Art by Joseph CiardielloIn our last article we discussed who should be on a retirement plan committee. Now let’s talk about when the committee should meet and what it should be doing at these meetings.
When to Meet
The committee should gather on the first Tuesday of every quarter. OK, we’re kidding about Tuesday, but, generally, committees should meet quarterly. Some small plans may do so less often, but quarterly meetings are better because they allow the committee to monitor the plan’s investments without too large a gap between reviews. If an unexpected issue that requires immediate attention arises between meetings, the committee may need to hold a special interim meeting. For example, if one of the plan’s investment funds undergoes a drastic change in management, the committee may decide to meet quickly to take any action needed to protect the plan’s interests.
The Meeting Agenda
As a starting point at every meeting, the committee should review the prior meeting’s minutes, any action items that had been called for and any new matters. Too often we see committees put something on the “to do” list or investment watch list without ever addressing it again. This is a red flag for Department of Labor (DOL) investigators that the committee is not fulfilling its fiduciary obligations.
Additionally, at every meeting, the committee should review the plan’s investment option lineup because that group has an ongoing duty to monitor the investments and make changes as appropriate.
There are other needs that should be addressed but not every time the committee convenes. To make sure such issues don’t slip through the cracks, we recommend that a committee develop an annual work plan outlining specifically what it will do at each of the different meetings. Here are some actions the committee should consider placing on its annual work plan:
- Review plan service providers. While the committee should do a request for proposals (RFP) for plan service providers—e.g., recordkeeper and investment adviser—every three to five years, each year the providers’ performance should be reviewed and discussed. This may be done in an executive session, after first excusing any service providers who had attended the meeting, to provide a forum in which committee members may speak freely. In fact, it’s a good idea to have an executive session at the end of at least some meetings to give committee members a chance to discuss any additional issues.
- Review the investment policy statement (IPS). Having an incorrect IPS is worse than not having an IPS at all, so it is important to review that document annually to see whether changes must be made.
- Review participant-related issues. By reviewing ongoing participant-related issues such as participation, investment education and retirement readiness, the committee keeps track of the plan’s population and how this may affect investment strategies.
- Review plan policies. For example, the committee should review the plan’s loan and qualified domestic relations order (QDRO) procedures for any necessary changes.
- Review insurance and bonding. Fiduciary insurance and bonding help protect the committee members, so it is in the committee’s best interest that the policies be kept current and sufficient for such protection.
- Participant disclosures and notices. Even if the committee has delegated this responsibility to human resources (HR), it retains responsibility to monitor such compliance. Having HR provide it with an annual report regarding participant communications can help the committee make sure notices are being properly provided.
- Fiduciary training. This is especially important when new members join the committee. It is also a good idea to, at every meeting, provide committee members with a brief fiduciary update regarding current legislative, regulatory and litigation issues affecting the plan.
- Target-date funds (TDFs) and stable value funds. In addition to the quarterly investment review, because these types of investments are often more complicated than typical investment funds, we recommend that committees engage in an annual deep dive to understand how the funds work and compare with similar funds.
Other issues may be addressed on an as-needed basis. For example, claims and appeals, and participant inquiries, can be attended to as they occur. Creating and following a work plan provides the committee with a road map for making sure it is meeting its responsibilities as plan fiduciary.—Summer Conley and Michael Rosenbaum