Staff Education Can Save the Day
Committees are not always the ones who add value to a retirement plan. While committees well-educated in the fundamentals of fiduciary responsibility and plan management run the most successful retirement plans, 80 percent of plan errors originate in the space between payroll and the plan’s records.
Advus believes that extending education beyond the committee to HR and payroll staff can play a key role in correcting errors, since these employees are often on the front line, interfacing with both payroll and the plan’s platform.
This extended education proved invaluable to a client even before becoming one. Here’s what happened. One of our clients hired a new payroll director, and asked our firm if we could bring her up to speed on the various issues that can occur between the payroll system and the plan. We took the new employee through our training program, and then, over the course of a few months, we worked more closely with her on understanding definition of compensation, eligibility determination and other common areas of concern.
Unfortunately, the employee left our client after six months. A few months later, we received a call from her. She had started a new job and was looking over her new employer’s plan and payroll setup when she noticed something that she thought could be an issue. After gaining approval from her new employer, our team reviewed the plan and confirmed that she had uncovered a substantial error. Our firm was engaged to correct the problem and file the Voluntary Fiduciary Correction Program (VFCP) application.
The new employee’s training and our involvement in correcting the error saved her new employer a substantial amount of time and money. Left uncorrected, the error would have cost approximately $300,000. An investment in educating frontline staff early-on can prove very valuable in the end.