"Two recent decisions ... granting defendants' motions to dismiss in ERISA prudence litigation illustrate emerging themes in these cases: challenges to the standing of plaintiffs who have not actually invested in the funds (or in one case, were not participants in the plan) being targeted; and challenges to the adequacy of the comparators whose allegedly superior performance (or lower cost) is used to 'infer' imprudence." [Singh v. Deloitte LLP, No. 21-8458 (S.D.N.Y. Jan. 13, 2023); Locascio v. Fluor Corp., No. 22-0154 (N.D. Tex. Jan. 18, 2023)]

"[C]ourts are recognizing the different purposes and glidepaths of actively managed and passively managed funds, and that the long-term nature of 401(k) investing means both types of funds can (or even should) be offered as a prudent response to customer demand.... Second, courts are viewing with more skepticism imprudent recordkeeping fee claims based upon nothing more than a comparison to the market average.... Finally, it appears that courts are willing to recognize claims of imprudence sufficient to survive a Rule 12(b)(6) challenge where the complaint includes an allegation that the plan continued to offer the retail share class of a fund when the institutional share class was available."

"A case is currently pending in the 10th Circuit Court of Appeals involves many of the same issues that were in Brotherston, specifically the 'apples and oranges' argument and the issue of whose has the burden of proving causation in 401(k) actions.... This case is a perfect example of how some courts are improperly confusing the two distinct stages of pleading and proof of causation." [Matney v. Barrick Gold of N. Am., Inc., No. 20-275 (D. Utah Apr. 21, 2022; recon. denied Jun. 21, 2022; on appeal to 10th Cir. No. 22-4045)]

"Passive mutual funds' popularity is growing among investors, but defined contribution retirement plans will help actively managed funds maintain their dominance over the next five years[.]"

"The increases in interest rates throughout 2022 improved pensions' funded status and provided attractive yields for sponsors wanting to de-risk by increasing their allocation to fixed-income assets, ... MetLife Investment Management (MIM) ... estimates that, as of November 7, 2022, the average U.S. corporate pension's funded status was at 106.3 percent -- the highest in 10 years. The quarter-end average was 104.7 percent, which is 4 percentage points above the end of the second quarter."

"This document contains a notice of an exemption issued by the [DOL] extending the exemptive relief provided by PTE 2017-05 for an additional four (4) years. This exemption provides that certain entities with specified relationships to Citigroup ... will not be precluded from relying on the exemptive relief provided by Prohibited Transaction Class Exemption 84-14 [the QPAM Exemption], notwithstanding the Conviction during the Exemption Period."

"New Section 4501 of the Internal Revenue Code imposes a 1% excise tax on ... the fair market value of any stock repurchased by a 'covered corporation' during the tax year, effective for repurchases after December 31, 2022.... [C]ertain reductions to the FMV are permitted in connection with stock issued to employees or stock contributed to employee benefit plans.... [IRS Notice 2023-2 provides] initial guidance on a number of issues in anticipation of future proposed regulations."

"Average annuity purchase rates are up more than 250 basis points since January of 2022. In 2022, the annuity purchase cost of retiree placements made by October Three was consistently between 94%-105% of the pension accounting value with the average at 100.55%. Pension Risk Transfer Market activity exceeded expectations and was at an all time high in 2022. This activity is expected to spill into 2023[.]"

"The companies are defendants in 11 virtually identical ERISA lawsuits against sponsors -- including Microsoft and Citigroup -- accusing them of keeping the BlackRock LifePath Index Fund, whose performance lagged four other target-date series over certain time periods."

"In its 401(k) operations, the money manager mainly provides investments to plans of large and medium-size companies. The investment in Human Interest will help BlackRock gain insight into the growing market for small-company 401(k) plans[.]"

"Among the proposed changes is to impose higher standards for independence for plan service providers involved in the prohibited transaction exemption request. This may make it difficult to identify appropriate independent service providers, especially in light of increasing consolidation in the financial services industry."

