It is not hyperbole to suggest that you as a retirement plan sponsor must take seriously your fiduciary responsibility. This includes plan governance, such as a review of the risks that threaten the plan’s compliance with ERISA requirements, an analysis of portfolio performance vis-à-vis benchmarks and peers, and a determination of whether plan participants will have the resources necessary to meet their expected retirement income needs.
Managing a thoughtful retirement plan while trying to keep up with the ever-changing legal and regulatory environment can be challenging. Often, concerns over managing a retirement plan can vary, and plan sponsors are unsure of what needs to be addressed. Below, we review five ongoing plan sponsor concerns that sponsors should keep in mind to guarantee they have an effective retirement plan in place not only to ensure the retirement readiness of their employees, but to avoid liability should an audit occur.
While most are familiar with the term, many plan sponsors are uncertain of what it actually means to be a fiduciary. In fact, a recent JP Morgan survey stated 43% of company fiduciaries do not identify themselves as fiduciaries. This reflects the fact that many plan sponsors are uncertain about what a fiduciary exactly is.
Cybersecurity has become a prevalent concern in the retirement industry. In part because the Employee Retirement Income Security Act (ERISA) holds no fiduciary functions in managing cybersecurity risk, the retirement industry is in target for cyber-attacks. Surprisingly, many plan breaches are not all due to third-party attackers; rather, it can stem from the misconduct by employees (e.g. falling for a phishing scheme, having an easy password, etc.). Thus, while it is important for plan sponsors and providers to understand the risks of cyber-attacks, plan participants should also be educated on these risks along with cybersecurity best practices.
Offering a thoughtful retirement plan can provide many benefits to an organization. It can have a significant impact on the hiring and retention of key employees as well as improving employees’ retirement readiness. However, the retirement plan space is complex. Trying to develop and manage a plan while complying with the constantly evolving legal and regulatory environment is not easy. Plan sponsors are held to a number of regulatory and fiduciary obligations, and failure to advocate on behalf of its plan members’ best interests can be subjected to hefty civil fines and penalties. Many sponsors lack the expertise to manage their retirement plan and fulfill their fiduciary obligations. This is where the need for a retirement plan consultant arises. Learn the key areas of service that retirement plan consultants can provide and why many organizations choose to hire one.