Here's what many retirement plan committees have in common
Although retirement plan committees can be as varied as the companies that sponsor them, they often are similar in structure and approach.
"While there is perhaps no perfect number of committees — or committee members — their construction, monitoring and maintenance through rotations and training are as critical to their effective operation as they are to the design of the plan functions they oversee," according to the Plan Sponsor Council of America.
The council recently surveyed retirement plan sponsors to learn what their committees have in common. Among the findings:
Number of committees
Although the majority of respondents indicated that their company has one committee (64 percent), there is a wide variety in how those committees are structured. Not surprisingly, many factors are related to size, with larger organizations having not only more committees but also ones that are more formalized and structured.
Nearly eight in 10 respondents indicated that their organization has a document that formally establishes their plan committees. Nearly all large organizations (94 percent of plans with 5,000 or more participants) do so, although it's much less common among smaller organizations (53 percent of plans with fewer than 200 participants).
Organizations are less likely to have a formal document that specifies which job positions serve on which committees (38 percent of plans). However, the size correlation also holds true here, with twice as many (54 percent) large organizations having one than smaller organizations (26 percent).
Although the majority of committees have between five and 10 participants, this again is related to size. Few organizations have more than 10 participants per committee, and only large organizations do so.
About two-thirds of organizations have legal counsel participate in committee meetings. This includes only half of organizations with fewer than 1,000 plan participants, in contrast to the 92 percent of organizations with more than 5,000 participants.
"Regardless of the committee structure chosen, having a documented, prudent process in place remains the best practice — and shields against litigation — for retirement plan fiduciaries," said Nevin E. Adams, chief content officer for the American Retirement Association, of which the council is a member.
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