Pension Trust (Erisa)
Many businesses offer pension plans or profit sharing plans to their employees, partners and members. These plans are typically managed by fiduciaries who are elected by the company's union/plan. In order to ensure that the funds are not lost due to fraud or dishonesty by the appointed fiduciary, the fiduciaries need to be bonded via a pension trust in accordance with the Pension Reform Act of 1974 (ERISA).
Under ERISA, the funds of a pension or profit sharing plan must be protected under a fidelity bond in the amount of 10% of the of funds handled. As an example, a fiduciary responsible for "handling" a profit sharing program involving $400,000 in funds must post a fidelity bond for $40,000 in order to help protect the plan's assets from any fraudulent activity.