What are Pension Trust/ERISA Bonds?
Many companies today offer pension plans and/or profit sharing programs as part of a benefit package for their employees. These programs are managed by appointed individuals associated with that company’s plan, known as fiduciaries. To protect the plan and the money in these funds from fraud and dishonesty, the appointed fiduciaries need to be bonded. The pension trust bond does just that. Why Is This Bond Needed? The Pension Reform Act of 1974 (also known as ERISA – Employee Retirement and Income Security Act) states that the funds of pension or profit sharing plans must be protected under a fidelity bond for 10% of the amount of qualified funds handled, plus 100% of non-qualified funds. As an example, a person who manages a profit sharing program that involves $300,000 in funds must post a bond for $30,000. The Commercial Blanket fidelity bond available satisfies this requirement at a reasonable cost. If the same program had $100,000 in non-qualified assets then a $120,000 bond will
