A substantial number of lawsuits have been filed against companies and their employees who offer retirement plan benefits. These lawsuits have come about in part because of improper administration of the plans by their “fiduciaries”. Unfortunately, if you are an officer or are involved in the administration of your plan, you are a Fiduciary – and could be at risk.
We’ve provided some information to help you avoid risk and negative impact to your business.
Background: ERISA & Company Benefits Dangers
Human Resources professionals and business executives understand some of the regulations set forth by ERISA (the Employee Retirement Income Security Act). ERISA is a federal law that sets minimum standards for most voluntarily established pension and health plans in private industry to provide protection for individuals in these plans.
An element of ERISA standards is the appointment of a Fiduciary or Fiduciaries that are required to act responsibly on behalf of the employees participating in benefits plans provided by their employers.
Violations of ERISA carry serious penalties, so it’s important for you or an appointed company executive to know these laws.
Companies that offer Retirement Plans have one or more Fiduciaries who owe to others (employees) the duties of good faith and trust, and to act in the best interest of the participants.
Basically, Fiduciaries are responsible for:
- Properly administering plans
- Ensuring that the plan provider (such as an insurance company or bank) offering the investment is vetted and is legitimate
- Shopping plan providers to ensure fair and competitive pricing and fees
- Confirming that the proper diversification and variety of investments satisfy the regulations
The term Fiduciary can be shared, but it can never be removed from at least one or more people employed in the business. This is often a misunderstanding by business owners and their employees.
In the end, regardless of who has broken a Fiduciary act, the business owner and any personnel who has had their hand on any facet of the retirement plan would be first line of any lawsuit.
You Could Be at Risk
We have access to publicly available third party reports gathered from federal Form 5500 filings. These reports show that many companies are in violation of some of the most basic ERISA stipulations.
Our research has shown that a high percentage of companies fall below their peer benchmarks related to retirement plans and Fiduciary oversight.
How We Can Help You – and How You Can Help Yourself
The ROI Group can provide guidance and education around Fiduciary risks so that you can avoid needless lawsuits, pain, and anguish.
We specialize in employee benefits and protecting companies from unnecessary exposure due to breaches of ERISA regulations.
We do not remove the current plan providers, record keepers, third party administrators, or health care providers unless directed to by your company representatives.
We have built a proprietary process and monitoring system that addresses the fiduciary responsibilities placed upon companies.
Contact us to schedule a free, brief introductory meeting. We will provide you with more educational materials and help you understand if your company is at risk.