Many individuals nationwide obtain employment benefits through retirement (pension) and health insurance plans. To ensure that an individual’s retirement and health plans obtained from a private company are adequately protected and properly maintained, the Department of Labor created the Employment Retirement Income Security Act (ERISA). ERISA has been in effect in the United States since September of 1974, during the presidency of Gerald Ford.
The Act was intended to create reform for pension and retirement plans for people who work in the private sector and to prevent abuse of those plans by their administrators. It requires that clear information be available to the plan owners (the employees) as to the details of their plans.
Who Administers Employee Pension and Benefit Plans?
The employer administers the plan, and they are referred to as the fiduciary. The employer/fiduciary has a duty to their employee/participants to treat them with a reasonable standard of care. This duty includes making any decisions regarding the plan for the benefit of the plan and its participants. They should invest wisely and produce as much money as possible in benefits.
What Types of Benefits Plans are Included in ERISA?
As mentioned, ERISA covers pension and health plans. It covers all “welfare plans,” including benefits such as disability insurance, vacation policies, daycare, and other benefits employers may grant employees.
What Plans Are Not Included in ERISA?
ERISA was created to govern private-sector plans. Thus, plans in the following categories are not covered by the Act:
- Plans put in place by churches
- Plans only maintained to comply with workers’ compensation or unemployment
- Government pension plans for employees who do not work in the U.S. (and who are not citizens)
- Simplified Employee Pension, or SEPs. These are still retirement accounts set up by employers to help employees save for retirement but are not subject to the complicated rules and regulations of ERISA
How Does ERISA Protect Your Benefits?
ERISA does not require employers to provide either pension or health benefit plans, but if they do so, ERISA regulates both types of plans. Under ERISA, employers are required to provide employees with certain financial information and follow standards of conduct with third parties handling the plans.
Some of the types of information required to be given, as enacted by ERISA, include:
- General features of the plan and how it is funded (does the employer match the amount their employee contributes? This is common).
- A summary of the plan. Provide you with your plan’s summaries. This is important because ERISA does not provide guidelines for claiming benefits under pension and health plans. Requiring the employer to provide a plan summary ensures that the employee is informed about how their individual benefits can be claimed.
- Length of service requirements. Often, an employee must work for their employer for a certain amount of time before they can participate in the plan. Your employer must tell you if this is the case for your company.
- Calculation of your accrued and vested pension benefits upon request.
- Tell you what your minimum contribution to the plans must be for you to be entitled to them.
- Tell you when your pension plan vests. Workers can sometimes remove funds they have paid into their pension fund before they retire. Typically an employee must work for the employer for a certain amount of time before they are granted access to all of their funds (or their share of the funds. They do not receive the employer’s contribution
- if they take the funds out before their retirement).
- Tell you the process for appealing a denial.
- Right to sue. You must be notified that you may file suit if the appeals process fails.
Under ERISA, employers must also provide information about the plan to the United State Labor Department. The Labor Department is in charge of enforcing ERISA. This provides added security for employees entitled to benefits but unknowingly being taken advantage of.
Employers and those who manage any plan investments have a financial responsibility to their plans. That includes not participating in certain transactions with the party handling the plan’s money or who is interested. Employers are also barred from investing more than 10% of the plan’s assets in the business’s securities.
When Can a Federal Lawsuit Be Filed Under ERISA?
If your retirement or health plan is covered under ERISA, you may be entitled to file an enforcement lawsuit in federal court. A federal lawsuit under ERISA may be filed:
- When your retirement or health benefits have been unjustly denied
- To clarify your right to future benefits under the plan
- To challenge a pension plan’s decision that will affect your future pension benefits or health benefits
- To obtain documents about your plan that you have requested in writing (generally, documents must be provided within 30 days of the written request)
- To force compliance with the ERISA disclosure requirements discussed above
- To address inadequate management of your pension plan by your employer or any other fiduciary
How Do I Claim Pension Benefits Under ERISA?
ERISA does not prescribe a uniform procedure for how pension benefits must be claimed. Instead, each pension plan has its own procedures. This is why strict rules are put into place requiring plan summaries to be provided to those covered. Reviewing your plan summary to review your eligibility and familiarize yourself with the process to claim your pension benefits is important.
Certain ERISA rules do apply to the process of claiming your pension benefits. For example:
- You must receive the decision for your filed claim in writing and within 90 days. The decision deadline can be extended under special circumstances, but you must be informed of the extension during the initial 90 days
- If more information is needed to make the decision, you have the right to be informed what information was missing and why it is necessary
- If your claim to pension benefits is denied, the reasoning must be explained clearly and include the specific reason for denying any pension benefits. The denial letter must state the reason for the denial. Your pension plan materials need to outline and explain the appeals process;
- For your appeal, the pension plan must permit you to examine its files and records
- The pension plan administrators are required to produce a written decision. This must occur within 60 days of filing your appeal.
It is important to note that if your claim is denied on appeal, you may still be entitled to pursue it in state or federal court. If you have been denied your benefits or have difficulties claiming pension or retirement benefits, you should seek the help of a qualified and knowledgeable attorney.
Do I Need to Hire a Lawyer for Assistance in Filing a Federal ERISA Lawsuit?
The sooner you consult with an employment attorney about any issue with your health or retirement plan, the better. ERISA laws are complex, and finding your way through their processes without help is hard.
A lawyer can guide you in determining whether you have a valid claim; communicate with the right people at the nearest U.S. Department of Labor office; file the claim on your behalf and negotiate on your behalf; and see the claim through to the end. If your claim is denied, an attorney will help you appeal the denial.
