Employee Retirement Income Security Act (ERISA)


The term Employee Retirement Income Security Act refers to a federal law that establishes the minimum standards for private industry pension plans.  The Employment Retirement Income Security Act of 1974 requires plan administrators to provide participants with information such as eligibility and vesting, in addition to specifying a number of standards the plans must follow.


Also referred to as ERISA, the Employee Retirement Income Security Act is a federal law enacted in 1974 that establishes the minimum standards for private sector pension and welfare benefits.  ERISA does not require an employer to offer a pension plan; rather, it merely sets forth the standards a plan must follow.  ERISA also does not mandate the minimum benefits a plan must pay a participant.

Under this law, administrators must provide all participants with information about their plan, including:  the plan's features, employee eligibility for benefits, and vesting rules.  ERISA also outlines the fiduciary responsibility of those entities managing the plan's assets, and grants participants the right to sue these entities if there is a breach of this responsibility.  In the event a plan is terminated, ERISA also guarantees that certain benefits will be available through the Pension Benefit Guaranty Corporation.

Two important amendments to ERISA include:

  • The Consolidated Omnibus Budget Reconciliation Act (COBRA), which can provide workers with the option to continue health coverage in the event they lose their job.
  • The Health Insurance Portability and Accountability Act (HIPAA), which protects workers that have preexisting medical conditions from discrimination in health care coverage.

Related Terms

Americans with Disabilities Actage discrimination, Family and Medical Leave Act, Occupational Safety and Health Act