One of the key employment rights is the right to security in retirement. In the developed world, there is basically universal acceptance that there is a right to a pension plan which can meet one’s need for security in retirement. In America there is legislation which offers broad protection to the rights of employees in respect of pensions and therefore security in retirement and freedom from dependence on social security. The Employee Retirement Income Security Act of 1974 was a landmark piece of legislation which established the statutory right of employees to the payment of pension plan entitlements by their employer. It subsequently became Title 29 of the United States Code.
The act provides significant tax benefits for employees in relation to the operation of s.401(k) of the Internal Revenue Code. It means that there need to be disclosures to employees of the financial details of the retirement plans which are operated by their employer. There are norms and rules for the conduct of the fiduciaries of the employment plans and it also has legal options for access to United States federal courts in a situation where there is non-compliance with the act.
There are a number of government agencies which share responsibility for the application and oversight of general adherence to the terms of the legislation. The Department of Labor, the United States and Treasury and the Pension Benefit Guaranty Corporation which is a special statutory corporation that provides for a situation where a private employer collapses without making adequate provision for the pension entitlements of their staff.
There was a long period of historical development for the piece of legislation. As far back as the period of the Kennedy administration the committee on corporate pension plans was established. However, the event that gave the impetus for reform was when Studebaker collapsed and it had failed to fund its pension plan sufficiently for its former employees to have any security in retirement without reliance on social security.
It is important to remember that this legislation doesn’t specifically require that an employer establish a pension plan. However it does establish rules for the administration of employer pension plans including the need for employers to fund the plan at certain levels. Employees also need to be aware that this legislation requires pension plans to pay benefits in a specific manner. One of these requirements is that if a participating employee has a spouse there is automatic passage of the benefits to a surviving spouse unless there is a specific waiver.
