A rising market is no longer a sure bet—and that, of course, makes retirement plan participants uneasy. It’s human nature to look for someone to blame for losses. When retirement is not secure, who’s responsible? Why not go after the plan sponsor?
That’s what retirement plan participants can do to plan sponsors when they get to wondering about fees, investments, options and so on. As Christopher Carosa observes in FiduciaryNews:“While plan sponsors have lived in relative safety during the rising market (nobody wants to rock the boat when they’re making money), the security of rising markets has suddenly disappeared…The first thing to do when you feel threatened is to blame someone else.” Specifically, as Joe Merrill of Sputnik ATX explains: “Plan sponsors are talking about ERISA lawsuits and fiduciary rules…This is particularly in light of recent market corrections that will result in participants taking a closer look at where their money is going. When your 401k is way down, you start to pay attention to the small things like fees and wonder if your plan sponsor is doing their part to help you save money.”
It is critical for retirement plan sponsors to be prepared for the cost of legal defense. Even allegations can be ruinous, given the expense of mounting a defense as complex ERISA litigation unfolds over time. Don’t let an allegation of a fiduciary breach distract you from your business—and put your personal assets at risk. Colonial Surety offers affordable fiduciary liability insurance. Our annual premium is less than what you would pay for just one hour with an expert ERISA lawyer if disaster strikes—and we even include cyber liability insurance: Fiduciary-Cyber Pack Here.
Armed with Colonial’s Fiduciary-Cyber Pack, if you face claims of alleged or actual breaches of duty in connection with the employee retirement plan, you’ll be covered for defense costs and penalty limits up to $1,000,000. Plus, in the event of a cyber breach, your business—and plan—will receive support at every stage of incident investigation and breach response, including implementation of legally mandated notification procedures. For the greatest value, protection and convenience, go for our multi-year packages: Yes Please: Fiduciary-Cyber Pack
Endless Responsibility Lists?
That’s what retirement industry experts say plan sponsors are confronting amid rising expectations for keeping retirement accounts safe. As Michael Bonfante, Business Development Manager at Colonial explains for FiduciaryNews:
“Since the DOL’s release of Cybersecurity Guidance in 2021, there’s a whole lot more for plan sponsors to worry about and figure out. At the end of the day, plan sponsors are now charged with greater fiduciary duties—such as verifying that all their service providers are following all the right cybersecurity protocols. For example, if there are data breaches, are notifications being handled properly? The list is endless—and the stakes are high, with the intersections of ERISA law and cybersecurity being created at audit tables and in courtrooms around the country.”
Most plan sponsors outsource retirement plan operations and administration to service providers, making it tempting to believe that cybersecurity is the responsibility of third parties too. Not so fast, say experts. Accounting giant EisnerAmper reminds us, for example, that plan sponsors have a fiduciary duty to safeguard plan assets, and emphasizes that outsourcing only heightens the need for vigilant cybersecurity: “Outsourcing elevates cybersecurity risk because of the electronic communications between service providers combined with the sensitivity of the information being shared…Plan sponsors, custodians, record keepers, third party administrators, payroll providers and participants all share personal information…Any company or service provider that has access to or stores this information is at risk for exposure of sensitive information.”
Because breaches in cybersecurity can result in allegations of fiduciary failure, even seemingly small incidents can rapidly spiral into disasters for plan sponsors. According to the U.S. Department of Labor, “Responsible plan fiduciaries have an obligation to ensure proper mitigation of cybersecurity risks.” Among the DOL’s recommended best practices for mitigating risk is putting in place a cyber breach response plan. That’s why plan sponsors across the country come to Colonial Surety. Our Basic Cyber Liability insurance is automatically included with Fiduciary Liability Insurance and includes:
- Expert-led response services following a data breach.
- Protection from lawsuits and regulatory actions related to the breach.
- Legal services.
- Computer forensic services.
- Public relations and crisis management expenses.
- Notification services.
- Call Center services.
- Credit and Identity monitoring and other personal fraud or loss prevention solutions.
Plus, in the event of a cyber breach, your business—and plan—will have coverage against lawsuits or regulatory actions related to the breach. Colonial’s affordable protections for plan sponsors everywhere in the country are available online, in minutes.
Colonial Surety was founded in 1930 and brings deep experience and market expertise to every product and every customer relationship. Colonial Surety gives its customers the assurance that they, their businesses, and their clients are safeguarded with the right surety and insurance products at all times.
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