Contract Considerations for Service Providers

Plan governance is an important aspect of Defining a Retirement Plan Standard of Excellence.

A key aspect of plan governance is understanding the contract provisions of each party providing services to the plan.

The attached article summarizes some of the key areas plan sponsors need to look at closely.  One of the areas pointed out in the article is the indemnity provisions of the agreement.  Review service agreements and check if they are very one-sided in favor of the service provider or limit the financial liability of the service provider to an unreasonable amount based on the size of the plan.  Plan sponsors can expose themselves to potentially substantial monetary risk if they do not review and understand service provider agreements thoroughly.