A landmark law at 40: How well is ERISA protecting workers’ retirements?

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President Gerald Ford signs the Employee Retirement Income Security Act on September 2, 1974.

Every American who has retired with economic security – or hopes to – should know these two dates in our history: August 14, 1935, and September 2, 1974.

The Social Security Act was signed into law by President Franklin D. Roosevelt in 1935, and 40 years ago today President Gerald Ford signed landmark pension reform legislation aimed at protecting the interests of Americans in private sector pension programs. The Employee Retirement Income Security Act (ERISA) was signed on Labor Day 1974.

These are the two of our most important laws governing the retirement security of Americans. And today’s ERISA anniversary is a good moment to ask: How are we doing when it comes to protecting the retirement security of everyday Americans? And how are these two laws connected?

For the answer, look no further than the two most important words in ERISA’s title: income security. Unfortunately, we’re not living up to those two words very well.

Since ERISA’s passage, we have seen a profound shift from defined benefit pensions to defined contribution plans, mainly 401(k)s. Pensions are a promise by employers of lifetime income in retirement; 401(k)s are a promise to contribute a certain amount to your account while you are working.

Evidence is mounting that we need to get focused on income again.