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NBC asks if our pension funds need protection

By Arthur Unger / July 25, 1985



Your pension-fund money has become a pervasive factor in the American enterprise system. According to NBC White Paper: The Biggest Lump of Money in the World (Saturday, July 27, 10-11 p.m.), more than a hundred billion new dollars per year flow into the American economy from pension funds. And more and more, the money you and your company put aside for your future is being manipulated and often misused by money-management companies involved in its investment.

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Nobody could ever call this ``NBC White Paper'' an entertainment. Reported and written by correspondent Steve Delaney under the aegis of executive producer Reuven Frank and senior producer-director Peter Poor, it is a solid public-service informational show -- exciting when it is hard hitting and critical, yet a bit heavy going when it serves up globs of necessary facts and figures.

However, if your money is involved in a pension fund, chances are you may find the factual stuff more heady than heavy.

By the year 2000, Delaney reports, pension funds will be the largest chunk of investment money in the country -- some $4 trillion vs. $1.25 trillion now -- and will represent majority ownership of all of America's common stocks. What the White Paper wants to warn you is that perhaps there is too much trust being placed in investment ``experts'' and that there is a growing politicization of proxy statements and a tendency in some quarters to place political and social goals over financial gains.

Mr. Delaney traces the growing use of the federal law which is supposed to prevent pension abuses -- the Employment Retirement Income Security Act (ERISA). But he points out that the explosive growth of pension funds may possibly have outgrown the protective law. The investment industry makes around $6 billion per year from management of pension-fund earnings. And now, many organizations -- unions in particular -- are beginning to feel that they should manage their own funds, thus assuring their workers a fairer shake in the use of the pension money. It is becoming common for large unions to try to put th eir pension funds to work to provide jobs for members, especially in the building trades.

Concludes Steve Delaney: ``A decade ago, pension funds amounted to only one-eighth of their present total. What has happened is that the lump of pension money has grown too large to be ignored. Invest it, sure; but also, get out of South Africa, create jobs, restrict investments, build housing, all by using the enormous leverage of money that was supposed to be invested for the sole benefit of those who would collect it as pensions. That could be an idea whose time has gone. . . .

``If Congress should decide to use all that money to underwrite the national debt, or to resuscitate a floundering corporation, or develop an investment priority scale for vital industries, it could order the pension funds to do those things. And they'd have to go along . . . or risk losing their tax exemptions. It would take an awful lot of political clout to do that, but that's all it would take. And that pressure is already being applied.''

``The Biggest Lump of Money in the World'' is bound to be attacked by money managers and politically inspired pension advisers because it questions the quality and the motivation of the job they do. But, in its quiet and understated way, the documentary manages to sound an ear-splitting alarm for pension contributors who have every right to demand more information and more protection for their life's savings.