ERISA Explained: Lessons for Australia’s Superannuation System

Retirement savings are a cornerstone of financial security, and every country grapples with the challenge of protecting workers’ nest eggs. In the United States, the Employee Retirement Income Security Act (ERISA) has provided a framework for private-sector retirement plans since 1974. While Australia’s superannuation system is quite different, examining ERISA reveals valuable lessons for policymakers, employers, and everyday Australians keen to safeguard their retirement future.

What Is ERISA and Why Was It Introduced?

ERISA was enacted by the US Congress in 1974 in response to widespread concerns over the mismanagement of employee retirement funds. Prior to ERISA, it was not uncommon for workers to lose their retirement savings if a company went bankrupt or failed to adequately fund its pension promises. ERISA set minimum standards for most voluntarily established pension and health plans in private industry, aiming to protect individuals in these plans.

• Minimum Standards: ERISA requires plans to provide participants with information about plan features and funding.

• Fiduciary Responsibilities: Those who manage and control plan assets must act in the best interests of plan participants.

• Grievance and Appeals: The law ensures participants have the right to sue for benefits and breaches of fiduciary duty.

• Pension Benefit Guaranty Corporation (PBGC): Created by ERISA to insure defined benefit plans, much like Australia’s government insurance for bank deposits.

In 2025, ERISA remains a bedrock of US retirement security, but it’s under constant review as the workforce evolves and economic conditions shift.

How Does ERISA Compare to Australia’s Superannuation?

Australia’s superannuation system is fundamentally different from the US model. Here, employer contributions to super are mandatory, and the system is tightly regulated by APRA and the ATO. In contrast, ERISA governs a largely voluntary system of employer-sponsored 401(k) and pension plans.

• Mandatory vs. Voluntary: Superannuation is compulsory for most Australian employees, while US employers can choose whether to offer retirement plans.

• Government Involvement: Australian super is backed by strict government regulation and the Superannuation Guarantee, whereas ERISA relies more on federal standards and insurance mechanisms.

• Portability: Superannuation accounts are highly portable between employers in Australia. In the US, 401(k) accounts are portable, but traditional pensions are not always as flexible.

• Recent Trends: Both systems are grappling with the rise of gig economy work and the need for more inclusive coverage. In the US, 2025 reforms under consideration include expanding auto-enrolment and improving fee transparency, echoing some of the ongoing debates in Australia.

One area where ERISA provides a useful lesson is fiduciary duty. The law places a strong emphasis on holding plan managers accountable for acting solely in the interest of participants—a principle that’s increasingly relevant as Australian super funds grow in size and complexity.

2025 Policy Developments and What’s Next

This year, US lawmakers are reviewing amendments to ERISA to address modern workforce challenges. Key proposals include:

• Expanding Coverage: Making it easier for small businesses and gig workers to access retirement plans, similar to Australia’s push for better super coverage among self-employed and casual workers.

• Fee Disclosure: Enhanced transparency requirements for plan fees and performance, mirroring recent ASIC crackdowns on superannuation fees and fund underperformance in Australia.

• Cybersecurity: New ERISA guidance on protecting retirement plan data, as cyber threats to financial accounts become more sophisticated globally.

For Australians, watching these developments is more than academic. As our own superannuation pool swells past $3.6 trillion in 2025, the risks and complexities facing members and trustees will only grow. The ERISA experience underscores the need for strong governance, transparency, and consumer protections—values that are just as critical here as in the US.

What Can Australians Take Away?

• Accountability Matters: Robust fiduciary standards protect members from mismanagement and conflicts of interest.

• Transparency Is Key: Clear disclosure of fees, risks, and returns empowers members to make informed decisions.

• Policy Evolution: Both countries must adapt retirement systems for a changing workforce, whether through better coverage for gig workers or updated cybersecurity protocols.

While ERISA and superannuation operate in different contexts, their shared goal is the same: ensuring that workers retire with dignity and financial security. Australians can learn from ERISA’s history—both its achievements and ongoing challenges—as we debate the next evolution of superannuation policy in 2025 and beyond.