Employee Retirement Income Security Act
The Employee Retirement Income Security Act (ERISA) of 1974, is a United States federal law ratified to guard interstate commerce and the interests of members in employee benefit plans and their beneficiaries, through necessitating the reporting and disclosure to participants and beneficiaries of financial and other information with respect thereto, through setting up standards of responsibility, conduct, and obligation for fiduciaries of employee benefit plans, and through providing the appropriate sanctions, remedies, and ready access to the Federal courts.
The Employee Retirement Income Security Act’s interpretation and enforcement is handled by the Internal Revenue Service and the U.S. Department of Labor. ERISA protects the retirement assets of Americans through putting into practice rules that qualified plans must follow for ensuring that fiduciaries do not misuse plan assets.
The Employee Retirement Income Security Act generally defines a fiduciary as anyone who implements discretion authority or administers over a plan’s management or assets, including anybody who provide investment advice to the plan. Fiduciaries should follow the principles of conduct at all times and anyone who does not do so, may be held responsible for restoring losses to the plan.
The right of members to sue for benefits and breaches of fiduciary duty is also provided by the Employee Retirement Income Security Act, including guaranteeing payment of certain benefits if a distinct plan is terminated through a federally chartered corporation known as the Pension Benefit Guaranty Corporation. The act also protects the plan for misconduct and misuse of assets through fiduciary provisions.
The Employee Retirement Income Security Act requires pension plans to give vesting of employees’ pension rights after a particular minimum number of years to meet certain funding requirements. I t does not however, require employers to establish pension plans, instead only applies those plans that an employer has created. Likewise, the Act, as a general rule, does not require employers that have created pension plans to give any minimum level of benefits instead regulates the way in which an employee can get vested rights to a pension and the manner in which the pension benefits can be lessened due to events such as early retirement or return to work in the business after retirement.
The Act on the other hand, does necessitate employers to provide some forms of benefits such as survivor and joint annuities that permit married couples who have chosen for such coverage to give for continuing benefits to a surviving spouse that plans may not have offered.
The Employee Retirement Security Act was enacted to deal with irregularities in the administration of particular large pension plans, specifically the Teamsters Pension Fund, which had a quite colorful history concerning questionable loans to certain Las Vegas casinos.