A 401(k) or other qualified retirement plan is a necessity for many companies who wish to remain competitive and improve employee satisfaction and retirement readiness. Yet because of a business owner’s many other needs and tasks, managing and improving a plan is often pushed off. However, as the plan sponsor, their fiduciary responsibility demands authority and a high level of responsibility that can’t be neglected. This is where the help of a retirement plan consulting firm comes in, providing plan governance to consistently manage the retirement plan to keep it running efficiently and effectively.
What is Plan Governance?
Plan governance refers to the holistic system of decision-making, oversight, and all other elements that go into maintaining a successful retirement plan. Because a plan sponsor often has enough tasks on his or her plate, plan governance responsibilities are often outsourced to a retirement plan consulting firm who has the experience and knowledge to ensure the plan is compliant and efficient.
There are three primary goals for plan governance:
1. Risk Management
Plan governance strives to ensure that the retirement plan isn’t exposing the sponsor, fiduciary, or members to unnecessary risk. The fiduciary role requires significant responsibility and comes with many risks. Effective plan governance aims to protect against fiduciary liabilities. As regulations continue to tighten, your plan needs to be well-managed to avoid audit concerns and compliance issues.
2. Sponsor Impact Maximization
In a perfect world, a retirement plan provides a reasonable return on its spend for the sponsor. A fundamental goal of plan governance is to analyze the projected return of the portfolio to the plan funding targets.
3. Member Outcome Maximization
A retirement plan will preferably provide its members an appropriate outcome so they can increase their retirement income. According to a recent study, 39% of employers surveyed were concerned about the ability of their employees to retire on time with sufficient resources. Plan governance aims to ensure members are able to mitigate this risk within their plan benefits.
Overall, plan governance is designed to help employees work toward a successful retirement, and for its sponsors to pursue organizational objectives, from retaining their best employees to controlling costs and improving benefits.
Could You Benefit From Plan Governance Consulting?
At PlanPilot, we believe well-thought-out decisive actions are critical to driving positive outcomes for any defined contribution plan and employee participants. Governance is the cornerstone of effective plan management, and by clearly defining roles, responsibilities, and decision-making guidelines, your retirement committee can feel more confident in their decisions and their fiduciary protection.
Through our plan governance consulting, we can help your company establish and maintain processes, procedures, and guidelines so your plan sponsor and decision-makers can feel confidence in their actions and you can improve your plan’s effectiveness. Call us today at (312) 973-4913 or email mark.olsen@planpilot.com. We can walk you through our consulting services and how we can help you improve plan decision-making through strong governance.
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