As ERISA celebrates its 35th anniversary it is clear that there is still more to do
Labor Day marks the 35th anniversary of a law hailed by its principal sponsor Senator Jacob Javits as "the greatest development in the life of the American worker since Social Security." Thanks to the Employee Retirement Income Security Act of 1974, millions of retirees are receiving the secure lifetime pensions that are making it possible for them to live comfortably in retirement.
When ERISA passed, hopes were high that by now the private pension system would have expanded to cover even more workers and that benefits would have been steadily improved.
Instead, fewer people are covered by pension plans, and, in many cases, their benefits have been frozen or even cut back. An increasing number of workers are being told that they will have to rely on whatever they are able to accumulate in retirement savings plans - amounts that for most are likely to be neither secure nor sufficient to provide them with an adequate supplement to their Social Security payments. Their prospects for a comfortable retirement appear bleak.
Many reasons have been given for the shift away from pensions, but a new one has been highlighted by BusinessWeek's Management IQ blog.
According to the blog, a new study has found that companies in the S&P 500 are putting more money toward paying their top executives than they are putting toward funding employee pensions - even though their pension plans are underfunded. While these companies pay executives a combined $44.5 billion, they leave their employees open to the risk of not receiving their full pension benefit if the company terminates its pension plan.
The blog goes on to note that 40 companies, including Sprint Nextel, the Chubb Group of Insurance Companies, and CVS, have put "more than five times their pension contributions toward stock grants, though all but two of them have plans that owe more than their current assets. And some companies with pension shortfalls put nothing at all into those plans last year, but still gave out stock compensation."
At least the executives of these companies will have something to celebrate on Labor Day.
Read a statement made by the U.S. Department of Labor as it marks the 35th anniversary of ERISA.
Looking for help with your retirement plan?
If you have a problem with your retirement plan, free help may be available from the U.S. Administration on Aging's network of Pension Counseling and Information Projects. Find help now.
What's your story?
We're hearing from people around the country who are worried about cuts to their pensions. These are their stories.
PensionHelp America connects people who need help with their pension, 401(k), and other retirement plans with the pension counseling projects, legal services providers, and government agencies that can help answer their questions. Visit www.pensionhelp.org.
Roadmap to retirement
Let our roadmap to helpful information about retirement plans for private-sector workers put you on the path toward a secure retirement. Get started.
Get E-mail Updates
Did You Know?
A joint-and-survivor annuity is an annuity that pays a monthly benefit over the lives of the participant and his or her surviving spouse. This is the default form of benefit for married participants in most defined benefit pension plans. Because it lasts for the life of both the worker and the spouse, a joint-and-survivor annuity typically results in a lower monthly benefit payment than a single-life annuity.