International Union of Operating Engineers and Participating Employers Central Pension Fund, Washington, today rejected a demand by its actuarial consultant, Watson Wyatt, that the $6.5 billion plan limit the firm’s liability in case of disputes over its work to no more than $200,000. Watson Wyatt also had asked the pension fund to indemnify it for amounts beyond that in case of lawsuits filed by participants or other outsiders. Plan trustees will ask the Labor Department’s pension office to clarify the issue, said Michael R. Fanning, plan CEO.
The plan will search for a new actuarial consultant and also intends to examine the possibility of hiring an in-house actuary, Mr. Fanning said. Watson Wyatt will remain with the plan on a month-by-month basis, he said.
In an interview yesterday, Eric P. Lofgren, global director of the benefits consulting group, confirmed Watson Wyatt recently has begun asking all clients to sign formal "letters of engagement.”
"We frankly think what we are proposing is pretty mainstream,” he said, adding that while several plans balked at accepting the provisions, only one had expressed concerns about being unable to accept them because of a possible violation of the trustees’ fiduciary duties.
