Final answer:
The Employee Retirement Income Security Act of 1974 requires minimum standards for private-sector pension and health plans and is true. Defined benefits retirement plans are being replaced by defined contribution plans, like 401(k)s, which offer portability and inflation protection. Pension insurance also protects pension benefits through the Pension Benefit Guarantee Corporation.
Step-by-step explanation:
The statement that the Employee Retirement Income Security Act of 1974 establishes minimum standards for the operation of voluntarily established private-sector pension and health plans is true. Private-sector employers are indeed required by this act to maintain minimum standards for health and pension plans.
However, over time, there has been a noticeable shift from defined benefits retirement plans, such as traditional pensions, to defined contribution plans, like 401(k)s and 403(b)s. Unlike pensions, these newer plans require the employer to add a fixed contribution to a retirement account, which the employee can invest and take with them if they switch employers. These accounts are tax-deferred and provide benefits that help protect retirees from inflation. Additionally, pension plans that continue to exist are supported by measures such as pension insurance through the Pension Benefit Guarantee Corporation, which secures benefits even if a company fails to fulfil its pension promises.