Experts anticipate that 2021 could bring plan sponsors more regulatory action to keep on top of—and increased litigation concerns too.
Trends and Predictions
With cybersecurity increasingly a challenge, some legal experts predict that in 2021, the Department of Labor will need to provide comprehensive guidance about the related responsibilities of retirement plan administrators. Given the confidential information in retirement plans, small businesses need to be especially diligent with cybersecurity efforts. As Plan Sponsor reports:
Smaller businesses, which normally lack the resources to invest in multifaceted cybersecurity measures and are therefore susceptible to cyber breaches, may be at risk, says Jordan Mamorsky, an ERISA [Employee Retirement Income Security Act] litigation attorney at the Wagner Law Group. “Smaller plans have a harder time investing in more robust cybersecurity measures, just because of their resources,” he says.
In addition to regulatory action related to cybersecurity, experts anticipate legislation aimed at preventing vendors from using plan data for commercial or marketing purposes. High profile cases in recent years have illustrated the need for a new fiduciary rule. Such a ruling would likely make it clear that vendors do not own the data and cannot use it for their own purposes.
Given the volatility of the market in the face of COVID-19 disruptions, litigation related to retirement plan fees and losses could also be on the rise. As John Niedernhofer, a complex claims leader at Marsh & McLennan Agency, explains:
Whenever there is substantial sustained market volatility, or a sustained bear market of 10% plus, claim frequency goes up substantially for 12-plus months….To that, add in desperation—such as dramatically increased unemployment figures and a pandemic-fueled widespread negative outlook—and litigation activity will increase in every area, and certainly in investment advice.
Head Into 2021 With Coverage—For The Plan and Yourself
As fiduciaries, plan sponsors are facing a critical year, implementing cybersecurity protocols, adapting to new regulations and monitoring increased litigation—all while supporting employees with their retirement saving efforts. Let Colonial Surety Company provide the affordable, comprehensive coverage plan sponsors need now. Select an affordable package and receive:
- The ERISA bond required to protect the assets of the retirement plan from theft;
- Cyber Liability coverage to safeguard your company and plan from covered losses and expenses in the event of a cyber breach; and,
- Fiduciary Liability coverage to protect you and your assets from personal liability.
As a leading national provider of ERISA bonds, Colonial makes it easy, fast and direct to quote and purchase your coverage package online-from anywhere.
Today’s Action Item: Coverage for Your New Year
Take one thing off your to do list as a plan sponsor today and feel more confident heading into the challenging months ahead: select your comprehensive ERISA bond package from Colonial. With our unique, affordable packages, you can secure up to $1,000,000 of fiduciary liability insurance.
Remember, the ERISA bond required for the retirement plan protects the participants of the plan, but does not cover the plan sponsor as the fiduciary. Colonial’s 2 or 3-year ERISA bond packages provide great overall savings and protection. In addition to fiduciary liability coverage, you can add cyber liability insurance to safeguard your company and plan from covered losses and expenses in the event of a cyber attack. Colonial even includes extended coverage to ensure your ERISA bond remains US Department of Labor compliant.
Colonial is rated “A Excellent” by A.M. Best Company, U.S. Treasury listed and in business all across the USA.