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ERISA Law

Employes or employee organization, or both, to the extent that by its express terms or as a result of its surrounding circumstances such plan, fund or program (a) provides retirement income to employees, or (b) results in a deferral of income by employees for periods extending to the termination of covered employment or beyond” (ERISA).In 1963, when the Studebaker Corporation was forced to shut down its auto production plant, many of its employees, especially the young ones, did not receive their pensions because Studebaker’s plan was poorly funded. It turned out that a part of the pension funds was used for investment. The incident at Studebaker drew the attention of the entire nation and it provided a catalyst to the enactment of ERISA a decade later. It became known as the “infamous Studebaker” case and gave impetus and direction to the President’s Committee on Corporate Pension Plans created by President John F. Kennedy two years earlier. The Committee later came out with a report entitled Public Policy and Private Pension Program, which set forth aThe Report of the Committee unsurprisingly drew adverse responses not only from employers but even employees who questioned the government’s interference in employment contracts between employers and employees. In addition, a regulatory law will potentially increase the costs of pension plans and the effect is to force the companies to reduce benefits or worse, give up pension plans completely. The Committee made minor revisions but on the whole, retained the essence of the report. This was during the time after Kennedy had been assassinated and Lyndon B. Johnson had taken over the presidency. Up for election in 1964, the staff of Johnson hid the controversial report fearing that it would hurt Johnson’s electoral campaign. In 1965, the report was finally released but the White House disowned it (Wooden 2005).In 1967, Senator John Javits, a Republican from New York, endorsed a bill that called for measures on fundraising, eligibility, and testing problems identified in the aforesaid report.