Certified Plan Sponsor Professional (CPSP) Practice Exam

Which of these describes a fiduciary's duty within an ERISA context?

1. To increase contributions for all participants.

2. To monitor the performance of plan investments.

3. To limit employee access to financial information.

4. To participate in all plan investment decisions.

The correct answer is: To monitor the performance of plan investments.

In the context of ERISA (Employee Retirement Income Security Act), a fiduciary has specific responsibilities that are aimed at protecting the interests of plan participants and beneficiaries. One of the essential duties of a fiduciary is to monitor the performance of plan investments. This ensures that the investments are appropriate for the plan's objectives and that they are performing in accordance with the standards set out under ERISA. Monitoring investment performance is crucial for several reasons. It helps to identify whether any investments are underperforming and may need to be replaced. It also ensures that the fiduciary is acting prudently and in the best interest of the participants, fulfilling their duty of loyalty and care. Regular assessments can help to mitigate potential risks and ensure that the plan remains compliant with ERISA regulations. The other choices do not accurately reflect fiduciary duties as defined by ERISA. For instance, increasing contributions is not a fiduciary duty; it's dependent on the plan’s design and the employer’s decisions. Limiting employee access to financial information contradicts transparency requirements that fiduciaries must uphold. Finally, while fiduciaries may be involved in investment decisions, the focus of the role is more about oversight and prudent management rather than mandatory participation in every decision. Thus, continuous monitoring of investment