Retirement plan sponsors need to keep careful track of their decisions and avoid thinking of hiring outside consultants as a “get out of jail free card.”

Rick Unser, a plan risk management consultant in the retirement services arm of Lockton Inc., Kansas City, Mo., makes those recommendations on a commentary on a recent 7th U.S. CircuitScales of justice Court of Appeals ruling on a retirement plan fiduciary duty case.

Lawyers for plan participants accused the employer of breaching its fiduciary duty by letting the plan generate low returns and incur high expenses.

A district court judge provided summary judgment in favor of the employer, but the appeals court required the district court to reconsider the case.

The court ruled that engaging consultants is a sign of employer prudence but does not free the employer from all responsibility for managing the plan, Unser says.

The 7th Circuit ruling also emphasizes the importance of documenting the decisionmaking process, benchmarking plan fees, and recognizing that a decision not to make a decision about a plan may be viewed as making a fiduciary decision, Unser says.

“If the status quo is deemed to be imprudent, you may be liable for any resulting damages,” Unser says.

- Allison Bell

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