Lawsuits filed against retirement plan sponsors are on the rise—and tend to linger. Draw insights from them to help you protect yourself, your company, and your plan.
A Lingering Case Against a Plan Sponsor
Recently, the National Association of Plan Sponsors (NAPA) reported on a data breach lawsuit suit filed in Illinois, against the fiduciaries of the Abbott Labs retirement plan and Alight Solutions LLC—the plan’s record keeper. The plaintiff, a plan participant, claimed that security breaches resulted in theft, ultimately via email, of $245,000 from her retirement account. The U.S. District Court for the Northern District of Illinois dispensed with allegations against the plan fiduciaries, finding no evidence that the plan sponsor—and named fiduciary—had acted “contrary to the exclusive purpose of providing benefits to plan participants…or failed to make sound investment decisions on behalf of the plan.”
Despite this ruling, the plan sponsor is now “back in the crosshairs” of this data breach suit, because the plaintiff has appealed the decision. Even if the original ruling is upheld, we can all envision the cost of time, money and reputation involved in mounting multiple defenses.
Plan Sponsors Require Full-Service Solutions
The Abbott Labs case exemplifies how lawsuits can involve both the company sponsoring the retirement plan—and the plan sponsor, personally, as a fiduciary. It also illustrates the increasing challenges of protecting the participants—and funds— in retirement plans amidst a dramatic rise in cybercrimes.
To confront these challenges, plan sponsors can now obtain an affordable, full-service solution from leading, national, ERISA bond provider, Colonial Surety Company. Remember, the required ERISA bond protects the participants of a plan, but does not cover the plan sponsor as the fiduciary. That’s why Colonial offers fiduciary liability insurance in a unique ERISA bond package. Fiduciary liability insurance provides plan sponsors with personal protection, as well as a discount on ERISA coverage.
Packages offer up to $1,000,000 of fiduciary liability insurance coverage and provide the greatest protection and overall cost savings. Colonial’s 2 or 3-year packages also include cyber liability insurance to safeguard your company and plan from covered losses and expenses in the event of a cyber attack— plus extended coverage to ensure your bond remains U.S. Department of Labor compliant.
Review Your Fiduciary Responsibilities
Of course understanding how the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) defines the fiduciary obligations of plan sponsors is key to fulfilling them. Whether you are new or experienced in your role as a plan sponsor, brushing up on your responsibilities is important—and will increase your confidence in carrying out your duties. The Department of Labor offers this helpful overview: Meeting Your Fiduciary Responsibilities. Here is an excerpt to jumpstart your refresher:
Fiduciaries have important responsibilities and are subject to standards of conduct because they act on behalf of participants in a retirement plan and their beneficiaries. These responsibilities include:
- Acting solely in the interest of plan participants and their beneficiaries and with the exclusive purpose of providing benefits to them;
- Carrying out their duties prudently;
- Following the plan documents (unless inconsistent with ERISA);
- Diversifying plan investments; and
- Paying only reasonable plan expenses.
Let Colonial Surety Company boost your confidence in protecting your retirement plan-and yourself—too.
Colonial is rated “A Excellent” by A.M. Best Company, U.S. Treasury listed, and licensed in all 50 states, the District of Columbia and most U.S. Territories. With Colonial’s simple digital and direct process, you can secure a comprehensive ERISA bond package immediately. Quote and purchase online—then print or e-file your bond right from your desktop or mobile device, instantly.
Choose an affordable, comprehensive ERISA Bond Package from Colonial and receive a discount on ERISA bond coverage for your plan; Fiduciary Liability coverage for yourself as the plan sponsor; and, Cyber Liability coverage too.