ERISA Turns 45!
As America’s workers look forward to the long Labor Day weekend, we take a moment to acknowledge the 45th anniversary of the enactment of the Employee Retirement Income Security Act. ERISA! It’s the acronym heard daily as human resources professionals and benefit managers work on behalf of their companies and employees.
President Ford signed ERISA into law on Labor Day 1974, and the focus then was on the R – retirement:
“Today, with great pleasure, I am signing into law a landmark measure that may finally give the American worker solid protection in his pension plan.” – President Gerald R. Ford, September 2, 1974
1974 also was the era of wild fashions and avocado-colored kitchen appliances. Barbra Streisand was singing The Way We Were, Arthur Fry invented the Post-It Note, the Nixons left Washington in a helicopter, and the Supreme Court would remain all-male until the next decade.
ERISA was enacted to protect workers’ rights in benefit plans sponsored by non-governmental employers by:
- Establishing fiduciary responsibilities for persons who manage and control plan assets;
- Requiring plans to provide participants with information about the plan’s features and funding;
- Setting minimum standards for participation, and for retirement plans, standards for vesting and benefit accrual; and
- Giving plan participants the right to sue for benefits and breaches of fiduciary duty.
Over the past four decades, the fundamentals of ERISA have not changed but the law has been amended and expanded many times as the country and the needs and expectations of its labor force have evolved. Traditional pension plans have become rare, 401(k) plans have surged as the most popular retirement savings vehicle, and workers typically cite health coverage as their most valued benefit as medical costs have soared. As ERISA has changed with the times, several other major laws also have been enacted:
- The Revenue Act of 1978 which added a new section to the Internal Revenue Code: 401(k).
- The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) which gave employees and families the right to continue their group health coverage on a self-pay basis following a job loss or other qualifying event.
- The Health Insurance Portability and Accountability Act of 1996 (HIPAA) which codified a wide range of protections for employers and workers, from guaranteed health insurance options for small employers to privacy safeguards on health information, bans on certain health-based discrimination, and more.
- The Pension Protection Act of 2006 (PPA) which increased 401(k) and IRA limits and sought to hold employers accountable for underfunding a pension plan.
- The Affordable Care Act of 2010 (ACA) which set minimum standards for health plans, created public insurance exchanges, required large employers to offer coverage to full-time workers to avoid potential penalties, and, for the first time in US history, prohibited medical plans from denying coverage or charging extra for persons with pre-existing conditions.
Wishing America’s workers and employers – and the dedicated HR and Benefits professionals who support them – a happy Labor Day weekend!
