The Employee Retirement Income Security Act of 1974 (ERISA), a federal statute, delineates minimum standards for the administration of private industry's pension plans and establishes the impact that federal income taxes will have on transactions associated with the management of such pension plans. The statute also creates causes of action for employee plan participants and their beneficiaries. Under ERISA, employers receive fiduciary responsibilities, and employee plan participants can sue employers in cases of fiduciary breach. ERISA provides equity as the remedy for a breach of fiduciary duty. However, if a plan participant selected certain choices within a given plan and suffers from a plan manager's failure to take action, ”the participant can seek equity in the form of "make whole money" to replace the amount lost (LaRue v. DeWolff, Boberg & Associates, Inc., 552 U.S. 248 (2008)). Because ERISA demands a higher-than-marketplace quality of plan administration, a plan manager cannot have both the responsibility of determining a participant's eligibility to receive benefits and the responsibility of paying the benefits. See MetLife v. Glenn, (06-923) (2008). This type of situation creates a conflict of interest. Thus, when reviewing the reasonableness of an administrator's decision, the court can consider the conflict of interest as a factor in its calculus.
[Last updated in November of 2022 by the Wex Definitions Team]