Plan Sponsors – Half Don’t Believe They’re Fiduciaries. Are You One of Them? Are you a fiduciary for your retirement plan? If you said no, do you know that for sure?
According to research from Alliance Bernstein, cited by BenefitsPro, half of plan sponsors don’t think they’re fiduciaries. However, under the Employee Retirement Income Security Act (ERISA), if you’re an employer sponsor of a retirement plan, you’re a fiduciary.
And although fiduciary regulations and lawsuits have dominated the headlines in the last two years, sponsors’ awareness of their role as fiduciaries has dropped 19 points since 2011. More concerning still: among sponsors who understand they have primary responsibility for overseeing their retirement plans, one-third don’t believe they’re fiduciaries.
What’s more, Alliance Bernstein found some fiduciary gaffes among the sponsors it studied: just four in 10 said their plan has an investment policy statement (IPS). Twenty percent said they don’t document their fiduciary process. Among those that do, over half say their oversight could use some improvement.
However, Alliance Bernstein found that sponsors who hire outside plan advisors and consultants have higher fiduciary awareness. That’s likely due in large part to the education they’re receiving from those providers regarding their roles and responsibilities for the plan. Participation and savings rates are also higher in advised plans vs. non-advised plans, according to the Alliance Bernstein study.
There are other bright spots: four in 10 plans have completed re-enrollments in the last three years, and financial wellness programs are on the rise. That said, most of the uptake in financial wellness is among larger institutional plans with more than $250 million in assets.
If you’re not sure if you’re a fiduciary for your plan or not, you should figure it out sooner than later. If your plan has an advisor, consultant, ERISA attorney, third party administrator (TPA) or recordkeeper, any one of them should be able to tell you what your fiduciary responsibilities and duties are. And yes, whether or not you’re an official fiduciary (not that there’s any such thing as an “unofficial” one). Not knowing your fiduciary duties could lead to dire legal consequences. And ignorance of the law won’t get you off the hook. It’s better to be safe than sorry.
