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Compliance February 4, 2013
ING Settles with DOL on Processing Error Policy
February 4, 2013 (PLANSPONSOR.com) – ING Life Insurance and Annuity Co. has agreed to settle allegations brought by the Department of Labor (DOL).
Reported by Rebecca Moore
The department alleged that ING’s failure to disclose its policy on reconciling transaction processing errors to retirement plan clients was a violation of the Employee Retirement Income Security Act (ERISA). The settlement includes a $5.2 million payment to certain retirement plan clients adversely affected by ING’s undisclosed practice of keeping investment gains achieved when the company failed to process requested transactions in a timely manner. The settlement will restore funds to about 1,400 retirement plans.
In a statement, ING said: “We are pleased to have resolved this matter with the Department of Labor in a way that benefits our client plans and participants, and various stakeholders. Our longstanding policy has been to put customers in the position they would have been in had a processing error never occurred.”
The settlement agreement requires that ING make full disclosure of its transactions policy to its current and prospective ERISA plan clients in writing. Current plan clients will be given the opportunity to object to the policy within 30 days of receipt of notice. Prospective plan clients will be informed of the policy by way of its incorporation in ING’s contracts and service agreements.The disclosure also will state that ING will track the effect of the corrections for each affected plan on an annual basis and will make that information available to its ERISA plan clients. The firm will acknowledge in the disclosure that any gains it keeps as a result of the policy constitute additional compensation for the services the company provides and it will report such compensation in accordance with ERISA Section 408(b)(2).
According to the settlement, ING also will ensure that any plans deemed to have been abandoned will be properly terminated. It will attempt to contact the sponsor of each such plan, and if its efforts are unsuccessful, the firm agrees to become that plan’s qualified termination administrator.
ING added in its statement: “Under terms of the agreement, ING Life Insurance and Annuity Company will continue applying its policy, which was communicated to sponsors during the 408(b)(2) fee disclosures in July 2012 and again recently as part of a sponsor mailing. This resolution with the DOL enhances our broader efforts to increase transparency in the industry and help our clients better understand how their plan services work.”