servicing strategies | PLANADVISER March/April 2016

Basic Training

How to help educate plan committee members

By Judy Ward | March/April 2016
Page 1 of 4
Art by Josh Cochran
The Department of Labor (DOL) is beginning to examine the training of plan committee fiduciaries, which is why advisers should consider helping plan sponsors with this task.

“There is nothing in ERISA [Employee Retirement Income Security Act] that requires fiduciary training of any kind, and there has been no formal guidance from the DOL indicating that training is required,” says Julie Stapel, a partner in the Chicago office of law firm Morgan, Lewis & Bockius LLP. But, in recent examinations, the DOL has been asking sponsors when their plan committee members last received fiduciary training, she says.

Training has also come up in 401(k) lawsuits lately, she says. “In those cases, the fact that a committee has received fiduciary training has been viewed as favorable.”

ERISA and Governance Basics
First, committee members need to understand how they must comply with ERISA’s fiduciary definition. “When someone is exercising discretionary control over the assets of the plan, he is a fiduciary,” Stapel says. “If you are on a committee and the committee has not explicitly delegated a fiduciary duty to another party, you can assume the fiduciary responsibility is [all] yours. We often see that, if a plan has an investment manager or consultant involved, committee members may think they are no longer fiduciaries. In fact, they are.”

The committee members also need to realize that ERISA does impose personal liability on plan fiduciaries—including them—Stapel says. And, while a plan fiduciary could conceivably lose his personal assets as part of a judgment against a plan, she cautions against stressing this. “I prefer not to lead with that, because then people will get unduly scared,” she says. In reality, most plans have fiduciary-liability insurance, and many employers indemnify committee members in case of potential legal actions, she notes.

ERISA can also specifically guide committee members regarding how to handle fiduciary duties. “ERISA is, first and foremost, an anti-conflict-of-interest statute,” Stapel says. “As a committee member, you have to make sure that, when you make a decision, you’re making that decision solely in the best interests of participants and their beneficiaries. The interests you have in your corporate role do not come into play.”