These employers can be exposed to millions of dollars in litigation risk. In fact, recent studies show insurance companies have paid more than $1 billion in settlements.4
The risks include ERISA litigation, which has increased significantly: more than 200 ERISA class action lawsuits have been filed since 2015. Failure to exercise appropriate fiduciary oversight can result in negative financial impact for participants.
A glimpse at the U.S. Department of Labor’s (DOL’s) current list of lawsuits reveals a wide range of fiduciary errors related to improperly managing investments and making imprudent investments. These errors cost retirement plans millions of dollars and loss of benefits to some plan participants.
Fiduciary Support That Fits
You don’t have to shoulder all the responsibility for investment selection or be an investment expert. USI Consulting Group (USICG) helps employers reduce their fiduciary liability by providing enhanced investment oversight and holistic plan governance through ERISA 3(38) or 3(21) service models. USICG offers customized, flexible fiduciary support depending on the employer’s level of involvement.
|ERISA 3(38) Service Model
||ERISA 3(21) Service Model
Investment decisions are made on your behalf by an ERISA 3(38) fiduciary who is an investment manager who:
- Has discretion and authority to manage the plan’s assets
- Makes ALL selection, monitoring and replacement decisions
You review and approve investment recommendations made by an ERISA 3(21) fiduciary advisor who:
- Recommends and monitors investments
- Suggests investment alternatives
|When selecting fiduciary support, consider these options:
- You prefer to delegate responsibilities and the investment selection process to an investment manager
- You are comfortable with the investment manager making and executing investment decisions on a fully discretionary basis
- You prefer to be actively involved in managing the plan’s assets
- You prefer to retain control of the investment selection process
- You are comfortable making decisions based on the fiduciary advisor’s recommendations
Case Study: Move in the Right Direction With USICG Fiduciary Support
A moving and storage company based in the Northeast selected USICG to provide an ERISA 3(38) service model solution, as its retirement plan committee struggled to meet regularly and wrestled with high investment costs.
USICG uncovered deficiencies in the plan governance where potential penalties could have been levied by the DOL. The issues were corrected as USICG’s team:
- Moved the plan to a 3(38) fiduciary model, which reduces fiduciary liability associated with the investment menu from the plan sponsor to the investment manager
- Transitioned from an all-mutual fund lineup to a collective investment trust (CIT) lineup, reducing investment management expenses from 0.37% to 0.19%
- Diversified the investment menu across new asset classes and streamlined the investment menu to meet the various levels of sophistication and risk tolerance of plan participants
- Negotiated lower recordkeeping fees, moving from 0.46% down to 0.30%
- Eliminated a bundled pricing model and moved to a more transparent fee schedule
- Developed a comprehensive retirement plan education and communication strategy for employees