BEST PRACTICES: Preparing an Effective Summary Plan Description Flashcards
All state and local government pension plans should prepare an SPD that completely, accurately, and clearly describes the significant components of the pension plan for participants.
What is the primary purpose of a Summary Plan Description (SPD) in public employee retirement systems?
To completely, accurately, and clearly describe the significant components of the pension plan for participants.
What steps should be included in the comprehensive process of preparing an SPD?
Assessing informational needs, analyzing pension plan terms, preparing and reviewing the initial draft, considering the level of detail, and including charts and graphs for readability.
Who should review the SPD for completeness and accuracy before it is finalized?
The retirement system attorney and actuary.
What basic information should an SPD provide at a minimum?
Type of plan, how the plan is administered, service rules, how benefits are calculated, vesting information, benefit payment forms, and how to file a claim for benefits.
Why is it important to involve many individuals in the drafting process of an SPD?
To achieve the best level of detail without overwhelming participants and to ensure a thorough understanding of the plan’s features.
How often should the SPD be reviewed and updated?
At least annually, when the plan is modified, or when legal or legislative changes affect participants.
What methods can be used to distribute the SPD to participants?
At work, through the mail, or via electronic media such as e-mail.
Why is the SPD considered an important document in courts regarding pension plans?
Courts might rely on the SPD as the most accurate description of the plan and might enforce the terms of an SPD, even if they are not included in an underlying plan document.
How can plan sponsors ensure that participants are familiar with the SPD?
By distributing it efficiently and emphasizing the responsibility of participants to familiarize themselves with the document.
What should be done when a plan is significantly modified?
An updated SPD that reflects these changes should be distributed to participants.
