Dec. 13, 2016
Employers or plan sponsors in Canada and the United States should ensure they have a robust process in place for disclosing and identifying fees in order to mitigate the potential risk of fee-based lawsuits, according to an article in Benefits Canada. In her article, author Sara Tatelman examines pension law in the United States and Canada and how it pertains to 401(k) plan sponsors. The article examines a recent ruling that dismissed a class action by employees of Chevron Corp. in the U.S., which “ruled plan sponsors could consider factors other than price when selecting retirement investment options.” Paul Litner, Chair of Osler’s Pension and Benefits Group, says that while this ruling is an exception to the norm, it offers companies leeway.
“The ruling shows an employer’s 401(k) choices don’t have to be perfect,” Paul tells Benefits Canada. “It’s a question of judging whether the decision they took at the time was reasonable, based upon the diligence they did, the facts that were known at the time.”
Paul also tells Benefits Canada that employers need to be conscientious in implementing the proper procedures so they can show they have done the necessary diligence in selecting investment options for their staff.
Find out more by reading Sara Tatelman’s article “How plan sponsors can avoid U.S.-style lawsuits over DC fees” in Benefits Canada.