It has been reported that infamous bank robber, Slick Willie Sutton, once said, “I rob banks because that’s where the money is.” Data thieves, understandably, have a similar strategy – go where the data is. The retail industry knows this as it has been a popular target for payment card data. The healthcare and certain other industries do as well considering ransomware attacks have increased four-fold since 2015. But the retirement plan industry must also see that it too is a significant target – that’s where a lot of data is!

PR Newswire reported yesterday that the UFCW Local 655 Food Employers Joint Pension Plan is notifying participants that it suffered a ransomware attack. In general, a “ransomware” attack occurs when a hacker takes control of the victim’s information systems and encrypts its data, preventing the owner from accessing it unless the victim pays a sum of money, usually in the form of bitcoins. The data at risk in the UFCW Local 655 case included individuals’ names, dates of birth, Social Security numbers, and bank account information. Every retirement plan, including pension and 401(k) plans, maintains this and other data about current and former participating employees, and their surviving spouses and designated beneficiaries, as applicable.

The question is whether plan sponsors and third party service providers are doing enough to safeguard the treasure troves of data they maintain.

On November 10, the ERISA Advisory Council, a 15-member body appointed by the Secretary of Labor to provide guidance on employee benefit plans, shared with the federal Department of Labor some considerations concerning cybersecurity. The Council noted that it is not seeking to be prescriptive, nor is it providing an opinion on fiduciary duties concerning protection of data. However, it is hoping its considerations will be publicized and “provide information to the employee benefit plan community to educate them on cybersecurity risks and potential approaches for managing those risks.”

According to the Council, there are four major areas for effective practices and policies:

  • Data management.
  • Technology management.
  • Service provider management.
  • People issues.

This is a good list to work from. Consider, for example, the wide range of service providers that perform various services to retirement plans – record keepers, auditors, law firms, accountants, actuaries, investment managers, brokers, etc. These organizations access, use, maintain, and disclose vast amounts of personal information in the course of servicing their retirement plan customers. Do these organizations have sufficient safeguards in place? Do you know if they do? What does the services agreement say?

Obviously, services providers are not the only source of risk to retirement plan data. As the Council points out, there are other considerations for plans concerning cybersecurity, such as:

  • Know your data and assess your risk (how it is accessed, shared, stored, controlled, transmitted, secured and maintained).
  • Think of how you could and should protect it (e.g., applicable federal and state laws, NIST, HITRUST, SAFETY Act, and industry-based initiatives).
  • Protect it with appropriate policies and procedures and an overall strategy taking into account available resources, cost, size, complexity, risk tolerance, insurance, etc.

In most discussions about data security and employee benefit plans, HIPAA tends to loom large. While important, with respect to employee benefit plans, the HIPAA privacy and security regulations only reach health plans, not retirement plans. But, as noted above, data thieves want to go where the data is, and that includes retirement plans.