ERISA requires that the pension benefits be properly funded and maintained separately from an employer’s operating assets. When the ERISA rules are adequately followed, pension funds should be sufficient to pay the vested benefits at retirement. The pension plan assets can be used only to pay plan benefits and cannot be used by creditors in a bankruptcy proceeding. But, very often the plans whose sponsor is in bankruptcy are underfunded for various reasons. The most common reason is the market performance of the assets that the sponsor was unable to offset.

If voluntary compliance is not achieved, the Employee Benefits Security Administration(EBSA) may refer a case to The Erisa attorney of the Labor Department for litigation. Under ERISA Section 502, the EBSA has the authority to assess civil penalties for reporting violations. For the ones who fail or deny to comply with annual reporting requirements, a penalty of $1000 per day may be assessed.

If you are a private sector employee, chances are that you are affected by ERISA. Under ERISA, companies are not legally entitled to provide pension plans for their employees. However, the law has set certain standards for companies that have such programs. For instance, there must be a vesting option for the employees. After a couple of years, there pension plan must mature and the employers who offer such programs must meet certain thresholds. Employee vesting enables employees to take advantage of such programs, after a comparatively short period of employment. Usually after three or after two-six year graded schedule, one becomes fully vested. Moreover, ERISA does not instruct that a company provide its workers with health insurance coverage. But, it mandates rules for operating a health plan, if the company decides to establish one.

However, the employee cannot remove the employer’s contribution whenever he or she feels like. Instead, the employer picks an option for the employee to remove the employers’s fraction of the contribution.

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