Smaller to mid-sized firms, trade and professional associations, financial advisors and legislators are fueling increased interest in Multiple Employer Plans (MEPs). The concern about the low retirement savings rate for millions of Americans, particularly those who do not work for large organizations, sparked demand in MEPs as a solution for small to mid-sized institutions to provide quality retirement plan benefits to their employees.
Updated January 2020
Retirement plan sponsors face a challenging legal and economic landscape in 2020. Regulation and litigation has increased dramatically over the past decade. While the Department of Labor’s fiduciary rule is now defunct, the SEC has adopted a best interest standard effective in 2020. While all qualified plan sponsors are fiduciaries under the Employee Retirement Income Security Act of 1974 (ERISA), legislative changes have made it confusing to determine which parties should share in that responsibility.
Since the vast majority of plan sponsors need to involve external plan managers in some capacity, it’s important to understand how financial professionals of different classes differ in what they bring to the table. Two major categories of professional assistants are available to sponsors. Broadly speaking, they can be grouped as investment brokers and retirement plan consultants.
One of the most crucial tasks for modern human resources professionals is providing an attractive benefits package to employees. Retirement savings, pensions and health plans provide enormous value to existing workers and prospective talent, but administering these benefits also comes with strong administrative and even regulatory challenges. Organizations that decide to act as retirement plan sponsors and offer such plans have several key responsibilities to keep in mind.
When a person is appointed or is being sought to be member of a retirement plan committee, the natural question is to understand exactly what the person is committing to. Simply stated, a committee member is a fiduciary, who is expected to always act on behalf of plan participants, using the care of a person familiar with retirement plans and investments. Fiduciaries are expected to exercise good care in the handling and diversifying of the plan’s assets, including the selection and monitoring of the investment options.
Yes, fiduciaries do have the potential for personal liability, both civilly and criminally. This is mitigated by following and documenting a good governance process, as well as by the bonding and liability insurance coverages. There is also a voluntary correction opportunity with the DOL and IRS if something does go awry.
ERISA litigation has been around almost as long as the law itself. Every year, some company is facing an excessive fees case or company stock litigation. However, a new trend emerged last year, which many plan sponsors find alarming.