When are Releases of Claims for ERISA Plan Benefits Effective (Part I)?

Part I of this Article proposes that ERISA severely limits the ability of individuals to release their claims to ERISA plan benefit entitlements. lt;brgt;lt;brgt;The ERISA prohibition of any agreement purporting to relieve fiduciaries of their duties voids any attempt to release claims to any ERISA benefit entitlements. lt;brgt;lt;brgt;The ERISA spendthrift prohibition on the assignment or alienation of pension benefits voids any release of such a plan or its fiduciaries from a claim that an individual is entitled to accrued benefits under such plan. This does not preclude settlements of pension benefit claims disputes. However, only judicially approved settlements are binding. lt;brgt;lt;brgt;The ERISA fiduciary-duty provisions void any release from claims that an individual is entitled to ERISA plan benefits, which is not otherwise voided unless, when the individual executed the purported release:lt;brgt;lt;brgt;(a) he or she voluntarily agreed to release the plan and fiduciaries from the claim at issue;lt;brgt;lt;brgt;(b) he or she fully understood what a prudent fiduciary would have known about the released rights; andlt;brgt;lt;brgt;(c) he or she received fair and reasonable consideration for such release.lt;brgt;lt;brgt;Thus, a court reviewing the effectiveness of a release must generally review the individual's underlying benefit claim. Therefore, fair settlements of bona fide ERISA claims disputes will be approved. However, releases which do not specify the benefits claim at issue, such as general releases in employee termination agreements do not generally affect such ERISA claims