"The guidance ... clarifies that proxy advisers 'regularly fit the definition of functional fiduciaries' under ERISA if they exercise control over shareholder votes or provide investment advice for a fee to retirement plans. At the same time, the agency signaled support for certain state-level regulations of the industry, saying laws that require disclosures when advice is not based on financial considerations would 'generally not be preempted' by ERISA." MORE >>
"While the Proposed Regulation acknowledges the fiduciary duty to monitor DIAs at regular intervals, the DOL opted not to include a monitoring safe harbor ... The Proposed Regulation's safe harbor protects the selection of individual DIAs but does not extend to overall investment menu curation ... [T]his gap leaves fiduciaries without safe harbor protection for an actively litigated aspect of plan governance.... The Proposed Regulation expressly excludes brokerage windows, self-directed brokerage accounts, and similar arrangements from the definition of DIA." MORE >>
"Advisors who wish to make available a managed account solution should either negotiate this service (and any resulting fees) at the outset of the relationship, or, for existing plan clients, should be careful that they are not making fiduciary recommendations that would increase their fees, unless they are relying on PTE 2020-02. Plan sponsors who are considering offering a managed account solution also should be aware of these PT issues and related considerations in evaluating the fiduciary advisor's services and fees." MORE >>
"This Technical Release addresses two issues. First, to the extent proxy advisory firms either: [1] exercise authority or control over shareholder rights attributable to shares that are ERISA plan assets, including the voting of proxies; or [2] provide advice for a fee to ERISA plans about how such plans should exercise proxy voting rights attributable to shares of stock they own, this Technical Release clarifies that such proxy advisory firms must meet ERISA's functional fiduciary requirements.
"Second, and relatedly, where a state law mandates disclosure to investors by proxy advisory firms only when they make recommendations other than for the purpose of maximizing risk-adjusted return for the advisee, such laws are generally not preempted by ERISA. ERISA fiduciary provisions do not alter this result. ERISA's fiduciary duties require that actions be taken with respect to a plan investor only for the purpose of maximizing risk-adjusted financial return. For that reason, no plan governed by ERISA should ever receive a disclosure under such a state disclosure law, and, accordingly, no relationship between that law and any ERISA plan would be created. Consequently, such a state law neither has an impermissible connection with, nor makes a prohibited reference to, ERISA plans, and it generally would not be preempted by ERISA." MORE >>
"[Executive Order 14366] makes clear that EBSA should not just examine whether proxy advisors' actions meet the test to make them investment advice fiduciaries but also asked the department to look at other actors who manage, or advise those that manage, the rights connected to shares of stock, such as the right to vote for board members, held by ERISA-covered plans. Proxy advisors have played a central role in politicizing the capital markets by pursuing ESG investing and DEI positions, but they aren't alone. At the President's directive, EBSA's Technical Release looks beyond the proxy advisors to consider when the actions of others, such as large asset managers, sovereign wealth funds, and the overseers of the proxy plumbing, render them investment advice fiduciaries." MORE >>
"The DOL is signaling that how plan fiduciaries make decisions matters more than what they ultimately select. A robust, well-documented investment selection process, grounded in the proposed rule's six factors, will be critical to managing fiduciary risk, particularly as plans consider more complex or alternative investment options. The proposed rule provides a roadmap for how fiduciaries should select (and ultimately monitor) investments, and how to document their process." MORE >>
"[Morningstar's] diversified test portfolio gained 18.3% in 2025, compared to 13.3% for a basic 60/40 portfolio consisting of U.S. stocks and investment-grade bonds.... [T]raditional methods outperformed in the long-term ... Over a 10-year period, 60/40 portfolios delivered higher risk-adjusted returns at 9.55%, compared to 8.19% for diversified portfolios. In two decades, traditional portfolios returned 9.68% relative to 7.13% for diversified portfolios." MORE >>
"Reviewing the investment policy statement (IPS) was the most prevalent fiduciary action taken in 2025, consistent with 2024.... Plan governance and process returned as the top area of focus for DC plan sponsors in 2025 ... In 2025, relatively few respondents reported they currently include or are considering alternative investments in their DC plans' TDFs.... About 7 in 10 plan sponsors calculated their recordkeeping fees within the past 12 months.... 78% calculated investment management fees within the past 12 months ... All respondents offered some type of advisory service to participants." MORE >>
"A federal judge allowed proceedings in a slate of consolidated complaints against the Cigna Group to move forward because the case does not entirely rest on the outcome of the Supreme Court's future ruling in a similar case.... [The judge] argued that pausing the Cigna lawsuits -- which involve both underperformance and forfeiture misuse claims -- would be unfair to the plaintiffs because the resolution of [Anderson v. Intel] will not address all liability theories alleged in the Cigna actions." [In re Cigna ERISA Litigation, No. 25-2465 (E.D. Penn. Apr. 8, 2026)] MORE >>
"This article explores 3(16) fiduciary services, what truly are 3(16) services, why viewing them through the lens of 'risk mitigation' is misleading, and how employers should properly evaluate and benefit from this growing service model." MORE >>
"The DOL's recently proposed rule on alternative investments ignores the fact that ERISA section 404(a) requires a plan sponsor to conduct an independent investigation and evaluation on each investment option chosen for a 401k plan. However, the very nature of alternative investments typically involves a basic lack of transparency, which effectively prevents the verification by a plan sponsor required by ERISA 404(a)." MORE >>
"With funded status holding at elevated levels, plan sponsors find themselves at a crossroads, deciding whether to transfer pension risk or continue managing assets in-house.... Planned uses of surplus assets varied across respondents ... After a decade-long decline, the expected return on assets (EROA) assumptions moved higher for the third consecutive year.... The average discount rate was 5.4% at the end of 2025, down 10 basis points from the prior year." MORE >>
"[1] Supreme Court will consider 'meaningful benchmark' standard for ERISA imprudent-investment claims ... [2] Fourth Circuit Court of Appeals vacates district court decision certifying class ... [3] Third Circuit Court of Appeals affirms summary judgment, agreeing that defendants engaged in a prudent process ... [4] Recent developments in pension risk transfer cases ... [5] District court grants motion to dismiss claims challenging health plans' prescription drug costs with prejudice."
