Where does the buck stop when errors occur?
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.