SURVEY SAYS

SURVEY SAYS: 40 Years of ERISA

By PS | August 11, 2014
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August 11, 2014 (PLANSPONSOR.com) - Next month, specifically September 2, will mark the 40th anniversary of the passage of the Employee Retirement Income Security Act (ERISA).

In the past 40 years, a number of changes have been made to the law through various legislation. Last week, I asked NewsDash readers which change to ERISA in the past 40 years they think has MOST helped participant retirement savings outcomes, and what suggestions they have for changes that would be helpful.

Nearly six in ten (58.7%) of responding readers are plan sponsors or work for plan sponsors, while 10.9% are or work for advisers/consultants, 26.1% are or work for TPAs/recordkeepers/investment managers, and 4.3% are attorneys.

The change to ERISA during the past 40 years that received the greatest percentage of votes for being the one that most helped participant retirement savings outcomes was the establishment of Section 401(k) qualified deferred compensation plans, at 44.7%. This was followed by the sanctioning of automatic enrollment subject to certain requirements, at 21.3%.

Seventeen percent of responding readers selected “increasing contribution limits and establishment of indexed increases each year” as the change to ERISA that has most helped participants retirement savings outcomes, 4.3% chose “addition of catch-up contributions for participants age 50 and older,” and 2.1 % each selected “creation of SIMPLE retirement savings incentive match plan for small businesses,” “establishment of Roth 401(k),” and “sanctioning of cash balance defined benefit plans as non-discriminatory.”

“Other” responses included the combination of auto enrollment and auto deferral escalation, and more stringent vesting on employer contributions, with one reader saying “ERISA originally allowed a 15 year graded vesting schedule which in 1974 seemed very generous!”