"[I]nstitutional investors across segments took nearly two times more uncompensated risks -- or risks that are not sufficiently rewarded by return -- than compensated risks.... While adding managers into the portfolio lineup can potentially reduce overall risk, ... risks that were ultimately reduced were often different from what was intended as managers frequently cancelled each other out."

"Discount rates were up slightly for the month, but meaningfully up year-over-year. Equity markets were down again for the month and for the year (the S&P 500 had its worst year since 2008). While funded status most likely deteriorated in December, most plan sponsors will be in significantly better position at the end of 2022 than they were at the beginning of the year."

"Increases in interest rates, the increasing cost of PBGC premiums, and the idiosyncrasies of IRS minimum funding/benefit restriction rules may, for many sponsors, make 2023 a good year for defined benefit plan liability settlement -- through the payment of lump sums or the purchase of annuities (AKA pension risk transfer). [This article reviews] the issues with respect to 2023 settlements sponsors will want to consider."

"In the end, Congress could not agree on just what the legislative securities law 'fix' should be before the law was passed. Any fix would be complicated, nuanced, and involve a number of important competing trade-offs, in part because of the difference in the very nature of 403(b) and 401(k) plans."

"Inflation, recession, and poor investment returns are top concerns across all cohorts for 2023. All cohorts believe the Fed will raise rates twice in 2023. Widely differing opinions on where inflation will end in 2023. Crypto is the least-preferred retirement asset class."

"Understanding how plan participants approach investing is key to designing defined contribution menus that can help improve retirement outcomes. Here's a look at three participant profiles and potential solutions for each."

"When paying a dividend, the corporation pro rates the payment, in cash, to all shareholders; so if a plan owns 99% of the corporation, the plan would receive 99% of the total dividend paid out. The ROBS participant would then be able to invest the dividend in traditional (non-ROBS) 401(k) investments offered within their retirement plan. In this way, dividends help the ROBS owner leverage their company investment to diversify their retirement savings."

" 'New' 401(k) and 403(b) plans must be automatically enrolled, with automatic deferral increases, no later than the plan year beginning after December 31, 2024 (e.g., 2025 for calendar year plans). Any plan 'established' on or after December 29, 2022 is considered a new plan. Defaulting participants must be invested in a QDIA. There are exceptions for government plans, church plans, SIMPLE 401(k) plans, employers with 10 or fewer employees, and employers during their first 3 years of existence."

"This report summarizes the findings of our annual survey that captures changes employers intend to make to their retirement and financial wellbeing plans in the year ahead.... This year's report includes insights on several new topics, including: [1] Reactions to investing in a high-inflation environment; [2] Thoughts on digital assets and ESG in defined contribution plans; [3] Perspectives on employers' DE&I initiatives."

"Many investment strategies are quite complex and depend on an investment manager fully understanding the short-term and long-term needs and objectives of the plan. This understanding is often built up over years. It is very disruptive and harmful to be forced to give up this excellent relationship and engage in a lengthy and expensive search for a new investment manager with little or no history with the plan.... By disqualifying a QPAM in cases where such treatment is not warranted, the proposal would be harming the plan and its participants."

"The widescale, national ban proposed this week surprised many employers, as it cut across all industries and roles ... That includes areas such as financial services and asset management, in which noncompetes have become a regular part of recruiting and hiring."

"This exemption allows entities with specified relationships to JPMorgan Chase Co.... to continue to rely on the exemptive relief provided by Prohibited Transaction Class Exemption 84-14 [the QPAM Exemption], notwithstanding the judgment of conviction against JPMC[.]"

"If this proposed exemption is granted, TT International Asset Management Ltd will not be precluded from relying on the exemptive relief provided by Prohibited Transaction Class Exemption 84-14 [the QPAM Exemption], notwithstanding the Conviction ... during the Exemption Period[.]"

"[T]his provision passed the House Committee on Ways and Means ... [and] would have amended the Internal Revenue Code and the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940 to permit CITs in 403(b) plans. However, the U.S. House Committee on Financial Services asserted jurisdiction over the securities changes, which were necessary to allow 403(b) plans to use CITs. House Financial Services ... had 'consumer protections' concerns. The required amendments to securities laws did not make it into the final SECURE 2.0 Act."