What is a plan committee and what does it do?
A plan committee is a group of individuals within an employer who have a formal duty to oversee the company’s benefit plan and ensure fiduciary responsibilities are met. They are responsible for supervising plan vendors, service providers, and interacting with auditors if needed. Having a committee is more beneficial than relying on a single individual for plan oversight.
Are employers required to have a plan committee?
Employers are not required to have a committee, but the fiduciary duties associated with benefit plans are mandatory. However, in cases where a written committee charter exists and the committee is not operating as described, it is essential to either fulfill the duties outlined or terminate the charter. While not mandatory, establishing a plan committee is considered a best practice for effective decision-making.
Are there situations where it makes sense for a plan sponsor to establish a committee?
Establishing a plan committee can be advantageous in scenarios where multiple employers participate in a single plan, requiring representatives from each entity to ensure comprehensive oversight. Additionally, successful committees often incorporate diverse perspectives and input from various roles within the organization, promoting informed decision-making and shared responsibilities.
Who should be on a plan committee and what roles are important to include?
Key roles to include on a plan committee are individuals from HR, decision-makers with authority, and representatives with diverse skills and perspectives. It is crucial to have members with the necessary authority to make decisions regarding the plan and ensure a balance of expertise within the committee for effective governance.
Where does the authority lie once a plan committee is established, and what duties can be delegated?
Upon establishing a plan committee, the authority should be clearly outlined in a committee charter, specifying the committee’s responsibilities such as meeting frequency, investment reviews, and plan operations assessments. Delegated duties can include interacting with investment advisors, monitoring plan performance, and addressing participant needs based on feedback and operational requirements.
What are some best practices for running an effective plan committee over time?
To ensure the effectiveness of a plan committee, ongoing training on ERISA fundamentals and plan governance is recommended for committee members. Involving an ERISA counsel in committee meetings can provide expert guidance, while engaging a registered investment advisor to review investments annually enhances decision-making. Regular education on legal developments and plan changes helps the committee stay informed and make informed decisions collectively.