Dive Brief:
- A recent survey found that 76% of employers have reviewed or plan to review their procedures for monitoring company stock.
- 74% have reviewed or plan to review their investment policy statement.
- 26% have initiated or are considering initiating procedures to eliminate their plan's company stock.
Dive Insight:
The findings of a recent Towers Watson survey of 160 employers with company stock in their defined contribution (DC) pension plans show that companies are paying close attention to the Fifth Third decision.
The Supreme Court’s ruling in that case is consistent with ERISA’s general approach to evaluating fiduciary decisions based on whether a fiduciary has followed a “prudent process.” A prudent process will usually include documenting that a plan’s fiduciaries have sought appropriate information, asked pertinent questions and accessed experts when appropriate. Towers Watson believes fiduciary committees will benefit from a post-Fifth Third review of their decision to offer company stock as a DC plan investment option. Towers Watson recommends the following questions for employers/plan sponsors as a starting point:
Should we maintain company stock as an investment option and, if so, with what, if any, modifications to our risk management approaches? If we should not keep company stock as an investment option, how do we best manage its elimination?