"Public pensions, normally the first to lead securities fraud cases, have been notably absent from the Apollo/Epstein stock drop litigation. That absence may reflect a deeper conflict: the same pensions that could sue Apollo for misleading disclosures are heavily invested in its private equity and private credit funds, where valuations remain opaque and untested." MORE >>
"The DOL's proposal is much broader than anticipated and represents a new interpretation by the DOL of ERISA's duty of prudence.... Managers of alternative investments should consider the proposal's implications on fee transparency, liquidity management, and valuation processes.... The DOL anticipates issuing separate interpretive guidance relating to the duty to monitor. Public comments on the proposal are due on June 1, 2026[.]" MORE >>
"[T]he Proposed Rule provides a welcome roadmap to plan fiduciaries responsible for selecting all of a plan's designated investment alternatives, not only those that relate to alternative assets. The regulation, when finalized, will allow fiduciaries to demonstrate their compliance with ERISA's fiduciary duty of prudence. However, it remains to be seen whether the Proposed Rule will deter ERISA litigation." MORE >>
Slide Deck. "[1] Background -- executive order: Democratizing access to alternative assets for 401(k) investors ... [2] Summary of proposed rule: Fiduciary duties in selecting designated investment alternatives ... [3] Safe harbor factors when selecting designated investment alternative ... [4] Specific requests for comments within 60 Days ... [5] Topics explicitly not addressed ... [6] Considerations for plan fiduciaries." MORE >>
21 pages. "At year-end 2023, 97% of participants held some portion of their assets in equities ... This compares with 87% of participants at year-end 2007.... On average, younger 401(k) plan participants allocate a higher share of their assets to equities than older participants.... At year-end 2023, 77% of 401(k) plan participants were in plans allowing loans, but only 15% of participants who were eligible for loans had loans outstanding against their 401(k) plan accounts." [Also available: Supplemental Tables (XLSX)] MORE >>
"The familiar contours of what has been feasible for decades, and which have shown recent signs of renewed energy -- so-called target-date, life-cycle and other 'allocator' strategies of which Alternative Assets are a component -- will continue to be the likely theatre of operations for the near future." MORE >>
"While the general statement of the requirement of prudence on the part of an ERISA plan fiduciary states that there is an obligation of the fiduciary to consider all relevant factors, and that this applies to the valuation of alternative assets as a plan investment option available to participants, this same fiduciary obligation can equally be read to require, with respect to more traditional types of plan investment options, that there be an evaluation of such matters as the impact on an investment of environmental factors, benefits of a diverse workforce and other governance and societal implications of the businesses included in the investment choices available to plan participants." MORE >>
"Annuity contracts have long provided the following capabilities to DC plans: [1] Asset accumulation.... [2] Protection of asset accumulations.... [3] Accumulations of guarantees.... [4] Protection and distribution of guarantees.... The question raised by the DOL's proposed prudence safe harbor, at least from the lifetime income side, will be whether and how any of the description of the standards apply to any of these particular features and the different types of contracts under which they are provided." MORE >>
"For plan sponsors willing to do due diligence, CITs can potentially reduce costs, improve flexibility, and support better long‑term outcomes for participants. But they can introduce risk and confusion just as easily as any other investment vehicle." MORE >>
"The DOL's proposal would introduce a safe harbor for offering alternative investments in 401(k) plans. The Supreme Court's review could clarify fiduciary liability and proof standards. These changes may accelerate adoption of private market assets in defined contribution plans." [Anderson v. Intel Corp. Inv. Policy Comm., No. 22-16268 (9th Cir. May 22, 2025; cert. pet. granted Jan 16, 2026, No. 25-498)] MORE >>
"[Judge Kymberly Evanson] dismissed the case on substantive grounds, noting that nearly all allegations about Athene's financial condition arose after the relevant transaction and thus did not show that the defendants breached their fiduciary duties when choosing Athene for the 2019 transaction." [Maneman v. Weyerhaeuser Co., No. 24-2050 (W.D. Wash. Mar. 31, 2026)] MORE >>
"The proposed regulation, through detailed examples, provides a roadmap to plan fiduciaries for investing in alternative assets, but also provides an asset-neutral 'process-based safe harbor' to guide plan fiduciaries in selecting DIAs. In providing the safe harbor, the DOL asserts that plan fiduciaries will enjoy reduced litigation risk -- another aim of the President's Executive Order. While the proposed regulation's safe harbor is helpful, there is an open question as to how effective it can be in taming the firehose of litigation that has been plaguing plans and plan fiduciaries for decades." MORE >>
