South Carolina Life and Health Practice Exam

Which of the following is a primary objective of ERISA?

1. To prevent fraud in the stock market

2. To provide federal insurance for pension plans

3. To ensure fiduciary accountability for plan managers

4. To reduce employer liability in employee disputes

The correct answer is: To ensure fiduciary accountability for plan managers

The primary objective of the Employee Retirement Income Security Act (ERISA) is to ensure fiduciary accountability for plan managers. This legislation establishes standards of conduct for those who manage and control employee benefit plans, demanding that fiduciaries act in the best interest of the plan participants and beneficiaries. This accountability is crucial because it aims to protect participants from potential mismanagement or negligence by ensuring that those overseeing employee benefits are making decisions that prioritize participants’ interests. Ensuring fiduciary accountability contributes to the broader goals of ERISA, which include promoting fair and equitable treatment of employees in benefit plans, but the foundation of these goals is rooted in the obligation of plan managers to act responsibly and with integrity. This focus on fiduciary duty is integral to maintaining trust in employee benefit systems.