Before the Employee Retirement Income Security Act (ERISA), came into effect in 1974, employers could revoke promised retirement funds in the blink of an eye.
Generation after generation experienced these abuses, and patience in financially inept and otherwise unsavory companies wore thin.
An epic pension fund collapse in 1963 acted as the spark that ignited the much-needed change in retirement protection.
The pension failure to end all pension failures
Some companies are plagued with problems, and that was true of the Studebaker-Packard Corporation (Studebaker), founded in 1852 in South Bend, Indiana.
For Studebaker, their problems were not based on automotive quality, but financial management. These problems came to a head in 1963 when their failures reached an epic proportion.
Without requirements for companies to disclose their finances, Studebaker employees had no way of anticipating the closure of the South Bend, Indiana plant in 1963. As if that weren’t bad enough, Studebaker also slashed, or denied entirely, the pensions for roughly 4,000 workers.
People demand change
Change happens slowly, and it took a little over a decade to pass legislation that would prevent another Studebaker pension collapse. In 1974, President Ford signed ERISA into law, protecting employee retirement funds for the first time in American history. To this day, ERISA requires employers and plan sponsors to:
- Be financially transparent
- Adhere to a strict code of conduct
- Report to the Department of Labor every year
Americans believe in justice, and few things are more unjust than taking away promised retirement funds. Thanks to those whose suffering inspired ERISA, employees have certain inalienable rights when it comes to retirement funds. If your retirement funds are in jeopardy, contact an experienced ERISA attorney immediately.