Final answer:
Individuals with decision-making authority over a group's health plan under ERISA have a fiduciary responsibility. They must act in the best interests of the plan's participants and diversify investments to minimize risk. Defined contribution plans, like 401(k)s, offer individual control and portability of retirement funds.
Step-by-step explanation:
An individual (or individuals) who has discretionary decision-making over a group's health plan under the Employee Retirement Income Security Act (ERISA) carries a fiduciary responsibility. This means they are required to act in the best interest of the participants and beneficiaries of the health plan.
Fiduciaries must use prudent judgment, follow the plan documents (unless inconsistent with ERISA), diversify plan investments to minimize the risk of large losses, and ensure that plan services are provided at a reasonable cost.
Defined contribution plans such as 401(k)s and 403(b)s, which have largely replaced traditional pension plans, grant the employee control over their retirement contributions. These funds can be invested in a variety of options, and these plans are portable, meaning employees can take them along if they change employers.
Employers that do offer traditional pension plans are required to insure these through payments to the Pension Benefit Guarantee Corporation, to protect employees in case the company is unable to fulfill its pension obligations.
The responsibilities of a fiduciary are critical to safeguarding the financial interests of employees, while individual freedom within the plans allows for personal decisions on retirement investments, reflecting a balance between collective responsibility and individual choice.