PLANSPONSOR - November - December 2023 - 6

RULES & REGULATIONS
Is It Time for an ERISA Reboot?
N
early 50 years since the Employee
Retirement Income Security
Act of 1974 became law, many
experts in the retirement industry believe
it is due for a reboot, especially at a time
when retirement readiness is on the
decline, savings levels are low and defined
benefit plans are headed toward extinction.
David Morse, a partner in law firm
K&L Gates LLP, says an " ERISA 2.0 "
should include several updates, including
universal access to a retirement saving
option, the return of defined benefit
pensions and an embrace of defaults and
technology.
While anyone, regardless of employment
status, may open an individual
retirement account or a regular investment
account to save for retirement, most fail to
do so without a nudge from an employer.
But more than 50% of the private-sector
workforce
consists
of: workers whose
company does not offer a plan; gig
workers; the self-employed; and frequent
job-hoppers. These are left in a " savings
6 PLANSPONSOR.COM November - December 2023
desert, " according to an article Morse
published in the Benefits Law Journal.
At the half-year mark, Americans
held $10.2 trillion in employer-based
defined contribution retirement plans,
of which $7.2 trillion was held in 401(k)
plans, the Investment Company Institute
reported in September. In addition, total
U.S. retirement assets were $36.7 trillion,
as of June 30.
But, according to recent Employee
Benefit Research Institute data, high
inflation has caused a decrease in many
participants'
retirement
savings,
and
Americans' overall confidence that they
will have enough money to live comfortably
throughout retirement has declined.
Morse suggested that an ERISA 2.0
should give all U.S. workers access to some
sort of savings program, whether through
an employer 401(k)-even without a
match-or a state-run auto-IRA.
" Every worker [should] be able to
have a portion of their pay withheld
and contributed and invested into some
plain-vanilla index fund,
lifecycle fund
or something, " says Morse, who recently
spoke to PLANSPONSOR about his ideas.
Angela Antonelli, a research
professor and the executive director of
the Center for Retirement Initiatives
at Georgetown University, says when
ERISA was enacted, it was fundamentally
ensuring that employers who were
offering DB pension plans kept the
promises they had made to workers.
" What ERISA didn't necessarily do
was to make employers make new promises, "
Antonelli says. " It was protecting
the promises that were being made, but
not necessarily making them make new
promises to workers. "
Today, employers are not required
to offer a retirement plan. Antonelli is a
proponent of the proliferation of statesponsored
auto-IRAs, which aim to
increase access to retirement plans and
close the existing gap.
" One of the things, as we look to
the future of our legal and regulatory
Art by Anja Susanj
http://www.PLANSPONSOR.COM
PLANSPONSOR - November - December 2023

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