If there were ever a meeting that couldn’t (or at least shouldn’t) be replaced with an email, it’s that of a retirement plan committee. A new survey by the Plan Sponsor Council of America uncovers some key consistencies in structure and approach.
Retirement plan committees, entrusted with a wide array of complex and sensitive decisions regarding a plan’s operation, benefits and cost, have always been an essential element in assuring prudent retirement plan operation and administration—even when they are a committee of one. While there is perhaps no perfect number of committees—or committee members—their construction, monitoring and maintenance through rotations and training is as critical to their effective operation as it is to the design of the plan function(s) they oversee.
There is also perhaps no wrong way to structure a retirement committee. However, PSCA’s recent snapshot survey of retirement plan sponsors finds some key commonalities, particularly among similarly sized organizations, in the way that employers build, structure and run the committees that oversee the operation of their retirement plans. These include:
- Most companies have at least one formal committee to oversee retirement plan administration, and many have two.
- While there is no specific list of job titles that always serve on committees, many companies do determine committee participation by job title, the most common criteria for selection, with expertise a close second.
- Most committees have between 5 and 10 participants.
- At least half of organizations, depending on plan size, also have legal counsel (internal or external) present during committee meetings.
- Committees most commonly meet quarterly across the board.
“Regardless of the committee structure chosen, having a documented prudent process in place remains the best practice—and shield against litigation—for retirement plan fiduciaries,” notes Nevin E. Adams, JD, Chief Content Officer and Head of Research at the American Retirement Association, of which the Plan Sponsor Council of America is part.
Number of Committees
Though the majority of respondents indicated that their company has one committee (63.9%), there is a wide variety in how those committees are structured. Not surprisingly, many factors are size-correlated with larger organizations having not only more committees, but more formalized/structured committees.
Formalized Committees
Nearly 80% of respondents indicated that their organization has a document that formally establishes their plan committees, and nearly all large organizations do (93.5% of plans with 5,000 or more participants), though it’s much less common among smaller organizations (52.8% 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 (38.2% of plans). However, the size correlation also holds true here: twice as many (54.1%) large organizations have one than smaller organizations (26.4%).
Committee Participation
Though the majority of committees have between 5 and 10 participants, this is again size-correlated. Very few organizations have more than 10 participants per committee, and only large organizations do.
About two-thirds of organizations have legal counsel participate in committee meetings, though that’s the case among only half of organizations with fewer than 1,000 plan participants, in contrast to the 91.9% of organizations with more than 5,000 participants.
In response to member inquiries, PSCA conducted a snapshot survey in April 2021 about the structure and function of retirement plan committees. PSCA received responses from 255 plan sponsors representing a range of industries and plan sizes. The full survey is available at https://www.psca.org/research/snapshot-surveys/2021/committees.
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