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Industry: Email Alert RSS FeedThe pension insurance flaw of ERISA; Subsequent legislation also played a part in devastating defined benefit plans.(Other Views)
Pensions & Investments, December, 2004 by McGinn, Daniel F.
Byline: Daniel F. McGinn ERISA, which marked its 30th anniversary this year, contained many worthwhile provisions to better secure pensions but one significant flaw, the creation of plan termination insurance. That insurance, overseen by the Pension Benefit Guaranty Corp., became a basic part of the Employee Retirement Income Security Act of 1974 and contributed to the decline in defined benefit plans.
When Congress was holding hearings on proposed federal legislation in 1973, I was invited to testify. I said I thought many provisions of the bills before Congress had much merit. But I was aghast at the section of ERISA that mandated that pension benefits be insured by a federal agency. The premium for such "insurance" was just $1 per employee per year,...
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