The Employee Retirement Income Security Act is now 40 years old. The types of investments available to employee benefit plans have evolved in that time. What does managing plan assets and fiduciary liability under ERISA look like these days?

The statute wisely refrains from establishing lists of specific securities or other assets that are either permitted or prohibited. Instead, ERISA requires fiduciaries to select investments in accordance with the duty of prudence. That is, with the care, skill, prudence and diligence that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.

Whether they are involved in selecting mutual fund options for a 401(k) plan's investment menu or choosing a mix of assets intended to fund lifetime pensions for a specific group of pension plan participants, the duty of prudence is seen by the courts as requiring fiduciaries who have investment duties to engage in a process whereby the merits of each proposed investment are examined before it is acquired and thereafter continuously monitored to ensure that the investment remains suitable.