Employee Retirement Income Security Act

Employee Retirement Income Security Act of 1974 is a federal law that regulates pension plans and other retirement plans in the United States, aiming to protect the interests of employees and their beneficiaries. The law was enacted by the 91st United States Congress and signed into law by President Gerald Ford on September 2, 1974, with the support of Senator Jacob Javits and Representative John Erlenborn. This comprehensive legislation has been influenced by the Securities and Exchange Commission, Internal Revenue Service, and the Department of Labor, with notable contributions from Senator Ted Kennedy and Representative Wilbur Mills.

Introduction

The Employee Retirement Income Security Act sets minimum standards for pension plans, health plans, and other employee benefit plans to ensure that they are established and maintained in a fair and financially sound manner, as recommended by the National Association of Securities Dealers and the Financial Industry Regulatory Authority. The law applies to most private-sector employer-sponsored retirement plans, including those offered by corporations like General Motors, Ford Motor Company, and IBM, as well as non-profit organizations like the American Red Cross and the Salvation Army. The Act is administered by the Department of Labor, with input from the Pension Benefit Guaranty Corporation, the Securities and Exchange Commission, and the Internal Revenue Service, which work together to protect the interests of employees and their beneficiaries, including those at universities like Harvard University and Stanford University.

History

The Employee Retirement Income Security Act was passed in response to concerns about the mismanagement of pension plans and the lack of protections for employees and their beneficiaries, as highlighted by the Studebaker pension plan failure, which affected Studebaker employees and was widely reported by the New York Times and the Wall Street Journal. The law was influenced by the Welfare and Pension Plans Disclosure Act of 1958, which required employers to disclose certain information about their pension plans to employees and the Department of Labor, as well as the Labor Management Relations Act of 1947, which regulated labor unions and collective bargaining agreements, including those at General Electric and Westinghouse Electric Corporation. The Act has been amended several times since its enactment, including the Multiemployer Pension Plan Amendments Act of 1980, the Omnibus Budget Reconciliation Act of 1987, and the Pension Protection Act of 2006, which were supported by Senator Ted Kennedy and Representative Charlie Rangel.

Provisions

The Employee Retirement Income Security Act includes several key provisions, such as the requirement that pension plans be established and maintained in a fair and financially sound manner, with input from actuaries like the Society of Actuaries and consultants like Mercer (consulting firm) and Towers Watson. The law also requires that employers provide certain disclosures to employees and beneficiaries, including information about plan benefits, vesting schedules, and funding status, as recommended by the Employee Benefits Security Administration and the Pension Benefit Guaranty Corporation. Additionally, the Act establishes minimum standards for plan funding, vesting, and benefit accrual, and provides protections for employees and their beneficiaries in the event of plan termination or merger, including those at Delta Air Lines and United Airlines.

Enforcement

The Employee Retirement Income Security Act is enforced by the Department of Labor, which is responsible for investigating complaints and conducting audits to ensure compliance with the law, with support from the Internal Revenue Service and the Securities and Exchange Commission. The Department of Labor also provides guidance and technical assistance to employers and plan administrators to help them understand and comply with the law, including those at Microsoft and Google. In addition, the Act provides for civil penalties and criminal penalties for violations of the law, which can be imposed by the Department of Justice, with input from the Federal Bureau of Investigation and the United States Attorney.

Impact

The Employee Retirement Income Security Act has had a significant impact on the retirement security of employees in the United States, with support from organizations like the AARP and the National Council on Aging. The law has helped to ensure that pension plans are established and maintained in a fair and financially sound manner, and has provided protections for employees and their beneficiaries in the event of plan termination or merger, including those at AT&T and Verizon Communications. The Act has also influenced the development of retirement plans in other countries, including Canada and the United Kingdom, with input from organizations like the International Labour Organization and the Organisation for Economic Co-operation and Development.

Amendments

The Employee Retirement Income Security Act has been amended several times since its enactment, including the Multiemployer Pension Plan Amendments Act of 1980, the Omnibus Budget Reconciliation Act of 1987, and the Pension Protection Act of 2006, which were supported by Senator Max Baucus and Representative Rob Portman. These amendments have made significant changes to the law, including changes to the funding rules for pension plans, the vesting schedules for plan benefits, and the disclosure requirements for plan information, as recommended by the American Benefits Council and the ERISA Industry Committee. The Act continues to evolve to address the changing needs of employees and employers in the United States, with input from organizations like the National Association of Manufacturers and the U.S. Chamber of Commerce. Category:United States federal labor legislation