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HR Magazine, July 2004 - Committe Management

By Carolyn Hirschman  7/1/2004
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HR Magazine, July 2004

Vol. 49, No. 7

Retirement plan committees should meet at least annually to review investment performance and other matters. Many experts recommend that committees meet two to four times per year, with special meetings as needed, such as to consider what to do when a mutual fund in the lineup is under investigation. The committee also works between formal meetings, reviewing reports and conferencing by telephone.

It’s a good idea to designate a chairman to convene meetings and set agendas, and a secretary to take and maintain minutes and other records. It’s possible but not necessary to form subcommittees to conduct vendor searches and other ad hoc or ongoing tasks. Taken together, these practices show that the committee follows certain procedures and documents its decisions—elements regulators and courts look for to demonstrate prudence.

Training can bolster the experience of both new and old committee members. It can range from a one-hour session with the plan sponsor’s lawyer or consultant to days of formal classes. Whatever its scope, training should drive home the importance of fiduciary responsibility and the legal dangers of not living up to one’s duties.

“I’m expecting to see training become more common” in light of the Enron scandal and other litigation over violations of the Employee Retirement Income Security Act, says Serena Simons, an attorney at Miller & Chevalier in Washington, D.C.

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