Achieving Excellence Through a Retirement Plan Operational Review
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Fiduciary and Plan Governance Achieving Excellence Through a Retirement Plan Operational Review The world of retirement plan administration can be summarized as good news, bad news, and some downright ugly news plan sponsors need to know. This 4-page paper outlines a path to excellence through a retirement plan operational review. Find out what an operational review is, the steps it entails, and the benefits of the process. Source: Francisinvco.com Significant ESG Movement on the ERISA Front Legislation is afoot that would amend ERISA to expressly permit fiduciaries to account for environmental, social, and governance factors as part of their fiduciary duties. Meanwhile, President Biden just issued an Executive Order on Climate-Related Financial Risk, in which he directed the DOL to consider proposing by September 2021 a rule that would suspend, revise or rescind the Financial Factors and proxy voting rules promulgated under the Trump Administration. Source: Fiduciarygovernanceblog.com Understanding and Evaluating Retirement Plan Fees: Benchmarking Investment Fees Benchmarking investment fees is essential to fulfilling a retirement plan sponsor's fiduciary obligation. However, it can be a complicated task. This article shares the importance of accurately benchmarking investment fees and how to overcome some common plan sponsor pitfalls. Source: Captrust.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers Employees Are More Confident in Their Retirement Savings Than Expected Seventy-two percent of workers feel confident in their ability to retire comfortably, up 3% since March 2020, according to the 2021 Retirement Confidence Survey by the Employee Benefit Research Institute. Eighty percent of current retirees feel they have enough money to live on in retirement. While the pandemic has caused financial insecurity for many, employees have been able to keep up with their savings. Source: Voya.com Impact of COVID-19 on Pensions and Benefits in Canada The COVID-19 pandemic has had significant implications for workplaces across the world. These implications extend into the realm of employee benefits, where employers and their workers must make difficult decisions regarding their retirement, health, and paid leave benefits. This International Foundation benchmarking survey captures a snapshot of current conditions. Source: Ifebp.org How to Prevent Retirement Plan Leakage In a new report, the Congressional Joint Committee on Taxation estimates that 22% of net contributions to 401ks and other workplace retirement savings plans made by those 50 or younger in any given year are withdrawn early in the form of hardship withdrawals, loans, or cash-outs by people switching jobs. These pre-retirement withdrawals from retirement accounts are often referred to as "leakage." Educating participants about the importance of remaining committed to retirement savings and of the value of consolidating accounts is a good place to start, experts say. Source: Planadviser.com Contributions to TDFs Fell As the Market Rebound Increased Assets A Morningstar report has found retirement savers' contributions continued to suffer even as the markets rebounded from last year's volatility. The findings were reported in Morningstar's 2021 "Target-Date Strategy Landscape Report," which said flows into target-date funds and collective investment trusts sank to $52.3 billion last year, a 59% decline from the previous year. Source: Plansponsor.com ERISA Prudence, Methodology and the Aggregate of Outcomes It's a matter of prudence to try to protect a retirement plan participant from economic loss because there is a strong possibility that it will impair them from reaching their desired lifestyle in retirement. Prudence, though, is a matter of behavior that causes an outcome -- like the investment options in a retirement plan -- and it's best judged by methodology or deriving methodology by quantifying the outcomes in aggregate. Any attempt to reach a conclusion based on one or few outcomes may lead to a myopic viewpoint and a distorted opinion. Source: Plansponsor.com »» Click here for More Studies, Research, and White Papers Court and Legal Columbia University Settlement: A Reminder of ERISA Litigation Risk On May 21, 2021, the terms of the proposed class action settlement in Cates v. The Trustees of Columbia University in the City of New York were announced. The case, which was filed in 2016, involved allegations that plan fiduciaries breached their ERISA duties by causing the plan and participants to pay excessive fees to service providers and by selecting and retaining expensive and poor-performing investment options. In addition to a monetary payment of $13 million, the settlement agreement includes several non-monetary terms. Source: Faegredrinker.com Third Circuit to Consider Class Certification Issues Percolating in ERISA Fee Litigation The Third Circuit will review a Pennsylvania district court's decision to certify a 60,000+ person class in an ERISA fiduciary breach lawsuit claiming mismanagement of a defined contribution plan's investments and recordkeeping fees. This appeal queues up guidance on a hotly litigated issue in recent ERISA cases: can defined contribution plan participants challenge the prudence and loyalty of retaining a plan investment option they never invested in? Source: Erisalitigationadvisor.com Court Finds Sponsor Not Liable for Plan Account Theft The US District Court for the Northern District of Illinois handed down a decision in Bartnett v. Abbott Laboratories, dismissing the plaintiff's claims against defendant sponsor fiduciaries in a case involving the theft of $245,000 in the plaintiff's Abbott retirement plan account. Particularly interesting for plan sponsors is the court's discussion of the sponsor fiduciary's standard of care concerning a plan provider's cybersecurity. Source: Octoberthree.com Russell Investments Draws Self-Dealing Scrutiny Plaintiffs in a new ERISA lawsuit say Caesars Entertainment allowed Russell Investments to pack its plan with proprietary investment options, to the disadvantage of plan participant outcomes. Source: Planadviser.com State Street Sees Self-Dealing Allegations in ERISA Lawsuit A new ERISA lawsuit has been filed in the U.S. District Court for the District of Massachusetts, wherein a proposed class of plaintiffs argues State Street Corp. has engaged in self-dealing within one of its retirement savings programs for employees, the State Street Salary Savings Program. Source: Planadviser.com »» Click here for more Court and Other Legal Issues Legislative and Washington DC Executive Order Includes Review of ESG Factors in Retirement Plans President Biden issued an Executive Order on Climate-Related Financial Risk, which includes a directive to the DOL Secretary to consider publishing, by September 2021, a proposed rule to suspend, revise, or rescind the Financial Factors in Selecting Plan Investments and Fiduciary Duties Regarding Proxy Voting and Shareholder Rights final rules that were published during the Trump administration regarding environmental, social, and governance investments and proxy voting by employee benefit plans. Source: Ascensus.com »» Click here for more on Legislative and Washington Actions Cyber and Plan Security Protecting Participant Personal Data Is the personally identifiable information shared with your retirement plan service providers safe? Many providers farm or harvest this data amongst their affiliates or others to market and solicit additional products or services. This gives the appearance that you, as the plan sponsor, endorse these additional products or services. Find out why allowing these practices may put you at risk of accusations of breaching fiduciary duties and what steps you can take to proactively protect yourself and your participants. Source: Francisinvco.com »» Click here for more on Cybersecurity Issues Compliance and Regulatory Missing Participant Best Practices The DOL has developed a list of best practices plan fiduciaries can implement to reduce missing participant issues and ensure participants and beneficiaries receive their plan benefits. According to EBSA, the first step in addressing any problem is knowing there is one. If your plan has one or more of the "red flags" listed here, you potentially have a missing participant issue. Source: Employeebenefitslawblog.com »» Click here for more Compliance and Regulatory Material Marketplace News T. Rowe to Cut Target-Date Fees, Add Fund Line
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