Great defined contribution (DC) retirement plan committees do not happen by accident. Like most things, they take planning and work. Arguably, having a functional committee that meets regularly is the key to the success of a plan to meet the needs of the employees and the company.
In a short and thoughtful video, Greenspring lays out the eight steps to creating and running an effective retirement committee which include:
- Have the right number of people – three to seven is recommended. Odd numbers are the norm in case of a vote.
- Have a strong Chair – someone needs to take ownership.
- Create a charter or mission statement.
- Make sure members have fiduciary training.
- Meet regularly – twice/year is recommended for smaller plans, more for larger companies. Keep the meetings short – 1-2 hours.
- Create an accountability calendar.
- Keep minutes of the meeting.
- Maintain a fiduciary file which includes the minutes of the committee meeting but also other documents – if it’s not documented, it didn’t happen.
Some companies allow outside people like their advisor to be part of the committee – even if a non-voting member, they can be valuable. Not recommended are other vendors or even an ERISA attorney who should be consulted but may not be as valuable in the process as they represent the plan and the company, not necessarily the participants which may hold true for in-house legal counsel as well.
Along with representatives from HR and finance, most committees include management and members of operations. Having well known and highly thought of participants can be valuable but it may be impossible to include all types of workers.
Most plans do not include the CEO or owner – these people can dominate the meeting inhibiting discussion while other members may be intimidated. Better to use them as a decision maker on important decisions. There certainly are exceptions to this “stereotype” in which case having an engaged CEO part of the process can be very helpful.
