The Hughes Supreme Court decision didn’t rock the ERISA plan administration world, but it may put a few stones in the path of the plaintiffs’ bar. Read on to see how.
The Hughes decision didn’t rock the ERISA plan administration world, but it may put a few stones in the path of the plaintiffs’ bar. Read on to see how.
For those of us in the industry, we know how much work goes into establishing and maintaining a retirement plan. There isn’t a plan administration fairy that comes down at night, and poof, you have a perfectly compliant ERISA retirement plan. Instead, numerous administrative and fiduciary decisions need to be made when setting up and maintaining a plan. For a participant directed defined contribution plan, two important decisions are selecting the investment lineup and the service providers. Once a designated investment alternative or a service provider is selected, there is a fiduciary obligation to monitor the overall lineup, each investment, and all service providers. So, the Supreme Court’s decision that a broad array of investments does not insulate fiduciaries from the duty to monitor each investment was neither ground-breaking nor a surprise.
Where does Hughes leave us? Although it leaves plan administration exactly where it was before, it is a good reminder of the importance of having a prudent process in place not only for selecting investment options and service providers, but also for monitoring them. And now would be a good time for fiduciaries...
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