Fiduciary liability protects fiduciaries of retirement and other employee benefit plans
Under the Employee Retirement Income Security Act (ERISA), fiduciaries of retirement and other employee benefit plans can be held personally liable for losses to a benefit plan incurred as a result of their alleged errors, omission or breach of their fiduciary duties.
Fiduciary liability insurance protects any employee who has discretionary authority over a plan or who assists in its administration. This list of individuals might include an appointed fiduciary, a plan administrator, a human resources employee or anyone who helps to administer a plan.
Fiduciary Liability policies can be
BLENDED WITH EXECUTIVE RISK OR MANAGEMENT LIABILITY POLICIES
Successful claims are often catastrophic in nature as many times a breach of fiduciary duty towards one plan participant are breaches to ALL participants.
LIABILITY CAN BE ESTABLISHED FOR:
• Actively managed plans
• Selection of plan investment options
• Monitoring of investments
• Educating employees of plan options
Scenarios where your employees may be held liable:
- An executive asks his HR department to move his retirement plan funds into specific mutual funds. Instead, the funds were rolled into money market funds that performed poorly.
- Plan participants allege that the fiduciaries of a 401(k) plan had failed to divest the plan of an investment option that was not keeping pace with the performance of the comparable index and resulted in poor returns.
- Employees sue the plan fiduciaries alleging that negligent investment practices needlessly depleted plan assets.