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News Items, by Subject

Ret plan investments - misc

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Second Circuit Affirms District Court's Equitable Remedy in Xerox Case
"[T]he Second Circuit upheld the district court's decisions to: [1] Apply the equitable remedy of reforming the plan, calculating benefits as if the plaintiffs were newly hired. [2] Award the plaintiffs prejudgment interest at the federal prime rate." [Frommert v. Conkright, Nos. 17-114, 17-738 (2d Cir. Jan. 14, 2019)] (Thomson Reuters Practical Law)
Best Interest and Best Practices, Part 13
"In most of the settled cases, the plaintiffs' class action attorneys require that certain conditions -- or 'best practices' -- be adopted by the plan fiduciaries. And, in settlement after settlement, those conditions are, by and large, the same. That raises the obvious question, why haven't plan committees reviewed these cases and instituted the practices required by the settlement agreements?" (
Developing a High-Performance Retirement Plan Committee
"[1] Choose the right number of members ... [2] Appoint a Chairman and a Secretary ... [3] Utilize a Committee Charter and Committee Roster ... [4] Provide formal fiduciary training ... [5] Meet 2 to 4 times per year (but no less than annually) ... [6] Keep meeting minutes ... [7] Maintain a 'fiduciary file' ... [8] Purchase fiduciary liability insurance." (Greenspring Advisors)
The Georgetown University 403(b) Decision and the Future of 403(b) Fiduciary Litigation
"Based on the nature of the arguments within the Court's analysis of the Stock fund, the Court based its opinion purely on the fund's returns, both the fund's nominal, or stated, and risk-adjusted returns. For the courts to start basing decisions even in part on Morningstar' 'star' system is not a good sign." [Wilcox v. Georgetown Univ., No. 18-422 (D.D.C. Jan. 8, 2019)] (The Prudent Investment Fiduciary Rules)
Vanguard Announces the Passing of Founder John C. Bogle
"John Clifton Bogle, founder of The Vanguard Group ... died [January 16] in Bryn Mawr, Pennsylvania. He was 89.... He introduced the first index mutual fund for investors and, in the face of skeptics, stood behind the concept until it gained widespread acceptance; and he drove down costs across the mutual fund industry by ceaselessly campaigning in the interests of investors." (Vanguard)
Rapid Collapse of Utility Underscores Need to Manage Risk
"In a regulatory filing, PG&E disclosed it will file for Chapter 11 bankruptcy protection. Three of its retirement plans -- the Supplemental Retirement Savings Plan (SRSP), Supplemental Executive Retirement Plan (SERP), and Defined Contribution Executive Supplemental Retirement Plan (DC-ESRP) -- are likely to experience substantial losses and may be worthless, as participants in these plans acquire status as General Unsecured Creditors (GUC).... Over the last three months, PG&E stock has lost more than 80% of its value, causing the company's valuation to crater to $2.8 billion from a peak of more than $36 billion in 2017.... Not a single analyst or market expert predicted such a precipitous decline." (StockShield)
Cybersecurity: Don't Become a Different Kind of Victim
"A former broker at a national brokerage firm was recently sanctioned by FINRA after accepting instructions to transfer assets out of a client account.... The instructions were actually sent by an imposter who had obtained access to the client's account, presumably through some form of cyber-crime. Unfortunately, the broker unwittingly contributed to the imposter's malfeasance by not only accepting the instructions but by also taking pro-active steps to circumvent his brokerage firm's controls." (Winstead PC)
Evaluating Your Financial Advisor
"This year's evaluation might be a bit different from most because of the significant volatility we experienced in the markets.... Learn exactly what you are paying ... Discuss fee transparency ... Understand your investment costs ... Determine whether your advisor is a fiduciary ... Get a list of the services you should be receiving ... Check your advisor's background ... Make sure you are getting leading-edge advice ... Confirm that your advisor has no conflicts of interest ... Check the marketplace[.]" (Lawton Retirement Plan Consultants)
Recent Market Volatility Has Revealed This About Target Date Funds
"[W]hile all the major indices were down double-digits in the fourth quarter, Morningstar reports the average losses for all categories of target date funds remained in single digits. For the year, target date funds performed comparable to the broader markets. Of course, longer term target date funds lost more as they held lower percentages of fixed income assets to help mitigate the decline in equities." (Fiduciary News)
Restoring Lawsuit Winnings to an IRA
