An Agency Costs Theory of Employee Benefits Plan Law

Abstract

This Article breaks new ground by using agency costs analysis to conceptualize the relationship between benefit plan sponsors and plan participants. The analysis provides normative insights on how governance mechanisms may mitigate agency costs. It also illuminates how those normative insights can be used to improve positive law. Courts, scholars, and policymakers have long tried to force employee benefit plan relationships into the pigeonholes used in donative trust law, and often bemoaned the results. Changing trends in benefit plan typology and importance have increased the disconnect between the relationships that exist in donative trusts and those in benefit plans. This Article argues that it is time to bring a new lens, agency costs analysis, to bear on the challenges in building governance mechanisms that enable American workers to accumulate the financial resources they need for a secure retirement and decrease the social safety net costs of supporting superannuated individuals.