On Labor Day 50 years ago, President Gerald Ford signed the Employee Retirement Income Security Act (ERISA) into law. ERISA, a long time in the making, has had notable successes—but also has led to much litigation and perhaps even contributed to the decline of pension plans.
Congress drafted and revised the law after Studebaker closed its plant in South Bend, Ind., in 1963 and left many employees without the pensions they had been promised.
ERISA has “accomplished much of what it set out to do,” said Lou Mazawey, an attorney with Groom Law Group in Washington, D.C.
“Without ERISA, there would be far fewer workers with retirement savings and far fewer workers with robust health insurance,” said Juliana Reno, an attorney with Venable in New York City.
However, ERISA also has become a weapon for plaintiffs’ attorneys to wield against retirement plan administrators and others in court.
“We have seen in the past 10 years an explosion of litigation challenging the fees and investments associated with 401(k) and 403(b) plans, and that is showing no signs of letting up,” said Will Delany, an attorney with Groom Law Group in Washington, D.C.
ERISA’s complicated rules were meant to protect pensions but may have inadvertently contributed to their demise, as 401(k) plans are less onerous for employers and nimbler for employees, said Diane Dygert, an attorney with Seyfarth in Chicago.
Reno agreed. “Technically, 401(k) plans came about due to changes in the tax...
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