As the swell of ERISA lawsuits continues, court rulings serve as reminders to all plan fiduciaries to actively and continuously monitor and control investment costs. The precedents set in large settlements are opening the doors to more cases and impacting smaller plans. No retirement plan fiduciary wants to be found “asleep at the wheel.”
Continuous Failure: Imprudence
Amway Retirement Savings Plan’s former participants have filed a lawsuit “accusing the fiduciaries of breaching their duties under ERISA by failing to monitor and control investment costs…..Among other allegations, the complaint says defendants continued to offer certain investment options despite the availability of identical or similar investment options with lower costs and/or better performance.”
Legal defense for the fiduciaries argued for the lawsuit to be dismissed, but the U.S. District Court for the Western District of Michigan refused, setting the stage for what is likely to be a lengthy and costly legal battle. As we follow these headlines, let’s remember that most of the thousands of ERISA lawsuits occurring now don’t make headlines. In fact, claims are increasingly targeting smaller businesses and plans. The truth is, any individual involved in the management of a retirement plan of any size can face personal exposure for breach of fiduciary duty. Defense costs against even an allegation can be ruinous—especially in small businesses.
Plan sponsors: let Colonial Surety help you mitigate your risks with affordable Fiduciary Liability Insurance. This covers your business—and you as the fiduciary—against claims of alleged or actual breaches of duty in connection with the employee retirement plan. We even include Cyber Liability Insurance to help you respond to data breaches quickly and effectively. Afterall, a cyber breach can result in claims against fiduciaries too. Obtain Affordable Fiduciary Liability Insurance Here Today.
Asleep At The Wheel?
It’s always a good idea for plan sponsors to brush up on their fiduciary responsibilities. This of course includes staying up to speed on the DOL’s cybersecurity protocols. As fiduciaries, remember, the nature of your obligations are continuous—not “once and done.” Importantly, Plan Adviser points out that in the ruling against Amway’s parent company, Alticor Inc, the court found that fiduciaries in this context have “a constant duty to replace imprudent investments,” meaning the fact that defendants eventually moved to replace certain challenged funds does not give rise to a blanket presumption of prudence. Furthermore, the court states that whether the fiduciary failed to leverage its size to negotiate a cheaper cost or was simply “asleep at the wheel” and failed to notice cheaper options is irrelevant at this stage: “
ERISA Fidelity Bond?
Of course no time is a good time to let your ERISA Fidelity Bond slip. This is required by the Department of Labor to protect the assets of your retirement plan from theft. It must be kept current with your plan and can only be obtained from a surety listed by the U.S. Department of Treasury. Let leading national ERISA bond provider, Colonial Surety help. Our packages offer the best value, ensuring you remain compliant—and protected with: an ERISA Bond, Fiduciary Liability Insurance and Cyber Liability Insurance. You can easily and quickly secure your affordable coverage package today. Take a few minutes and do it now: Complete ERISA Bond Package.
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