ABA Family Legal Guide

The Rights of Older Americans

Pensions

Traditional Pension Plans

Is my employer or union required to set up a pension plan?

No. The law does not obligate an employer to set up a pension plan. Less than half of American employees in the private sector are covered by traditional defined contribution and defined benefit pension plans, although many other employees are covered by employer-sponsored simplified employee pension plans and 401(k) plans. Most pensions are governed by rules of the Employee Retirement Income Security Act (ERISA), which sets minimum standards for pension plans that already exist and new pension plans that are created.