If you’re an employer that offers a retirement plan to employees, stay tuned! Employers may have more responsibilities to employees than they realize. For instance, employers may be obligated to inform employees about changes in company ownership, or how changes of ownership may affect the value of employees’ retirement plans. Or, employers may be required to disclose to employees how much their employer is paying consultants to monitor employee retirement plans and investments.
In 2006 and 2007, employees around the country challenged how their employers invested their retirement funds. Lawyers and business executives predict that the challenges are far from over. In 2008, an employer’s failure to take appropriate action to protect employees’ investments could be costly. In Nelson v. Hodowal, employees of Indianapolis Power & Light Company (IPALCO) sued IPALCO when the value of its stock option plan for employees dropped. Their main gripe was that the executives should have seen the drop in value coming. They claimed that the executives were not upfront over the value of the company stock. Secondly, the executives failed to advise employees to sell their IPALCO stock. The court disagreed and determined IPALCO executives did everything right. First, IPALCO provided a variety of investment options to its employees. Second, IPALCO hired Merrill Lynch to advise employees regarding their investments. Third, both IPALCO executives and consultants from Merrill Lynch educated IPALCO employees about the importance of diversifying investments.
Here’s what you can do:
- Enable employees to make informed investment decisions.
- Empower employees to make their own decisions.
- Maintain transparency with employees about the company’s financial problems