Preventing Cyber Theft of Plan Assets Before it is Too Late
In the employee benefit plan landscape, cyber theft of participant accounts is a disaster waiting to happen. Whether or not you are liable as a plan sponsor, is a situation that you do not want to be in. Fortunately, there are steps plan sponsors can take to safeguard participant accounts from cyber theft.
Plan sponsors should clearly understand their plan management function. Plan sponsors can protect themselves and plan participants by satisfying the following:
- Confirming authorization for distributions with the plan participants before processing the distribution requests.
- Providing timely notice of distributions to the participant by email (or telephone).
- Identifying (and halting) suspicious distribution requests.
- Establishing processes to safeguard plan assets against unauthorized withdrawals.
- Monitoring other fiduciaries’ distribution processes, protocols and activities to remain educated about the state of the art of participant protection.
- Performing additional due diligence regarding service providers’ accounting safeguards, such as segregation of duties and personnel background checks.
- Purchasing cyber theft insurance to help make a victimized plan participant whole and dissuade the plan participant from resorting to litigation to seek restitution.
Protect your plan and participants
For plan sponsors, the goal is not to evade liability, but rather, to prevent fraud through proactive scrutiny of cybersecurity. An increase in cyber theft cases, as well as the number of victimized plan participants seeking legal action, should serve as a wake-up call for plan fiduciaries who may be ignoring cybersecurity issues. Additionally, the widespread move to remote working in light of the COVID-19 pandemic emphasizes the importance of plan sponsors taking a look at their current cybersecurity policies.
Plan sponsors should view themselves as having an obligation to ensure that their service providers’ security measures, as well as their own, provide adequate protection for plan assets.
For more information, contact Ken Kobiernicki at [email protected] or 312.670.7444. Visit ORBA.com to learn more about our Employee Benefit Plans Services.