ERISA, Individual Exemptions & the Impact on Pension Plan, Retirement

In 1974, the passing of ERISA substantially changed the way employees manage their retirement and pension plans. While many employers modified their pension and retirement plans so as to comply with ERISA, there are some who applied for, and were granted, exemption to the rule.

With potential risks for depleted social security benefits, and the realization that many employees fail to save money on their own, employers understand the importance of protecting employer-sponsored retirement plans and pensions. While the equities market continues to be volatile, there is much debate over the ability of defined benefit plans to continue holding equities; just one example of issues employers must address in the protection of employee programs.

When ERISA was first passed, in 1974, the number of exemptions requested by companies was quite high. In recent years, however, these exemption requests have dropped significantly. In part, this decline in exemption requests has come as employers have developed new retirement programs for employees and moved away from the issues and complications associated with defined benefit plans.

If you work for a company that offers pension and retirement plans, it is important to understand how that plan may be regulated by ERISA and what, if any, exemptions your employer may request in their management of that plan. When employers are not careful in their exemption requests, and assets and investments become questionable, it is possible the defined benefit, or other pension plan, can be frozen. This freezing of the asset may lead to loss of millions of retirement dollars to employees.

In most cases, your employer may not be directly involved in the management of your pension plan, lending that responsibility to a financial management company. Therefore, if you are concerned about your pension plan, or other retirement plan, and how it is affected by ERISA, simply call the financial company directly. In doing so, you can obtain information without involving your employer or management team, and you can capture that information for review by your financial planner.