ERISA FIDUCIARY DUTIES

ERISA governs nearly all areas of employee benefits, from pensions to group health plans and arrangements. The key unifying factor of all these areas of ERISA litigation is the all-important fiduciary duty requirement. Plan sponsors and fiduciaries must discharge duties with respect to a plan–

solely in the interest of the participants and beneficiaries and—

(A) for the exclusive purpose of:

(i) providing benefits to participants and their beneficiaries; and
(ii) defraying reasonable expenses of administering the plan.

A fiduciary must act–

With the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.

and must:

[diversify] the investments of the plan so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so.

In an expanding economy, the risk of large losses may be a more remote risk. But in a contracting and volatile economy, the emphasis on avoiding large losses must be central to each and every decision of a plan fiduciary.