Pension plans have been subject to a fiduciary bonding requirement since
ERISA. The Department of Labor (DOL) is working with ASPA, as well as
other pension related organizations, to enhance the security and
accountability for assets in 'small' ( less than 100 participant) plans.
Such plans do not currently need an audit. The DOL has proposed that
small plans can still be free of audit requirements if they have assets
held by and certified by 'qualifying financial institutions' and/or
provide 100% bonds ( in lieu of the 10% bond now) just for 'hard to
value' assets (like limited partnerships, for example). It is about this
possible requirement of 100% bonds (as an add on to the already existing
total plan bond) for this portion of a small plan's assets that we need
your help/guidance.
Can any CAS member on CASNET respond to questions such as:
* Would insurance companies be interested in extra fiduciary bonding
only upon a fraction of a small plan's assets?
* What is the best way to ascertain the possible range of premiums for
this extra bonding?
* Does the fact that the bond covers the participants from theft and not
from market loss make a difference?
* Is there significant more risk involved with 'hard to value' asset
bonds and if so, how can that be managed or controlled?
* I'm sure there are more, but I can't think of any just now!!
Thanks for any advice you can provide. The DOL hopes to make the
pension world a safer place for small plan employees. ASPA hopes to get
them there without unreasonable burden upon the employers.
Carol Sears
Tel: 800-242-2356
E-mail: crs@espab.com
Visit the CAS Web Site at http://www.casact.org
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