Protecting Fiduciaries and Optimizing Committee Performance

September 20, 2013 ( – Traditionally, benefit plan committees oversaw administration, investments—everything to do with sponsoring and administering an employer-sponsored plan.

By Rebecca Moore | September 20, 2013
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However, as financial responsibilities have changed, so have committee dynamics, according to Nancy Gerrie, partner at McDermott Will & Emery LLP, and speaker during a session at the Plan Sponsor Council of America (PSCA) 66th Annual Conference in Scottsdale, Arizona. Gerrie said now it is best to have one committee for administration oversight and a separate committee for investment selection and oversight. If a plan sponsor does have a blended committee, each member should understand his or her role and whether they are acting in a fiduciary capacity or not.

Heath Miller, principal at Shepherd Kaplan, LLC, added that if a plan sponsor has separate committees, they must communicate and each must understand what the other is doing. Gerrie said the plan document can provide guidance for who does what.

Gerrie said she is seeing more plan sponsors setting up separate committees for claims appeals also, especially for welfare plans. She noted that the Employee Retirement Income Security Act (ERISA) emphasizes making sure reviewers are not low-level employees who can be influenced by higher-ups or who could be reviewing supervisors’ appeals. “It is good to have a separate committee, for litigation purposes,” she told conference attendees.

Sally Doubet King, partner at McGuireWoods LLP, pointed out that committee members will be carrying out both settlor functions and fiduciary functions, and it is important for them to know the difference. She explained that settlor functions include such things as plan design decisions and amending or terminating a plan. Fiduciary functions include selecting investments, making claims determinations and choosing and monitoring service providers. She suggested marking on meeting agendas whether the item being discussed or decided upon represents a fiduciary or settlor function.