Allegations of ERISA law violations continue creating disruption and expense for retirement plan fiduciaries, including plan sponsors, across the country. Here’s a sampling of the kinds of claims that are winning cases for retirement plan participants, while defense costs, penalties and settlement costs stack up.
The legal experts at JD Supra urge plan sponsors to sweat the details, especially when it comes to understanding fees, choosing providers and keeping good records of all prudent process actions. Examples of the allegations that are plaguing retirement plans and fiduciaries, as noted by Pensions & Investments, include:
- Failure to monitor the performance of investment funds in the plan
- Consistent underperformance of funds against benchmark indexes
- Use of more expensive funds—although the marketplace for plans of a similar size has plenty of lower cost and better performing funds
- Settlement terms—and hiring independent consultants to review the investment options and fees.
- Violation of ERISA requirements by keeping “underperforming” target date series
- Failure to “properly monitor” the fiduciaries behavior
Despite your diligence as a plan sponsor, can you ever be 100% certain that if your plan faced a review, you wouldn’t be confronted with allegations of fiduciary failure? ERISA law obligates you to be more careful with the retirement assets of your employees then you are with your own money—that’s a very high legal standard. If an allegation is made, you’ll be forced to defend yourself—with ERISA law experts costing over $600 per hour. Unless that’s how you envision spending your hard earned savings, act wisely: obtain fiduciary liability insurance from Colonial Surety. Our annual premium is less than just one hour with an expert lawyer if you face claims of alleged or actual breaches of duty in connection with the employee retirement plan. Our fiduciary liability insurance provides defense costs and penalty limits up to $1,000,000. Get protected now: Choose Your Protection Here in Minutes.
Love The Details
Yes, that’s your job as a plan sponsor! Ultimately, you are responsible for the appropriateness of available investment options, and also for the selection—and periodic review—of service providers—and the fees charged. While you may be content with your service providers, regularly benchmarking is an important way to demonstrate your prudence as a fiduciary. If you think having a small company—and small retirement plan—will shield you from lawsuits and regulatory actions, think again! While it’s true that it tends to be the big dollar ERISA cases making headlines, don’t fool yourself. The large cases that make the headlines have set precedent. A deluge of cookie cutter cases impacting smaller businesses and their retirement plans are winding their way through courts every week. Meanwhile, the Employment Benefit’s Security Administration (EBSA) is holding small businesses accountable too. The defense costs, fines and restitution can even cause the shut-down of small businesses.
When you review your service providers and contracts, include cybersecurity considerations, following the Tips from the Department of Labor (DOL). These guidelines underscore the importance of plan sponsor vigilance when contracting with service providers. Remember to beef up your own cybersecurity protocols too. In addition to the damage cyber breaches can cause to your business and retirement plan, they can also result in allegations of fiduciary breaches. That’s why Colonial Surety’s multi-year protection packages for plan sponsors conveniently come with Cyber Liability Insurance. Get covered today and in the event of a cyber breach at your business, experts will identify what’s been comprised and coordinate the response. Liability protection in the event of covered lawsuits or regulatory actions due to a data breach? That’s included too.
Colonial’s multi-year packages for plan sponsors provide the greatest convenience and value, ensuring continuous compliance and protection. 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.
Colonial Surety Company is rated “A Excellent” by A.M. Best Company, U.S. Treasury listed and in business all across the country. Serving customers since 1930, we are the trusted source for the pension industry to secure legally required ERISA bonds, fiduciary liability insurance and cyber-liability insurance. We help safeguard plan sponsors, pension professionals and financial advisors — and keep their businesses compliant — with pain-free, efficient, and friendly service every time.