The Employee Retirement Income Security Act of 1974, or ERISA, is a federal law that sets minimum standards for pension plans in private industry. ERISA protects the assets of millions of Americans so that funds placed in retirement plans during their working lives will be there when they retire. Most health insurance, 401k, profit sharing and even some severance plans are governed by ERISA. For example, if an employer maintains a pension plan, ERISA specifies when an employee must be allowed to become a participant, how long they have to work before they have a nonforfeitable interest in their pension, how long a participant can be away from their job before it might affect their benefit, and whether their spouse has a right to part of their pension in the event of their death. Most of the provisions of ERISA are effective for plan years beginning on or after January 1, 1975.

ERISA does not require any employer to establish a pension plan. It only requires that those who establish plans must meet certain minimum standards.

Last updated on May 14, 2009 by Jack Parsons