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Shifting Benefit Programs Undercut Retirees, Professor Norman Stein Tells New York Times

Professor Norman Stein

June 06, 2016

Employers are changing 401(k) plans and other benefit programs in ways that make them less accountable for shortchanging retirees, Professor Norman Stein said in a New York Times article published on June 3.  

Although the federal Employee Retirement Income Security Act of 1974 requires benefit plan overseers to run them in ways that serve participants’ best financial interests, some companies have reduced the length of time for beneficiaries to bring legal action or required such actions to be brought in a court that is convenient for the plan sponsors but not necessarily the retirees.

Such actions make it harder for beneficiaries to receive the benefits to which they are entitled and prevents them from holding plan overseers accountable, Stein said.

“If you have a plan and you want to do everything you can to immunize yourself against suits, you can take these measures,” Stein said, describing the trend as “a slowly growing problem.”

Under ERISA, Stein explained, plan sponsors have a fiduciary responsibility to operate in ways that serve participants’ interests but the freedom to create and design plans in ways that are inconsistent with that duty.