I have read with great interest countless articles, opinions, and new legislative proposals resulting from the Enron debacle.
It is only natural for our legislatures to weigh in with lofty speeches, scathing criticisms, and conspiracy innuendo. Clearly, there exists a likelihood of new compliance requirements for the retirement planning industry. My kinsmen in the legal profession will surely join the game by protecting victims via the ever-popular class action lawsuit.
All things considered, it may be worthwhile for the working public, if the contemplated reforms result in a solid framework for providing retirement planning guidance to plan participants.
What Your Peers Are Reading
Lost in recent events has been the role of the “corporate trustee” who, arguably, is chiefly responsible for the sound administration of corporate retirement plans.
My career in the retirement planning industry, like that of so many other attorneys, has included time working in the trust departments of various banks. That was time well spent, when considering it provided hands-on experience regarding the common law theory of fiduciary responsibility while acting as a trustee for another.
The Employee Retirement Income Security Act, or ERISA, reminds us that “The Trustee” of a qualified retirement plan has the exclusive duty to protect the benefits of plan participants and beneficiaries. Often, however, this simple duty seems difficult to practice. Frequently, I learn about the shirking of fiduciary responsibility not only by individual plan sponsors, but, also, by professional corporate plan trustees.
It seems that the professional corporate trustee industry, like much of corporate America, has executed a shift from employer paternalism to a laissez-faire philosophy of permitting individual employees to save, invest, and plan for the future. This is evident in the curtailment of defined benefit pension plans in favor of defined contribution plans.
The natural consequence has been self-direction of investments and individual participant brokerage accounts. Our legislatures have sanctioned this retirement planning approach by providing fiduciaries with the popular protection afforded to them by Code Section 404(c), and the interesting concept of the Directed Trustee.