Focus on saying that the first and last points are things that we’re hearing from our clients. HR departments don’t want to get that call asking them what they’re doing in the governance area and not have a coherent strategy/plan. DOL’s aggressive position is the position they’ve taken in the amicus brief they filed in Tittle vs. Enron. Their position asserts a significantly expanded fiduciary responsibility level for senior executives and boards Accounting firms will likely be looking at plans much closer as a result of the Enron plan issues Sarbanes-Oxley; 3 pending bills with expanded fiduciary penalties In Mercer’s 2002 People at Work survey , only 34% of employees agreed that they can trust management to always communicate honestly
Stakeholders in retirement plan governance need to have the right level of knowledge and the right skills to be successful in governing the plan. Through implementation of a plan policy, we can define job requirements and necessary skills and we can identify who should get what training when. The plan policy can also dictate what and how institutional plan knowledge can be preserved and passed on.
These are the types of issues raised by our clients and how are clients are addressing these issues.
Effective communication in the governance structure is critical to success. This is where a lot of companies fall down. Decision makers and other stakeholders need the right amount of information to make efficient and informed decisions. Reporting protocols establish what information goes to who and when.
FGFOA Good Governance – The Practical Aspect May 20, 2007 Jay Love, CFA - Mercer Investment Consulting Stuart Kauffman - Klausner & Kaufman, P.A.
Procedural Due Diligence - process for making high-quality, prudent fiduciary decisions and documenting the decision making process. Procedural due diligence with regard to investments involves the following:
Read the investment related documents and highlight the costs, level of risk, and expected return (more DC related)
Determine whether the fees associated with the investments are reasonable
Demonstrate that the investments are reasonably designed to further the purposes of the plan and are consistent with the plan’s funding policy and method
Review investment alternatives and, where appropriate, obtain competitive bids