The issue of participant data—or more precisely the use of participant data—even more precisely the use of plan data for purposes beyond plan administration—has recently emerged in a handful of excessive fee lawsuits. Do the plans you work with have a policy regarding that?
The litigation in question has (to date) revolved around the notion that participant data—garnered in conjunction with the administration of the plan—is a plan asset. Now, you won’t find that in ERISA’s text, and arguably that specific issue hasn’t been “fully” adjudicated to date, though there’s one recent case—Divane v. Northwestern University—that spoke to the issue, and that district court found that the sponsor doesn’t have a fiduciary duty to manage the use of participant data by its recordkeeper.
Meanwhile, if they’ve not yet prevailed at court, the Schlichter law firm has been successful in negotiating, as part of a broader settlement, agreements in two cases that, for a period of three years, the plan sponsor “must not solicit current Plan participants for the purpose of cross-selling proprietary non-Plan products and services, including, but not limited to, Individual Retirement Accounts (IRAs), non-Plan managed account services, life or disability insurance, investment products, and wealth management services, unless in response to a request or expressed need by the Plan participant.”
Now, it has been suggested that this data use is, in fact, in the best interests of plan participants. It’s also been suggested that access to, and utilization of, this data is factored into the pricing of recordkeeping services (for more on this issue of the use of participant data, and the legal implications, check out “Data Driven,” a feature article in the Summer Issue of NAPA Net the Magazine).
This week, we’d like to know what you’re seeing, saying and recommending about the use of participant data. You can reply to this week’s NAPA-Net Reader Poll at https://www.research.net/r/RCGSL2G.
And we’ll have the… data… all sorted out for you on Friday!
