Plan Sponsor Worry List
Retirement plan sponsors across the country find themselves with ever more to do—and worry about—especially in small businesses. Striving to provide employees with better benefits, keep up with regulations, address cybersecurity and navigate investment options in a changing market—all add to the weight plan sponsors carry.
Topping The List?
It’s tough for even retirement industry experts to name the biggest worries confronting plan sponsors these days. As Christopher Carosa points out in Fiduciary News, unintended consequences can be spotted everywhere. For example, keeping up with increased regulations costs more money—just as fee structures are under ever greater scrutiny. Lawsuits are on the rise—and so are cybersecurity concerns. Two industry experts offer these perspectives on what’s stressing plan sponsors these days:
“ERISA lawsuits will only grow as plan participants realize that fees have eroded their savings, and the plan sponsors don’t always pick the lowest cost provider,” says Joe Merrill, General Partner at Sputnik ATX in Austin, Texas. “The lack of many ERISA plaintiff attorneys seems to be a moat at this time, but as massive lawsuit windfalls continue to pay off for lawyers, more and more people will begin practicing this law and we’ll see an explosion in this type of litigation.”
“How far the cybersecurity regulations will ultimately go and the intersection of those regulations with the fiduciary obligations of plan sponsors,” says Michael Bonfante, Business Development Manager at Colonial Surety in Woodcliff Lake, New Jersey. “Cybersecurity is in the news every day—it’s hard not to worry about account fraud and theft of personal data—and the related allegations of fiduciary breaches that can quickly become business ending disasters.”
Indeed, cybersecurity oversights pack a double punch for plan sponsors, since they can result in allegations of fiduciary failure. That’s why Colonial Surety’s Fiduciary-Cyber Liability Insurance pack offers affordable extra protection for plan sponsors. Armed with this coverage, if you face claims of alleged or actual breaches of duty in connection with the employee retirement plan, you’ll be covered for defense costs and penalty limits up to $1,000,000. Plus, in the event of a cyber breach, your business—and plan—will receive support at every stage of incident investigation and breach response—including implementing obligatory notification procedures. You’ll also have coverage against lawsuits or regulatory actions related to the breach. Colonial’s affordable coverage is available to plan sponsors everywhere in the country. Secure your policy in minutes, today:
Fiduciary-Cyber Liability Insurance Right Here
Cybersecurity Considerations
Cybersecurity concerns and complexities for plan fiduciaries were of course on the agenda at the 2022 PLANSPONSOR National Conference, where experts reported: “there has been a clear increase in cybersecurity-related incidents involving retirement plans and related benefit offerings, raising the stakes for fiduciaries and the companies and plan participants they serve.” While it is the question of “whether plan data is to be defined as a plan asset under ERISA” is not yet fully resolved, experts note: “It is probably smart for plan sponsors to behave as if this is the case, meaning they should strive to protect plan data in the same way they strive to protect plan assets. Regulatory action could also have an impact, they explained, as Congress has empowered the Department of Labor to set out the definition of plan assets via regulation.”
One critical aspect of plan sponsor duties related to cybersecurity that is more clear is the importance of monitoring the protocols service providers are using. Beth Kushner, deputy director of administration for the New York City Deferred Compensation Plan offers this example:“If there are large withdrawals requested, the recordkeeper should be looking at this and there should be stops in place…For example, if there is a change in banking information filed on the same day as a large withdrawal request and a change of address request are made, this needs to be flagged and reviewed. Yes, it is a bit of an inconvenience at times, but we need to ensure we are protecting our people and their assets.”
Extra Worries for Small Businesses
Plan sponsors from small businesses are especially feeling the extra stress of cybersecurity responsibilities. While large companies typically have dedicated human resource, benefit and tech experts on hand (not to mention accounting and legal expertise), smaller businesses don’t always have swift and easy access to this know-how. As one expert sums up: “Most small businesses are privately owned, and the business owner is often a fiduciary to the plan. Fiduciaries are personally liable for the decisions they make. They don’t get to stand behind the corporate veil of protection if they make the decision to offer a plan to their employees. Their personal assets are exposed to liability.”
Importantly, given these risks, Colonial Surety helps plan sponsors from small businesses manage their risks with efficient and affordable protection packages. Colonial’s annual premium for a Fiduciary-Cyber Liability Insurance Pack costs less than just one hour with an ERISA lawyer if a lawsuit strikes, and arms plans sponsors with defense costs and penalty limits up to $1,000,000. For added value, we even include basic cyber liability insurance, lock in multi-year rates and offer installation payments. Obtain protection, in minutes, now:
Fiduciary-Cyber Liability Insurance Pack
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.