PLANSPONSOR - October/November 2020 - 35

PS COACH
educating the new members about the
seriousness of acting as a fiduciary while
not scaring people who may already feel
anxious due to the pandemic, Irvin says it
is important to be honest about the responsibilities
they are taking on. " I do think
you need to adequately explain the risk of
serving on such a committee, " Irvin says.
" Part of our fiduciary training is to explain
the risks-but it's important to note that
the next part is to ensure they know the
various methods for mitigating that risk.
By [being walked] through these mitigation
methods and [shown] how they're integrated
into the process of the committee,
new members tend to feel more comfortable
with the role they're taking on. "
Delano agrees, saying, " It is important
that they understand the liability
involved and how the company can
protect them from that liability. I've found
that the balance lies in helping the new
members understand that the standard
of prudence and loyalty doesn't mean
they have to be experts in everything, but
that when they need help fulfilling their
obligations they can hire experts who can
fulfill that expert standard. "
Irvin emphasizes that an adviser
should continue to act as mentor to
the new members after their initial
onboarding by making himself available
to them for questions.
Fiduciary Training Basics
Once the committee and its fiduciary
duties are established, it is critical to
train the members about those duties,
advisers say. That can start by explaining
how the plan works at a high level-i.e.,
" its provision, match, eligibility and plan
economics such as revenue sharing, fee
leveling or other ways services in the plan
get paid for, " Irvin says. " They should
also understand not only their own role
and responsibilities, but also those of the
vendors and the consultant. "
Bruce Lanser, senior retirement
plan consultant at UBS Retirement
Plan Consulting Group in Elm Grove,
Wisconsin, says he believes that the
most important concept retirement plan
committee members need to understand,
as outlined in ERISA, is the standard of
prudence and loyalty they must uphold.
" Committee members must adhere to the
overriding principle that they operate the
plan in the best interest of participants, "
Lanser says. " Decisions will come up
that are not black and white or covered by
ERISA. If you have that principle in mind,
you'll make the right decision. "
Irvin suggests that the next item of
business should be to review plan documents,
including the investment policy
statement (IPS), with new committee
members and to do that as a refresher
every year for existing members.
At Cammack, the consultant assigned
to the plan handles all of this training,
sometimes bringing in an ERISA attorney,
Irvin says. As well, Cammack often has
ERISA attorneys attend plan committee
meetings to add their insight, he says.
-Lee Barney
What Plan Fiduciaries Should
Consider During the Pandemic
LAW FIRM Morgan Lewis identified steps that plan fiduciaries should be taking
and decisions they should be contemplating to adjust their process in the face of the
coronavirus pandemic.
1) Review and adjust the committee process. Despite the challenges of the
current world, fiduciary committees should stay focused on appropriate procedures.
Committees may need to adjust their processes to ensure they can continue to function
and engage in an appropriate level of oversight of the plan in a virtual environment.
2) Discuss preparedness with investment managers and investment
consultants. The goal of this inquiry could be to confirm, and document, that
the provider appears able to continue to operate-or adjust-to future economic and
societal disruptions, so that the plan can continue investment-related operations.
3) Review plan investments to confirm readiness for a volatile market-
and then closely watch those investments. During this time of uncertainty, it
may be appropriate for Employee Retirement Income Security Act (ERISA) fiduciaries
of a defined contribution (DC) plan to review the plan's investments and fund lineup, to
consider whether those remain prudent investments in the current market environment.
4) For defined contribution plans, consider whether the plan offers
adequate capital preservation options. Participants nearing retirement
often focus on preserving investment value. Fiduciaries may want to engage with their
consultants to evaluate whether their conservative investment options offer sufficient
income preservation opportunities.
5) Increase participant education, especially for defined contribution
plans. If the markets keep experiencing volatility, both the plan's participants and
fiduciaries will benefit from an increased focus on educating the participants, to
empower them to make decisions that best suit their investment and retirement goals.
6) Evaluate the plan's fraud protection mechanisms. The COVID-19 crisis
may trigger a jump in fraud activities, due to the economic disruptions and the increase
in electronic communications the crisis has brought about. The ERISA fiduciary duties
of loyalty and prudence could be deemed to impose an obligation to take reasonable
steps to shield participants from losses stemming from benefit plan fraud.
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