What ERISA is

The Employment Retirement Securities Act of 1974 became law on September 2, 1974. ERISA completely overhauled the federal pension law after Congress found that, in general:

     a.     Employees with long years of service were losing anticipated retirement benefits because of application of strict vesting or years of service requirements;

     b.     Many plans were "asset poor" and unable to pay the "promised benefits"; and,

     c.     Plans were terminated before appropriate assets were sufficiently accumulated to pay employees and their beneficiaries promised retirement benefits.

To protect the qualified retirement plan participants and their beneficiaries, ERISA established a new set of rules for participation, added mandatory and "quicker" vesting schedules, fixed minimum funding standards, set standards of conduct for administering the plan and handling plan assets, required disclosure of plan information, and established a system for insuring the payment of pension benefits.