The Department of Labor's View on Training for Pension Fiduciaries

In its efforts to increase the competency of retirement plan trustees, administrators, and other fiduciaries, the U.S. Department of Labor has revealed its view of the role training plays in the safety of assets held in ERISA qualified pension plans. The Department of Labor's Report of the Working Group on Fiduciary Education and Training revealed three opinions that should motivate every fiduciary to seek training in how to fulfill their legal duty.

First, the Department of Labor believes that most fiduciaries have their hearts in the right place and want to perform well. This may not be surprising but it certainly supports the idea that education has an important role to play in fiduciary compliance: a pure heart and an educated head are the prerequisites for a high level of fiduciary performance.

Second, fiduciaries in plans under $150 million in assets are different from fiduciaries of large plans: they face different issues, have less time and resources to obtain education and professional advice, and pose particular problems with respect to outreach efforts by the Department of Labor and organizations that sponsor educational programs. Many fiduciaries of small plans are unaware that they are cloaked in fiduciary status and ignorant of the duties such status requires.

Third, with the collapse of retirement savings plans in Enron and other recent corporate failures focusing attention on and awareness of fiduciary responsibility, we may be in a "teachable moment."

The Department of Labor's recent enforcement history shows that it is no longer to excuse imprudent conduct among fiduciaries due to ignorance. Now would be a good time to get trained on the essentials of fiduciary duty if you involved in overseeing an ERISA pension plan.

IFLC Contact:
Deanna Bond - Member Services