The 2021 PBGC Premium Burden Report
plan sponsors are paying PBGC Variable Rate Premiums and of those that still are, fewer sponsors are leaving money on the table than at any previous year since we began publishing the PBGC premium report
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Pension Finance Update – January 2022
January was a mixed month for pensions, as higher interest rates and lower stock markets pushed pension assets and liabilities down last month.
Outlook 2022 – The Retirement Policy agenda – Highlights
In this article, we briefly consider the 2022 retirement policy legislative, regulatory, and litigation agenda. Most of these issues are carryovers from 2021, and we have discussed them at length elsewhere. We are, therefore, going to keep our preview of 2022 brief, focusing on the “highlights,” and providing links to our prior, more comprehensive treatment.
Court grants Intel’s motion to dismiss in litigation challenging the use of “non-traditional assets” in a TDF
On January 8, 2022, the United States District Court for the Northern District of California granted defendant plan fiduciaries’ motion to dismiss in Anderson v. Intel, a case involving a challenge to Intel’s inclusion of non-traditional assets (including hedge funds, private equity, and commodities) in Intel’s 401(k) plan default target date fund (TDF). Plaintiffs argued… Read More
Parsing DOL Guidance On Private Equity In DC Plans
In June 2020, the (Trump Administration) Department of Labor issued an Information Letter with respect to the inclusion of private equity investments as a “component” of a fund (e.g., a target date fund) included in a fund menu in a participant directed defined contribution plan. On December 21, 2021, the (Biden Administration) DOL issued a “Supplemental Statement” with respect to the 2020 Information Letter, qualifying and limiting the application of the (2020) Information Letter in some respects.
The Supreme Court sends Hughes v. Northwestern back to the Seventh Circuit
On January 24, 2022, in a unanimous decision, the Supreme Court vacated the Seventh Circuit’s decision in Hughes v. Northwestern (an ERISA prudence case implicating a number of issues that have been raised in 401(k) fee litigation). The Court rejected the Seventh Circuit’s reliance on the availability of lower-cost alternatives as a defense to claims that the cost of certain funds and of plan recordkeeping was unreasonably high, remanding the case for consideration under the rule in Tibble v. Edison, that a fiduciary has an obligation to remove imprudent investments.
2021 Retirement Policy – A Year In Review
Throughout the year, we have followed the performance of the interest rate and securities markets, tracking their effect on retirement finance. As of mid-December, interest rates are up 30-40 basis points for plans with typical duration, and the S&P 500 is up 25% on the year.
401(k) Fiduciary Litigation – “Underperformance” – Current Issues
Among other issues, Linkedin involves a claim that Linkedin plan fiduciaries breached their duty of prudence by selecting/retaining an “underperforming” target date fund. This sort of claim is being brought more frequently by plaintiffs’ lawyers in 401(k) breach-of-duty-of-prudence litigation.
DB Plan Terminations – Some Basics
The combination of higher interest rates and a strong stock market have significantly improved pension funding. For some sponsors looking to exit the DB system, this improvement in funding may put them in a position to consider plan termination. In this article we briefly review some of the key issues the project of terminating a plan presents.
Retirement Policy Update – November 2021
President Biden signed into law the Infrastructure Investment and Jobs Act (IIJA). The new legislation (among many other things) extends 25-year average interest rate stabilization relief under ERISA’s DB plan minimum funding rules another five years.