A look at ERISA

Imagine the day of your retirement, fondly looking forward to the golden geezerhood ahead, safe in your knowledge that your union pension go out support your financial needs. Then to your horror, you find out that your friendship has squandered the funds set deflexion for retirement! Thankfully, thither are protections in place to prevent this scenario from playing out. In 1974, the Employee Retirement Income Security Act (referred hereafter as ERISA) was passed into impartiality. This make a motion gave protection to employee pensions and retirement funds.

        Although there was regulation of employer pension programs earlier to 1974, there was no clear protection of these pensions until the passing of ERISA (History, 2004). The observe up until 1974 was largely make for tax purposes. This monitoring was done under the Revenue Act of 1942 and the Welfare and bonus Plans disclosure Act of 1959 (History, 2004)

There was nothing to protect the employee or stop the employer from robbing the pension. angiotensin-converting enzyme such example was the Studebaker Car Company. Even though Studebaker had an minute pension program, the company fell on hard times. Employees were floor upon retiring to find that the very funds set aside for them had been mismanaged and squandered (Richardson, 1995). There were also stories like these:

People were surprise to hear about one employee who worked for ten straight years.



later a short break in service, he worked some other ten years. But guess what? His years working for the company did not satisfy its 20 year service exigency -his service had to be consecutive. And the employee got nothing (Richardson, 1995).

        Stories like these finally hale the government to act. On Labor Day in 1974, ERISA was passed into law by Congress (Richardson, 1995). A new agency was formed, the Pension Benefit Guaranty Corporation and a new section...

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