6 Common Retirement Plan Committee Pitfalls. Retirement plan committees are created with the best of intentions. Unfortunately, however, to paraphrase the inimitable Shakespeare, like true love, ne’er does their course run smooth. In other words, like any group working together toward a common goal, plan committees are bound to experience some operational hiccups.
A recent blog post from retirement plan fiduciary solutions provider Fiduciary Plan Governance, LLC points out six common problems in plan committee operations:
Problem #1: Failure to report up to the board: When a committee or individual member of the committee is appointed, the board needs to know about it. Under ERISA, such appointments are a fiduciary task, which makes the board responsible for overseeing and monitoring them. The board should receive regular reports that provide enough detail to help them keep on top of committee member comings and goings.
Problem #2: Committee collapse: Over time, the committee just stops operating, and responsibilities either go unfulfilled or get shuttled off to HR. A strong commitment to the committee by company leadership is the best way to help prevent this phenomenon.
Problem #3: Not tapping available resources and experts: Committees should consult regularly with plan advisers and service providers. Ask them to help provide a picture of how your plan is doing in key areas (investments, participation, communications, fees, etc.) via benchmarking and based on their experience with plans similar to yours.
Problem #4: Not staying on top of plan amendments: Check in every year to see if your plan needs to be amended. Committees often forget to do this, so make sure yours is making it an annual priority.
Problem #5: No control over meetings: The short version — don’t let someone else who may not have the plan’s and participants’ best interest at heart set the committee’s agenda. Committee members should take charge and set the agenda and meeting objectives, and make sure they’re laser-focused on accomplishing them.
Problem #6: Depending on meetings to get difficult work done: The hardest work should be done by committee members BEFORE the meeting. Meetings are a time for committee members to come together to make key plan decisions and address new developments. The tough stuff can also be delegated to sub-committees, HR staff, or plan service providers.
The bottom line: retirement plan committees need love, too. Or at least regular tune-ups to keep them on course and running like a well-oiled machine.
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