Correcting Conflict of Interest...

[Guest blabukiff]

There is a severance fund. The trustees and administrators of the fund are also participants in it.

If the trustees and administrators vote to deny somebody benefits, it may look like a conflict of interest, because granting the benefit would diminish the trustees' and administrators' benefits.

There is no reason to believe that the trustees and administrators are acting arbitrarily or capriciously, and there are safeguards set up in the fund. There are certain procedures which must be followed, including appealing to the entire board of trustees if a person's benefits are denied.

What safeguards have you used or do you know of which would help eliminate this problem? Thank you.

[david rigby]

Hold meetings?

Written documentation of the benefit application?

Written documentation of the actions?

[Guest blabukiff]

Hold meetings?

Written documentation of the benefit application?

Written documentation of the actions?

There is already a multi-step process involved. The employee will apply for benefits, and a board will grant/deny them. If the employee doesn't like the decisions, he/she can appeal to the executive board of the plan.

The problem is that most, if not all, of the members of the executive board have their pensions in the fund, so if they award the benefits, their own benefits will decrease, even if only slightly.

So, I'm just wondering if there are any ways to modify the plan to eliminate this inherent conflict of interest.

Would it be best to have an independent consultant making the decisions?