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REQUIREMENTS FOR ELECTING BOARD OF TRUSTEE MEMBERS
FOR
THE ASEA/AFSCME LOCAL 52 HEALTH BENEFITS TRUST
The Board of Trustees for the ASEA/AFSCME Local 52 Health Benefits Trust will be a unilateral board, containing no employer representatives.
The ASEA/AFSCME Local 52 Health Benefits Trust has adopted a Trust Agreement which:
1. Establishes the manner in which the members of the Board of Trustees shall be elected, and
2. Determines the number of Trustees that will serve on the Board.
In evaluating the content and term of office of the Board of Trustees, the following factors were considered:
1. The Board of Trustees is an entity completely separate from the ASEA Local 52 Union. While its members may be affiliated with the Union or part of the membership of the Union, the duties of a Trustee must be carried out independent of the business of the Union. Trusteeship is not a political position. Union politics or issues regarding Union Leadership are not appropriately considered as part of the business of the Trust. Upon entering the Board Room, the Trustee must remove his or her hat as a Union representative or member and don the hat of the fiduciary. The Trust exists in perpetuity to provide benefits to the membership of the Union and their dependents, independent of the Union leadership. The Trustee's duty is to act solely in the exclusive interest of the Plan participants. Continuity on the Board aside from the shifting power within the political entity of the Union is essential to adequately manage the business of the Trust.
2. The position of Trustee requires a high degree of understanding of the technical operations of employee benefit plans, fiduciary standards, investment policy design and management, demographic and economic factors affecting the provision of health care, cost containment and managed care issues, and the legal requirements imposed by the IRS and the Healthcare Finance Administration as well as guidance from ERISA and the U.S. Department of Labor. Education is an ongoing responsibility for a Trustee, given the fact that the law requires that a Trustee exercise the care, skill, prudence, and diligence of a prudent expert acting in like capacity and familiar with such matters in making trust decisions. New Trustees will agree to attend as expediently as possible an IFEBP Certificate of Achievement on Public Plan Policy - CAPPP or an equivalent education program. A copy of the certificate of completion for all education courses must be supplied by each Trustee to the Trust office for its records. The position of Trustee is serious, time consuming and uncompensated. Federal law allows and encourages Trustees to hire and rely on experts to assist them in their duties. A Trustee may not, however, rely blindly on the advice of experts. The Trustee must act prudently in educating him or herself in the matters on which he or she is being advised and to actively evaluate the performance of the experts who are hired.
3. Trustees are fiduciaries who are required to be insured under fiduciary liability insurance policies. Trustees are also required to be bonded. Insurance and bonding, however, will not release a Trustee from liability for a knowing fiduciary breach involving a criminal violation, libel, slander, fraud, or from resulting penalties, fines or punitive damages. An individual is barred from service as a Trustee if the individual has been convicted or imprisoned as a result of his or her conviction of a felony crime, any violation of Section 302 of the Labor-Management Relation Act, any violation of the provisions of ERISA, any violation of the federal mail fraud prohibitions, any crime that would bar a person from serving as an investment advisor, and a number of other violations involving abuse or misuse of a person's labor organization or employee benefit plan. An individual who is elected or appointed as a Trustee of the Plan will be required to sign an affidavit as to his or her fitness to act as a fiduciary and may be subject to a thorough criminal background investigation.
4. The records that need to be maintained in the operations of an employee benefit plan are numerous and diverse. In general, they include all necessary financial records to account for all payments to and from the plan and all assets and liabilities. The finances of the plan are audited annually by an independent public accounting agency retained by the plan to prepare necessary reports to federal agencies, and to attest to the fact that the plan is in compliance with its record keeping, requirements. A Trustee must be familiar with the records of the plan and be able to evaluate the records for sufficiency and accuracy. A Trustee by him/herself cannot release, disclose or otherwise make available sensitive and/or non-public Trust documentation or information, nor can a trustee by him/herself require the Trust Administrator (nor Trust staff) to do the same, without consensus of the full Board.
5. Investments are the area most frequently the subject of claims of fiduciary breach and are frequently the subject of suits against a plan by plan participants. While Trustees are not required to have a level of investment expertise equal to that of a professional investment manager or adviser, the Trustees do have a duty to oversee the performance of the professionals hired to manage the plan's assets. Moreover, the Trustees must exhibit a high level of prudence and expertise in developing an investment policy and guidelines. Put simply, the Trustees should delegate investment management responsibility to a hired professional investment advisor; however, such delegation does not relieve the Trustees from understanding and overseeing the plan?s investment performance and goals. A Trustee must have the skills necessary to evaluate the performance of those individuals the Board of Trustees has delegated to perform investment functions on behalf of the Trust.
Trustees will be elected based on their credentials, taking into consideration the individuals' knowledge of employee benefits issues, special training pertaining to benefit plans and/or fiduciary responsibility, and other unique qualifications, training, or knowledge. The Trustee shall serve a term of office prescribed by the Trust Agreement. As stated above, the Board of Trustees must act independently from the political environment of the Union to fulfill its fiduciary obligations. A Trustee must act solely in the best interest of the plan participants and their dependents.
I have read this "Requirements for Electing the Board of Trustees" document, I understand its contents, and I agree to execute this document and also agree to follow all administrative policies and procedures approved by the Board of trustees, if selected as an ASEA/AFSCME Local 52 Health Benefits Trust Trustee.
Dated this _______ day of __________________, 2007
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Signature
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Printed Name
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