The fiduciary obligations of trustees also make it vital that actions be taken to recover losses due to securities fraud. Additionally individuals who have lost their retirement benefits, or whose plan value has significantly declined, may have causes for legal action.

The Employee Retirement Income Security Act of 1974 (ERISA) protects the assets of the American public to ensure funds placed in retirement plans will be available to them when they retire. ERISA is a federal law that sets minimum standards for pension plans in private industry. Most of the provisions of ERISA are effective for plan years beginning on or after January 1, 1975. ERISA requires that companies who establish plans must meet certain minimum standards. The law generally does not however specify how much money a participant must be paid as a benefit.

In general, ERISA does the following:

* Requires plans to provide participants with information about the plan including important information about plan features and funding. The plan administrators must furnish important facts about the plan regularly and automatically.

* Sets minimum standards for participation, vesting, benefit accrual and funding. The law defines how long a person may be required to work before becoming eligible to participate in a plan, to accumulate benefits, and to have a non-forfeitable right to those benefits. The law also establishes detailed funding rules that require plan sponsors to provide adequate funding for your plan.

* Requires accountability of plan fiduciaries. Defines a fiduciary as anyone who exercises discretionary authority or control over a plan's management or assets, including anyone who provides investment advice to the plan. Fiduciaries that do not follow the principles of conduct may be held responsible for restoring losses to the plan.

* Gives participants the right to sue for benefits and breaches of fiduciary duty.

* Guarantees payment of certain benefits if a defined plan is terminated, through a federally chartered corporation, known as the Pension Benefit Guaranty Corporation (PBGC).

Under the requirements to provide information one of the most important documents a participant must receive automatically when becoming a member of an ERISA-covered pension plan or a beneficiary receiving benefits under such a plan, is a summary of the plan (SPD). The plan administrator is legally obligated to provide this document. If a plan is changed the participant must be informed, through a revised SPD, or in a separate document, called a summary of material modifications.

ERISA protects plans from mismanagement and the misuse of assets through its fiduciary provisions. ERISA defines a fiduciary as anyone who exercises discretionary control or authority over plan management or plan assets, anyone with discretionary authority or responsibility for the administration of a plan, or anyone who provides investment advice to a plan for compensation or has any authority or responsibility to do so. Plan fiduciaries include, for example, plan trustees, plan administrators, and members of a plan's investment committee.

The primary responsibility of fiduciaries is to run the plan solely in the interest of participants and beneficiaries and for the exclusive purpose of providing benefits and paying plan expenses.

Fiduciaries must act prudently and must diversify the plan's investments in order to minimize the risk of large losses. In addition, they must follow the terms of plan documents to the extent that the plan terms are consistent with ERISA. They also must avoid conflicts on behalf of the plan that benefit parties related to the plan, such as other fiduciaries, service providers, or the plan sponsor.

Fiduciaries that do not follow these principles of conduct may be personally liable to restore any losses to the plan, or to restore any profits made through improper use of plan assets. Legal action may follow against fiduciaries that breach their duties under ERISA including their removal and potential criminal prosecution.

ERISA civil violations examples:

* Failing to operate the plan prudently and for the exclusive benefit of participants.

* Using plan assets to benefit certain related parties to the plan, including the plan administrator, the plan sponsor, and parties related to these individuals.

* Failing to properly value plan assets at their current fair market value, or to hold plan assets in trust.

* Failing to follow the terms of the plan (unless inconsistent with ERISA).

* Failing to properly select and monitor service providers. Taking any adverse action against a participant for exercising their rights under the plan.

The Department of Labor (DOL) enforces Title I of the Employee Retirement Income Security Act (ERISA), which, in part, establishes participants' rights and fiduciaries' duties. The DOL's Employee Benefits Security Administration (EBSA) is the agency charged with enforcing the rules governing the conduct of plan managers, investment of plan assets, reporting and disclosure of plan information, enforcement of the fiduciary provisions of the law, and workers' benefit rights.

If an employer declares bankruptcy, there are a number of choices as to what form the bankruptcy takes. A Chapter 11 (reorganization) bankruptcy may not have any effect on a pension plan and the plan may continue to exist. A Chapter 7 (final) bankruptcy, where the employer's company ceases to exist, is a more complicated matter.