When cyber crimes lead to the fraudulent distribution of retirement funds, who is responsible? While official answers play out in court rooms and regulatory departments across the country, legal experts offer practical advice to plan sponsors.
Take Precautions: Fiduciary Liability Protection
As sponsors of retirement plans, employers are cautioned by legal experts to stay focused on their responsibilities as fiduciaries. For example, Andrew Williams, Partner at Golan Christie Taglia LLP, counsels:
Make sure your own house is in order by observing appropriate cybersecurity practices including employee education on avoiding fraudulent information disclosures by means such as phishing. With employees more likely to be working from remote locations during the COVID-19 pandemic, this threat may be significantly increased.
Also important is to verify that plan service providers adequately protect participant account information with secure systems and practices to stop unauthorized distributions by generating security alerts (and participant notices) when there are changes in account information such as new passwords and access devices – as well as distribution requests.
As to the employer’s own responsibility, consider maintaining fiduciary insurance to cover any security breach that allegedly results from the employer’s conduct as the plan sponsor or designated “plan administrator.”
It is important for plan sponsors to consider how even allegations of a fiduciary breach would divert attention and resources from work—and life. For example, if you suddenly needed an attorney with ERISA expertise, you would likely pay upwards of $600—per hour. Avoid this possibility—and a lot of other stress—with Colonial Surety Company’s affordable liability protection for fiduciaries. Why not protect your business and yourself, with annual premiums costing less then one hour of legal expertise?
Ready to Respond?
As cyber crimes against businesses of all sizes increase, retirement plan accounts have been identified as especially vulnerable. In fact, the Government Accountability Office (GAO) has recommended updated ERISA regulations from the Department of Labor. Small businesses confronting the rise in cyber breaches are generally without access to the services and protections that larger companies are able to put in place.
Your business does not have to face these challenges alone. Let Colonial Surety Company help you. Armed with Colonial’s Cyber Liability protection, in the event of a breach, expert forensic and legal experts will identify what’s been comprised and coordinate the response. As needed, call-center support, credit and identity monitoring services and even public relations expertise are provided. Liability protection in the event of covered lawsuits or regulatory actions due to a data breach? Of course that’s included too.
Designed especially for retirement plan sponsors, Colonial’s packages include:
- The required ERISA bond which protects the assets of the retirement plan from theft;
- Fiduciary Liability coverage to protect you and your assets from personal liability; and,
- Cyber Liability coverage to safeguard your company and plan from covered losses and expenses in the event of a cyber breach.
With Colonial, you can easily and affordably secure this complete coverage package.
Colonial Surety Company is rated “A Excellent” by A.M. Best Company, U.S. Treasury listed and in business all across the country.