Steve Rosenberg in his Boston ERISA Law Blog recently asked the question, When is a Plan Admininstrator a Fiduciary? Steve then goes on to answer the question in writiing about a recent court decision in the which the decision’s main analysis was whether one of the plaintiffs, the plan administrator, qualified as a fiduciary. ERISA requires that the Plan Adminstrator be named in the plan document. The Plan Administrator is a fiduciary because of discretionary responsibility for making the key decisions in the retirement plan such as:
- Determing eligibility for someone to participate in the plan;
- Determining the amount of benefits payable under the plan; and
- Approving or denying claims for benefits.
So who exactly should the Plan Adminstrator be? The Plan Administrator could be an individual, a committee made up of key executives, or the employer itself. So who should be the Plan Administrator? From a risk management standpoint, the employer should not be the Plan Administrator.
If it is, the Board of Directors and officers can be held liable as plan fiduciaries even if they know little about the day to day operations of the plan. The plan document would then provide that an administrative committee designated by the employer would be the Plan Administrator. The employer, of course, still has the duty to monitor the committee’s activities.
But you’re an employee who is asked – and willing to serve – as a member of your plan’s administrative committee, make sure that your employer will indemnify you from fiduciary liability – except in cases of an intentional breach of fiduciary responsibility. How? Appropriate language in the plan document and fiduciary liability coverage.