Question

Under the protection of ERISA, or Employee Retirement Income Security Act (ERISA), there are stipulations in place that are for the sole purpose of protecting a participants assets. The provision of the law requires that those persons or entities who exercise discretionary control or authority over plan management or plan assets, anyone with discretionary authority or responsibility for the administration of a plan, or anyone who provides investment advice to a plan for compensation or has any authority or responsibility to do so are subject to fiduciary responsibilities (U.S Department of Labor, 2018).

As an HR professional, understanding fiduciary duties is imperative. Falling short of this knowledge could lead to liability, both personal and corporate. "It is critical for HR managers and their organizations to ensure that the fiduciary obligations of retirement plans are met (Shlensky, 2015)."

How does ERISA influence your retirement plan? Does your HR department share notification from ERISA? Is there an intranet for employees to access live communications on your retirement plan and in accordance to ERISA?

Answer 1

Employee Retirement Income Security Act (ERISA):

• Employee Retirement Income Security Act (ERISA) of 1974 has an influence over all the individuals who work in private sector.
• The main objective of ERISA is to give protection to the retirement plans of individuals and provide regulations for the financial future of millions of Americans.
• ERISA tells about the minimum standards of company-run pension plans that should be offered by the company to it's employees.
• ERISA also tells about how benefit packages of a company are impacted by federal income tax.

Let's discuss impacts of ERISA on the retirement plans in following points:

Pension plans

• ERISA doesn't bound an employer to develop pension plans for the employees.
• ERISA doesn't bound an employer to give a specific level of benefit coverage for the employees.
• ERISA mandates minimum standards for the companies which are currently offering employee benefit programs.

For example: A company following ERISA, should provide vesting options for the employees in pension plans.

• In other words, after working a certain number of years, am employee's pension plan will get matured.
• Companies which are offering pension plans must meet specific threshold minimums under ERISA requirements.

Vesting

• According to ERISA regulations, an employee should be vested after relatively short period of time.
• Workers are fully vested after three years or on a two-six graduated schedule.

Healthcare benefits

• ERISA doesn't bound companies to offer health insurance benefits for the employees.
• ERISA provides guidelines of operation for the companies which are giving healthcare benefits.

These days Pension plans are less common but still millions of Americans are getting health insurance through their employer. In this way we can say ERISA has an impact on American working people on a wide-scale and if an individual is not a part of employer-sponsered pension program, ERISA still has an impact on that individual.

It is essential for an employer to notify it's employees about the health benefits, pension plans etc. Yes, HR department does share notifications from ERISA.

• ERISA bounds companies to notify it's employees about how plans operate through an SPD.
• SPD stands for Summary Plan Description and it is the most important document for which the government bounds that an employer should provide it's employees.
• ERISA also bounds a company to update it's employees about any kind of material changes in plans.
• Notification can be given through a Summary of Material Notification (SMM).
• ERISA sets further the guidelines for the document delivery.
• ERISA bounds employers to give certain information to DOL (Department of Labor) every year.
• For this purpose, Form 5500 is used.
• The content of Form 5500 should be summarized to employees via a Summary Annual Report (SAR) and should be delivered to the employees.

Yes, In the company, Employees can contact and communicate with HR department via intranet about their retirement plans in accordance to ERISA.

So, this is about influence of ERISA on American workforce and it's requirements on companies which may differ from company to company.

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