September 3, 2014
- American Benefits Council IN THE NEWS: ERISA's 40th Anniversary
- Senate Finance Committee to Hold Hearing on Retirement Tax Incentives
American Benefits Council IN THE NEWS: ERISA's 40th Anniversary
On September 2, the American Benefits Council joined the benefits community in recognizing the 40th anniversary of President Gerald Ford’s signing of ERISA – the Employee Retirement Income Security Act of 1974 – the landmark law governing employee benefit plans.
In our role as a national trade association representing employer sponsors of health and retirement benefit plans, the Council’s perspective was widely sought by the news media in feature stories on ERISA’s legacy:
- In a September 2 story for Workforce (ERISA turns 40), the author quotes the chair of the Council’s board of directors Janet Boyd, of Dow Chemical Company. “ERISA isn’t perfect, but I still think the concept works, and the basic principle still makes sense,” Boyd told the magazine. Council President James Klein was also quoted in the article.
- In a September 2 story for Business Insurance (Landmark ERISA pension reform law sees mixed results 40 years after implementation), Klein called ERISA’s federal pre-emption standard “the crown jewel” of the law because it allows multi-state employers to provide consistent benefits to its domestic employee population.
- A September 2 BenefitsPro story (5 changes ushered in by ERISA) cites Klein’s concerns about how the Pension Protection Act of 2006 (PPA) amended ERISA’s pension plan funding rules. The Council has long noted that the PPA increased funding volatility by emphasizing current-day calculations over long-term perspectives. A follow-up story on September 3 (ERISA’s mid-life crisis) quotes Klein on the subject of employers’ and employees’ aligned retirement priorities.
- A Pensions & Investments article from September 2 (ERISA at 40, subscription required) quotes Lynn Dudley, Council senior vice president, global retirement & compensation policy, praising ERISA’s flexibility. ERISA “was written in a way that was very flexible. It allowed the [defined contribution] system to evolve,” she said.
- Additionally, Jason Hammersla, Council senior director, communications, authored an opinions piece for the September 2 edition of PlanSponsor.com (Staying Flexible: American Football and the Future of Employee Benefits).
Hammersla’s article previews the forthcoming release of the Council’s long-term public policy strategic plan. A 2020 Vision: Flexibility and the Future of Employee Benefits, approved by the Council’s Policy Board of Directors, sets forth the Council’s vision, goals and recommendations for a vibrant and effective employer-sponsored benefits system within the next six years.
The Council will report in greater detail on A 2020 Vision when it is released within the next few weeks. For more information on the Council’s media outreach or the strategic plan, contact Jason Hammersla at (202) 289-6700.
Senate Finance Committee to Hold Hearing on Retirement Tax Incentives
In conjunction with ERISA’s 40th anniversary, Senate Finance Committee Chairman Ron Wyden (D-OR) issued a public statement linking retirement security and possible comprehensive income tax reform:
“Forty years ago today, President Ford signed the Employee Retirement Income Security Act into law and enshrined a new level of security for Americans in retirement. In today’s economy, workers are carrying more and more of the load in preparation for retirement. It’s time to update our pension rules to help provide greater economic security in retirement – not less. As the Finance Committee continues to work on comprehensive tax reform this fall, we will take a close look at pension and retirement rules in the tax code to make improvements wherever they’re needed. Later this month, the committee will hold hearings on retirement security that examine additional steps to help American workers save.”
It is our understanding that the first such hearing may be held as early as the week of September 15, with a focus on the role and value of the current retirement tax incentives, primarily with regard to defined contribution plans and IRAs.
As we most recently reported in an August 7 Benefits Byte story, the Joint Committee on Taxation (JCT) recently released a report to the congressional tax-writing committees showing that the collective tax incentives provided to retirement plans constitutes the second-highest federal tax expenditure (i.e., loss of revenue to the federal government) for the next five years (more than $800 billion, including defined contribution plans, defined benefit plans and IRAs), behind only the tax exclusion for the provision of employer-sponsored health insurance.
Numerous proposals to curtail the value of these tax incentives have been proposed over the past several years, some of which will likely be raised at the Senate Finance Committee hearing. As we have on many occasions in the past, the Council will submit written comments to the committee.