Where does the buck stop when er­rors oc­cur?

Employee Benefit News - - CONTENTS - BY RICHARD STOLZ

The Stan­dard’s Ken Waineo ex­plains who’s re­spon­si­ble when re­tire­ment plan ad­min­is­tra­tors make a mis­take.

Providers of re­tire­ment plan ad­min­is­tra­tive ser­vices have pro­lif­er­ated over the years as the com­plex­ity of plan ad­min­is­tra­tion has mush­roomed. In a liti­gious en­vi­ron­ment, plan spon­sors need to pay close at­ten­tion the role of fidu­cia­ries and the level of re­spon­si­bil­ity as­sumed by ex­ter­nal ad­min­is­tra­tors. EBN spoke to Ken Waineo, se­nior di­rec­tor of busi­ness de­vel­op­ment and re­tire­ment plan op­er­a­tions for The Stan­dard, to ex­plore these top­ics.

Em­ployee Ben­e­fit News: Is a plan spon­sor by de­fault the plan ad­min­is­tra­tor?

Ken Waineo: The most com­mon struc­ture is for an em­ployer to be des­ig­nated as the plan ad­min­is­tra­tor in the plan doc­u­ment, or em­ploy­ees who are serv­ing on a com­mit­tee. But there are many ex­ter­nal providers step­ping up and say­ing that they can sign on as a third-party plan ad­min­is­tra­tor, or TPA, to sup­port the plan ad­min­is­tra­tor. Some act in a fidu­ciary ca­pac­ity, and oth­ers do not.

EBN: But even if the em­ployer re­tained an­other en­tity to act as plan ad­min­is­tra­tor, it still couldn’t es­cape its ul­ti­mate re­spon­si­bil­ity for over­see­ing ser­vice providers any­way, right?

Waineo: Yes, the em­ployer can never com­pletely get away from their fidu­ciary re­spon­si­bil­ity. They still have the obli­ga­tion, at the very least, to over­see the plan ad­min­is­tra­tor, and one of the plan ad­min­is­tra­tor’s pri­mary obli­ga­tions is to overview the ser­vice providers and be sure that the ser­vices that are be­ing pro­vided are ac­cu­rate and de­liv­er­ing value for what they’re be­ing paid.

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