Abstract
hlie Employee Relireieineil licom)e Secuirity Act of 1974 (ERISA) was enacte(d in or(ler to protect anid enhanice tlhe welfare of employees anid othlers covere(d by private pension) plans. hI or(ler lo achieve thiis objective, ERISA requiire(l pension plans to vest thle accriuc(d be)nefits of employees wilth siginificant perio(ls of service, mleet illimlinlimu standidni(s of fuin(ii)g, guarantee tlie a(le(qtacy of thle plan's assets against tIle risk of premilatiure plan termination, anid chalnge the legal stattis of pilani administrators froin tlmat of nlonifiduticiary agenlis of (lte sponsoring firmi to that of fidticiaries whiose primiiary responsibility is to plani beneficiaries. Ibhis stti(ly conisi(lers thle extenii lo whiicih chaniginig tle legal slatus of r)laii a(lministrators niiay have had incidentll, anid perhaps unilntended, sile effects. Empirical evi(lenice suiggests Ihat, sinice tlie enactiment of ER ISA, private pension futnd(l port folios have mmnderperformed porl folios lhel(d by comparable inivestlimentl ftundcs niol sulbject to hIRISA. TIhliis stut(ly ainalyzes tlhe extent to which hlis challge iln legal stat ms, whlicih hiold(s a(diniiistrators to a hIiglher stanidar(d of cond(uict and stibjects tlemii lo increase(d liabl)ility expostire, may have conilributed to this un(lerlperformaince plmleuioiunemioni.
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