3 Simple Steps on How to Decrease the Risk of Participant Lawsuits
Step #1: Take Advantage of the Available Safe Harbors. Participants need help, and one of the safe harbors specifically helps participants and protects plan fiduciaries alike. The PPA created the role of PPA Fiduciary Adviser, which provides investment advice for a fee. Most providers have not responded because the regulations are simply too onerous. However, a hybrid Fiduciary Adviser, with a fee-for-service approach via the ’01 SunAmerica DoL ruling, while also abiding by the PPA, does exist. The result is a clear fiduciary safe harbor, and now you can even learn who is and is not certified for adherence to a defined, global fiduciary standard and PPA provisions.
#2: Hire Independent Fiduciaries. First, ERISA states that if plan fiduciaries need help with certain areas of plan management, they have a fiduciary duty to hire a prudent expert. Secondly, in hiring a prudent expert it is best when they are independent fiduciaries; therefore, providing you advice with “skin in the game” when it comes to the quality and process behind their advice to you. Also, make sure their fiduciary status is in writing, and the fiduciary claim “has teeth.” If you are not sure, ask your benefits attorney, for they will be able to tell you whether the language established skin in the game or is simply fluff. In order to discern which type of advisor(s) you need for your plan, click here.
Step #3: Base Your Decisions on the Benefit of Your Employees. If participants need help with asset allocation, saving rates, or if plan fees seem too high, they should seek out solutions that can have a measured impact on the problem. We know first hand that many providers have their own proprietary solutions but are willing (some more so than others) to work with independent third parties in order to add value to their clients. If you keep the best interests of your employees at the forefront of your mind as you make decisions regarding your plan and put in place a process behind those decisions, it will be difficult not to decrease your overall liability. Learn more on how to immediately improve on your liability against participants suits.