What is the Employee Retirement Income Security Act of 1974?
The federal government established the Employee Retirement Income Security Act to protect employees. To accomplish this, it established the minimum requirements for private pension plans and private health plans. The misuse of plan assets, such as suspicious loans to Las Vegas casinos, prompted the need for this act.
Compliance guidelines primarily affect the insurance industry, but employers also need to be aware of the requirements and how they work. The minimum standards set by this law cover several components of voluntary plans. It also requires the provision of information to participants regarding the following:
- Fiduciary responsibilities for professionals who control and manage assets in the plan
- Procedure for facilitating payment of benefits after termination via the Pension Guaranty Corporation
- Standards for enrolling and vesting
- Plan features
- Funding process and benefits accrual
- Grievance appeals process
Learn more about the Employee Retirement Income Security Act of 1974
When do I need to be aware of the Employee Retirement Income Security Act of 1974?
Entities operating within private insurance and financial spaces need to pay close attention to their obligations and rights under ERISA. Insurance companies, insurance brokers, and employers need to be mindful of their obligations to employees under ERISA. Employees should read the information provided or seek it out, so they are aware when they are offered non-compliant plans.
What is important to know about the Employee Retirement Income Security Act of 1974?
ERISA is one of the most important labor laws still existent in America. Note the following:
- ERISA does not cover government plans or benefits.
- ERISA does not apply to plans offered by churches.
- ERISA does not govern plans maintained overseas that primarily benefit nonresident aliens.
- ERISA may or may not govern Simplified Employee Pension plans.
- The Employee Benefits Security Administration, which is part of the Department of Labor, enforces ERISA.
- If the assets in a plan are mismanaged, the responsible parties may become liable for making up losses incurred.