"An IRA owner sometimes has a claim against an investment advisor or a company for losses in connection with products or services provided to the IRA.... In the context of qualified plans, a recovery on a claim like this is allowed to be paid into the plan as a 'restorative payment' ... and as such the IRS does not consider it a contribution to the plan. Therefore, it is not subject to the rules and limits applicable to plan contributions. The IRS similarly has allowed IRA owners to contribute this type of recovery to their IRAs." (Morningstar Advisor)
Pension Derisking: Start with the End in Mind (PDF)
12 pages. "Recognizing that all plans are different, the formulation of each plan's glide path should begin by determining the funding-level objective at which the plan sponsor wishes to minimize volatility of funding status. Once that level of funding is identified and a matching end-state asset portfolio has been designed, a gradual path based on funding level and asset allocation can be mapped." (Vanguard)
The Do's and Don'ts of Your 401(k) Fund Lineup
"Develop a standalone menu of funds, which allows you to give participants the opportunity to develop a properly diversified portfolio on their own.... Remember that too many options can be confusing for participants and actually cause them to make poor decisions or no decision at all.... When designing the menu, make sure that decisions are made for the group collectively, not just the Committee members.... Be sure to review your fund lineup regularly. It doesn't make sense to make changes for the sake of making changes." (Conrad Siegel Actuaries)
Examining the Fiduciary Duties of Investment Advisers Under State Common Law
"In 2018 the SEC published a draft of its interpretation of the fiduciary duties of investment advisers.... The SEC's draft could lead investment advisers to believe their conduct is 'o.k.' -- when in fact litigation (and arbitration) occurs as a result of state common law fiduciary claims -- and only very rarely under the Advisers Act itself ... [This article describes] the fiduciary duties of investment advisers, as discerned from both the SEC's proposed rule, but as augmented with state common law understandings of the fiduciary standard of conduct." (Ron A. Rhoades, JD, CFP)
BlackRock to Cut 500 Jobs Amid Corporate Restructuring and Market Uncertainty
"BlackRock announced Thursday layoffs of about 500 employees, or 3% of its workforce, as part of company-wide restructuring. The planned staff cuts are firmwide, across all departments and geographies, and will happen over the next few weeks[.]" (Pensions & Investments)
Getting Your DB Plan Ready to Land Safely
"As plans get closer to their intended destination and as they line up for their (hopefully) final approach, emphasis needs to turn more towards addressing the liability risks.... Continually changing liabilities and short-term cash flow demands can provide severe and unpredictable turbulence and strong side winds on that final approach to the runway.... Making use of the best technology to regularly track not only your assets, but also your liabilities in detail -- and, most importantly, the interaction between the two -- is essential if you don't want to lose control at critical moments." (RiskFirst)
Best Interest and Best Practices, Part 12
"This article discusses a novel approach for compliance with the fiduciary standard for the selection of investments for 401(k) plans.... [For the First Circuit Court of Appeals], the starting point is to consider index funds. Then, plan fiduciaries should seek to identify other funds, including actively managed funds, that can reasonably be expected to match or outperform the index funds." [Brotherston v. Putnam Investments, LLC, No. 17-1711 (1st Cir. Oct. 15, 2018)] (
Alight Solutions 401(k) Index Full Year 2018 Observations
"[P]articipants were very active during the year, with 46 days of above-normal daily transfer activity -- the highest number of above-normal days in the last five years, much higher than the 13 days of above-normal trading in 2017. On the other hand, net trades in 2018 amounted to only 1.42% of total plan balances, making 2018 a record low year for trading activity in the over 20-year history of the Index." (Alight Solutions)
The Stock Market Soap Opera and Some Basic Math
"[Is] the current stock market 'crisis' real -- or just a soap opera? And, if the 'crisis' has substance, should it cause concern for retirement plan investors? ... For most of us, the answer is to stay the course and maintain a properly diversified investment strategy, regardless of market performance, and avoid being reactionary to market events. A proper understanding of percentage movements in the market should help in this regard, as opposed letting the media narrative drive decisions." (Cammack Retirement Group)
[Opinion] 2019 Wish List for Regulation of Financial and Investment Advice
