Achieving 20/20
Fiduciary Vision
By Alan Hahn, Esq. & Gabrielle White, Esq. Davis & Gilbert LLP
T
he best athletes in the world often say they need to “see the whole field” to be effective. In professional football,
for example, the quarterback takes a broad look at the playing field before starting play. In Major League Baseball,
the batter takes a moment to survey the defensive positioning before stepping up to the plate. Similarly, in the
business world, senior executives often move from job to job within an organization to get a sense of the whole
picture. Plan fiduciaries, however, typically do not get to see the larger world of employee benefits, at least beyond
the plan issues they are reviewing. In many cases this is as it should be, as committee members have regular jobs that they must
attend to and do not have the time to become an employee benefits expert beyond their focus area. However, this can lead to
blind spots, and a failure to ask the right questions at the right time about issues that may not be readily apparent. As a result,
committee members should get perspective by asking for guidance from those members of the committee who have a broader
view of the field of employee benefits, and ERISA counsel, to ensure they are seeing the whole field before taking action.
A good starting point for committee members is to consider
the scope of the committee’s responsibilities. Most
committees are responsible for more than just investments.
They may also be an administrative committee—i.e., the
Plan Administrator designated under ERISA and responsible
for ensuring that the plan is administered in accordance with
its terms. Even if committee members understand the need to
meet this fiduciary standard, they may struggle to articulate
how to go about ensuring that they actually provide the
oversight called for by the terms of the plan and ERISA.
To combat this myopia, legal counsel should ensure that
committee members become familiar with the terms of the
plan and the plan’s administrative procedures.
Additionally, many committees, by their terms, are
responsible for more than just the qualified retirement plan
sponsored by the organization. For example, a committee
charter may actually reference the committee’s responsibility
for providing oversight of other benefits plans sponsored by
the organization, like health and welfare, non-qualified and
even international plans. Thus, committee members may
need to ask themselves a fundamental question: Is my 401(k)
committee really a Benefits Plan Committee? If so, do
committee minutes reference a review of these other plans?
Even if a committee is narrowly charged to address only
qualified retirement plans, the organization may be losing an
opportunity to take lessons learned from the administration
of the qualified plan and apply them across all of the
organization’s plans. For example, if an organization struggles
with offering 401(k) benefits to “temporary employees” and
other contingent workers, it may make sense to expand a
committee discussion to address other benefits issues that
affect such workers, including those under the Affordable
Care Act.
So, what is a committee member to do if he or she wants
to get a sense of the broader field of employee benefits?
Aside from consulting with counsel directly, here’s a quick
checklist of areas that committees may want to examine, as
part of their regular meetings:
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