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Fiduciary Duty of Prudence

Meaning

The Fiduciary Duty of Prudence is a fundamental legal obligation requiring an individual acting as a fiduciary to manage the affairs of a beneficiary with the care, skill, caution, and diligence that a prudent person would exercise under similar circumstances. In the context of group health plans, this mandates a systematic, objective process for selecting, monitoring, and administering plan options. This duty ensures that decisions regarding plan assets and benefit offerings are made in the sole financial interest of the participants, not the employer or the fiduciary themselves. It is the cornerstone of responsible benefit plan governance.