What exactly does ERISA do for workers?
The Employee Retirement Income Security Act of 1974, known as ERISA, is a law that most workers are unfamiliar with.
In short, this federal law sets standards for pension and health plans as a means of providing protection.
Under ERISA, employers are not required by law to establish a pension plan. However, those that decide to establish a plan are required to meet specific standards.
Some of the other ways the law helps workers include:
— Participants must be provided with information about the plan such as funding and features.
— Sets minimum standards with regard to participation, funding, benefit accrual, and vesting.
— Gives participants the option to file a lawsuit in relation to any breach of fiduciary duty.
— Requires that plan fiduciaries are responsible for certain duties. In the event that a fiduciary does not live up to the conduct outlined by ERISA, they could be held responsible for losses.
— In the event that a defined plan is terminated, ERISA guarantees payment of some benefits through the Pension Benefit Guaranty Corporation.
As an employee in the United States, it is nice to know that there are many federal laws in place to keep you and your money safe. The downside of this is that you need to understand many of these laws, such as ERISA.
You may never find yourself dealing with this law, but it is still a good idea to understand the benefits it affords you. You owe it to yourself to understand ERISA and how it can help you regarding pension and health plans.
Source: United States Department of Labor, “Frequently Asked Questions (FAQs),” accessed Aug. 10, 2015