Ideas to Think About After 40 Years of ERISA

October 31, 2014 ( – Between some reminiscing about what it was like to be part of shaping and enforcing the Employee Retirement Income Security Act (ERISA) when it was constructed and afterwards, a group of industry veterans discussed what good came out of the law and what is still disappointing.

Alvin Lurie, president of Alvin D. Lurie, P.C., who served as assistant commissioner of Internal Revenue (Employee Plans & Exempt Organizations) from 1974 to 1978, noted that with ERISA, for the first time, two regulators—that did not always like each other—had to work together to establish rules and enforce the law. It was not without its bumps in the road, but the Department of Labor (DOL) and Internal Revenue Service (IRS) paired well on this singular focus.

According to Harry Conaway, head of Mercer’s Washington Resource Group, and former associate tax legislative counsel in the Office of Tax Policy at the U.S. Treasury Department, the best thing about ERISA is its pre-emption of state laws. “The ERISA pre-emption—setting up a federal framework for the provision of benefits to employees was the best thing,” he told attendees at the 2014 American Society of Pension Professionals and Actuaries (ASPPA) Annual Conference.

Dallas Salisbury, president and CEO of the Employee Benefit Research Institute (EBRI), who joined EBRI as the chief staff executive at its founding in 1978, said ERISA’s funding standards and fiduciary standards—which protect employees’ benefits security and make sure those responsible for plans and investments are working in the best interest of employees—are the best things about ERISA.

However, Mark Iwry, senior advisor and deputy assistant secretary at the U.S. Department of Treasury, said there is a single disappointment with ERISA: the continued lack of retirement plan coverage of American workers. “The employer retirement system has done great things, but we need to do more to cover the 20 million Americans making $30,000 to $40,000 per year who do not have an employer-sponsored retirement plan,” he stated.

Lurie pointed out that, at the time ERISA was passed, legislators and regulators had no idea the retirement industry would shift from a mostly defined benefit (DB) plan landscape to a defined contribution (DC) plan landscape.

Ann Combs, principal and head of Vanguard Government Relations, and former assistant secretary of labor for the Department of Labor (DOL)’s Employee Benefits Security Administration (EBSA), noted this is one reason why the Social Security system and its continued solvency are so important.

On the subject of combining systems to ensure a financially healthy retirement for Americans, Lurie noted that health care and retirement are now competing “at the same trough” for employee savings. “There’s not enough money for both; America needs something that will cover both,” he said.

Salisbury agreed that the combining of resources will be the best thing for Americans. “Having a 401(k) or IRA can disqualify a person for food stamps, for example,” he said. “All groups need to work together to come up with a way to help Americans have security in retirement without sacrificing their needs today.”