With ERISA headed into its next 50 years, robust compliance with the high standards it continues to set is a high priority for retirement plan sponsors. Regulatory investigations, class action lawsuits, and courtroom precedence all point to fiduciary risks–the kind that no plan sponsor wants to be held personally liable for.
Set It and Forget It?
Although ERISA is now fifty years old, the law not only remains relevant, but continues to evolve to address retirement risks in a changing world. Notable for example, as Eric Droblyen has pointed out, are the “sweeping changes to 401(k) plans” ushered in by SECURE 2.0, which include “provisions intended to expand coverage, increase retirement savings, and simplify and clarify retirement plan rules. Employers of all sizes should understand the law’s provisions to ensure their 401(k) plan is ready to meet their effective date.” Just as expectations around employer sponsored retirement plans continue to evolve, so too does ERISA litigation, with each new court case establishing precedence for new waves of lawsuits. Whether driven by analysis of the past, or predictions of the future, retirement plan sponsors are encouraged to double down on compliance responsibilities, with ERISA heading into a new era:
As ERISA litigation evolves, it’s more critical than ever to stay ahead of regulatory changes and maintain robust compliance practices. The rise of class actions, increased scrutiny from the DOL and significant court decisions…highlight the need for thorough fiduciary oversight and proactive management strategies.Now is the time to review and enhance your ERISA compliance strategies, adapting to the dynamic regulatory environment to protect your organization and its employees. By staying informed and proactive, you can navigate these challenges successfully and uphold the highest standards of fiduciary responsibility.
Defense Strategies
Careful documentation of decision making and administrative protocols, expert led- audits and ongoing communication with plan participants are among the best strategies retirement plan sponsors can put in place to proactively mitigate their fiduciary risks. At Best Lawyers, Bryan Driscoll details these best practices for fiduciaries:
- To build stronger cases against representative claims and safeguard fiduciary responsibilities, businesses must take proactive steps to shore up their defense, beginning with thorough documentation. Meticulous records of all fiduciary decisions and plan management activities are crucial, as inadequate documentation can weaken the defense. In Tussey v. ABB, Inc., the absence of detailed documentation of fiduciary processes played a significant role in the court’s ruling against the plan fiduciaries.
- Regular audits, both internal and external, are also vital to ensure ongoing compliance with ERISA and to identify potential issues before they escalate. Audits provide an objective assessment of fiduciary practices, highlighting areas for improvement and fortifying the defense against future claims.
- Proactive communication with plan participants is also critical. Establishing clear communication channels and addressing participant concerns promptly can prevent misunderstandings and disputes from escalating into litigation. This approach demonstrates a commitment to transparency and fiduciary responsibility.
Even while rolling up their sleeves around fiduciary duties, it’s wise for retirement plan sponsors to remember that the role comes inherent with risks that can never be fully eliminated. That’s why experts also advise securing protection to further mitigate personal risk: “Fiduciary liability insurance is an indispensable measure to ensure sponsors and their businesses are protected with defense costs and penalty limits.” Colonial Surety Company is here to help with fiduciary liability insurance that plan sponsors from businesses of all sizes can afford. Armed with our coverage, 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. Uniquely, Colonial even includes Cyber Liability Insurance, locks in multi-year rates and offers installation payments. Conveniently, our Fiduciary With Cyber liability package is now available with just a one year commitment. Protect yourself, your business and plan, for a few dollars a day, now:
Fiduciary With Cyber Liability Insurance Right Here.
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.