The Retirement Learning Center works with plan committees to help assess the effectiveness of their plan governance process. This process, known as a governance review, consists of reviewing various plan related documents to help assess how well the plan committee is satisfying its ERISA obligations. Recently we completed a review for an organization in the Midwest and it was clear—something was missing.
We had requested and received the prior three years of agendas, meeting minutes and handouts, service agreements, the investment policy statement (IPS) and the plan document.
The documentation we reviewed was good. The meeting minutes were clear and well done; the investment review and assessment process was thorough; and it appeared the IPS was followed appropriately. A solid array of investment options was maintained for the benefit of the participants.
Our concern was not with what we saw, but what was absent in meeting minutes and other materials. The committee’s documentation only addressed investment-related issues, and was devoid of any consideration or issues other than the investment process. Per the plan committee meeting minutes, no non-investment topic was ever discussed. Our view is such an omission is problematic.
Good governance goes beyond oversight of the investment options. A good governance process should include ongoing fiduciary education, periodic review of service agreements and standards, review and evaluation of the plan document, analysis of the plan audit, timeliness of payroll remission, amendment needs and status, to name just a few. And these elements should be documented and be reflected in the agenda and minutes.
A good governance process extends beyond oversight of the investment menu. We encourage plan officials to ensure that their governance process is holistic and covers all aspects of plan operations, communications and overall effectiveness.
Any information provided is for informational purposes only. It cannot be used for the purposes of avoiding penalties and taxes. Consumers should consult with their tax advisor or attorney regarding their specific situation.
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