Fiduciary Liability and Responsibility
If you sponsor an employee pension fund or other forms of employee benefit plans you have a significant exposure relating to potential liability for wrongful administration of these programs.
This liability may arise from administrative errors, improper advice or counsel, misrepresentation of facts, conflict of interest, imprudent investment of pension funds, failure to arrange proper funding or selection of incompetent consultants.

You could also be responsible for improper or untimely changes in benefits, denial of benefits to deserving employees, incorrect benefit calculations, wrongful terminations, civil rights denials or discrimination.

Fiduciary Liability insurance will offer you protection for all of these financial exposures and combined with Employment Practice Liability insurance is an absolute must for corporations with large payrolls – and especially those with operations in the USA.

Under ERISA Law, Employee Benefit Plan Fiduciaries can be held personally liable for a breach of fiduciary duties imposed on them. Fiduciary Liability coverage can be purchased to protect those fiduciaries and their personal assets from lawsuits alleging “wrongful acts” in respect to the benefit plans. This can include improper investments, advice given, failure of an insurer, and insufficient funding.

Some common misconceptions about a business’s Fiduciary Liability exposure follow:

My ERISA Fidelity bond protects my fiduciaries for this exposure.
FALSE. An ERISA Fidelity Bond only protects the plan from a loss due to dishonest acts of trustees. You need a separate Fiduciary Liability Policy to protect the personal assets of a plan fiduciary for Wrongful Acts.

We have an outside firm (i.e.. bank, insurance company, professional investment firm) handling the investment activities, so we are not at risk.
FALSE. While hiring a competent team of experts can help reduce a fiduciary’s personal liability, they can never fully insulate themselves from liability, nor transfer their responsibilities for compliance with ERISA. The fiduciary remains ultimately responsible for the management and administration of the benefit plan.