Final answer:
The Employment Retirement Income Security Act (ERISA) of 1974 is true to provide regulations for private pension plans in the U.S. and protection for retired workers' benefits. Employers contribute to the Pension Benefit Guarantee Corporation to ensure benefits are paid. Defined contribution plans like 401(k)s have become more common due to portability and tax benefits. True.
Step-by-step explanation:
The statement given by the student is true. The Employment Retirement Income Security Act (ERISA) of 1974 does regulate private pension plans in the United States and provides protection against the loss of benefits to retired workers. ERISA sets minimum standards to ensure that pension plans are managed responsibly and that qualified plan participants receive their benefits, even if their employer goes bankrupt. This is because employers offering pensions are required to pay a small fraction of their pension commitments to the Pension Benefit Guarantee Corporation (PBGC), which steps in to pay at least some pension benefits if a company cannot fulfill its promises.
Over time, defined contribution plans like 401(k)s and 403(b)s have become more common. These plans are portable and tax deferred, allowing employees to take their retirement savings with them when they change jobs, potentially avoiding the risks associated with traditional pension plans.