When the Employee Retirement Income Security Act of 1974 (ERISA) was first enacted, Congress was trying to make sure that when workers had a benefit that was promised to them through their employment, it would actually be there when they need it. At the time, the United States had a system that was built for long-term employment and a job-based pension.  

Since then, many things have changed in what the retirement landscape looked like. Workers often do not work for the same employers; they move from job to job. And, they have much more responsibility for saving for retirement. 

In today’s system, we’re asking workers to save, to invest, to look at different types of investments and multiple retirement accounts, and to navigate different plans over the course of their lifetimes. Workers must make increasingly complicated financial decisions, all within their control and their responsibility. 

The legal and regulatory system and structure has not caught up with that. ERISA put many protections in place for workers with respect to their job-based pensions. And those protections are still definitely necessary. But we must evaluate ERISA’s protections to make sure we’re protecting workers in this fast-moving landscape with these new and different challenges they’re facing.  

Modernization doesn’t mean sacrificing consumer protections 

With how fast the financial and retirement worlds are evolving today, it’s important for regulators to embrace technology while making sure that there are guardrails surrounding consent, authorization, and consumer protections.  

It’s within regulators’ jobs to consider all of the problems that could potentially occur and try to determine how to best protect consumers. At the same time, technology is evolving quickly. Responsibility falls on regulators to think of solutions that will work now and will also be durable as technology changes. 

What should meaningful authorization look like? 

We authorize other people and technologies to do consequential things for us every day, but retirement accounts deserve a higher bar. Informed authorization is crucial, as is revocable permission. 

One of the most important things is making sure that there is accountability, and that there is oversight. When it comes to technology, regulators want to see that there is information that is provided to the individual before they grant someone access to their retirement account information, that that access is limited, and that that person can turn off access. 

Can workers choose who helps manage their 401(k)? 

The law does not prohibit participants from choosing an outside advisor to provide them with investment advice when it comes to their 401(k), nor does it prohibit an outside advisor providing that advice. In fact, the Department of Labor recognized 30 years ago that participants sometimes choose providers outside of their retirement plan to provide them with education and advice about managing their 401(k). 

What should the retirement system look like in the future? 

So many things have changed in the way people look at their financial lives and the way people look at retirement security. And so, how do we address these various changes? How do we recognize what the current reality is? What issues are there that we need to take into consideration and how can we find ways to move forward with them? 

Two years from now, I would love to be in a place where the retirement system works better for workers. And to get there, employers and plan sponsors, plan service providers, regulators, and legislators need to understand directly from workers how their retirement plans and the broader retirement system can better serve them and what is really important and helpful to workers in their journey to long-term financial security in retirement and beyond. Regulators, advisors, technology providers, plan sponsors, and workers all have a role to play in building a system that empowers people to get to better financial outcomes. 

The goal is a retirement system that keeps pace with how people live and work today; one that preserves critical protections while giving workers greater choice, control, and confidence in their financial futures.