Fiduciary Insurers Follow Plaintiffs' Paths
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Fiduciary and Plan Governance Fiduciary Insurers Follow Plaintiffs' Paths Fiduciary liability insurers have taken note of the recent surge in excessive fee suits and are now making pointed inquiries based on the plaintiffs' bar's playbook. This "new" generation of questionnaires cover the same type of questions, but now get into areas such as how fiduciaries are selected, as well as whether a periodic review is conducted (including benchmarking) to determine the reasonableness and competitiveness of fees of service providers -- in particular for recordkeepers -- as well as how often, how/is it documented, and "what is the recordkeeping fee for each plan when calculated on a per capita basis?" Source: Napa-net.org Thoughts on the DOL's Proposed ESG Regulation The latest installment in the regulatory back-and-forth over the investment of ERISA-governed retirement plan assets based on ESG factors arrived in the form of a newly proposed regulation on "Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights." This post focuses on the part of the regulation relating to the selection of plan investments. After briefly summarizing what's new, this post comments on winners and losers in this latest round of guidance, discusses how the proposal would change the risks affecting ERISA plan fiduciaries, and speculates on what it might take to settle the perennial uncertainties generated by changing DOL guidance in this area. Source: Verrill-law.com Managing Fiduciary Responsibility With ERISA lawsuits alleging negligence and mismanagement on the rise, fiduciary liability insurance is a critical component of managing a retirement plan. However, experts say settlements in the tens or hundreds of millions of dollars are forcing insurers to institute dramatic premium increases. Some carriers are hesitant to offer such coverage at all. This article investigates the risks associated with fiduciary responsibility, the need for fiduciary liability insurance, and ways employers can secure coverage and reduce the likelihood of litigation. Source: Captrust.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers While ERISA litigation has proliferated in recent years, the Supreme Court has pointed plan sponsors toward a way to help control plan disputes. The Roberts Court's ERISA jurisprudence has re-awakened the idea that one of ERISA's key tenets is that a plan's written terms matter. In other words, if plan sponsors want to reduce their exposure to litigation, one way to do so is by adding certain plan terms that mitigate risk. This column identifies some ways in which plan sponsors can amend plan language to manage and/or mitigate exposure to claims for benefits and other ERISA claims. Source: Jenner.com Unanimous Support Seen for Workplace Retirement Plans With anxiety running high about not having enough saved for retirement, a new survey finds that virtually all respondents want help saving for retirement while they are working. AARP's survey of 1,000 registered voters aged 25 or older reveals that 99.7% of respondents agree about the importance of being able to save for retirement through their paychecks. AARP notes that the views are similar regardless of political affiliation, income, or gender. Source: Napa-net.org »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers Dangers Advisers May Face Due to Recordkeeper Consolidation The larger providers produced by consolidation will cater to larger RPA groups like aggregators and major broker-dealers at the expense of smaller, independent RPAs. Source: Investmentnews.com (registration may be required) RIA Aggregators' Influence in DC Plan Market on the Rise As registered investment advisor aggregator firms continue to acquire smaller players in the DC space, their size and scale have brought greater influence in the DC market, according to a new report from Cerulli. This is particularly true in the $25 million to $500 million market segment, the firm notes in its latest report, "U.S. Defined Contribution Distribution 2021: Uncovering Investment-Only Distribution Opportunities." Source: Napa-net.org Court and Legal Cumulus Media Granted Summary Judgment in 401k Excessive Fee Suit A judge has granted summary judgment to Cumulus Media in a lawsuit over retirement plan fees because he found that the plaintiff waived his right to sue. On May 31, 2019, the plaintiff signed a separation agreement with Cumulus Media that released the company from all claims held by the plaintiff as of that date. The plaintiff admitted that before signing the agreement, he did not read the document in its entirety nor consult with an attorney about the effect of its terms. Source: Planadviser.com U.S. Business Groups Support Cornell in ERISA Case Two trade groups recently offered support to Cornell University after the academic institution settled a class-action lawsuit brought by participants in Cornell's 403b retirement program. The U.S. Chamber of Commerce and the American Benefits Council filed an amici curiae (friend of the court) brief in Cunningham et al. v. Cornell University et al., case number 21-88 in the U.S. Court of Appeals for the Second Circuit. The brief supports Cornell and the decision rendered in 2019. The determinative issue of the case was which party bears the burden of proof once an injury has been alleged. Source: Hallbenefitslaw.com Aon Defeats ERISA Class Action at Trial Aon Hewitt Investment Consulting defeated a class action in the Western District of North Carolina brought by nearly 250,000 current and former Lowe's Companies employees who were participants in Lowe's 401k retirement plan. Plaintiffs alleged that Aon and Lowe's breached their fiduciary duties of loyalty and prudence under ERISA to the Plan by directing substantial Plan assets to Aon's proprietary investment products. Source: Erisalitigationadvisor.com GKN Latest to Face Scrutiny Over GoalMaker Service Plaintiffs have filed a new ERISA lawsuit in the U.S. District Court for the Eastern District of Michigan, naming as defendants GKN North American Services Inc. and its board of directors. GKN is an automotive components and supply business. Though its GoalMaker portfolio management solution features prominently in the plaintiffs' allegations, Prudential is not a party in the case. Source: Planadviser.com »» Click here for more Court and Other Legal Issues Cyber and Plan Security Cybersecurity Requests Appear in DOL Audits Benefit plan sponsors and service providers need to take a proactive approach to cybersecurity and be prepared for a possible DOL investigation. Although the immediate attention has been on retirement plans, health and welfare plan sponsors and fiduciaries should also be prepared to field questions about cybersecurity from DOL auditors. Source: Groom.com »» Click here for more on Cybersecurity Issues Compliance and Regulatory 401k Plan Top 10 Year End Laundry List No one likes doing laundry, but having a calendar year-end top 10 list may be exactly what plan sponsors and administration committees need to prevent operational or document compliance issues being raised by a 401k plan participant or beneficiary, the IRS, or the DOL. This list highlights issues for sponsors and administration committees between now and year-end for calendar year plans. Source: Foley.com Retirement Plan Sponsors Have Short List of 2021 Year-End Amendments Retirement plan sponsors face a very short list of required amendments to make before year-end, but a few will need to formally adopt plan changes already operationally in effect. This article summarizes the amendments that may be required by year-end for qualified defined benefit, defined contribution plans, and Section 403b plans. Source: Mercer.com How Can Plan Sponsors Evaluate Prospective Auditors? As the results of a DOL study on audit quality shift, the industry focus on the qualifications of employee benefit plan auditors. CPA firms with specialized retirement plan audit practices choose to demonstrate their commitment to quality employee benefit plan audits by displaying their auditors' badges on marketing materials, social media, and email signature lines. What do the badges mean and how does a plan sponsor differentiate between prospective audit teams that are equally credentialed? Source: Belfint.com SAS 136 Is Here: A Review of All the Changes SAS 136 is around the corner. There have been tidbits of information so you can be prepared for the change, but this piece ties it all together because the effective date is for periods ending on or after December 15, 2021 (i.e., beginning with December 31, 2021, year-ends). Source: Lindquistcpa.com »» Click here for more Compliance and Regulatory Material Marketplace News Empower Achieves $100 Billion in Organic Retirement Plan Sales Euclid Specialty Managers Now Doing Business as Euclid Fiduciary BPAS Launches New Fraud Prevention Tool ASPPA Welcomes Wyatt as 2022 President
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