CD: Could you explain to whom and to what the Employee Retirement Income Security Act (ERISA) of 1974 federal law applies? What have been the most significant modifications made to ERISA legislation in recent years?

Hines: ERISA is a comprehensive statute that regulates the design and administration of voluntarily established pension and health plans in private industry to provide protection for individuals in these plans, passed into law on Labor Day in 1974. The basic goal of ERISA is the protection of promised benefits. ERISA does not require any employer to establish pension or welfare benefits; it only requires that those who establish such plans meet certain minimum standards. Within the confines of those requirements, however, ERISA permits employers substantial discretion in the design of their plans.

Colby: Over the past 40-plus years, the laws affecting employee benefit plans, including federal tax laws that influence benefit plans, have been supplemented and amended on several occasions. ERISA has expanded to include, for example, government-mandated benefits, an increase in automatic plan features, such as auto enrolment and auto escalation features, and greater transparency in plan information, particularly fee information. Major legislative amendments to ERISA and related statutes have included the enactment of the Affordable Care Act (ACA), which requires employers to provide health insurance to their employees or face a penalty. In addition, the Pension Protection Act of 2006 has been one of the more sweeping reforms since ERISA was enacted, which made substantive changes to 401(k) rules and changed the pension-funding rules, including imposing benefit plan amendment and payout restrictions on underfunded plans. Major changes to ERISA included allowing fiduciary advisers of a plan to give participants investment advice if certain requirements are met, and providing for default investment alternatives where participants fail to provide investment direction.

Jan-Mar 2018 issue

Skadden, Arps, Slate, Meagher & Flom LLP