What happens if the people in control of an employee benefit plan’s assets make decisions that benefit themselves at the expense of the plan participants? What if they are lazy and don’t make decisions based on a reasoned, researched, thoughtful process? How are they held accountable?
Under ERISA, an employee benefit plan’s assets are meant to be held in trust for the use of the plan participants and their beneficiaries. The people who manage those assets, have the authority to determine who is eligible for benefits under the plan, and make determinations on claims submitted to the plan are plan fiduciaries and they owe fiduciary duties to the plan’s participants and beneficiaries.
An ERISA plan fiduciary must “discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and for the exclusive purpose of providing benefits to participants and their beneficiaries and defraying reasonable expenses of administering the plan, with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use…” 29 U.S.C. §1104.