March 14, 1991
TO: PENSION MEMBERS NO. 14-91
INVESTMENT ADVISER MEMBERS NO. 12-91
INVESTMENT ADVISER ASSOCIATE MEMBERS NO. 13-91
RE: PENSION PLAN CONSULTANT NOT LIABLE AS FIDUCIARY
__________________________________________________________
The U.S. Court of Appeals for the Seventh Circuit recently
held that a pension plan consultant providing actuarial and
administrative services cannot be held liable as a fiduciary
under ERISA.
The case involved a suit by the fiduciaries of a defined
benefit pension plan against a large actuarial consulting firm.
The plan trustee and employer made allegations that, among other
matters, the actuary violated the fiduciary provisions of ERISA
by erroneously (1) calculating the present value of plan assets,
(2) advising the plan to delay plan termination (until after the
October 1987 market break) and (3) completing annual reports.
The court dismissed all ERISA claims against the consultant
because it did not meet the definition of "fiduciary" under
ERISA. The actuarial firm did not exercise any discretionary
authority or discretionary control respecting management or
administration of the plan or disposition of its assets. The
court summarized the decisions of other courts which have refused
to fit professionals like accountants or attorneys within the
statutory definition of fiduciary when all they have done is
advise the trustees of an ERISA plan.
The court noted that there is no rule that prevents
professionals who render advice to an ERISA plan from becoming
fiduciaries. However, it concluded that consultants do not
become ERISA fiduciaries when they perform professional functions
improperly if they do not otherwise meet the definition of
"fiduciary." Finally, the court noted that ERISA does not create
a right of action which would allow ERISA beneficiaries to sue
professionals who assist plan administrators in the preparation
of statutorily required reports.
A copy of Pappas v. Buck Consultants is attached. We will
keep you informed of related developments.
W. Richard Mason
Assistant Counsel - Pension
Attachment