"[1] Have the SEC alter how the Advisers Act is applied and enforced.... [2] The states should move to adopt fiduciary standards for brokers who provide investment advice.... [3] Clean up mutual fund regulation.... [4] Solve the problems in defined contribution plans ... [5] Reduce broker-dealer conflicts of interest.... [6] Work to reduce regulatory overkill.... [7] Disband FINRA." (Ron A. Rhoades, JD, CFP)
[Opinion] Divestment: The Impact of Political Decisions on Public Pensions (PDF)
11 pages. " Divestment is rooted in arguments based on global urgency, political necessity, or morality. This is inherently against the fiduciary responsibility of public pension fund managers.... Divestment as a means of creating change is ineffective.... Expert financial management firms disagree on divestment strategies.... There are real, expensive costs associated with divestment which directly harmed public pensions." (Institute for Pension Fund Integrity)
Another University Wins 403(b) Suit
"In the course of the 28-page ruling, [Judge Collyer] took the plaintiffs to task for: [1] not appreciating the difference in standing between defined benefit and defined contribution plans ... [2] applying 401(k) plan standards to 403(b) ... and [3] 20/20 hindsight in evaluating investment decisions[.]" [Wilcox v. Georgetown Univ., No. 18-422 (D.D.C. Jan. 8, 2019)] (National Association of Plan Advisors [NAPA])
Most Pension Plans Will Have Seen Material Declines in Funded Status During December
"In December, discount rates decreased sharply from the 2018 high water mark the past couple months, dipping nearly 0.25%. Despite the decline, rates are still slightly higher than rates at the end of Q3 2018 and are up over 0.60% since the end of 2017." (River and Mercantile Solutions)
[Opinion] Disclosure Requirements the SEC Could Adopt -- That Would Make Sense
"While disclosures are not the most effective means of consumer protection, the disclosure forms [in this article] would provide consumers with much more useful information. These forms of disclosure would more clearly provide consumers with information that permits them to understand the role their broker or investment adviser is in, and the duties owed (or not owed) to the consumer." (Ron A. Rhoades, JD, CFP)
An Annuity Is Not a Holiday Sweater: A Look at Lifetime Income in TDFs
"[An] 'auto-annuitize' feature in a TDF does not serve the best interest of defaulted DC plan participants.... [T]ools that largely exist today and are achievable within our current regulatory framework ... include: [1] Removing age restrictions and mandatory cash-outs. [2] Granting greater withdrawal flexibility for retired participants. [3] Allowing for incoming rollovers. [4] Offering investment options oriented to current retirees. [5] Providing enhanced advice and education that may inform participants of annuitization as an option." (Vanguard)
Ninth Circuit Rejects Petition for Rehearing from Chevron 401(k) Participants
"On Jan. 3, three federal appeals court judges voted to deny the request for a rehearing en banc ... The participants had sought class-action status. They claimed that some funds in the Chevron plan's investment lineup had charged 'unreasonably high' investment management fees among the six fiduciary breach claims." [White v. Chevron Corp., No. 17-16208 (9th Cir. Nov. 13, 2018, unpub.)] (Pensions & Investments)
Four Critical ERISA Cases to Watch in 2019
"[1] Plan participants' role in retirement plan management put into question.... [2] Will the standard challenge finally make its way to the Supreme Court? ... [3] Courts grapple with which party must prove loss causation in a breach of fiduciary duty case.... [4] The [DOL]'s fiduciary rule meets its demise." (401K Specialist)
Second Circuit Allows IBM Stock Drop Case to Proceed
"Jander does not resolve the 'would have' vs. 'could have' issue. Instead, the Jander court holds that, ... where disclosure of the inside information is likely in the near future ... in effect no fiduciary could conclude that disclosure would do more harm than good. This holding, in the court's view, does not conflict with related restrictions on securities fraud litigation (a related securities fraud case based on more or less identical facts was dismissed), because the ERISA action is based on fiduciary breach, not fraud.." [Jander v. Ret. Plans Comm. of IBM, No. 17-3518 (2d Cir. Dec. 10, 2018)] (October Three Consulting)
Selecting and Monitoring Target Date Funds
"Things [for plan fiduciaries] to consider are: [1] How well does the TDF's characteristics align with the ages and expected retirement dates of the plan participants? [2] What are the principal strategies and risks of the fund? [3] Have there been any changes to the investment strategy or management team since the fund was initially chosen? [4] What is the glide path? [5] What are the fees and expenses, including sales loads?" (Retirement Management Services, LLC)
Money Down the Drain During Typical De-Risking Process?
