What is an ERISA Bond?
ERISA insurance comes from the Employee Retirement Income Security Act passed by Congress in 1974, which was meant to provide protections for those with pension plans in the private industry. Although it is commonly referred to as a “bond”, ERISA is actually a type of commercial insurance. ERISA insurance protects the employees of a business or organization by safeguarding their assets in the event that their employers commits a dishonest or negligent act that financially harms them.
How Does ERISA Insurance Work?
The ERISA act does three major things:
- It requires all employers who offer benefits to disclose the details of the plan and all financial information to their employees and beneficiaries.
- Establishes a standard of conduct for benefits plan fiduciaries, which are usually the employers.
- Establishes appropriate legal remedies for beneficiaries (employees) who are wronged in some way by their fiduciary.
ERISA bonds protect the employees of a company and their beneficiaries by setting a minimum standard for pension plans. They also guarantee the payment of benefits to employees. ERISA coverage can also give participants the right to sue their employers for breach of benefits.
When an employer obtains an ERISA bond, the bond will guarantee financial recompense to employees in the event that the employer isn’t able to pay out the benefits they have promised their employees. ERISA bonds protect employees by giving them legal remedies and rights. They generally cover employer-provided benefits like:
- 401k accounts
- Pension plans
- Other retirement accounts and plans
What Types of Businesses Need ERISA Bonds?
Businesses large and small can benefit from (and may even be required to obtain) ERISA insurance for their employees. So long as your business provides these types of benefits to your employees, getting an ERISA bond is an added form of protection that may be necessary for your employees.
Obtaining ERISA Bonds in Minnesota
If you are a business who requires an ERISA bond for the benefits plans you provide to your employees, contact the surety and commercial insurance experts at The Patrick J. Thomas Agency. Our team can help you obtain an ERISA bond for your Minnesota business quickly and without any hassle. Contact us today to get started.