Roland|Criss’ Risk Practice Group deals with urgent questions every day from clients who are challenged by COVID-19 related issues. Human resources and finance leaders are worried that they make the right decisions for the good of their organizations and employees.
The COVID-19 outbreak is an extraordinary event that is extreme and complex due to its uncertainty. Few members of employee benefit plan fiduciary committees have experienced anything like it. It is a crisis that demands the ability to make tough decisions in the face of inconclusive data. The implications of which are both immediate and far-reaching.
The COVID-19 outbreak is an extraordinary event that is extreme and complex due to its uncertainty.
Preparation is the key to responding successfully to any crisis and the regulatory changes that usually accompany them. The best-prepared organizations are those whose fiduciary risk management systems see continuous improvement. Combined with fiduciary training, leaders in such organizations will emerge stronger from the COVID-19 crisis.
““Human resources and finance leaders are worried that they make the right decisions for the good of their organizations and employees.
The following five actions chart a course for leaders to take that can help them achieve a high level of care over their employees’ retirement plan assets, while at the same time, protecting their organization’s risk culture.
Review the plan’s governance policies
The first priority is to be sure you are fluent in the plan’s governance structure. Three essential elements in the review are the fiduciary committee’s charter, the “plan document,” and the investment policy statement. Study them carefully.
Test the Plan’s costs
A primary duty of retirement plan fiduciaries is to ensure that the fees paid to a plan’s service providers are reasonable. A recently documented analysis of your plan’s fees should be retained in the fiduciary file. The analysis should contain a report that explains the steps the fiduciaries took in order to ensure that fees paid to vendors were aligned properly with the services the vendors delivered to the plan.
Examine the CARES Act
Decide which provisions of the CARES Act should be adopted by your plan. Take into account all of the likely liquidity needs of your plan’s participants. Document the issues considered during the decision-making process. Verify that the plan’s recordkeeper has a clear understanding of the provisions the fiduciaries chose.
Test the recordkeeping system
Due to short regulatory deadlines, recordkeeping vendors are under stress to implement CARES Act related changes to their administration systems in a timely matter. It is, therefore, important that a test of any changes made by your plan’s recordkeeper to its computer and servicing systems be validated before going “live.”
Update the fiduciary governance, risk, and compliance (“GRC”) framework
Any additions or modifications to the scope of issues that the COVID-19 event have imposed on your plan’s fiduciary oversight should be supported by relevant internal control procedures.
Roland|Criss offers a complete governance, risk, and compliance program that’s tailored for the ERISA plan environment. Called FiduciaryGRC, it is the ideal fiduciary risk management tool for the coronavirus COVID-19 era.
FiduciaryGRC is a trademark of Roland|Criss Fiduciary Services
