When it comes to surety bonds and commercial insurance, one term that many struggle with is ERISA bonds. What do they do? Who do they protect? How can they be obtained? These are some of the questions that quickly spring to mind. While the process of obtaining ERISA insurance is multifaceted, understanding what it is and what it does is not that complicated.
What is ERISA?
ERISA stands for the Employee Retirement Income Security Act of 1974. It was an act passed by Congress in order to provide protections for those with pension plans in the private industry. It protects the employees of a company, and their beneficiaries, who have benefits plans.
What Does it Do?
ERISA requires all employees who offer these types of benefits to disclose the details of the plan and all financial information to their employees and beneficiaries. The ERISA act also established a standard of conduct for plan fiduciaries (usually employers) as well as appropriate legal remedies for beneficiaries (employees) who are wronged in some way by their fiduciary.
What About Bonds and Insurance?
As an employer who offers a pension or other benefits packages to your employees, you will want to obtain an ERISA bond (some states may require you to do so) that protect those assets (pensions, 401ks, retirements plans, etc.) and provides financial recompense in the event that you, as an employer, aren’t able to pay them out. ERISA bonds protect employees by giving them legal remedies and rights by setting a standard for pension plans and guaranteeing the payment of benefits to employees.
How Can You Obtain an ERISA Bond?
ERISA bonds can be obtained in the same way that other surety bonds can be, by having a federally recognized surety back the bond. ERISA bonds can be tricky to write and obtain, which is why it’s best to work with a trusted surety. Many choose to go through a surety bond agency that has connections to federally recognized sureties and can help facilitate the process of getting a bond written and obtained. If you are a business owner who needs an ERISA bond to cover the benefits packages of your employees, contact The Patrick J. Thomas Agency today.
Disclaimer: this is for informational purposes only and is not intended to be legal advice. If you need legal counsel, please contact an attorney directly.