Protecting Retirement Plan
you have responsibilities as a CFO, staff attorney or HR
professional, or instead serve as an independent plan service
provider (third party administrator, recordkeeper, or investment
advisor), you should be concerned about the new duties of retirement
fiduciaries are those responsible for operating the plan and include
the sponsoring employer (which frequently is designated as the
"plan administrator"), members of any investment or
administrative committee, and employees serving as plan trustee or
detailed retirement plan fee disclosure rules have imposed specific
responsibilities on plan fiduciaries. Cases like Tussey v. ABB, Inc. make
it clear that retirement plan fiduciaries can be held accountable
for non-compliance (see here
for details). Plan fiduciaries must act now
to assure compliance.
the following questions that can help determine whether or not plan
fiduciaries are properly responding to the fee disclosure rules and
guidelines reflected in the Tussey
Have plan fiduciaries reviewed and evaluated
the July 1, 2012 provider fee disclosures to make sure all
covered service providers have provided compliant disclosures?
Have plan fiduciaries determined the
reasonableness of the fees disclosed by plan service providers
and memorialized that determination in writing?
Have plan fiduciaries who have not delegated
investment responsibilities to an outside investment manager
deliberated over the plan's investment offerings?
Have plan fiduciaries made a written record of
Do plan fiduciaries meet on a regular basis to
review the plan's investment performance and provider fees?
the answer to any of these questions is "no," then your
plan fiduciaries need to take corrective action.
service providers (TPAs, recordkeepers and investment advisors) also
should think about the fiduciary practices of their clients.
Although advising clients on fiduciaries' practices may be beyond
the scope of their service agreements, if the plan fiduciaries'
conduct results in liability, those fiduciaries may want to share
that liability with you.
Consider referring your clients to providers who can assist plan
fiduciaries with their compliance concerns even if you are not in a
position to do so.
your plan fiduciaries need to remedy any deficiencies in their
current practices, consider the best way to proceed. Do the
fiduciaries want to work directly with their current plan service
providers in disclosing and evaluating these deficiencies? Do they
want to acknowledge these deficiencies in communications that are
subject to discovery by government agencies and aggrieved
participants? Do they want to create a "roadmap" to be
followed by any claimant that may seek damages for past compliance
engaging special legal counsel to work directly with plan
fiduciaries and to act as a conduit for input from plan service
providers. By engaging special counsel that works only for the plan
fiduciaries, any communications concerning compliance deficiencies
can be protected from unintended disclosure as confidential
attorney-client communications and attorney work product.
in mind that the lawyer advising the sponsoring employer may not be
able to assert confidentiality with respect to communications with
fiduciaries concerning their retirement plan duties. In any event,
retirement plan fiduciaries need to be evaluating the compliance of
the July 1, 2012 provider fee disclosures right
now in order to satisfy the recent fee disclosure rules.
CFOs, in-house attorneys and HR staff need to assist plan
fiduciaries now with their new responsibilities under the fee
disclosure rules. Current plan service providers (TPAs,
recordkeepers and investment advisors) may want to consider their
own exposure and assist their clients with fiduciary compliance. In
either case, fiduciaries who want to correct any compliance
deficiencies should consider engaging competent outside legal
counsel to assure communications that are protected by
Golan & Christie LLP
70 West Madison St.
Chicago, Illinois 60602