PWBA Issues Briefing Paper on Settlor versus Fiduciary Duties

November 13, 2002 ( - Executives of multiemployer retirement plans can get a quick tutorial on how to handle the perennially thorny problem of deciding which expenses can be charged to the plan and which have to be borne by the company.

That helping hand came from the Pension and Welfare Benefits Administration (PWBA), the US Department of Labor’s (DoL) ERISA enforcement arm in  Field Assistance Bulletin 2002-2 .  

According to the PWBA, a key issue is whether the company representative is acting in a settlor capacity (that is, establishing, designing, or terminating plans) or in a fiduciary role, which involves plan management decisions. Generally, the PWBA said, company officials can’t dip into a plan’s assets to pay settlor expenses because such expenses benefit the employer.

The PWBA pointed out that certain activities classified as settlor related in a single-employer plan could be considered fiduciary in the case of a multiemployer arrangement. The agency said, for example, that employer-appointed trustees don’t represent the employers’ interests but act as plan fiduciaries instead.

The latest Field Assistance Bulletin uses a case study to illustrate the agency’s position on settlor versus fiduciary activities.