Get out the party hats and horns. The Employee Retirement Income Security Act ("ERISA") turns 40 years old today. Signing this legislation into law on September 2, 1974, U.S. President Gerald R. Ford proclaimed a new era, noting that "the men and women of our labor force will have much more clearly defined rights to pension funds and greater assurances that retirement dollars will be there when they are needed. Employees will also be given greater tax incentives to provide for their own retirement if a company plan is unavailable."
Since 1974, change has not been a stranger. In her testimony before the ERISA Advisory Council on June 18, 2014, Honeywell in-house counsel Allison Klausner talked about greater mobility of the work force and a significant reliance on technology over time. The use of third parties was another area of emphasis. She added that "As ERISA turns 40, to effectively deliver 'benefits' (perhaps best stated as 'the delivery of support for the well-being of our workers and retirees') in an employer-sponsored system, plan sponsors find that it cannot be done without outsourcing some (or all) of the administrative and other work associated with and necessary to operate employee benefit plans."
Statistics about plan design paint a dramatic picture of change as well. According to the Private Pension Plan Bulletin Historical Tables and Graphs (U.S. Department of Labor, June 2013), the number of single-employer sponsored defined benefit plans fell from 101, 214 in 1975 to 43,813 in 2011. In contrast, the number of single-employer defined contribution plans rose from 207,437 in 1975 to 637,086 in 2011. As plan design preferences reflect demographic and economic shifts, they also present new challenges for fiduciaries.
For those who want to learn more about the history of ERISA and predictions of things to come, the American Bar Association and various co-sponsors are offering a free webinar on the topic. Click to register for "ERISA Turns 40: The Past, Current and Future State of Pension Plans," The event will be held on September 9, 2014 from 1:00 to 2:30 PM EST and will feature speakers from the U.S. Department of Labor and ERISA attorneys in private practice.