WASHINGTON (CN) – Employee pension plan providers must disclose what they are being paid, potential conflicts of interest, and other information plan fiduciaries may use to assess the reasonableness of beneficiaries’ contracts.
Changes in the way pension plan services are provided and how the providers are compensated have made it more difficult for plan sponsors and fiduciaries to understand what the providers actually get for the specific services rendered. So, the Labor Department’s Employee Benefits Security Administration is making the providers spell it out.
Under the Employee Retirement Income Security Act, a pension plan provider’s services would be prohibited, because the act does not allow the exchange of goods, services or facilities between a plan and a party in interest to the plan. But the statute allow the relationship if the contract or arrangement is reasonable, the services are necessary for the establishment or operation of the plan, and no more than reasonable compensation is paid for the services.
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