PLANSPONSOR - May/June 2024 - 35

committees, often because different people at the company will
be working on those matters, " Kreindler says. " For example, you
might expect that people in the treasury department of companies
will be working on the investment matters, whereas folks
in the HR department will be working on the plan administrative
matters, though it's also common for those in the treasury
department to work on plan administration and vice versa. "
What do these committees look like? The Callan survey
found that investment committees average 6.5 members, while
administrative committees average 5.5. At employers with a
single committee, those average 4.8 members.
... companies should
periodically review their
governance structure to
ensure that it still works,
considering their size
and needs.
As might be presumed, the investment committees are
typically composed of members focused on the investment and
finance side of the plan, while the administrative committee
comprises the company experts on benefits. However, for survey
respondents with a single committee, the average break down of
members was 40% executives, 38% employees from the investment
and finance departments, 31% benefits staff, 27% human
resources or payroll staff and 17% legal staff.
Benefits and Challenges
While having two committees may help cover more ground for
larger companies, it can come with obstacles.
" A challenge we often see in the two-committee governance
structure is that they don't talk to each other or they don't have
overlap in membership, " O'Connor says. " When you have retirement
solutions that bridge both areas, it can be very clunky or not
executed as efficiently as when everyone is working together. "
In fact, one of the biggest benefits of having a single
committee is it allows for real-time discussions with everyone
involved in the retirement plan decisions, all together, says
Martha Griffin Munhall, vice president of human resources
at The Jackson Laboratory, a nonprofit genetic research center
in Bar Harbor, Maine. Her organization's one committee has
both fiduciary members-including the chief operating officer,
chief human resources officer, chief financial officer, controller
and chief legal counsel-and nonfiduciary members such as
the benefits administrator and employees from across the
organization.
This structure has worked well for " JAX, " because all
members are able to receive first-hand information and hear
feedback from one another before making decisions, as opposed
to having to get information second- or third-hand, which invites
the risk of something important getting lost in translation,
Munhall says. " This method is very efficient. "
She agrees, however,
that a larger company may require
a different committee structure. The approach can also vary
depending on whether a plan is defined benefit or defined contribution,
especially since some organizations may be working with
multiple plans and vendors.
One benefit of having a committee dedicated to administrative
needs is that it frees up the investment committee to focus
specifically on its fiduciary responsibilities, Ungerman says.
Forming an administrative committee can also occasion a wider
representation of company voices.
" HR staffs do a great job of administering, but it's nice
sometimes to hear from other areas within the organization, as
that might affect various, different attributes of the retirement
plans, " he says.
Ad Hoc Options
When organizations do not have a permanent second committee
dedicated to administrative needs, Ungerman says, they often
will create an ad hoc committee to tackle a specific task, such
as to do a recordkeeper search, that requires substantial time,
effort and specialized knowledge. Such a project-based, impermanent
group may include additional staff that can do research
and bring their findings and recommendations to the main
committee, he says.
Whether or not an organization will need that second, ad
hoc, committee can depend on the task at hand, but also on the
makeup of the primary committee.
" If you have executive-level folks, their schedules and calendars
are very full, " Ungerman says. " Therefore, you might form
an ad hoc committee of people who have a little bit more dedicated
time for a specific topic. "
Non-committee members may also be invited to meetings
to contribute based on their area of expertise. In 2022, investment
consultants were the most likely non-committee members
to attend committee meetings, followed by legal counsel and the
relationship manager from the DC plan recordkeeper, according
to the Callan survey.
There is no silver bullet-like rule to determine when
creating an ad hoc committee makes sense, which is also true
of whether organizations should have two permanent retirement
plan committees. However, companies should periodically
review their governance structure to ensure that it still works,
considering their size and needs, Kreindler says.
As companies undergo changes, such as corporate transactions
or adjustments to their philosophy, it is useful to have an
updated governance structure in place that allows the organization
to operate and administer its plan more efficiently and help
with risk management, she says. -Mallika Mitra
PLANSPONSOR.COM May - June 2024 35
http://www.PLANSPONSOR.COM
PLANSPONSOR - May/June 2024

Table of Contents for the Digital Edition of PLANSPONSOR - May/June 2024
