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Investopedia explains 'Employee Retirement Income Security Act - ERISA'
ERISA also:
1. Requires plans to provide participants with important information about plan features and funding. The plan must furnish some information regularly and automatically. Some of this information is available free of charge.
2. Sets minimum standards for participation, vesting, benefit accrual and funding. The law defines how long a person may be required to work before becoming eligible to participate in a plan, to accumulate benefits and to have a non-forfeitable right to those benefits. The law also establishes detailed funding rules that require plan sponsors to provide adequate funding for the plan.
3. Requires accountability of plan fiduciaries. ERISA generally defines a fiduciary as anyone who exercises discretionary authority or control over a plan's management or assets, including anyone who provides investment advice to the plan. Fiduciaries who do not follow the principles of conduct may be held responsible for restoring losses to the plan.
4. Gives participants the right to sue for benefits and breaches 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.
6. Protects the plan from mismanagement and misuse of assets through its fiduciary provisions.
This act was enacted to address irregularities in the administration of certain large pension plans - particularly the Teamsters Pension Fund, which had a rather colorful history involving questionable loans to certain Las Vegas casinos.
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