Compliance October 14, 2020

Settlement Reached in Insperity 401(k) Excessive Fee, Self-Dealing Suit

Among other things, the lawsuit accused Reliance Trust Co. of selecting funds for the plan that would benefit itself.

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A settlement agreement has been reached in a lawsuit alleging that Reliance Trust Co., Insperity, Insperity Holdings and Insperity Retirement Services breached their fiduciary duties and committed prohibited transactions under the Employee Retirement Income Security Act (ERISA) relating to the management, operation and administration of the Insperity 401(k) plan.

The lawsuit was filed in 2015 by participants in the plan, which Insperity, a professional employer organization (PEO), offers to employees of small and medium-sized businesses. Insperity retained Reliance Trust as discretionary trustee to hold, manage and control the assets of the plan and to be responsible for selecting, retaining and monitoring investment options available to participants.

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The plaintiffs argued in their complaint that the defendants selected untested proprietary funds as investment options for the plan and retained those funds despite their poor performance, which benefited defendants at the expense of participants. The plaintiffs also claimed that defendants breached their fiduciary duties by selecting Insperity Retirement Services, a subsidiary of Insperity, as the plan’s recordkeeper, paying it excessive administrative expenses, and failing to monitor and control the amount of those administrative expenses. In addition, the plaintiffs claimed the defendants breached their fiduciary duties by providing as a plan investment an imprudent money market fund and later providing an imprudent proprietary stable value fund.

In March 2017, U.S. District Judge Mark H. Cohen of the U.S. District Court for the Northern District of Georgia granted in part and denied in part motions to dismiss the lawsuit. Insperity and Insperity Retirement Services were dismissed from the lawsuit in 2019.

“Insperity is pleased that this matter was resolved favorably, pending court approval, with a full release of claims against them and without any monetary contribution from the company or changes to the 401(k) plan. We vigorously defended this case and believe the release of all claims against our client with no financial consequences for them reflects the merits of Insperity’s defense,” says Emily S. Costin, partner with Alston and Bird and counsel to the Insperity defendants.

According to the settlement agreement, Reliance Trust will pay $39.8 million to settle the case.

“Reliance Trust admits no wrongdoing or liability with respect to any of the allegations or claims in this action and maintains that the plan was managed, operated and administered during its tenure as the plan’s discretionary trustee in full compliance with ERISA and applicable regulations,” the agreement states.

The agreement is subject to court approval.

Data and Research October 14, 2020

Financial Wellness Program Trends Advance During Pandemic

Employers are offering help with emergency savings and debt, and employees are asking for more help with the selection of health and other benefits.

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A webinar held by the American Savings Education Council (ASEC) reviewed two Employee Benefit Research Institute (EBRI) surveys that examined how employers and employees are navigating the coronavirus crisis.

The companion reports—“The Employer Perspectives on Financial Wellness Survey” and “The Workplace Wellness Survey”—studied recent trends among both groups when it comes to financial planning, retirement and health care. The first survey found that about half of employers are currently offering financial wellness initiatives tied to their retirement plans. Larger employers are more likely to already offer a financial wellness initiative, while smaller employers are more likely to be actively working to implement one.

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“The Employer Perspectives on Financial Wellness Survey” found that more plans are offering holistic approaches to financial wellness, and few are providing benefits as a one-time initiative. For this year, 57% of employers stated their primary approach in offering financial wellness is to have a holistic program. Only 6% indicated it would be a one-time opportunity.

“More plan sponsors are committed to these programs. They are here to stay, and they are a big part of the employee benefits landscape moving forward,” said Craig Copeland, a senior research associate at EBRI.

The survey also found that employers are emphasizing select benefits to help minimize the impact of COVID-19. Emergency savings accounts and debt counseling services are two topics receiving a lot of plan sponsor attention during the pandemic. Discount programs, tuition reimbursement and bank-at-work partnerships are less likely to be offered at the moment. Survey findings also indicate that the pandemic has led to an increase in employee engagement with emergency funds, short-term loans, payroll advances, debt management services and caregiving benefits.

Long-term financial planning is regularly a hot topic for both employers and their workers, but the pandemic has shown many people the importance of shorter-term economic well-being, especially when it concerns health care costs. “The Workplace Wellness Survey” found seven in 10 employees feel that they need their employer’s help in feeling healthy and financially secure. Additionally, 54% of workers say having a traditional pension or defined benefit (DB) plan contributes significantly to their feeling of financial security, while 55% say the same for retirement savings plans. Unsurprisingly, 63% of employees said they feel more financially secure if their employer offers health insurance.

Since the start of the COVID-19 pandemic, employees say their employers have furloughed or laid off workers, promoted telemedicine benefits or increased leave availability, according to “The Workplace Wellness Survey.” “The Employer Perspectives on Financial Wellness Survey” found most employers are not planning on pausing or discontinuing any financial well-being benefits. Only 14% have paused financial planning education, seminars or webinars, and 11% have discontinued personalized financial counseling, coaching or planning.

“The Workplace Wellness Survey” finds more employees are asking for information and guidance about open enrollment as the process moves to remote environments. Nearly four in 10 workers are requesting more communication than they did in past years. Furloughed employees are more likely to want additional information—58% compared with 37% of employed workers.

When it comes to online resources for open enrollment, employees say the tools they want the most are a portal for selecting benefits, online tools to help make decisions on benefits and online brochures. Employees, and especially furloughed workers, are asking for information packets and forms to be mailed home. Twenty-one percent of employees said they would like one-on-one support on the phone or online, and eight in 10 employees were at least somewhat likely to take advantage of an adviser service that recommends benefits based on their household situation.

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