In an earlier blog, “DOL Fiduciary Rule Delayed: Future Still Remains Unclear,” we communicated that the Department of Labor’s (DOL) Conflict of Interest Rule (also known as the Fiduciary Rule) would become applicable June 9th, 2017. As a result, after today, investment advice providers to retirement savers will become fiduciaries, and the “impartial conduct standards” will become requirements of the related prohibited transaction exemptions. Continue reading
Todd Hughes, JD, Director, ERISA and Vendor Services, was recently quoted in a DETROIT FREE PRESS article “Would you know if you are paying too much in fees with your 401(k)?”. Todd explains how excessive fee lawsuits have increased concerns about conflicts of interest and the lack of transparency in the retirement plan management industry. Click to read the full article in the DETROIT FREE PRESS and learn more about the need for fee transparency – not only to help avoid lawsuits but to also help participants minimize extra costs.
Todd Hughes, JD, Director, ERISA and Vendor Services, was recently quoted in PLANSPONSOR’s article “Getting to a Better Place – Improving a plan through the RFP/RFI process”. Todd discusses how Pension Consultants was able to help its plan sponsor clients reduce their record keeping fees. He also explains what plan sponsors need to do annually to track their plan fees and services in between the times they go out for a formal search. Click to read the full article in PLANSPONSOR and learn how the RFP process can help deliver a top-performing plan.
The world seems to have changed a great deal in recent days, but at least one thing remains unchanged. Another excessive fee lawsuit has been filed, this time in the Eastern District of Michigan against Xerox HR Solutions, Inc. The plaintiffs are participants in three Ford Motor Company retirement plans, and are seeking class certification to make this suit a class action suit. The combined assets of the three plans come to nearly $14 billion.
There are three sources of threats to any qualified plan: the DOL, the IRS, and lawsuits. Until recently, lawsuits had only been filed against plans with assets in the billions and had only been filed by Schlichter, a St. Louis-based firm. The threat of lawsuits seemed remote to small and mid-sized plans; a reality for larger plans only until just recently. On May 18, 2016, a lawsuit was filed in Minnesota by a law firm named Madia, LLC on behalf of Participants of the LaMettry’s Collision, Inc. 401k plan. The LaMettry’s plan has $9.2 million in assets. No longer can smaller plans pull the covers over their heads.
The threat of a lawsuit is now real to plans of all sizes.
Over the past several years the retirement planning industry has seen a number of large mergers and acquisitions among record keepers. John Hancock bought New York Life; Great-West, Putnam, and JP Morgan became Empower; OneAmerica bought BMO; and Transamerica bought Mercer just to name a few. This industry consolidation has been driven by rising technology costs that have made smaller record keepers less competitive. It has also resulted in commoditization of record keeping services. Continue reading
When considering the duties of the various parties involved in a retirement plan, it is important to first distinguish between settlor and fiduciary functions. Settlor decisions, such as the decision to start, amend, or terminate a plan, do not carry with them the same high standards of conduct as fiduciary decisions.
As a responsible plan fiduciary (RPF), the Employee Retirement Income Security Act (ERISA) requires you under Section 408(b)(2) to ensure that arrangements with your service providers are “reasonable” and that only “reasonable” compensation is paid for their services. To ensure RPFs were provided the information they needed to make better decisions when selecting and monitoring service providers for their plan, the Employee Benefits Security Administration (EBSA) estimated that the final rule would cost approximately $207 million1. Continue reading
(Springfield, MO, February 6, 2015) – Pension Consultants, Inc., a leader in offering in-depth, un-conflicted advice on every aspect of retirement plan management, was recently recognized as one of the country’s Top 100 Advisers of 2015 by PLANADVISER. PLANADVISER, a nationally recognized and leading resource for advisers and consultants in the retirement planning industry, compiles the Top 100 listing annually.
There are many costs involved in successfully sponsoring and operating a retirement plan. Those costs can include paying the people who help operate the plan, including internal staff and third party administrators, record keepers, financial advisers, and more. To pay for some of these plan services, plan sponsors may reimburse certain service providers, e.g., administrative and record keeping expenses, through the use of revenue sharing. Although there is some controversy with revenue sharing as the retirement industry moves to more fee transparency, courts have continued to reaffirm that the use of revenue sharing to pay certain plan expenses is, in fact, legal. Plan fiduciaries are still obligated to understand how the record keeping arrangement is structured and what role revenue sharing plays in that set-up. They must ultimately be able to make a determination that the fees are reasonable and the services are necessary. Continue reading