OUR THOUGHTS ON:

The Challenges Facing ERISA and Future Retirees

ERISA

By Lara Fuller

How did September 2, 1974 change retirement plans for Americans?  It was on that date that The Employee Retirement Income Security Act (ERISA) was signed into law.  ERISA was put in place to protect Americans’ retirement dollars by expanding the federal government’s role in regulating private-sector retirement plans.  While that is still the case today, a lot has changed in the world of employee benefit plans since that time 40 years ago.  The retirement challenges that Americans face today compared to then are mounting. 

In the mid-70s, defined benefit pension plans comprised approximately 33% of sponsored plans. Today, 97% of all plans are defined contribution plans, shifting the responsibility of saving for retirement from the employers to the employees.  During that same time, the life expectancy has increased, requiring individuals to save even more than before. And increasing that retirement balance is all the more difficult as the savings rate has decreased.  Then there is the obvious challenge of the decrease in available social security benefits for retirees.  The Social Security Administration believes there are sufficient funds to pay all benefits until the year 2033, and then reserves will only cover 77% of the benefits. 

While ERISA will always serve an integral role in protecting employees’ rights, the evolving retirement landscape is demanding a greater amount of synergy between the Department of Labor and other regulatory agencies to develop coordinated rules and regulations designed to address the challenges being faced by Americans preparing for retirement.

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This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.

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Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2018 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

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