If you serve on a retirement plan committee, you’ve taken on an important and legally significant role. As a fiduciary under the ERISA, you are personally liable for the decisions you make regarding the plan. That’s not a metaphor: your personal assets could be at risk in the event of a fiduciary breach.
Yet, many plan fiduciaries don’t realize that they can’t meet their obligations if they don’t understand them. That’s where fiduciary training comes in. It is not just a best practice, but can be a critical defense in the event of litigation or a Department of Labor (DOL) investigation. Here’s why we feel that fiduciary training is not optional, it’s essential:
1. You Have Personal Liability
ERISA fiduciaries are held to the highest standard of care in law: the duty of loyalty and the duty of prudence. If the plan suffers losses due to imprudent actions — or inaction — fiduciaries can be held personally liable for restoring those losses. There’s no corporate veil to hide behind. However, fiduciary liability insurance can help protect you, so it is also important to ensure your company has purchased liability insurance for that very reason.
2. You Can't Satisfy Duties You Don’t Understand
The fiduciary standard requires acting with the care, skill, prudence, and diligence that a prudent person familiar with such matters would use. But how can you act prudently if you don’t know what ERISA expects of you?
Training helps you understand:
- Your fiduciary responsibilities
- The difference between fiduciary and settlor functions
- How to properly select and monitor plan investments and service providers
- How to document decisions in a way that shows procedural prudence
3. Training Helps You Win in Court (or Avoid It Altogether)
Courts have consistently found that lack of training can support a finding of fiduciary breach — and that evidence of training can help defeat such claims. In Tussey v. ABB, Inc., the Eighth Circuit noted that plan fiduciaries lacked training, contributing to an imprudent process. However, in the Wildman v. American Century case, the judge ruled in favor of American Century on all counts and discussed in its reasoning the prudent process they followed including the fiduciary training provided to all new members of the committee. These cases demonstrate a key point: Training doesn't guarantee victory, but lack of it can be used against you. And when a DOL auditor comes knocking, documented fiduciary training can show that you take your responsibilities seriously.
4. It’s Easy to Do — and Worth Every Minute
Fiduciary training doesn’t need to be burdensome. We recommend it be done annually and supplemented with periodic refreshers or updates when regulations change or new members are added to the committee. Your attorney, your investment advisor or third-party administrator may all offer training as part of the services that they provide your plan. The DOL also periodically offers fiduciary trainings on its website. Training can also be tailored to different roles on the committee — and should always be documented.
Final Thought: Protect Yourself and the Plan
Serving on a retirement plan committee is a valuable way to support your organization and its employees, but it comes with real responsibilities. Training is an effective tool that you can use to carry out those duties effectively, reduce legal risk, and protect yourself and your fellow fiduciaries.
If your committee hasn’t had training in the last 12 months, or if new members have joined, now is the time to act.
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