A solid retirement plan committee is key to managing a successful plan that both improves fiduciary governance and serves participants’ best interests. A recent article from PlanPilot put forth the following strategies for plan sponsors to follow to help enhance the effectiveness of a retirement plan committee:
- Commit to education: Recognize that not all committee members will be—nor do they need to be—retirement plan experts. But that means they must receive education to help them do their jobs better, which includes emphasizing the need for committee members to understand their fiduciary roles and stay informed about regulatory changes.
- Delegate tasks appropriately: Consider dividing the committee into sub-groups to manage specific responsibilities, aiding in focused training and mentorship.
- Reflect company demographics: Advocate for diversity in the committee membership to better represent and address the needs of all employee groups. Having a diverse committee also promotes more creative problem-solving and different perspectives, as well as the potential to make the plan more inclusive thanks to a variety of lived experiences, all of which can help support participants and improve outcomes.
- Documentation and transparency: Documenting decisions and activities is essential for fiduciary accountability and potential legal defense. Designate at least one member as secretary to take minutes at every meeting, and ensure that all additional decisions and retirement plan changes undertaken by the committee are properly documented. While a charter isn’t required, it can help committee members stay organized and help them fulfill their fiduciary responsibilities.
- Seek consulting services: If necessary, work with outside professional consultants to help the committee stay up-to-date on trends and changing regulations so they can effectively manage the retirement plan and act in participants’ best interests.
Many plans have retirement committees to help provide governance and guidance to plan sponsors. According to Plan Sponsor Council of America (PSCA) research from 2021, most committees have between five and 10 members, and are primarily focused on either retirement plan administration or investments. If your retirement plan committee hasn’t met in a while, it may be time to “get the band back together” and make some changes to ensure your plan is being managed in a way that’s compliant with current regulations and serves the best interests of participants.
