not just those with retirement accounts, the amount saved in 401(k) plans is about $2,500. Studies show that workers of color are much less likely than whites to be covered by employer-sponsored retirement plans.
National opinion polls reflect America’s anxiety. A recent Gallup poll shows that Americans are more worried about not having enough money for retirement than any other economic issue – including paying for health care, their mortgage, or their kids’ education.
The Pension Rights Center is working every day to try to develop solutions to increase retirement savings and protect against broken promises.
To address the lack of pension coverage in this country, the Pension Rights Center has called for a new national universal, secure and adequate pension system on top of Social Security. The Center strongly supports the expansion of Social Security and we also support new and creative approaches to expand coverage being pioneered in the states.
We also are ensuring that retirees’ and workers’ already-earned pensions and protected.
We’re seeing new trends every day in which consulting firms advise corporations on how to cut pensions and other benefits, by taking advantage of loopholes in the law. Some of the companies have off-loaded their pension plans to insurance companies, and we’re even seeing nonprofit hospitals do the same. Some of these hospitals have a loose connection with a church or synagogue and have discovered that a loophole in the law allows them to convert their federally-protected pension plans into unprotected “church plans,” endangering pensions of millions of worker and retirees. Fortunately, the Pension Rights Center’s research has served as a basis for 12 lawsuits, many of which have been decided in workers’ and retirees’ favor.
I am going to spend the last part of my speech talking about two recent 2016 victories in which the Pension Rights Center and its allies stood up to power and won.
Lots of people say it’s impossible to have victories in today’s divided Congress. Well, with grassroots support, and enough stakeholders, we’ve shown that legislative victories are possible. We’ve also seen great things come out of the regulatory process. We had two big successes this year.
The first victory dealt with stopping predatory practices in the financial advice industry. The Pension Rights Center and allies, including AARP, the Consumer Federation of America, the AFL-CIO and others, joined together in the Save Our Retirement coalition to stand up to the multi-million dollar lobby of the financial industry. And we won a great victory for American consumers.
For the last five years, brokers and financial institutions fought vigorously to stop the Department of Labor from releasing a common ground rule to ensure that brokers and financial advisers who give advice on investments in retirement accounts must do so in the best interest of their clients – not just to line their own pockets. According to the U.S. Department of Labor, this type of conflicted advice was costing American consumers $17 billion per year. And of course the industry didn’t want changes that would stop them from making them big bucks.
But we fought the industry and won.
How? By building a strong consumer coalition, coordinating technical comments, meeting with editorial boards, educating policymakers, utilizing social media and simply by being persistent.
The battle isn’t over because the financial industry is still lobbying Congress to water down the rule – but we are confident that we can overcome this opposition.
What is perhaps the Center’s biggest victory, we were able to help protect the pensions of more than 270,000 retired truck drivers in the Central State Pension Fund who faced pension cuts of 40 to 70 percent because of a terrible law Congress passed at the end of 2014.
Congress, in the dead of the night, attached a bill called the Multiemployer Pension Reform Act to an end-year spending bill. This bill allowed certain severely underfunded multiemployer pension plans to slash the benefits of retirees in order “fix” underfunded plans. These cuts would have been unprecedented and torpedoed fundamental protections of ERISA. Suddenly, retirees who had done everything right and who had given up wages and vacation pay in exchange for a lifetime pension learned that these “unbreakable” promises were about be broken and their lives devastated.
We knew these cuts had to be stopped.
So, working with thousands of truck drivers, spouses and widows, certain unions and AARP, we developed a campaign to both try to change the law and also to influence the Treasury Department, which was given authority to review these cuts. We used the tactics we always have – but updated for the 21st century. We analyzed the law and posted plain- English summaries on our website. When Thousands of retirees from across the country contacted us, we helped provide them with information and encouraged them to start their own Facebook pages – and now they’ve organized themselves into 60 powerful committees in 30 states.
In April, retirees organized a rally outside the U.S. Capitol building right here in D.C. with 2,000 retirees, spouses and widows calling for the Treasury Department to reject the Central State Pension Fund’s application and for Congress to pass a bill to stop these cuts.
In an amazing victory, the Treasury Department, after receiving thousands of comments from retirees, the Pension Rights Center, labor and retiree advocates, REJECTED the application for sound legal reasons.
So while Congress passed a law in 2014 that failed retirees, the regulatory process protected them. This is democracy at work.
And now we and the retirees are working for repeal of the bad 2014 law and pushing for a bill like the Keep our Pension Promises Act, introduced by Senator Bernie Sanders and Representative Marcy Kaptur that would stop these plans from cutting retiree benefits. The amazing thing about all of this is that thousands of former truck drivers are now effective citizen activists – inspiring US to work harder for change.
And remember my story about Pat Tice from 1984?
Well 32 year later, Rita Lewis, a widow from Ohio, testified before the Senate Finance Committee and really changed hearts and minds.
Rita, whose late husband, Butch, earned a Purple Heart in Vietnam and later drove a truck for 40 years, testified how 40 percent proposed cuts to her survivors’ pension would force her to sell her home, stop her from taking care of her dad with stage IV cancer.
She was so effective you could hear a pin drop.
Her testimony was called the “most powerful” members had heard in the committee… and led to a commitment for Senators of both parties to work together toward bipartisan legislation.
Retirees know that if these cuts aren’t stopped, it would be setting a dangerous precedent that could lead to retiree cuts in corporate pension plans, in state and local plans – and in Social Security.
So we all are the supermen and women of the citizen action movement.
Join with the Pension Rights Center in a larger movement for Retirement Security for All – for today’s and future retirees:
Let’s keep fighting! Thanks!