The Department of Labor’s Electronic Disclosure Rule finally allows retirement plans to satisfy information disclosure requirements electronically. Head’s up, though: plans that have not stepped up cybersecurity and data protection efforts have a lot to do!
The Good News: $3.2 Billion!
It is estimated that over the next ten years, the Electronic Delivery Rule (E-Delivery), will save retirement plans about $3.2 billion dollars. As producing, printing and mailing paper disclosures becomes a practice of the past, plan sponsors and committees do need to adhere to the DOL’s guidance on how to administer e-notifications. For example, prior to implementing E-Delivery, plans must send paper notifications out to advise participants about the electronic delivery and allow for opting out. Going forward, plans can then use a “notice and access” method to direct participants to a website when new information is posted, or use E-Mail, carefully following specific DOL protocols.
Stressing the importance of “eliminating unnecessary burdens for employers that sponsor retirement plans,” The U.S. Department of Labor‘s news release about E-Delivery states: “This commonsense rule reflects today’s marketplace while retaining the ability of participants to choose how they receive their retirement information.”
As you gear up for E-Delivery, you can read the complete Final Rule in the Federal Register.
Keeping Up: Fiduciary Responsibilities
Experts caution retirement plan fiduciaries on the heightened attention now needed for cybersecurity and data protection. As summed up by the American Society of Pension Professionals & Actuaries (ASPPA):
Retirement plan stakeholders have long lobbied the DOL to modernize and simplify its rules concerning electronic delivery of retirement plan information. While the E-Delivery Rule advances that goal, it heightens fiduciary complexity for plans that choose to rely on it. The DOL has made clear that plans have a fiduciary duty to protect the confidentiality of participants’ personal information. As a result, plans relying on the new safe harbor must assess the security of their (and as part of the prudent selection and monitoring process, their service providers’) e-delivery procedures, repairing any vulnerabilities that might place participant data at risk. Plans should conduct such assessments regularly and document both their findings and the actions taken to address any security risks.
Suggestions and a Three-Point Coverage Solution for Plan Sponsors
ASPPA suggests seeking assistance from experts on data protection systems, and carefully monitoring how service providers are handling security and data protection. A best practice is to obtain updates every six months on provider efforts to refine and upgrade their systems. Be sure your providers are reporting breaches. Also, obtain and use provider protocols for educating plan participants on best practices for accessing their account information and keeping it safe. ASPPA also suggests obtaining cyber liability coverage.
Let Colonial Surety Company help you easily obtain a full circle of coverage. Just select an affordable package and receive the comprehensive, three-point solution for the times at hand:
- 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.
Colonial Surety Company provides user-friendly, digital, and direct service. You can easily and quickly purchase your bonds and related insurance coverage online—and instantly print or e-file them from your desktop—or anywhere.
As a plan sponsor, it is very important for you to understand: the ERISA bond required for the retirement plan protects the participants of the plan, but does not cover you—the plan sponsor— as a fiduciary.
That’s why Colonial Surety Company’s affordable ERISA bond package provides plan sponsors up to $1,000,000 of fiduciary liability insurance. Our 2 or 3-year ERISA bond packages provide the greatest overall savings and protection. With a package, you can add both fiduciary liability and cyber liability insurance. Colonial even includes extended coverage to ensure your ERISA bond remains US Department of Labor compliant.
At Colonial, we make obtaining comprehensive coverage easy for plan sponsors: Choose Your ERISA Bond Package Now!
Colonial Surety Company is in business all across the USA. We are rated “A Excellent” by A.M. Best Company and U.S. Treasury listed.