On September 2, the Employee Retirement Income Security Act (ERISA) will celebrate 45 years (That’s a lot of candles to put on one cake!) since being signed into law in 1974.
I can’t promise cake, but let’s take a walk down memory lane with a glimpse into ERISA’s life.
Before ERISA was born, several large corporations went out of business, most notably Studebaker in 1963, leaving behind pension plans that were significantly underfunded. The number of people impacted by pension failures caught the attention of the public and Congress.
The start of ERISA can be found in the study of employee pension plans that was commissioned by President John Kennedy in November 1963. Over ten years later, on Labor Day, September 2, 1974, President Gerald Ford signed ERISA into law to provide employees protections by setting minimum standards for pension plans and guaranteeing payment of certain benefits through the newly created Pension Benefit Guaranty Corp (PBGC). Today, private employee health and welfare and retirement benefit plans are required to comply with ERISA.
Here’s Why ERISA Was Passed
- There was a rapid and substantial growth in employee benefit plans.
- Employee pension plans had a significant economic impact.
- Millions of employees and dependents were affected by these plans.
- Preferential tax treatment impacted federal revenues.
- Soundness and stability of retirement plans was inadequate.
- Minimum standards were needed.
Here’s What It Addressed
- Requiring disclosure and reporting
- Establishing standards of conduct and responsibility of plan sponsors
- Establishing obligations of fiduciaries
- Providing appropriate remedies and access to federal courts
- Establishing minimum employee protections (participation, eligibility, vesting, funding)
Just like we have changed over the years (Here’s looking at you, fifth grade yearbook pic!), over 20 laws have passed since 1974 that amended various aspects of ERISA. These amendments have often changed the minimum requirement standards, reporting requirements or protected rights.
Tell Me More About ERISA
The International Foundation follows ERISA closely and will keep you up to date on any changes administrators need to be aware of. If you want to celebrate by digging into more details of the law and its impact on employee benefit plans, check out the International Foundation’s e-learning course on ERISA. (You can even earn an entire Certificate in ERISA Compliance if you really want to go nuts with the celebrating.)
Now let’s cut into that cake (any excuse for cake)!
Anne Patterson
Social Marketing and Communications Strategist at the International Foundation
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