ABA Family Legal Guide

The Rights of Older Americans

Pensions

Traditional Pension Plans

What rules govern when an employee can participate in a pension plan?

Employee Retirement Income Security Act (ERISA) sets up two criteria for when employers must permit workers to begin earning credit toward pensions. The employer must permit the earning of credit toward a pension if the worker is at least twenty-one years old and has worked for the employer for at least one year. ERISA calculates a year of employment as one thousand or more hours of work in twelve months. Once employees satisfy these two requirements, they must be allowed to begin accruing credits that will affect the amount of their pensions.

Of course, as with all ERISA requirements, these are the minimums allowed by law. Individual pension plans can have more generous credit-earning policies. For example, they can permit employees to start earning pension credits from their first day on the job, and they can permit workers younger than twenty-one to earn pension credits.