Retirement plan committees are becoming more relevant. These days, most plans have one, and sometimes, even two retirement plan committees.
New research from the Plan Sponsor Council of America (PSCA) reflects nearly 64% of plan sponsors have at least one retirement plan committee, and 19% have two retirement plan committees. In addition, PSCA’s research noted that these committees typically have five to 10 members on average.
Generally, PSCA finds that retirement plan committees tend to be focused either on retirement plan administration (79.3%) or investments (67.6%). In some cases, although less common, sponsors created one committee to oversee both responsibilities.
The majority of plan sponsors (78.4%) reported they have properly documented the creation and establishment of their retirement plan committees. This number rose to 93.5% of plan sponsors with more than 5,000 participants. In addition, nearly 50% of sponsors surveyed said they make sure legal counsel is always in attendance at their meetings.
The PSCA survey included responses from 255 plan sponsors representing a variety of industries and plan sizes.
Retirement plan committees serve by designing, creating, and following a documented procedures. The critical fiduciary processes such as fee benchmarking, investment monitoring, and asset class selection – have an impact on performance.
With the fiduciary landscape becoming more complex and retirement plan committees responsibilities increasing there is a need for education. Two topics are at the forefront for plan fiduciaries:
- plan litigation; and
- cybersecurity.
It may be time to “get the retirement plan committees back together” if your retirement plan committee hasn’t convened for awhile. Some retirement plan committee best practices to keep in mind:
- Your committee should be “right-sized” for your plan (i.e., dependent on the size of your organization and complexity of your retirement plan);
- Members do not have to be ERISA experts, but should have some knowledge of investing and financial matters;
- Retirement plan committees should meet as frequently as needed for the circumstances; and
- Detailed minutes should be taken to carefully document every retirement plan committee meeting.
