Skip to main content

Best Practices for Setting Up An Investment Committee for Corporate Retirement Plans

In our 2014 Retirement Survey Report, about 79% of survey participants said they have an investment committee. Given a complex environment of regulatory scrutiny and fiduciary liability exposure, a committee specifically charged with investment oversight is a sound risk management strategy for plans and organizations of all types and sizes.

Although they will differ from one organization to the next, best practices suggest an investment committee’s responsibilities and duties include:
  • developing an investment policy statement;
  • establishing a formal process to manage the plan’s investment strategy;
  • determining and implementing investment decisions;
  • establishing procedures for selecting and monitoring investment options;
  • selecting and removing fund managers and evaluating their performance; and
  • reviewing investment management fees.
As these duties suggest, it is also a best practice to ensure that an investment committee is appropriately empowered to make and carry out relevant investment decisions. A committee that is purely advisory in nature may result in unnecessary delays in making and implementing critical retirement plan decisions and policy. An “advice only” committee may also discourage qualified prospective members who may only wish to serve on a committee with real authority.

Broad representation is another best practice to help ensure effective investment committee activity. More than 37% of survey participants said their investment committee was comprised of a combination of senior staff and members of their board of directors. Roughly 13% of respondents said their committee consisted of board members exclusively, while an additional 29% said their committee was comprised exclusively of senior staff. A remaining 21% answered “other” when asked about the composition of their investment committee.

One compelling reason to compile a diverse committee is the inherent risks of limited thinking and outlook. An unduly narrow perspective can influence a committee’s thinking. Best practices suggest that effective committees should be comprised of members who have a good understanding of financial and/or investment matters, and incorporate people with diverse backgrounds, including financial, legal, human resources, and other disciplines. Not only does this approach allow for input from a broad array of perspectives, it can also mitigate the risk of a committee being dominated by a single person or point of view.

If you have any questions about establishing an investment committee, or would like to speak with an advisor, please get in touch by calling (800) 388-1963 or via e-mail at hbs@hanys.org.

Popular posts from this blog

COVID-19: Retirement and Benefit Plan Resources

As the COVID-19 crisis continues to unfold, we are closely monitoring news and updates from top sources. We’ll be updating this section as new developments unfold. Here are several key articles and links to help plan sponsors and administrators navigate the COVID-19 impact to retirement and benefit plans: Retirement Plans 4 Key CARES Act Provisions for Retirement Plan Sponsors Markets React to Coronavirus   Important Considerations for Retirement Plan Sponsors during the Coronavirus Pandemic In Fed We Trust Participant Education Services: Timely Help from a Safe Distance CRDs 100% Taxable for New York State and Local Income Tax Purposes in 2020 IRS Permits Remote Notarization of Participant Elections   Employee Benefits CARES Act Expands Health Coverage Rules Understanding the Historic $2 Trillion Stimulus Package Employee Compensation and Benefits During Closures and Furloughs DOL Clarifies Exemptions to Coronavirus Paid Leave Laws Small Business Exemption to

HBS named as a Top 100 Retirement Plan Adviser, again!

The 2021 PLANADVISER Top 100 Retirement Plan Advisers list is out—and HANYS Benefit Services is on it!  PLANADVISER’s Top 100 Retirement Plan Advisers is an annual list of noteworthy retirement plan specialists, based on number of plans and total assets under advisement — including sponsors of defined contribution, defined benefit and nonqualified plans. “Each recognition by PLANADVISER reaffirms our commitment to our clients.” said James J. Kelley, president, HBS. “HBS conducts business in a manner that is in the best interests of our clients, with an ultimate goal of assuring our clients’ employees are ready for retirement. We are grateful to our clients for allowing us that opportunity.” HBS is categorized by PLANADVISER as a large team, having met this year’s eligibility standards of $5 billion or more retirement plan assets under advisement. HBS was previously named to PLANADVISER’s list in 2019, 2017 and 2016.  HBS is a full-service, independent consulting firm, registered invest

Coronavirus-related distributions 100% taxable for New York state and local income tax purposes in 2020

The Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law on March 27. Under the Act, participants affected by the coronavirus may be able to take distributions in 2020 of up to $100,000 from an employer-sponsored retirement plan or an IRA. Although allowing these distributions from a qualified retirement plan is optional, we have seen that a number of employers have chosen to amend their plans to permit such distributions. The Act provides that coronavirus-related distributions will not be subject to the mandatory 20% withholding nor the 10% early withdrawal penalty (for those younger than 59½) that would otherwise apply.