A Wake Up Call for Retirement Plan Sponsors
Last year's unanimous 9-0 decision by the U.S. Supreme Court in Tibble v. Edison International makes it easier for retirement plan participants to sue their employers and should be a wake-up call to all plan sponsors. Why is this decision so significant? Primarily, because the plan fiduciaries of the defendant did a lot of things right in managing the Edison plan -- things that many retirement plan sponsors don’t do, and still came out on the losing end. With significant changes on the horizon to close the loopholes of conflicted advice for retirement plans, now is a very good time to reevaluate your current plan management practices to determine what's working, and what's not.
Here are five things the defendant did right:
Lessons for Plan SponsorsMany experts believe that the Tibble v. Edison decision will lead to further litigation in the industry. And while litigation against large retirement plans receives the media attention, small plans are also subject to legal action. The overriding lesson of this noteworthy court decision is that retirement plan fiduciaries must be proactive in carrying out their duties and stay current on facts and information that might affect the plans to which they have a duty. Apathy is not a strategy. Set it and forget it is not an appropriate standard. Often times, whether a fiduciary has breached his or her duty is not determined by the outcome of a decision, but the process that leads to the decision, and whether the process demonstrated prudence.
In addition the Tibble v. Edison decision provides three specific helpful hints for retirement plan fiduciaries:
We just sent you an email. Please click the link in the email to confirm your subscription!