Are pension plans legally required?
John Hall
Updated on February 10, 2026
ERISA does not require any employer to establish a retirement plan. It only requires that those who establish plans must meet certain minimum standards. The law generally does not specify how much money a participant must be paid as a benefit.
What are the different type of pension plans?
There are two main types of pension plans the defined-benefit and the defined-contribution plans.
How much do pension plans pay?
Median Pension Benefit
| Table 10. Median benefit for persons age 65 and older with income from private pensions and annuities, public pensions, and veterans benefits | |
|---|---|
| Type of pension benefit | Median benefit, 2019 |
| Private pensions and annuities | $10,788 |
| Federal government pension | $27,687 |
| State or local government pension | $22,662 |
What is a minimum pension plan?
The purpose of the minimum pension plan is to guarantee a minimum level of income in retirement in addition to the balance/benefit of your Retirement Contribution Account (“RC account”). When your Pension Benefit is calculated, Intel ensures that the RC Account is valuable enough to provide that benefit.
What are the 2 types of pensions?
There are two main types of workplace pension:
- Defined benefit (or final salary)
- Defined contribution (or money purchase)
- Retirement annuity contracts (section 226)
- Personal pensions.
- Stakeholder pensions.
- SIPPs (self-invested personal pensions)
- Read more:
What kind of payment is required for a pension plan?
Because pension plans are intended to provide periodic payments for life, certain forms of payment are required by law. For single employees, the required form of payment is a straight-life annuity, which typically provides a monthly payment based on the plan formula.
Why are there different types of pension options?
Because the options are designed to be roughly equivalent (more formally, the “actuarial equivalent”), your decision to choose one form of payment over another is not about the monetary value; other factors come into play, such as the need to provide benefits for survivors.
What kind of pension do single employees get?
For single employees, the required form of payment is a straight-life annuity, which typically provides a monthly payment based on the plan formula. If the formula provides $30 per month for each year of service, the single employee with 40 years of service would receive $1,200 per month ($30 X 40 years).
What are the requirements for a private pension plan?
By law, private companies must make sure their pension funds have adequate funding. Also, they must insure their pensions by paying premiums to the Pension Benefit Guaranty Corporation. Public pensions aren’t subject to the same requirements.
