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Pension Plans

U.S. private industry pensions are subject to the Employee Retirement Income Security Act of 1974 (ERISA), which is administered by the Department of Labor.

ERISA does not require employers to offer a pension plan, but sets minimum standards for those that have pension plans. The law generally does not specify how much money a participant must receive as a pension benefit.

Required disclosures for pension plans

ERISA requires plan administrators -- the people who run plans -- to give pension plan participants the most important facts about the plan. This information must be provided in writing, and some of it must be provided automatically. Other information is available on written request, either free of charge or for the cost of copying the materials.

One of the most important documents you are entitled to receive automatically when you become a participant of an ERISA-covered pension plan is the summary plan description, or SPD. The plan administrator is legally obligated to provide the SPD to plan participants free of charge.

The SPD explains what the plan provides and how it operates. It describes:

  • how service time and benefits are calculated
  • when benefits become vested
  • when payments will be made and in what form
  • how to file a claim for benefits

Pension plan administrators must inform plan participants of changes to the plan, either by providing them with a revised SPD or a separate document called a summary of material modifications. In either case, the materials are provided free of charge to plan participants.

Each year, the plan administrator must automatically provide plan participants with a copy of the plan's summary annual report, free of charge. This summarizes the annual financial report that most pension plans must file with the Department of Labor on government Form 5500 or 5500-C/R. To learn more about your plan's assets, ask the plan administrator for a copy of the annual report in its entirety.

To learn more about pensions and how they operate, visit the Department of Labor, Employee Benefits Security Administration.