Fiduciary Risk Management
Plan sponsors can minimize fiduciary exposure to litigation, reduce insurance costs, and enhance benefit program administration through sound risk management practices.
David Witz1 min read189 wordsERISA governs a complex and challenging environment. Lawsuits and benefit claims are increasingly brought against ERISA fiduciaries, subjecting them to personal liability and extensive legal proceedings.
Fiduciary Responsibilities
A fiduciary is any person named in the plan instrument or any person who exercises discretionary authority or control with respect to the plans management or assets. The definition is deliberately broad and extends beyond common-law to encompass all individuals that might be responsible for misuse of plan assets or loss to participants.
Common Fiduciary Claims
The most frequently alleged claims include denial or change of benefits, administrative error, incorrect benefit calculation, improper advice, misleading representation, wrongful termination of plan, conflict of interest, and imprudent investment.
Fiduciary Delegation
Fiduciaries are generally not liable for a breach if that duty has been specifically delegated to another fiduciary. The plan document must specifically authorize the delegation and the fiduciary must exercise reasonable prudence in delegating responsibilities.
Risk Management Practices
ERISA fiduciaries must ensure that plan documents and summary plan descriptions fully comply with applicable laws and reflect actual plan operation. Periodic opinions of legal counsel about conformity of the plan document and its actual operation will ensure accuracy and completeness of regulated filings.
