If you are an employee, you should be familiar with the acronym “ERISA.” This stands for the Employee Retirement Income Security Act of 1974 and it is an important component of the Department of Labor’s (DOL) Employee Benefits Security Administration. The DOL enforces this legislation. This act, according to the DOL, sets “minimum standards for pension plans in private industry.”
While employers are by no means required to set up a pension plan for their employees, ERISA does set the standards for those employers who do choose to set them up. Why are employers not required by the federal government to set up pension plans? A major reason is because all individuals have the freedom to set up a 401(k) or retirement plan on their own at any time. Upon retirement, an individual will receive fixed and regular payments from this pension fund.
ERISA does not dictate the amount of money a retired employee can receive, but it does dictate other parameters such as vesting, benefit accrual, fiduciary accountability and the right to sue for benefits and for breaches of fiduciary duty. That last parameter is important. What is a breach of fiduciary duty? People or entities that have a fiduciary duty are, in other words, obligated to practice in good faith for the benefit of their employees. When employers fail to act in the best interests of their employees, this could constitute a breach of fiduciary duty.
Another thing that ERISA establishes is a guaranteed payment of certain benefits upon cancellation of a pension plan, should a cancellation occur. For example, if an employer decides to terminate this plan, then employees could have this replaced by benefits through the Pension Benefit Guaranty Corporation.
There are two basic types of pension plans: defined benefit and defined contribution plans. The former allots for a specific monthly benefit (payment) post-retirement while the latter does not guarantee a specific amount of benefits after an employee retires. 401(k) and 403(b) plans are actually defined contribution plans. If you would like to learn more about ERISA, view the DOL’s ERISA FAQ page.
Employers, unfortunately, can abuse retirement benefits, but there is something that employees can do about it. Attorneys like those at Sloan, Bagley, Hatcher & Perry Law Firm have years of experience not only in accident and personal injury law, but in dealing with ERISA violations and overtime law. If you are an employee and are concerned about your rights, please do not hesitate to contact an attorney from our firm.
Don’t settle for this point in your life. Let our Longview car accident lawyers help you. At Sloan, Bagley, Hatcher & Perry Law Firm, we make our clients our #1 priority!