Changes to ERISA Plan Laws Affect Employees

Ontario, CAERISA plan lawsuits can be difficult for employees. Although ERISA stock plan and ERISA savings plan fiduciaries owe a duty to plan participants, proving that a fiduciary has breached that duty can be troublesome, especially in grey areas such as determining what constitutes a fiduciary or what constitutes excessive fees.

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.

ERISA fiduciaries and plan providers have faced lawsuits alleging high, hidden fees cost employees their hard-earned money. When fees are hidden, participants have no idea if what they are paying for in services are in line with the services received. Hidden fees also hide any potential conflicts of interest that could result if the service provider acts in its own best interests and not in the best interests of the plan or plan participants—for example, executing trades at a less than ideal price because of fee sharing arrangements that financially benefit the service provider.

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.