"[M]any investor and asset managers have historically been nonchalant in the transition of assets to fixed income mandates.... The investor leaves assets uninvested in cash until the new manager invests the cash into a complete fixed income portfolio.... This uninvested cash can lose out on investment income relative to yield-rich long-duration credit. As such, plan performance suffers.... [In] a suboptimal approach of giving uninvested cash to a fixed income manager, you should assume that your plan loses about one basis point (bp) of investment income per day. Could be more, could be less, but on average your assets are losing precious income." (Russell Investments)
[Opinion] Not Impossible: Meaningful Reforms to the Regulation of Investment Advice
"[This article sets] forth two major rules the SEC could adopt, in lieu of its current proposed Reg BI. The first rule would be adopted under the Advisers Act and would define, correctly, the scope of the broker-dealer exemption from the requirement to register under the Advisers Act. The second major rule herein would define the scope of the investment adviser's fiduciary obligation, in order to correct misunderstandings that might otherwise have resulted over time." (Ron A. Rhoades, JD, CFP)
Benchmarks for Target Date Funds (PDF)
10 pages. "This article describes the benchmarks that are currently available and offers some guidance on selecting the appropriate benchmark. Fiduciaries should align the objectives of their TDF with those of the benchmark, and confirm that the benchmark glide path and underlying allocations are in line with the TDF that is being evaluated." (Target Date Solutions, via Journal of Performance Measurement)
Ninth Circuit Opines on Effect of Actual Knowledge on ERISA's Statute of Limitations
"The Ninth Circuit's holding on this point make sense; a prohibited-transaction claim can be brought based solely on knowledge that a transaction occurred, thus the date a plaintiff learns of the transaction should start the three-year limitations period. But the Ninth Circuit's interpretation of 'actual knowledge' is practically problematic. A defendant will have to prove that a plaintiff in fact read materials in order to show a plaintiff had knowledge of facts contained in those materials." [Sulyma v. Intel Corp. Investment Policy Comm., No. 17-15864 (9th Cir. Nov. 28, 2018)] (McDermott, Will & Emery, via National Law Review)
Mutual of Omaha ERISA Plaintiffs Defeat Motion to Dismiss
"Citing a series of precedent-setting cases, Senior U.S. District Judge Joseph F. Bataillon of the U.S. District Court for the District of Nebraska [explained] that an ERISA complaint of this nature does not need to describe in exhaustive detail the ways in which plaintiffs claim defendants breached their fiduciary duties." [Lechner v. Mutual of Omaha, No. 18-22 (D. Nebr. Dec. 31, 2018)] (PLANSPONSOR)
2018 Variable Annuity Pricing Survey Summary
"[W]hile model sophistication has generally advanced in recent years in areas such as the projection of hedging strategies, stochastic reserves and capital, and the use of predictive analytics for policyholder behavior -- considerable variation in practices still exists among different organizations. The importance of these variations becomes apparent when they lead to drastically different design and guarantee level decisions, and also have a broader long-term effect on downstream sales, profitability and volatility of financial results." (Willis Towers Watson)
[Opinion] The SEC Protects Brokers, Not Investment Advisers, and Not Consumers
"For decades the S.E.C. has diminished the line between 'product sales' (broker-dealer activities) and 'investment advice' (investment adviser activities). Without court intervention, there would be no line at all. And, even then, the S.E.C. refuses to draw common-sense lines, and to apply fiduciary standards of conduct to relationships that are advisory in nature." (Ron A. Rhoades, JD, CFP)
Pension Finance Update, December 2018
"December was the worst month for pensions in a decade, due to plunging stock markets and lower interest rates. Both model plans ... gave back all 2018 gains to date and then some -- Plan A lost 8% last month, ending 2018 down 1%, while the more conservative Plan B lost more than 2% in December, ending 2018 down almost 2%[.]" (October Three Consulting)
