Are you a Board Member of an organization that sponsors a retirement plan? If so, are you aware of your fiduciary responsibilities that may exist related to that retirement plan? Boards often delegate the authority to manage a retirement plan to an employee or a group of employees on a committee. By doing so, the Board may believe they have shifted their fiduciary duty away from themselves to the employee or committee. While they may have shifted the work of managing the plan, they still retain a fiduciary duty to monitor that employee or committee to ensure they are meeting their fiduciary duties. Failure to do so could result in a Board Member being held personally liable for any breach of duty related to the management of the plan.
You may be asking yourself “if the Board is a fiduciary, how can they ensure they are meeting their fiduciary duty?” The Board must periodically monitor the management and oversight of the plan. One of the best ways to accomplish this is to have the committee chair or employee managing the plan complete and present a Board Report. This is typically done at least once per year and provides an overview of the management of the plan and includes updates on any significant decisions or changes that were made with the retirement plan. In addition, if there are substantive changes impacting the plan taking place throughout the year a special report may be required.
Information that is often included in a board report includes:
- Fiduciary governance (update on any changes to governing documents such as the Charter, Investment Policy Statement, or Plan Document)
- Overview of the process used to monitor investment options and updates on any investment changes over the past year
- Results of annual fee benchmarking for recordkeeping and investment services, including any Requests for Proposal that were completed
- Information on the Employee Education program, including participant demographics and a confirmation that all required participant notices have been completed
- Overview of plan operations including a regulatory update and any government filings
- Names and titles of all committee members
For this information + more focused on reporting to the board, download our resource. We also cover this information in our Fiduciary Training Program Level 3. Click here to see the training material.
Multnomah Group is a registered investment adviser, registered with the Securities and Exchange Commission. Any information contained herein or on Multnomah Group’s website is provided for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Multnomah Group does not provide legal or tax advice.