Ignore The Hype, But Don’t Fall Asleep…

You’re not alone as a retirement plan sponsor if you find yourself wondering whether you need to be concerned about every possible risk, regulatory proposal, study, or investment path that comes your way. How could you possibly keep up? Good news: retirement industry thought leader, Nevin Adams is sharing some common sense advice about what may actually need your attention as an ERISA fiduciary.  

Fundamentals of Prudent Fiduciary Oversight

At the American Society of Pension Professionals & Actuaries, Nevin Adams reassures us that “the purpose of fiduciary oversight isn’t to eliminate every conceivable risk. It’s to make informed, prudent decisions, monitor them appropriately, and (always) act in the interests of participants and beneficiaries.” Adams also underscores that the “fundamentals of prudent fiduciary oversight” have remained consistent over time, and advises plan sponsors to:

• Understand the investments you’ve selected. 
• Know what services you’re paying for — and what you’re paying (and how). 
• Ask questions about the protections in place for participant information. 
• Make sure the people entitled to benefits can actually receive them. 
• And understand the responsibilities — and potential liabilities — you’ve undertaken.

Do Ask Questions, Monitor, and Take Cybersecurity More Seriously

While you don’t have to jump on every new product offering that comes your way as an ERISA retirement plan sponsor, you do need to take your role seriously. Adams points out, for example, that it’s most likely the things you haven’t looked at closely enough that could spell trouble for you, and offers examples about glidepaths and personalization that are well worth thinking about. He also underscores that we do need to be giving more actual attention to cybersecurity:

• Cybersecurity is one of those risks that most fiduciaries recognize, at least in principle. ….But recognition isn’t the same as preparation. And many, perhaps most, plan fiduciaries seem to assume that someone (else) is taking care of it.

• Retirement plans contain an extraordinary amount of sensitive participant information, and much of that information is maintained by third-party service providers. While those providers may have sophisticated cybersecurity protections, the fiduciary responsibility to prudently select and monitor them doesn’t simply “vanish” because the data is (also) stored somewhere else.

• The Labor Department has provided guidance on cybersecurity practices, and the kinds of questions fiduciaries should be asking their service providers.But how many plan committees have actually asked those questions? How many have documented the responses? And how many know what happens if a provider experiences a breach?

If you have not yet tuned in to the DOL’s cybersecurity guidance, follow Adams’ advice, and get going here: Tips for Hiring a Service Provider with Strong Security Practices

Take Personal Liability Seriously: Check Your Insurance

“ERISA fiduciary liability is personal. Fiduciaries can be held personally responsible for losses resulting from breaches of their duties.” That’s an important cautionary note from Adams, who reminds us: “The fidelity bond required under ERISA…is not the same thing as fiduciary liability insurance.”

As a plan sponsor, it is wise to know exactly what you are currently covered for, as well as to ask your third party administrators and other service providers what their insurance covers. 

While assessing your protection gaps, consider a conversation with the ERISA specialists at Colonial Surety Company: 888-383-3313 / erisadept@colonialsurety.com

Uniquely, Colonial Surety Company bundles the required ERISA Bond with Fiduciary Liability Insurance for the plan sponsor’s protection, and includes $50,000 of Cyber Liability Insurance which explicitly covers the business and the plan. Specifically, the bundle includes: 

• ERISA Fidelity Bond: the DOL-required bond that protects plan assets from fraud and dishonesty.
• Fiduciary Liability Insurance: protects you personally, with up to $1,000,000 for defense and penalties if you’re accused of a fiduciary breach.
• Cyber Liability Insurance: $50,000 of coverage for your business and plan for:
  • Expert-led response services following a data breach
  • Legal services
  • Computer forensic services
  • Notification services
  • Public relations and crisis management expenses
  • Credit and identity monitoring and other personal fraud or loss-prevention solutions
  • Protection from lawsuits and regulatory actions related to the breach

Quote and Obtain your Affordable ERISA Package in minutes, now: 

ERISA Protection Package for Retirement Plan Sponsors

Why Choose Colonial Surety Company?

• Trusted & Reliable: U.S. Treasury Listed, Rated “A” (Excellent) by A.M. Best Company, and in business since 1930.
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