The ERISA Advisory Council, the entity that advises the Secretary of Labor on issues of concern with respect to employee benefit plans, voted at its March 26, 2014, meeting to focus on three key issues for 2014 — two of which relate specifically to qualified retirement plans.
Fiduciary Delegation and Outsourcing
The first area of concern the council voted to investigate is fiduciary delegation and outsourcing. The council has determined that some plan fiduciaries do not fully comprehend the pervasive level of obligation they have with respect to their qualified retirement plans. While plan fiduciaries may delegate certain duties to others or hire service providers to fulfill selected plan tasks, they may not fully rid themselves of their underlying fiduciary responsibilities to the plan, which include the prudent selection and ongoing monitoring of service providers and/or co-fiduciaries. Therefore, the council wants to determine how well plan fiduciaries understand their responsibilities in order to suggest best practices when delegating or outsourcing fiduciary duties.
Retirement Assets Moving Away from ERISA Protection
According to Aon Hewitt, when leaving employment, 65% of qualified plan participants remove their retirement savings from their workplace retirement plans through a rollover or cash distribution (Aon Hewitt, “Leakage of Participants DC Assets,” 2011). Once the assets are outside the qualified plan, they are no longer under the purview of the Department of Labor and the protection of ERISA rules and regulations. The council wants to examine distribution trends and concerns related to the movement of retirement assets away from ERISA protection in order to determine the need for participant protections.
The Columbia Management Learning Center will continue to report on developments related to the ERISA Advisory Council’s recommendations on these critical topics that have the potential to materially impact financial advisors and their practices.
Jenny Kiffmeyer, CISP, CRSP, PRP, is the director of educational content at the Retirement Learning Center in Brainerd, MN.