[Opinion] SEC's Proposed Form CRS Obfuscates, Rather Than Informs
"2019 may well be a watershed year for those who care about the future of the emerging profession of financial and investment advice. Against the backdrop of a court's overturning of the [DOL's] Conflict of Interest and related rules, and the SEC's bungling, several state securities administrators, and/or state legislatures, may step in to feel the void. First up may the New Jersey Bureau of Securities, which will likely release in early 2019 a proposal to impose fiduciary duties upon brokers who provide investment advice." (Ron A. Rhoades, JD, CFP)
Transamerica Faces Familiar Allegations in Self-Dealing ERISA Complaint
"Allegations in the text of the complaint put an emphasis on a warning that ERISA experts have been sharing heading into 2019, based on the results of both recent regulatory audits and litigation.... [If] a fund on a DC plan menu has been underperforming its stated benchmark for a long period of time and no action has been taken, this is a clear red flag." [Karg v. Transamerica Corp., No. 18-134 (N.D. Ia. complaint filed Dec. 28, 2018)] (planadviser)
Pension Plan OCIO: Is It Right for Your Company? (PDF)
"This paper reviews the primary challenges a plan sponsor faces when managing a [DB plan], and outlines the factors to consider in meeting objectives. It examines three models for running a pension: the internal team, the consultant assist, and the [outsourced chief investment officer (OCIO)]. With the help of a questionnaire, readers can better understand which model would be best for their unique pension need." (Vanguard)
New Year's Resolutions to Avoid 401(k) Fiduciary Frustration
"[1] Review plan fees ... [2] Review plan providers ... [3] Review salary deferral deposits ... [4] Review compensation ... [5] Review the employee census ... [6] Review active plan participation." (401K Specialist)
[Opinion] An Open Letter to the SEC and DOL: Please Clarify Who Is the 'Client' in Target Date Funds (PDF)
"TDFs have become riskier since 2008 ... [P]roposed prudence standards [would] require consultants to hold client best interests above their own, but it depends on your definition of 'client.' ... Please make it clear that TDF beneficiaries are the 'clients.' These clients want to be protected from investment losses as they near retirement and they think they are being protected, but they are not." (Target Date Solutions)
Second Circuit Revives Dismissed IBM Stock-Drop Suit
"The Second Circuit reinstated a claim for breach of fiduciary duty under ERISA brought by participants in IBM's 401(k) plan who suffered losses from their investment in IBM stock.... In so ruling, the Second Circuit became the first circuit court since the Supreme Court's decision in Fifth Third Bancorp v. Dudenhoeffer ... to allow such a claim to survive a motion to dismiss. According to media reports, this has sparked renewed hope within the ERISA plaintiffs' bar in the viability of these claims." [Jander v. Ret. Plans Comm. of IBM, No. 17-3518 (2d Cir. Dec. 10, 2018)] (Proskauer's ERISA Practice Center)
Full Ninth Circuit Panel Asked to Review Chevron ERISA Case
"The plaintiffs request a review by the full appellate panel, rather than the three-judge panel that affirmed dismissal of the case, because they say the court imposed strict pleading standards that conflict with the decisions of the 9th and other circuits." [White v. Chevron Corp., No. 17-16208 (9th Cir. Nov. 13, 2018, unpub.; appellants' petition for rehearing filed Nov. 27, 2018)] (planadviser)
D.C. Court of Appeals: Delta Pilots Cannot Recover Fiduciary Breach Damages from Plan's Post-Termination Investment Gains (PDF)
"The Corporation argues that it is entitled under Section 1344(c) to any post-termination increase in the value of pension plan assets. In other words, the Corporation reasons, Congress has already decided who benefits or suffers the loss from a change in the value of plan assets once that plan has been terminated. Therefore, the Corporation concludes that the pilots cannot recover that money as equitable relief for an alleged breach of fiduciary duty. We agree.... The pilots' request for post-termination investment gains is fundamentally flawed." [Lewis v. PBGC, No. 17-5068 (D.C. Cir. Dec. 21, 2018)] (U.S. Court of Appeals for the District of Columbia Circuit)
