How much ERISA fiduciary liability can be “outsourced?”
In an "ordinary" outsourcing transaction, the basic (substantive) question is: "How much of what I do now can I stop doing after outsourcing is implemented?" In an ERISA fiduciary outsourcing transaction, it's just as important to ask: "How much of my current ERISA fiduciary liability will I no longer have after outsourcing is implemented?"
In this paper we address that second question – the extent to which fiduciary liability may be "outsourced" (avoided by the employer/plan sponsor) in an outsourcing transaction. We discuss three different approaches:
- The "traditional" approach, using plan delegation provisions
- Designating the outsourcer as the "named fiduciary" in the plan document
- Providing contractual remedies to allocate the "cost" of any fiduciary liability to the outsourcer