Retired plan sponsors are busy people, with lots of built in duties and deadlines. Learning about SECURE 2.0 provisions, keeping up with cybersecurity protocols, and staying on top of emergent regulations contribute to ever fuller days. Nonetheless, continuously engaging participants is essential to the success of participants–and you.
To And Thru Retirement
As longer lives and higher costs of living are rapidly increasing the magic number of dollars needed to retire successfully, the work plan sponsors do to fully engage participants is ever more important. This of course feels easier said than done, especially given the swell of ERISA litigation related to alleged fiduciary breaches that shows no signs of stopping, as well as the growth of cybersecurity threats and evolving regulatory protocols. Nonetheless, as Groom Law Group reminds us: “Being a fiduciary is about more than just avoiding lawsuits—it is about improving participant outcomes.”
In addition to attending to fiduciary responsibilities as laid out by the Department of Labor (DOL), truly engaged plan sponsors stay on top of new approaches that the company sponsored plan can adapt to positively impact participant outcomes. For example, Groom Law Group observes that there are now many lifetime income options on the market, and notes: “Incorporating lifetime income options into a DC plan can help fiduciaries improve participant outcomes. Fiduciaries have access to more lifetime income options than ever before, and they have the ability to design lifetime income programs that both achieve the desired outcomes for participants and mitigate fiduciary risk.” Groom Law Group provides information to help plan fiduciaries understand and evaluate lifetime income options right here.
Best Practice Reminders For Plan Sponsors
Underscoring the importance of plan sponsor engagement, Jonathan Young, senior national accounts manager at Capital Group suggests these best practices:
- Draft policy. These include creating properly drafted policy statements, including policy statements for recordkeeping, education, cybersecurity and investment. However, Young cautions that everything put in writing becomes a plan document that is discoverable and admissible in court.
- Communicate, educate….Fiduciaries must educate their participants about the plan and investments. Written notices will suffice but are a bare minimum and traditional education is not that successful, so thoughtful and creative approaches to education are desirable. “The more engaged the plan sponsor, the more engaged the participant and the greater likelihood of improving participant outcomes,” said Young.
- Choose plan committee carefully. When forming a plan committee, choose members who take their responsibility seriously, determine what role each committee member will play, and prioritize including people who have some knowledge of ERISA, recordkeeping and investments. If they don’t have that knowledge, educate them. Codify the roles and responsibilities of the committee in a written charter….
It goes without saying that participants and beneficiaries “missing” from the plan is counter productive to successful retirements–and in fact, a big problem in the eyes of the DOL. Plan sponsors retain fiduciary responsibility for communicating with missing participants,“so it is important to take steps to keep in touch with employees even if they leave or retire by collecting personal contact information while they are still employed….” The DOL’s guidance on missing participants, issued in 2021, provides further instruction for plan sponsors to follow.
Assistance For Plan Sponsors
As a sponsor, you make a difference in the lives of employees–and their beneficiaries, but that entails navigating the complexities of ERISA. Unforeseen challenges arise all the time, and seemingly small oversights have been triggering costly lawsuits. The average ERISA claim costs businesses over $1.2 million in legal fees.
That’s where Colonial Surety comes in. When you’re armed with our cost-efficient Fiduciary+Cyber Liability Insurance, you’ll have:
- Reliable Defense: If a claim alleging fiduciary breaches surfaces, attorneys will be ready to fight for you, defending your company and your personal assets.
- Cybersecurity Protection: A data breach can be a nightmare, but we’ve got you covered with expert crisis management services.
- Fast and Easy Coverage: Get a quote, purchase, and download your policy in minutes, all online.
Ready to let us shield you? Take a moment and get your quote now: Right HERE.
Friendly Reminder
In Section 412, ERISA specifically requires retirement plan sponsors to obtain and maintain ERISA fidelity bonds to protect the retirement plan against acts of fraud or dishonesty. As a leading national provider, listed with the Department of the Treasury, Colonial Surety helps plan sponsors ensure compliance. Opt for comprehensive, multi-year coverage, ensuring the ERISA bond remains Department of Labor compliant for the life of its term. At Colonial, adding Fiduciary & Cyber Liability Insurance to your ERISA fidelity bond is quick – login to your dashboard, click “upgrade” next to your bond, and get a quote. Our packages are available for 1, 2, and 3-year terms, providing flexibility and locked-in rates:
ERISA Bond+Liability Insurance HERE
Colonial Surety was founded in 1930 and continues giving customers the assurance that they, their businesses, and their clients are safeguarded with the right surety and insurance products at all times. We are a direct and digital insurer offering products through an online platform supported with exemplary customer service. We give customers a simple, direct, and instant service that takes the pain out of buying insurance and bonds. Colonial Surety is licensed in every state in the U.S., rated “A” Excellent by A.M. Best, and listed by the U.S. Treasury as an approved surety.