By Nick Thornton
The Employee Retirement Income Security Act was born into a tumultuous world, winning enactment only after years of repeatedly failing to overcome stiff resistance from the nation’s business interests.
It was signed into law as the country, fatigued from the seemingly endless Vietnam War, was at the same time reeling from the constitutional crisis of Watergate.
A decade or so earlier, the nation’s attention had been drawn to the need for pension and health benefit reforms after the Studebaker-Packard Corp. shuttered its Indiana automobile factory in 1963. More than 4,000 workers saw their hard-earned pensions go up in smoke. Abuses had occurred before, but the Studebaker case brought home the need for change.
New York Sen. Jacob Javits took up the legislative mantle and proposed a law in 1967 that would establish an array of new safeguards. But his efforts stalled in Congress, as had previous such attempts. Then, in 1971, a study spearheaded by Javits revealed that only a handful of American workers would actually receive the pension benefits employers were promising. His report drew the media’s attention, which helped to bring the issue to the forefront.
On Sept. 2, 1974, less than a month after taking office, President Gerald Ford signed the act into law. (Six days later he would go on national television and pardon President Richard M. Nixon.)
Now, at 40, the law that eventually allowed for the creation of individual retirement accounts and 401(k) plans
is functioning in a much different world.
Few people doubted the necessity of the law at the time of its inception. But a growing chorus of voices now wonders whether the law – amended repeatedly over the years – isn’t in need of an overhaul.
Automatic enrollment mandates, the end of savings limits, better retirement income projections, better fee disclosure, a tightening of the rules for hardship withdrawals. There’s no shortage of ideas on how to make ERISA
BenefitsPro.com interviewed industry leaders, academics and other insiders for their perspectives on what changes in ERISA would most help plan sponsors and plan participants as the law enters its fifth decade.
What follows are their insights and thoughts. So, happy 40th, ERISA. But be forewarned: your birthday party may not be as well attended as you expected.
Also read: Demand rising for 401(k) advisors
Originally published on BenefitsPro.com