The HR Legal News Blog

Spring Cleaning for Benefit Plans – It’s Time to Dust Off Your Vendor Agreements

Managing an employee benefit plan means managing a small army of service providers.  Not only should plan sponsors and fiduciaries be able to identify these vendors, but they should also understand the scope of the services which each vendor has agreed to provide and—perhaps even more critical—the responsibilities which the vendor has declined to provide.

Managing vendor relationships can be a daunting task.  Establishing a system for identifying and regularly reviewing your vendor services agreement, however, has its own rewards.  The satisfaction of being able to put your hands on the right document at the moment when you need it most—say, for example, a HIPAA audit or a due diligence request—speaks for itself.  But, more importantly, understanding the terms of your vendor agreement will help you to ensure that your plans are receiving all of the services to which they are entitled.  Moreover, a thorough review of the vendor agreements will bring to light the responsibilities that remain with the plan sponsor or the plan fiduciaries.  For example, an investment management agreement will normally clarify whether a vendor has assumed fiduciary responsibility with regard to the plan’s investments.

An inventory of your vendor services agreements is a good place to start.