ERISA Retirement Plan Fiduciary Responsibility Practicing Fiduciary Prudence Workshop. 2006 Benefits New York Conference New York, NY March 13, 2006 11:00 AM – 11:50 AM. About Your Presenters.
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2006 Benefits New York Conference New York, NYMarch 13, 200611:00 AM – 11:50 AM
Greg holds a B.S. in Psychology, Plymouth State University, and an M.B.A. from Rivier College. He is a Certified Compensation Professional, Certified Benefits Professional and a member of WorldatWork.
Wayne has a B.S. from Northeastern University, an M.B.A. from Suffolk University, is an Accredited Investment Fiduciary (AIF), and holds various securities licenses.
4 Diversify plan investments, unless imprudent
5 Comply with provisions of plan and applicable law
Board of Directors
Retirement or Administrative Committee
Functional Responsibilities in order to comply w/ERISA
(Duties may be delegated)
ERISA & IRC
(Style, Market Cap, Geography
Buy & Sell Decisions, etc.)
“Prudence is About Process … Not Performance!”
WHO IS A PLAN FIDUCIARY?
Social Security 30% to 35%
Personal Savings 30% to 40%
Pension 30% to 35%
“Under the Investment Advisers Act of 1940 (Advisers Act), an investment adviser providing consulting services has a fiduciary duty to provide disinterested advice and disclose any material conflicts of interest to their clients.
In this context, SEC staff examined the practices of advisers that provide pension consulting services to plan sponsors and trustees. These consulting services included assisting in determining the plan's investment objectives and restrictions, allocating plan assets, selecting money managers, choosing mutual fund options, tracking investment performance, and selecting other service providers.
Many of the consultants also offered, directly or through an affiliate or subsidiary, products and services to money managers. Additionally, many of the consultants also offered, directly or through an affiliate or subsidiary, brokerage and money management services, often marketed to plans as a package of “bundled” services.
The SEC examination staff concluded in its report that the business alliances among pension consultants and money managers can give rise to serious potential conflicts of interest under the Advisers Act that need to be monitored and disclosed to plan fiduciaries.”
- Excerpt from “Selecting and Monitoring Pension Consultants: Tips for Plan Fiduciaries”
Written by the Securities and Exchange Commission, May 2005
Action: Does Your Plan have a “Committee Charter”?
… and many others
Do Plan Funds Add Value? Responsibility
Three-Year Benchmark And Portfolio Performance For Various Risk Levels
The return information below was determined using the following funds (indexes), as reported by Morningstar (Ibbotson):
MODERATELY AGGRESSIVE (MA)
25% Cash 40% Fixed Income
25% Balanced 3% Large Value 4% Large Blend 3% Large Growth
35% Fixed Income
25% Balanced 9% Large Value
7% Large Blend
9% Large Growth
5% Fixed Income
10% Large Value
10% Large Blend
10% Large Growth
8% Mid-Cap Value
7% Mid-Cap Growth
8% Small-Cap Value
7% Small-Cap Growth
10% Real Estate
10% Fixed Income
10% Large Value
15% Large Blend
10% Large Growth
5% Mid-Cap Value
5% Mid-Cap Growth
5% Small-Cap Value
5% Small-Cap Growth
5% Real Estate
Asset Allocation Assistance Responsibility
(Lifecycle (Risk & Age-based), Managed Accounts, Custom Strategies)
* The Naïve Allocation uses only the S&P 500 Index for equities, Lehman Brothers Aggregate Bond Index for fixed income, and 90-day Treasury Bills for cash and equivalents.
** Performance numbers reflect the target allocation weight of each underlying fund or index, rebalanced monthly.
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If you don’t know what you are doing …
ERISA requires you to find someone who does.
Vice President, Compensation, Benefits, HRIS
Five Clock Tower Place
Maynard, MA 01754
Wayne G. Bogosian
The PFE Group
144 Turnpike Road, Suite 360
Southborough, MA 01772
(508) 683-1400, ext. 205