Paul Visconti, senior director of total health and retirement programs at energy services company AVANGRID Inc., found himself in a situation last year that's increasingly common among plan sponsors: The retirement plan committee overseeing the company's $2 billion 401(k) plan lost four of its five members — all within six months' time.
"They trickled out over the course of 2022," Mr. Visconti said, referring to four committee members and "long-timers" who either left the company for better opportunities or retired. His concern, he said, was less about finding replacements and more about finding people who would be thoroughly prepared to serve on the committee.
AVANGRID is not alone. More plan sponsors are reporting high turnover in retirement plan committees, losses that industry observers say have sent some plan sponsors scrambling to find new members and get them up to speed on their fiduciary responsibilities. In some cases, the losses have even led to stalled projects and initiatives.
The turnover stems mostly from the "great resignation" and other post-pandemic labor shifts but also from a weakened economy, according to industry experts.
Emily Wrightson, a principal at CAPTRUST Financial Advisors LLC in New York, has seen a high level of turnover among committee members across her entire client base, often not just of one member but multiple members, a reflection of the tight labor market, she said.
Greg Ungerman, a senior vice president and defined contribution practice leader at Callan LLC in San Francisco, also reports an uptick in committee turnover, attributing it to layoffs and business restructurings in the post-COVID environment.
"Committees are not immune to all the layoffs going on," he said, adding that workforce reductions in technology and other industries "flows through to both staff and committee members."
Gregg Levinson, senior director of retirement at Willis Towers Watson PLC in Philadelphia, says colleagues, too, have seen higher-than-expected turnover, and attributes the turnover to business disruptions triggered by the pandemic. Last year, a large retail company client had to "suddenly reconstitute the committee" because all of its members were "let go" as the company struggled in the wake of the pandemic, he said.
In some instances, committee turnover has also been due to people being removed from the committee for not taking the job seriously and "putting the committee's decision-making power at risk," Mr. Levinson said. "They're not coming to meetings. They're not doing their homework," he said.