ABA Family Legal Guide

The Rights of Older Americans

Pensions

Traditional Pension Plans

Do I have a right to know how my pension plan is investing money?

Yes. You should receive a summary of the plan's annual financial report. Each year, a report summarizing the plan's financial operations must be made to both the Internal Revenue Service and the secretary of labor.

Also, Employee Retirement Income Security Act (ERISA) requires that the people in charge of investing your plan's money use care, skill, and prudence and invest only in the interest of participants and beneficiaries. A requirement for investment diversity minimizes the risk of losses. ERISA forbids several investment practices. For example, the pension directors cannot invest more than 10 percent of the fund in the employer's stock or real property. They cannot personally buy the fund's property or lend the fund's money to their friends.