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.