401(k) Suits Point to Need for Litigation Risk Prevention
"These settlements cover financial institutions that have filled their 401(k) plans with proprietary investments ... Although defendants admitted no wrongdoing and agreed to pay money, many settlements include non-monetary remedies for plan management practices that could have reduced litigation risk in the first place." (Pensions & Investments)
Under ERISA, Ignorance Is Bliss in the Ninth Circuit
"[T]he Ninth Circuit concluded that the statute of limitations was not triggered when the documents were made available to the plaintiff.... [T]he plaintiff was required to have actual knowledge that Intel increased the retirement funds' alternative investments and that those investments were imprudent." [Sulyma v. Intel Corp. Investment Policy Comm., No. 17-15864 (9th Cir. Nov. 28, 2018)] (Ogletree Deakins)
Trust in Financial Institutions Can Affect Retirement Plan Participation
"The results suggest an association between distrust in financial institutions and the likelihood that workers will choose to stay in a retirement savings plan if enrolled automatically. That includes whether they would take part in a state-sponsored individual retirement account with automatic enrollment [auto IRA], or one sponsored by their employer." (The Pew Charitable Trusts)
Retirement Assets Total $29.2 Trillion in Third Quarter
"Total US retirement assets were $29.2 trillion as of September 30, 2018, up 2.8 percent from June 30, 2018. Retirement assets accounted for 33 percent of all household financial assets in the United States at the end of September 2018." (Investment Company Institute [ICI])
In with the New, Out with the Old: A Flood of Quasi-fiduciary Rules Is Coming (PDF)
27 presentation slides. Topics include: [1] SEC initiatives; [2] DOL activity; [3] State fiduciary initiatives; [4] ERISA litigation trends; [5] 2019 legislative outlook. (Fi360)
Most Counts Against GE Allowed to Proceed in ERISA Lawsuit
"[The district court said] that, although mere knowledge that 'something was awry' is insufficient for actual knowledge ... Congress intended the actual knowledge requirement to excuse 'willful blindness by a plaintiff.'... [T]he defense unsuccessfully argue[d] that ERISA Section 406 does not apply here because the management fees are not a 'plan asset,' and that even if management fees are a plan asset, the claims must be dismissed because plaintiffs have not pled a non-exempt prohibited transaction." [In re G.E. ERISA Litigation, No. 17-12123 (D. Mass. Dec. 14, 2018)] (PLANSPONSOR)
Second Circuit Gives New Life to Stock Drop Claim
"The Second Circuit reversed dismissal of an ERISA stock drop class action finding plaintiff alleged enough to plausibly show that disclosure of alleged corporate problems would not have done more harm than good and sketching a treasure map for ERISA plaintiffs seeking to recover for 401(k) plan losses." [Jander v. Ret. Plans Comm. of IBM, No. 17-3518 (2d Cir. Dec. 10, 2018)] (Seyfarth Shaw LLP)
Fiduciary Status for the Unwary
"Since the determination of whether a broker-dealer is a fiduciary is 'functional,' that is, based on conduct, courts consider all of the facts in the relationship in determining whether the five-part fiduciary advice test is met. This includes the terms of the service agreement between the parties, as well as the conduct of the broker and the client's reliance on the broker's suggestions. Relevant factors may include: the regularity of the advice; the length of the relationship; the broker's knowledge about the plan client; the client's expertise in financial matters; whether the client is receiving any other investment advice for the plan assets; and whether the client has ever rejected the broker's recommendations." (Drinker Biddle)
[Opinion] What the Fed Does Next Could Save Your 401(k) -- or Drive It Even Lower
"Depending on what policy makers do and say, stocks could pull out of the dive that has left us worried about our 401(k) retirement savings.... Since most people expect the Fed to go ahead with its fourth 0.25 percentage point increase of 2018, the market's reaction shouldn't be too negative. (Quarter-point changes are the norm, except when drastic action is required.) However, a decision to pause would more than likely trigger a rally in stocks and bonds as investors breathe a big sigh of relief." (The Boston Globe; subscription may be required)
