Many workers, upon retirement, receive monetary compensation from their employers in the form of a pension. There are two types of pensions—defined benefit plan and defined contribution plan. Under a defined benefit plan, the benefit that an employee receives is normally based on the length of a worker’s employment and the wages that were received. In a defined contribution plan the employer makes regular deposits into an account established for each employee.

 

Pensions are governed primarily by federal statutory law. ERISA, the Employee Retirement Income Security Act, was passed in response to the mismanagement of funds in direct benefit plans. All employers who engage in interstate commerce and provide defined benefit plans to their employees must comply with ERISA guidelines. The provisions of ERISA do not apply to defined compensation plans. ERISA is highly complicated and provides detailed regulation for many aspects of defined contribution plans.

 

In 2006, Congress passed the Pension Protection Act of 2006, designed to protect workers from underfunded pensions that crippled their retirement savings. At its core, the act requires employers to maintain certain funding levels on their defined-benefit pension plans, which are traditional pension plans in which an employee receives a certain amount of retirement funding from an employer. Lawyers at some of the nation's largest law firms expect a sharp rise in legal work following the recent passage of a pension reform law that makes broad changes to employee retirement programs. Specifically, lawyers in tax, trusts and estates, and employee benefits anticipate that the law, called the Pension Protection Act of 2006, could bring more legal work from employers looking to overhaul the retirement plans they offer to employees. The law also opens up opportunities for private investment funds to receive more money from certain types of pension plans. Lawyers say those changes could bring more investment deals, which would require more legal work.

 

Benefits law also consists of laws related to disability policies, health care plans and COBRA’s health insurance continuation provisions, among other things. As changes run through the health care delivery system, as disability policies that were oversold result in denials to the disabled, as the problem of payment of health care and managed care increase, litigation is assured.