So today was ERISA's 35th birthday. Happy Birthday to ERISA. . . ?
Well, maybe. ERISA has done its share of good. It faced the daunting task of comprehensively regulating both the qualification and fiduciary aspects of both pension and welfare plans, reacting to crises in the fairness and stability of the system, on the one hand, and its trustworthiness (or lack thereof), on the other.
Is it perfect? Undoubtedly not. There're meddlesome micromanagement, sometimes incomprehensible complexity, counterintuitive results and unanticipated consequences. Let's take these serially. Congress might argue that it's meddling is justified by its conferring of what might be the largest tax subsidy in creation. Complexity might be forgiven after consideration of the breadth of regulation undertaken. Counterintuitive results may occur when remedial efforts prove to have overshot the mark. And unanticipated consequences arise when, well, either by affirmative error or by omission, they don't always get it quite right. Complicating the problems is that fact that the imperfections and mistakes can come from the legislative, executive and judicial branches.
But it's quite an ambitious attempt, and the basic framework seems intact. (Cool acronym, too.) So give ERISA a bit of a break. A preemptive reach probably unsurpassed by that of any other statute results in quite a challenge. That's a lot of potential gaps to leave, and a lot to get right. After a great many years, recent changes may finally have made inroads into addressing some of the imperfections in the system, but there's a lot of story left to be told. It's not a bad place to be, what with changing rules, an impenetrable lexicon, a lack of law and a presence of lore that continues to require expert judgment, an ever-increasing focus on issues of concern to key executives, and an evolution towards higher-profile, more mainstream issues.
Ultimately, there is some consensus regarding the positive side of ERISA. Its general fiduciary standards regarding prudence and use of the modern portfolio theory are lauded as models for fiduciary regulation. The statute is a starting point for so many other attempts to regulate employee benefits. There is so much well-intentioned legislation and regulation, and the area has attracted so many good people. Of course, it's also responsible for something sorta near and dear to me: my job and career.
Current challenges include the 401(k) crisis, exacerbated by the market crash and the move away from DBs; the regulation-nearly-out-of-existence of DBs; the question of whether ERISA's preemptive effect should have the unfortunate effect of leaving sympathetic claims in an abyss of no relief; and the question of whether localities can and should be able to react to the crisis in health care without a federal lead. If you consider an expanded "ERISA" as including executive compensation, you can add to the list of challenges 409A (and 457A); and the loss of faith in executives and the compensation process, resulting is all kinds of recent activity from the SEC, Treasury, and Congress. The ride should be, to use that ol' f-word . . . fun.
Maybe most importantly from my own selfish perspective, if I may harken back to some sentiments I expressed in my first foray on this site, I continue to believe that, as a general matter, there isn't a more open, inclusive, collegial and supportive group of practitioners out there. Many of us worry about right answers and mutual respect, rather than tearing down and diminishing each other. Client development for some of us consists of saying nice things about our competition, and hoping that (forgive the whole Zen/karma thing), somehow, the same will come back in the reverse direction. And to those not Of The Body - pfftht.
As suggested above, no one's likely to be making the case that ERISA is perfect. But it reaches for a high bar in an area increasingly recognized as being utterly critical to the fortunes of this country and its people. So, I guess, for all of its warts, ERISA may well indeed deserve a . . . Happy Birthday.
Subscribe to:
Post Comments (Atom)
3 comments:
OK, ERISA is not all bad. But it ought to be tweaked.
What is your basis for stating that ERISA has a preemptive reach usurpassed by any other statute? Have you ever read the legislaton regulating commercial aviation which vests regulation in the FAA and preempts all state laws that regulate the operation of airports and commercial airlines, including safety matters. A few years ago a NY law that created an airline passengers bill of rights including the right to food, water, bathroom facilitiess and the right to leave the plan after a lengthy delay before takeoff was voided by a federal judge becuse it was preempted by the FAA act.
After that read the Atomic Energy Ect which premepted all state alws relating to necular reactors.
To the prior commenter:
Ha! I only said, "a preemptive reach probably unsurpassed by that of any other statute." In my birthday-fueled euphoria, I almost said "a preemptive reach greater than that of any other statute" - then look at the trouble in which I'd have been! Anyway, without intending to denigrate the preemptive reach of the statutes you cite, or that of any other statute, I would note Pilot Life Ins. Co. V. Dedeaux, 481 U. S. 41 (1987), as an example of a case discussing the exceedingly broad deliberate preemptive effect of ERISA. See also FMC Corp. v. Holliday, 498 U.S. 133, 138 (1990) (stating that ERISA preemption is “conspicuous for its breadth”). See generally New York State Conf. of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 655 (1995) (describing ERISA preemption clause as “clearly expansive”); Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 739 (1985) (noting the ERISA preemption provision’s “broad scope”). I would also note the extensive and multi-faceted nature of the area (employee benefits, generally) covered by ERISA. Having said all that, while I remain unconvinced that my statement in question is ultimately incorrect, I concede the difficulty in being able to prove empirically the validity of even a relatively muted broad comparison of the type I made.
Post a Comment