Employee Retirement Income Security Act  
The Employee Retirement Income Security Act of 1974 (ERISA) is the federal law that governs employee retirement plans. ERISA is designed to protect the rights of employees and the security of their retirement benefits. ERISA also covers such areas as health benefits, death benefits, vacation benefits, training programs, daycare centers, scholarship funds, and other employee welfare benefit plans.

Who is Covered

ERISA covers any employer with a retirement (pension) plan and/or employee benefit plan. Employee benefit plans are voluntarily established and maintained by an employer, and employee organization, or jointly by one or more such employers and an employee organization. Pension plans are established and maintained to provide retirement income or to defer income until termination of covered employment or beyond.

In general, ERISA does not cover plans established or maintained by federal, state and local government entities or churches for their employees; railroad retirement plans; plans maintained outside the United States primarily for nonresident aliens; and plans maintained solely to comply with workers’ compensation laws, unemployment compensation laws, or disability insurance laws.

Basic Provisions/Requirements

ERISA sets uniform standards to ensure that employee benefit plans are established and maintained in a fair and financially sound manner. In addition, employers have an obligation to provide promised benefits and satisfy ERISA’s requirements for managing and administering private pension and welfare plans. ERISA requires employees to do the following:

  • Manage plans for the exclusive benefit of participants and beneficiaries;
  • Carry out their duties in a prudent manner and refrain from conflict-of-interest transactions expressly prohibited by law;
  • Comply with limitations on certain plans’ investments in employer securities and properties;
  • Fund benefits in accordance with the law and plan rules;
  • Report and disclose information on the operations and financial conditions of plans to the government and participants;
  • Provide documents required in the conduct of investigations to ensure compliance with the law.
The Department of Labor’s Pension and Welfare Benefits Administration (PWBA) and the Internal Revenue Service share the responsibility for enforcing ERISA.