In many situations, practitioners recommend establishing a fiduciary committee to oversee ERISA-covered employee benefit plans. There are several reasons for this, including providing a well-defined process for decision-making; bringing together a diverse team with a wide set of experience to address issues relevant to the benefit plan’s administration; managing the investment, legal compliance, and operational risks that can arise in a complex regulatory landscape; and establishing clear separation between plan sponsor and fiduciary roles.
Fiduciary committees may also be tasked with evaluating and monitoring the plan’s third-party service providers. This may involve running requests for proposal (RFPs) to select the provider(s), engaging in contract negotiations, and regularly monitoring and reviewing the providers’ performance and services. In these circumstances, it may be appropriate for the committee to be a named party in the third-party provider’s services agreement.
Although the plan and/or the company may also be named as parties in this agreement (as reflecting their contractual responsibilities), identifying the committee as the responsible party for specific provisions, such as those relating to plan administration, monitoring, and compliance requirements, can help align the contract with the governance structure that is in place and may help prevent the company or individuals from being treated as fiduciaries to the plan.
Our team of employee benefits lawyers are ready to help plan sponsors and fiduciary committees develop plan governance processes, provide guidance on fiduciary duties, and negotiate contracts with plan service providers.
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