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Retirement Plan Committee – How to Structure?

Retirement Plan Committee – How to Structure?

How to structure a retirement plan committee is a question asked by many retirement plan administrators. Specifically, should a plan sponsor company place non-executives on the retirement plan committee?  Should non-management employees be voting members of a retirement committee?  The Plan Sponsor University (TPSU) Founder and CEO, Fred Barstein spoke with Mark Laughton, Vice President of Client Satisfaction at Quintes.  Mr. Laughton and Fred Barstein conclude a two-part interview at the conclusion of the TPSU Fiduciary Education Program held on campus at San Jose State University in California.  Mr. Laughton shares his experiences when working with employer-sponsored qualified retirement plans. There may be a need to have rank-and-file employees be voting members on a retirement committee.  There are always challenges when plan sponsors grapple with the concept of How to structure a retirement plan committee with rank-and-file employees.

Full Transcript Here

Fred Barstein:
Okay. This is Fred Barstein with 401k TV and part two of our video with Mark Laughton who just completed TPSU program conducting for us at San Jose State University. So, Mark, we talked a little bit about whether you should have a CEO on the retirement committee. What about actual participants and employees? What’s your feeling on that?

Mark Laughton:
I think in the smaller plan market it’s really hard to avoid not having the participants on the committee. I think it’s also a good feel for them to have input on the plan. They’re using it regularly. So as an example, if you’re talking about technology and the participant website, it’s good to be able to have them because they’re actually interacting with the website, with the tools. They’re also receiving potentially some of the education if there’s an advisory consultant on the plan. So I think that’s a positive. The drawback is they could make decisions that are maybe not in the best interest of everyone in the plan, but maybe just themselves. As I said, in smaller plans, it’s really hard to avoid not having participants or employees on the committee.

Mark Laughton:
In medium and larger sized companies, that’s where you could have an outsourced committee, which I think once again there’s pros and cons of that depending on how you look at it. As I made the example of technology, they don’t interact with the website. So as much as they might get a demo, maybe once a year, once every couple of years of different vendors or of their particular vendor, they’re not really interacting with it on a regular basis, so.

Fred Barstein:
If you are going to put an employee, obviously they’re all, everyone’s an employee, HR, and finance, but people who this is not their job, are there certain types you would recommend to be on that committee versus others?

Mark Laughton:
Yeah. I think ones that are … What we see from our clients and we do think is best practices is those that are in finance or HR or maybe they’re a department head and or if you have a company where you have folks that are in the office, then you have those that are maybe out in the field doing the work, you have two totally different demographics as far as what they’re doing and also what they might be looking for. So it’s going to be able to get feedback on from those different groups and what they want to see from the plan and how it’s benefiting them.

Fred Barstein:
Maybe an older, younger, different person.

Mark Laughton:
Yeah, maybe older or younger or also just the type of work that they do. Like I say, you might have some manual labor. Folks that are participating in the plan, what’s their perception of the plan, how can we help them? Then also too, you have things like the C-suite or the office staff and they might have a different need or a different perception of the plan.

Fred Barstein:
Maybe those who are perceived as leaders or spokespeople.

Mark Laughton:
Right.

Fred Barstein:
Those are natural leaders.

Mark Laughton:
Yeah. It’s really important to … When you’re educating, look for the people in the room that are the champions of the plan. So the ones that are really invested, they care not only just about themselves and their personal account in the 401k, but also to ones that are proactive and trying to get more people involved with the plan is very positive.

Fred Barstein:
Very good. Well, thanks for your time today and thanks for your commitment to TPSU. We appreciate it.

Mark Laughton:
Absolutely.

Fred Barstein:
Thank you for watching 401k TV. Stay tuned.

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