What is ERISA, and what does it do?

Even if you enjoy your job in California, you probably do not want to do it forever. Like many employees, you probably have aspirations of retiring someday. To that end, you may participate in a pension plan that provides benefits when you stop working, but you may have doubts or fears about your ability to access that money when the time comes.

The Employee Retirement Income Security Act affords you, as an employee, more information about your pension than you would have had access to in the past. It prevents plan administrators from making excessively risky investments and requires them to act in the best interests of you and other plan participants.

Under ERISA, plan administrators must notify you of any significant changes and inform you on how to file a claim. In many instances, participants in a pension plan have to meet certain standards in order to receive unconditional entitlement to their benefits. ERISA requires plan administrators to make participants aware of these standards.

The purpose of ERISA is to set guidelines under which employers may provide retirement benefits in the form of pensions to employees, but it does not require private employers to provide this benefit. There are also benefits to which ERISA does not apply:

  • Workers compensation
  • Unemployment benefits
  • Plans established for church employees
  • Health plans by governmental entities

Even though ERISA pertains primarily to retirement benefits, since it went into effect in 1974 there have been a number of amendments to ERISA regarding employees’ access to health benefits. Among these are the Newborns’ and Mothers’ Health Protection Act, which provides maternity coverage to women who have recently given birth, and the Consolidated Omnibus Budget Reconciliation Act, which extends health benefits to workers who leave a job, whether voluntarily or under qualifying involuntary circumstances.

The information in this article is not intended as legal advice but is provided for educational purposes only.

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