ERISA

The Employee Retirement Income Security Act of 1974 (ERISA), which governs employee retirement plans, describes the “prudent man standard of care” in this way [§404(a)(1)]:

(a) Prudent man standard of care

(1) …a fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and -

(A) for the exclusive purpose of:

(i) providing benefits to participants and their beneficiaries; and
(ii) defraying reasonable expenses of administering the plan;

(B) with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man 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;

(C) by diversifying the investments of the plan so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so.

The Code of Federal Regulations for this section of ERISA further develops this definition of prudence.

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