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