Ford Signs Employee Retirement Income Security Act 48 Years Ago Today

Each day, Benzinga takes a look back at a notable market-related moment that occurred on this date.

What Happened? On this day in 1974, U.S. President Gerald Ford signs the Employee Retirement Income Security Act.

Where The Market Was: The Dow Jones Industrial Average closed at 678.58 and the S&P 500 traded at 72.15.

What Else Was Going On In The World? In 1974, the Irish Republican Army began a bombing campaign in mainland Britain. Richard Nixon became the first U.S. president forced to resign following the Watergate Scandal. The U.S. inflation rate was 11.3%.

Mexican Economic Crisis: The ERISA sets minimum standards for private industry retirement and health plans that protect the individuals participating in those plans.

The law contains each of the following provisions:

• It requires plans to provide participants with updated information on features and funding.
• It establishes minimum standards for participation, vesting, benefit accrual and funding.
• It provides fiduciary responsibilities to plan managers.
• It requires plans to set up a grievance and appeals process for participants.
• In the event of a plan termination, it guarantees payment of certain benefits via the Pension Benefit Guaranty Corporation (PBGC).

The ERISA ultimately opened the door for the creation of 401(k) plans in 1981. Today, 401(k) plans hold an estimated $6.9 trillion in assets and represent nearly 20% of the total U.S. retirement market. There are a total of about 600,000 401(k) plans that have roughly 60 million active participants.