457 Plans Watch Out - Fiduciary Responsibility & Fund Scandals
Government 457(b) plans have a fiduciary responsibility associated with them and it is time that plan sponsors start realizing this. Many mutual fund companies are coming under increased scrutiny as the practices of these companies are being revealed by a probe from none other than Elliot Spitzer, the New York State Attorney General. State pension systems are pulling their money out of these companies in droves and it is time that 457(b) providers start looking at their liability in this situation. The question plan sponsors need to be asking is whether or not they want to continue to allow their plans to offer funds from the companies in question. The quick answer is "probably not." Whatever the answer is, the question better have been asked and the responses better be documented. A plan sponsor is going to have a hard time keeping funds from companies like Alger, Strong, Janus, & Putnam in the lineup. The problem is that most plan sponsors refuse to acknowledge any liability and will fail to take action, this will lead to lawsuits claiming breach of fiduciary responsibility and ultimately to more scandals. This is your warning Plan Sponsors - take charge now or expect to be charged (with breach of fiduciary responsibility).
More on this topic as it develops.....