Question

what is ERISA?who does it protect and why is it important.

Answer 1

ERISA - Employee Retirement Income Security Act

Is a federal law that sets minimum standards for pension plans in private industry.Does not require an employer to establish a pension plan.

ERISA protects retirement savings from mismanagement and abuse, and clarifies that those in charge of those savings be held to a high standard – that is, they must act in the best interests of plan participants

ERISA does the following:

(1) Requires plans to provide participants with information about the plan including plan features and plan funding.

(2) Sets minimum standards for participation, vesting, benefit accrual and funding.

(3) Requires accountability of plan fiduciaries.

(4) Gives participants the right to sue for benefits and breach of fiduciary duty.

(5) Guarantees payment of certain benefits if a defined plan is terminated, through a federally chartered corporation known as the Pension Benefit Guaranty Corporation.