The Employee Retirement Income Security Act of 1974 was set with an aim of addressing and countering constant irregularities that were often witnessed in the management of retirement and other employee welfare plans. The act governs private employers by establishing minimum standards that they should maintained for welfare benefit plans such as retirement, life insurance, health insurance, disability insurance among others. The aim of the act is to prevent misuse on plan assets by fiduciaries through a set of rules to be followed by qualified plans.
ERISA has generally been of great assistance to employees whose funds risked being mismanaged prior to the establishment of the act such that they could not access their benefits when they became due. It must be noted however that ERISA only establishes the standards for plans that the employer has chosen to give to the employees but does not require the provision of insurance plans by the employer. The Employee Benefits Security Administration (EBSA) is the governing body for ERISA.
EBSA mostly aims at educating employees on health benefits so as to enable them make informed decisions regarding themselves and their families. Plans not covered by ERISA ERISA does not cover employee plans provided by government bodies and neither does it cover plans established by churches for their employees. Plans that are established outside the United States to cover non-resident employees are also not covered under the act. Laws and Regulations
In order to ensure proper management of funds and assets bought through the employee’s welfare plan funds, ERISA maintains regulations for careful management of the funds. ERISA demands accountability and requires detailed reports to be submitted to the federal government. It also requires disclosure of the plan information to the members. ERISA has established the Pension Benefit Guaranty Corporation (PBGC) that undertakes the payment of pension funds to participants in case a plan is terminated and the plan cannot pay all the customers.
The following section of the paper provides a description of the laws and regulations that ERISA requires employers providing employee welfare plans to follow. Information Disclosure ERISA requires that members of the plan be provided with important and accurate information regarding the plan. This kind of information includes summaries of contribution, rules and regulation of the plan such as ways of making claims, duration for maturity among others (Schneider and Pinheiro, 2-4).
Form 5500 which gives the latest annual statement should be made available to the members of the plan (Lieff Cabraser, 3). Any changes in the plans must be transmitted to the members automatically through printed letters of announcements. Upon request made by the employee, the employer has an obligation to provide the employee with a calculation of the total vested and accrued benefits. The employer should request for the summary in writing and the employer must grant the request within thirty days (Lieff Cabraser, 3).