Individuals in corporations who oversee retirement plan assets have been repeatedly schooled in serving the interest of the plan participants. The Exclusive Benefit Rule is a mantra that plan fiduciaries have grown accustomed to reciting when pondering plan related decisions. All Retirement Plan decisions need to pass a personal “prudent fiduciary” litmus test. At times, an answer to fiduciary questions can be black or white. But that is not always the case.
On a weekly basis, the pension industry professional will notice legal or regulatory cases proceedings that beg the question, “What in the world were they thinking?”
Plan Participants Take Notice
A Staff Writer for the National Association of Plan Advisors has described a recent ruling within the United States District Court for the State of New Jersey where it was held that a former plan participant of the Alcatel-Lucent’s Lucent Technologies Inc. Pension Plan (and defendant in the case) is a plan fiduciary. The court upheld that a former plan participant has achieved fiduciary status based upon the participant’s failure to return plan assets that were mistakenly forwarded to them. By “no action” on the part of the plan participant, the court has deemed the plan participant (who is exercising control over plan assets) a fiduciary to the plan.
What Plan Fiduciaries Know
Plan fiduciaries comprehend the seriousness of paying too much in custody fees; or using a more expensive share class of mutual fund than necessary – in the absence of securing commensurate service – levels for the plan participants. Plan fiduciaries are aware of the need to benchmark plan services and service providers on a periodic basis.
This case – viewable here – sheds new light on the unusual actions of the court while simultaneously casting doubt on the actual reach of the court. Under most circumstances, someone who retains $233,691.92 of someone else’s property would be considered something other than a fiduciary. Perhaps the moniker of fiduciary will convince this former plan participant to begin serving the interests of plan participants and act honorably. Or, perhaps the new moniker will be just what the plan sponsor needs to claim “fiduciary breach” which can then pass the case to an unsuspecting insurance company.
