Other Free Encyclopedias » Medicine Encyclopedia » Aging Healthy - Part 2 » Employee Retirement Income Security Act - History Leading Up To Erisa, Subsequent Amendments To Erisa, Types Of Erisa-covered Retirement Plans

Employee Retirement Income Security Act - The Future Of Erisa

age social pensions committee pension washington

Over the years, there have been a number of proposals to expand participation in employer-sponsored pensions. In particular, many analysts have suggested shortening the vesting period, promoting pension-plan portability, and increasing participation (e.g., by covering part-time workers). Another alternative would be to allow designated financial institutions to administer defined contribution megaplans for numerous small employers. Employers would contribute to these megaplans, each employee would have her or his own account, and the financial institution would take on all of the reporting, disclosure, and fiduciary responsibilities.

Another approach would be to mandate private pensions. Depending upon the size of the program, this approach could compel most workers to set aside a large enough share of their earnings over their careers to fund adequate retirement benefits. For example, in 1981, the President's Commission on Pension Policy recommended adoption of a Mandatory Universal Pension System (MUPS). Basically, the proposal would have required all employers to contribute at least 3 percent of wages to private pensions for their workers. The proposal drew little interest at the time. Recently, however, there has been renewed interest in mandated pensions.

One design for a mandatory pension system would be to piggyback a system of individual retirement savings accounts (IRSAs) onto the existing Social Security withholding system. For example, both employers and employees could each be required to contribute 1.5 percent of payroll to these IRSAs (and the self-employed would be required to contribute the entire 3 percent). These accounts could be held by the government, invested in secure equity funds, and annuitized on retirement. Alternatively, these individual accounts could be held by financial institutions and their investment could be directed by individual workers.

A different approach would be for the government to mandate that employers provide a suitable defined benefit plan for their employees. In that regard, the government might authorize employers to use a central clearinghouse where employers could send pension contributions on behalf of their employees. Over the course of a career, each worker would earn entitlement to a defined benefit that, at retirement, would supplement Social Security.

JONATHAN BARRY FORMAN

BIBLIOGRAPHY

BERNSTEIN, M. C. The Future of Private Pensions. New York: Free Press, 1964.

Committee for Economic Development. New Opportunities for Older Workers: A Statement on National Policy by the Research and Policy Committee of the Committee for Economic Development. New York: Committee for Economic Development, 1999.

CONISON, J. Employee Benefit Plans in a Nutshell. 2d ed. St. Paul, Minn.: West Publishing Co., 1998.

COSTA, D. L. The Evolution of Retirement: An American Economic History, 1880–1990. Chicago: University of Chicago Press, 1998.

Council of Economic Advisors. "Annual Report of the Council of Economic Advisors." In Economic Report of the President. Washington, D.C.: Government Printing Office, 1999. Pages 7–454.

EISENBERG, D. "The Big Pension Swap; Accounts That Yield Benefits Sooner Are Replacing Traditional Plans, but Older Workers Are Crying Foul." Time 19 April 1999, p. 36. Employee Benefit Research Institute. EBRI Data-book on Employee Benefits, 4th ed. Washington, D.C.: Employee Benefit Research Institute, 1997.

Employee Retirement Income Security Act of 1974, Public Law No. 93-406, 88 Statutes at Large 829 (1974) (codified as amended in scattered sections of Titles 26 and 29 of the United States Code).

FORMAN, J. B. "Universal Pensions." Chapman Law Review 2 (1999): 95–131.

President's Commission on Pension Policy. Coming of Age: Toward a National Retirement Income Policy. Washington, D.C.: President's Commission on Pension Policy, 1981.

SASS, S. A. The Promise of Private Pensions: The First Hundred Years. Cambridge, Mass.: Harvard University Press, 1997.

STEUERLE, C. E., and BAKIJA, J. M. Retooling Social Security For The 21st Century: Right & Wrong Approaches To Reform. Washington, D.C.: Urban Institute Press, 1994.

U.S. Congress, Joint Committee on Taxation. Overview of Present-Law Tax Rules and Issues Relating to Employer-Sponsored Retirement Plans. Report No. JCX-16-99. Washington, D.C.: Joint Committee on Taxation, 1999.

U.S. Congress, Staff of the House Committee on Ways and Means. 1998 Green Book: Background Material and Date on Programs within the Jurisdiction of the Committee on Ways and Means, 105th Congress, 2d Session. Committee Print No. WMCP: 105–107. Washington, D.C.: U.S. Government Printing Office, 1998.

U.S. Department of Labor. PWBA History and ERISA. 2000. Available on the World Wide Web at http://www.dol.gov/dol/pwba/public/aboutpwba/history4.htm

U.S. General Accounting Office. Implications of Demographic Trends for Social Security and Pension Reform. Report No. GAO/HEHS-97-81. Washington, D.C.: U.S. Government Printing Office, 1997.

World Bank. Averting the Old-Age Crisis. Oxford: Oxford University Press, 1994.

YAKOBOSKI, P. "Overview of the U.S. Employment-Based Retirement Income System." In The Future of Private Retirement Plans. Edited by Dallas A. Salisbury. Washington, D.C.: Employee Benefits Research Institute, 2000. Pages 19–37.

ZELINSKY, E. A. "ERISA and the Emergence of the Defined Contribution Society." In Proceedings of the Fifty-Seventh New York University Institute on Federal Taxation—Employee Benefits and Executive Compensation. Edited by Alvin D. Lurie. New York: Matthew Bender, 1999. Pages 6-1 and 6-29.

[back] Employee Retirement Income Security Act - Pension Coverage

User Comments

The following comments are not guaranteed to be that of a trained medical professional. Please consult your physician for advice.

Your email address will be altered so spam harvesting bots can't read it easily.
Hide my email completely instead?

Cancel or