ERISA protections available for private employees of states

Despite recent outcry over the Congressional Review Act with regard to state-sponsored retirement plans, Congress has been trying to level the playing field for those states that want to give their private employees the same protection offered to other private employees.

The Employee Retirement Income Security Act (ERISA) is a federal statute that deals with employer-provided retirement options. Many states have argued that they cannot offer retirement plans unless they have been offered an ERISA exemption.

In response, some states have created their own benefit plans. However, it has been argued that there are more advantages to using an ERISA approach. One benefit of an ERISA approach is that contribution limits are higher than those of state plans.

ERISA imposes strict accountability standards for plan fiduciaries. For those who fail to follow the principles of ERISA, they may have to pay back any losses and could also be open to lawsuits by the government or individual plan participants for any lost benefits.

There are currently three options for states that do not require an exemption of ERISA for benefit plans. They are a marketplace plan, a prototype plan or a state multiple employer plan. Each one gives employees retirement savings as well as the ERISA protections.