The second guidance release in as many days from the Department of Labor covers best practices for maintaining cybersecurity for 401k plan sponsors, plan fiduciaries, record keepers and plan participants.
This is the first time the department’s Employee Benefits Security Administration has issued cybersecurity guidance. This guidance is directed at plan sponsors and fiduciaries regulated by the Employee Retirement Income Security Act, and plan participants and beneficiaries.
The release comes after the Government Accountability Office (GAO) called on the Department of Labor (DOL) in mid-March to provide direction with the growing issue of cybersecurity.
As of 2018, EBSA estimates that there are 34 million defined benefit plan participants in private pension plans and 106 million defined contribution plan participants covering estimated assets of $9.3 trillion.
Without sufficient protections, these participants and assets may be at risk from both internal and external cybersecurity threats. ERISA requires plan fiduciaries to take appropriate precautions to mitigate these risks.
The guidance comes in three forms
- Tips for Hiring a Service Provider: Helps plan sponsors and fiduciaries prudently select a service provider with strong cybersecurity practices and monitor their activities, as ERISA requires.
- Cybersecurity Program Best Practices: Assists plan fiduciaries and record-keepers in their responsibilities to manage cybersecurity risks.
- Online Security Tips: Offers plan participants and beneficiaries who check their retirement accounts online basic rules to reduce the risk of fraud and loss.
“The cybersecurity guidance we issued today is an important step towards helping plan sponsors, fiduciaries and participants to safeguard retirement benefits and personal information,” Acting Assistant Secretary for Employee Benefits Security Ali Khawar said in a statement. “This much-needed guidance emphasizes the importance that plan sponsors and fiduciaries must place on combatting cybercrime and gives important tips to participants and beneficiaries on remaining vigilant against emerging cyber threats.”
The guidance complements EBSA’s regulations on electronic records and disclosures to plan participants and beneficiaries. These include provisions on ensuring that electronic recordkeeping systems have reasonable controls, adequate records management practices are in place, and that electronic disclosure systems include measures calculated to protect Personally Identifiable Information.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.