ERISA at 50 – and at 100?

By James S. Beall, Esq. and Louise F. Pongracz, Esq.

Our dear friend, Peg Coyle (may she rest in peace), a spunky single lady who supported herself and her family for her long working life, retired in 1970 at age 64 and 9 months. She had worked for her employer for twenty-three years. But, she was laid off just three months shy of her 65th birthday, the age required for her to receive a full pension. Instead of receiving $261 per month, she received just $91 per month – a devastating difference. It is for the Peg Coyle’s of this country that fifty years ago Congress passed the Employee Retirement Income Security Act of 1974 (“ERISA”).

There were legislative precursors to ERISA, but these lacked a comprehensive approach. With ERISA’s passage, for the first time there were broad protections for both pension and health benefits.

Congress has amended ERISA countless times since its enactment, often at labor unions’ urging, such as the special financial assistance for underfunded multiemployer pension plans passed in 2021. As a result of labor’s unrelenting efforts, both legislatively and at the negotiating table, collectively bargained plans remain the gold standard for employee benefits.

But, maybe it is time for another major overhaul of benefits law and policy. In 2024, few people work for a single employer for ten, twenty, or thirty years. Defined benefit pension plans (with a guaranteed monthly benefit) are mostly a thing of the past. Even many organized industries have moved to 401(k) plans, where the employee pays for his or her own retirement, with or without any employer contributions. With a 401(k), the employee – not the employer – bears the double-risk (a) that the demands of ordinary life (kids, house, car, etc.) will make it impossible to save enough money from their paychecks to retire, and (b) that the investments he or she chooses will not earn enough money to survive when he or she can no longer work.

The value of employer-provided health insurance also has eroded dangerously. Good employer-provided health benefits are often too costly in terms of premium contributions, deductibles, and copayments to be affordable for the average worker. Instead, these “benefits” become barriers to care.

A major overhaul of benefits law and policy will require rethinking how to provide retirement and health benefits for full-time employees; for individuals who often have no access to employee benefits like gig and part-time workers; and for people who move from employer to employer. States are getting creative about retirement, with state-facilitated retirement plans for both employees and individuals. A good source of information on this topic is Georgetown University’s Center for Retirement Initiatives. But, even if these programs provide significant tax breaks for individual contributors, they do not assist hard-pressed workers to find the money to contribute to these accounts in the first place.

On the health benefits side, it likely is time to move on from the concept of tying health benefits to employment, a holdover from wage freezes during World War II. Should we instead expand the reach of the Marketplace established under the Affordable Care Act, and the eligibility provisions for Medicaid, Medicare, or both? Any transition to such a system would take a number of years – and lots of education for purchasers – about how to shop for insurance. But now is the time to start thinking differently and planning new strategies for making everyone more secure and healthy during their working years and into retirement.

What is the role for labor unions in this new world? In the vanguard, where they have always been! Even though an overhaul of retirement and health benefits will require novel arrangements, and new laws to implement them, organized labor is now and will remain in the best position to guide the movement forward. Unions understand workers’ needs; they have the know-how and networks to create and lobby for necessary law changes; and they have the strength to make things happen at the bargaining table and the picket line.

Onward and upward! Contact us. We want to help you move the next 50 years of benefits law and policy forward.