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Abstract

Since its enactment in 1974, the Employee Retirement Income Security Act (ERISA) and related insurance and disability programs provided retirement security for employees and employers, amassing more than $9 trillion in protected assets. Congress preempted conflicting state laws so as to promote certainty of distribution and ease of administration, two hallmarks of ERISA-governed plans. Nonetheless, since 1974, American society embraced spousal equality, an increased number of marriages end in divorce, and wealth most often passes through nonprobate transfers such as insurance contracts and pension policy plans. To accommodate these societal and wealth changes, states enacted statutes to provide elective share rights for spouses without title to marital property, and to revoke contract designations whenever there is a final decree of divorce, treating the former spouse as predeceased. Unfortunately, ERISA failed to accommodate the state statutory evolutions. The ERISA statute preempts state laws, thereby permitting former spouses who are otherwise barred by state revocation by operation of law statutes to take pension and insurance proceeds from deceased pensioners. This results in unintended beneficiaries.

Federal courts at every level consistently uphold federal preemption, resulting in continuing litigation and zealous pursuit of state sovereignty in areas traditionally governed by state law. The Article argues the remedy may better arise through the ERISA statute itself, namely Title 29, United States Code, Section 1132(a)(3) and provision for the pursuit of appropriate equitable relief. ERISA plan fiduciaries fail in providing adequate forms to plan holders. These forms are necessary to elicit the intent of the plan holder and to provide the plan holder with his or her future options. Furthermore, plan fiduciaries ignore the possibility of a plan holder’s changing circumstances after employment commences and fiduciaries later augment this failure by failing to make periodic inquiries. The fiduciary breach of plan managers results in unjust enrichment of persons who are not the intended recipients of what is often a substantial portion of an employee’s estate. While the scope and depth of equitable relief under ERISA remains the subject of Supreme Court decisions and law professor commentary, this Article argues the range and pursuit of appropriate equitable relief on a private basis under the terms of ERISA will remedy the unjust enrichment that eludes solution at a public level.

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