840 CMR 1.00, to protect the interests of retirement system members and their
beneficiaries, is promulgated by the Public Employee Retirement Administration
Commission pursuant to M.G.L. c. 7, § 50 and M.G.L. c. 32, §§ 21 and 23. Except
as may otherwise be provided by the Commission, or by supplementary rules of a
particular retirement board approved by the Commission pursuant to 840 CMR
14.02, or by statute, 840 CMR 1.00 protects the interests of retirement system
members and their beneficiaries.
1.01: Board Members' Duty
A board member shall discharge all of his/her duties solely in the interest of
members and their beneficiaries, and
(1) For the exclusive purpose of:
(a) providing benefits to members and their beneficiaries; and
(b) defraying reasonable expenses of administering the system.
(2) With the care, skill, prudence and diligence under the circumstances then
prevailing that a prudent person acting in a like capacity and familiar with such
matters would use in the conduct of an enterprise of like character and with like
(3) By diversifying the investments of the system so as to minimize the risk of
large losses, unless under the circumstances it is clearly prudent not to do so.
4) In accordance with the Massachusetts General Laws, the rules and regulations
promulgated by the Commission, and rules and regulations adopted by the Board
and approved by the Commission.
1:02: Liability For Breach of Fiduciary Duty
(1) Failure to comply with the fiduciary standard set forth in M.G.L. c. 32, § 23 and
in 840 CMR 1.01 may subject the fiduciary to personal liability for any losses to the
system resulting from such failure.
(2) If a fiduciary knowingly participates in or knowingly conceals an act or
omission of a co-fiduciary which is a breach of fiduciary duty the fiduciary may be
subject to personal liability for any losses to the system resulting from such breach.
(3) If, by failing to comply with his/her fiduciary duty, a fiduciary enables a
co-fiduciary to breach his/her fiduciary duty, the fiduciary may be subject to
personal liability for any losses to the system resulting from such breach.
(4) If a fiduciary has knowledge of a breach of fiduciary duty by a co-fiduciary and
the fiduciary fails to make reasonable efforts under the circumstances to remedy the
breach of fiduciary duty, the fiduciary may be subject to personal liability for any
losses to the system resulting from such breach.
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