But then came the 1980s. I mentioned earlier how the tax code tweak 401(k), which went into effect in 1980, handed a captive audience of millions of new customers and a revenue bonanza to the financial industry. But this innovation also provided a cost-cutting financial bonanza to employers. They now had another clever way to execute on the new Scrooge spirit: replacing the pensions they’d funded for decades with individual-worker-funded investment plans—self-reliance! freedom!—cost them less right away and cost them nothing once employee number 49732 left the building for good.
