Who is a Fiduciary?
- Individuals or organizations who exercise authority or control over the management of an employee benefit plan. Specifically, those responsible for investing, controlling or disposing of assets held by the plan.
- Entities that service pension plans, such as consulting firms, law firms, accounting firms, professional administrative firms, investment advisors, investment management companies and trust departments of financial institutions.
What are a Fiduciary’s Responsibilities?
- Acting solely in the interest of plan participants and their beneficiaries and with the exclusive purpose of providing benefits to them;
- Carrying out their duties prudently;
- Following the plan documents (unless inconsistent with ERISA);
- Diversifying plan investments;
- Paying only reasonable plan expenses;
- Monitoring investments; and
- Avoiding prohibited transactions.
Fiduciary Liability Insurance protects fiduciaries against legal liability for claims arising out of their roles. These policies are stand-alone, yet there are several other protections available for organizations wishing to protect themselves:
- Fidelity bonds are required under ERISA and are designed for safeguarding beneficiaries when administrators or trustees financially harm an employee benefit plan. This bonding insurance is only designed to benefit the plan and beneficiaries and will not protect the trustees from liability claims (the difference as compared to Fiduciary Liability Insurance).
- Employee Benefit Liability (EBL) insurance covers claims arising out of errors or omissions while administering a benefit plan. EBL does not protect against all fiduciary responsibilities and may be included in a Fiduciary Liability policy.
Consider Fiduciary Liability Insurance to protect you and your organization against losses associated with fiduciary error.