Welfare and pension plan bond coverage, usually added by rider to a fidelity bond, protects funds and property in employee welfare and pension plans against loss by reason of acts of fraud or dishonesty on the part of administrators, officers, and employees of such plans.
Bonding is required to safeguard these funds under the terms of the Federal Welfare and Pension Plans Disclosure Act. A guideline of 10 percent of the aggregate amount of funds handled, subject to a $1,000 minimum and a $500,000 maximum, is generally used to establish the required amount of coverage.