Nevin's Data "Points"

Daylight saving time doesn’t really live up to its name—but as you’re resetting clocks, anxiously awaiting the realignment of circadian rhythms and changing smoke detector batteries, it might be a good time to (re)consider the following. Do you have fiduciary liability insurance? I’m NOT talking about the Fidelity Bond required of every ERISA plan (this protects the plan and its participants from potential malfeasance on the part of those who handle plan assets. In fact, the plan is the named insured in the fidelity bond). I’m also NOT talking about the corporate governance policies that many organizations have in place for actions undertaken by organization officials. These may not cover you, and they very likely won’t cover actions taken as an ERISA plan fiduciary even if you are covered.  What you need to check for is something called Fiduciary Liability Insurance. This policy typically protects the plan’s fiduciaries from claims of a breach of fiduciary responsi...

In the course of my day, I talk to (and email with) people, read a lot, and every so often jot down a random thought or insight that gives me pause and makes me think. See what you think. It’s not what you’re doing wrong; it’s what you’re not doing that’s wrong. The best way to stay out of court is to avoid situations where participants lose money. The key to successful retirement savings is not how you invest, but how much you save. Does anybody still expect their taxes to be lower in retirement? If you don’t know how much you’re paying, you can’t know if it’s reasonable. Everybody wants a pension, but nobody seems to want an annuity. Everybody’s “committed to the business”…until they aren’t. Retirement income is a challenge to solve, not a product to build. “Stay the course” is only good advice if you were on a good course to begin with. Does anybody but lawyers actually read those legal “disclosures?” (that’s a rhetorical question.) When selecting plan investm...

There’s an old saying that when you assume… well, here are five assumptions that can create real headaches for retirement plan fiduciaries. Assuming that not being required to have an investment policy statement means you don’t need to have an investment policy. While plan advisers and consultants routinely counsel on the need for, and importance of, an investment policy statement (IPS), the reality is that the law does not require one, and thus, many plan sponsors — sometimes at the direction of legal counsel — choose not to put one in place. Of course, if the law does not specifically require a written IPS — think of it as investment guidelines for the plan — ERISA nonetheless basically anticipates that plan fiduciaries will conduct themselves as though they had one in place. And, generally speaking, plan sponsors (and the advisors they work with) will find it easier to conduct the plan’s investment business in accordance with a set of established, prudent standards if those ...

There is frequently a difference between doing all that the law requires of a plan sponsor and doing everything that could be done. Here are five things that plan sponsors don’t always do — but should. 1. Have a Plan/Plan Investment Committee. ERISA only requires that the named fiduciary (and there must be one of those) make decisions regarding the plan that are in the best interests of plan participants and beneficiaries, and that are the types of decisions that a prudent expert would make about such matters. ERISA does not require that you make those decisions by yourself — and, in fact, requires that, if you lack the requisite expertise, you enlist the support of those who do have it. However, having a committee for having a committee’s sake can not only hinder your decisions — it can result in bad decisions. Make sure your committee members add value to the process. (Hint: Once they discover that ERISA has a personal liability clause, casual participants generally drop out ...

10 Things You’re (Probably) Doing Wrong—or Not Doing Right—as a Plan Fiduciary Being a plan fiduciary is a tough job—and one that, it’s probably fair to say—is underappreciated, if not undercompensated. In my experience, most who find themselves in that role (see “IMHO: Duty Bound”) I think do an admirable job of living up to the spirit, if not the letter, of their responsibilities. Nonetheless, there are plenty of areas in which we could do a better job, and the purpose of this column—and the one will follow it next week—is to focus on those issues that come up regularly in my discussions with plan sponsors, advisers, and industry experts. A couple of disclaimers up front: first, if you’re taking the time to read this, odds are you are probably doing a better-than-average job as a plan fiduciary. Second, you may well be able to identify things that are not on this list. This is a list compiled based on three decades of experience working with retirement plans; numerous conversation...