What You Should do If Your Retirement Plan has Been Mismanaged
Retirement benefits are an important part of your employment compensation package. For many people, these plans are the most cost effective way to save for retirement. However, with the benefits of retirement plans come some risks. Individual employees must count on the plan’s administrator and other fiduciaries to make important decisions that will affect the amount of money that is available to each individual employee upon retirement.
While employees often have no choice but to put their trust in the plan’s fiduciaries, employees are entitled to certain information and to make sure that the plan is being run in the best interest of the plan holders. When information comes to light that indicates that the fund has been mismanaged then individual employees have rights available to them to remedy the situation.
The Employee Retirement Income Security Act of 1974 (ERISA) is the federal law that provides protections to employees who participate in employer sponsored retirement plans. ERISA provides protection to most employees with private employer retirement plans. However, it does not apply to most government employees or to employees of some religious institutions.
Contact the Plan Administrator
The first step that you should take is to contact the retirement plan administrator and ask questions. You want to know if the plan administrator is aware of what you know and whether the administrator has a good reason for it happening. If the administrator is not able to provide you with a satisfactory explanation for your allegations then you should consider filing a grievance.
File a Grievance According to the Plan’s Terms
Each employee retirement plan that falls within the jurisdiction of the Employee Retirement Income Security Act of 1974 (ERISA) should have an explicit grievance plan which you can follow should you suspect plan mismanagement. The grievance procedure should require the plan administrator or his or her designee to investigate the allegations and provide you with an explanation of the findings.
If the grievance procedure does not satisfactorily resolve your claims then you may be able to bring an administrative action against the plan fiduciaries. The Department of Labor can informally seek resolution of disputes, conduct investigations and require employers to remedy any violations of the ERISA law. State departments of labor may also have administrative remedies that you can pursue.
File a Lawsuit
Employees who contribute to retirement plans that have been allegedly mismanaged may also file a lawsuit concerning plan mismanagement or breach of fiduciary duty. If you are successful in your lawsuit then you may be able to recover financial damages and prevent any future misconduct. A judge is likely to look at whether you made requests for information in writing concerning the alleged mismanagement and tried to work out any misunderstanding or wrongdoing through other methods prior to filing your lawsuit.
Just because you choose to participate in an employee sponsored retirement plan does not mean that you have to relinquish control to make sure that the plan is properly managed. Those who administer and manage the plan have a fiduciary responsibility to act in your best interest. If you believe that that fiduciary responsibility was violated then you should take the actions described above to protect your rights.