Retirement Industry Trends to Watch in 2019 (PDF)
"The enactment of legislation could usher in greater interest and adoption of guaranteed income options for 401(k) and other DC retirement plans.... [R]ecord-keepers will be under increasing pressure ... DC record-keepers that integrate with HSAs will have an advantage ... A more challenging stock market along with steadily rising interest rates ... could drive greater proliferation of, and demand for, products offering downside protection, stable value contracts, insurance products such as deferred annuities and guaranteed income benefits, alternative funds and real asset funds." (Institutional Retirement Income Council [IRIC])
Ninth Circuit Addresses 'Actual Knowledge' in ERISA Statute of Limitations Decision
"The Court determined that based on current law and precedent, 'actual knowledge' is something more than knowledge that a transaction has occurred.... The Court noted that the required level of knowledge will vary depending on the nature of the claim ... 'The key is that, whatever the underlying ERISA claim, the limitations period begins to run once the plaintiff has sufficient knowledge to be alerted to the particular claim.' " [Sulyma v. Intel Corp. Investment Policy Comm., No. 17-15864 (9th Cir. Nov. 28, 2018)] (FosterSwift)
Second Circuit Holds that Participants Stated Plausible ERISA Claim for Breach of Duty to Manage ESOP Assets Prudently
"[T]he Court was presented with the question of what standard one must meet to plausibly allege that fiduciaries of an [ESOP] have violated ERISA's duty of prudence.... On appeal, Plaintiff proposed just one alternative action: early corrective disclosure of the microelectronics division's impairment, conducted alongside the regular SEC reporting process. The Court found that a prudent fiduciary could not have concluded that the corrective disclosure would do more harm than good." [Jander v. Ret. Plans Comm. of IBM, No. 17-3518 (2d Cir. Dec. 10, 2018)] (Kantor & Kantor)
Deep-in-Debt CalSTRS Also Has $9.8 Billion Surplus
"The main CalSTRS pension fund is seriously underfunded, and school district pension costs are more than doubling, biting deep into classroom budgets. But a CalSTRS inflation-protection fund has a growing $9.8 billion surplus and an eye-popping positive cash flow.... [T]he add-on inflation protection is a separate special fund ... [which is] paid for only by the state ... Step-by-step, inflation protection grew from 58.4 percent to 85 percent of original purchasing power." (Calpensions)
Litigation Lessons for 401(k) and 403(b) Fiduciaries: Apply These in 2019
"[1] Your process matters.... [2] Put it in writing.... [3] Know and review your options.... [4] Understand target date funds.... [5] Benchmark plan fees ... [6] Retain an expert to help you.... [7] Consult outside counsel when necessary.... [8] Hold regular committee meetings.... [9] Review your providers.... [10] Schedule regular RFPs." (Cohen & Buckmann, P.C.)
State of the Insured Retirement Industry: 2018 Review and 2019 Outlook (PDF)
32 pages. "Demographic trends continue to favor growth of lifetime income solutions. 2018 saw continued shifts in the leading annuity product types across distribution channels, a trend that will continue in 2019. An improving interest rate environment will improve capacity and potentially have a positive impact on lifetime income benefit design. Rising market volatility will create both challenges (sales disruption) and opportunities (highlighting the value of protecting financial assets and income)." (Insured Retirement Institute [IRI])
How to Manage Your 401(k) Plan in a Time of Market Volatility
"For most people with 401(k) retirement plans, stock market volatility is taking its toll.... [R]ecent dips may feel like serious threats to one's retirement plans. But investment professionals suggest that rebalancing one's account is as radical a change as one should make.... That may be hard to hear at the moment for those experiencing 'account balance trauma.' But, despite the fact that the majority of 401(k) participants have exposure to equities, only around 8 percent are all in on stocks ... And if they have been keeping up with their accounts, they may just be closer to flat than seriously down." (Born2Invest)
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