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Challenges and Opportunities in 2023

Fiduciary Governance

Having engaged plan fiduciaries who are aware of their roles and responsibilities—and who want to serve in that capacity—is an important key to avoiding litigation and addressing today’s staffing crisis.

Retirement plan advisors and plan sponsor retirement committee members are currently either in the midst of annual evaluations of the company’s qualified plan or addressing the aftermath of the investment carnage in 2022.

In either case there are probably changes that need to occur within the plan investment offerings or in the strategic positioning of the company’s financial wellness, emergency savings support or student-loan debt repayment plans.

Despite that, there is some “good news” for everyone involved: the plan sponsors of 2023 are generally staffed with educated and motivated retirement committee members and trustees who choose to be in those positions of responsibility. Unlike plan fiduciaries of days gone by—say 5 or 10 years ago— today’s plan fiduciaries are taking seriously and embracing the role of qualified plan fiduciary. They understand their role and the responsibility that has been bestowed upon them. And unlike fiduciaries of yesteryear, today’s plan fiduciaries want to serve as a plan fiduciary. Many consider that role as being “of service” to everyone in the company.

Having engaged plan fiduciaries who are aware of their roles and responsibilities clearly makes the advisor interaction more productive and fulfilling.

Is It All a Bed of Roses?

Not by a longshot! Plaintiff’s counsel is always lurking and never bashful about why they exist. As long as there are ignorant or sloppy fiduciaries, there will be law firms feeding at the trough of poorly managed plans. That is why every shred of any fiduciary decision, documentation and directive must be prepared and maintained for an assumed audience of three: plaintiff’s counsel, a presiding judge and the collective jury.

The role of defendant in a court case can spell doom and gloom, like it was for the Tussey v. ABB case and the Enron case before that. And for hundreds of other plan sponsors who failed to have their cases dismissed during the early stages of the defense. Even the most well-intentioned and educated plan fiduciaries can find themselves sitting across the table from a New York or St. Louis law firm serving as plaintiff’s counsel. New 401(k)-related lawsuits ramped up during 2019 and 2020, with approximately 90 new suits being filed during 2020—although new suits tapered off during 2021 and 2022, as plaintiffs and their counsel have been held to a higher standard by some courts. This has not gone unnoticed by plan sponsors. Plan sponsors and their retirement committee members are more prudent in how they oversee plans today. In recent years that has been reflected in the number of defendants who are willing to take a case to court versus choosing to negotiate a settlement. This is welcome progress for industry service providers, plan sponsors and plan participants.

Read more commentary from Steff Chalk here.

The New Challenges in Staffing

Staffing and retaining a productive workforce has always been difficult, but the arrival of the pandemic has taken the difficulty of that task to a new level. Today there are multiple challenges around staffing, and in some cases a qualified plan can help. A company that offers employees access to a qualified plan stands out from competitors that do not.

Today’s plan sponsors are struggling to meet the retirement needs of four different generations. These various generations have unique motivators. Generation X workers are not motivated the same way as Baby Boomers. Millennials think much differently than the Generation Z cohort. One size does not fit all in this case. Certainly, one benefit package (or retirement plan) does not equally satisfy the needs of all workers. This translates to difficulties when attempting to make a single retirement plan work for everyone. The challenges are many—but the work is rewarding and well worth the effort!


Steff Chalk is the Executive Director of The Retirement Advisor University (TRAU), The Plan Sponsor University (TPSU) and 401kTV. This column first appeared in the Spring issue of NAPA Net the Magazine.