What is ERISA? ERISA is the Employee Retirement Income Security Act which sets uniform minimum standards for establishing employee benefit programs in a fair and financially sound manner. The purpose of this paper is to explain the history and purposes of ERISA. Within this paper the questions: What circumstances prompted the enactment of ERISA? , What types of benefits does ERISA protect? and How does ERISA protect these benefits? , What are some requirements that ERISA imposes on plan administrators?Circumstances which prompted the enactment of ERISAIt was said that President John F. Kennedy began ERISA in 1961 when he created the President's Committee on Corporate Pension Plans. In 1963 when the Studebaker Corporation closed its plants; their poorly planned pension plan could not meet the needs of their employee's pensions. The Studebaker Corporation created three classes of employees. The first class was the workers who had reached retirement age. These employees were eligible for full benefits.
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English: President Gerald Ford appearing at the Ho...
The five Studebaker brothers—founders of the Stu...The second class was workers aged 49-50 who had been with the corporation for 10 years. These employees received a lump sum which was equal to 15% of the actual value of their benefits. The third class was the workers with no vested pensions. These employees received nothing (Wikipedia, 2008).
In 1970 the NBC broadcast Pensions: The Broken Promise, an hour-long television special that showed millions of Americans the consequences of poorly funded pension plans and onerous vesting requirements, shook things up for Congress which forced them to revisit these pension issues. On September 2, 1974, Labor Day, President Gerald Ford signed ERISA into law (Wikipedia, 2008).
Types of benefits ERISA protects and how ERISA protects these benefitsAlthough ERISA does not require a company to establish pensions or provided health insurance they do however, regulate them once they are established. ERISA requires that if...