Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
September 2nd, 2014
Editor’s Note
The Employee Retirement Income Security Act (ERISA) was signed into law 40 years ago today. As employees in the employer-sponsored retirement plan industry, and as retirement plan participants, it affects our lives every day—and may even be the reason we have a career. So, we bring you this special edition of NewsDash, to commemorate ERISA and its evolution over the past four decades.
Benefit Briefs
Retirement Plan Industry Trends Then Versus Now
The retirement plan industry today is vastly different from that of 1974, when the Employee Retirement Income Security Act was passed. There have been big changes since 1974 that perhaps some industry players back in the day would have found unimaginable. In 1974, most workers with employer-sponsored retirement plan coverage were in defined benefit plans, and those with defined contribution plans were in profit sharing plans; the 401(k) hadn’t even been introduced yet. That year saw the introduction of the first mass-produced personal computer; the Altair was sold in kit form for $395 or assembled, for $650, which translates to $3,142 in today’s dollars. The Dow Jones Industrial Average closed the year at 616.
Industry Voices
Industry Voice: Staying Flexible
ERISA’s 40th anniversary coincides with the start of the professional football season, and the sport provides an apt metaphor for examining how the health and retirement benefits game is changing.
Industry Leaders Share Thoughts About ERISA
In anticipation of the 40th anniversary of ERISA, we asked our readers to share their thoughts about ERISA and what change over the past 40 years has had the biggest impact on plan participants. We wondered how those who have influenced the industry—through their work within the government, as an advocate or as a long-time provider to retirement plans—would answer the same questions. We asked, and several influential industry leaders shared their thoughts.
Economic Events
THE ECONOMIC WEEK AHEAD: Today, the Census Bureau will report about construction spending for July, and tomorrow, it will report about factory orders for July. Thursday, the Labor Department will issue its initial claims report. Friday, the Bureau of Labor Statistics will report about nonfarm payrolls and we’ll learn the unemployment rate for August.
Market Mirror
Friday, the Dow ticked up 18.88 points (0.11%) to 17,098.45, the NASDAQ climbed 22.58 points (0.50%) to 4,580.27, and the S&P 500 increased 6.63 points (0.33%) to 2,003.37. The Russell 2000 gained 8.40 points (0.72%) to finish at 1,174.35, and the Wilshire 5000 closed 83.34 points (0.39%) higher at 21,233.89. On the NYSE, 3.2 billion shares changed hands, and on the NASDAQ, 2.8 billion shares traded, with 2.4 advancing issues for every declining issue on both exchanges. The price of the 10-year Treasury note slipped 2/32, bringing its yield up to 2.345%. The price of the 30-year Treasury bond was down 4/32, increasing its yield to 3.080%. WEEK’S WORTH: For the week ending August 29, the Dow increased 0.57%, the NASDAQ gained 0.92%, and the S&P 500 was up 0.75%. The Russell 2000 climbed 1.21%, and the Wilshire 5000 finished 0.85% higher.
Rules & Regulators
ERISA and Health Benefits: Yesterday, Today and Tomorrow
While the main focus of the Employee Retirement Income Security Act (ERISA) is retirement plans, the law created rules and protections for other employee benefits, including group health plans. “ERISA was enacted in 1974 and established minimum standards for both pension and health care plans,” Neal Schelberg, partner at law firm Proskauer Rose in its Labor and Employment Law Department, tells PLANSPONSOR.  For health benefit plans, ERISA created standards for reporting certain plan information to the government and disclosing certain plan information to participants, as well as creating a claims and appeals process, says the New York-based Schelberg, who is also a member of his firm’s Employee Benefits, Executive Compensation and ERISA Litigation Practice Center. Amy Bergner, managing director, PwC Human Resource Services’ health care practice, explains to PLANSPONSOR, “What ERISA basically does is to govern the way that group health plans are administered, such as how benefit claims and appeals are processed, what employee communications are needed, what these communications look like, how these communications are delivered, and what government filings are required for the health plan.”
ERISA 40th Anniversary: Time for an Update?
September 2nd marks 40 years since the Employee Retirement Income Security Act (ERISA) became law, and one expert says it’s high time to revise sections of the law covering prohibited service provider transactions. Bradford Campbell, counsel at Drinker Biddle & Reath LLP and a former Assistant Secretary of Labor for the Department of Labor’s Employee Benefits Security Administration (2007 – 2009), points to Section 406 of ERISA as the part of the landmark benefits law perhaps most in need of change. The section establishes a long list of prohibited transactions and other restrictions meant to prevent conflicts of interest among fiduciaries and investment service providers working with tax-advantaged workplace retirement plans.
Small Talk
The Pension Benefit Guaranty Corporation (PBGC) has created a series of blog posts—one for each decade—looking back and commemorating the agency’s work.
The remarks of President Gerald R. Ford upon signing the Employee Retirement Income Security Act (ERISA) into law.
ON THIS DATE:  In 1789, the U.S. Treasury Department was established. In 1897, the first issue of “McCall’s” magazine was published. The magazine had been known previously as “Queens Magazine” and “Queen of Fashion.” In 1901, Theodore Roosevelt, then vice president, delivered his “Speak softly and carry a big stick” speech at the Minnesota State Fair. In 1945, Japan surrendered to the U.S. aboard the USS Missouri, ending World War II. The war ended six years and one day after it began. In 1969, America’s first automatic teller machine (ATM) made its public debut at Chemical Bank in Rockville Center, New York. In 1974, President Gerald R. Ford signed the Employee Retirement Income Security Act (ERISA) into law. In 1996, Michael Jackson earned his 12th and final solo No. 1 hit with “You Are Not Alone.”   TUESDAY TRIVIA: The Pension Benefit Guaranty Corporation (PBGC) issued its first pension check for $140.75 on February 28, 1975, to a participant in the International City Bank of New Orleans Employees Retirement Plan.
TUESDAY TRIVIA: How much per participant did companies have to pay the Pension Benefit Guaranty Corporation (PBGC) in 1974 to insure their defined benefit retirement plans?
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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