The Plan Committee (Part One): Should You Have One?

This is the first post in a 5-part series on plan committees - how to both establish and run them. Some will say, “Why bother with a plan committee? We’ve got complicated plan documents, more service providers than we can count, and day-to-day administrative burdens that already take up too much of our time. Do we really need to overlay this with another thing?”

Not sure if a committee is right for your plan? We've put together this easy worksheet to help you decide.

The answer is, no you don’t. Plan sponsors are not legally compelled to set up committees. Most standardized plan documents give plan sponsors the flexibility to set one up or not. But just because you are not required to do something doesn’t mean it’s not a good idea.  I am one those that think a plan committee is a really good idea for all except the smallest of plan sponsors.

Here’s why:

  • Committees focus attention on key plan matters. Committees focus periodic and systematic attention on matters important to the operation and administration of a plan. There are five or six key areas of plan operations that have to be handled properly each year, year in and year out. Most are handled by in-house personnel or by third party vendors, although ultimate responsibility for failures blow back to the plan sponsor. A well-run committee puts plan sponsors in the best position to prevent and defend against these failures, and to improve plan effectiveness and performance.
  • Two heads are better than one. Everyone has heard this expression and it is true except when it isn’t. A committee comprised of idiots will be no better or perhaps worse than a single individual with the same responsibilities. But in general a committee properly comprised is better. Thrashing out solutions to problems by individuals with diverse skills and backgrounds will produce better decisions.
  • Committees establish accountability. Committees create structure and structure leads to allocation of responsibility and accountability in individual committee members for the various areas of plan operations. This, in turn, means problems can be avoided or diminished before they become big problems. This is because specific  knowledge and experience is more easily brought to bear on them.blog_image_17.jpg
  • Committees make plans better. I have encountered very few plan sponsors that do not have goals for their plans that do not relate in some way relate to making their plans better. In my experience they have a variety of reasons. They want to provide their employees with retirement security or they want to help them meet their retirement savings goals. They may want to attract or retain employees. In order to do this they need the best plan design, the best investments, efficient and error-free administration, communication, investment education, and reasonable fees. Committees can be really good at helping plan sponsors achieve a better plan and their goals.
  • Committees make things easier. This observation may surprise some. But committees tend to create solid, repeatable processes that are used year-by-year and actually reduce the amount of time plan sponsors spend on plan matters.
  • Committees reduce exposure to liability.  It follows that when you have established solid and repeatable processes under a committee structure, you are going to reduce the opportunity for error and exposure to liability for errors.

 Of course, nothing can be achieved if there is not commitment. To that point, I have observed to a new client more than once that it's wonderful to see that they have a plan committee (some have even had written committee charters) only to be told, “Oh, the committee. The committee has not met in years.”

Still not sure if a committee is right for your plan? We've put together this easy worsheet to help you decide.

For a comprehensive discussion of ERISA fiduciary responsibilities and a valuable day-to-day resource, be sure to check out the Fiduciary Responsibility eSource being offered by



Chuck Humphrey is principal of Law Offices of Charles G. Humphrey, a firm concentrating its practice in the field of employee benefits and fiduciary law. He is the author of the Fiduciary Responsibility eSource available at