Prudence and Loyalty: New Regulations for Plan Fiduciaries


As anticipated, the U.S. Department of Labor (DOL) has released a final rule updating and detailing the fiduciary duties of prudence and loyalty under ERISA.

Plan Sponsors: Pay Attention—Even When Voting By Proxy!

The new DOL regulations emphasize the critical importance of prioritizing the financial interests of the plan participants and beneficiaries in all decisions about the plan. As reported by the Society for Human Resource Management:

Retirement plan fiduciaries will be barred from casting corporate-shareholder proxy votes in favor of social or political positions that don’t advance the financial interests of retirement plan participants….These matters are often referred to as economic, social and governance (ESG) issues.

Specifically, the U.S. Department of Labor directs plan fiduciaries to:

  1. Act solely in accordance with the economic interest of the plan and its participants and beneficiaries;
  2. Consider any costs involved;
  3. Not subordinate the interests of the participants and beneficiaries in their retirement income or financial benefits under the plan to any non-pecuniary objective, or promote non-pecuniary benefits or goals unrelated to those financial interests of the plans participants and beneficiaries or the purposes of the plan;
  4. Evaluate material facts that form the basis for any particular proxy vote or another exercise of shareholder rights;
  5. Maintain records on proxy voting activities and other exercises of shareholder rights; and
  6. Exercise prudence and diligence in the selection and monitoring of persons, if any, selected to advise or otherwise assist with exercises of shareholder rights, such as providing research and analysis, recommendations regarding proxy votes, administrative services with voting proxies, and recordkeeping and reporting services.

A Growing To-Do List For Plan Sponsors

2021 is bringing retirement plan sponsors many new duties! New regulations require both operational and governance attention. The plan data needs more protection against the rise in cybercrime. Class action lawsuits against companies—and the fiduciaries—are on the rise.

With all this going on, now more than ever, plan sponsors need full-service coverage solutions for their retirement plans—and themselves. Check this “to-do” off your list today. Come to Colonial Surety Company for an efficient, full-service solution. 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.

Colonial is rated “A Excellent” by A.M. Best Company, U.S. Treasury listed and in business all across the USA. 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.

Obtain Your ERISA Bond Package with Fiduciary Liability Coverage Now!

Mark Your Calendar

The U.S. Department of Labor provides these timing specifications for implementation of the new regulations:

  1. Fiduciaries that are not SEC-registered investment advisers have until January 31, 2022 to comply with the new requirements to evaluate material facts providing the basis for exercising a right, and to maintain records on proxy voting activities. SEC-registered investment advisers must comply as of the 30-day applicability date, however, as these requirements are intended to align with their existing obligations under the Investment Advisers Act of 1940.
  2. All fiduciaries have until January 31, 2022 to comply with the requirements that fiduciaries review service provider proxy voting guidelines prior to following their recommendations to determine that the guidelines are consistent with their obligations under the final rule, and the requirements pertaining to investment managers of pooled investment vehicles.

Why wait to get covered? With Colonial’s affordable ERISA bond packages, plan sponsors can immediately 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 the greatest overall savings and protection— including options for 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. Now’s the time: Obtain Your ERISA Bond Package with Fiduciary Liability Coverage Now!