ERISA is the Employee Retirement Income Security Act, a federal law enacted in 1974. ERISA established minimum standards for plan administrators and investment advisers to protect employee pension and health plans in the private sector. ERISA requires that plan officials who manage, oversee, recommend or handle funds or other property of an employee benefit plan must be covered by a Personal Fidelity bond, according to the U.S. Department of Labor.
If a plan official commits fraudulent or dishonest acts, this bond ensures that the pension or health fund can recover some of its losses. The surety bond only pays if the fraudulent administrator is financially unable to meet his obligations, which means that that the plan official is personally responsible for any loss, not the company. A plan official must be bonded for at least 10 percent of all qualified assets plus 100 percent of all non-qualified assets.
To learn more about ERISA, visit the United States Department of Labor website.