The majority of all multiemployer employee benefit plans are managed by a Board of Trustees, comprised of an equal number of members from the applicable Union(s) and representatives from Employers who employee union members. Such Trustees are charged with significant responsibilities that range from overseeing the delegated administrator of their employee benefit plans, monitoring the collection of plan contributions to eligibility for and approval of all types of plan distribution requests by participants and beneficiaries. Many Boards of Trustees normally meet only once every three months to collectively meet these fiduciary responsibilities. These meetings are often jam-packed, require intense discussions to present important voting issues, may last anywhere from two to 8 hours and can burn out well-intentioned Trustees.
In an effort to better fulfill their fiduciary commitments while reducing meeting times, retaining high-quality Trustees and prevent rushing into important decisions, many Boards have agreed to form committees to handle the business of their employee benefit plans between full Board of Trustee meetings. Committees are often formed to research and narrow down options for specific purposes, like choosing investment alternatives or replacing service providers such as actuaries, insurance companies or auditors. But standing committees are also frequently appointed by the Trustees for audits, collections, technology upgrades, legal updates, withdrawal liability assessments or participant education programs.
Well-run committees will bring their research and summaries of their decisions to the full Board of Trustees and move for those decisions to be voted on for adoption. Many times, the committees are able to better interact and understand the actions of service providers or the intricacies of legislative actions and bring a “truncated” version of their activities to the full Board.
While there are many advantages to the committee system, such division within a Board is not advantageous to every Board of Trustees. Sometimes committees get bogged down in their investigations and discussions and spend an inordinate amount of time on issues, which can exhaust committee members. Additionally, many plans and their Boards are simply too small to form committees in the first place. Further, inappropriate appointment of the ideal Trustees to a committee can result in disinterest if a member has no expertise in that committee’s specific area (like investments) or isn’t even sure what questions to ask a service provider. However, many Trustees may enjoy serving on a committee to learn about new operations or activities that they are not familiar with.
Boards of Trustees that have not considered forming committees may want to contemplate this action to better facilitate the numerous decisions and discussions which much take place in order for benefit plans to be effectively operated.