Provided below are several key components the charter should address:

Establish the investment committee. This committee, which should be approved by the board of directors, is tasked with selecting and reviewing plan investments in accordance with the plan's investment policy statement (ISP). The ISP, in general terms, outlines the plans investment objectives, rules for selecting/monitoring/changing investment options, and the roles/responsibilities of the plan's fiduciary.
Formalize meeting protocols. The committee should meet regularly to assess plan performance and review administrative operations. The charter should clearly describe who sets the agenda and takes/writes meeting minutes. Meeting minutes record actions taken by the committee and are considered legal documents by auditors, federal regulators, the IRS and the courts.
Identify who interacts with the plan's investment service provider. This person plays a vital role by interacting with the company that is overseeing the variety of plan investments offered to employees. This person is on the front line when it comes to how investments (mutual funds, ETFs, target date funds, etc.) are performing and the cost of fees to administer the plan.
Define administrative duties. This is one of the most important positions on the retirement plan committee because the functions encompass a wide variety of tasks that must be prudently managed. Those include:
- Confirming and maintaining timely remittance of participant contributions.
- Managing any necessary amendments to the retirement plan document.
- Reporting to the company report of directors on all significant issues affecting the plan.
- Coordinating and documenting participant education/communication activities.
- Reviewing, confirming and documenting competitiveness of plan expenses and service for each plan vendor.

Because of the broad and complex nature of managing a company retirement plan, we advise that companies outsource this role to a proven, experienced advisor. The advisor will have a team of professionals well versed in understanding how the increasingly complex and changing rules and regulations will affect your company's retirement plan.

Instant Insights /

Why you need to update your company's retirement committee charter

More From HR Executive

Related Stories

Recommended For You