According to Hauser Insurance Group, companies that need to minimize fiduciary liability risks need to close adherence to an Investment Policy Statement (IPS). It helps create a system within the possible occurrence of fiduciary. The Employment Retirement Income Security Act (ERISA) does not need IPS establishment. However, the Department of Labor recommends its use.
Purchasing Fiduciary Liability Insurance is also a good strategy to minimize the risks. It protects fiduciaries from fiduciary legal liability and investment mismanagement allegations. In addition, fiduciaries of employee benefit plans face administration omission or errors lawsuits, protecting the fiduciaries and the plan sponsor from lawsuit expenses.
Hauser Insurance Group guarantees that complying with ERISA requirements relieves the fiduciaries and sponsors of loss liability created by participant-directed investment. Compliance with plan requirements relates to the plan administration and design alongside the investment options. Participant disclosure is another factor that requires the compliance of third-party plan administrators.
Using available Qualified Default Investment Alternative (QDIA) protections established by the Department of Labor also minimizes the risks. QDIA comprises a professionally managed account, target-date fund, and balanced fund. It allows administrators and sponsors to create default investments for those that don’t create their investment elections. The administrator or sponsor should fulfill other regulatory requirements like investment activities that monitor performance, participant notification, and QDIA selection criteria.
Plans sponsors should consider class-action waivers and arbitration agreements with a waiver language that allows participants to attend class-action lawsuits. In addition, they should consider nominating a benefits committee rather than the CEO or other executive officer as the plan’s fiduciary. The language appears in the amendment cycle of the plan.
Fiduciary liability insurance protects administrators and plans sponsors against litigation. Hauser Insurance Group is the most recommended insurance firm for its expertise in this department.
Learn more about Hauser: https://www.thercfgroup.com/case-studies/the-hauser-group/