What you can do if you are a Plan Sponsor:
As a Plan Sponsor, benefits manager, or trustee, it is nearly impossible to ignore the press about the allegations and investigations of companies in the mutual fund industry. And it is even more difficult to ignore the employees, as well as those in management, who may be concerned about your current investment options. Assistant Labor Secretary Ann Combs recently told attendees at the annual conference of the National Defined Contribution Council, that the fact that "improper practices are being investigated needs to be factored in" to a plan sponsor's thinking. Combs said that providers and plan sponsors "should have active communications with mutual fund companies" about their practices.
Things you can do as a plan sponsor include:
- Fulfill your fiduciary responsibility. In this tumultuous environment, there are many complex issues to consider when acting in the interests of plan participants. We recommend that plan sponsors consult with their legal and investment advisors and money managers to ensure that the plan document is followed with the necessary skill, prudence, and diligence.
- Review your investment options.
- Contact the funds in your plans to determine what they are doing about market timing and late trading, and what they are doing to protect the interests of shareholders.
- Reevaluate all asset classes and styles.
- Consider adding funds to your plan that assess companies on corporate responsibility. Keep in mind that socially responsible funds are perfectly acceptable for retirement plans - ERISA's fiduciary obligations do not prohibit socially responsible investing as long as the performance of the investment holds up to its traditional peers.
- Provide information to your plan participants such as what participants should look for in their fund prospectus on important policies and fees such as market timing and redemption fees.
- Determine whether the funds in your plans vote their proxies in your participants' best interests. Read the proxy voting guidelines of the funds in your plans to determine how they vote on issues of corporate governance, workplace practices, environmental impacts, etc. Funds that merely vote with management on these issues may not be voting in a way that is consistent with how the majority of the participants would vote.