We’ve all heard the physician’s Hippocratic oath: “First, do no harm.” But there’s a similar, less-well-known principle in the world of pensions: First, do no harm to retirees.
When pension programs are changed, it’s almost unheard of to cut benefits for retirees in their seventies, eighties or beyond, who would have trouble adjusting to abrupt reductions in income. The principle is a cornerstone of the Employee Retirement Income Security Act (ERISA), which governs private-sector pension plans.
It’s also a guiding principle in other areas of retirement policy. For example, when Social Security’s retirement age was raised in 1983, the changes were phased in over a 20-year period – and the increases didn’t start kicking in until 1990.
But all that could change soon.
Congress is expected to consider changes to ERISA later this summer that could open the door to benefit cuts for current retirees for the first time in recent memory. Learn more at Reuters Money.