Legal experts predict that 2022 will be another hot year for ERISA litigation, particularly related to retirement plans. With more firms now working for plaintiffs and drawing on established precedent, cases continue to widen their way through the court system. Here are some of the trends—and advice to help plan sponsors head forward confidently in the face of the new normal regarding allegations against retirement plans.
ERISA Plaintiffs Experience Success
JD Supra reports that with the 2020s record-setting volume of ERISA litigation cases still making their way to conclusions in court, new cases were added throughout 2021. Though plaintiff’s firms are plenty busy with the “old” cases that have not yet been resolved, more firms have entered the field, making use of legal pathways set in motion by plaintiff success in previous ERISA litigation cases. Three reported trends include:
- Particularly in 2020, but also in 2021, we have seen plaintiffs’ firms that have not historically been active in ERISA cases file lawsuits. Some of these firms have filed many lawsuits; one firm alone filed over 40 ERISA cases in the past three years.
- Lawsuits have been brought against sponsors and fiduciaries of smaller retirement plans: In earlier waves of ERISA litigation, lawsuits mainly concerned very large, multi-billion dollar plans.
- Outside of California, most cases have survived motions to dismiss…Ultimately, many cases have ended in settlements.
What’s a Plan Sponsor To Do?
With ERISA litigation hot, the tough reality for retirement plan sponsors is that despite diligence, allegations of fiduciary breaches are now considered a “new normal.” Defense is costly: litigation eats up time and ERISA legal experts cost upwards of $600—per hour. That’s why plan sponsors across the country are being proactive and obtaining Colonial Surety’s affordable Fiduciary Liability Insurance. With annual premiums of less than just one hour with an ERISA lawyer, 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 in the event of a lawsuit. Uniquely, Colonial even includes Cyber Liability Insurance, locks in multi-year rates and offers installation payments. Get protected efficiently and affordable here now: Fiduciary Liability Insurance–with Cyber Included!.
Fundamental Lapse?
Another tip for heading confidently into the new year is to ensure your fundamental requirements as a plan sponsor are met. For example, failure to have current and adequate ERISA bond coverage at all times is among the most common compliance issues plaguing retirement plan sponsors. Experts caution that insufficient, or expired ERISA bonds are a trigger for Department of Labor (DOL) audits. The National Association of Retirement Plan Advisors (NAPA) reminds us: “Plan fiduciaries can be held personally liable for losses that should have been covered by a fidelity bond.”
An ERISA fidelity bond protects the assets of your retirement plan from theft and can only be obtained from a surety listed by the U.S. Department of Treasury—like Colonial Surety Company. Uniquely, Colonial includes retroactive ERISA fidelity bond coverage for years when the plan was not adequately covered. Additionally, plan sponsors can opt for cost-saving multi-year coverage, ensuring the ERISA bond remains Department of Labor compliant for the life of its term. Colonial Surety makes it so quick and easy to secure an ERISA bond that you can do it right now. For the greatest value and coverage, choose a package. Conveniently, Colonia provides: the required ERISA bond to protect the assets of the retirement plan from theft; Fiduciary Liability coverage to protect you and your assets from personal liability; and, Cyber Liability coverage to safeguard your company and plan from covered losses and expenses in the event of a cyber breach.
Proceed with confidence: Choose Your Complete Plan Sponsor Package Now
Serving customers since 1930, Colonial Surety is 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.
Colonial Surety Company is rated “A Excellent” by A.M. Best Company, US Treasury listed and in business all across the country.