How the NFL’s Blown Call Fiasco Will Boost Your Retirement Security

When replacement referees blew a call on Monday night they probably didn't know that they were furthering the retirement security of every American. Then again, it's just one more thing they didn't know. Here's why we should all be thankful.

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Wide receiver Golden Tate #81 of the Seattle Seahawks makes a catch in the end zone to defeat the Green Bay Packers on a controversial call by the officials at CenturyLink Field on September 24, 2012 in Seattle, Washington.

Whether or not you give a hoot about the National Football League, by now you’ve heard of the referees’ blown call that cost the Green Bay Packers a win on Monday night. It was front-page news. Even Barack Obama and Mitt Romney weighed in.

But no one saw it the way I did—as a defining moment in the battle over all Americans’ retirement security.

What? Ok, let’s back up a bit. The bogus touchdown call occurred because NFL games were put in the hands of replacement referees, who did not have the experience or the training to consistently get the tough calls right. These replacements were on the field because team owners had locked out the regular refs as part of a labor dispute, which was settled late Wednesday night.

(MORE: Why the Referee Lockout Has to End)

The crux of that labor dispute was something most workers will understand: The league wanted to ditch its pension plan for refs and instead offer a 401(k) plan. This swap would save the owners of a $9 billion-a-year colossus about $3.3 million a year. This exact swap—defined benefits for defined contributions—has been going on in private industry for 30 years.

In 1979, 62% of all workers with an employer-sponsored retirement plan were covered by a traditional defined-benefit pension, according to the Employee Benefit Research Institute. Today, that figure is just 7%. Participation in 401(k) plans draws an inverse image: Just 16% of workers had one in 1979 and the rate stands at 67% today.

One can only assume that team owners, who in many cases are also private industry magnates, are intimately familiar with this profitable conversion and that they were simply seeking for their NFL franchises the same cost savings enjoyed so broadly in their other enterprises and those of the vast majority of private employers.

The pushback is what made it interesting.

A ton of data is now in hand showing that 401(k) plans have been a bust as a primary retirement security vehicle. Too many people don’t contribute enough, don’t diversify and don’t repay loans from the plans; too many take early distributions and try to time the market. Most with only a 401(k) plan have not saved anything close to what they’ll need to live for 20 or 30 years in retirement.

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The NFL refs have seen this and told the owners, No thanks. Their position was: Fund our traditional pension or keep watching as the replacements destroy your season. It was a power play rooted in the disgust that millions of workers have for their failed 401(k) plans—a disgust so broad and well understood that it’s beginning to foment change.

One huge problem with the shift to 401(k) plans is that it eliminates a source of guaranteed lifetime income. This is emerging as the retirement issue of our day. Surveys have found that retirees with a guaranteed income stream are far more confident about their finances, and happier too. Employers and policymakers alike have only begun to explore ways to restore this valuable component, and they want to do it within the 401(k) structure.

That’s why the blown call on Monday night may be a defining moment in our retirement savings crisis. The error was so big and seen by so many that, late Wednesday night, it forced the owners to cut a deal in order to get the regular refs back on the field by tonight’s game. Current refs will get to keep the traditional pensions they fought for so hard. New hires will have to accept a 401(k), which is a shame. The refs probably had the leverage to win that battle too, and further underscore all workers’ renewed appreciation for guaranteed lifetime income. But it was a win for retirement security nonetheless.