Pensions in the United States

Pensions in the United States consist of the Social Security system, a federal social insurance program which pays old-age pensions, as well as various private pension plans offered by employers, insurance companies, and trade unions. Private pension plans are governed by various federal statutes and regulations: labor law regarding the establishment (primarily ERISA), maintenance, and termination of pension plans; tax treatment of pension plans and pension distributions; provisions of securities law relevant to pension plans; pension-related bankruptcy laws; protection against age discrimination and other requirements imposed on pensions. Pension law also incorporates judicial decisions with respect to those federal statutes and regulations.

Pension plans and benefits may also be subject to state law.

History

ERISA

The primary law governing the establishment, maintenance, and termination of pension plans in the United States is the Employee Retirement Income Security Act (ERISA). ERISA includes various provisions of labor law, as well as provisions of tax law that parallel certain provisions in the Internal Revenue Code. (Tax law provisions of ERISA will be separately addressed in the tax law section below.)

Various federal tax provisions of the Internal Revenue Code apply to pension plans. Similar rules apply to profit-sharing plans and stock bonus plans, which are commonly used for retirement savings. Significant portions of these tax law provisions parallel portions of ERISA (see discussion in a preceding section of this article).

In April 2012, the Northern Mariana Islands Retirement Fund filed for Chapter 11 bankruptcy protection. The retirement fund is a defined benefit type pension plan and was only partially funded by the government, with only $268.4 million in assets and $911 million in liabilities. The plan experienced low investment returns and a benefit structure that had been increased without raises in funding.[1]

According to "Pensions and Investments", this is "apparently the first" US public pension plan to declare bankruptcy.[1]

See also

References

  1. 1 2 Mercado, Darla (2012-04-19). "In apparent first, a public pension plan files for bankruptcy". Pensions and Investments. Retrieved 2012-04-28.



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