Employee Retirement Income Security Act

Background

In 1974, Congress passed protections for individuals in private retirement and health insurance plans. The Employee Retirement Income Security ActThe Employee Retirement Income Security Act sets minimum standards for pension and welfare plans in the private sector. Private employers must meet these standards for their plans to be eligible for tax-favored status. ( ERISA The Employee Retirement Income Security Act sets minimum standards for pension and welfare plans in the private sector. Private employers must meet these standards for their plans to be eligible for tax-favored status. ) lays out rules and remedies. These include standards concerning fiduciary duties, the provision of plan information, grievance and appeals procedures, and rights to pursue legal remedies. In addition, ERISA The Employee Retirement Income Security Act sets minimum standards for pension and welfare plans in the private sector. Private employers must meet these standards for their plans to be eligible for tax-favored status. addresses plan participation, vesting, benefit accrual, and funding. Finally, ERISA The Employee Retirement Income Security Act sets minimum standards for pension and welfare plans in the private sector. Private employers must meet these standards for their plans to be eligible for tax-favored status. also established the Pension Benefit Guaranty CorporationA federal government agency created to insure private-sector defined benefit pension funds. that insures benefit payments in the case of defined-benefit plan termination.

Judicial interpretations of ERISA The Employee Retirement Income Security Act sets minimum standards for pension and welfare plans in the private sector. Private employers must meet these standards for their plans to be eligible for tax-favored status. provisions have often limited the rights of retirement plan participants and beneficiaries. Even when participants and beneficiaries can prove ERISA The Employee Retirement Income Security Act sets minimum standards for pension and welfare plans in the private sector. Private employers must meet these standards for their plans to be eligible for tax-favored status. violations, courts have severely limited the remedies available. This undermines participants’ and beneficiaries’ rights.

Some states also have laws related to employer-sponsored benefits. In general, ERISA The Employee Retirement Income Security Act sets minimum standards for pension and welfare plans in the private sector. Private employers must meet these standards for their plans to be eligible for tax-favored status. preempts those laws to provide uniformity for employer-sponsored benefit programs. In a number of areas, state laws provided protections that ERISA The Employee Retirement Income Security Act sets minimum standards for pension and welfare plans in the private sector. Private employers must meet these standards for their plans to be eligible for tax-favored status. does not. The result of preemption in these circumstances is to leave plan participants without a remedy. For example, courts have held that ERISA The Employee Retirement Income Security Act sets minimum standards for pension and welfare plans in the private sector. Private employers must meet these standards for their plans to be eligible for tax-favored status. preempts actions against nonfiduciary violations and preempts state laws against fraud and misrepresentation.

EMPLOYEE RETIREMENT INCOME SECURITY ACT: Policy

EMPLOYEE RETIREMENT INCOME SECURITY ACT: Policy

Strengthening interpretation and enforcement

The Employee Retirement Income Security ActThe Employee Retirement Income Security Act sets minimum standards for pension and welfare plans in the private sector. Private employers must meet these standards for their plans to be eligible for tax-favored status. ( ERISA The Employee Retirement Income Security Act sets minimum standards for pension and welfare plans in the private sector. Private employers must meet these standards for their plans to be eligible for tax-favored status. ) should be interpreted and implemented to give participants and beneficiaries full legal protections.

The Department of Labor (DOL) should strengthen enforcement under ERISA The Employee Retirement Income Security Act sets minimum standards for pension and welfare plans in the private sector. Private employers must meet these standards for their plans to be eligible for tax-favored status. . This may require better and more productive use of resources and additional funds. Audit procedures and regulatory actions that help participants and beneficiaries secure benefits and protect their rights should be strengthened.

Public education and information

The DOL and other agencies should improve their efforts to educate plan members about their rights. They should publish easy-to-understand, culturally and linguistically appropriate pamphlets; create public service announcements; and use other strategies.

Reporting and disclosure

Comprehensive reporting and disclosure requirements must be maintained and enforced.

Mandated disclosures, reports, and notices should be provided to participants and beneficiaries in a form that comports with their preferences. This information must be private and secure. The information should adequately convey important information about retirement plan rights, promote actual receipt of benefits, and be preserved and accessible decades later.

Policymakers should consider mandatory penalties for failure to provide required information on plan finances to plan participants.

Judicial proceedings

Remedies under ERISA The Employee Retirement Income Security Act sets minimum standards for pension and welfare plans in the private sector. Private employers must meet these standards for their plans to be eligible for tax-favored status. should be improved so employees can recover all losses due to ERISA The Employee Retirement Income Security Act sets minimum standards for pension and welfare plans in the private sector. Private employers must meet these standards for their plans to be eligible for tax-favored status. violations.

Congress should enhance private rights of action under ERISA The Employee Retirement Income Security Act sets minimum standards for pension and welfare plans in the private sector. Private employers must meet these standards for their plans to be eligible for tax-favored status. to supplement the DOL’s limited ability to monitor the benefits system.

ERISA The Employee Retirement Income Security Act sets minimum standards for pension and welfare plans in the private sector. Private employers must meet these standards for their plans to be eligible for tax-favored status. should be amended to require the award of mandatory attorney’s fees in successful fiduciary and benefits claim cases. It should also allow all courts to award attorney’s fees for work performed during the administrative review process.

A court reviewing a disputed ERISA The Employee Retirement Income Security Act sets minimum standards for pension and welfare plans in the private sector. Private employers must meet these standards for their plans to be eligible for tax-favored status. case should examine the relevant contracts and documents for itself (that is, review the case de novo). It should not defer to the findings of the plan administrator, who may have an inherent financial conflict of interest.

The DOL should explore alternative dispute resolution forums for those claimants who otherwise would lack adequate remedies.

ERISA preemption

Where ERISA The Employee Retirement Income Security Act sets minimum standards for pension and welfare plans in the private sector. Private employers must meet these standards for their plans to be eligible for tax-favored status. preempts state law and deprives individuals of rights and remedies available under state law, ERISA The Employee Retirement Income Security Act sets minimum standards for pension and welfare plans in the private sector. Private employers must meet these standards for their plans to be eligible for tax-favored status. should provide an adequate federal remedy.