Employee Benefit Plans (EBPs) play a crucial role in securing the future of millions of workers. However, with the rising tide of cybersecurity threats, these plans are increasingly vulnerable to attacks that could compromise sensitive data and assets. Understanding the importance of cybersecurity in relation to EBPs is vital for Plan Sponsors, Record keepers, and Participants alike.
In April 2021, the Department of Labor (DOL) issued comprehensive guidance on cybersecurity for EBPs, highlighting the need for robust security measures. This article aims to provide you with essential information on how to protect your EBPs from cyber threats and why partnering with experts like us can make all the difference.
Understanding the Scope of Employee Benefit Plans
Employee Benefit Plans are essential for the financial security of employees, covering defined contribution, health and welfare, defined benefit and other benefit plans. According to the 2020 Form 5500, there were 86,863 EBP audits, overseeing approximately $10.8 trillion in assets and covering about 129 million participants. These staggering numbers underline the importance of protecting these plans from cyber threats.
The Employee Retirement Income Security Act of 1974 (ERISA) was enacted to safeguard employee benefits, but it did not address cybersecurity explicitly. Today, as cyber threats become more sophisticated, ensuring the protection of EBP assets is more critical than ever.
The DOL’s Cybersecurity Guidance
In response to the growing threat landscape, the DOL released guidance to help Plan Sponsors and other stakeholders enhance their cybersecurity practices. This guidance covers:
- Tips for Hiring a Service Provider with Strong Cybersecurity Practices
- Cybersecurity Program Best Practices
- Online Security Tips
For a detailed look at the DOL’s guidance, you can refer to the official DOL Cybersecurity Guidance.
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Tips for Hiring a Service Provider with Strong Cybersecurity Practices
Selecting the right service provider is crucial for maintaining strong cybersecurity. When evaluating potential providers, it’s essential to review their service contracts thoroughly. Key elements to consider include:
- Information security reporting: Ensure regular and transparent reporting of security measures and incidents, through SOC 2 Reports or the like reporting on information systems and security.
- Use and sharing of information: Clear provisions on how information is used and shared to maintain confidentiality.
- Notification of cybersecurity breaches: Prompt notification procedures in case of a breach.
By partnering with providers who meet these stringent criteria, you can significantly enhance your EBP’s security posture.
Cybersecurity Program Best Practices
A strong cybersecurity program is foundational to protecting EBPs. Here are some best practices to implement:
- Formal documented cybersecurity program: Establish and maintain a comprehensive cybersecurity plan.
- Prudent annual risk assessments: Regularly evaluate and address potential risks.
- Regular cybersecurity awareness training: Educate all personnel on the latest threats and security protocols to ensure everyone plays a role in safeguarding the plan.
The Future of Cybersecurity in EBPs
The DOL may soon require Plan Sponsors to document their cybersecurity measures as part of EBP audits. This means demonstrating proactive compliance and addressing the following challenges:
- Proactive compliance: Staying ahead of potential regulatory requirements by implementing robust cybersecurity measures now.
- Resource challenges: Many organizations struggle with the resources and urgency needed for full compliance. Our team can help bridge this gap, providing the expertise and support necessary to meet these demands.
- Ongoing monitoring and documentation: Continuously monitor and document your cybersecurity practices to ensure compliance and protect your plan.
Rigorous cybersecurity measures are essential for protecting Employee Benefit Plans and the sensitive data they hold. As cyber threats evolve, the role of all stakeholders—Plan Sponsors, Recordkeepers, and Participants—in safeguarding these plans becomes increasingly vital.
At Rea, we have a dedicated information services team as well as experts in pension advisory who are ready to help you navigate the complexities of cybersecurity for EBPs. Our knowledgeable and approachable professionals provide tailored solutions to meet your specific needs, ensuring your plans are secure and compliant.
Don’t leave the security of your Employee Benefit Plans to chance. Contact us today to learn more about how we can help protect your plans from cyber threats and ensure their long-term success. Our experts are here to guide you every step of the way.
Let us be your trusted partner in safeguarding your Employee Benefit Plans and securing the future of your workforce.
By Kealey Bricker (Wooster Office)