New changes to the ERISA (Employee Retirement Savings Act) are designed to help employees have a better understanding of their rights, how their ERISA plans work and who can be considered a fiduciary. Although the deadlines for the new regulations to take effect have been moved back—by approximately three months—they are a welcome relief to employees and plaintiffs who argue that their fiduciaries have breached their duties to plan participants.
One of the new regulations requires plan service providers to disclose to fiduciaries all compensation, fees and expenses related to their servicing of the plan. Fees charged to a plan can have a huge impact on the plan's assets, and failure to fully understand how a plan is being charged can result in massive losses. In some cases, plan participants may have no idea how much they are paying in fees over their career, but those fees could affect the plan's accumulations by up to half. Requiring fiduciaries and service providers to disclose their fees gives the employee the ability to decide if the service is worth the fees.
Service providers must also inform fiduciaries as to what services are being provided, how much each service costs and if there are any conflicts of interest.
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Failure to adequately disclose fees or failure to ensure that high fees are not being paid could be a breach of fiduciary duty on the part of the fiduciary or service provider, and could be considered a breach of ERISA laws.