Employers sponsoring retirement plans must comply with Department of Labor requirements for sharing clear, comprehensible information with participants and beneficiaries. Going above and beyond compliance inspires more engagement in the plan, and more trust in the company.
Sharing Essential Information
At the Department of Labor (DOL), the Employee Benefits Security Administration (EBSA) provides resources to help plan sponsors successfully address their fiduciary duties. One short booklet sponsors can turn to for a periodic refresh of their overall obligations is Meeting Your Fiduciary Responsibilities. Specific to communications, the booklet reminds us that ERISA requires the provision of essential information to participants and beneficiaries, and this includes: the Summary Plan Description (SPD) and Summary of Material Modifications (SMM); a Summary Annual Report (SAR); Pension Benefit Statements. EBSA advises providing information that is clear and readily understandable, offering this specific guidance on the SPD:
The summary plan description (SPD) — the basic descriptive document — is a plain language explanation of the plan and must be comprehensive enough to apprise participants of their rights and responsibilities under the plan. It also informs participants about the plan features and what to expect of the plan. Among other things, the SPD must include information about:
- When and how employees become eligible to participate;
- The source of contributions and contribution levels;
- The vesting period, i.e., the length of time an employee must belong to a plan to receive benefits from it; How to file a claim for those benefits; and
- A participant’s basic rights and responsibilities under ERISA
Timely response to participant inquiries is another essential communication responsibility of plan sponsors. As part of its Fiduciary Education Campaign, EBSA recently hosted a “Retirement Plan Compliance Assistance Seminar” at the New Jersey Institute of Technology (NJIT). During the seminar, Nichelle Langone, a Supervisory Investigator with EBSA’s New York Regional Office, underscored responding to participant questions, noting: “If you ignore them, they will reach out to us and we are then obligated to investigate. Once we are in, we can look further and deeper….”
Best Practices
As necessary as it is to closely adhere to DOL standards for keeping participants and beneficiaries informed, it’s best for plan sponsors to aim above and beyond compliance. Experts at RPAG remind us of the pay-offs for embracing excellence in communications: “Retirement plan communications serve as a vital link between employers and participants. Done right, they can help lead to better-informed decision-making and enable employees to take control of their retirement planning. Providing clear, thorough information fosters a more financially secure and engaged workforce, ultimately benefiting the organization as a whole.” Four specific best practices for communicating about the retirement plan include:
- Break it down. Offer content in bite-size chunks to increase engagement. Provide useful checklists, guides, decision trees, and action plans to unpack multi-step tasks into concrete action items and checkpoints.
- Once upon a participant. Story is a powerful medium….Use storytelling with vivid imagery and examples to make information more relatable and memorable.
- Personalize, personalize, personalize. Customize messaging to employee demographic and psychographic profiles. The topics, voice, language, and examples you use can all help create common touchpoints and build trust. Whenever you issue a communication, segment messaging across relevant dimensions, whether by generational cohort, stage of career development, or retirement timeline.
- Diversify your delivery. Use multiple media formats — including videos, podcasts, infographics, webinars, and in-person events — to cater to diverse learning preferences…. Tailor the content to fit the format, making the most of each medium’s unique strengths. Regularly evaluate the effectiveness of each format, adapting your strategy…for maximum impact….
Protection for Plan Sponsors
Even while fulfilling ERISA obligations and driving their businesses forward, it is a wise idea for plan sponsors to shield personal and business assets from the personal liability risks inherent with the fiduciary role.
At Colonial Surety Company, a one-year, Fiduciary Liability Insurance policy, inclusive of 50k Cyber Liability Insurance, costs less than an hour of ERISA defense attorney fees in the event of an oversight. Our packages are specifically designed to help plan sponsors with:
- Comprehensive Protection: All our packages include Fiduciary Liability Insurance, ensuring your business and personal assets are shielded from the repercussions of fiduciary breaches. If you face claims of alleged or actual breaches of duty in connection with the employee retirement plan, you’ll be protected with defense costs and penalty limits up to $1,000,000.
- Cyber Liability protection for the plan and business—including cyber breach response services, as advised by the DOL to prevent cyber incidents from spiraling into fiduciary breach allegations.
- Cost-Control: Our packages are available for 1, 2, and 3-year terms, providing flexibility and locked-in rates.
Protect yourself, your business and your plan for the go forward:
ERISA Bond+Fiduciary+Cyber Liability HERE
Providing customers with knowledgeable and friendly service since 1930, Colonial Surety Company is rated “A Excellent” by A.M. Best Company, U.S. Treasury listed and in business all across the country.