ERISA refers to the Employee Retirement Income Security Act that was presented to Congress in 1974. It was accepted as federal law and put into effect beginning on January 1, 1975. This set of employment laws establishes the minimum standards that must be met for most voluntarily established pension and health plans in private industry in order to provide protection for individuals participating in these plans.
ERISA does not demand the establishment of any kind of retirement plan by any company whatsoever. For companies that do choose to provide pension plans for employees, ERISA sets the minimum guidelines that must be met. There is flexibility in that the company can go above and beyond this minimum set of standards when it comes to their individual plan.
ERISA Explained Further
For people that feel having ERISA explained would be too overwhelming, some basics of the Act are explained here. ERISA states that within the retirement plans that are provided, companies must give needed information to the participants within that particular plan detailing information about the plans features and its funding. This is so the employee who participates in such a plan and have full knowledge of how that plan will be implemented. This is a protection for the employee who can know exactly how the money being put away for their retirement will be treated.
ERISA also sets in place the responsibilities for those who manage and control pan assets as it pertains to their monetary responsibilities. This act requires retirement plans to establish a process for participants to get benefits from their plans in case of a grievance and appeal. Participants are given the right to sue for benefits and breaches of fiduciary duty.
