Educational Policy Statement: Required?



It’s certainly an understatement to say that attending to the high standards of ERISA results in plenty for retirement plan sponsors to take responsibility for. Fortunately, an Educational Policy Statement (EPS) is not a requirement. However, ERISA experts suggest that having a fulsome EPS can help plan sponsors reduce their fiduciary liabilities.


Shifting Responsibility

Although a plan sponsor can never fully eliminate the risk of being held

personally liable for a breach of fiduciary responsibilities, steps can be taken to reduce the associated risks. Essentially, having an Education Policy Statement (EPS) is one such step. Note, however, that an EPS is not mandated by the Department of Labor (DOL). ERISA consultant Jenny Kiffmeyer, JD, offers this guidance:


While the DOL does not require qualified retirement plans to have an Education Policy Statement (EPS), it can be a helpful fiduciary liability reduction tool for plan sponsors who offer plan participants the ability to self-direct their account balances. It is often viewed as an extension of a plan’s Investment Policy Statement. The EPS is the blueprint for how the fiduciaries of the plan will implement, monitor and evaluate an employee education program with respect to the plan. ERISA 404(c) provides a mechanism for plan sponsors to shift investment responsibility to participants….


Of course to effectively address ERISA 404(c), the plan must meet specific requirements: having a proper EPS enables plan sponsors to detail how the requirements are fulfilled.Experts have shared this further explanation of how an EPS can reduce fiduciary liability with the National Association of Plan Advisors:


Generally, to meet the requirements of ERISA 404(c), participants must have the opportunity to: 1) exercise control over their individual account; and 2) choose from a broad range of investment alternatives (DOL Reg. 2550.404c-1). As part of the ability to exercise control, participants must have “…the opportunity to obtain sufficient information to make informed investment decisions.” The EPS can be the means by which plan fiduciaries document how this requirement is met. While there is no prescribed format for an EPS, answering the following questions may be helpful in designing the document:


  • What is the purpose of the EPS?
  • What are the objectives of the EPS?
  • What are the educational goals?
  • Who are the responsible parties and what are their duties?
  • How will the education be delivered?
  • How will results be measured?


Summing up, though not required, plan sponsors may find an EPS “a prudent addition to a plan sponsor’s fiduciary fulfillment file.” Experts also remind plan sponsors that although their fiduciary risks can never be  eliminated, they do not have to be shouldered alone: “Retirement plan sponsors have enough on their plates dealing with the elements under their control, so they should pursue remedies, like fiduciary liability insurance, that relieve the exceptional burden of things they cannot control.”  


Colonial Surety ensures that for a few dollars a day, plan sponsors can be covered in the event of claims of alleged or actual breaches of duty in connection with the employee retirement plan. Colonial’s fiduciary liability insurance includes defense costs and penalty limits up to $1,000,000. Uniquely, Colonial even includes Cyber Liability Insurance, locks in multi-year rates and offers installation payments. Be wise: protect yourself and your business now:


Fiduciary With Cyber Liability Insurance Right Here


Good To Know

Unlike an Educational Policy Statement, ERISA fidelity bonds are required by the Department of Labor for everyone involved in handling funds or property of the retirement plan (in any way). The purpose of ERISA fidelity bonds is to protect the retirement plan against acts of fraud or dishonesty. The experts at Eisner Amper offer this summation of the regulation:


Section 412 of the Employee Retirement Income Security Act of 1974 (“ERISA”) requires every person who handles funds or other property of a plan to be bonded (excluding certain exempted individuals). Such persons include plan fiduciaries but may also include any director, officer or employee of the fiduciary. This is referred to as ERISA’s bonding requirement. The ERISA fidelity bond, also known as an employee dishonesty bond, is a legal requirement arising from ERISA to protect plans against losses resulting from an act of fraud or dishonesty by persons handling a plan’s assets.


As a leading national ERISA Bond  provider, listed with the Department of the Treasury, Colonial helps plan sponsors ensure compliance. Uniquely, Colonial includes retroactive ERISA fidelity bond coverage for years when the plan was not adequately covered. Additionally, plan sponsors can opt for comprehensive, multi-year coverage packages, ensuring the ERISA bond remains Department of Labor compliant for the life of its term. Conveniently, plan sponsors can secure affordable packages that contain the ERISA bond, plus fiduciary and cyber liability insurance. Update your protection today:


ERISA Bond+Liability Insurance HERE


Pension plan professional?

Colonial can help you make sure your plan sponsor clients have the coverage they need—and we’ve got you too. From Errors and Omissions Insurance to Fiduciary Liability Insurance, Employment Practices Liability Insurance–and more, we’re HERE with the coverages pension professionals need to keep the business going—and growing.

Colonial Surety Company is rated “A Excellent” by A.M. Best Company, U.S. Treasury listed and in business all across the country. Serving customers since 1930, we are the trusted source for the pension industry to secure legally required ERISA bonds, fiduciary liability insurance and cyber-liability insurance. We help safeguard plan sponsors, pension professionals and financial advisors — and keep their businesses compliant — with pain-free, efficient, and friendly service every time.