Employee Retirement Income Security Act
In 1974 Congress enacted
the Employee Retirement Income Security Act (ERISA). ERISA's main
purpose was to protect workers who had worked for substantial
periods under pension plans.
ERISA's provisions are set out in the Labor and Tax Codes.
Congress has amended ERISA several times since its initial
enactment. In addition, the Department of Labor (DOL), the
Internal Revenue Service (IRS), and the Pension Benefit Guaranty
Corporation (PBGC) have issued various regulations and rulings to
implement the statutes. Finally, decisions by the courts have
created an extensive body of law interpreting the statutes and
regulations.
In order to be a qualified plan, a plan must provide rights for
employees in the following areas:
DISCLOSURE. Plans must give participants basic
plan documents and make other documents available to participants
on request.
COVERAGE. Plans must include a certain proportion
of (but not all) employees.
PARTICIPATION. Workers "covered" by a plan who
meet certain requirements must be given an opportunity to become
plan members.
VESTING. Participants who work specified periods
of time earn nonforfeitable rights to receive pensions at
retirement.
BENEFIT ACCRUAL. Plans are generally required to give
benefit credit for all years of plan participation.
NONDISCRIMINATION. The dollar value assigned to each year of
benefit credit must conform to nondiscrimination rules aimed at
preventing excessive weighting in favor of higher-paid and older
employees.
SURVIVORS
BENEFITS. Plans are
required to provide benefits for widows and widowers of plan
participants, although this protection can be given up if both
husband and wife agree.
BENEFITS FOR
DIVORCED SPOUSES. Plans
must pay pensions to former spouses if directed to do so by a
specific kind of court order.
DISTRIBUTIONS. Participants have rights as to the timing
and form of payment of their pensions.
FIDUCIARY
STANDARDS. Persons
administering pension plans or investing plan assets are subject
to mandatory standards of conduct.
APPEALS OF BENEFIT
DENIALS. There are
procedures for participants to appeal adverse pension benefit
decisions, first to the plan, and then, if necessary, to the
courts.
REMEDIES. ERISA provides that courts can award certain
remedies for violations of the law.
NON-INTERFERENCE
WITH BENEFIT RIGHTS. Plans
may not use discharges, layoffs, plant closings, or other means
to interfere with participants' attaining their benefits under a
pension plan.
REPORTING. Each plan is required to report detailed
financial and actuarial data regularly to the IRS. This data may
be made available to participants.